Vivine Wang v. Bear Stearns & Co., Inc. , 456 F. App'x 670 ( 2011 )

FILED
NOT FOR PUBLICATION OCT 31 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
VIVINE H. WANG, Nos. 10-55147 & 10-55901
Petitioner - Counter- D.C. No. 2:09-cv-05731-GHK-CT
Respondent - Appellant,
v. MEMORANDUM*
BEAR STEARNS & CO., INC., d/b/a J.P.
MORGAN SECURITIES, INC.,
Respondent - Counter-
Petitioner - Appellee.
Appeal from the United States District Court
for the Central District of California
George H. King, District Judge, Presiding
Argued and Submitted October 13, 2011
Pasadena, California
Before: FERNANDEZ and CALLAHAN, Circuit Judges, and ERICKSON, Chief
District Judge.**
Vivine Wang appeals from the district court’s ruling confirming an
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Ralph R. Erickson, Chief District Judge for the U.S.
District Court for North Dakota, Fargo, sitting by designation.
arbitration award entered in favor of Bear Stearns & Co., Inc.1 On appeal, Wang
challenges (1) both the district court’s interpretation of the Customer Agreement
she entered into with Bear Stearns and the court’s determination that Bear Stearns’
claims were arbitrable, and (2) the district court’s decision to confirm the
arbitration award. Finally, Wang challenges the district court’s award of attorney
fees and costs incurred by Bear Stearns to confirm the arbitration award. We
affirm.2
We review the district court’s decision to confirm an arbitration award de
novo. New Regency Productions, Inc. v. Nippon Herald Films, Inc., 501 F.3d
1101, 1105 (9th Cir. 2007). We also consider the construction and interpretation
of a contract term relating to the validity and scope of an arbitration clause, which
are questions of law, de novo. Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1267
(9th Cir. 2006) (en banc).
The claim submitted by Bear Stearns in the arbitration proceedings was one
to recover unpaid debt. Resolution turned on the terms of the Customer Agreement
specifying that Wang was obligated to pay for any completed stock purchases.
1
Bear Stearns & Co. has undergone a number of restructurings during
the course of the litigation. Because Bear Stearns was the original contracting
company, this name is used throughout the memorandum for the sake of clarity.
2
Because the parties are familiar with the facts and procedural history,
we do not restate them here except as necessary to explain our decision.
2
Both parties agree that under their dispute arbitration agreement, arbitration is the
contractually agreed upon forum for resolution of these claims so long as the
“carve out” clause does not apply. In order for the carve out clause to apply, the
claim submitted to arbitration must be “encompassed by” a putative class action.
The collection claim and the putative class action in this case arise out of the
same set of operative facts. A plain reading of the term “encompassed by” requires
more than simply arising out of the same set of facts. It suggests that the
arbitration claims must lie “within” the class action claim.
Although the facts giving rise to the claims at issue are the same, the
essential elements of the claims are distinct and bear little relation to each other.
Bear Stearns seeks to be paid for Wang’s stock purchases. Its claim is fact-
specific, demanding only proof of the orders and whether payment for the orders
was made. In the pending class actions, Wang alleges Bear Stearns committed
fraud and/or other securities law violations with regard to the sale of the stock. It
is axiomatic that Bear Stearns cannot assert a counterclaim for monetary damages
in the pending class actions where Wang is not a named party. See Fed. R. Civ. P.
13 (outlining circumstances in which a pleader must state a counterclaim and may
state a counterclaim against “an opposing party”); Allapattah Services, Inc. v.
Exxon Corp. 333 F.3d 1248, 1260 (11th Cir. 2003). Moreover, where
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individualized inquiries predominate over common issues, class certification is
inappropriate. Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011).
Interpreting the scope of the carve out clause so broadly as to include any claim
related to the transactions is contrary to the plain language of the provision and
may serve to defeat legitimate class actions.
Wang’s overbroad interpretation of the phrase “encompassed by” would
create a rule in which a party with a legitimate arbitrable claim would be precluded
from getting the benefit of its bargain (the execution of a pre-dispute arbitration
agreement) even where the pending class action claims would not or could not
resolve the arbitration claim.
Arbitration in front of the duly-appointed subsidiary of the Financial
Industry Regulatory Authority (“FINRA”) was proper under the terms of the
Customer Agreement, as was the arbitrator’s reliance on the FINRA Rules. The
district court’s ruling allowed Bear Stearns to collect what is due under the contract
while not interfering with Wang’s putative class action claims. We affirm the
district court’s confirmation of the arbitration award.
In the second of these consolidated appeals, Wang argues the district court
erred by awarding attorney’s fees and costs that Bear Stearns incurred in
confirming the arbitration award. This issue can be resolved by reference to the
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language of the underlying contract. There is no need to reach a statutory analysis.
Accordingly, our review of the issue is de novo. Cape Flattery, Ltd. v. Titan
Maritime, LLC, 647 F.3d 914, 917 (9th Cir. 2011) (validity and scope of arbitration
clause reviewed de novo). The contract provided:
You [Wang] hereby agree to pay, on demand, all reasonable costs, fees,
expenses, liabilities and damages (collectively “Costs”) incurred by Bear
Stearns in connection with (i) enforcing its rights hereunder, (ii) any
investigation, litigation or proceeding involving your Account(s) or any
property therein, (iii) . . . (B) the failure by you or any person authorized
to act on your behalf to comply with any terms, conditions, or limitations
. . . (iv) any breach or failure by you to perform any term or provision of
this Agreement . . .
This provision unambiguously provides for the reasonable reimbursement of all
costs to Bear Stearns in enforcing its rights, including any litigation undertaken in
that pursuit. Bear Stearns was forced to litigate this case in federal court in order
to secure the arbitration award. The costs of this endeavor are clearly covered by
the plain language of the contract, and we affirm the district court’s ruling
authorizing reimbursement of expenses incurred by Bear Stearns in confirming the
arbitrator’s award.
AFFIRMED.
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