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Alternative Dispute Resolution | Monday, March 30, 2015 | S7

Fourth Circuit used contract law principles

to hold that if arbitration was imputed into
the forum selection clause at issue, the forum
selection clause became nonsensical because
Complex disputes and investigations require the provision would mean arbitration must
be brought in federal court. Id. at 327-28. The
Fourth Circuit found that if the forum selec-
tion clause was meant to displace arbitration,
experienced financial experts. Do you have then the clause would indeed specifically and
explicitly refer to that fact. The Second Cir-

cuit summarily dismissed these arguments in
the right team on your side?
Goldman, Sachs by finding them “little more
than a linguistic trick.” Goldman, Sachs, 764
F.3d at 217 (internal citations omitted). The
Second Circuit’s holding is in agreement with
the ninth Circuit’s finding on this issue in
Goldman, Sachs & Co. v. City of Reno, 747
EisnerAmper’s team assists clients with complex F.3d 733 (9th Cir. 2014).

financial analysis and expert testimony in dispute
The Takeaway

and investigation settings, including commercial A few lessons. First, the Second Circuit’s
decision establishes that a forum selection
disputes, intellectual property disputes, marital clause that requires “all actions and proceed-
ings” arising out of the broker-dealer agree-
disputes, forensic investigations, bankruptcy and ment to be filed in court will be sufficient to
override FInRA’s arbitration rule. The same,
restructuring, and business valuations.
however, is not true in the Fourth Circuit.
One possible solution to avoid the risks of
this current split is to explicitly state in the
Our experienced professionals have the skills and clause that the parties are giving up their
rights to arbitration under FInRA Rule 12200.
expert witness experience to provide effective, Second, Goldman, Sachs v. Golden Empire
acts as a powerful reminder concerning the
quality services. Make the right call. Contact limits of the FAA’s reach. Litigants routinely
make the mistake of arguing that the FAA’s
EisnerAmper.
promotion of arbitration means whenever
in doubt, courts should always rule in favor
of arbitration. The analysis, however, needs
Read more at EisnerAmper.com/Disputes
to be much more precise. The FAA’s pre-
sumption in favor of arbitration applies to
discrete judicial determinations of whether
the substance of their dispute arguably falls
within the scope of that arbitration agree-
ment. Here, the broker-dealers successfully

argued that the issue before the court was
one step removed: whether the parties had,
by a subsequent contract, in fact superseded
an earlier agreement to arbitrate. Under that
analysis, the FAA’s presumption is not trig-
gered, and instead the courts must turn to
basic contract law principles, as the Second
Let’sgetdowntobusiness.® eisneramper.com 212.891.4028 Circuit did here. The lesson: If you want to

Dennis S. Neier [email protected]
avoid the presumption in favor of arbitra-
tion, then attempt to characterize the issue
before the court as one slightly removed from
whether or not the dispute falls within the
scope of an agreement to arbitrate.
Finally, Goldman, Sachs reflects a growing
trend of FInRA members seeking to avoid
FInRA arbitration. The law in this area will
continue to develop, and it will be interesting
New edITION!
to see if FInRA responds.
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The America Invents Act (AIA) Handbook:
1. Goldman, Sachs & Co. v. Golden Empire Sch. Fin. A Guide to the Patent Law Reform of 2011:
Auth., 922 F. Supp. 2d 435 (S.D.n.Y. 2013).
2. “Auction rate securities are debt or equity interests
issued by various public and private entities and traded 2014 Edition
through periodic auctions.” Wilson v. Merrill Lynch & by Mary A. Merchant
Co., 671 F.3d 120, 123 (2d Cir. 2011).
P
3. Citigroup Global Mkts. v. N.C. Eastern Mun. Pow- er Agency, no. 13-1703, 2013 U.S. Dist. LEXIS 188771 Save 25% with Promo Code 497143
(S.D.n.Y. May 10, 2013).
Visit lawcatalog.com or call (877) 807-8076
4. FInRA Rule 12200, available at http:// C
R TM
finra.complinet.com/en/display/display_main. New subscribers only.
html?rbid=2403&element_id=4106.
5. UBS Fin. Servs. v. W. Va. Univ. Hosps., 660 F.3d 644, 648 (2d Cir. 2011) (quoting 72 Fed. Reg. 42169, 42170 LawJournalPress.com
(Aug. 1, 2007)).