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Bufkin v. Scottrade, Inc.

United States District Court, M.D. Florida, Fort Myers Division

November 29, 2017

MICHAEL EDWARD BUFKIN, Plaintiff,
v.
SCOTTRADE, INCORPORATED, JACOB J. LEW, TIMOTHY F. GEITHNER, JOHN KOSKINEN, DOUGLAS SHULMAN, STEVEN T. MILLER, DANIEL WERFEL, WILLIAM J. WILKINS, C.D. BAILEY, CALVIN BYRD, individually, and UNITED STATES OF AMERICA, Defendants.

          OPINION AND ORDER

          JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Scottrade, Inc.'s Motion to Compel Arbitration and to Stay or Dismiss the Proceedings Against Scottrade, Inc. Pending Arbitration (Doc. #20) filed on September 1, 2017. Plaintiff filed a Response (Doc. #29), and Scottrade, Inc. (Scottrade) filed a Reply in Support (Doc. #53) with leave of Court.

         Plaintiff asserts only one claim of breach against Scottrade in his Complaint (Doc. #1). The remaining claims all pertain to the United States and those named individually and officially. Plaintiff alleges that Scottrade sold his shares of both Sprott Silver Fund and Sprott Gold Fund, and transferred the proceeds to the Internal Revenue Service (IRS) in May 2013. (Doc. #1, ¶¶ 16-17.) Plaintiff alleges that Scottrade breached their contract by selling the shares at the request of the IRS who is not authorized on his trading account, and by transferring the proceeds of those sales to the IRS without his authorization. (Id., ¶¶ 20-22.) Plaintiff asserts that he did not volunteer to be a taxpayer for any purported taxes, and that he provided no Tax Identification Number. Plaintiff alleges that Scottrade should have demanded proof from the IRS of his volunteering to pay taxes. (Id., ¶¶ 25, 27.) Plaintiff states that he specifically crossed out Tax ID Number on his application for a Scottrade account, and only provided a Social Security Number. (Id., ¶ 18.) Plaintiff seeks restoration of the Scottrade account, a principal amount of damages in the amount of $380, 108.00 for the breach, and pre- and post judgment interest. (Id., ¶¶ 23, 138.)

         A. The Agreement

         The first page of the Scottrade Brokerage Account Application (Doc. #1-1) for a traditional IRA account was signed in 2010, and is attached to the Complaint. Above the signature line of the first page is the following statement in all capital letters:

BY SIGNING THIS AGREEMENT I ACKOWLEDGE THAT I HAVE RECEIVED, READ AND AGREE TO ABIDE BY THE TERMS OF THE ACCOMPANYING BROKERAGE ACCOUNT AGREEMENT WHICH CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AT PARAGRAPH 29.

         (Doc. #1-1, P-1.) An Account Transfer Form is also attached. (Id.) The full Terms and Conditions (Doc. #20-1, Exh. B) of the Brokerage Account Agreement are attached to Scottrade's motion by way of Affidavit of Harry Carr (Doc. #20-1, Exh. 1), a Senior Paralegal and Records custodian with Scottrade who reviews such agreements in the regular course of his business. The arbitration terms are set forth in paragraphs 28 and 29 as follows:

28. Arbitration Disclosures. This Agreement contains a predispute arbitration clause. By signing this Agreement, the parties agree as follows:
(A) All parties to this Agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.
(B) Arbitration awards are generally final and binding: a party's ability to have a court reverse or modify an arbitration award is very limited.
(C) The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings.
(D) The arbitrators do not have to explain the reason(s) for their award.
(E) The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.
(F) The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for ...

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