FAILURE TO RESPOND TO REQUESTS FOR INFORMATION BY THE NASD UNDER NASD RULE 8210 AND TO TAKE CORRECTIVE ACTION WITHIN 20 DAYS AFTER SERVICE OF PRE-SUSPENSION NOTICE DATED DECEMBER 6, 2001.

BARRED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY EFFECTIVE JUNE 18, 2002 PURSUANT TO NASD RULE 9544 AND IN ACCORDANCE WITH THE NOTICE OF SUSPENSION FROM ASSOCIATION WITH ANY NASD MEMBER PURSUANT TO NASD RULE 9541(B).

SUSPENDED DECEMBER 28, 2001, IN ANY CAPACITY PURSUANT TO THE PROVISIONS OF NASD RULE 9541(B). IF RESPONDENT FAILS TO REQUEST A HEARING TO CHALLENGE THE SUSPENSION WITHIN SIX MONTHS OF RECEIPT OF THE PRE-SUSPENSION NOTICE (12/06/01), HE WILL AUTOMATICALLY BE BARRED FROM ASSOCIATION WITH ANY MEMBER IN ANY CAPACITY. APPEALED TO THE SEC ON NOVEMBER 26, 2003. DECEMBER 16, 203 - THE SEC DECLINED TO REVIEW FLOWERS'S APPLICATION BECAUSE IT WAS NOT FILED TIMELY.

[D]efendant acknowledged that two district courts in California have refused to find federal question jurisdiction in cases similar to this one, see In re Lickiss, No. C-11-1986 EMC, 2011 U.S. Dist. LEXIS 66437 (N.D. Cal. June 22, 2011); Doe v. Financial Industry Regulatory Authority, Inc., No. CV 13-06436 DDP (ASx), 2013 U.S. Dist. LEXIS 164671 (C.D. Cal. Nov. 19, 2013), but alleged this case is different because Plaintiff "seeks to remove regulatory information - not customer complaints." (Id. ¶ 5.) Plaintiff disagrees that his case is any different from Lickiss and Doe, and argues his case, like those, should be remanded to state court.

SIDE BAR: For more details about Lickiss, read "FINRA Rule 2080: Obtaining Customer Dispute Expungement / FINRA Rule 2081: Prohibited Conditions Relating to Expungement of Customer Dispute / FINRA Rules 12805 and 13805: Expunging Customer-Dispute Information Under Rule 2080"(Analysis by Bill Singer, Esq. BrokeAndBroker.com Blog)

Here, as mentioned above, FINRA asserts this case is distinguishable from Lickiss and Doe because Plaintiff "seeks to remove regulatory information - not customer complaints." (Notice of Removal ¶ 5.) However, neither Lickiss nor Doe relied on the type of information at issue in reaching the conclusion that federal question jurisdiction was lacking. Rather, those courts relied on the language of 15 U.S.C. § 78aa, which gives federal courts exclusive jurisdiction over only those claims involving a "liability or duty" created by the Exchange Act. Those courts found the claims at issue did not involve any such "liability or duty," and therefore federal question jurisdiction was lacking. That reasoning applies to this case, as well, even though the type of information sought to be expunged may be different.

Next, FINRA argues, as it did in Spalding and Doe, that this case raises substantial questions of federal law. This argument, however, was rejected in those cases, and the reasoning of those cases applies with equal force here.

In sum, Defendant has not shown why this case falls outside the holdings of Lickiss, Spalding and Doe. This Court finds the reasoning of those cases persuasive, and like those courts, finds there is no basis for this Court to exercise jurisdiction over this case.

In requiring that Flowers exhaust his federal administrative and judicial remedies, we fully recognize the trial court has equitable power to order expungement of public records in appropriate circumstances. (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1133-1134 (Lickiss).) The court in Lickiss expressly recognized that power. (Ibid.) "[I]n any given context in which the court is prevailed upon to exercise its equitable powers, it should weigh the competing equities bearing on the issue at hand and then grant or deny relief based on the overall balance of these equities . . . [thus,] expungement is proper where the benefits to the petitioner outweigh the disadvantages to the public and the burden on the court." (Ibid.; italics added.) However, because a trial court, in exercising its equitable power to order expungement, must weigh the benefits to an individual against the public's interest in full disclosure, disposition of Flowers's claims by the agencies tasked with protecting the public interest will not only avoid the need for the trial court's intervention but will plainly facilitate the " 'development of a complete record that draws on administrative expertise.' " (Yamaha Motor Corp. v. Super. Ct., supra, 185 Cal.App.3d at p. 1240.)

"Congress's intent to preempt state law is implied to the extent that federal law actually conflicts with any state law. [Citation.] Conflict preemption analysis examines the federal statute as a whole to determine whether a party's compliance with both federal and state requirements is impossible or whether, in light of the federal statute's purpose and intended effects, state law poses an obstacle to the accomplishment of Congress's objectives." (Whistler Invs. v. Depository Trust & Clearing Corp. (2008) 539 F.3d 1159, 1164.) Conflict preemption applies even where, as here, a case is heard in a state tribunal. (See, e.g., AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352, [preventing state court from applying rule which is obstacle to purposes and objectives of Federal Arbitration Act].) In light of the SEC's determination the public has an interest in having access to the disciplinary records of individuals providing financial and investment advice, there is an obvious risk of conflict between the SEC's conclusion a particular individual's records should remain public and a state court's decision that the individual's interests outweigh the public benefit of disclosure. Such a result would plainly put FINRA in a situation where it was subject to the conflicting duties and in turn require application of conflict preemption.

We note that in adopting the predecessor to rule 2080 discussed in Lickiss, the NASD was responding to concerns that members, by way of settlements with customers in third party litigation would be able to "buy clean records" by obtaining an expungement order from a court or arbitrator hearing a customer complaint. (68 Fed.Reg. 74667-01.) Rule 2080 and its predecessor sought to prevent such evasion of its recording keeping and publication responsibilities by requiring notice to the NASD and now FINRA and providing them an opportunity to object to any expungement sought in such third-party proceedings. In the context of third party customer disputes which are the subject of rule 2080, the SEC has expressly found state and federal courts are fully capable of determining whether expungement is appropriate. (68 Fed.Reg. 74667-01; Lickiss, supra, 208 Cal.App.4th at p. 1135.) As FINRA emphasizes, Flowers is seeking expungement of disciplinary actions FINRA itself has taken against him and quasi-disciplinary action taken by the State of Ohio; by its terms rule 2080 does not speak to expungement of such disciplinary actions. Thus, the SEC's expressed willingness to permit the state and federal courts where customer complaints are pending determine whether expungement is appropriate in those cases in no way suggests the SEC believes its own disciplinary actions should be treated similarly by courts or any other forum which did not impose the discipline in the first instance. . .