Public Customer Sues Merrill Lynch for $7.3 Trillion

March 8, 2017

If you're gonna sue a big firm like Merrill Lynch, ya gotta think big. In a recent FINRA arbitration, an unhappy customer filed a claim against the brokerage firm and demanded a humongous amount of damages. Lots and lots of zeros. A breathtaking amount of zeros. Unfortunately, the customer sort of showed up to a gunfight with only a knife because he represented himself and his adversary was defended by lawyers from a prominent law firm. Take that as a spoiler alert.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in August 2016, and as amended thereafter, pro se public customer Claimant Aaron alleged breach of fiduciary duty and misrepresentations/non-disclosures by Respondent Merrill Lynch when that firm purportedly sent unauthorized and deceptive account information and had failed to provide account invoices. Ultimately, Claimant sought $7,300,000,000,000.00 in compensatory damages, $7,300,000,000,000.00 in punitive damages, and unspecified other monetary relief. In the Matter of the FINRA Arbitration Between David J. Aaron, Claimant, vs. Merrill Lynch Pierce Fenner & Smith Inc., Respondent (FINRA Arbitration 16-02379, February 3, 2017).

SIDE BAR: As set forth in the FINRA Arbitration Decision, the requested compensatory and punitive damages were each set at $7,300,000,000,000.00. So, okay, yeah, I first thought that Claimant Aaron was seeking $7.3 million. Then I noticed a lot more zeros than I usually see and, you know, I started counting them. Excluding the two zeros for cents, I tallied 11 zeros after the 7.3. For those of you who are math challenged, please consider this list:

1,000 = one thousand (3 zeros)
1,000,000 = one million (6 zeros)
1,000,000,000 = one billion (9 zeros)
1,000,000,000,000 = one trillion (12 zeros)
Quadrillion has 15 zeros
Quintillion has 18 zeros
Sextillion has 21 zeros
Septillion has 24 zeros
Octillion has 27 zeros
Nonillion has 30 zeros
Decillion has 33 zeros
Undecillion has 36 zeros
Duodecillion has 39 zeros
Tredecillion has 42 zeros
Quattuordecillion has 45 zeros
Quindecillion has 48 zeros
Sexdecillion has 51 zeros
Septendecillion has 54 zeros
Octodecillion has 57 zeros
Novemdecillion has 60 zeros
Vigintillion has 63 zeros
Googol has 100 zeros

As it turns out, Claimant was suing for two separate awards of $7.3 trillion. To put that in perspective, there is something like $2 trillion in client assets at Merrill Lynch Global Wealth Management. So, if Claimant wins only one of his $7.3 trillion awards, Respondent would need to fork over about 3.5 times the value of the client assets in the firm's global wealth management division.

Respondent Merrill Lynch generally denied the allegations and asserted various affirmative defenses.

Let's Get Going!

In August 2016, Claimant filed a Motion for Defendant's Attorney to Expedite Procedure Stipulation Appointment of Non-Ranked Arbitrators and Sanctions, which Respondent opposed and the FINRA Arbitration Panel denied in November 2016.

A Matter of Detail

On or about December 1, 2016, the Panel entered an Order directing Claimant to file an Amended Statement of Claim:

that would provide details regarding the factual and legal basis of this claim. This Amended Statement of Claim should also state specific detailed damages to the Claimant (including the dollar amount).

It's never a good sign when a FINRA Arbitration Panel is ordering a claimant to provide "details" as to the "factual and legal basis" of the claim.  As with many pro se parties, the pleadings don't always achieve the goal of explaining the case and providing the necessary background.

SIDE BAR: If you can't afford a lawyer -- and that is often the case -- the threshold challenge of presenting your claims in a compelling manner is where many pro se litigants founder. If you're going amateur-hour, make sure to first review copies of professionally drafted Statements of Claim and try to understand how claims are presented. If you can't afford the full range of a lawyer's services, you might want to see if you could pay to have someone review your draft Statement of Claim and give you some pointers.

Motion to Dismiss

As is often the case when a lawyer-represented party is dealing with a pro se adversary, on or about December 23, 2016, Respondent filed a Motion to Dismiss the Amended Statement of Claim ("Motion to Dismiss"). Prevailing on a Motion to Dismiss before the Claimant has concluded his Case In Chief is a daunting challenge and subject to these strict limits:

FINRA Code of Arbitration Procedure for Customer Disputes Rule 2504: Motions to Dismiss
(a) Motions to Dismiss Prior to Conclusion of Case in Chief
(1) Motions to dismiss a claim prior to the conclusion of a party's case in chief are discouraged in arbitration.
(2) Motions under this rule must be made in writing, and must be filed separately from the answer, and only after the answer is filed.
(3) Unless the parties agree or the panel determines otherwise, parties must serve motions under this rule at least 60 days before a scheduled hearing, and parties have 45 days to respond to the motion. Moving parties may reply to responses to motions. Any such reply must be made within 5 days of receipt of a response.
(4) Motions under this rule will be decided by the full panel.
(5) The panel may not grant a motion under this rule unless an in-person or telephonic prehearing conference on the motion is held or waived by the parties. Prehearing conferences to consider motions under this rule will be recorded as set forth in Rule 12606.
(6) The panel cannot act upon a motion to dismiss a party or claim under paragraph (a) of this rule, unless the panel determines that:
(A) the non-moving party previously released the claim(s) in dispute by a signed settlement agreement and/or written release;
(B) the moving party was not associated with the account(s), security(ies), or conduct at issue; or
(C) The non-moving party previously brought a claim regarding the same dispute against the same party that was fully and finally adjudicated on the merits and memorialized in an order, judgment, award, or decision.
(7) If the panel grants a motion under this rule (in whole or part), the decision must be unanimous, and must be accompanied by a written explanation.
(8) If the panel denies a motion under this rule, the moving party may not re-file the denied motion, unless specifically permitted by panel order.
(9) If the panel denies a motion under this rule, the panel must assess forum fees associated with hearings on the motion against the moving party.
(10) If the panel deems frivolous a motion filed under this rule, the panel must also award reasonable costs and attorneys' fees to any party that opposed the motion.
(11) The panel also may issue other sanctions under Rule 12212 if it determines that a party filed a motion under this rule in bad faith.
(b) Motions to Dismiss After Conclusion of Case in Chief
A motion to dismiss made after the conclusion of a party's case in chief is not subject to the procedures set forth in paragraph (a).
(c) Motions to Dismiss Based on Eligibility
A motion to dismiss based on eligibility filed under Rule 12206 will be governed by that rule.
(d) Motions to Dismiss Based on Failure to Comply with Code or Panel Order
A motion to dismiss based on failure to comply with any provision in the Code, or any order of the panel or single arbitrator filed under Rule 12212 will be governed by that rule.
(e) Motions to Dismiss Based on Discovery Abuse
A motion to dismiss based on discovery abuse filed under Rule 12511 will be governed by that rule.

Two Strikes And Yer Out

Claimant opposed the Motion to Dismiss but the FINRA Arbitration Panel granted the motion with prejudice. As more fully explained in the FINRA Arbitration Decision:

In the scheduling order for the December 1, 2016, pre-hearing conferenced call, the Panel ordered Claimant to submit an Amended Statement of Claim, which would include details regarding the factual and legal basis for his claim, and specific details of the damages he requested. The Amended Statement of Claim was submitted by Claimant on December 5, 2016. The Amended Statement of Claim did not provide any more clarity than he original Statement of Claim. It was still devoid of any factual or legal basis for a claim, and there were no specific details of the damages he requested.

Per Rule 12504(a)(6)(B), a Panel cannot act on a Motion to Dismiss under the Rule, unless the Panel determines that the moving party was not associated with the accounts, securities or conduct at issue. In this case, although the moving party was associated with the account at issue, Claimant failed to identify any specific conduct to be the basis of the claim. Therefore, the moving party is not associated with "a specific conduct" because Claimant did not provide "a specific conduct" in his original or Amended Statement of Claim.

Bill Singer's Comment

If nothing else, this FINRA Arbitration Panel (composed of an all-public panel) seems to have given Claimant Aaron an opportunity to go back to the drawing board and re-submit a Statement of Claim that would clarify what he was suing about in terms that the arbitrators and Respondent could comprehend. Comprehension in this sense means that you are notifying your adversary of the nature of your claims with sufficient detail so that your opponent can reasonably respond. As the arbitrators concluded, even after giving Claimant a second bite of the apple, his claims were "still devoid of any factual or legal basis." Similarly, if you're going to ask for trillions of dollars in damages, you really have to provide "specific details of the damages."

Finally, as only a lawyer would muse, I must wonder how things would have gone if I had taken a $7.3 trillion case on a contingency fee of one-third. Geez, if I had won, I would have earned about $2.4333 trillion. Let's say the local, state, and federal taxes on that amounts to 50%, so that leaves me with about $1.2166 trillion. And all these years I was wondering what I would do if I had a million dollars.