Chapter 6 - § 6.5 • ARBITRATION OF SPECIFIC STATUTORY CLAIMS

• Jurisdiction: Colorado

§ 6.5 • ARBITRATION OF SPECIFIC STATUTORY CLAIMS

The following are examples of statutory claims generally held to be arbitrable.

§ 6.5.1—Securities Claims

Prior to 1987, pre-dispute agreements to arbitrate claims arising under the Securities Act of 1933, 15 U.S.C. § 771(2), and the Securities and Exchange Act of 1934, 15 U.S.C. § 78(a), were held by the courts to be void.⁵⁰ This conclusion was based upon interpretation of the provisions prohibiting waiver of any provision of the acts, e.g., judicial remedies.

However, in 1987, the U.S. Supreme Court held, in essence, that customers who open a brokerage account could agree to arbitration of any disputes with respect thereto under the Securities Act and Securities and Exchange Act.⁵¹ Today, such arbitration agreements are standard, and the National Association of Securities Dealers and stock exchanges have their own code of arbitration procedure, administration of arbitrations, and panel of arbitrators.

Securities arbitrations are somewhat unique in that, in the parties' arbitration agreement, the parties agree to the extensive rules contained in the code of arbitration adopted by the relevant agencies. These arbitrations typically are between the stockbroker and his or her employer brokerage firm, or between the customer and the broker/brokerage firm. The agreement to arbitrate is a part of the customer agreement or employment agreement.⁵²

Commonly, securities claims are arbitrated under the auspices of the Financial Industry Regulatory Authority (FINRA) (formerly NASD). In general, the FINRA code requires members to arbitrate a dispute if so required by a written agreement or if requested by the customer.⁵³

• Annot., Who is "Customer" for Purposes of Nat'l Ass'n of Sec. Dealers (NASD) Rule Requiring NASD Member to Arbitrate Any Dispute Between Customer & Member, 16 A.L.R. Fed.2d 231.
• Annot., Securities Arbitration: Construction and Application of Self-Regulatory Organization Eligibility Rules, 129 A.L.R. Fed. 489.
• Stoneman, "Securities Arbitration: A Hypothetical Securities Arbitration Case," 27 Colo. Law. 73 (Sept. 1998) (Part I); 27 Colo. Law. 61 (Nov. 1998) (Part II).

§ 6.5.2—Sarbanes-Oxley Claims

The claims of an employee that he or she was fired for being a whistle-blower in violation of the Sarbanes-Oxley Act are subject to that employee's arbitration agreement with his or her employer.⁵⁴ Arbitration agreement provisions requiring confidentiality, limited discovery, and a brief summary of the arbitrator's award did not make it unconscionable.

§ 6.5.3—Colorado Consumer Protection Act Claims

Colorado Consumer Protection Act claims are subject to arbitration.⁵⁵ In Gergel v. High View Homes, LLC,⁵⁶ the Colorado Court of Appeals enforced arbitration as to a homebuyer's suit against a developer, asserting violation of the Consumer Protection Act and the Soils Disclosure Act.⁵⁷

§ 6.5.4—Magnuson-Moss Warranty Act Claims

The Magnuson-Moss Warranty Act has been interpreted by the Federal Trade Commission to preclude pre-dispute provisions that would eliminate a plaintiff's access to the courts for remedies. The Act has been found to be superseded by the FAA, although courts are split. The courts are somewhat split as to whether rules issued under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301, et seq., barring pre-dispute binding arbitration clauses, 40 Fed. Reg. 60,168, 60,211, are valid, given the dictates and policy of the FAA. For example, arbitration clauses are barred.⁵⁸

§ 6.5.5—Uniformed Services Employment And Re-employment Rights Act Claims

A reservist's employment rights under the Uniformed Services Employment and Re-employment Rights Act (USERRA) may be subject to arbitration.⁵⁹ The Act protects the substantive rights of soldiers and reservists to re-employment, to leaves of absence, to protection against discrimination, and to health and pension plan benefits. Submission of these rights to arbitration does not forego them; it only submits their resolution to an arbitral rather than a judicial forum. Arbitration of substantive statutory rights is precluded only when Congress evidences an intent that the judicial forum is part of the protected rights.

§ 6.5.6—Claims Or Defenses Based On Regulatory Agency Rule-Making Concerning Arbitration

Agencies charged with enforcing specific laws may by case decision or rule impact the exercise of rights under the federal or state arbitration acts.

See Federal Reserve Board of Governors Regulation 12 C.F.R. § 240.16 (78 Fed. Reg. 21,019 (April 9, 2013)) (Prohibits banking institution from entering into any agreement to submit to any settlement procedure prior to claim arising). See also Financial Industry Regulatory Authority (FINRA) Rule 13204 and 17 C.F.R. § 166.5 (Commodity Futures Trading Commission).

§ 6.5.7—Tenant Security Deposit Claims

A tenant cannot be forced to arbitrate a claim for the return of a security deposit under C.R.S. §§ 38-12-101, et seq.⁶⁰ In Ingold v. AIMCO/Bluffs, L.L.C. Apartments,⁶¹ the Colorado Supreme Court held that a claim under the Colorado Wrongful Withholding of Security Deposits Act, C.R.S. §§ 38-12-101 through -104 (2006), was not subject to arbitration...