June 11, 2014
At first, this Wall Street intra-industry arbitration really looked interesting and exciting. There were allegations of wrongful termination and raiding allegations. With great eagerness I read the entire decision. Alas, it was more titillation than substance. Just another tease from another FINRA arbitration panel. It coulda been so much more.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 7, 2012, and thereafter amended in March 2012, Claimant Meckenstock asserted causes of action including breach of contract, defamation, libel, slander, and fraud. According to the FINRA Arbitration Decision:
The causes of action related to Claimant's allegation that he was wrongfully terminated from and his sales force raided by NPC.
Claimant sought in excess of $5,000,000 in compensatory damages, punitive damages, interest, costs, and attorneys' fees. In the Matter of the FINRA Arbitration Between Bobb Meckenstock, Claimant, vs. National Planning Corporation, James L. Livingston, Jr., and Scott E. Romine, Respondents (FINRA Arbitration 12-00492, May 29, 2014).
Respondents generally denied the allegations and asserted affirmative defenses. Respondents Livingston and Romine also sought an expungement of the matter from their Central Registration Depository records ("CRD").
After the conclusion of Claimant's case, Respondents moved for dismissal of all claims against Respondents Livingston and Romine, which the FINRA Arbitration Panel granted based upon a finding that Claimant Meckenstock had failed to state a case against the individuals.
Not Exactly $5 Million
The FINRA Arbitration Panel found Respondent National Planning Corporation ("NPC") liable and ordered it to pay to Claimant Meckenstock $324,000 in compensatory damages on Count 1 of the Amended Statement of Claim (not set forth in the Decision).
The FINRA Arbitration Panel denied and dismissed with prejudice Claimant's claims against Respondents Livingston and Romine; however, the Panel denied and dismissed with prejudice the expungement applications.
Bill Singer's Comment
We get an inkling that some of Claimant's case may not have been incredibly compelling because the FINRA Arbitration Panel found that he had failed to state a case against the two individuals he had named. On the other hand, the absence of even a motion to dismiss on behalf of Respondent NPC suggests that the case against that entity may not have been similarly lacking in merit.
SIDE BAR: All of which permits a lot of Monday morning quarterbacking in which we try to figure out whether it was a mistake to name the two individuals and that detracted from the overall strength of the case; or whether circumstances compelled the naming of all three respondents, including the two individuals. Regardless of the ultimate answer to that threshold question, litigants and their lawyers should always carefully consider whether less is more, or whether less may hamstring and hamper the successful prosecution/defense of a case.
By the time you learn that the Panel granted the motion to dismiss the two individual respondents, you sort of figure that the expungement recommendation for Livingston and Romine is a given. Also, you figure that NPC may well get slammed for something in the seven-figure range, given the demand for $5 million in damages.
So much for expectations.
Although the two individual Respondents were essentially exonerated by the Panel's dismissal with prejudice, inexplicably, the arbitrators refuse to recommend expungement. Given the virtual lack of background and facts in the Decision, it's anyone's guess as to whether there was anything involved in this case that actually required an expungement. As such, what the hell was the point of publishing this Decision? We truly can't make much rhyme or reason out of anything involved here.
As to the award against NPC, it's nice that the Decision explains how it only applies to Count 1. It might have been nicer if we were actually told what Count 1 was.
Worse, there's not even so much as an effort by the Panel to explain why they awarded $324,000 in compensatory damages -- and there isn't any explanation as to what was being compensated. Seems to me when a Claimant is seeking over $5 Million and the award is for less than a tenth of that sum, that the FINRA Arbitration Decision would at least take a few sentences to explain the chasm between what was sought and what was awarded. Keep in mind that this is a case in which two of the three Respondents were dismissed pursuant to a motion and the remaining entity Respondent was found liable.
Not exactly FINRA's finest moment if you ask me. Go ahead. Ask me.