Roskind
Roskind v. Morgan Stanley Dean Witter & Co.
Opinion
Lead Opinion
Stevens, J.
Does federal law preempt a state law cause of action brought under California’s unfair competition law (UCL), Business and Professions Code section 17200 et seq., 1 where a brokerage firm is alleged to have violated its duty to its customers, by not executing their orders for stock sales in a fair and timely manner, and by instead “trading ahead” for its own benefit before processing those sales for its customers? We conclude there is no provision of federal law that preempts a state law cause of action under the UCL in these circumstances, and therefore we must reverse the judgment of the trial court.
*348 I. Facts and Procedural History
As this appeal proceeds from a judgment following a ruling sustaining a demurrer without leave to amend, we must accept the facts as properly pleaded by appellant James Roskind.
Appellant alleged that he owned a large block of stock in Netscape, which was listed on the NASDAQ (National Association of Securities Dealers Automated Quotation System) exchange. Appellant instructed his stockbroker, Morgan Stanley Dean Witter & Co. (Morgan), to sell 14,000 shares of Netscape stock on his behalf. Instead of selling appellant’s stock in a…