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Cohen v. UBS Financial Services, Inc.

United States Court of Appeals, Second Circuit

June 30, 2015

ELIOT COHEN, on behalf of himself and all others similarly situated, Plaintiff-Appellant, DAVID HALE, CHARLES SHOEMAKER, on behalf of themselves and all others similarly situated, PHILIP RICASATA, STAN SKLENAR, Plaintiffs,
v.
UBS FINANCIAL SERVICES, INC., UBS AG, Defendants-Appellees

Argued: January 30, 2015.

ALEXANDER H. SCHMIDT (Jeffrey G. Smith, Robert Abrams, and Matthew M. Guiney, on the brief), Wolf Haldenstein Adler Freeman & Herz LLP, New York, New York, for Plaintiff-Appellant.

MARK A. PERRY (Eugene Scalia, Paul Blankenstein, and Rachel E. Mondl, on the brief), Gibson, Dunn & Crutcher LLP, Washington, D.C., for Defendants-Appellees.

Before: JACOBS, WESLEY, and CARNEY, Circuit Judges.

OPINION

Page 175

DENNIS JACOBS, Circuit Judge:

Eliot Cohen, a financial advisor employed by UBS Financial Services, Inc. (" UBS" ), consented by contract to arbitrate " claims concerning compensation, benefits or other terms or conditions of employment" before the Financial Industry Regulatory Authority (" FINRA" ), and to waive " any right to commence, be a party to or an actual or putative class member of any class or collective action arising out of or relating to [his] employment with UBS."

Cohen nevertheless initiated a putative class and collective action against UBS, asserting wage-and-hour claims under the Fair Labor Standards Act (" FLSA" ) and California law, including claims under California's Labor Code Private Attorneys General Act (" PAGA" ). UBS moved to stay the action and compel arbitration. Without disputing that the arbitration agreement covered his claims, Cohen argued that enforcement of it was barred by Rule 13204 of the FINRA Code of Arbitration Procedure for Industry Disputes (" Industry Code" ). The district court granted UBS's motion and denied Cohen's motion for reconsideration.

On appeal, Cohen argues that Rule 13204 must be treated as a " contrary congressional command" that overrides the enforceability of the arbitration agreement under the Federal Arbitration Act

Page 176

(" FAA" ). See CompuCredit Corp. v. Greenwood, 132 S.Ct. 665, 669, 181 L.Ed.2d 586 (2012) (internal quotation marks omitted). We need not consider whether Rule 13204 is a " congressional" command because we conclude that it is not " contrary." The Rule does not prohibit a pre-dispute waiver of class and collective action procedures, and permits FINRA arbitration of individual wage-and-hour claims.

Cohen argues that, under California law, his PAGA claims cannot be arbitrated. See Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348, 173 Cal.Rptr.3d 289, 327 P.3d 129, 145 (Cal. 2014), cert. denied, 135 S.Ct. 1155, 190 L.Ed.2d 911 (2015). We need not consider that argument because Cohen's PAGA claims are in any event time-barred.

We affirm.

BACKGROUND

The decisive facts are undisputed.

Cohen, a resident of California, was employed by UBS as a financial advisor. He entered into a contract (the " Compensation Plan" ), which provided as follows:

[Y]ou and UBS agree that any disputes between you and UBS including claims concerning compensation, benefits or other terms or conditions of employment ... including but not limited to, claims arising under the Fair Labor Standards Act..., or any other federal, state or local employment ... laws, rules or regulations, including wage and hour laws, will be determined by arbitration as authorized and governed by the arbitration law of the state of New York. Any such arbitration will be conducted under the auspices and rules of [FINRA].... By agreeing to the terms of this Compensation Plan, you waive any right to commence, be a party to or an actual or putative class member of any class or collective action arising out of or relating to your employment with UBS.

A. 48 (emphases added).[1]

FINRA is a self-regulatory organization that (among other things) sponsors an arbitration forum. See generally Securities and Exchange Commission Release No. 34-56145, 72 Fed.Reg. 42169, 42188-89 (Aug. 1, 2007). Use of that forum to adjudicate disputes between FINRA members and " associated persons" is governed by the Code of Arbitration Procedure for Industry Disputes (" Industry Code" ). See FINRA Rule 13200(a). UBS is a FINRA member, and Cohen (a financial advisor registered with FINRA) is an associated person. See FINRA Rule 13100(a), (o), (r).

In 2011, Cohen sued UBS and its parent company, UBS AG, in the United States District Court for the Central District of California, asserting wage-and hour claims under the FLSA and California state law. The case was transferred to the Southern District of New York, and the complaint was amended ...


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