McLeod v. BTIG CA1/1 ( 2021 )

Filed 12/6/21 McLeod v. BTIG CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
MATTHEW MCLEOD,
Plaintiff and Respondent,
A159016
v.
BTIG, LLC, (San Francisco City & County
Super. Ct. No. CGC-19-576499)
Defendant and Appellant.
BTIG, LLC (BTIG) appeals from an order denying its motion to compel
arbitration as to three of the four causes of action alleged in a complaint filed
by BTIG’s former employee, respondent Matthew McLeod. The three claims,
which allege claims for retaliation, wrongful termination, and injunctive
relief, are based on respondent’s contention that BTIG retaliated against him
for reporting acts of discrimination in violation of the Fair Employment and
Housing Act (FEHA) (Gov. Code, § 12900 et seq.).1 BTIG contends that
respondent’s claims must be submitted to arbitration even though the
parties’ arbitration agreement excludes claims that allege “employment
discrimination . . . in violation of a statute.” The trial court concluded that
the three claims are not arbitrable because they fall within this exclusion.
We affirm.
1 All undesignated statutory references are to the Government Code.
1
I. FACTUAL AND PROCEDURAL BACKGROUND
Appellant is a global financial services firm that specializes in
institutional trading, investment banking, research, and related brokerage
services. It is a registered member of the Financial Industry Regulatory
Authority (FINRA),2 and is subject to regulations promulgated by FINRA.
Pursuant to these FINRA regulations, BTIG requires all employees hired to
perform regulated activities, such as investment banking services, to fill out
and sign a “Uniform Application for Securities Industry Registration or
Transfer Form,” otherwise known as a “Form U-4.”3
In November 2014, BTIG hired respondent as an investment banker.
As a condition of his employment, he completed and signed a Form U-4. The
form included a provision requiring him to consent to the following language:
“I agree to arbitrate any dispute, claim or controversy that may arise between
me and my firm . . . that is required to be arbitrated under the rules,
2“FINRA is the self-regulatory organization for securities brokers and
brokerage firms and is the successor to the National Association of Securities
Dealers, Inc. (NASD).” (Ronay Family Limited Partnership v. Tweed (2013)
216 Cal.App.4th 830, 834, fn. 1.) “FINRA is responsible for regulatory
oversight of all securities brokers and firms that do business with the public;
professional training, testing, and licensing of persons registered by FINRA;
and arbitration and mediation of disputes.” (Ibid.)
3 On appeal, BTIG requests judicial notice of various FINRA
regulations and related documents under Evidence Code section 452,
subdivisions (b), (c), and (h). We deny the request with respect to materials
described in paragraphs 1 through 3 because these materials were part of the
record before the trial court and are included in the record on appeal. (Davis
v. Southern California Edison Co. (2015) 236 Cal.App.4th 619, 632, fn. 11.)
We deny the request with respect to exhibits 1 through 11 attached to BTIG’s
request for judicial notice because these materials were not presented to the
trial court in the first instance. (Evid. Code, § 459, subd. (a).)
2
constitutions, or bylaws of the SROs4 indicated in Section 4 (SRO
REGISTRATON) as may be amended from time to time and that any
arbitration award rendered against me may be entered as a judgment in any
court of competent jurisdiction.” In section 4 of his Form U-4, respondent
registered with FINRA.
According to respondent, during his tenure with BTIG “he witnessed
blatant religious, racial and gender discrimination.” For example, he
observed a managing director making anti-Semitic comments regarding a key
client of BTIG. That same manager also directed BTIG staff to screen out
female and African-American job applicants. Respondent complained directly
to BTIG executives about this discrimination, but the company reportedly
“did not investigate, and instead reprimanded [respondent] for making things
‘awkward.’ Shortly thereafter, despite never having received a negative
performance review or feedback, [respondent] was fired.”
In June 2019, respondent filed a complaint against BTIG stating causes
of action for retaliation in violation of the FEHA, wrongful termination in
violation of public policy, injunctive relief, and unfair business practices. He
alleged that in addition to being wrongfully terminated, BTIG submitted
fraudulent information to FINRA resulting in a damaging designation on his
publicly available FINRA profile.
BTIG filed a petition to compel FINRA arbitration and stay this
lawsuit. BTIG asserted that by signing the Form U-4, respondent had agreed
to arbitrate any controversy arising between him and BTIG involving his
employment and its termination. Respondent filed an opposition contending
4 “SRO” refers to a “self-regulatory organization” such as FINRA.
3
that his claims were exempt from arbitration. Alternatively, he argued that
the parties’ arbitration agreement was void as unconscionable.
In September 2019, the trial court rejected respondent’s
unconscionability argument and granted BTIG’s petition to compel
arbitration of his unfair business practices claim. The court denied the
petition as to respondent’s claims for retaliation and wrongful termination,
concluding those claims were exempt from arbitration under FINRA’s
arbitration rules because the rules expressly exclude claims “ ‘alleging
employment discrimination, including a sexual harassment claim, in
violation of a statute.’ ” The court also denied the petition as to the claim for
injunctive relief because that claim “is best characterized as part of
[respondent’s] FEHA retaliation claim.” The court stayed the case pending
completion of arbitration on the unfair business practices claim. This appeal
followed.
II. DISCUSSION
A. Standard of Review
“ ‘There is no uniform standard of review for evaluating an order
denying a motion to compel arbitration. [Citation.] If the court’s order is
based on a decision of fact, then we adopt a substantial evidence standard.
[Citations.] Alternatively, if the court’s denial rests solely on a decision of
law, then a de novo standard of review is employed. [Citations.]’ [Citation.]
Interpreting a written document to determine whether it is an enforceable
arbitration agreement is a question of law subject to de novo review when the
parties do not offer conflicting extrinsic evidence regarding the document’s
meaning.” (Avery v. Integrated Healthcare Holdings, Inc. (2013)
218 Cal.App.4th 50, 60.) Here, the parties offered no conflicting extrinsic
4
evidence on the meaning of the arbitration provisions at issue. We therefore
apply the de novo standard of review.
B. Applicable Legal Principles
The Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) applies to
employee disputes with FINRA member firms. (Cione v. Foresters Equity
Services, Inc. (1997) 58 Cal.App.4th 625, 633–634; see also Valentine Capital
Asset Management, Inc. v. Agahi (2009) 174 Cal.App.4th 606, 613 (Valentine
Capital).) “Courts interpret the FINRA arbitration rules the same way they
interpret contracts, giving effect to the parties’ intent as expressed by the
plain and ordinary meaning of the language they used.” (Ronay Family
Limited Partnership v. Tweed, supra, 216 Cal.App.4th at pp. 841–842.)
As BTIG correctly observes, federal and state public policy strongly favors
arbitration and seeks to ensure that “ ‘private agreements to arbitrate are
enforced according to their terms.’ ” (Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp. (2010) 559 U.S. 662, 664; see Moncharsh v. Heily & Blase (1992)
3 Cal.4th 1, 9.) However, “ ‘ “there is no policy compelling persons to accept
arbitration of controversies which they have not agreed to arbitrate . . . .” ’ ”
(Victoria v. Superior Court (1985) 40 Cal.3d 734, 744; accord, Cohen v. TNP
2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 855.)
“ ‘[A]rbitration is a matter of contract and a party cannot be required to
submit to arbitration any dispute which he [or she] has not agreed so to
submit.’ ” (AT&T Technologies, Inc. v. Communications Workers (1986)
475 U.S. 643, 648; see also Cohen, at pp. 855, 857–858.)
The party seeking to compel arbitration bears the burden of proving the
existence of an arbitration agreement, while the party opposing the petition
bears the burden of establishing a defense to the agreement’s enforcement.
(Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.) Doubts
5
regarding the validity of an arbitration agreement generally are resolved in
favor of arbitration. (Valentine Capital, supra, 174 Cal.App.4th at p. 613;
Coast Plaza Doctors Hospital v. Blue Cross of California (2000)
83 Cal.App.4th 677, 686.)
C. Form U-4 Arbitration Clause
Respondent signed Form U-4, agreeing “to arbitrate any dispute, claim
or controversy that may arise between me and my firm . . . that is required to
be arbitrated under the rules, constitutions, or bylaws of the SROs . . . as may
be amended from time to time . . . .” FINRA’s Code of Arbitration for
Industries Disputes (FINRA Code) provides that “[e]xcept as otherwise
provided in the Code, a dispute must be arbitrated under the Code if the
dispute arises out of the business activities of a member or an associated
person and is between or among: [¶] Members; [¶] Members and Associated
Persons; or [¶] Associated Persons.” (FINRA Code, rule13200(a).) FINRA
Code rule 13201(a) (Rule 13201(a)) carves out an exception to the arbitration
of such claims. It provides in relevant part: “A claim alleging employment
discrimination, including sexual harassment, in violation of a statute, is not
required to be arbitrated under the Code. Such a claim may be arbitrated
only if the parties have agreed to arbitrate it, either before or after the
dispute arose.”
The foregoing language is clear and unambiguous. Under the FINRA
provision quoted above, the parties agreed to arbitrate all disputes arising
out of business activities between a FINRA member (BTIG) and an
associated person (respondent), except for claims “alleging employment
6
discrimination . . . in violation of a statute.”5 Although the FINRA rules
permit the arbitration of statutory employment discrimination claims if the
parties privately agree to doing so, BTIG does not identify any such
agreement between the parties here. Accordingly, the question presented in
this appeal is whether the three causes of action for retaliation, wrongful
termination, and injunctive relief allege claims of employment discrimination
in violation of a statute. If they do, those claims cannot be arbitrated
pursuant to the unambiguous terms of the parties’ arbitration agreement.
D. Respondent’s Claims
i. Retaliation
In the complaint’s first cause of action, respondent alleges that he was
terminated in retaliation for reporting unlawful discrimination on the basis
of religion, sex, and race. To state a claim for retaliation under the FEHA, a
plaintiff must show that “(1) he or she engaged in a ‘protected activity,’
(2) the employer subjected the employee to an adverse employment action,
and (3) a causal link existed between the protected activity and the
employer’s action.” (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028,
1042 (Yanowitz).) “The statutory language of section 12940[, subdivision] (h)
indicates that protected conduct can take many forms. Specifically,
section 12940[, subdivision] (h) makes it an unlawful employment practice
‘[f]or any employer . . . to discharge, expel, or otherwise discriminate against
any person because the person has opposed any practices forbidden under
this part or because the person has filed a complaint, testified, or assisted in
5As BTIG points out, California appellate courts have concluded that
the phrase “business activities” encompasses employment disputes between
FINRA members and employees who signed Form U-4. (See Cione v.
Foresters Equity Servs., Inc., supra, 58 Cal.App.4th at p. 645.) Respondent
does not contend otherwise.
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any proceeding under this part.’ ” (Ibid., italics omitted.) There is no
disagreement that the complaint’s allegations state a legally sufficient claim
for retaliation under the FEHA.
What the parties dispute is whether retaliation constitutes an
“employment discrimination” claim within the meaning of Rule 13201(a)’s
exception to mandatory arbitration. BTIG notes that respondent does not
allege he was personally subject to any harassment or discrimination on the
basis of a protected characteristic. Rather, BTIG contends that retaliation is
not an “employment discrimination” claim under the FEHA because it is a
separate cause of action with different elements than discrimination. BTIG
is mistaken.
The statutory text of the FEHA makes clear that retaliation constitutes
a form of employment discrimination. Section 12940, subdivision (h) provides
that it is an unlawful employment practice “[f]or any employer . . . to
discharge, expel, or otherwise discriminate against any person because the
person has opposed any practices forbidden under this part or because the
person has filed a complaint, testified, or assisted in any proceeding under
this part.” (Italics added). The phrase “otherwise discriminate” clearly
identifies retaliation as a form of discrimination barred by subdivision (h).
Title VII of the Civil Rights Act of 1964, on which the FEHA is modeled, also
defines retaliation against an employee for opposing an unlawful practice as
a form of discrimination. Section 2000e-3 states in relevant part: “It shall be
an unlawful employment practice for an employer to discriminate against any
of his employees . . . because he has opposed any practice made an unlawful
employment practice by this title, or because he has made a charge, testified,
assisted, or participated in any manner in an investigation, proceeding, or
hearing under this title.” (42 U.S.C. § 2000e-3.) (See Camargo v. California
8
Portland Cement Co. (2001) 86 Cal.App.4th 995, 1006 [“FEHA has the same
objectives as its federal counterpart and model, title VII of the federal Civil
Rights Act”].) Relevant United States Supreme Court precedent confirms
this understanding.
In Jackson v. Birmingham Board of Education (2005) 544 U.S. 167(Jackson), the high court held that Title IX’s anti-discrimination provision
prohibited retaliation against a male public school teacher for having
complained about sex discrimination in the high school’s athletic program.
The court explained: “Retaliation against a person because that person has
complained of sex discrimination is another form of intentional sex
discrimination encompassed by Title IX’s private cause of action. Retaliation
is, by definition, an intentional act. It is a form of ‘discrimination’ because
the complainant is being subjected to differential treatment. [Citations.]
Moreover, retaliation is discrimination ‘on the basis of sex’ because it is an
intentional response to the nature of the complaint: an allegation of sex
discrimination.” (Jackson, at pp. 173–174; accord, Gomez-Perez v. Potter
(2008) 553 U.S. 474, 480–481 [extending reasoning in Jackson to hold that
the statutory phase “discrimination based on age” in the Age Discrimination
in Employment Act of 1967 encompasses claims of retaliation].)
California law is in accord. In Yanowitz, the California Supreme Court
considered what type of employment actions are sufficiently adverse to
support a cause of action for retaliation. The court acknowledged that the
statutory language concerning discrimination under section 12940,
subdivision (a), bore some differences than the language regarding retaliation
9
under subdivision (h).6 Nevertheless, the court rejected the plaintiff’s
argument that what constitutes as the scope of an “adverse employment
action” should be read more broadly for retaliation claims than for
discrimination claims. The Yanowitz court explained: “When the provisions
of section 12940 are viewed as a whole, . . . we believe it is more reasonable to
conclude that the Legislature intended to extend a comparable degree of
protection both to employees who are subject to the types of basic forms of
discrimination at which the FEHA is directed—that is, for example,
discrimination on the basis of race or sex—and to employees who are
discriminated against in retaliation for opposing such discrimination, rather
than to interpret the statutory scheme as affording a greater degree of
protection against improper retaliation than is afforded against direct
discrimination.” (Yanowitz, supra, 36 Cal.4th at p. 1050, italics added; see
also Taylor v. City of Los Angeles Dept. of Water & Power (2006)
144 Cal.App.4th 1216, 1240 (Taylor) [holding that “retaliation is a form of
discrimination” under the FEHA]), disapproved on other grounds in Jones v.
Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1173–1174 (Jones).
BTIG’s reliance on Jones is misplaced. In Jones, the California
Supreme Court was asked to consider whether its holding in Reno v. Baird
(1998) 18 Cal.4th 640 (Reno) should be extended to bar claims of retaliation
against non-employer individuals. In Reno, the court held that although
employers may be held liable for discrimination under the FEHA, individuals
working for the employer, including supervisors, are not personally liable for
that discrimination. The Jones court concluded that the same rule
6(Compare § 12940, subd (a) [“to discriminate against the person in
compensation or in terms, conditions, or privileges of employment”] with
§ 12940, subd. (h) [“to discharge, expel, or otherwise discriminate”].)
10
announced in Reno should apply to claims of retaliation against individuals.
(Jones, supra, 42 Cal.4th at p. 1160.) The court reasoned that imposing
liability on individual supervisory employees would not enhance a plaintiff’s
recovery and would severely impair the exercise of supervisory judgment and
place supervisors in direct conflict of interest with their employers. (Id. at
pp. 1165–1167.)
BTIG contends that if retaliation were a form of discrimination, there
would have been no reason for the Jones court to answer the question
presented in that appeal. We disagree. Jones addressed the question of
individual liability in a retaliation claim because such claim derives from a
different subdivision of the FEHA. But the Jones court did not address,
much less determine, that retaliation does not constitute a form of
discrimination under the FEHA. On the contrary, Jones explained: “If, as we
held in Yanowitz, the employment actions that can give rise to a claim for
retaliation are identical to the actions that can give rise to a claim for
discrimination, it is hard to conceive why the Legislature would impose
individual liability for actions that are claimed to be retaliatory but not for
the same actions that are claimed to be discriminatory.” (Jones, supra,
42 Cal.4th at pp. 1168–1169.) As the Jackson and Yanowitz courts both
recognized, retaliation is a form of discrimination because it subjects a
complainant to differential treatment on the basis of his or her opposition to
discriminatory acts committed by the employer. Jones did nothing to
undermine this understanding of a retaliation claim.
Finally, BTIG asserts that the canon of expressio unius est exclusio
alterius supports its argument that Rule 13210(a)’s exclusion does not apply
to claims of retaliation. “ ‘ “Under the familiar maxim of expressio unius est
exclusio alterius it is well settled that, when a statute expresses certain
11
exceptions to a general rule, other exceptions are necessarily excluded.’ ”
[Citations.] This canon, based on common patterns of usage and drafting, is
equally applicable to the construction of contracts.” (White v. Western Title
Ins. Co. (1985) 40 Cal.3d 870, 902.) BTIG argues that because Rule 13201(a)
“expressly mentions ‘sexual harassment’ as included in ‘employment
discrimination,’ but is silent as to retaliation, [this] is a strong indication that
retaliation does not fall within the Exclusion.” We are not persuaded. The
reference to sexual harassment is clearly intended to serve as an example of
an employment discrimination claim not subject to arbitration under
FINRA’s regulations, and not as a limitation on that term. By BTIG’s logic,
an employee discriminated against on the basis of religion or race would also
be required to arbitrate their disputes because such categories were not
expressly cited in Rule 13201(a). BTIG provides no support for this
implausible construction. We conclude that respondent’s retaliation claim is
a claim alleging employment discrimination in violation of a statute and is
therefore exempt from arbitration under Rule 13210(a).
ii. Wrongful Termination in Violation of Public Policy
The complaint’s second cause of action states a claim for wrongful
termination in violation of public policy. In his claim, respondent alleged
that he was fired because he had opposed, protested, and reported
discriminatory practices. He alleges that his termination was in violation of
public policy based on the California Constitution, article I, section 8, and the
FEHA. The trial court determined that this cause of action was exempt from
the obligation to arbitrate “because it too is a retaliation (or discrimination)
claim,” observing that BTIG had conceded in its petition that the wrongful
termination claim was “ ‘entirely derivative of [respondent’s] FEHA
retaliation claim.’ ” On appeal, BTIG contends wrongful termination is a
12
common law and not a statutory claim, and therefore is not exempt from
arbitration under Rule 13201(a).
In Tameny v. Atlantic Richfield Co., (1980) 27 Cal.3d 167 (Tameny), our
Supreme Court held that “when an employer’s discharge of an employee
violates fundamental principles of public policy, the discharged employee
may maintain a tort action and recover damages traditionally available in
such actions.” (Id. at p. 170). BTIG argues that termination in violation of
public policy is a common law claim that does not depend on violation of any
statute to be asserted. (See Palmer v. Regents of Univ. of California (2003)
107 Cal.App.4th 899, 909 [“Because the ‘classic Tameny cause of action’ is a
common law, judicially created tort . . . and not authorized by statute, it is
not properly asserted against the Regents.”]) Respondent answers that to
support a tortious wrongful discharge claim, a fundamental public policy
must be grounded in a constitutional or statutory provision. (Jennings v.
Marralle (1994) 8 Cal.4th 121, 130.)
Even if, as a general matter, a cause of action for wrongful termination
in violation of public policy arises from common law and need not depend on
the violation of an express statutory provision, there is no dispute that in this
action, respondent’s wrongful termination claim is predicated entirely on a
violation of the FEHA. Respondent’s wrongful termination claim mirrors the
allegations of his retaliation claim by asserting that his termination was an
act of retaliation for “opposing, protesting, and reporting discriminatory
practices” in violation of the FEHA. Indeed, in the absence of these statutory
allegations, respondent would have no basis upon which to state a claim for
wrongful termination. Accordingly, respondent’s wrongful termination claim
is “[a] claim alleging employment discrimination . . . in violation of a statute.”
(Rule 13201(a).)
13
In arguing to the contrary, BTIG relies on a Texas Supreme Court case,
In re NEXT Financial Group (Tex. 2008) 271 S.W.3d 263 (NEXT) to assert
that a claim for wrongful termination is not covered by Rule 13201(a), and
that a retaliation claim is not an employment discrimination claim. In
NEXT, the employee’s wrongful discharge claim was predicated upon the
employer having allegedly fired the securities broker for refusing to conceal a
trader’s fraudulent “churning” transactions. (Next, at p. 265.) The Texas
Supreme Court found that the claim was subject to arbitration under the
NASD Arbitration Code because, “although [the securities broker’s]
retaliatory discharge claim [was] premised on NEXT’s allegedly illegal
activities, the alleged conduct involve[d] ‘significant aspects’ of NEXT’s
legitimate business activities, bringing the dispute within the scope of the
NASD arbitration clause.” (Next, at p. 269.) The court further found that the
employee’s claim for retaliation did not fall within Rule 13201’s exemption for
employment discrimination claims because “[t]he plain language of the NASD
Code confirms that Rule 13201 does not except common law discrimination
claims.” (Next, at p. 269.)
We find NEXT inapplicable. The employee in NEXT did not allege a
statutory discrimination claim nor was such claim based on the violation of a
discrimination statute. Rather, the plaintiff asserted a claim under Texas
common law that permits an employee to sue if they are discharged for the
sole reason that the employee refused to perform an illegal act. (See Sabine
Pilot Service, Inc. v. Hauck (Tex. 1985) 687 S.W.2d 733, 735.) As the NEXT
court explained, “We do not view a Sabine Pilot claim as a ‘discrimination
claim.’ ” (NEXT, supra, 271 S.W.3d at p. 270.) Unlike the employee in
NEXT, respondent’s cause of action here is based on allegations of statutory
employment discrimination. As discussed above, retaliation that is in
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response to an employee’s opposition to discriminatory conduct by the
employer is itself a form of employment discrimination under the FEHA.
iii. Injunctive Relief
The complaint’s third cause of action seeks injunctive relief based on
BTIG’s allegedly false report to FINRA that respondent was fired “because
his performance did not meet expectations,” when, “[i]n fact, he was fired in
retaliation for having complained about unlawful activity.” BTIG argues that
respondent’s claim is not excluded from arbitration because it alleges
defamation, not employment discrimination.
When a registered employee is terminated, FINRA regulations require
the company to file a Uniform Termination Notice for Securities Industry
Registration, Form U-5, which requires the company to state the basis of the
registered employee’s termination. (Fontani v. Wells Fargo Investments, LLC
(2005) 129 Cal.App.4th 719, 725–726, disapproved on another ground in
Kibler v. Northern Inyo County Local Hospital District (2006) 39 Cal.4th 192,
203, fn. 5.) Federal law requires “that FINRA publish information about its
members’ ‘disciplinary actions, regulatory . . . proceedings, and other
information required by . . . exchange or association rule, and the source and
status of such information.’ [Citation.] FINRA does this through
BrokerCheck . . . , which allows members of the public to search for and
review the professional history of individual brokers.” (Flowers v. Financial
Industry Regulatory Authority, Inc. (2017) 16 Cal.App.5th 946, 950, italics
omitted.) Because the information supplied by BTIG is reflected on
respondent’s publicly available FINRA U-5 Form, respondent seeks an
injunction ordering BTIG to direct FINRA to revise the Form U-5 “to state
that his employment was not terminated due to performance.”
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The trial court concluded that respondent’s prayer for injunctive relief
was also exempt from arbitration. As the court correctly observed,
“ ‘[i]njunctive relief is a remedy and not, in itself, a cause of action” (Shell Oil
Company, Incorporated et al., v. Richter (1942) 52 Cal.App.2d 164, 168
[injunctive relief is a remedy and a cause of action that must exist before
injunctive relief may be granted].) The court reasoned that “[t]he request for
injunctive relief is best characterized as part of [respondent’s] FEHA
retaliation claim,” relying on Aguilar v. Avis Rent A Car System, Inc. (1999)
21 Cal.4th 121, 131–132, which held that an injunction can be a proper
remedy both to provide redress for past instances of employment
discrimination, as well as to prevent a recurrence of such misconduct.
At oral argument, counsel for BTIG asserted that respondent’s claim
for injunctive relief sounds in defamation, not retaliation, because the claim
is primarily an allegation of injury to reputation. Counsel referred to his
opening brief, in which he cited several federal district court decisions
holding that allegations of misreporting on U-5 forms are arbitrable under
the FINRA Code. These cases are distinguishable, however, because the
plaintiffs filed defamation causes of action related to the U-5 forms, and did
not join or allege any claims of employment discrimination or retaliation.
Here, the complaint specifically alleges that the information BTIG
submitted to FINRA was false because “[i]n fact, he was fired in retaliation
for having complained about unlawful activity.” (Italics added.) Thus, the
complaint asserts that BTIG’s filing of a false U-5 form was an additional act
of retaliation against respondent. We agree with the trial court that
respondent’s request for injunctive relief is properly understood as a request
that a remedy be entered in response to BTIG’s retaliation against him in
violation of the FEHA. Entitlement to such relief will require respondent to
16
prove his retaliation claim. And because we have concluded that
respondent’s cause of action for retaliation is exempt from FINRA
arbitration, so too is respondent’s request for equitable relief.
In sum, the trial court properly denied BTIG’s motion to compel
FINRA arbitration of respondent’s exempt claims for wrongful termination in
violation of public policy, retaliation, and injunctive relief.
E. Delegation of Arbitrability
On appeal, BTIG contends that the issue of arbitrability should not be
decided by the courts, but should be delegated to an arbitrator. As
respondent correctly observes, because BTIG asked the trial court to exercise
its authority to determine the arbitrability of his claims, BTIG is estopped
from advancing this contention on appeal under the doctrine of invited error.
The purpose of the invited error doctrine is to “prevent a party from
misleading the trial court and then profiting therefrom in the appellate
court.” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403.) “Under the
doctrine of ‘invited error’ a party cannot successfully take advantage of error
committed by the court at his request. . . . Nor can he challenge a finding of
the trial court made at his instance.” (Jentick v. Pacific Gas & Electric Co.
(1941) 18 Cal.2d 117, 121.) If BTIG wanted arbitrability to be decided by an
arbitrator rather than by the court, it should not have asked the court to rule
on that issue. Even had BTIG not invited error, BTIG has forfeited this
claim by failing to raise it before the trial court in the first instance. (See
Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68, 73 [“Generally,
issues raised for the first time on appeal which were not litigated in the trial
court are waived.”].) In light of our conclusions, we need not address the
parties’ remaining arguments.
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III. DISPOSITION
The order denying BTIG’s motion to compel arbitration is affirmed.
Respondent shall recover his costs on appeal.
18
SANCHEZ, J.
WE CONCUR:
HUMES, P. J.
BANKE, J.
A159016
McLeod v. BTIG, LLC
19