There is a famous New Yorker cartoon depicting a client and a lawyer sitting at the lawyer's desk in his office. The desk is strewn with what appears to be the client's file. The lawyer looks earnestly at his client and says, "You have a pretty good case, Mr. Pitkin. How much justice can you afford?" Perhaps more than anything, that cartoon captures the essence of lawsuits in America: cold, hard cash. Some say that casts lawyers in the unflattering role of whores. Others say that it's nothing more than the Old West tradition of a hired gun -- the faster the draw the higher the rate. I'm not going to weigh in on the debate because as one of those whores or hired guns, I've earned a wonderful living providing my services. In today's BrokeAndBroker.com Blog, we consider the plight of a former J.P. Morgan Securities employee who opted to represent himself in a wrongful-termination case. It may well be that this Claimant just couldn't afford a lawyer's price-tag. Sometimes, these pro se cases end well. By way of spoiler alert, this one doesn't.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in January 2017 by Claimant Smith, who represented himself pro se, alleged that Respondent J. P. Morgan Securities had terminated him "before he was allowed to take full paternity leave." In furtherance of those allegations, Claimant asserted wrongful termination and defamation, and sought $50,000 in compensatory damages and an expungement of his Central Registration and Depository records ("CRD"). In the Matter of the FINRA Arbitration Between William Kenneth Smith, Claimant, vs. J.P. Morgan Securities, LLC, Respondent (FINRA Arbitration 17-00067, October 6, 2017).
Respondent J.P. Morgan generally denies the allegations and asserted various affirmative defenses.
When Claimant did not appear at the October 2, 2017, evidentiary hearing, Respondent moved for dismissal, which the sole FINRA arbitrator granted with prejudice. As set forth in pertinent part in the FINRA Arbitration Decision, the Arbitrator offered this rationale for her dismissal with prejudice and the denial of the requested expungement:
Claimant has the burden of proof. Claimant did not appear either in person, by video conference, or by telephone for the hearing. No testimony or exhibits were introduced on behalf of Claimant at the hearing. Furthermore, Claimant has provided no reason for his absence, despite the numerous accommodations made for him.
Prior to the commencement of the hearing, Claimant failed to timely and properly answer discovery propounded by Respondent. Claimant failed to file a 20-day Witness List or Document Disclosure as required by FINRA Rules. Claimant also did not submit a pre-hearing brief.
The Initial Pre-Hearing Conference ("IPHC") Scheduling Order, agreed to by both parties, set an expedited calendar to get the case heard quickly. On August 25, 2017, the date all discovery responses were due, Claimant had provided nothing to Respondents, no information and no documents. On September 5, 2017, pursuant to FINRA Rules, Respondent attempted to meet and confer with Claimant about the outstanding discovery; but after no response, Respondent filed a Motion to Compel Production. On September 12, 2017, Claimant's Response indicated documents exist, they "[were] being compiled," but the "process [was] delayed due to theft of [his] previous computer upon moving from Colorado from Illinois in October 2016, so more time was needed. Respondent's Reply objected to any further extensions because there was such little time remaining before hearing. On September 26, 2017, the Arbitrator facilitated a telephonic discussion between the parties during a pre-hearing conference on discovery, which had been set during the IPHC. During this call, Claimant announced no one knew about the claim but himself, he was presenting no witnesses or documents, and the hearing would consist only of his testimony AND he was not appearing in person. By the call's end, Claimant agreed to deliver within three days previously requested redacted federal and state income tax returns and evidence of his efforts to get a job. The Arbitrator granted Claimant permission to file by Friday, September 29, 2017, any documents he intended to use during the hearing or be forever barred from presenting them. Claimant orally asked the Arbitrator to issue a subpoena from his former cellular phone carrier of his own phone records, texts and voice recordings between of himself with several named individuals. Another pre-hearing call with parties was scheduled the next day for Claimant to submit his written subpoena request and for FINRA to determine whether it could accommodate Claimant's surprise announcement to participate by phone. The next day, FINRA represented arrangements were in progress and details would be shared Friday, September 29, 2017, with the parties of how Claimant could participate, telephonically or by video conference. Although Claimant presented a letter (not motion) that day, asking for issuance of the subpoena, this request was denied for failure to attach the necessary order for signature as required by FINRA Rules.
Apart from the Statement of Claim and earlier e-mail (dated February 10, 2017), Claimant submitted that Friday only the "potential evidentiary exhibits" discussed during the discovery call. Claimant's exhibits included the following: a list of jobs applied for, his resume, unredacted 2015 and 2016 U.S. individual income tax returns and attachments, as well as unredacted Illinois Department of Revenue individual income tax returns for 2015 and 2016. Before call ended, Arbitrator directed parties to file with FINRA any proposed exhibits book or exhibit list the hour before commencement of the Monday hearing scheduled to start on October 2, 2017. Respondent timely filed their exhibit book. Claimant filed nothing.
Claimant failed to meet his burden of proof. While numerous accommodations were provided to the pro se Claimant, no reasonable explanation has been submitted (by phone or by email) for his absence at the arbitration hearing. On the hearing day, FINRA contacted Claimant by email and multiple telephone calls, but received no answer or response. At the hearing and on the record, the Arbitrator called Claimant in the presence of Respondent and FINRA staff, but there was no answer. Claimant was advised that the hearing would be commencing and he could call in at any time to participate. He chose not to.
Claimant first informed the Arbitrator, Respondent, and FINRA that he would not be appearing in person for the arbitration hearing during the pre-hearing conference on discovery, less than one week before the hearing. FINRA made special accommodations in this unusual instance and notified Claimant of his options to appear either by video conference or telephonic conference on this short notice.
Bill Singer's Comment
Compliments to the sole FINRA Arbitrator for providing us with a succinct and thoughtful rationale for her findings.
According to online FINRA BrokerCheck records as of October 12, 2017, Smith was registered with J.P. Morgan Securities only from February 2015 to August 2016 and is not currently registered.
In addition to having his case tossed, Smith must also contend with the loss of his $600 Initial Claim Filing Fee and the Arbitrator's award against him for $1,350 in hearing session fees. Separately, the Arbitrator assessed against J.P. Morgan $2,500 in member surcharge/processing fees and $450 in hearing session fees.
As the FINRA Arbitrator so pointedly admonished: "Claimant has the burden of proof." No issue should warrant more consideration from potential industry pro se claimants than this. You can allege whatever you like. You may ruminate as to why something did or didn't happen and then fulminate about the inequities of working on Wall Street. That's not a lawsuit; that's rage. Carrying your burden of proof as a non-lawyer may prove insurmountable, but if you go it on your own, you will still incur financial costs and the investment of your time. Similarly, walking away from or losing a FINRA Arbitration is not without consequence. You may be liable for your adversary's Counterclaims, which may not have come into play but for your lawsuit. You may be liable for costs, fees, and expenses. Keep in mind that once you start a lawsuit, it may not be solely in your control to end it.
Before you file a pro se lawsuit, ask yourself a number of questions:
If you can locate a lawyer to take your case on a contingency basis, that may be your only viable option to obtain legal representation from beginning to end. If you retain counsel on a contingency, however, there may be very little tolerance for your non-cooperation with requests to provide information or documents. If you are beset by personal problems that inhibit your ability to work with contingency counsel on what they view as a "timely and cooperative" basis, that lawyer may withdraw from your case.
If you can't afford the soup-to-nuts legal representation, then you may want to consider hiring a lawyer to review your case and offer you some guidance as to how to best prepare and what you will need to do. Beyond such preliminary counsel, you may also wish to seek a quote for the legal fees involved in reviewing your proposed Statement of Claim or various production demands and your responses. Such task-based legal counsel may be quoted to you pursuant to a flat or project fee. One advantage of such a limited relationship is that a lawyer may gain familiarity with your case and subsequently propose to handle the balance of your case on a contingency basis if you appear to have a winning claim.
Also, you may wish to retain a lawyer for the limited purpose of representing you at evidentiary hearings, and you may be able to negotiate a per-hearing-session fee; however, many lawyers may decline such a role for ethical and liability reasons. Your best (and possibly only) option may be to hire what for you is an affordable but also a relatively inexperienced lawyer who may be eager to take on his or her first FINRA employment arbitration. Such a lawyer may feel it worthwhile to gain experience albeit on the basis of a "bargain" legal retainer. You would have to weigh the lack of industry inexperience against the benefit of having a lawyer handling the procedural issues and questioning the witnesses. You may want a Porsche 911 Turbo but since you only need a car to drive about 30 miles each way to work, that used PT Cruiser your neighbor is selling may still get it done. Then again, you may be broke and the only way for you to get to work is by bicycle or on foot.