Winston Churchill sagely observed that the "problems of victory are more agreeable than those of defeat, but they are no less difficult." Speak to enough lawyers and their clients, and you will find many voices of concurrence with that observation. Sometimes that gold trophy turns out to be gold plated. Sometimes the million dollar lottery pays out a dollar a year for a million years. Sometimes you hit the jackpot and every relative and friend comes a running with hands out. And so it goes. In today's BrokeAndBroker.com Blog, we consider the problems of an apparent victory in which it looked like a registered representative had favorably settled her claims against Raymond James.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2012, registered representative Claimant Ylvisaker asserted wrongful termination breach of implied contract, defamation, violations of the Maine Human Rights Act: Gender Discrimination and Retaliation. Claimant sought unspecified compensatory and punitive damages, fees, and costs. In the Matter of the FINRA Arbitration Between April Elizabeth Ylvisaker, Claimant, vs. Raymond James & Associates, Inc., Respondent (FINRA Arbitration 12-01787, July 22, 2014).
Respondent Raymond James generally denied the allegations and asserted various affirmative defenses.
On April 28, 2014, Claimant Ylviskaer notified FINRA Dispute Resolution that this matter was settled and requested an expungement hearing, which was purportedly unopposed by Respondent, and the firm did not participate at the expungement hearing.
Claimant Proposes. The Panel Disposes
The FINRA Arbitration Panel denied the requested expungement. In explaining its rationale, the Panel submits to our consideration a nuanced and interesting deliberation [Ed: the misspelling "ABITRATORS'" is in the original Decision]:
The panel examined all of the pleadings in the original arbitration filed with FINRA, as well as the Motion for Expungement, the Settlement Agreement, Claimant's U5, a packet of materials submitted by Claimant on the day of the hearing, which was represented to the panel to be Claimant's human resources file with the Respondent, and Claimant April Elizabeth Ylvisaker's sworn testimony before the panel at its recorded telephonic hearing held on June 17, 2014.
The case in chief was settled before a hearing on the merits. Claimant settled her claims against Respondent Raymond James & Associates, Inc. by an agreement dated April 29, 2014, under the terms of which Respondent paid Claimant the sum of $75,000 in full settlement. Respondent did not oppose Claimant's Motion for Expungement and did not appear at the hearing thereon. The panel found no evidence that the settlement required Respondent not to oppose the expungement. The panel also did not infer from the amount of the settlement any admission of Respondent's liability.
The Claimant's sworn testimony at the telephonic hearing on the Motion for Expungement as to the reasons for her termination was directly opposed by a sworn affidavit from the Respondent's Branch Manager presented to the panel by the Claimant on the day of the hearing. Because the case was settled before a hearing on the merits, the panel has very limited information and was not able to question the witnesses nor to hear direct and cross-examination of the parties and witnesses.
The panel is aware that the burden of proof in an intra-industry case may be less than in a customer case. Claimant has requested that the "Reason for Termination" be changed from "Permitted to Resign" to "Voluntary." However, Claimant admitted at the expungement hearing that her termination was not voluntary. The panel concludes that "Permitted to Resign" should remain as the "Reason for Termination." In view of the fact that the panel finds that Claimant's termination was not voluntary, we also find that the reason therefore was conduct, and conclude that the "Termination Explanation" of "Conduct, not client related" should stand. This information will not be accessible to customers. Claimant is still gainfully employed in the industry, and the panel finds that she has not been harmed by this wording on her U5.
Bill Singer's Comment
Wow!!! Lemme tell ya . . . this one did not end anywhere near where I thought it would.
Whatever the underlying nature of the dispute, (the Decision did not provide any substantive details), Respondent Raymond James settled Claimant Ylvisaker's claims for $75,000. Notwithstanding the lack of a substantive statement of facts detailing the issues that prompted the lawsuit, $75,000 ain't chicken feed, particularly in terms of the traditional "wrongful termination" arbitrations that are reported by FINRA. Consequently, we need to acknowledge that Claimant got paid something more than mere "nuisance value."
All of which should have boded well for the recommendation of expungement -- or so I thought. Particularly since the guts of the requested expungement seems to have been Claimant's unhappiness with the disclosure on her Uniform Termination Notice for Securities Industry Registration ("Form U5") of a "Permitted to Resign" ("PTR") rather than a mere "Voluntary Resignation." True, that distinction is not without significance and the mere fact of the former employer having settled does not necessarily mean that the basis for the termination of Claimant's registration was not a PTR but, what can I say, you'd sort of expect that this last issue would have fallen by the wayside. Moreover, the Decision informs us that Respondent Raymond James did not appear at the expungement hearing, and we are led to believe that the expungement request was "unopposed."
All of which set us up for a bit of a shock when the Decision informed us that:
The Claimant's sworn testimony at the telephonic hearing on the Motion for Expungement as to the reasons for her termination was directly opposed by a sworn affidavit from the Respondent's Branch Manager presented to the panel by the Claimant on the day of the hearing.
Ummm . . . what???
Respondent Raymond James settled the case for $75,000.
Respondent did not oppose the requested expungement.
Respondent didn't even show up at the expungement hearing.
What the hell is this "sworn affidavit" in direct opposition to Claimant's request for an expungement recommendation?
According to the Decision, Claimant Ylvisaker presented to the arbitrators a sworn affidavit from her former Branch Manager that "directly opposed" her testimony; or, put another way, Claimant introduced what now appears to have been a crucial piece of evidence against her expungement request. Talk about putting a knife in your own back. Further, the Panel seems to have placed quite a bit of weight on this affidavit, particularly since the arbitrators made it a point to note that because the:
case was settled before a hearing on the merits, the panel has very limited information and was not able to question the witnesses nor to hear direct and cross-examination of the parties and witnesses.
I would have loved to know what the affidavit said and why Claimant -- of all people -- introduced it. There may very well be a sound and compelling reason for the introduction of this document. Unfortunately, we are not offered any explanation in the Decision.
Then there is the other puzzling aspect of the requested expungement, namely the arbitrators' determination that the matter had not and would not be disclosed on Claimant Ylvisaker's FINRA BrokerCheck report. I took a look at her online disclosure page and, sure enough, nary a word about this whole episode appears anywhere on BrokerCheck; in fact, since her 2004 entry into the industry, her record is clean as a whistle.
I suspect that Claimant and her counsel were arguing and, perhaps, the Panel may not have understood (or perhaps, in fairness, did not concur with) that the problem was NOT solely whether public customers saw the recitations of the dispute between Ylvisaker and Raymond James on BrokerCheck but whether potential employers would have access to the information via a review of her Central Registration Depository record ("CRD") of Form U5 -- and whether she would have to continue to explain during future job interviews that her separation from Raymond James was somewhat involuntary pursuant to a PTR rather than her choice of a voluntary resignation.
The arbitrators noted that Claimant was presently employed despite the legacy nature of the allegations on her CRD or Form U5. Such commentary seems to imply that Ylvisaker's concerns amounted to little more than speculation about a circumstance that the Panel viewed as a no-harm-no-foul situation. The inference from the Panel's comment is that despite whatever language Ylvisaker was unhappy with, she got hired after her departure from Raymond James and, as such, her conjecture just doesn't hold water.
If I have properly inferred the arbitrators' position, then I respectfully disagree. Notwithstanding that Ylivisaker was hired after her departure from Raymond James, in the future, another potential employer may read her CRD or Form U5 and negatively factor in her PTR, and, as a result, decide against hiring her. So the Panel's "no harm, no foul" conclusion may be more the result of a specific employer rather than a career-long prescription.