Claimant's Attorney In ER, Claimant's Wife Gives Birth, but FINRA Arbitrators Won't Postpone Hearing

October 29, 2019

In 2015, a former J.P. Morgan Securities associated person sought over $800,000 in damages arising from alleged harm to his book of business by his former employer. It all set up as a fascinating dispute. Unfortunately, it ended in what seems a 2017 fizzle of a FINRA Arbitration Decision in favor of JP Morgan. Julius Caesar famously said "I came, I saw, I conquered." In the FINRA arbitration, the Claimant and his counsel essentially said "I came, I couldn't come back, but I tried, but I couldn't make it, and asked for an adjournment, and, I lost." It just doesn't have the poetry of the older pronouncement. On the other hand, the case may well last two more millennia as it makes its way through the federal District and Circuit courts -- perhaps all the way to the Supreme Court.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Amended Arbitration Statement of Claim filed in April 2015, former associated person Claimant Sayre asserted breaches of contract and the covenant of good faith and fair dealing; negligence; intentional misrepresentation; negligence per se; defamation; and negligent misrepresentation. The allegations arose from circumstances attendant to Claimant's employment with Respondent J.P. Morgan Securities LLC. As explained in the FINRA Arbitration Decision, Claimant sought at least $830,000 in damages from "the loss of Claimant's book of business and two months of revenue he would have otherwise received." Additionally, Claimant sought future damages to compensate for ongoing losses, punitive damages, interest, costs, and fees. In the Matter of the FINRA Arbitration Between Bradley Aaron Sayre, Claimant, vs. J.P. Morgan Securities LLC, Respondent (FINRA Arbitration 15-00524, August 4, 2017).  
https://www.finra.org/sites/default/files/aao_documents/15-00524.pdf

(Amended) Statement of Claim

As stated in the FINRA Arbitration Decision:  

Claimant amended the Statement of Claim prior to service of the claim. Although the claim is entitled Amended Statement of Claim, it is deemed the only Statement of Claim filed in this case. 

I'm not sure I understand that. Let me set out the pertinent facts:
  1. A claim was drafted but never served. 
  2. What got served was an amended version of the previously drafted but unserved claim. 
  3. The arbitrators and parties apparently concurred on calling the only served claim the "Amended Statement of Claim." 
If a tree falls in the woods but nobody hears it, is there sound? If a Statement of Claim is drafted but never served, is that actually a Statement of Claim? Frankly, I don't think that we're dealing with an "Amended" Statement of Claim but a plain-old "Statement of Claim." If I draft ten versions of a Statement of Claim on my computer but only serve the last (so-called "FINAL") draft, isn't that served version the Statement of Claim? According to this FINRA Arbitration Decision, my first of the ten drafts would be deemed the "Statement of Claim" and each of the subsequent nine would be deemed "Amended Statements of Claim." Frankly, it would seem to be a sensible policy to only label the first served version of an Statement of Claim as that, and any future submissions as "Amended." 

Answer

Respondent J.P. Morgan Securities LLC generally denied the allegations and asserted various affirmative defenses.  

For the Parties

The FINRA Arbitration Decision asserts the following legal representation:  

For Claimant Bradley Aaron Sayre ("Claimant): Kevin J. Mirch, Esq., Mirch Law Firm LLP, San Diego, California  

For Respondent J.P. Morgan Securities LLC ("Respondent): Jeffrey S. Dunlap, Esq., Ulmer & Berne LLP, Cleveland, Ohio  

The Opening Session

At the first evidentiary hearing, which began at 10 a.m. on July 18, 2017, all the parties showed up and the lawyers made their opening statements. So far, so good. Next, Claimant's case-in-chief kicks off with the presentation to the FINRA Arbitration Panel of a three-ring binder containing Exhibits 1 through 42. which were admitted into evidence and used to examine Claimant's first witness. The first session ended about noon and everyone was supposed to reconvene at 1:30 p.m. 

Reconvening

Alas, that word "supposed" always causes problems. The reconvening time of 1:30 p.m. comes and goes and although the arbitrators and Respondent J.P. Morgan's counsel made it back to the hearing room, neither Claimant Sayre nor his lawyer Kevin J. Mirch, Esq. were anywhere to be seen.  

Now, let me permit the FINRA Arbitration Decision to pick it up from there -- what follows is a lengthy extract because I don't want to be accused of spinning the facts or slanting the conduct:

[M]s. Marie Mirch, an attorney and wife of Mr. Mirch, Claimant's counsel, then informed all the parties that she had to take Mr. Mirch to see a doctor and that Claimant himself had left to be with his wife who was giving birth. Ms. Mirch made an oral motion for an indefinite postponement of the hearing. Respondents counsel objected to the postponement request. The Panel recessed the hearing to deliberate its ruling on the motion. The Panel reconvened the hearing and requested Ms. Mirch return the following day at 9:00 a.m. with information on Mr. Mirch's medical condition and when Mr. Mirch would be available to continue the hearing. Ms. Mirch stated that she did not believe she could represent the Claimant, although she had acted on the case previously. At this time, the Panel did not take any action on Ms. Mirch's oral motion for an indefinite postponement of the hearing. The session concluded at approximately 2:00 p.m. 

Following the closing of the session, in an executive session, the Panel discussed the possible actions available, including: 
 
1. Granting the motion and any parameters to be set to assure the integrity of the process;  
2. Denying the motion and any parameters to be set to assure the integrity of the process;   
3. Dismissing the case without prejudice;  
4. Dismissing the case with prejudice; and  
5. Any other possible action.  

The Panel wanted to confirm that all parties received proper consideration, the integrity of the hearing process would be assured, and that the final action of the Panel would stand up to scrutiny.  

On July 19, 2017 at 9:00 a.m., the Panel, Respondent's counsel, and Ms. Mirch were available to convene the session. Ms. Mirch was asked for the information previously requested, the medical condition of Mr. Mirch and his availability for resuming the hearing. The Panel also requested information on Claimant's failure to appear and the Claimants future availability as a participant in the hearing. Ms. Mirch responded that she had not brought her husband to the doctor as yet. The Panel informed Ms. Mirch that the information was still required, and that the Panel would conclude this session. Ms. Mirch was instructed to provide the requested information for the afternoon session which would convene at 3:00 p.m. The session was concluded at approximately 9:30 a.m.  

The Panel retired to executive session spending time individually and as a Panel, examining Claimants exhibits, Claimant's Statement of Claim, FINRA Rules, and other appropriate documents in the case file. The Panel continued in this activity with a break only for lunch.  

That same day at 3:00 p.m., the Panel and Respondents counsel were available to convene the session. Ms. Mirch arrived at approximately 3:10 p.m. and the session was convened. Ms. Mirch brought two memos, marked M-1 and M-2. The memo from the Claimant indicated that he was attending to his wife and new child, and would not be available for 12 weeks. The memo regarding Mr. Mirch's health gave no date of actual availability to return, but indicated that he could not return for the remainder of this week, i.e. through July 21, 2017. Ms. Mirch again made an oral motion for an indefinite postponement of the hearing and reiterated that she could not represent the Claimant. Respondent's counsel again objected to Ms. Mirch's motion. The Panel recessed the session to go into executive session to rule on the oral motion.  

During the executive session, the Panel discussed if there was sufficient evidence presented by Claimant's counsel, both witness testimony and the written exhibits, to assure that the Panel could make an honest, impartial, and comprehensive evaluation of Claimant's case. The Panel also considered Claimant's memo concerning his voluntary absence from the hearing. By unanimous vote, the Panel affirmed that the Panel could and would make an honest, impartial, and comprehensive evaluation of Claimant's case. The unanimous vote was to deny the request for an indefinite postponement.  

That same day at approximately 3:25 p.m., the session was reconvened and the Panel announced the decision to deny the oral motion. Ms. Mirch stated her objection to the denial and left the hearing. Respondent's counsel requested a directed verdict, which the Panel denied. Respondent's counsel was offered the same option as Claimant's counsel had -- to submit his exhibit books to the Panel to be accepted as evidence. Respondent did not have a witness testify, and did not cross-examine Claimants witness. Respondent's counsel then submitted exhibit books and the Panel accepted the exhibit books into evidence. Respondent's counsel made his closing statement and the session was adjourned at approximately 3:35 p.m.  

Executive Session

Thereafter, the arbitrators went into executive session, reviewed the parties' exhibit books and apparently took a shot at . . . at what, you might ask. I would likely raise that same question. Armed with whatever they had from whatever the hell had gone on in the form of an evidentiary hearing on July 18 and July 19, 2017, the FINRA Arbitration Panel apparently believed that it could deliberate and render a decision. And render they did!

Award

The FINRA Arbitration Panel denied Claimant Ayre's claims because he had "failed to prove that there were grounds for an award that was substantiated by any credible evidence." 


Superior Court of California

On September 6, 2017, Claimant Sayre filed a Petition to Vacate or Modify Arbitration Award in the Superior Court of California, in which he argued that the FINRA arbitrators' refusal to postpone the arbitration hearing substantially prejudiced his rights and provides sufficient basis to vacate the Award. Bradley Sayre, Petitioner, v. J.P. Morgan Securities LLC, Respondent (Petition to Vacate or Modify Arbitration Award; California Superior Court; 37-2017-00033086 / September 6, 2017)
https://www.finra.org/sites/default/files/aao_documents/15-00524%281%29.pdf 
In part, Claimant's Petition offers some additional context to the underlying medical issues that prompted the requests for postponement:

[T]he reason for the request was Mr. Mirch's poor health, and the need to get him to a doctor. Id. Mrs. Mirch explained that there was no another attorney that could try the case. Id. . Erin Hanson, who had worked on the case, was no longer with the Mirch Law Firm. Mrs. Mirch had not worked on the case and was not familiar with it to be able to competently represent Mr. Sayre. She explained that it would violate her ethical duties to undertake his representation for the hearing. Id. Mr. Mirch was the attorney who had worked on the case for over two years and was trial counsel. The Panel granted the motion. 
. . .

Mrs. Mirch took Mr. Mirch to the doctor again on July 19, 2017. He was seen at a Kaiser urgent care facility. Dr. Alison Cybele-Harden sent Mr. Mirch to the ER department at Kaiser hospital. She wrote a note for Mr. Mirch not to work from July 19-21, 2017. The ER department would follow up with determine the amount of additional time Mr. Mirch would need. Dr. Cybele Harden told Mr. Mirch he had to get to the ER right away. She wanted Mr. Mirch to be transported in an ambulance, but Mrs. Mirch agreed to transport him directly to the ER. Mrs. Mirch dropped Mr. Mirch off at the Kaiser ER, and then went to the hearing that was reconvening at 3:00
p.m. . . .

at Page 4 of the Claimant's Petition

In addition to the above narrative, the Petition further asserted that:

Mrs. Mirch presented the documents that the arbitrators asked for, a note from the Kaiser Doctor, which said that Mr. Mirch could not work and required further evaluation in the emergency room of the hospital that could not be provided in the Urgent Care. Exhibit 2, Emergency Motion at Ex 1. 

Mrs. Mirch also submitted a statement from Brad Sayre, explaining that he was not available to appear at the remainder of the hearing because his wife was going to have a baby and he was to be home to care for her and his new baby for 12 weeks as he is allowed under the California Family and Medical Leave Act. (FMLA). Exhibit 2, Emergency Motion at Exhibit 2. 

Mrs. Mirch told the panel that she had just dropped her husband off at the ER and needed to get back to the hospital as soon as possible. . . .

at Page 4 of the Claimant's Petition


Southern District of California 2017

On April 3, 2017, Sayre filed a First Amended Complaint in the United States District Court for the Southern District of California ("SDCA"). Bradley Sayre, Plaintiff, v. JP Morgan Chase & Co, JP Morgan Chase Securities, LLC, and DOES 1-10, Defendants (First Amended Complaint, SDCA, 17-CV-0449 / April 3, 2017)
http://brokeandbroker.com/PDF/SayreSDCACompAmd170403.pdf 

What happened to the earlier State Court Petition? Great question. I have my theories but since it's not explained in any of the following court documents, let's just agree that it was a lovely side-trip, a charming diversion, and just walk up the steps of the federal courthouse and accept that we're all here.

As it turns out we're standing before SDCA with Sayre's Amended Complaint and JP Morgan's motion to Dismiss/Modify;  and also Sayre's Petition to Vacate and JP Morgan's Petition to Modify the FINRA Award. Bradley Sayre, Plaintiff/Petitioner, v. JP Morgan Chase & Co, JP Morgan Chase Securities, LLC, and DOES 1-10, Defendants/Respondents (Order Denying Petition to Vacate Arbitration Award and Granting Motion to Dismiss, SDCA, consolidating 17-CV-449 and 17-CV-2285 / February 26, 2018) (the "SDCA Order)
https://www.leagle.com/decision/infdco20180227845, which are consolidated:

[P]etitioner Bradley Sayre's ("Mr. Sayre") Petition to Vacate or Modify Arbitration Award in Sayre v. J.P. Morgan Securities LLC, 17-CV-2285, ("Petition," ECF No. 1). Respondent J.P. Morgan Securities LLC ("JMPS") filed a Response to the Petition, ("Petition Opp'n," ECF No. 7), and Mr. Sayre filed a Reply in Support of the Petition, ("Petition Reply," ECF No. 10).

Pending in Sayre v. JP Morgan Chase & Co., 17-CV-449 is Defendants JPMorgan Chase & Co. and J.P. Morgan Securities LLC's ("Defendants") Motion to Dismiss or to Stay Plaintiff's First Amended Complaint, or, in the Alternative, Motion for Summary Judgment, ("MTN," ECF No. 8-1). Mr. Sayre filed an Opposition to the Motion, ("Opp'n," ECF No. 10), and Defendants filed a Reply in Support of the Motion, ("Reply, ECF No. 12). Defendants also requested leave to file supplemental briefing in support of their Motion, which the Court granted. (See ECF Nos. 14, 17.) Defendants filed their supplemental brief, ("Supp. Brief," ECF No. 17), Mr. Sayre filed an Opposition, ("Supp. Opp'n," ECF No. 18), and Defendants filed a Reply, ("Supp. Reply," ECF No. 21).

Petition to Vacate FINRA Arbitration: Denied

In addressing Sayre's petition to vacate the FINRA Arbitration Award because the arbitrators were allegedly guilty of misconduct when they refused to postpone the hearing, SDCA found no "manifest disregard for law" in the Panel's conduct and, as such, denied Sayre's Petition to Vacate. Pointedly, SDCA considered the following circumstances:

[T]he Panel determined it could make an impartial decision with or without Mr. Sayer and Mr. Mirch's presence. The Panel reviewed the evidence submitted by both Parties. The Panel reasonably found an indefinite postponement of the arbitration hearing was unnecessary given there was sufficient evidence available that would allow it to make a fair and impartial decision. The Parties had both made opening statements, Mr. Sayre's first witness had been examined, and both Parties' exhibit books were to be admitted into evidence. (ECF No. 11-5, at 3, 5.) Although the arbitration hearing continued in Mr. Sayre and Mr. Mirch's absence, "[JPMS] did not have a witness testify, and did not cross-examine [Mr. Sayre's] witness. . . . [JPMS's] counsel made his closing statement and the session was adjourned." (Id. at 5.)

Motion to Dismiss Federal Complaint: Granted

In addressing JP Morgan's Motion to Dismiss Sayre's Complaint asserting violations of the Dodd-Frank Act and various federal and state statutes, and wrongful termination, SDCA granted the motion and dismissed the Complaint. Among the various issues considered, was this interesting problem involving the arbitrability of Sayre's Dodd-Frank claims:

Plaintiff first argues that claims arising under the Dodd-Frank Act are not subject to arbitration because the Act disallows arbitration for whistleblower claims. (Supp. Opp'n 4.) Plaintiff has misread the Dodd-Frank statute under which he brings his claim, 15 U.S.C. § 78u-6(h). (See Compl. ¶¶ 123-136.) The Dodd-Frank Act disallows arbitration for whistleblower claims brought under other statutes; it does not in fact disallow arbitration for Dodd-Frank whistleblower claims. See Khazin v. TD Ameritrade Holding Corp., 773 F.3d 488, 491 (3d Cir. 2014) (holding the Dodd-Frank Act added the Anti-Arbitration Provision to the Sarbanes-Oxley cause of action and "[t]he text and structure of Dodd-Frank compel the conclusion that whistleblower retaliation claims brought pursuant to 15 U.S.C. § 78u-6(h) are not exempt from predispute arbitration agreements"); Beard v. Santander Consumer USA, Inc., No. 1:11-cv-11-1815 LJO-BAM, 2012 WL 1292576, at *6 (E.D. Cal. Apr. 16, 2012) ("Provisions of the Dodd-Frank Act amend the whistleblower provisions of the Sarbanes-Oxley Act to make unenforceable any predispute arbitration clause for disputes arising under those whistleblower sections."); Ruhe v. Masimo Corp., No. SACV 11-734-CJC(JCGx), 2011 WL 4442790, at *4 (C.D. Cal. Sept. 16, 2011) ("The Dodd-Frank Act's whistleblower amendments to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act both contain provisions that render pre-dispute arbitration agreements unenforceable for claims brought under these two sections. Unlike these other whistleblower provisions of the Dodd-Frank Act, Section 78-u contains no such provision."). Thus, Plaintiff was not barred from bringing his Dodd-Frank Act whistleblower claims in arbitration.5
= = = = =
Footnote 5: Plaintiff also argues FINRA rule 13201(b) also precludes disputes arising under a whistleblower statute from arbitration. (Supp. Opp'n 4.) In fact, the rule provides: "A dispute arising under a whistleblower statute that prohibits the use of predispute arbitration agreements is not required to be arbitrated under the Code." As detailed herein, this does not apply to the Dodd-Frank Act because this is not a statute that prohibits the use of predispute arbitration agreements.

2019 9Cir Appeal

Sayre appealed the SDCA Order to the United States Court of Appeals for the Ninth Circuit. Bradley Sayre, Plaintiff/Appellant, v. JP Morgan Chase & Co, JP Morgan Chase Securities, LLC, and DOES 1-10, Defendants/Appellees (Memorandum, 9Cir, appeal of the consolidated 17-CV-449 and 17-CV-2285 / October 24, 2019)
http://brokeandbroker.com/PDF/Sayre9CirOp191124.pdf.
Oral argument was heard on October 15, 2019 by Judges Hurwitz, Owens, and Lee
:


Rare Instance: SDCA Reversed by 9Cir (2:1)

The 9Cir Opinion states, in part, that:

This case presents one of the rare instances where an arbitration award must be vacated due to the arbitration panel's arbitrary denial of a reasonable request for postponement. The arbitration panel denied Sayre's counsel's request for a continuance, even though it is undisputed that he had a medical emergency. At the time of the continuance request, only half a day of a scheduled nine-day arbitration hearing had been completed and only a single witness had testified. After denying postponement, the panel proceeded in Sayre's counsel's absence, admitting exhibits into evidence and hearing only the defense's closing argument. The panel then summarily denied Sayre's claims without articulating how it could have rendered a "comprehensive evaluation" based on only a portion of Sayre's case-in-chief and without addressing why it could not have granted a continuance at least for the three days for which the doctor had placed Sayre's counsel off work. 

Because the panel arbitrarily denied Sayre's reasonable request for postponement, see Sheet Metal Workers, 756 F.2d at 746, we reverse and vacate the arbitration award.

at Pages 2 -3 of the 9Cir Opinion

As a result of the 9Cir's vacatur of the FINRA Award, there is no longer a "final judgment on the merits," and, as such, the Amended Complaint is not impacted by any purported res judicata of the issues in dispute. Therefore, the 9Cir, reversed SDCA's dismissal of the Amended Complaint. Note, that the 9Cir Opinion was rendered by Judges Hurwitz, Owens, and Lee, and that Owens dissented:

I respectfully dissent. In light of all the circumstances before the arbitration panel-including Sayre's last-minute announcement that he would be unavailable for 12 weeks-and the extremely deferential standard of review accorded to an arbitration panel's decision, I cannot say the district court erred by denying Sayre's motion to vacate the arbitration award.


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