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Goldman, Sachs & Co. v. Golden Empire Schools Financing Authority

United States Court of Appeals, Second Circuit

August 21, 2014

GOLDMAN, SACHS & CO., Plaintiff-Appellee,
v.
GOLDEN EMPIRE SCHOOLS FINANCING AUTHORITY, KERN HIGH SCHOOL DISTRICT, Defendants-Appellants. CITIGROUP GLOBAL MARKETS INC., Plaintiff-Appellee,
v.
NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY, Defendant-Appellant

Argued April 4, 2014

Page 211

Because these appeals raise the same legal issue, we dispose of them in a single opinion. In each case, the district court granted a financial services firm's motion to enjoin a Financial Industry Regulatory Authority (" FINRA" ) arbitration brought against the firm by a public financing authority. Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 922 F.Supp.2d 435 (S.D.N.Y. 2013) ; Citigroup Global Mkts. Inc. v. N.C. E. Mun. Power Agency, No. 13 CV 1703 (S.D.N.Y. May 10, 2013), ECF No. 29. We agree that in each case, the FINRA arbitration rules have been superseded by forum selection clauses requiring " all actions and proceedings" related to the transactions between the parties to be brought in court. We thus AFFIRM in both appeals.

MATTHEW A. SCHWARTZ (David H. Braff, Andrew H. Reynard, on the brief), Sullivan & Cromwell LLP, New York, NY, for Plaintiff-Appellee Goldman, Sachs & Co.

AUDRA J. SOLOWAY (Brad S. Karp, Andrew J. Ehrlich, on the brief), Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, for Plaintiff-Appellee Citigroup Global Markets Inc.

JAMES R. SWANSON (Alysson L. Mills, on the briefs), Fishman Haygood Phelps Walmsley Willis & Swanson, LLP, New Orleans, LA, for Defendants-Appellants Golden Empire Schools Financing Authority, Kern High School District, and North Carolina Eastern Municipal Power Agency.

Before: KATZMANN, Chief Judge, WALKER and DRONEY, Circuit Judges.

OPINION

Page 212

John M. Walker, Jr., Circuit Judge.

Because these appeals raise the same legal issue, we dispose of them in a single opinion. In each case, the district court granted a financial services firm's motion to enjoin a Financial Industry Regulatory Authority (" FINRA" ) arbitration brought against the firm by a public financing authority. Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 922 F.Supp.2d 435 (S.D.N.Y. 2013); Citigroup Global Mkts. Inc. v. N.C. E. Mun. Power Agency, No. 13 CV 1703 (S.D.N.Y. May 10, 2013), ECF No. 29. We agree that in each case, the FINRA arbitration rules have been superseded by forum selection clauses requiring " all actions and proceedings" related to the transactions between the parties to be brought in court. We thus AFFIRM in both appeals.

BACKGROUND

I. Goldman v. Golden Empire

Defendants-appellants Golden Empire Schools Financing Authority and Kern High School District (collectively, " Golden Empire" ) issued approximately $125 million of auction rate securities (" ARS" )[1] in 2004, 2006, and 2007, for which Golden Empire retained plaintiff-appellee Goldman, Sachs & Co. (" Goldman" ) as an underwriter and broker-dealer. For each ARS issuance, the parties executed both an underwriter agreement, which was silent as to dispute resolution, and a broker-dealer agreement. The 2004 and 2006 broker-dealer agreements included the following forum selection clause:

The parties agree that all actions and proceedings arising out of this Broker-Dealer Agreement or any of the transactions contemplated hereby shall be brought in the United States District Court in the County of New York and that, in connection with any such action or ...

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