Goldman, Sachs & Co. v. City of Reno

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

GOLDMAN, SACHS & CO., No. 13-15445
Plaintiff-Appellant,
D.C. No.
v. 3:12-cv-00327-
RCJ-WGC
CITY OF RENO,
Defendant-Appellee. OPINION

Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, Chief District Judge, Presiding

Argued and Submitted
September 9, 2013—San Francisco, California

Filed March 31, 2014

Before: Mary M. Schroeder and Jay S. Bybee, Circuit
Judges, and Anthony J. Battaglia, District Judge.*

Opinion by Judge Bybee;
Partial Concurrence and Partial Dissent by Judge Battaglia

*
The Honorable Anthony J. Battaglia, District Judge for the U.S.
District Court for the Southern District of California, sitting by
designation.
2 GOLDMAN, SACHS & CO. V. CITY OF RENO

SUMMARY**

Arbitration / Forum Selection

The panel reversed the district court’s denial of a
preliminary injunction, and its final judgment in favor of the
City of Reno, in an action brought by Goldman, Sachs & Co.
to enjoin Financial Industry Regulatory Authority arbitration.

The panel held that the forum selection clauses in the
parties’ contracts superseded any right to Financial Industry
Regulatory Authority (“FINRA”) arbitration. The panel held
that the court, rather than FINRA, must determine the
arbitrability of the dispute. The panel further held that
although Reno qualified as Goldman’s customer under
FINRA Rule 12200, Reno disclaimed its right to FINRA
arbitration by agreeing to the forum selection clauses in the
parties’ agreements. The panel remanded to the district court
to consider whether a preliminary injunction is warranted.

District Judge Battaglia concurred with Parts III-A and
III-B of the majority’s opinion, and dissented from the
finding that the contracting parties’ forum selection clauses
superseded Goldman’s pre-existing obligation to arbitrate
under the FINRA Rules. Judge Battaglia would affirm the
district court’s denial of Goldman’s motion to preliminarily
enjoin the FINRA arbitration.

**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 3

COUNSEL

Matthew A. Schwartz (argued), David H. Braff, and Andrew
H. Reynard, Sullivan & Cromwell LLP, New York, New
York; Stanley W. Parry and Jon T. Pearson, Ballard Spahr
LLP, Las Vegas, Nevada, for Plaintiff-Appellant.

James R. Swanson (argued) and Alysson L. Mills, Fishman
Haygood Phelps Walmsley Willis & Swanson, LLP, New
Orleans, Louisiana; Robert A. Winner, Winner & Carson, PC,
Las Vegas, Nevada, for Defendant-Appellee.

OPINION

BYBEE, Circuit Judge:

In 2005 and 2006, the City of Reno issued approximately
$211 million in complex securities and employed Goldman,
Sachs & Co. (“Goldman”) as its sole underwriter and broker-
dealer. Years after Reno’s financing collapsed, Reno initiated
an arbitration before the Financial Industry Regulatory
Authority (“FINRA”) to resolve its claims against Goldman
arising out of their contractual relationship. Goldman then
filed this action to enjoin the FINRA arbitration, arguing that
(1) Reno was not a “customer” entitled to arbitrate under
FINRA Rule 12200 and (2), at any rate, Reno had disclaimed
any right to arbitrate by agreeing to forum selection clauses
in the contracts between the parties. Reno responded that
FINRA had the right in the first instance to determine
arbitrability. The district court agreed with Reno and
disagreed with Goldman. It therefore denied Goldman’s
motion for injunctive relief and entered final judgment in
favor of Reno.
4 GOLDMAN, SACHS & CO. V. CITY OF RENO

We have little difficulty determining that Reno was
Goldman’s “customer” under the FINRA Rules. However, the
second question—whether the forum selection clauses
superseded Goldman’s obligation to arbitrate under FINRA
Rule 12200—has been the subject of litigation in multiple
circuits, with decidedly mixed results. The Fourth Circuit and
the District of Minnesota have held that an identical forum
selection clause does not supersede a FINRA member’s
obligation to arbitrate under the FINRA Rules, see UBS Fin.
Servs., Inc. v. Carilion Clinic, 706 F.3d 319 (4th Cir. 2013);
UBS Sec. LLC v. Allina Health Sys., No. 12-2090, 2013 WL
500373 (D. Minn. Feb. 11, 2013), while two judges within the
Southern District of New York have held that materially
identical forum selection clauses trump FINRA Rule 12200
such that the customer must bring its claims in federal court,
see Goldman, Sachs & Co v. N.C. Mun. Power Agency No.
One, No. 13-CV-1319, 2013 WL 6409348, at *7 (S.D.N.Y.
Dec. 9, 2013); Goldman, Sachs & Co. v. Golden Empire
Schools Fin. Auth., 922 F. Supp. 2d 435 (S.D.N.Y. 2013).
Because we find that the forum selection clauses in the
parties’ contracts superseded any right to FINRA arbitration,
we reverse the district court’s order and final judgment, and
remand for further proceedings consistent with this opinion.

I. BACKGROUND

In 2005, Reno undertook a series of city projects. To
finance these projects, Reno chose to issue municipal bonds.
Reno approached Goldman to discuss financing options, and
Goldman advised Reno to issue the debt in the form of
auction rate securities (“ARS”).

ARS are long-term, variable-rate instruments with interest
rates that reset at periodic auctions. At each auction, ARS
 GOLDMAN, SACHS & CO. V. CITY OF RENO 5

investors submit a bid setting forth the number of ARS that
they wish to purchase, hold, or sell, and the lowest interest
rate that they will accept. The lowest interest rate at which the
entire issue can be sold at par establishes the new interest rate
to be paid until the next auction. This new interest rate is
known as the “clearing rate.” If there are insufficient bids to
cover the bonds available for sale at the auction, however, the
auction “fails,” and the interest rate is set at a contractual
“maximum rate” until the next auction.

With Goldman’s assistance, Reno issued $73.45 million
in ARS in October 2005 (the “2005 Bonds”). At that time,
Reno and Goldman entered into two written agreements that
governed their relationship: (1) an underwriter agreement that
outlined Goldman’s duty to purchase and offer the 2005
Bonds (the “2005 Underwriter Agreement”) and (2) a
separate, but contemporaneously executed, broker-dealer
agreement that outlined Goldman’s duty to manage the
auctions for the 2005 Bonds (the “2005 Broker-Dealer
Agreement). The contracts were entered into after arm’s-
length negotiations in which both parties were represented by
counsel.

For purposes of our analysis, the 2005 Broker-Dealer
Agreement contains two significant clauses. First, it contains
a forum selection clause providing that:

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 for the District of
Nevada and that, in connection with any such
6 GOLDMAN, SACHS & CO. V. CITY OF RENO

action or proceeding, the parties shall submit
to the jurisdiction of, and venue in, such court.

Second, the 2005 Broker-Dealer Agreement contains a
merger clause providing that:

This Broker-Dealer Agreement, and the other
agreements and instruments executed and
delivered in connection with the issuance of
the ARS, contain the entire agreement
between the parties relating to the subject
matter hereof, and there are no other
representations, endorsements, promises,
agreements or understandings, oral, written or
inferred, between the parties relating to the
subject matter hereof.

Reno and Goldman entered into substantially identical
contracts in 2006 (the “2006 Underwriter Agreement” and the
“2006 Broker-Dealer Agreement”) when Reno financed a
new city project by issuing $137.43 million in ARS (the
“2006 Bonds”).

Reno compensated Goldman for its services under each
of these four agreements. Pursuant to the 2005 and 2006
Underwriter Agreements, Goldman received an underwriter’s
discount by purchasing the 2005 and 2006 Bonds for less than
their face value. In addition, pursuant to the 2005 and 2006
Broker-Dealer Agreements, Goldman received annual broker-
dealer fees in exchange for its management of the ARS
auctions.

In 2008, the ARS market collapsed, and Reno’s ARS
auctions began to fail. As a result, Reno was forced to
 GOLDMAN, SACHS & CO. V. CITY OF RENO 7

refinance the 2005 and 2006 Bonds at considerable cost.
According to Reno, these costs should be attributed to
Goldman’s conduct. Specifically, Reno alleges that, where
Goldman served as underwriter, it had a general practice of
placing support bids in ARS auctions to ensure that these
auctions did not fail; that Goldman did not disclose this
general practice to Reno before Reno issued the 2005 and
2006 Bonds; that, consistent with Goldman’s general
practice, it placed support bids in Reno’s ARS auctions until
2008; that Goldman’s decision to stop placing support bids in
2008 caused Reno’s ARS auctions to fail; and that, if
Goldman had told Reno about this general practice, Reno
would not have issued ARS to finance its city projects. Based
on these allegations, Reno claims that Goldman’s conduct
breached its fiduciary duty, amounted to fraud and negligent
misrepresentation, violated the Securities Exchange Act of
1934, violated the Nevada Securities Act, and violated
Municipal Securities Rulemaking Board and FINRA Rules.

In order to resolve these claims through arbitration,
Reno filed a Statement of Claim against Goldman before
FINRA on February 10, 2012. FINRA is a self-regulatory
organization that has “the authority to exercise
comprehensive oversight over ‘all securities firms that do
business with the public.’” UBS Fin. Servs., Inc. v. W. Va.
Univ. Hosps., Inc., 660 F.3d 643, 648 (2d Cir. 2011) (quoting
72 Fed. Reg. 42169, 42170 (Aug. 1, 2007)). To exercise this
oversight, FINRA has instituted rules with which its
members, including Goldman, agree to comply. See FINRA
Bylaws, art. IV, § 1(a). And one of these rules provides that
FINRA members and their customers “must arbitrate a
dispute . . . [i]f [a]rbitration . . . [is] [r]equested by the
customer; [t]he dispute is between a customer and a member
8 GOLDMAN, SACHS & CO. V. CITY OF RENO

. . . ; and [t]he dispute arises in connection with the business
activities of the member . . . .” FINRA Rule 12200.

In response to Reno’s Statement of Claim, Goldman filed
this action in the United States District Court for the District
of Nevada, seeking a declaratory judgment that FINRA lacks
jurisdiction over the dispute and an injunction against the
arbitration proceedings. In Goldman’s motion for preliminary
injunction, filed shortly after its complaint, Goldman argued
that Reno was not a “customer” entitled to arbitrate under
FINRA Rule 12200 and that, at any rate, Reno had disclaimed
any right to arbitrate by agreeing to the forum selection
clauses in the 2005 and 2006 Broker-Dealer Agreements.

The district court denied Goldman’s motion for
preliminary injunction. Goldman, Sachs & Co. v. City of
Reno, No. 3:12-CV-00327, 2012 WL 5944966 (D. Nev. Nov.
26, 2012). In so doing, the district court reached three legal
conclusions that are at issue on appeal. First, the district court
found that FINRA had jurisdiction to decide the arbitrability
of Reno’s claims. Second, the district court determined that
Reno was a “customer” under FINRA Rule 12200. And third,
the district court found that the forum selection clauses in the
2005 and 2006 Broker-Dealer Agreements did not supersede
Reno’s right to FINRA arbitration. Accordingly, the district
court ruled that Goldman was not likely to succeed on the
merits.

Following the district court’s ruling, the parties agreed
that there was nothing further to litigate, and the district court
entered final judgment in favor of Reno. Goldman then filed
this appeal.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 9

II. STANDARD OF REVIEW

In order to obtain a preliminary injunction, Goldman must
demonstrate that (1) it is likely to succeed on the merits, (2)
it is likely to suffer irreparable harm in the absence of
preliminary relief, (3) the balance of equities tips in its favor,
and (4) an injunction is in the public interest. Winter v.
Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).

We review the district court’s denial of a preliminary
injunction for an abuse of discretion, its factual findings for
clear error, and its conclusions of law de novo. See Perfect
10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1157 (9th Cir.
2007).

III. DISCUSSION

There are three issues on appeal. First, we address
whether FINRA must determine the arbitrability of this
matter in the first instance. Because we conclude that we,
rather than FINRA, have jurisdiction to determine
arbitrability, we reach the remaining two issues. Second, we
consider whether Reno was a “customer” of Goldman, giving
it the right to invoke arbitration under the FINRA Rules.
Third, we examine whether Reno and Goldman contracted
around FINRA Rule 12200 through forum selection clauses
and agreed to litigate any claims in the United States District
Court for the District of Nevada.

A. Jurisdiction to determine arbitrability

Both the arbitrability of the merits of a dispute and the
question of who has the primary power to decide arbitrability
depend on the agreement of the parties. See First Options of
10 GOLDMAN, SACHS & CO. V. CITY OF RENO

Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995). “But, unlike
the arbitrability of claims in general, whether the court or the
arbitrator decides arbitrability is an issue for judicial
determination unless the parties clearly and unmistakably
provide otherwise.” Oracle Am., Inc. v. Myriad Group A.G.,
724 F.3d 1069, 1072 (9th Cir. 2013) (internal quotation marks
and citations omitted). Thus, “there is a presumption that
courts will decide which issues are arbitrable.” Id.

The district court concluded that, because Goldman is a
FINRA member, it has agreed to FINRA arbitration on the
issue of arbitrability itself. As support for this conclusion, the
district court relied on FINRA Rule 12203(a), which states
that “[t]he Director may decline to permit the use of the
FINRA arbitration forum if the Director determines that . . .
the subject matter of the dispute is inappropriate, or that
accepting the matter would pose a risk to the health or safety
of arbitrators, staff, or parties or their representatives.”

This legal conclusion was incorrect. FINRA Rule
12203(a) does not provide “clear and unmistakable” evidence
that FINRA members like Goldman have consented to
FINRA determination of the issue of arbitrability. Instead,
FINRA Rule 12203(a) simply describes certain circumstances
under which the FINRA Director may deny access to the
FINRA arbitration forum. Furthermore, neither the
underwriter nor the broker-dealer agreements provide “clear
and unmistakable” evidence that the parties intended that
FINRA would determine the issue of arbitrability. The
presumption that the court will decide which issues are
arbitrable remains unrebutted, and we must make the call.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 11

B. Reno as Goldman’s “Customer”

“[A]rbitration is a matter of contract,” Rent-A-Center, W.,
Inc. v. Jackson, 130 S. Ct. 2772, 2776 (2010), and there is “a
liberal federal policy favoring arbitration agreements.”1
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24 (1983). “In line with these principles, courts
must place arbitration agreements on an equal footing with
other contracts, and enforce them according to their terms.”
AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745
(2011) (internal citations omitted).

Here, the relevant arbitration provision is FINRA Rule
12200, which requires FINRA members like Goldman to
arbitrate disputes arising out of their business activities at the
request of a “customer.” Goldman denies any obligation to

1
The Federal Arbitration Act (“FAA”) provides that:

A written provision in any maritime transaction or a
contract evidencing a transaction involving commerce
to settle by arbitration a controversy thereafter arising
out of such contract or transaction, or the refusal to
perform the whole or any part thereof, or an agreement
in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction,
or refusal, shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for
the revocation of any contract.

9 U.S.C. § 2. FINRA Rule 12200 constitutes an “agreement in writing”
under the FAA, and, assuming Reno is a customer, it is entitled to invoke
FINRA Rule 12200 as an intended third-party beneficiary in its dispute
with Goldman. See Kidder, Peabody & Co. v. Zinsmeyer Trusts P’ship,
41 F.3d 861, 863–64 (2d Cir. 1994); see also Waterford Inv. Servs., Inc.
v. Bosco, 682 F.3d 348, 353 (4th Cir. 2012); MONY Sec. Corp. v.
Bornstein, 390 F.3d 1340, 1342 (11th Cir. 2004).
12 GOLDMAN, SACHS & CO. V. CITY OF RENO

arbitrate under this rule because Reno was not a “customer”
as that term is used in the FINRA Rules.

The FINRA Rules define “customer” only in the negative:
“A customer shall not include a broker or dealer.” FINRA
Rule 12100(i). This definition does not tell us what a
“customer” is, and because Reno is neither a broker nor a
dealer, the FINRA Rules’ definition, standing alone, cannot
tell us whether Reno fits the bill.

Goldman argues that Reno was not a “customer” because
their relationship did not relate directly to investment or
brokerage services. As support for this narrow definition,
Goldman cites the Eighth Circuit’s decision in Fleet Boston
Robertson Stephens, Inc. v. Innovex, Inc., 264 F.3d 770 (8th
Cir. 2001). In Fleet Boston, the court considered whether “a
‘customer’ is everyone who is not a broker or dealer.” Id. at
772. Rejecting this broad definition, the court explained that
“the [FINRA] Rules were [not] meant to apply to every sort
of financial service a [FINRA] member might provide,
regardless of how remote that service might be from the
investing or brokerage activities, which [FINRA] oversees.”
Id. The court then held that “[FINRA] Rules support a
general definition of ‘customer’ as one who receives
investment and brokerage services or otherwise deals more
directly with securities than what occurred here.” Id.
(emphasis added). Although the court said it was a “close
call,” the Eighth Circuit held that where the purported
customer “only received financial advice,” it did not qualify
as a “customer” entitled to arbitration. Id. at 773.

Other circuits have refined the definition of “customer” in
the years following Fleet Boston. See Carilion Clinic,
706 F.3d at 325; W. Va. Univ. Hosps., Inc., 660 F.3d at 651.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 13

In Carilion Clinic, UBS and Citigroup sought to enjoin
arbitration under the FINRA Rules, contending that Carilion
Clinic was not a “customer.” 706 F.3d at 321. The Fourth
Circuit rejected this contention. In so doing, the court looked
to other provisions of the FINRA Rules to provide context for
the definition of “customer.” Id. at 324–35. Specifically, the
court noted that FINRA Rule 12200 provides that arbitrable
disputes must arise in connection with the “business
activities” of the FINRA Member, suggesting that a person
must be a customer of a FINRA member’s business activities
to obtain arbitration; that FINRA Rule 12100(r) suggests that
the business activities of a FINRA member involve
“investment banking or securities business”; and that
FINRA’s mission, among other things, is “[t]o promote
through cooperative effort the investment banking and
securities business, to standardize its principles and practices,
to promote therein high standards of commercial honor, and
to encourage and promote among members observance of
federal and state securities laws.” Restated Certificate of
Incorporation of Financial Industry Regulatory Authority,
Inc. § 3 (July 2, 2010).

Subject to the scope indicated by the FINRA Rules,
however, the court reasoned that “the term ‘customer’ in Rule
12200 still retains its generally accepted meaning—‘one that
purchases a commodity or service.’” Carilion Clinic,
706 F.3d at 325 (quoting Merriam Webster’s Collegiate
Dictionary 308 (11th ed. 2007)). The court concluded that a
“customer” is “one, not a broker or dealer, who purchases
commodities or services from a FINRA member in the course
of the member’s business activities insofar as those activities
are covered by FINRA’s regulation, namely the activities of
investment banking and the securities business.” Id; see also
W. Va. Univ. Hosps., Inc., 660 F.3d at 650. Thus, because
14 GOLDMAN, SACHS & CO. V. CITY OF RENO

UBS and Citigroup had provided a variety of services to
Carilion Clinic in connection with the issuance of ARS
bonds, Carilion Clinic was their “customer.” Carilion Clinic,
706 F.3d at 327–28.

Similarly, in UBS Financial Services, Inc. v. West
Virginia University Hospitals, West Virginia University
Hospitals (“WVUH”) issued $329 million in bonds, a portion
of which were issued as ARS. 660 F.3d at 645. UBS served
as “both the lead underwriter and the main broker-dealer
responsible for facilitating the Dutch auctions in which
WVUH’s bonds were resold and their interest rates set.” Id.
Like Reno and Goldman, WVUH and UBS entered into
underwriter and broker-dealer agreements. UBS facilitated
the auctions, for which it was paid a fee, and was permitted
to purchase the ARS at a discount rate. Id. The Second
Circuit concluded that “[t]he term ‘customer’ includes at least
a non-broker or non-dealer who purchases, or undertakes to
purchase, a good or service from a FINRA member.” Id. at
650. On that basis, “WVUH was UBS’s customer because
WVUH purchased a service, specifically auction services,
from UBS.” Id.

We find the Second and Fourth Circuits’ analysis
persuasive. Accordingly, we conclude that a “customer” is a
non-broker and non-dealer who purchases commodities or
services from a FINRA member in the course of the
member’s FINRA-regulated business activities, i.e., the
member’s investment banking and securities business
activities.

With this definition in mind, we find that Reno easily
qualifies as Goldman’s “customer.” To finance a series of city
projects, Reno issued approximately $211 million in ARS
 GOLDMAN, SACHS & CO. V. CITY OF RENO 15

bonds. Pursuant to the 2005 and 2006 Underwriter and
Broker-Dealer Agreements, Goldman served as the
underwriter for the 2005 and 2006 Bonds and as the broker-
dealer for the ARS auctions; sold Reno interest rate swaps to
protect the financing structure; acted as Reno’s agent in
dealing with the rating agencies; conducted discussions with
bond insurers on Reno’s behalf; and provided monitoring and
advisory services for the 2005 and 2006 Bonds and the
interest rate swaps. Goldman provided these services in the
course of its securities business activities, and Reno
compensated Goldman in the form of underwriter’s discounts
and annual broker-dealer fees. Accordingly, under both the
2005 and 2006 Underwriter and Broker-Dealer Agreements,
Reno was Goldman’s “customer.” And because Goldman’s
customer has requested arbitration, FINRA Rule 12200
requires Goldman to arbitrate unless Reno has disclaimed its
right to arbitrate through contract.

C. Forum Selection Clauses

Goldman argues that, even if Reno is its customer,
Goldman may enjoin the ongoing FINRA arbitration because
Reno disclaimed its right to arbitrate by agreeing to the forum
selection clauses in the 2005 and 2006 Broker-Dealer
Agreements. These forum selection clauses recite that “all
actions and proceedings . . . shall be brought in the . . .
District of Nevada.” As a threshold matter, we agree with
Goldman that a contract between the parties can supersede
the default obligation to arbitrate under the FINRA Rules.
See, e.g., Carilion Clinic, 706 F.3d at 328; Applied
Energetics, Inc. v. NewOak Capital Markets, LLC, 645 F.3d
522, 525 (2d Cir. 2011). The question, then, is whether the
forum selection clauses at issue here sufficiently demonstrate
the parties’ intent to do so. We conclude that they do.
16 GOLDMAN, SACHS & CO. V. CITY OF RENO

Goldman had a default obligation to arbitrate with its
customers under the FINRA Rules, but Goldman was free to
make alternative arrangements with each individual customer
when the parties formed or modified their contractual
relationship. Here, at the time the contracts were negotiated,
Goldman and Reno agreed to forum selection clauses which
clearly indicate that the parties never agreed to arbitrate
claims arising out of their contractual relationship. Instead,
from the beginning of this relationship, Goldman and Reno
agreed to bring such claims in the District of Nevada. We
therefore hold that these forum selection clauses superseded
Goldman’s default obligation to arbitrate under the FINRA
Rules.

1. Legal Standards

The Supreme Court has emphasized that the “first
principle” of its arbitration decisions is that “[a]rbitration is
strictly a matter of consent and thus is a way to resolve those
disputes—but only those disputes—that the parties have
agreed to submit to arbitration.” Granite Rock Co. v. Int’l
Bhd. of Teamsters, 130 S. Ct. 2847, 2857 (2010) (internal
quotation marks and citations omitted). When determining
whether parties have agreed to submit to arbitration, “we
apply ‘general state-law principles of contract interpretation,
while giving due regard to the federal policy in favor of
arbitration by resolving ambiguities as to the scope of
arbitration in favor of arbitration.’” Mundi v. Union Sec. Life
Ins. Co., 555 F.3d 1042, 1044 (9th Cir. 2009) (quoting
Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th
Cir. 1996)). This policy, however, “is merely an
acknowledgment of the FAA’s commitment to ‘overrule the
judiciary’s longstanding refusal to enforce agreements to
arbitrate and to place such agreements upon the same footing
 GOLDMAN, SACHS & CO. V. CITY OF RENO 17

as other contracts.’” Granite Rock, 130 S. Ct. at 2859
(emphasis added) (quoting Volt Info. Scis., Inc. v. Bd. of
Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478
(1989)). Accordingly, the Supreme Court “[has] never held
that this policy overrides the principle that a court may
submit to arbitration ‘only those disputes . . . that the parties
have agreed to submit.’ Nor [has the Court] held that courts
may use policy considerations as a substitute for party
agreement.” Id. (citations omitted) (quoting First Options of
Chi., 514 U.S. at 943).

Guided by this first principle, we do not apply the so-
called “presumption in favor of arbitrability” in every case.
Where the arbitrability of a dispute is contested, we must
decide whether the parties are contesting the existence or the
scope of an arbitration agreement. If the parties contest the
existence of an arbitration agreement, the presumption in
favor of arbitrability does not apply. If the parties contest the
scope of an arbitration agreement, we must determine
whether the scope of the agreement covers the relevant
dispute. The presumption in favor of arbitrability applies only
where the scope of the agreement is ambiguous as to the
dispute at hand, and we adhere to the presumption and order
arbitration only where the presumption is not rebutted.
Granite Rock, 130 S. Ct. at 2858–60; AT&T Techs., Inc. v.
Commc’ns Workers of Am., 475 U.S. 643, 650 (1986)
(“[W]here the contract contains an arbitration clause, there is
a presumption of arbitrability in the sense that an order to
arbitrate the particular grievance should not be denied unless
it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the
asserted dispute.” (internal quotation marks, brackets, and
citation omitted)); Mundi, 555 F.3d at 1044–45 (“The
presumption in favor of arbitration . . . does not apply if
18 GOLDMAN, SACHS & CO. V. CITY OF RENO

contractual language is plain that arbitration of a particular
controversy is not within the scope of the arbitration
provision.” (internal quotation marks and citation omitted));
Bank Julius Baer & Co. v. Waxfield Ltd., 424 F.3d 278, 281
(2d Cir. 2005).

Consistent with this analytical framework, we must
decide whether Goldman contests the existence or scope of a
valid arbitration agreement. Goldman and Reno did not
include an express arbitration clause in the Underwriter or
Broker-Dealer Agreements. Instead, as a FINRA member,
Goldman had a default obligation to arbitrate at the request of
a “customer.” And as a “customer,” Reno stood to benefit
from this default obligation, provided that the parties did not
contract around it. According to Goldman, however, that is
precisely what occurred when the parties agreed to the forum
selection clauses: Reno disclaimed any right to arbitrate that
it might otherwise have had. If Goldman is correct that the
forum selection clauses superseded its default obligation
under the FINRA Rules, Goldman and Reno agreed not to
arbitrate any claims that might arise out of their contractual
relationship at the very time this relationship was formed.
Goldman thus contests the existence, rather than the scope, of
an arbitration agreement, and, therefore, the presumption in
favor of arbitrability does not apply in this case.

The Second Circuit reached the same conclusion on
similar facts in Applied Energetics, 645 F.3d at 526. There,
the parties included an arbitration clause in an “Engagement
Agreement.” That clause, however, was allegedly superseded
by a forum selection clause in a subsequent “Placement
Agreement.” Id. at 523. The court noted that “while doubts
concerning the scope of an arbitration clause should be
resolved in favor of arbitration, the presumption does not
 GOLDMAN, SACHS & CO. V. CITY OF RENO 19

apply to disputes concerning whether an agreement to
arbitrate has been made.” Id. at 526. Consequently, because
the question of whether the Placement Agreement had
superseded the Engagement Agreement was a dispute over
the existence, rather than the scope, of the agreement to
arbitrate, “the presumption in favor of arbitrability [did] not
apply.” Id.

Because we likewise conclude that the presumption in
favor of arbitrability does not apply here, we use general
state-law principles of contract interpretation to decide
whether a contractual obligation to arbitrate exists, see
Mundi, 555 F.3d at 1044: If the parties’ agreement is clear on
its face, we must enforce it as written. See Greenfield v.
Philles Records, Inc., 780 N.E.2d 166, 170 (N.Y. 2002) (“[A]
written agreement that is complete, clear and unambiguous on
its face must be enforced according to the plain meaning of
its terms.”); accord Canfora v. Coast Hotels & Casinos, Inc.,
121 P.3d 599, 603 (Nev. 2005) (“[W]hen a contract is clear
on its face, it will be construed from the written language and
enforced as written.” (internal quotation marks and citation
omitted)). Accordingly, to avoid arbitration, the forum
selection clauses to which Goldman and Reno agreed need
only be “sufficiently specific to impute to the contracting
parties the reasonable expectation that they are superseding,
displacing, or waiving the arbitration obligation created by
FINRA Rule 12200.” Carilion Clinic, 706 F.3d at 328.

2. Application

With this standard in mind, we turn to the text of the
forum selection clauses and conclude that Reno has clearly
and unambiguously disclaimed any right it might otherwise
have had to FINRA arbitration. As previously mentioned, the
20 GOLDMAN, SACHS & CO. V. CITY OF RENO

forum selection clauses provide that “all actions and
proceedings . . . shall be brought in the . . . District of
Nevada.” Reno argues that the phrase “all actions and
proceedings” refers only to judicial proceedings and is not
incompatible with Reno enforcing its rights under FINRA
Rule 12200.

We are not writing on a blank slate. Although the precise
question is new in our court, it has been the subject of
litigation in federal courts around the country. The Fourth
Circuit and the District of Minnesota have held that the
phrase “all actions and proceedings” is in fact limited to
judicial proceedings, see Carilion Clinic, 706 F.3d at 329–30;
Allina Health Sys., 2013 WL 500373, at *6 , while the
Southern District of New York has held that the very same
phrase, “by its plain terms, encompasses arbitration,” Golden
Empire, 922 F. Supp. 2d at 443; see also N.C. Mun. Power
Agency, 2013 WL 6409348, at *6.2 We have benefitted from
the thoughtful opinions of these courts and recognize that the
question is a close one. For the reasons that follow, we agree
with the Southern District of New York that the parties have
agreed to resolve their contractual disputes in federal court in
Nevada.

First, noting that the forum selection clauses make no
reference to arbitration, Reno argues that if Goldman had
intended to contract out of its duty to arbitrate, it could have
and should have included an express waiver of arbitration in
the parties’ agreements. While this certainly would be an
easier case if the parties had included an express waiver, we
know of no requirement that they do so. Rather, because the

2
We note that Golden Empire is on appeal to the Second Circuit and
will be heard on April 4, 2014.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 21

presumption in favor of arbitrability does not apply here, the
forum selection clauses need only be sufficiently specific to
impute to the contracting parties the reasonable expectation
that they would litigate any disputes in federal court, thereby
superseding Goldman’s default obligation to arbitrate under
FINRA Rule 12200. See Applied Energetics, 645 F.3d at
525–26. Thus, although an express waiver might be
preferable, we decline to impose formal incantations when
applying general state-law principles of contract
interpretation. But see Carilion Clinic, 706 F.3d at 329
(“[O]ne would reasonably expect that a clause designed to
supersede, displace, or waive arbitration would mention
arbitration.”).

Second, Reno points out that the forum selection clauses
require only that “actions and proceedings” be brought in
federal court in Nevada. Reno contends that the New York
Civil Practice Laws and Rules3 (“N.Y. C.P.L.R.”) do not
consider arbitrations to be “actions” or “proceedings” and
that, as a result, the forum selection clauses do not encompass
arbitration. See N.Y. C.P.L.R. § 103 (defining civil judicial
disputes as “actions” or “special proceedings”); id. § 304
(“An action is commenced by filing a summons and
complaint or summons with notice . . . . A special proceeding
is commenced by filing a petition . . . .”). In Goldman, Sachs
& Co. v. Golden Empire Schools Financing Authority, the
Southern District of New York found that this argument
“strains reason,” noting that “the Forum Selection Clause
negotiated between [the ARS issuer] and Goldman makes no
mention of the C.P.L.R. and suggests no such limitation.”

3
The 2005 and 2006 Broker-Dealer Agreements stipulate that they
“shall be governed by and construed in accordance with the laws of the
State of New York . . . .”
22 GOLDMAN, SACHS & CO. V. CITY OF RENO

922 F. Supp. 2d at 442. The same is true here; there is no
evidence the parties intended the phrase “actions and
proceedings” to have a technical meaning limited by the N.Y.
C.P.L.R. In common parlance, an arbitration is certainly an
action or a proceeding. The United States Supreme Court, our
court, and New York state courts routinely refer to
arbitrations as “actions” or “proceedings.” See, e.g., 14 Penn
Plaza LLC v. Pyett, 556 U.S. 247, 269 (2009) (referencing an
“arbitral body conducting a proceeding” (emphasis added)
(quoting Mitsubishi Motors Corp. v. Soler Chrysler-
Plymouth, Inc., 473 U.S. 614, 634 (1985)); Sacks v. Dietrich,
663 F.3d 1065, 1066–67 (9th Cir. 2011) (discussing “a
securities arbitration proceeding to be administered by
[FINRA]” (emphasis added)); City of New York v. Uniformed
Fire Officers Ass’n, Local 854, 263 A.D.2d 3, 7 (N.Y. App.
Div. 1999) (“Normally, a party to a valid arbitration
agreement is required to submit to arbitration and to defer any
challenge to the proceeding until an award is rendered.”
(emphasis added) (internal quotation marks and citation
omitted)). Similarly, the FINRA Rules repeatedly refer to
arbitrations held under their authority as “proceedings.” See,
e.g., FINRA Rule 12400 (discussing “the selected hearing
location for each proceeding” (emphasis added)). What is
more, Reno itself refers to the FINRA arbitration as a
“proceeding[]” and an “action” in its Statement of Claim. In
light of these ubiquitous references to arbitration as an action
or proceeding, it is of little significance that the N.Y.
C.P.L.R. contemplate “actions” or “proceedings” in the civil
judicial context.4

4
Reno and the dissent contend that the forum selection clauses at issue
here are narrower than the provision covering “any dispute” in Applied
Energetics, where the Second Circuit found that a similar forum selection
clause had displaced an earlier agreement to arbitrate. 645 F.3d at 525.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 23

Third, Reno asserts that if the term “actions and
proceedings” included arbitration, the forum selection clauses
would make no sense. The Fourth Circuit endorsed this
argument in Carilion Clinic. There, the court reasoned that if
“actions and proceedings” included arbitration, the forum
selection clauses would have to be read with the following
substitution: “all proceedings, including arbitration . . . shall
be brought in [federal court].” Carilion Clinic, 706 F.3d at
329 (omission in original) (emphasis added). The court
rejected this reading:

In whatever way that sentence could be read,
it could not be read to preclude arbitration; to
the contrary, it presumes its availability but
localizes it, albeit to a forum where it could
not be pursued . . . . Regardless of how one
might explain the commitment of an
arbitration proceeding to a court, the sentence
surely cannot be read to preclude or waive
arbitration.

According to Reno and the dissent, because the forum selection clauses
here do not purport to address “any dispute,” they should be limited to
judicial proceedings arising under the agreements between the parties. Dis.
Op. at 35–37. This argument assumes that the term “dispute” is
necessarily broader than the term “actions and proceedings.” We cannot
see why this would be so. The fact that the term “dispute” includes
arbitration does not mean that the term “actions and proceedings” does
not. To the contrary, we now follow the Supreme Court, our own
precedents, New York state courts, the FINRA Rules, and Reno itself in
concluding that the term “actions and proceedings,” by its plain meaning,
encompasses arbitration.
24 GOLDMAN, SACHS & CO. V. CITY OF RENO

Id.; see also Dis. Op. at 41–42. We respectfully disagree.5 An
arbitration is an alternative to a civil action in federal court,
not an alternative remedy.6 By their nature, arbitrations are
brought in lieu of a federal lawsuit. An arbitration may be
enforced in federal court, 9 U.S.C. § 9, but federal courts do
not conduct the arbitrations themselves. We thus agree with
the Fourth Circuit that it makes no sense to read these forum
selection clauses as obligating the parties to bring their
arbitrations to federal court, but we reach the opposite
conclusion from this premise: the parties have agreed to
litigate their disputes in federal court, and that is incompatible
with any prior obligation to arbitrate such disputes in another
forum. In other words, the question is not whether an
arbitration can be brought in federal court. The question is
whether, by definition, the term “arbitration” falls under the
broad umbrella of “all actions and proceedings.” Because we
find that it does, Goldman and Reno have agreed to bring

5
As the Golden Empire court explained, the same logical conclusion
would follow from the analogous substitution of “actions in the Nevada
state courts” since actions in the Nevada state courts cannot be brought in
the District of Nevada; “[n]evertheless, it can hardly be argued that such
a dispute would fall outside the heading of ‘actions and proceedings.’”
922 F. Supp. 2d at 442.
6
We use the term “arbitration” to refer both to a particular kind of
proceeding and to an alternative forum. Thus, we may speak of
“commencing an arbitration” rather than “commencing a lawsuit.” We
also may say that we are “going to arbitration” instead of “going to court.”
The point of the forum selection clauses is that “all actions and
proceedings” must be pursued in a particular forum, federal district court
in Nevada. Because arbitration is an “action” or “proceeding,” and “all
actions and proceedings” must be brought in federal district court,
Goldman and Reno have agreed to resolve all of their disputes in judicial
proceedings rather than arbitrations. Even if we think of an arbitration as
a forum, it is an alternative forum to the forum agreed upon by the parties.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 25

their claims in a judicial action in the District of Nevada,
even if those same claims might otherwise have been raised
in an arbitral forum in the absence of the forum selection
clauses agreed to by the parties.

Fourth, Reno argues that if the term “actions and
proceedings” included arbitration, the portion of the forum
selection clauses that waives “all right to trial by jury” would
become nonsensical. The Fourth Circuit also endorsed this
argument in Carilion Clinic, reasoning that, because there is
no right to trial by jury, “[t]he more reasonable construction
would take the references to ‘court’ and ‘jury trials’ as
limiting what is meant by ‘actions and proceedings.’”
706 F.3d at 329–30; see also Dis. Op. at 40–41. Again, we
respectfully disagree. The waiver of the right to jury in the
forum selection clauses “merely states the obvious, that
certain ‘actions and proceedings’ would allow for jury trials,
and then clarifies that the jury right is forfeited in those
instances.” Golden Empire, 922 F. Supp. 2d at 442. The
forum selection clauses thus commit the parties to federal
court, where they consent to a bench trial.

Fifth, both Reno and the dissent argue that if there is a
reading of the forum selection clauses that permits
Goldman’s default obligation to arbitrate under the FINRA
Rules to remain in effect, we must choose that reading. Dis.
Op. at 34. And indeed, such a reading is available here.
Arbitration awards are not self-enforceable. Accordingly, we
could require Goldman to arbitrate at Reno’s request and then
require Reno to enforce the arbitration award, if any, in the
District of Nevada, thereby harmonizing Goldman’s default
obligation to arbitrate with the forum selection clauses. The
flaw in this argument is that it erroneously assumes that the
presumption in favor of arbitrability applies. Where the
26 GOLDMAN, SACHS & CO. V. CITY OF RENO

presumption applies, we compel arbitration “unless it may be
said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted
dispute.” AT&T Techs., Inc., 475 U.S. at 650 (internal
quotation marks and citation omitted). Where, as here, the
presumption does not apply, however, we use general state-
law principles of contract interpretation to effectuate the
intent of the parties. As a result, the mere availability of an
alternative reading of the forum selection clauses is beside the
point.

In light of the foregoing, we will give full effect to the all-
inclusive breadth of the forum selection clauses (“all actions
and proceedings”), their mandatory nature (“shall”), and their
reference to a judicial forum (“the United States District
Court for the District of Nevada”). We therefore conclude
that the forum selection clauses superseded Goldman’s
default obligation to arbitrate under the FINRA Rules and
that, by agreeing to these clauses, Reno disclaimed any right
it might otherwise have had to the FINRA arbitration forum.

Lastly, Reno contends that, even if the forum selection
clauses in the 2005 and 2006 Broker-Dealer Agreements
require that Reno bring claims arising out of those
agreements in the District of Nevada, Reno’s claims arising
solely out of the 2005 and 2006 Underwriter Agreements—
which do not contain a forum selection clause—may still
proceed in FINRA arbitration. Reno is mistaken on this point,
too.

The 2005 and 2006 Broker-Dealer Agreements contain
broad merger clauses referencing “the other agreements and
instruments executed and delivered in connection with the
issuance of the ARS” and stipulating that the Broker-Dealer
 GOLDMAN, SACHS & CO. V. CITY OF RENO 27

Agreements “contain the entire agreement between the parties
relating to the subject matter hereof.” The “other agreements
and instruments executed and delivered in connection with
the issuance of the ARS” certainly include the 2005 and 2006
Underwriter Agreements. As a result, the forum selection
clauses also encompass claims arising out of those
agreements.

Moreover, as the Statement of Claim reveals, all of
Reno’s claims are inextricably linked to the 2005 and 2006
Broker-Dealer Agreements. The core of Reno’s claims is that,
when negotiating with Reno to become both underwriter and
broker-dealer for the 2005 and 2006 Bonds, Goldman did not
disclose its general practice of placing support bids to prevent
ARS auctions from failing. Reno asserts that “[h]ad [it]
known that [its ARS] would be wholly-dependent on
Goldman’s continued support bidding practice . . . , Reno
would never have taken the risk . . . . Instead, Reno could
have chosen an alternative structure for the financing.” As
damages, Reno seeks, inter alia, “disgorgement of all fees and
costs associated with issuing the ARS [and] conducting the
auctions,” i.e., both underwriter and broker-dealer fees.
Accordingly, all of Reno’s claims arise, at least in part, out of
the 2005 and 2006 Broker-Dealer Agreements and are
therefore subject to the forum selection clauses that limit
jurisdiction to the District of Nevada.

IV. CONCLUSION

We conclude that we, rather than FINRA, must determine
the arbitrability of this dispute. Although we agree with the
district court that Reno qualifies as Goldman’s customer
under FINRA Rule 12200, we hold that Reno disclaimed its
right to FINRA arbitration by agreeing to the forum selection
28 GOLDMAN, SACHS & CO. V. CITY OF RENO

clauses in the 2005 and 2006 Broker-Dealer Agreements.
Consequently, we reverse the district court’s order and final
judgment. And despite Goldman’s “overwhelming likelihood
of success on the merits,” we remand this case to the district
court to consider the remaining Winter factors consistent with
this opinion. Evans v. Shoshone-Bannock Land Use Policy
Comm’n, 736 F.3d 1298, 1307 (9th Cir. 2013) (noting that “a
preliminary injunction is an extraordinary remedy never
awarded as of right” and that “the grant of a preliminary
injunction is a matter committed to the discretion of the trial
judge” (internal quotation marks, citations, and alterations
omitted)).

REVERSED and REMANDED.

BATTAGLIA, District Judge, concurring in part and
dissenting in part:

I concur with Parts III-A and III-B of the Majority’s
opinion.

I concur that the district court erroneously concluded that
Goldman, Sachs & Co. (“Goldman”), as a member of the
Financial Industry Regulatory Authority (“FINRA”), agreed
to FINRA arbitration on the issue of arbitrability itself.
Rather, courts should decide where an agreement does not
provide “clear and unmistakable” evidence that the parties
intended FINRA would determine the issue of arbitrability.
Thus, the district court erred in delegating this matter to
FINRA.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 29

I also concur with the Majority’s conclusion that a
“customer” is a non-broker and non-dealer who purchases
commodities or services from a FINRA member in the course
of the member’s FINRA-regulated business activities. The
City of Reno (“Reno”), therefore, falls within this definition
of “customer” under both the 2005 and 2006 Underwriter and
Broker-Dealer Agreements.

Finally, I concur with the Majority’s finding that parties
can supersede, displace, or waive FINRA’s arbitration
requirement through a subsequent agreement and that an
express waiver of arbitration is unnecessary. The Majority’s
adoption of the Fourth Circuit’s “sufficiently specific” test
was appropriate for determining if, in fact, the parties
superseded, displaced, or waived the arbitration obligation
created by FINRA Rule 12200 through the 2005 and 2006
Broker-Dealer Agreements. However, it is here that I diverge
from my colleagues and respectfully dissent from the finding
that the contracting parties’ forum selection clauses
superseded Goldman’s pre-existing obligation to arbitrate
under the FINRA Rules. For the following reasons, I would
affirm the district court’s finding that: “[t]he exclusive forum
selection clauses in the Broker-Dealer Agreements do not
touch upon arbitration or arbitrability directly, but rather only
control the forum of a court action apart from, or in review of,
arbitration.” Goldman, Sachs & Co. v. City of Reno, No. 3:12-
CV-00327, 2012 WL 5944966, at *4 (D. Nev. Nov. 26,
2012). As a result, I would affirm the district court’s denial of
Goldman’s motion to preliminarily enjoin the FINRA
arbitration.

In UBS Financial Services, Inc. v. Carilion Clinic, the
Fourth Circuit held that contracting parties may avoid FINRA
arbitration by executing a subsequent agreement that is
30 GOLDMAN, SACHS & CO. V. CITY OF RENO

“sufficiently specific to impute to the contracting parties the
reasonable expectation that they are superseding, displacing,
or waiving the arbitration obligation created by FINRA Rule
12200.” 706 F.3d 319, 328 (4th Cir. 2013) (emphasis added).
As an issue of first impression for the Ninth Circuit, I agree
that adoption of this approach is appropriate. This is
preferable to a narrower express waiver requirement.1
However, as stated above, under the facts of the instant case,
I do not find the forum selection clauses at issue to have
sufficiently demonstrated the parties’ intent to supersede,
displace, or waive arbitration.

I disagree with two aspects of the Majority’s analysis.
First, I disagree with the Majority’s heavy reliance on the
opinion of the Honorable Richard J. Sullivan in Goldman,
Sachs & Co. v. Golden Empire Schools Financial Authority,
922 F. Supp. 2d 435 (S.D.N.Y. 2013). Instead, the Fourth
Circuit’s Carilion Clinic is more persuasive. Second, I do
not agree with the Majority’s conclusion that the phrase
“all actions and proceedings,” in the forum selection clauses
of the 2005 and 2006 Broker-Dealer Agreements, is
“sufficiently specific” to impute to the contracting parties the
reasonable expectation that they are superseding, displacing,
or waiving the arbitration obligation under FINRA Rule
12200.

1
Similarly, the Second Circuit will find FINRA arbitration waived
where contracting parties execute a “subsequent agreement the terms of
which plainly preclude arbitration,” but will enforce arbitration if the
contractual provision can possibly be read as complementary to FINRA’s
arbitration requirement. Applied Energetics, Inc. v. NewOak Capital Mkts,
LLC, 645 F.3d 522, 525 (2d Cir. 2011) (citing Bank Julius Baer & Co. v.
Waxfield Ltd., 424 F.3d 278, 281 (2d Cir. 2005)).
 GOLDMAN, SACHS & CO. V. CITY OF RENO 31

Founded in 2007, FINRA is a self-regulatory organization
established under Section 15A of the Securities Exchange Act
of 19342 and has the authority to exercise comprehensive
oversight over “all securities firms that do business with the
public.” Sacks v. SEC, 648 F.3d 945, 948 (9th Cir. 2011)
(quoting 72 Fed. Reg. 42170 (Aug. 1, 2007)). FINRA
membership constitutes an agreement to “adhere to FINRA’s
rules and regulations, including its Code and relevant
arbitration provisions contained therein.” UBS Fin. Servs.,
Inc. v. W. Va. Univ. Hosps., Inc., 660 F.3d 643, 648–49 (2d
Cir. 2011). By becoming a member of FINRA, Goldman
agreed to submit to FINRA rules, including Rule 12200,
which requires members to arbitrate disputes in connection
with their business activities if and when arbitration is
requested by a customer or required by a written agreement.
See FINRA Rule 12200; Citigroup Global Mkts., Inc. v. VCG
Special Opportunities Master Fund Ltd., 598 F.3d 30, 32 n.1
(2d Cir. 2010).

Therefore, although a written arbitration agreement
between Goldman and Reno does not exist, “FINRA rules
may establish the requisite arbitration agreement.” See J.P
Morgan Sec. Inc. v. La. Citizens Prop. Ins. Corp., 712 F.
Supp. 2d 70, 76–77 (S.D.N.Y. 2010). Moreover, FINRA Rule
12200 constitutes an agreement in writing under the Federal
Arbitration Act (“FAA”) and Reno is entitled to invoke
FINRA Rule 12200 as an intended third-party beneficiary.

2
15 U.S.C. § 78o–3; Karsner v. Lothian, 532 F.3d 876, 879 n. 1 (D.C.
Cir. 2008); SEC Release No. 34–56145 (July 26, 2007).
32 GOLDMAN, SACHS & CO. V. CITY OF RENO

See Kidder, Peabody & Co. v. Zinsmeyer Trusts P’ship,
41 F.3d 861, 863–64 (2d Cir. 1994).3

While this existing obligation to arbitrate under FINRA
Rule 12200 exists, Goldman and Reno are nevertheless free
to supersede, displace, or waive arbitration with a subsequent
agreement that is “sufficiently specific.” However, even
without applying the presumption in favor of arbitration, and
instead using general state principles of contract
interpretation, the contract language in the forum selection
clauses is not “sufficiently specific” to impute to the
contracting parties the reasonable expectation they are
superseding, displacing, or waiving the arbitration obligation
created by FINRA Rule 12200. Carilion Clinic, 706 F.3d at
328.

In applying the standard set by Carilion Clinic, the
Majority relies heavily on an opinion from the Southern
District of New York, agreeing with the New York district
court that the phrase “all actions and proceedings”
encompasses arbitration. See Golden Empire, 922 F. Supp. 2d
at 443. In my view, this reliance is misplaced for two reasons.
First, Golden Empire failed to adhere to Second Circuit
precedent directing its courts to enforce an arbitration where
a forum selection clause and an agreement to arbitrate may be
read as complementary. See Bank Julius Baer & Co. v.
Waxfield Ltd., 424 F.3d 278, 284 (2d Cir. 2005) (“Under our
cases, if there is a reading of the various agreements that
permits the Arbitration Clause to remain in effect, we must
chose it . . . .”). Second, Golden Empire failed to

3
Though not addressing FINRA rules themselves, Kidder considered the
rules and regulations of the National Association of Securities Dealers,
Inc. (“NASD”), the predecessor of FINRA.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 33

acknowledge the distinction between the phrase “any dispute”
as featured in Applied Energetics and the phrase “all actions
and proceedings” in the agreements presented to the district
court. Golden Empire, 922 F. Supp. 2d at 443 (citing Applied
Energetics Inc. v. NewOak Capital Mkts., LLC, 645 F.3d 522,
525 (2011)). This led the New York district court to
mischaracterize the agreements as being “all-inclusive, . . .
mandatory, and neither admits the possibility of the other.”
Id.

In Bank Julius, the Second Circuit determined that the
existence of a broad arbitration agreement creates a
“presumption of arbitrability which is only overcome if it
may be said with positive assurance that the arbitration clause
is not susceptible of an interpretation that covers the asserted
dispute.” 424 F. 3d at 284. The parties in Bank Julius,
initially agreed to arbitrate “any . . . dispute” arising out of
their contractual relationship then subsequently entered into
an agreement omitting any mention of arbitration. Id. at 282.
The subsequent agreement, however, contained a forum
selection clause stating that “any Action” brought by the
defendant must be in any New York State or Federal Court
sitting in New York City. Id. Furthermore, the subsequent
agreement contained a merger clause providing that “[t]his
Agreement supersedes all prior agreements and understanding
between [the parties]” but also provided that “the rights and
remedies provided [herein] are cumulative and not exclusive
of any rights or remedies provided under any other agreement
or by law or in equity.” Id.

Under these circumstances, the Second Circuit concluded
that the forum selection clause in the subsequent agreement
could be read as complementary with an initial agreement to
arbitrate. Id. at 284. The court noted that a subsequent
34 GOLDMAN, SACHS & CO. V. CITY OF RENO

agreement, such as one containing a forum selection clause
and a merger clause, could not nullify an arbitration
agreement unless that subsequent contract “specifically
precludes arbitration.” Id. at 284 (citing Personal Sec. &
Safety Sys. v. Motorola, 297 F.3d 388, 396 n.11 (5th Cir.
2002)). In analyzing the forum selection clause, the Bank
Julius court concluded that “we cannot say that the Forum
Selection Clause, which does not even mention arbitration,
either ‘specifically precludes’ arbitration or contains a
‘positive assurance’ that this dispute is not governed by the
Arbitration Agreement.” Id. The court found that there is
“nothing inconsistent between the arbitration obligation and
the instant forum selection clause. Both can be given effect
. . . .” Id.

Thus, “where a Forum Selection Clause can be
understood . . . as complementary to an agreement to
arbitrate,” a court should enforce the arbitration agreement.
Id. Additionally, because the forum selection clause made no
reference to arbitration, the Second Circuit in Bank Julius
found it to be “at least ambiguous” which requires resolution
“in favor of coverage.” Id. at 285 (internal quotations
omitted) (citing WorldCrisa Corp. v. Armstrong, 129 F.3d 71,
74 (2d. Cir. 1997)). Golden Empire did not adhere to this
Second Circuit directive and ignored the natural integration
of the role and control of the forum court action, apart from,
or in review of, arbitration agreements. Under the facts of
Golden Empire, as well as in the instant case, the forum
selection clause requiring the parties to submit to the
jurisdiction of the district court for the District of Nevada “all
actions and proceedings” may be read as complementary to
FINRA Rule 12200 in that the parties may seek court
enforcement of arbitral awards or challenge the validity or
application of the arbitration agreement in court.
 GOLDMAN, SACHS & CO. V. CITY OF RENO 35

Of further concern is Golden Empire’s failure to
recognize the distinction between the phrases “all actions and
proceedings” and “any dispute.” In Bank Julius, the parties
first agreed to arbitrate “any . . . dispute” arising out of their
contractual relationship but subsequently executed an
agreement in which the defendant agreed to submit “any
Action” to a New York state or federal court, creating two
complementary and enforceable agreements.4 This subtle, but
significant, difference in language was recognized by the
Second Circuit in Applied Energetics, Inc. v. NewOak Capital
Markets, and was used to distinguish the two agreements
presented to the Applied court. 645 F.3d at 525–26.

In Applied Energetics, the parties entered into two
agreements during the course of their transaction. The first,
the Engagement Agreement, contained an arbitration clause
stating, “[e]ach of NewOak and Applied agrees that any
dispute arising out of or relating to this letter, the Indemnity
Agreement and/or the transactions contemplated hereby or
thereby . . . shall be resolved through binding arbitration
. . . .” Id. at 523 (emphasis added). The second, the Placement
Agreement, contained a clause providing that “[a]ny dispute
arising out of this Agreement shall be adjudicated in the
Supreme Court, New York County or in the federal district
court for the Southern District of New York.” Id. (emphasis
added). Because the two agreements used the same phrase
“any dispute,” with one requiring arbitration and the other
providing for adjudication in a judicial forum, the Applied
Court found the case fell within the scenario contemplated by
Bank Julius, “where contracting parties are free to revoke an

4
Similarly, the parties in Golden Empire were obligated to arbitrate “a
dispute” under FINRA Rule 12200 should Golden Empire, as a customer,
so request.
36 GOLDMAN, SACHS & CO. V. CITY OF RENO

earlier agreement to arbitrate by executing a subsequent
agreement the terms of which plainly preclude arbitration.”
Id. at 525. The two provisions at issue in Applied Energetics
used parallel language; as a result, the Second Circuit
concluded both provisions were “all-inclusive, both
mandatory, and neither admits the possibility of the other.”
Id.

Thus the Second Circuit in Applied Energetics found the
subsequent Placement Agreement specifically precluded
arbitration. Id. In arriving at this conclusion, the Second
Circuit considered two factors equally worthy of analysis
here. First, the Applied Court noted that the Engagement
Agreement and the Placement Agreement used “parallel
language” that stood in “direct conflict” with each other. Id.
As stated above, the two Agreements were all-inclusive,
mandatory, and neither admitted the possibility of the other,
thereby making it abundantly apparent that the subsequent
agreement completely displaced the first. Id. Second, the
Placement Agreement used the term “adjudicate” as a clear
and unmistakable reference to judicial action. Id.
Accordingly, the subsequent Placement Agreement, which
completely supplanted the Engagement Agreement,
exclusively contemplated judicial proceedings to resolve the
parties’ dispute. These two factors were a part of the basis for
the Second Circuit’s conclusion. However, these two factors
did not exist in Golden Empire, nor do they exist in the
instant matter, and the court in Golden Empire failed to
recognize these important distinctions.

Accordingly, I disagree with Golden Empire’s conclusion
that FINRA Rule 12200 and the Broker-Dealer Agreements’
forum selection clauses were “all inclusive, . . . mandatory,
and neither admits the possibility of the other.” Golden
 GOLDMAN, SACHS & CO. V. CITY OF RENO 37

Empire, 922 F. Supp. 2d at 443 (ellipsis in original). Indeed,
the contract language at issue in Golden Empire, and
substantially the same language at issue here, is more akin to
that found in Bank Julius. 424 F.3d at 282. FINRA Rule
12200 provides that a “dispute” must be arbitrated if the
customer so requests or is required by writing, whereas the
Broker-Dealer Agreements’ forum selection clauses provide
that “all actions and proceedings” must be brought in a
judicial forum. Enforcement of both is possible as the two
provisions may be read as complementary. Next, the Golden
Empire court, and the Majority here, concluded that FINRA
Rule 12200 and the forum selection clause are both
mandatory and neither admits the possibility of the other; I
respectfully disagree. Despite the use of the obligatory verb
“must” in FINRA Rule 12200, the duty to arbitrate is only
triggered when one of two conditions are met, if indeed they
are ever met. Yet the court in Golden Empire failed to
recognize that the duty to arbitrate may never be triggered if
a written agreement does not provide for it or if the customer
does not request it. If neither conditions occurs, the parties
may proceed in a judicial forum without any obligation to
arbitrate. Thus, Golden Empire’s characterization of FINRA
Rule 12200 and the forum selection clause as all-inclusive,
mandatory, and mutually exclusive was incorrect.

Moreover, the forum selection clauses contained within
the 2005 and 2006 Broker-Dealer Agreements are not
sufficiently specific to impute the reasonable expectation that
they were intended to supersede, displace, or waive the
arbitration obligation created by FINRA Rule 12200. The
Fourth Circuit reached the same conclusion in Carilion Clinic
when analyzing the language of a forum selection clause
nearly identical to the forum selection clauses at issue here.
706 F.3d at 329. The forum selection clause in Carilion
38 GOLDMAN, SACHS & CO. V. CITY OF RENO

Clinic provided that “all actions and proceedings shall be
brought in the United States District Court in the County of
New York,” then expressly waived the parties’ right to trial
by jury. Id. The Fourth Circuit provided a thorough and well-
reasoned analysis of the adequacy of the forum selection
clause and concluded the clause failed to meet the
“sufficiently specific” standard as it made no suggestion of
the parties’ intent to supersede, displace, or waive the right to
FINRA arbitration. Id. at 330. The Majority here dismisses
the Fourth Circuit’s reasoning and instead fully adopts the
analysis set forth in Golden Empire.

As a result, the Majority agrees with Golden Empire and
finds that there is no evidence the parties intended the phrase
“actions and proceedings” to have a technical meaning
limited to only those actions and proceedings that may be
brought in a judicial forum. It is unsurprising that many
courts and even FINRA have referred to arbitration as a
“proceeding.” It is undeniable that arbitration is referred to as
an “action” or a “proceeding” in common parlance. Indeed,
there are only so many ways we can refer to a course of
events or action. While the Majority references to a number
of sources that refer to arbitration as an “action” or a
“proceeding,” it is also possible to find sources limiting
“actions and proceedings” to those brought in a judicial
forum.

For instance, an “action” in the legal sense is defined as
“[a] civil or criminal judicial proceeding.”5 Black’s Law

5
This broad definition is supported by the following reason:

An action has been defined to be an ordinary
proceeding in a court of justice, by which one party
 GOLDMAN, SACHS & CO. V. CITY OF RENO 39

Dictionary 31 (8th ed. 2004); see also Black’s Law
Dictionary 28 (6th ed. 1990) (“A lawsuit brought in a court,
a formal complaint within the jurisdiction of a court of law
. . . that includes all the formal proceedings in a court of
justice . . . .”). The phrase “all actions and proceedings” also
appears in Rule 1 of the Federal Rules of Civil Procedure,
which governs civil actions and proceedings in the United
States district courts. Fed. R. Civ. P. 1. Rule 1 explicitly
refers to actions and proceedings as those brought in a
judicial forum, from which arbitrations are precluded. Section
3 of the Federal Arbitration Act (“FAA”) allows parties with
a valid arbitration agreement to apply for a stay in “any suit
or proceeding” that has been brought into any of the courts of
the United States. 9 U.S.C § 3 (emphasis added). Here, the
FAA undoubtedly refers to “proceedings” as meaning those
proceedings brought in a judicial forum; consequently,
“proceedings” under the language of the FAA does not
encompass arbitration.

In light of the above ambiguities, it is obvious why the
parties have sought judicial resolution on the issue of whether
the forum selection clause superseded, displaced, or waived
the arbitration requirement under FINRA. While not

prosecutes another party for the enforcement or
protection of a right, the redress or prevention of a
wrong, or the punishment of a public offense . . . . More
accurately, it is defined to be any judicial proceeding,
which, if conducted to a determination, will result in a
judgment or decree. The action is said to terminate at
judgment.

Black’s Law Dictionary 31 (8th ed. 2004) (quoting 1 Morris M. Estee,
Estee’s Pleadings, Practice, and Forms § 3, at 1 (Carter P. Pomeroy ed.,
3d ed. 1885)).
40 GOLDMAN, SACHS & CO. V. CITY OF RENO

dispositive, it is important to be mindful of the sophistication
of the parties involved, both undoubtedly represented by
skilled counsel in negotiating, forming, and executing the
Agreements at issue in an arm-length transaction. While it
may be that it is “common parlance” to refer to arbitrations as
an action or a proceeding, it is equally reasonable to conclude
that the parties intended the phrase to denote its technical and
legal meaning that excludes arbitration. With two reasonable
interpretations possible, we must look to the contract itself to
determine the parties’ intent.

“In interpreting a contract, ‘the document must be read as
a whole to determine the parties’ purpose and intent, giving
a practical interpretation to the language employed so that the
parties’ reasonable expectations are realized.’” Queens Best,
LLC v. Brazal S. Holdings, LLC, 35 A.D.3d 695, 696–97
(N.Y. App. Div. 2006) (quoting Snug Harbor Square Venture
v. Never Home Laundry, Inc., 252 A.D.2d 520, 521 (N.Y.
App. Div. 1998)); see also Beal Sav. Bank v. Sommer,
8 N.Y.3d 318, 324–25 (N.Y. 2007) (“Further, a contract
should be read as a whole and every part will be interpreted
with reference to the whole and if possible it will be so
interpreted as to give effect to its general purpose.” (internal
quotation marks and citation omitted)).6 After the initial
language regarding the District of Nevada as the forum for all
actions and proceedings, the forum selection clause goes on
to state “[e]ach of the parties hereto also irrevocably waives
all right to trial by jury in any action, proceeding or
counterclaim arising out of this Broker-Dealer Agreement or
the transactions contemplated hereby.” Therefore, simply

6
Section 5.09 of the 2005 and 2006 Broker-Dealer Agreements provides
that this “Agreement shall be governed by and construed in accordance
with the laws of the State of New York . . . .”
 GOLDMAN, SACHS & CO. V. CITY OF RENO 41

referencing this next sentence suggests that the phrase “all
actions and proceedings” refers to only those brought in a
judicial forum, the only forum in which a jury may sit. See
Carilion Clinic, 706 F.3d at 329–30 (“The more reasonable
construction would take the references to ‘court’ and ‘jury
trials’ as limiting what is meant by ‘actions and proceedings.’
Thus read in the context of courts and jury trials, the terms
‘actions and proceedings’ would be understood as a term of
art . . . .”).

Furthermore, if contract clauses appear to be repugnant to
each other, the court should interpret the contract “in a way
which reconciles all its provisions, if possible.” Green
Harbour Homeowners’ Assn., Inc. v. G.H. Dev. & Constr.,
Inc., 14 A.D.3d 963, 965 (N.Y. App. Div. 2005). Here,
although we are dealing with the specific phrase “actions and
proceedings” within a forum selection clause, the same
principles of contract interpretation are relevant. If “actions
and proceedings” includes arbitration, then the provision
suggests arbitration remains available but must be brought in
court. Such a reading renders the entire sentence
contradictory as arbitrations may not be pursued in courts as
a general rule. The Fourth Circuit arrived at this same
conclusion, noting the “problems inherent in this logical
construct.” Carilion Clinic, 706 F.3d at 329. To reconcile the
entire sentence, “all actions and proceedings” must be read to
mean only judicial actions and proceedings. Moreover, we
should not read a contract in a way that would render any
portion meaningless. CNR Healthcare Network, Inc. v. 86
Lefferts Corp., 59 A.D.3d 486, 489 (N.Y. App. Div. 2009).
Again, the suggestion that “actions and proceedings” includes
arbitration results in a nonsensical reading of the remaining
portion of the forum selection clause as the language suggests
arbitration should be brought in a judicial forum with the
42 GOLDMAN, SACHS & CO. V. CITY OF RENO

parties waiving all rights to a trial by jury in the “action” or
“proceeding.” See Carilion Clinic, 706 F.3d at 329. As an
arbitration may not be brought in a judicial forum and
arbitration does not include a right to a jury trial, an
interpretation of “actions and proceedings” as including
arbitration results in an illogical reading of the entire
provision.

With these considerations in mind, I would agree with the
Fourth Circuit in Carilion Clinic that “it would never cross a
reader’s mind that the [forum selection] clause provides that
the right to FINRA arbitration was being superseded or
waived.” Id. at 330. Given the broad right a customer has to
seek arbitration under FINRA Rule 12200, the forum
selection clauses in the Broker-Dealer Agreements falls far
short of providing “sufficiently specific” language to impute
to the contracting parties the reasonable expectation that
FINRA’s arbitration requirement has been superseded,
displaced, or waived. Accordingly, I would affirm the district
court’s denial of Goldman’s motion for preliminary
injunction.