Time Barred Employee Claims Win In Odd Arbitration

September 4, 2013

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in September 2012 and amended thereafter, Claimant Lampert, representing himself in a pro se capacity, ultimately sought $86,752.66 in compensatory damages plus punitive damages, costs, and treble damages arising from a dispute over employment compensation. In the Matter of the FINRA Arbitration Between Stewart Randy Lampert, Claimant, vs. Morgan Joseph Triartisan LLC, Respondent (FINRA Arbitration 12-03252, August 27, 2013).

Respondent Morgan Joseph Triartisan ("MJT") generally denied the allegations, asserted various affirmative defenses, and filed a Counterclaim asserting unjust enrichment and seeking at least $7,183.25.  The Counterclaim was withdrawn at the conclusion of the hearings.

The Crossroads of Confusion

The FINRA Arbitration Panel held that Claimant Lampert's claims were precluded by the terms of some 2009 agreement and release; however, the Panel further found that Respondent MJT had an obligation to arbitrate the underlying dispute.  

FINRA Code of Arbitration for Industry Disputes 13200. Required Arbitration

(a) Generally

Except as otherwise provided in the Code, a dispute must be arbitrated under the Code if the dispute arises out of the business activities of a member or an associated person and is between or among:

 Members;

 Members and Associated Persons; or

 Associated Persons. . .

SIDE BAR: All of which leaves us at a puzzling crossroads.  

If we go down one path, we will apparently find that it's a dead end because Claimant Lampert's claims were purportedly filed too late to satisfy applicable statutes of limitation and/or eligibility rules.  

If we go down the other path, we seem to be confronted with a detour sign indicating that even though the claims were filed too late, Respondent MJT purportedly had an obligation to arbitrate those claims when they were still timely but apparently failed to honor that obligation.

I don't like guessing games when it comes to FINRA Arbitration Decisions.  Frankly,  I have no idea whatsoever as to the nature of the 2009 agreement and release.  Perhaps the parties had previously reached some settlement about the issues but a disagreement subsequently arose and instigated the FINRA arbitration? Your guess is as good as mine.

Award

The FINRA Arbitration Panel found Respondent MJT liable and ordered it to pay to Claimant Lampert $15,566.75 in exemplary damages because the former employer had "unilaterally withheld disputed money instead of turning to FINRA to make a determination regarding that issue."

Bill Singer's Comment

Among the most common question that I and other veteran industry lawyers are asked is "Can they do that?"  To which we often answer something along the lines of "Yes but . . ." The variations on that "Yes but" theme are

  • it's not legal;
  • they are not supposed to; or
  • they shouldn't have but they did.
Although FINRA's rules clearly set forth the terms for mandatory intra-industry arbitration, many employers circumvent the proscription. Sometimes, the creative juices lead to various courtrooms, where an arbitration hearing room was mandated; other times, employers engage in all sorts of asset freezes and seizures, and then, with the smug view that possession is 9/10ths of the law, the self-helpers dare their former employee to sue them. 

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