Tawfik-Oshana v. Wells Fargo Advisors CA6

Filed 4/2/15 Tawfik-Oshana v. Wells Fargo Advisors CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
SIXTH APPELLATE DISTRICT
MERA TAWFIK-OSHANA, H039626
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 1-12-CV-222670)
v.
WELLS FARGO ADVISORS, LLC et al.,
Defendants and Respondents.
Plaintiff Mera Tawfik-Oshana appeals from a judgment entered after the trial court
denied her petition to vacate an arbitration award in favor of defendants Wells Fargo
Advisors, LLC, also known as Wachovia Securities, LLC, formerly doing business as
Wells Fargo Investments, LLC; Robert Kricena; and George von Zedlitz (collectively,
Wells Fargo) and granted defendants’ petition to confirm the award. She contends that
(1) the trial court’s finding that she failed to participate in the arbitration was “without
foundation and flawed,” (2) the arbitrator was “unqualified,” (3) her Labor Code claims
were not arbitrable, (4) her Business and Professions Code claim was not arbitrable, and
(5) the arbitration agreements were unconscionable and unenforceable under Armendariz
v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83 (Armendariz),
abrogated in part on another ground in AT&T Mobility LLC v. Concepcion (2011)
__U.S.__ [131 S. Ct. 1740, 1746] (Concepcion). We affirm.
I. Background
Tawfik-Oshana was working as an investment advisor for Washington Mutual
Bank (WAMU) and was “very successful in that role” when she was offered a position as
a senior financial consultant for Wells Fargo in the fall of 2007. She claims that the
senior regional sales manager who offered her the position promised her a $650,000
“sign-on bonus” and told her that she would be eligible for an additional $350,000 bonus
in two years if she continued to perform at the level she had attained during the past year
at WAMU. Tawfik-Oshana accepted Wells Fargo’s written offer of employment on
December 13, 2007.
On December 18, 2007, she signed a Form U4 Uniform Application for Securities
Industry Registration or Transfer (Form U4). Form U4 is a Financial Industry Regulatory
Authority (FINRA) form that all “associated persons” of broker dealers, investment
advisors, and securities issuers are required by law to sign before engaging in securities
transactions as representatives of FINRA-member firms like Wells Fargo.1 (17 C.F.R.
§ 240.15b7-1; 10 Cal. Code Regs., § 260.210.) “The Form U4 is a contract between the
regulatory organization . . . and the individual registrant. [Citation.]” (Valentine Capital
Asset Management, Inc. v. Agahi (2009) 174 Cal. App. 4th 606, 613 (Valentine).)
1
“FINRA is the self-regulatory organization [SRO] for securities brokers and
brokerage firms and is the successor to the National Association of Securities Dealers,
Inc. (NASD). [Citation.]” (Ronay Family Limited Partnership v. Tweed (2013) 216
Cal. App. 4th 830, 834, fn. 1 (Ronay).) “FINRA regulates member brokerage firms and
exchange markets, subject to oversight by the SEC.” (Mathis v. United States SEC (2d.
Cir. 2012) 671 F.3d 210, 215 (Mathis).) “FINRA was created in 2007 through the
consolidation of the [NASD] and the member regulation, enforcement, and arbitration
operations of the New York Stock Exchange. [Citations.]” (Sacks v. SEC (9th Cir. 2011)
648 F.3d 945, 948, fn. 1.) “On July 26, 2007, . . . the NASD changed its corporate name
to the Financial Industry Regulatory Authority, Inc. (‘FINRA’). [Citations.]” (Mathis, at
p. 211, fn. 1.)
2
The Form U4 that Tawfik-Oshana signed contained an arbitration provision
stating, “I agree to arbitrate any dispute, claim or controversy that may arise between me
and my firm, or a customer, or any other person, that is required to be arbitrated under the
rules, constitutions, or by-laws of the SROs indicated in Section 4 . . . 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.” Tawfik-Oshana indicated one SRO in
section 4, the NASD.
Tawfik-Oshana resigned her position at WAMU on December 22, 2007, and
reported for orientation at Wells Fargo that same day. She was given various documents
to sign, including a promissory note “[i]n consideration of a loan of six hundred fifty
thousand dollars” from Wells Fargo. The note provided that Wells Fargo would forgive
the loan principal and the interest on the loan in 84 equal monthly increments
commencing on the first day of the month following disbursement of the proceeds and
continuing each month until the loan was repaid. The note stated that “[t]he
compensation and withholding will be reported in the appropriate pay period for each
monthly forgiveness.” The note also provided that the outstanding balance would
“immediately become due and payable” upon the happening of specified events of
default, including termination of employment “for any reason whatsoever.”
The note contained its own arbitration provision. That provision stated that “[a]ny
controversy regarding the validity, enforcement or construction of this Note or any
dispute concerning the Undersigned’s employment or termination of employment with
[Wells Fargo] shall be resolved by arbitration under the then-prevailing Rules of the
[NASD]. Any state or federal court having jurisdiction to enter such an award may enter
judgment upon any award rendered by the arbitrator(s) . . . .” The note further provided
that “[i]n the event any action or lawsuit is required to be brought for collection of any
amount under this Note, the Undersigned promises to pay reasonable attorney’s fees and
costs, including all fees and costs involved in collection.”
3
The note stated that “[t]he Undersigned has reviewed the terms of this Note and
has participated in its drafting, and agrees that the rule of construction by which
ambiguities are resolved against the drafting party shall not apply in any interpretation of
it. . . . [¶] The Undersigned executes this Note without reliance on any oral
representations. This Note contains the entire agreement between the Undersigned and
[Wells Fargo] with respect to the matters addressed in it, and supersedes all prior
agreements, written or oral, between the Undersigned and [Wells Fargo] on such matters.
No other agreement, statement of [sic] promise made by any party with respect to any of
the matters addressed in this note will be binding or valid.”
Tawfik-Oshana received a check for $650,000 about a week after she signed the
note. She resigned from Wells Fargo four years later, in February 2011. On
September 6, 2011, Wells Fargo demanded repayment of the balance owing on the note.
On February 17, 2012, Wells Fargo initiated an arbitration proceeding before
FINRA. Wells Fargo declared in its statement of claim in arbitration that it was a broker-
dealer registered with the United States Securities and Exchange Commission [SEC]
“and, among others, the State of California.” It asserted that FINRA had jurisdiction over
the claim because Wells Fargo was a member of FINRA (formerly known as the NASD)
and Tawfik-Oshana was at all times during her employment with Wells Fargo “an
associated person of a member of FINRA.” Wells Fargo alleged that Tawfik-Oshana
owed $386,635.68 plus interest and expenses under the note.
Tawfik-Oshana ignored the pending arbitration proceeding and filed suit against
Wells Fargo on April 17, 2012. Her complaint asserted causes of action for violations of
the Labor Code, violation of Business and Professions Code section 17200,
misrepresentation, and breach of oral contract. She alleged that she was enticed to join
Wells Fargo with oral promises of a $650,000 “sign-on bonus” and a possible $350,000
additional bonus in two years. She was “surprised and shocked” to learn that the “sign-
on bonus” would be treated as a loan. She asserted that she was given no opportunity to
4
negotiate the loan or to seek legal advice before she signed it. She “felt she had no
choice but to sign” it because she had ended her previous employment that morning.
Within weeks after signing the note, she transferred $20 million of client brokerage and
annuity accounts from WAMU to Wells Fargo. She claimed that her working
environment began to deteriorate after that and that she began to encounter “other work
conditions that were materially different from what she had been promised.” The
“outright hostile work environment” and Wells Fargo’s failure to correct her
compensation package “forced” her to resign on February 5, 2011. The complaint prayed
for damages and for a declaration that the arbitration provision in the note was
unconscionable and therefore unenforceable.
On April 23, 2012, Tawfik-Oshana filed a “Notice and Objection” with FINRA.
The document explained “as a courtesy” that she had filed suit against Wells Fargo and
objected “to any assertion of jurisdiction over any claims between her and WELLS by
FINRA, NASD, or any other arbitral forum or entity.”
On May 8, 2012, FINRA notified Tawfik-Oshana that the case was ready for the
appointment of an arbitrator. The letter warned her that if FINRA did not receive her
arbitrator ranking lists by May 29, 2012, “you will be deemed to have accepted all
Arbitrators on the lists.” In a separate letter, FINRA informed her that it had not received
her statement of answer and that if that and other deficiencies were not corrected within
30 days, “the panel will proceed with the arbitration as though the deficient counterclaim,
cross claim or third party claim had not been made.” In a third letter, FINRA informed
her that because it had not received her statement of answer, “pursuant to Code of
Arbitration Procedure Rule 13806, no hearing will be held. This case will be decided
based on the pleadings and other materials submitted by the parties.”
On May 23, 2012, Wells Fargo filed a petition in the trial court to compel
arbitration and to stay Tawfik-Oshana’s lawsuit. Wells Fargo asserted that the Federal
Arbitration Act (9 U.S.C. §§ 1-16 (FAA)) required and state law encouraged enforcement
5
of the arbitration agreement in the Form U4, which was “a contract evidencing a
transaction involving commerce” under the FAA. Wells Fargo stated that it had not
waived its right to arbitration and that no grounds existed for revocation of the
agreement.
On May 24, 2012, FINRA confirmed to Tawfik-Oshana’s counsel that without a
court order staying the arbitration, a stipulation extending the answer deadline, or the
filing of an answer, the matter would be “ripe to be decided on the papers” as soon as the
arbitrator was appointed and entered a ruling. On May 31, 2012, the trial court stayed the
arbitration proceedings pending a ruling on Wells Fargo’s petition to compel arbitration.
Tawfik-Oshana opposed the petition to compel arbitration on the ground that the
arbitration agreements were unenforceable. She argued that the arbitration provision in
the note violated California law and public policy and was procedurally and substantively
unconscionable and therefore unenforceable, that the Form U4 arbitration provision was
unenforceable “for the same reasons,” and that her Business and Professions Code claim
was not arbitrable at all because she was “functioning as a private attorney general in
seeking an injunction . . . on behalf of the general public.”
In July 2012, the trial court granted Wells Fargo’s petition to compel arbitration
and stayed Tawfik-Oshana’s lawsuit. The order stated that “an employee signing a
written contract is conclusively presumed to know its contents and to assent to them.
[Citation.] The evidence . . . indicates that the Plaintiff signed and executed two separate
documents containing an arbitration provision . . . . In reviewing the recent case of
Hoover v. American Income Life Insurance Company [(2012) 206 Cal. App. 4th 1193
(Hoover)]), the Court finds that there is sufficient evidence to conclude that the [FAA]
applies and therefore the general rule that an arbitration agreement does not apply to an
action enforcing statutes governing collection of unpaid wages is inapplicable.”
Tawfik-Oshana sought writ relief. This court summarily denied her petition.
(Tawfik-Oshana v. Superior Court, H038776, Nov. 27, 2012.)
6
On July 30, 2012, FINRA notified Tawfik-Oshana that the arbitration would
proceed with or without her participation. FINRA sent her a confirming e-mail on
August 8, 2012. By letter dated August 18, 2012, it informed her that an arbitrator had
been appointed and that case materials would be forwarded to the arbitrator for a decision
without a hearing.
Wells Fargo’s “Final Submission” to the arbitrator argued that the terms of the
note were clear and unambiguous, that Tawfik-Oshana had a duty to learn and know the
contents of the contract before she signed it, and that she should be held to her
contractual obligations. Wells Fargo reiterated that Tawfik-Oshana never filed an answer
to its statement of claim.
The arbitrator awarded Wells Fargo $386,723.18 in compensatory damages,
interest at a rate of 4.13 percent per year until the award was paid in full, and $12,586.03
in attorney’s fees and costs.
Tawfik-Oshana petitioned to vacate the award on grounds that “the misconduct of
a neutral arbitrator substantially prejudiced [her] rights” and “the arbitrator exceeded
his . . . authority, and the award cannot not be fairly corrected.” She argued that the
arbitrator “did not provide a written decision . . . with regard to her unwaivable statutory
rights under the . . . Labor Code,” that the decision violated her statutory rights, and that
“[t]he arbitration was procedurally and substantively unconscionable because it was a
mandatory agreement created by the employer on a take-it-or leave it [sic] basis and
allowed an assessment of fees and costs against the employee.”
Wells Fargo opposed Tawfik-Oshana’s petition and petitioned to confirm the
award. Wells Fargo argued among other things that any alleged failure of the arbitrator
to rule on Tawfik-Oshana’s Labor Code and declaratory relief claims (which she did not
raise as defenses or counterclaims) was “entirely Plaintiff’s fault” and did not in any
event constitute grounds to vacate the award.
7
On March 20, 2013, the trial court issued a tentative ruling in favor of Wells
Fargo. Tawfik-Oshana did not request oral argument. In a single order filed on
April 3, 2013, the trial court denied Tawfik-Oshana’s petition to vacate the award and
granted Wells Fargo’s petition to affirm it. The order stated that Tawfik-Oshana “had the
opportunity to participate in the [arbitration] process . . . and chose not to do so.
Accordingly, the Court finds that there is no valid legal or factual basis to set aside or
vacate the arbitration award.”
Tawfik-Oshana filed a timely notice of appeal.
II. Discussion
A. Appealability
Tawfik-Oshana asserts that her appeal is from a judgment entered on May 2, 2013.
There is no judgment in the record. Further, her notice of appeal asserted that she was
appealing from an April 8, 2013 “Order Confirming Arbitration Award under CCP
section 1285 et seq.” There is no order with that caption or any order with that date in the
record. Thus, we must as a preliminary matter determine whether this appeal is properly
before us. (Olson v. Cory (1983) 35 Cal. 3d 390, 398.)
The right to appeal is “wholly statutory.” (Powers v. City of Richmond (1995) 10
Cal. 4th 85, 109.) “[O]nce a petition to confirm, correct, or vacate [an arbitration award]
is filed, the superior court has only four choices: It may (1) confirm the award, (2)
correct the award and confirm it as corrected, (3) vacate the award, or (4) dismiss the
proceedings.” (Sunnyvale Unified School Dist. v. Jacobs (2009) 171 Cal. App. 4th 168,
175.) “If the trial court which does not dismiss the petition also does not correct or
vacate an arbitration award, it must confirm the award. Entry of judgment in conformity
8
therewith is required (Code Civ. Proc., § 1287.4),[2] resulting in an appealable judgment
under . . . section 1294, subdivision (d).” (Law Offices of David S. Karton v. Segreto
(2009) 176 Cal. App. 4th 1, 9.)
Here, the trial court entered its “Order Denying Plaintiff’s Petition to Vacate
Arbitration Award and Granting Defendant’s Petition to Confirm Arbitration Award” on
April 3, 2013. We assume that the “April 8, 2013” date in Tawfik-Oshana’s notice of
appeal was a typographical error and that she intended to appeal from the April 3, 2013
order. “However, neither an order denying a petition to vacate the award under . . .
section 1286.2 nor an order confirming an award is directly appealable. [Citations.]
Review of an order denying a petition to vacate may only be had upon appeal from the
judgment of confirmation or by writ of mandate. [Citation.]” (Ahdout v. Hekmatjah
(2013) 213 Cal. App. 4th 21, 30 (Ahdout); § 1294.) As the record does not include a copy
of the judgment, we take judicial notice on our own motion of the trial court’s public
record docket entries, which reflect entry of judgment on May 2, 2013. (Evid. Code,
§ 452, subd. (d); see Truong v. Nguyen (2007) 156 Cal. App. 4th 865, 872.) We treat this
appeal as taken from the May 2, 2013 judgment. (Ahdout, at p. 30.)
B. Applicable Law and Standard of Review
California and federal law favor the enforcement of contractual arbitration
provisions. (§ 1281; 9 U.S.C. § 2.) The FAA governs arbitration provisions in written
contracts “evidencing a transaction involving commerce . . . .” (9 U.S.C. § 2.) Both the
Form U4 and the note that Tawfik-Oshana signed fit that definition. (Baker v. Aubry
(1989) 216 Cal. App. 3d 1259, 1263 (Baker); see Gilmer v. Interstate/Johnson Lane Corp.
(1991) 500 U.S. 20, 21-25 [implicitly holding FAA applicable to Form U4 registration];
2
Subsequent statutory references are to the Code of Civil Procedure unless
otherwise indicated.
9
see also Cortina v. Citigroup Global Markets, Inc. (S.D. Cal., Aug. 19, 2011, Civ. No.
10cv2423-L(RBB)) 2011 U.S. Dist. Lexis 92954 at pp. 1, 4, & fn. 1 [holding that FAA
governed dispute arising out of promissory note “related to a signing bonus [that]
Petitioner received at the beginning of his employment as a financial advisor . . . .”].)
The FAA governs here.
“[T]he basic purpose of the [FAA] is to overcome courts’ refusals to enforce
agreements to arbitrate.” (Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265,
270.) Section 2 is “the primary substantive provision of the Act, declaring that a written
agreement to arbitrate ‘in any . . . contract . . . involving commerce . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.’ [Citation.]” (Moses H. Cone Memorial Hosp. v. Mercury
Constr. Corp. (1983) 460 U.S. 1, 24.) “ ‘The effect of the section is to create a body of
federal substantive law of arbitrability, applicable to any arbitration agreement within the
coverage of the Act.’ [Citation.] Enacted pursuant to the Commerce Clause, . . . this
body of substantive law is enforceable in both state and federal courts. [Citation.] . . .
‘[I]n enacting [section] 2 . . . , Congress . . . withdrew the power of the states to require a
judicial forum for the resolution of claims which the contracting parties agreed to resolve
by arbitration.’ [Citation.] ‘Congress intended to foreclose state legislative attempts to
undercut the enforceability of arbitration agreements.’ [Citation.] Section 2, therefore,
embodies a clear federal policy of requiring arbitration unless the agreement to arbitrate
is not part of a contract evidencing interstate commerce or is revocable ‘upon such
grounds as exist at law or in equity for the revocation of any contract.’ [Citation.]”
(Perry v. Thomas (1987) 482 U.S. 483, 489 (Perry).) “[N]othing in the Act indicat[es]
that the broad principle of enforceability is subject to any additional limitations under
state law.” (Id. at pp. 489-490.)
The savings clause in section 2 of the FAA “preserves generally applicable
contract defenses.” (Concepcion, supra, __ U.S. __ [131 S.Ct. at p. 1748].) Under that
10
clause, “ ‘[s]tate law, whether of legislative or judicial origin, is applicable if that law
arose to govern issues concerning the validity, revocability, and enforceability of
contracts generally.’ ” (Doctor’s Assocs., Inc. v. Casarotto (1996) 517 U.S. 681, 685
(Doctor’s Assocs.).) “Thus, generally applicable contract defenses, such as fraud, duress,
or unconscionability, may be applied to invalidate arbitration agreements without
contravening [section] 2.” (Doctor’s Assocs., at p. 687.) “Courts may not, however,
invalidate arbitration agreements under state laws applicable only to arbitration
provisions.” (Ibid.) “By enacting [section] 2, . . . Congress precluded States from
singling out arbitration provisions for suspect status, requiring instead that such
provisions be placed ‘upon the same footing as other contracts.’ [Citation.]” (Doctor’s
Assocs., at p. 687.)
The FAA does not preempt state law mechanisms for enforcing or vacating
arbitration awards, because those mechanisms are procedural rather than substantive.
(Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal. 4th 1334, 1350-1351
(DIRECTV).) “ ‘[T]he United States Supreme Court does not read the FAA’s procedural
provisions to apply to state court proceedings.’ ” (DIRECTV, at p. 1351; see Southland
Corp. v. Keating (1984) 465 U.S. 1, 16, fn. 10 (Southland).) “ ‘[N]othing in the
legislative reports and debates [on the FAA] evidences a congressional intention that
postaward and state court litigation rules be preempted so long as the basic policy
upholding the enforceability of arbitration awards remained in full force and effect.’
[Citation.]” (DIRECTV, at p. 1352.)
Section 1286.2 lists the exclusive grounds for vacating a nonjudicial arbitration
award. (Moncharsh v. Heily & Blase (1992) 3 Cal. 4th 1, 28.) It provides in pertinent
part that “the court shall vacate the award if the court determines any of the following:
[¶] . . . [¶] (3) The rights of the party were substantially prejudiced by misconduct of a
neutral arbitrator. [¶] (4) The arbitrators exceeded their powers and the award cannot be
corrected without affecting the merits of the decision upon the controversy
11
submitted. . . . .” (§ 1286.2, subd. (a).) “[A]n arbitrator exceeds his powers by acting
without subject matter jurisdiction, deciding an issue that was not submitted to
arbitration, arbitrarily remaking the contract, upholding an illegal contract, issuing an
award that violates a well-defined public policy or statutory right, fashioning a remedy
that is not rationally related to the contract, or selecting a remedy not authorized by law.
[Citations.]” (Gravillis v. Coldwell Banker Residential Brokerage Co. (2010) 182
Cal. App. 4th 503, 511 (Gravillis).)
“The decision to confirm or vacate an arbitration award lies with the trial court.”
(Betz v. Pankow (1993) 16 Cal. App. 4th 919, 923.) “We review de novo the trial court’s
order confirming the arbitration award.” (Gravillis, supra, 182 Cal.App.4th at p. 511; see
Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal. 4th 362, 376, fn. 9.) “We must
accept the trial court’s findings of fact if substantial evidence supports them, and we must
draw every reasonable inference to support the award.” (Alexander v. Blue Cross of
California (2001) 88 Cal. App. 4th 1082, 1087.)
C. Failure to Participate in the Arbitration Process
Tawfik-Oshana challenges the trial court’s conclusion that she failed to participate
in the arbitration process as “without foundation and flawed.” She argues that “the
record discloses no such ‘failure.’ ” We disagree. The arbitrator expressly found that
Tawfik-Oshana did not sign the February 2012 submission agreement. The record
further establishes that she did not file a statement of answer even after FINRA warned
her in writing that she needed to correct “all deficiencies” within 30 days to avoid having
the matter decided without any answer or counterclaim from her and without a hearing.
Even after the trial court ordered the matter to arbitration, Tawfik-Oshana declined to
submit an answer or a counterclaim. The record amply supports the trial court’s finding
that she failed to participate in the arbitration process.
12
FINRA Code of Arbitration Procedure, rule 13806 describes the procedure to be
followed in such situations. The rule applies in arbitrations involving a FINRA
member’s claim that an associated person failed to pay money owed on a promissory
note. It provides that if the associated person does not file an answer, a single arbitrator
will be appointed, no initial prehearing conference or hearing will be held, and the
arbitrator will render an award based on the pleadings and other materials submitted by
the parties.
Tawfik-Oshana maintains that she did participate in the arbitration by filing her
“Notice and Objection” and “by allowing all her Superior Court documents and pleadings
to be reviewed” by the arbitrator. She provides no record cite to support the latter
assertion. “ ‘It is the duty of counsel to refer the reviewing court to the portion of the
record which supports appellant’s contentions on appeal.’ ” (Sakaguchi v. Sakaguchi
(2009) 173 Cal. App. 4th 852, 862.) “Each and every statement in a brief regarding
matters that are in the record on appeal, whether factual or procedural, must be supported
by a citation to the record. This rule applies regardless of where the reference occurs in
the brief.” (Lona v. Citibank, N.A. (2011) 202 Cal. App. 4th 89, 96, fn. 2; Cal. Rules of
Court, rule 8.204(a)(1)(C).) “ ‘The appellate court is not required to search the record on
its own seeking error.’ [Citation.] Thus, ‘[i]f a party fails to support an argument with
the necessary citations to the record, . . . the argument [will be] deemed to have been
waived. [Citations.]” (Nwosu v. Uba (2004) 122 Cal. App. 4th 1229, 1246-1247.)
To the extent that Tawfik-Oshana may be relying on the arbitrator’s statement in
the award “acknowledg[ing] that he . . . read the pleadings and other materials filed by
the parties,” she takes that statement out of context. We read the acknowledgment to
refer to the pleadings and other materials that the parties filed with FINRA. There is no
evidence in the record that the arbitrator was provided with or that he reviewed any trial
court documents. The record establishes that the parties filed with FINRA and that the
arbitrator reviewed (1) Wells Fargo’s signed submission agreement and its statement of
13
claim, to which it attached a copy of the note and a copy of its demand letter, (2) Tawfik-
Oshana’s two-page “Notice and Objection,” and (3) Wells Fargo’s “Final Submission,”
to which it attached another copy of the note, another copy of Tawfik-Oshana’s “Notice
of Objection,” a copy of the trial court’s order granting the petition to compel arbitration
and staying Tawfik-Oshana’s lawsuit, a “Summary of Amounts Due,” a copy of a FINRA
form reflecting Tawfik-Oshana’s termination date, another copy of the demand letter, and
a copy of the $650,000 check that Tawfik-Oshana received. We reject Tawfik-Oshana’s
argument that she participated in the arbitration by “allowing” the arbitrator to review
documents she filed in the trial court.
To the extent that Tawfik-Oshana contends that the arbitrator committed
misconduct by failing to decide issues that she raised in the trial court but never
submitted for arbitration, we reject that contention as well. Her appellate briefs contain
numerous general assertions that the arbitrator “rejected” arguments from her trial court
pleadings and “never decided” various other issues that she raised in the trial court.
There is no evidence that the arbitrator was aware of those arguments. Because Tawfik-
Oshana failed to present these arguments for decision, she cannot fault the arbitrator for
failing to decide them.
D. Qualifications of the Arbitrator
Tawfik-Oshana asserts that the arbitrator was “unqualified” because he “has no
law degree” and his “experience shows nothing related to public policy employment
issues, in particular claims under the Labor Code.” She does not develop the argument
further or cite any authority to support the proposition that these are grounds for vacating
an arbitration award. They are not. (§ 1286.2.) She does not claim that either arbitration
agreement required FINRA to provide an arbitrator who possessed a law degree and
particularized experience in deciding Labor Code claims. Neither agreement includes
14
any such requirement. She does not assert that any FINRA rule was violated. We find
no evidence of any rules violation in the record.
“It is the duty of counsel by argument and the citation of authorities to show that
the claimed error exists.” (In re Estate of Randall (1924) 194 Cal. 725, 728 (Randall);
see Cal. Rules of Court, rule 8.204(a)(1)(B).) “We are not bound to develop appellants’
arguments for them.” (In re Marriage of Falcone & Fyke (2008) 164 Cal. App. 4th 814,
830.) “ ‘Appellate briefs must provide argument and legal authority for the positions
taken. “When an appellant fails to raise a point, or asserts it but fails to support it with
reasoned argument and citations to authority, we treat the point as waived.” ’ [Citation.]”
(Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal. App. 4th 939, 956.) Because
Tawfik-Oshana failed to support her complaints about the arbitrator’s purported lack of
qualifications with reasoned argument or citations to authority, we reject them as not
properly raised. (Randall, at p. 728.)
E. Labor Code Claims
Relying on Hoover, Tawfik-Oshana asserts that her Labor Code claims “derive
from the ‘public policies’ imbedded in the Labor Code” and that “[t]he arbitration
process may never be used as a vehicle to waive those statutorily protected rights.” She
complains that the trial court “intentionally ignored” statements in Hoover that “[a]s a
general rule, state statutory wage and hour claims are not subject to arbitration” and that
“[a]n individual arbitration agreement also does not apply to an action to enforce statutes
governing collection of unpaid wages, which ‘may be maintained without regard to the
existence of any private agreement to arbitrate . . . .’ ([Lab. Code,] § 229.)” (Hoover,
supra, 206 Cal.App.4th at pp. 1206-1207.)
We reject the contention that the public policies imbedded in the Labor Code
preclude arbitration of Tawfik-Oshana’s Labor Code claims. The FAA applies here. The
United States Supreme Court has repeatedly held that where the FAA applies, it preempts
15
conflicting state laws. (E.g., Southland, supra, 465 U.S. at p. 16; Perry, supra, 482 U.S.
at p. 491.)
Perry involved a stockbroker’s claim for unpaid commissions under Labor Code
section 229, which provides that wage collection actions can be litigated in court
notwithstanding any private agreement to arbitrate. The trial court denied the defendant
employer’s motion to compel arbitration. The California Supreme Court affirmed. The
United States Supreme Court reversed. The court held that the “clear federal policy” in
favor of arbitration “places [section] 2 of the Act in unmistakable conflict with
California’s [section] 229 requirement that litigants be provided a judicial forum for
resolving wage disputes. Therefore, under the Supremacy Clause, the state statute must
give way.” (Perry, supra, 482 U.S. at p. 491.) California cases applying the FAA are in
accord. (E.g., Baker, supra, 216 Cal.App.3d at pp. 1266-1267 [holding that Baker’s
claim for overtime pay, even if based on a statutory right under former Labor Code
section 510, was subject to arbitration because “[t]he [FAA] preempts our state law in
this area.”].)
Hoover does not advance Tawfik-Oshana’s position.3 In Hoover, a sales agent for
an insurance company sued her former employer for violations of the Labor Code.
(Hoover, supra, 224 Cal.App.4th at pp. 1197, 1199-1200.) The trial court denied the
employer’s motion to compel arbitration. (Id. at p. 1201.) The Court of Appeal affirmed,
holding that the employer waived its right to seek arbitration. (Id. at p. 1198.) The court
added that arbitration could not be compelled even in the absence of waiver because the
employer had not shown that the contract at issue involved interstate commerce. (Id. at
p. 1207.) The court noted that “Hoover was not an employee of a national stock
brokerage firm or the employee of a member of a national stock exchange.” (Id. at
3
At oral argument, Tawfik-Oshana conceded that Hoover did not support her
position, and she withdrew all arguments relying on that case.
16
p. 1208.) Thus, “the FAA did not apply [and] the exception favoring federal preemption
and arbitration did not operate.” (Ibid.)
Hoover is inapposite because the contracts at issue here involved interstate
commerce. The trial court expressly so found when it ordered the parties to arbitration.
Substantial evidence supported the trial court’s finding. Wells Fargo submitted evidence
that it is a nationwide financial services organization providing a full range of investment
and brokerage services, that it is regulated by SRO’s such as FINRA, and that “as a
registered securities broker/dealer[, it] was at all relevant times . . . a member of the
FINRA.” It submitted evidence that Tawfik-Oshana was at all relevant times during her
employment a registered representative of FINRA and an associated person of Wells
Fargo, a FINRA member firm. “It is well settled that disputes between a member of a
national stock exchange and its employee are governed by the [FAA] where there is a
binding arbitration agreement.” (Baker, supra, 216 Cal.App.3d at p. 1263.) “State and
federal courts must enforce the [FAA] with respect to all arbitration agreements covered
by that statute.” (Marmet Health Care Center, Inc. v. Brown (2012) ___ U.S. ___ [132
S. Ct. 1201, 1202].) Tawfik-Oshana’s reliance on Hoover is misplaced.
To the extent that Tawfik-Oshana contends that Armendariz prohibits arbitration
of her Labor Code claims, we reject the contention. In Armendariz, the California
Supreme Court addressed two different grounds for invalidating mandatory arbitration
provisions in employment contracts, unlawfulness and unconscionability. (Armendariz,
supra, 24 Cal.4th at p. 113.) Addressing lawfulness, the court held that antidiscrimination
claims under California’s Fair Employment and Housing Act (Gov. Code, § 12900 et
seq.) (FEHA) are arbitrable “if the arbitration permits an employee to vindicate his or her
statutory rights.” (Armendariz, at p. 90.) “[F]or such vindication to occur, the arbitration
must meet certain minimum requirements, including neutrality of the arbitrator, the
provision of adequate discovery, a written decision that will permit a limited form of
judicial review, and limitations on the costs of arbitration.” (Id. at pp. 90-91; Boghos v.
17
Certain Underwriters at Lloyd’s of London (2005) 36 Cal. 4th 495, 505.) The Armendariz
court held that arbitration provisions that do not satisfy the five minimum requirements
are contrary to public policy and “grounds for invalidating or revoking an arbitration
agreement and denying a petition to compel arbitration . . . .” (Armendariz, at p. 110.)
But those minimum requirements have no application here.
Armendariz’s prohibition against the arbitration of claims asserting unwaivable
statutory rights arose in the context of “a mandatory employment arbitration
agreement . . . which an employer imposes on a prospective or current employee as a
condition of employment.” (Armendariz, supra, 24 Cal.4th at p. 90.) There is no
employment agreement at issue here. Tawfik-Oshana does not challenge the “written
employment offer” that she accepted on December 13, 2007, nor has she included a copy
of that written offer in the record on appeal. The Form U4 is not an employment
contract. (See Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 113, citing Gilmer
v. Interstate/Johnson Lane Corp., supra, 500 U.S. 20, 25, fn. 2.) Nor was it imposed on
Tawfik-Oshana by Wells Fargo. “The Form U4 is a contract between the regulatory
organization . . . and the individual registrant. [Citation.]” (Valentine, supra, 174
Cal.App.4th at p. 613.) To the extent it was “imposed” on Tawfik-Oshana, it was
imposed by federal and state law, not by Wells Fargo. (17 C.F.R. § 240.15b7-1; 10 Cal.
Code Regs., § 260.210.)
The note that Tawfik-Oshana signed is not an employment contract either. It is
prominently titled “PROMISSORY NOTE.” It contains all of the terms that one would
expect to find in a promissory note given as security for a loan. Among other things, it
states the principal amount of the loan and the interest rate, describes prepayment and
lien terms, and specifies “events of default . . . .” The note does not include terms that
one would expect to find in a written employment agreement. It says nothing about
Tawfik-Oshana’s starting date or title. It does not describe her compensation or her
entitlement to health care or other benefits. It refers to the $650,000 she received as a
18
“loan” rather than as a “sign-on bonus.” It says nothing about the possibility of an
additional $350,000 bonus that Tawfik-Oshana claims she was promised. It does not
state where her office would be located, although she claims she was promised
assignment to “the high-volume, stable Westgate office in San Jose.” The note cannot
reasonably be considered an employment contract.
Even if it could be, nothing in the record suggests that it was a condition of
Tawfik-Oshana’s employment. (Armendariz, supra, 24 Cal.4th at p. 90.) She declared
that neither the regional sales manager who offered her the position “nor anyone at Wells
Fargo ever suggested the document was negotiable” and that she “had no choice but to
sign” all of the documents she was presented with on her first day since she had already
quit her job at WAMU. But she did not declare that anyone told her that she had to sign
the note as a condition of her employment or that it was not negotiable. Nor could she.
The note expressly stated that “[t]he Undersigned has reviewed the terms of this Note and
has participated in its drafting . . . .” Armendariz’s minimum requirements were never
triggered here because neither of the arbitration provisions that Tawfik-Oshana
challenges was contained in a mandatory employment arbitration agreement that Wells
Fargo imposed on her as a condition of her employment. Her reliance on Armendariz is
misplaced.
F. Business and Professions Code Claim
Tawfik-Oshana contends that the trial court erred in compelling arbitration of her
Business and Professions Code claim. Relying on Broughton v. CIGNA Healthplans of
California (1999) 21 Cal. 4th 1066 (Broughton) and Brown v. Ralph’s Grocery Co.
(2011) 197 Cal. App. 4th 489 (Brown), she argues that the claim is not arbitrable because
she is “seeking to act as a private attorney general to enjoin future unlawful practices on
behalf of the general public.” We reject the argument.
19
In Broughton, the California Supreme Court held that claims under the Consumers
Legal Remedies Act (CLRA) for injunctive relief to protect the public from deceptive
business practices are nonarbitrable. (Broughton, supra, 21 Cal.4th at pp. 1082-1084.)
CLRA claims seeking damages are “fully arbitrable and should be severed from an
injunctive relief action when . . . a plaintiff requests both types of relief.” (Broughton, at
p. 1072.) The court later extended Broughton to prohibit arbitration of consumer claims
to enjoin unfair competition and deceptive advertising under the Unfair Competition Law
(Bus. & Prof. Code, § 17200 et seq. (UCL)) where the injunctive relief is sought to
prevent further harm to the public at large rather than simply to redress or prevent injury
to a plaintiff. (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal. 4th 303, 307, 315-
316, 317-320 (Cruz).)
In Brown, the Court of Appeal held that a waiver in an arbitration agreement of an
employee’s right to pursue a representative action under the Labor Code Private
Attorneys General Act of 2004 (PAGA)4 was unenforceable under California law.
(Brown, supra, 197 Cal.App.4th at p. 494.) Relying in part on Broughton and Cruz, the
Brown court concluded that the FAA did not preempt state law holding such waivers
unenforceable because the law did not conflict with the purposes of the FAA. (Brown, at
pp. 494, 501-502.) Several years later, the California Supreme Court held in Iskanian v.
CLS Transportation Los Angeles, LLC (2014) 59 Cal. 4th 348 (Iskanian) that “an
arbitration agreement requiring an employee as a condition of employment to give up the
right to bring representative PAGA actions in any forum is contrary to public policy” and
that the FAA does not preempt that state court rule. (Iskanian, at pp. 360, 384.)
4
PAGA “authorizes an employee to bring an action for civil penalties on behalf of
the state against his or her employer for Labor Code violations committed against the
employee and fellow employees, with most of the penalties going to the state.”
(Iskanian, supra, 59 Cal.4th at pp. 360, 378-382; Lab. Code, §§ 2698-2699.5.)
20
None of these cases help Tawfik-Oshana. Unlike Broughton and Cruz, her case
was not a consumer case. Unlike in Brown, her complaint did not invoke PAGA, seek
civil penalties, or allege compliance with the administrative prerequisites to pursuing a
PAGA action. (Lab. Code, § 2699.3, subd. (a); see Arias v. Superior Court (2009) 46
Cal. 4th 969, 981 [“Before bringing a civil action for statutory penalties, an employee
must comply with Labor Code section 2699.3.”].) There is no evidence in the record that
she satisfied those prerequisites.
Unlike in the above cases, Tawfik-Oshana’s complaint contained no hint that she
was asserting a representative claim or seeking to act as a private attorney general.
(Compare Cruz, supra, 30 Cal.4th at pp. 308-309, 315.) Her complaint did not mention
other aggrieved persons or suggest in any way that she sought relief on behalf of anyone
but herself. She alleged that Wells Fargo “failed to pay Plaintiff wages, used the illusory
promise of a sign-on bonus, then attempted to recoup that bonus as a ‘loan’ in violation
of the Labor Code.” Her complaint did not mention PAGA. Instead, it invoked the
“California Unfair Trade Practices Act (a.k.a. ‘UCL,’ Unfair Competition Laws,
California Bus. & Prof. Code Sec. 17200 et seq.)” She asserted that Wells Fargo’s
alleged violations of the Labor Code constituted unfair competition and unfair business
practices under the UCL. It was not until Wells Fargo petitioned to compel arbitration
that Tawfik-Oshana argued in her opposition brief that she was seeking an injunction
under the UCL “on behalf of herself and the citizens of California to enjoin defendant’s
violations of California’s employment laws and regulations.” On this record, the trial
court properly rejected that argument. The trial court did not err in compelling arbitration
of Tawfik-Oshana’s individual Business and Professions Code claim. (See Cruz, supra,
30 Cal.4th at pp. 317-320 [reiterating arbitrability of UCL claims for restitution or
disgorgement].)
21
G. Unconscionability
Tawfik-Oshana contends that the trial court erred in denying her motion to vacate
and in confirming the arbitration award because the arbitration agreements that she
signed were procedurally and substantively unconscionable. We disagree.
“ ‘[U]nconscionability has both a “procedural” and a “substantive” element,’ the
former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the
latter on ‘ “overly harsh” ’ or ‘ “one-sided” ’ results. [Citation.] ‘The prevailing view is
that [procedural and substantive unconscionability] must both be present in order for a
court to exercise its discretion to refuse to enforce a contract or clause under the doctrine
of unconscionability.’ [Citation.] But they need not be present in the same degree.
‘Essentially a sliding scale is invoked . . . .’ In other words, the more substantively
oppressive the contract term, the less evidence of procedural unconscionability is
required to come to the conclusion that the term is unenforceable, and vice versa.”
(Armendariz, supra, 24 Cal.4th at p. 114.)
Tawfik-Oshana argues that the Form U4 arbitration agreement was procedurally
unconscionable because it was a contract of adhesion imposed on her with no opportunity
for negotiation. We reject the argument.
A contract of adhesion is “ ‘a standardized contract, which, imposed and drafted by
the party of superior bargaining strength, relegates to the subscribing party only the
opportunity to adhere to the contract or reject it.” (Armendariz, supra, 24 Cal.4th at
p. 113.) The Form U4 arbitration agreement does not fit that definition. The Form U4
was a contract between Tawfik-Oshana and FINRA, not between her and Wells Fargo.
(Valentine, supra, 174 Cal.App.4th at 613.) It was not drafted by Wells Fargo. (See
Desiderio v. National Assn. of Securities Dealers, Inc. (2nd Cir. 1999) 191 F.3d 198, 207
[“the arbitration clause in Form U-4 was drafted by the NASD in cooperation with other
self-regulatory organizations” and approved by the SEC].) To the extent it was
“imposed” on Tawfik-Oshana, it was imposed by law, not by Wells Fargo. (17 C.F.R.
22
§ 240.15b7-1; 10 Cal. Code Regs., § 260.210.) Wells Fargo had no choice in the matter.
Federal law prohibits it from engaging in securities transactions unless all natural persons
“associated with” it who effect or are involved with effecting such transactions are
registered or approved according to certain standards, “including . . . submitting and
maintaining all required forms . . . .” (17 C.F.R. § 240.15b7-1.) California law similarly
requires that “[u]pon employment of an individual as an agent,” registered broker-dealers
like Wells Fargo must obtain and file “a properly executed application for registration, on
the [Form U4] . . . .” (10 Cal. Code Regs., § 260.210, subds. (a), (b).) The Form U4 that
Tawfik-Oshana signed was not a contract of adhesion.
Even if we assume that it was, it did not render the arbitration provision
procedurally unconscionable. Procedural unconscionability “focus[es] on ‘ “oppression” ’
or ‘ “surprise” ’ due to unequal bargaining power.” (Armendariz, supra, 24 Cal.4th at
p. 114.) Wells Fargo did not wield superior bargaining strength in obtaining the Form U4
from Tawfik-Oshana. The law required it to obtain and Tawfik-Oshana to provide her
signature on the form. The form cannot have come as a surprise to Tawfik-Oshana. She
had worked in the securities industry since at least 1993 and was merely transferring her
registration to her latest employer. Nor can she claim to have been surprised by the
arbitration provision. By signing the form, she expressly acknowledged “that I have read
and understand the items and instructions on this form . . . .” We conclude that the Form
U4 arbitration provision was not procedurally unconscionable.
Because procedural and substantive unconscionability must both be present before
a court will refuse to enforce a contract or clause under the doctrine of unconscionability,
our conclusion that the Form U4 arbitration agreement was not procedurally
unconscionable makes it unnecessary for us to address Tawfik-Oshana’s contention that
it was also substantively unconscionable. (Crippen v. Central Valley RV Outlet (2004)
124 Cal. App. 4th 1159, 1167.) We conclude that unconscionability did not render the
Form U4 arbitration provision unenforceable.
23
We have rejected Tawfik-Oshana’s other challenges to the Form U4 arbitration
provision. Thus, the trial court did not err in compelling arbitration of Tawfik-Oshana’s
claims under that provision.5 Tawfik-Oshana did not establish that the arbitrator
committed misconduct or exceeded his powers by deciding issues that were properly
before him. It follows that the trial court did not err in confirming the arbitrator’s award
after Tawfik-Oshana failed to establish a statutory ground for vacating it. (§ 1287.4.)
III. Disposition
The judgment is affirmed.
5
This conclusion makes it unnecessary for us to address Tawfik-Oshana’s
contention that the arbitration provision in the promissory note was unenforceable. She
does not dispute that both arbitration provisions separately covered the claims she asserts.
She raises the same challenges to both arbitration provisions. We have rejected those
challenges with respect to the Form U4 provision. Even if the arbitration provision in the
note was unconscionable or otherwise unenforceable, Tawfik-Oshana was required to
arbitrate her claims under the Form U4 arbitration provision.
24
___________________________
Mihara, J.
WE CONCUR:
_____________________________
Premo, Acting P. J.
_____________________________
Elia, J.
25