Erichsen v. RBC Capital Markets, LLC

• Decision Date: 05 July 2012
• Docket Number: No. 7:11–CV–190–FL.,7:11–CV–190–FL.
• Citation: 883 F.Supp.2d 562
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Benjamin ERICHSEN, Plaintiff, v. RBC CAPITAL MARKETS, LLC, Defendant.

883 F.Supp.2d 562

Benjamin ERICHSEN, Plaintiff,

v.RBC CAPITAL MARKETS, LLC, Defendant.

No. 7:11–CV–190–FL.

United States District Court,

E.D. North Carolina,

Southern Division.

July 5, 2012.

Thomas William Kerner, Kerner Law Firm, PLLC, Wilmington, NC, for Plaintiff.

Cory Hohnbaum, David Glen Guidry, Charlotte, NC, for Defendant.

ORDER

LOUISE W. FLANAGAN, District Judge.

This matter is before the court on defendant's motion to compel arbitration and stay action (DE # 10), defendant's motion to seal selected exhibits (DE # 12), and plaintiff's motion to strike (DE # 18) paragraph 11 from the declaration of Christian Park (Exhibit A to defendant's motion to compel). The parties have responded in opposition to each of the motions and have also filed replies. In this posture, the issues raised are ripe for review. Based on the following, the court grants plaintiff's motion to strike, grants defendant's motion to compel arbitration and stay, and denies defendant's motion to seal.

STATEMENT OF THE CASE

Plaintiff filed complaint in the Superior Court of New Hanover County, North Carolina, in May 2011, alleging fraud, unfair and deceptive trade practices, unjust enrichment, breach of implied contract, negligent misrepresentation, and negligence. On September 9, 2011, defendant removed to this court based on diversity jurisdiction. Shortly thereafter, on October 21, 2011, defendant filed the instant motion to compel arbitration. Contemporaneously, defendant filed the instant motion to seal certain exhibits filed in support of the motion to compel. Plaintiff opposes both motions. On December 8, 2011, plaintiff filed motion to strike a particular paragraph from an affidavit submitted in support of defendant's motion to compel. No scheduling or case management order has been entered.

STATEMENT OF FACTS

The facts, as alleged by plaintiff in the complaint, are as follows. Plaintiff has been a successful securities trader since 2000. In 2002, plaintiff opened a trading account with an entity he describes as the Carlin Financial Group.¹ For the reasons set forth below the line, the court refers to the entity that plaintiff traded with and that plaintiff signed two Risk Disclosure Statements (“RDS”) with as “Carlin.” From approximately 2004 through 2007, plaintiff traded with Carlin, averaging approximately $750,000.00 annually in post-commission trading profits.

In 2003, plaintiff signed an agreement with Carlin entitled “Risk Disclosure Statement and Trading Acknowledgment Agreement” (previously referred to as a RDS). See Park Decl. Ex. 5. Plaintiff signed his initials at the bottom of each page of the agreement, which agreement is between plaintiff, the trader, and Carlin Equities Corporation, its employees, representatives, officers, directors, agents, successors and assigns. Id. The agreement discusses the risks associated with day trading, other forms of trading, and use of Carlin's systems and resources to trade. It discusses information provided by Carlin for its traders and matters regarding commissions. Additionally, the agreement contains an unambiguous arbitration clause which states that arbitration is final and binding on the parties and that the parties waive their right to seek remedies in court, including the right to a jury trial. Id. at 7. There is no signature from any individual on behalf of Carlin in the 2003 RDS.

Plaintiff signed a similar RDS at a later unknown date. Park Decl. Ex. 6. The second RDS displays “Carlin Equities Corporation” at the top of the first page and contains similar warnings and information as the 2003 RDS. As with the 2003 RDS, plaintiff signed his initials on every page as well as at the end of the document. There is no signature from any individual affiliated with Carlin. The later RDS also contains an “Arbitration Disclosure.” The disclosure states that “[b]y signing an arbitration agreement the parties agree” that they are giving up the right to sue each other in court, including right to a trial by jury. The second RDS appears to be missing a page. Id. at 8 (reading that it is page 8 “of 9” yet there is no ninth page).

In January 2007, defendant acquired Carlin, and announced the introduction of the RBC Accel trading platform. Thereafter, for approximately sixteen (16) months, defendant offered traders like plaintiff the option of continuing to trade on the Carlin platform or use the Accel platform. Plaintiff chose to continue with the Carlin platform because of his past success with it. He did this from 2007 through the spring of 2008. During early 2008, defendant urged plaintiff to move his trading to the Accel platform, informing plaintiff that the Carlin platform was in the process of beingeliminated. During this trial period of plaintiff's use of Accel, plaintiff noticed that the Accel platform was not as functional as the Carlin platform, and that it had other problems, including “ ‘stale’ market data, slower execution, and other issues.' ” Compl. ¶ 13. Plaintiff communicated these problems to defendant, and defendant's representatives told plaintiff the problems would be addressed.

Plaintiff continued to trade using the Carlin platform until March or April of 2008, when defendant abandoned it. When plaintiff began to use Accel, he encountered the same problems previously experienced. Plaintiff reported the problems, and defendant's representatives assured the problems were being addressed. Simultaneously, plaintiff alleges that defendant was dismantling its trading division. As part of this process, defendant terminated plaintiff's personal representative, and plaintiff's questions were passed around to different employees, none of whom seemed to have knowledge of plaintiff's history or trading.

In the summer of 2009, plaintiff experienced new problems with Accel, including “consistent missing market data and orders functioning improperly.” Compl. ¶ 20. Plaintiff received an email from one of defendant's representatives in which the representative acknowledged that problems had arisen because of a lack of infrastructure. Plaintiff continued to communicate with defendant throughout 2009 regarding problems he was experiencing. Plaintiff also began to inquire of defendant whether the Accel platform was being sufficiently supported. After repeated inquiries, plaintiff received response from defendant denying any intent to phase out retail traders and the Accel platform. In October or November 2009, plaintiff was informed by two of defendant's representatives, in separate conversations, that defendant would not longer support retail traders like plaintiff, and that defendant was focusing on its core business of servicing institutional traders.

Plaintiff states that his profits dropped precipitously immediately following the switch to the Accel platform. His profits remained significantly lower that his historic average after the switch to Accel. Plaintiff alleges that during this time, defendant reaped commissions from defendant far in excess of plaintiff's trading profits.

Plaintiff filed civil suit in New Hanover County Superior Court on May 17, 2011, alleging fraud, unfair and deceptive trade practices, unjust enrichment, breach of implied contract, negligent misrepresentation, and negligence.

DISCUSSION

A. Motion to Strike

The court first addresses plaintiff's motion to strike paragraph 11 of the Park Declaration (Exhibit A to defendant's motion to compel arbitration) because the language at issue bears on the court's consideration of the motion to compel arbitration.

The parties do not dispute that the standard for deciding a motion to compel arbitration brought under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 4, is a standard similar to a motion for summary judgment. See Minter v. Freeway Food, Inc., 2004 WL 735047 at *2 (M.D.N.C. Apr. 2, 2004) (citing case law from the Second, Third, Seventh, and District of Columbia circuits); see also Shaffer v. ACS Govt. Servs., Inc., 321 F.Supp.2d 682, 683–84 n. 1 (D.Md.2004); Rose v. New Day Finan., LLC, 816 F.Supp.2d 245, 251 (D.Md.2011).

Accordingly, arbitration should be compelled where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (holding that a factual dispute is “material” only if it might affect the outcome of the suit and “genuine” only if there is sufficient evidence for a reasonable jury to find for the non-moving party). The party seeking to compel arbitration bears the initial burden of demonstrating the absence of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the nonmoving party then must affirmatively demonstrate with specific evidence that there exists a genuine issue of material fact requiring trial. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In opposing the motion to compel arbitration, plaintiff has requested that if the court finds a genuine issue of fact on the question of whether a valid agreement to arbitrate the claims exists, that a jury trial be conducted to determine the issue.

Rule 56 provides that a party may object that material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence. Fed.R.Civ.P. 56(c)(2). An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated. Fed.R.Civ.P. 56(c)(2).

Paragraph 11 of the Park Declaration states as follows:

11. In addition, Erichsen also signed an undated Trading Agreement. Based on the dates of the other account documents believed...