1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 LOUIS KLEIST, Case No. 25-cv-09793-AMO
8 Plaintiff, ORDER RE PLAINTIFF’S MOTION 9 v. FOR PRELIMINARY INJUNCTION AND DEFENDANTS’ MOTION TO 10 CREDIT SUISSE (USA) LLC, et al., COMPEL ARBITRATION 11 Defendants. Re: Dkt. Nos. 15, 23
12 13 Plaintiff Louis Kleist’s motion for preliminary injunction, Dkt. No. 23, and Defendants 14 Credit Suisse (USA) LLC’s and Credit Suisse Securities (USA) LLC’s (together, “Credit Suisse”) 15 motion to compel arbitration, Dkt. No. 15, were heard before this Court on May 28, 2026. Having 16 read the papers filed by the parties and carefully considered their arguments therein and those 17 made at the hearing, as well as the relevant legal authority, the Court DENIES the motion for 18 preliminary injunction and GRANTS the motion to compel arbitration for the following reasons. 19 I. BACKGROUND 20 A. Factual Background 21 Kleist began his employment with Credit Suisse as a Director of International Wealth 22 Management in January 2019, initially based out of the bank’s New York City office. Kleist Decl. 23 (Dkt. No. 20-1) ¶ 2. Credit Suisse required him to execute the Employment Dispute Resolution 24 Program (“EDRP”) agreement as a condition of his employment. See Kleist Decl. ¶ 6; id., Ex. 1. 25 On or about March 8, 2019, Kleist signed what is known in the securities industry as an 26 “Application for Securities Industry Registration or Transfer,” commonly known as a “Form U-4,” 27 an industry-standard registration document. Fox-Lupi Decl. (Dkt. No. 15-3) ¶ 5; id., Ex. A. 1 In June 2020, Kleist relocated to the West Coast, working remotely from Spokane, 2 Washington. Kleist Decl. ¶ 3. In 2021, Credit Suisse formally transferred Kleist’s employment to 3 its San Francisco office. Kleist Decl. ¶ 5. 4 In February 2022, Credit Suisse presented Kleist with an Upfront Cash Award certificate 5 (“UCA”) which set forth certain terms for him to receive a bonus, including a claw back provision. 6 Kleist Decl. ¶ 6; id., Ex. 2. In May 2022, Credit Suisse eliminated his San Francisco position and 7 issued an ultimatum: transfer back across the country to New York City or be terminated. Kleist 8 Decl. ¶¶ 15, 17. Kleist declined the transfer to New York. Kleist Decl. ¶ 18. Credit Suisse 9 characterized the separation as a voluntary resignation and demanded he repay part of his recent 10 cash bonus pursuant to the UCA’s claw back provision. Kleist Decl. ¶ 19. 11 B. Form U-4 12 The Financial Industry Regulatory Authority (“FINRA”) is a self-regulatory organization 13 (“SRO”) with supervisory jurisdiction over participants in the securities industry including 14 (1) “member firms” such as Credit Suisse, and (2) “associated persons” such as Kleist. FINRA’s 15 Rules require member firms and associated persons to resolve all industry-related disputes, subject 16 to exceptions not relevant here, through binding arbitration. Kleist was required by FINRA’s 17 licensing and registration rules to execute, and in fact did execute on March 8, 2019, his Form U-4 18 as part of his registration with FINRA. Fox-Lupi Decl. ¶ 5; id., Ex. A. 19 When Kleist became registered with and licensed by FINRA as an “associated person,” he 20 agreed to submit all claims and disputes against Credit Suisse, as his employer, to FINRA’s 21 exclusive arbitral jurisdiction. Section 15A, subpart 5, at page 12 of the Form U-4 he executed 22 contains an arbitration clause, which provides as follows:
23 I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm or a customer, or any other person, that is 24 required to be arbitrated under the rules, constitutions, or by-laws of the SROs indicated in Section 4 (SRO REGISTRATION) as may be 25 amended from time to time, and that any arbitration award rendered against me may be entered as a judgment in any court of competent 26 jurisdiction. 27 Dkt. No. 15-3 at 15 (emphasis in original). 1 C. Procedural Posture 2 Credit Suisse initiated a FINRA Arbitration action by filing a statement of claim on 3 September 9, 2025. See Berlajolli Decl. (Dkt. No. 15-4) ¶ 5; id., Ex. A. The FINRA Arbitration 4 arises out of Kleist’s refusal to repay Credit Suisse $238,858.57 after his separation from the bank. 5 That figure represents a pro rata amount of the $415,105.42 (less withheld taxes) bonus that was 6 accompanied by the UCA, which Credit Suisse paid Kleist on or about February 28, 2022. Id. 7 The $238,858.57 payback amount is calculated under the UCA’s claw back provision on the 8 disputed premise that Kleist voluntarily resigned from Credit Suisse fewer than three months after 9 he was paid the six-figure bonus – Kleist contends that he did not voluntarily resign because 10 Credit Suisse effectively terminated him when he refused to transfer back to New York. 11 On the same day that Kleist submitted an answer in the FINRA Arbitration, November 13, 12 2025, he filed his Complaint here. See Dkt. No. 1. The Complaint lists the following causes of 13 action: 14 • (1) breach of contract; 15 • (2) unlawful collection of wages; 16 • (3) waiting time penalties; 17 • (4) unfair competition; 18 • (5) declaratory judgment; and 19 • (6) “injunction.” 20 Id. 21 Credit Suisse filed the motion to compel this case to arbitration on February 3, 2026. Dkt. 22 No. 15. 23 Kleist filed a motion for preliminary injunction on April 23, 2026, more than seven months 24 after Defendants initiated the FINRA Arbitration, and five months before the first evidentiary 25 hearings in the Arbitration are scheduled to commence on October 20, 2026. See Dkt. No. 23. 26 Through the motion for preliminary injunction, Kleist seeks to halt the FINRA arbitration 27 proceedings. Dkt. No. 23 at 2. 1 II. DISCUSSION 2 Both the motion to compel arbitration and motion for preliminary injunction were heard 3 together on Thursday, May 28, 2026. At the hearing, the parties both acknowledged that the two 4 motions relate to the same issue – whether the case should proceed in the FINRA arbitration. The 5 Court discusses the motion to compel arbitration first because the legal issues are more squarely 6 addressed in that context. 7 A. Motion to Compel Arbitration 8 Credit Suisse moves to compel Kleist’s claims to arbitration and to stay the case. Dkt. No. 9 19. The Federal Arbitration Act (“FAA”) provides that written arbitration agreements in contracts 10 “evidencing a transaction involving commerce . . . shall be valid, irrevocable, and enforceable, 11 save upon such grounds as exist at law or in equity for the revocation of any contract.” AT&T 12 Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (quoting 9 U.S.C. § 2). The FAA reflects 13 a “liberal federal policy favoring arbitration agreements.” Gilmer v. Interstate/Johnson Lane 14 Corp., 500 U.S. 20, 25 (1991) (quoting Moses H. Cone Memorial Hospital v. Mercury 15 Construction Corp., 460 U.S. 1, 24 (1983)). The FAA “mandates that district courts shall direct 16 the parties to proceed to arbitration on issues as to which an arbitration agreement has been 17 signed.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985). However, “arbitration is a 18 matter of contract and a party cannot be required to submit to arbitration any dispute which he has 19 not agreed so to submit.” Howsam v. Dean Witter Reynolds, 537 U.S. 79, 83 (2002).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 LOUIS KLEIST, Case No. 25-cv-09793-AMO
8 Plaintiff, ORDER RE PLAINTIFF’S MOTION 9 v. FOR PRELIMINARY INJUNCTION AND DEFENDANTS’ MOTION TO 10 CREDIT SUISSE (USA) LLC, et al., COMPEL ARBITRATION 11 Defendants. Re: Dkt. Nos. 15, 23
12 13 Plaintiff Louis Kleist’s motion for preliminary injunction, Dkt. No. 23, and Defendants 14 Credit Suisse (USA) LLC’s and Credit Suisse Securities (USA) LLC’s (together, “Credit Suisse”) 15 motion to compel arbitration, Dkt. No. 15, were heard before this Court on May 28, 2026. Having 16 read the papers filed by the parties and carefully considered their arguments therein and those 17 made at the hearing, as well as the relevant legal authority, the Court DENIES the motion for 18 preliminary injunction and GRANTS the motion to compel arbitration for the following reasons. 19 I. BACKGROUND 20 A. Factual Background 21 Kleist began his employment with Credit Suisse as a Director of International Wealth 22 Management in January 2019, initially based out of the bank’s New York City office. Kleist Decl. 23 (Dkt. No. 20-1) ¶ 2. Credit Suisse required him to execute the Employment Dispute Resolution 24 Program (“EDRP”) agreement as a condition of his employment. See Kleist Decl. ¶ 6; id., Ex. 1. 25 On or about March 8, 2019, Kleist signed what is known in the securities industry as an 26 “Application for Securities Industry Registration or Transfer,” commonly known as a “Form U-4,” 27 an industry-standard registration document. Fox-Lupi Decl. (Dkt. No. 15-3) ¶ 5; id., Ex. A. 1 In June 2020, Kleist relocated to the West Coast, working remotely from Spokane, 2 Washington. Kleist Decl. ¶ 3. In 2021, Credit Suisse formally transferred Kleist’s employment to 3 its San Francisco office. Kleist Decl. ¶ 5. 4 In February 2022, Credit Suisse presented Kleist with an Upfront Cash Award certificate 5 (“UCA”) which set forth certain terms for him to receive a bonus, including a claw back provision. 6 Kleist Decl. ¶ 6; id., Ex. 2. In May 2022, Credit Suisse eliminated his San Francisco position and 7 issued an ultimatum: transfer back across the country to New York City or be terminated. Kleist 8 Decl. ¶¶ 15, 17. Kleist declined the transfer to New York. Kleist Decl. ¶ 18. Credit Suisse 9 characterized the separation as a voluntary resignation and demanded he repay part of his recent 10 cash bonus pursuant to the UCA’s claw back provision. Kleist Decl. ¶ 19. 11 B. Form U-4 12 The Financial Industry Regulatory Authority (“FINRA”) is a self-regulatory organization 13 (“SRO”) with supervisory jurisdiction over participants in the securities industry including 14 (1) “member firms” such as Credit Suisse, and (2) “associated persons” such as Kleist. FINRA’s 15 Rules require member firms and associated persons to resolve all industry-related disputes, subject 16 to exceptions not relevant here, through binding arbitration. Kleist was required by FINRA’s 17 licensing and registration rules to execute, and in fact did execute on March 8, 2019, his Form U-4 18 as part of his registration with FINRA. Fox-Lupi Decl. ¶ 5; id., Ex. A. 19 When Kleist became registered with and licensed by FINRA as an “associated person,” he 20 agreed to submit all claims and disputes against Credit Suisse, as his employer, to FINRA’s 21 exclusive arbitral jurisdiction. Section 15A, subpart 5, at page 12 of the Form U-4 he executed 22 contains an arbitration clause, which provides as follows:
23 I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm or a customer, or any other person, that is 24 required to be arbitrated under the rules, constitutions, or by-laws of the SROs indicated in Section 4 (SRO REGISTRATION) as may be 25 amended from time to time, and that any arbitration award rendered against me may be entered as a judgment in any court of competent 26 jurisdiction. 27 Dkt. No. 15-3 at 15 (emphasis in original). 1 C. Procedural Posture 2 Credit Suisse initiated a FINRA Arbitration action by filing a statement of claim on 3 September 9, 2025. See Berlajolli Decl. (Dkt. No. 15-4) ¶ 5; id., Ex. A. The FINRA Arbitration 4 arises out of Kleist’s refusal to repay Credit Suisse $238,858.57 after his separation from the bank. 5 That figure represents a pro rata amount of the $415,105.42 (less withheld taxes) bonus that was 6 accompanied by the UCA, which Credit Suisse paid Kleist on or about February 28, 2022. Id. 7 The $238,858.57 payback amount is calculated under the UCA’s claw back provision on the 8 disputed premise that Kleist voluntarily resigned from Credit Suisse fewer than three months after 9 he was paid the six-figure bonus – Kleist contends that he did not voluntarily resign because 10 Credit Suisse effectively terminated him when he refused to transfer back to New York. 11 On the same day that Kleist submitted an answer in the FINRA Arbitration, November 13, 12 2025, he filed his Complaint here. See Dkt. No. 1. The Complaint lists the following causes of 13 action: 14 • (1) breach of contract; 15 • (2) unlawful collection of wages; 16 • (3) waiting time penalties; 17 • (4) unfair competition; 18 • (5) declaratory judgment; and 19 • (6) “injunction.” 20 Id. 21 Credit Suisse filed the motion to compel this case to arbitration on February 3, 2026. Dkt. 22 No. 15. 23 Kleist filed a motion for preliminary injunction on April 23, 2026, more than seven months 24 after Defendants initiated the FINRA Arbitration, and five months before the first evidentiary 25 hearings in the Arbitration are scheduled to commence on October 20, 2026. See Dkt. No. 23. 26 Through the motion for preliminary injunction, Kleist seeks to halt the FINRA arbitration 27 proceedings. Dkt. No. 23 at 2. 1 II. DISCUSSION 2 Both the motion to compel arbitration and motion for preliminary injunction were heard 3 together on Thursday, May 28, 2026. At the hearing, the parties both acknowledged that the two 4 motions relate to the same issue – whether the case should proceed in the FINRA arbitration. The 5 Court discusses the motion to compel arbitration first because the legal issues are more squarely 6 addressed in that context. 7 A. Motion to Compel Arbitration 8 Credit Suisse moves to compel Kleist’s claims to arbitration and to stay the case. Dkt. No. 9 19. The Federal Arbitration Act (“FAA”) provides that written arbitration agreements in contracts 10 “evidencing a transaction involving commerce . . . shall be valid, irrevocable, and enforceable, 11 save upon such grounds as exist at law or in equity for the revocation of any contract.” AT&T 12 Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (quoting 9 U.S.C. § 2). The FAA reflects 13 a “liberal federal policy favoring arbitration agreements.” Gilmer v. Interstate/Johnson Lane 14 Corp., 500 U.S. 20, 25 (1991) (quoting Moses H. Cone Memorial Hospital v. Mercury 15 Construction Corp., 460 U.S. 1, 24 (1983)). The FAA “mandates that district courts shall direct 16 the parties to proceed to arbitration on issues as to which an arbitration agreement has been 17 signed.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985). However, “arbitration is a 18 matter of contract and a party cannot be required to submit to arbitration any dispute which he has 19 not agreed so to submit.” Howsam v. Dean Witter Reynolds, 537 U.S. 79, 83 (2002). Where a 20 valid agreement to arbitrate exists and encompasses the dispute at issue, “then the [FAA] requires 21 the court to enforce the arbitration agreement in accordance with its terms.” Chiron Corp. v. 22 Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (internal citations omitted). 23 When evaluating whether a party is bound by an arbitration agreement, federal courts 24 “ ‘apply ordinary state-law principles that govern the formation of contracts’ to decide whether an 25 agreement to arbitrate exists.” Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1283 26 (9th Cir. 2017) (quoting First Options of Chi. Inc. v. Kaplan, 514 U.S. 938, 944 (1995)); see also 27 Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 2002) (noting that although the 1 principles and defenses “grounded in state contract law, may operate to invalidate arbitration 2 agreements”) (citing Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). To form a 3 contract under California law, there must be “actual or constructive notice of the agreement” and a 4 “manifest[ation of] mutual assent.” Oberstein v. Live Nation Ent., Inc., 60 F.4th 505, 512-13 (9th 5 Cir. 2023). If these foundational elements are satisfied, the agreement shall be enforced so long as 6 it is fair and conscionable. The plaintiff bears the burden of showing that an arbitration agreement 7 is unconscionable. Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1260 (9th Cir. 2017); Engalla 8 v. Permanente Med. Grp., Inc., 15 Cal. 4th 951, 972 (1997) (“a party opposing the petition [to 9 compel arbitration] bears the burden of proving by a preponderance of the evidence any fact 10 necessary to its defense”). 11 1. Application of the FAA to the Form U-4 12 The FAA makes arbitration agreements “valid, irrevocable, and enforceable, save upon 13 such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Under 14 the FAA, a court must compel arbitration if: (1) a valid agreement to arbitrate exists, and (2) the 15 dispute falls within the scope of the agreement. Geier v. M-Qube Inc., 824 F.3d 797, 799 (9th Cir. 16 2016) (internal citation omitted). 17 Here, a valid agreement to arbitrate exists. Credit Suisse’s motion to compel Kleist’s 18 claims to arbitration rests solely upon the arbitration provision in Kleist’s Form U-4 and on 19 FINRA Rule 13200(a). The Form U-4 includes the following arbitration provision:
20 5. I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, 21 that is required to be arbitrated under the rules, constitutions, or by- laws of the SROs indicated in Section 4 (SRO REGISTRATION) as 22 may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of 23 competent jurisdiction. 24 Dkt. No. 15-3 at 15 (emphasis in original). Kleist does not argue that the arbitration provision 25 contained in the Form U-4 he signed as required by FINRA when his securities license transferred 26 to Credit Suisse, standing alone, is invalid or unenforceable. 27 Additionally, Kleist’s contract and employment claims fall within the scope of the 1 Code [of Arbitration Procedure] if the dispute arises out of the business activities of a member or 2 an associated person and is between or among: Members; Members and Associated Persons; or 3 Associated Persons.” Rule 13200(a).1 The phrase “business activities of a member or an 4 associated person” is broadly construed to include virtually any dispute arising from, for example, 5 an associated person’s current or former employment with a member firm. See, e.g., Monk v. 6 Goldman Sachs & Co. LLC, No. 22-CV-6056 (JMF), 2023 WL 22618, at *5 (S.D.N.Y. Jan. 3, 7 2023) (finding a former financial advisor’s contract and employment-based claims against FINRA 8 member institution fell within the bounds of a Form U-4 arbitration provision and Rule 13200(a)). 9 Kleist’s claims meet this description. Kleist was an associated person following his execution of 10 Form U-4, and the claims arise out of his business activities, which courts have construed to 11 include “employment-related disputes between a FINRA member and an associated person.” 12 Christensen v. Nauman, 73 F. Supp. 3d 405, 412 (S.D.N.Y. 2014) (collecting cases). Because the 13 claims arise between a FINRA member, Credit Suisse, and an associated person, Kleist, the claims 14 fall within the scope of FINRA Rule 13200. 15 Applying the governing arbitration provision pursuant to the FAA, the Court must compel 16 the dispute to FINRA arbitration. 17 2. Purported Unconscionability of UCA & EDRP 18 Kleist resists the conclusion reached above based on a conflation of (1) the EDRP and the 19 UCA, with (2) the arbitration agreement in the FINRA Form U-4. See Dkt. No. 20 at 4-5. Kleist 20 argues that the Form U-4 upon which Credit Suisse here relies to compel arbitration must be read 21 in conjunction with the UCA and EDRP because all three agreements fall within a suite of 22 documents governing his employment and accordingly trigger California Civil Code section 1642. 23 See Dkt. No. 20 at 4-5. He argues further that none of the dispute resolution provisions contained 24 in the three documents may be used to compel him to arbitration because both the UCA and 25 EDRP, invoked by Credit Suisse within the ongoing FINRA arbitration, fail as both substantively 26
27 1 At the hearing, the Court granted Credit Suisse’s unopposed request for judicial notice of FINRA 1 and procedurally unconscionable. Id. at 6-10. Kleist does not challenge the Form U-4 as 2 unconscionable. The analysis accordingly must first focus on whether, as Kleist insists, the Form 3 U-4 fails as unconscionable based on its relation to the UCA and EDRP. The Form U-4, however, 4 is not part of the same transaction, and the Court need not reach the arguments of the latter two 5 documents’ procedural and substantive unconscionability. 6 Under California law, when multiple contracts are executed as part of a single transaction, 7 they may be “construed together” to clarify the meaning of those contracts. Alberto v. Cambrian 8 Homecare, 91 Cal. App. 5th 482, 490 (2023) (internal quotation marks omitted) (“Under Civil 9 Code section 1642, it is the general rule that several papers relating to the same subject matter and 10 executed as parts of substantially one transaction, are to be construed together as one contract.”); 11 see also Cortes v. Univ. & State Emps. Credit Union, No. 22-cv-00444-LAB-DEB, 2023 WL 12 12009972, at *4-5 (S.D. Cal. Mar. 13, 2023) (interpreting two agreements entered as part of the 13 same transaction so as to make the terms consistent across the agreements). Contracts which are 14 jointly executed are generally construed in light of each other. Mountain Air Enters., LLC v. 15 Sundowner Towers, LLC, 3 Cal. 5th 744, 759 (2017) (citing Pankow Constr. Co. v. Advance 16 Mortg. Corp., 618 F.2d 611, 616 (9th Cir. 1980)). However, California courts have been careful 17 to note that construing contracts together does not render them a single contract for all purposes. 18 Id. at 759; see also Ahern v. Asset Mgmt. Consultants, Inc., 74 Cal. App. 5th 675, 693-94 (2022) 19 (explaining that the terms of one agreement are not necessarily incorporated into all other 20 agreements that form distinct parts of a single transaction). Rather, section 1642 is “a rule to aid 21 in the interpretation of contracts and to allow the construction of two contracts together in pursuit 22 of that purpose.” Hartford Accident & Indem. Co. v. Sequoia Ins. Co., 211 Cal. App. 3d 1285, 23 1300 (1989). 24 Here, the materials fail Civil Code section 1642’s test because they do not arise from or 25 relate to the same transaction. Contrary to Kleist’s bare averments, the Form U-4 was not 26 executed as part of the same transaction as either the UCA or the EDRP. Kleist agreed to the 27 EDRP as a condition of his employment at the time he joined Credit Suisse in January 2019. See 1 (Dkt. No. 20-1), Ex. 1. The Form U-4 was an application for regulatory registration with FINRA, 2 rather than an agreement with Credit Suisse. Fox-Lupi Decl. (Dkt. No. 15-3), Ex. A. Moreover, 3 the Form U-4 was executed some two months later in March 2019. Id. Kleist fails to identify any 4 factual connection between the Form U-4 and the EDRP beyond the fact that they were executed 5 during the early part of his Credit Suisse tenure. Because the Form U-4 was an agreement 6 regarding licensure between Kleist and FINRA unlike the employment-based EDRP agreement 7 between Kleist and Credit Suisse, and because the Form U-4 was executed months after Kleist’s 8 assent to the EDRP, the two agreements do not form part of a single transaction. 9 The UCA is even more attenuated from the Form U-4 than the EDRP. The UCA was 10 executed in February 2022, nearly three years after completion of the Form U-4. See Kleist Decl., 11 Ex. 2. Moreover, the compensation-focused UCA was executed between Kleist and Credit Suisse, 12 while the licensure-focused Form U-4 exists between Kleist and FINRA. As with the EDRP, 13 Kleist fails to identify any factual connection between the Form U-4 and the UCA that would 14 require the agreements to be construed together under California Civil Code section 1642. 15 Ultimately, the Form U-4 serves as the basis for the parties to participate in the FINRA 16 Arbitration because the employment-related claims arise between an associated person, Kleist, and 17 a member institution, Credit Suisse. Kleist fails to demonstrate that the UCA and EDRP should be 18 reviewed at all in assessing the unconscionability of the Form U-4, and his attacks on the 19 enforceability of those agreements fall within the scope of the arbitration. Because Credit Suisse 20 relies on the Form U-4 as the legal foundation to compel Kleist’s claims to FINRA arbitration and 21 Kleist fails to present any contractual defense to the arbitration provision contained in the Form U- 22 4, the Court must compel the case to arbitration. 23 B. Motion for Preliminary Injunction 24 As noted above, Kleist moves for a mandatory preliminary injunction halting the FINRA 25 arbitration during the pendency of this action. See Dkt. No. 23. A “preliminary injunction is an 26 extraordinary and drastic remedy” which should not be granted unless the movant shows 27 “substantial proof” and “by a clear showing, carries the burden of persuasion.” Mazurek v. 1 To obtain preliminary injunctive relief, the moving party must show: (1) a likelihood of success on 2 the merits, (2) a likelihood of irreparable harm to the moving party in the absence of preliminary 3 relief, (3) the balance of equities tips in the favor of the moving party, and (4) an injunction is in 4 the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The Winter 5 factors may be evaluated on a sliding scale such that preliminary relief may be issued when the 6 moving party demonstrates “that serious questions going to the merits were raised and the balance 7 of hardships tips sharply in the plaintiff’s favor.” All. for the Wild Rockies v. Cottrell, 632 F.3d 8 1127, 1134-35 (9th Cir. 2011) (citation omitted). To grant preliminary injunctive relief, a court 9 must find that “a certain threshold showing [has been] made on each factor.” Leiva-Perez v. 10 Holder, 640 F.3d 962, 966 (9th Cir. 2011) (per curiam). 11 Credit Suisse argues that Kleist fails to establish any of the four requirements for a 12 preliminary injunction. See Dkt. No. 26. Credit Suisse’s contention that Kleist fails to meet the 13 “irreparable harm” requirement is particularly persuasive and proves sufficient to defeat Kleist’s 14 bid for a preliminary injunction. 15 “Irreparable harm is traditionally defined as harm for which there is no adequate legal 16 remedy, such as an award of damages.” Arizona Dream Act Coal. v. Brewer, 757 F.3d 1053, 1068 17 (9th Cir. 2014) (citing Rent-A-Ctr., Inc. v. Canyon Television & Appliance Rental, Inc., 944 F.2d 18 597, 603 (9th Cir. 1991)). An unexplained delay in seeking “emergency” injunctive relief 19 undercuts a claim that an injunction is necessary to prevent immediate and irreparable injury. 20 Miller v. Cal. Pac. Med. Ctr., 991 F.2d 536, 544 (9th Cir. 1993) (“Plaintiff’s long delay before 21 seeking a preliminary injunction implies a lack of urgency and irreparable harm.”). 22 Courts consider the type of injunction sought, either mandatory or prohibitory, to be an 23 important factor in assessing the level of harm necessary to warrant a preliminary injunction. A 24 mandatory injunction is “one that goes beyond simply maintaining the status quo and orders the 25 responsible party to take action pending the determination of the case on its merits.” Doe v. 26 Snyder, 28 F.4th 103, 111 (9th Cir. 2022) (citing Marlyn Nutraceuticals, Inc. v. Mucos Pharma 27 GmbH & Co., 571 F.3d 873, 879 (9th Cir. 2009)). “The standard for issuing a mandatory 1 Here, Kleist plainly fails to establish the level of irreparable harm necessary to warrant the 2 injunction he seeks. Kleist advances that the injunction he seeks would merely preserve the status 3 quo. See, e.g., Dkt. No. 23-1 at 6. Not so. Kleist asks the Court to halt an ongoing FINRA 4 arbitration proceeding – the ongoing arbitration has been the status quo for over seven months, 5 and Kleist asks for relief that goes beyond the preservation of that status quo and thus reflects a 6 mandatory injunction. Cf. Snyder, 28 F.4th at 111. Accordingly, Kleist must evidence that 7 extreme or very serious damage will result cannot be compensated in damages. See Snyder, 28 8 F.4th at 111 (quoting Marlyn Nutraceuticals, 571 F.3d at 879). 9 Kleist fails to establish the irreparable harm necessary to support a mandatory injunction 10 through his moving papers. To the contrary, Kleist offers nothing more than speculation and 11 hyperbole. He argues that he will suffer irreparable harm because he will lose if the FINRA 12 arbitration panel continues its work – that the panel will apply the wrong body of law, an award 13 will be issued against him, and he will suffer professionally based on the publication of an adverse 14 award against him in FINRA’s Central Registration Depository. See Dkt. No. 23-1 at 17-19. 15 Kleist has not and cannot establish that he will lose the California-versus-New York choice of law 16 argument he advances; though he may certainly anticipate that he will lose at arbitration, he does 17 not establish that the arbitration panel will refuse to entertain his argument nor that his anticipated 18 loss is a foregone conclusion. Kleist’s unadorned speculation regarding his prospects at 19 arbitration do not reach the high level of irreparable harm necessary to support a negative 20 injunction, much less a mandatory one. 21 Further, Kleist’s failure to demonstrate irreparable harm is exacerbated by the timing of his 22 motion. Credit Suisse initiated the FINRA arbitration by filing their statement of claim on 23 September 9, 2025. See Berlajolli Decl. (Dkt. No. 15-4) ¶ 5; id., Ex. A. Kleist subsequently filed 24 the complaint in this lawsuit as well as his answer in the FINRA arbitration on November 13, 25 2025. Id.; Dkt. No. 1. Credit Suisse filed the motion to compel arbitration on February 3, 2026. 26 Dkt. No. 15. Yet Kleist did not file the instant motion for preliminary injunction until April 23, 27 2026, more than seven months after Credit Suisse initiated the FINRA arbitration, less than five 1 evidentiary hearings in the arbitration. Dkt. No. 26. Kleist offers no meaningful explanation for 2 the delay nor does he address why he needs emergency injunctive relief at this late stage. Indeed, 3 any emergency posed by potentially participating in the FINRA arbitration appears to be self- 4 manufactured. The Ninth Circuit’s guidance thus proves particularly relevant here – Kleist’s 5 “long delay before seeking a preliminary injunction implies a lack of urgency and irreparable 6 harm.” Miller, 991 F.2d at 544. 7 Based on Kleist’s failure to demonstrate irreparable harm, the Court must deny the motion 8 for preliminary injunction. 9 III. CONCLUSION 10 For the foregoing reasons, the Court finds that the FAA requires that this action be 11 compelled to arbitration before FINRA in accordance with the Form U-4. The Court therefore 12 DENIES Kleist’s motion for preliminary injunction to halt the arbitration, and the Court 13 GRANTS Credit Suisse’s motion to compel the action to arbitration. 14 The Supreme Court instructs, “[w]hen a district court finds that a lawsuit involves an 15 arbitrable dispute, and a party requests a stay pending arbitration, § 3 of the FAA compels the 16 court to stay the proceeding.” Smith v. Spizzirri, 601 U.S. 472, 478 (2024). The Court 17 accordingly GRANTS Credit Suisse’s motion to stay and STAYS the case. 18 Given the procedural posture, the Court ORDERS that the instant case is CLOSED for 19 statistical purposes only. Nothing contained in this Order shall be construed as a dismissal or 20 disposition of the action, and should further proceedings become necessary herein, any party may 21 initiate them in the same manner as if this Order had not been entered. 22 // 23 // 24 // 25 // 26 // 27 // 1 The parties shall file a joint status report on November 1, 2026, and every 90 days 2 || thereafter, to inform the Court of the status of the arbitration proceedings. Within 30 days of the 3 || resolution of the arbitration, the parties shall contact the Court and advise whether the case should 4 || be terminated and/or identify other actions to be taken. 5 6 IT IS SO ORDERED. 7 || Dated: May 29, 2026 8 =
ARACELI MARTINEZ-OLGUIN 10 United States District Judge 1] a 12
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