Hirsch v. Securities America, Inc., 2012 N.J. Super. Unpub. LEXIS 896 (2012)

Non-signatory third party to arbitration clause is compelled to arbitrate securities case.

The plaintiffs filed a FINRA arbitration against a broker dealer and its registered representative while filing a contemporaneous New Jersey state court action against an accounting firm. Both actions stemmed from the alleged recommendation to purchase certain non-publicly traded securities. The broker dealer was brought into the state court action as a third party defendant by the accounting firm. The broker dealer defendant successfully compelled the state court action to be consolidated with the existing arbitration, despite that the accounting firm was not a party to the subject arbitration clause. The court notes that the factual and legal issues concerning the plaintiffs' transactions were intertwined and should be resolved in one proceeding and that the plaintiffs were "attempting to circumvent the policy favoring arbitration."

Case Law Alert - 1st Quarter 2013