FINRA Panel Splits On Award In Overtime Pay And Harassment Case

April 5, 2013

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in July 2010 and amended thereafter, Claimant McFadden asserted

  • Fair Labor Standards Act violations;
  • New York State Labor Law overtime and meal break violations;
  • New York State Human Rights Law gender and sex discrimination;
  • sexual harassment; and
  • constructive discharge.

At the hearing, Claimant withdrew her claim of unlawful discrimination based on sex and gender under the New York State Human Rights Law. In the Matter of the FINRA Arbitration Between Karen McFadden, Claimant, vs. Clarkeson Research Group Inc. and Brian Lewis Bornstein,Respondents(FINRA Arbitration 10-03283, March 27, 2013).  By the close of the hearing. Claimant requested about $221,492.16 in damages, fees, and costs as follows:

  • unpaid overtime wages in the amount of $65,851.92;
  • liquidated damages in the amount of $41,280.21;
  • pre-judgment interest in the amount of $35,560.03; and
  • legal fees and expenses in the amount of $78,800.00


The FINRA Arbitration Panel found Respondents jointly and severally liable and ordered them to pay to Claimant:

  • $16,462.98 in compensatory damages;
  • $10,320.18 in liquidated damages;
  • $8,890.01 in pre-judgment interest plus 9% interest per annum on the Award from March 1, 2013 until paid in full; and
  • $35,000.00 in attorneys' fees.

In determining the $70,673.17 Award, two of the arbitrators found that Claimant had worked an average of two hours of overtime a week, in contradistinction to Claimant's testimony of eight to ten hours of overtime. In opting for the lesser two-hour basis, the majority made the point that Claimant had, in fact, represented in her federal District Court filing that she had worked an average of  tw0-hours overtime per week.  Given that the majority made a specific reference to this discrepancy, it appears that the lack of conforming claims was an issue that troubled the arbitrators.

Although the third arbitrator filed a Dissenting Opinion, the disagreement does not appear to include the finding of liability but solely addresses the amount of the Award. The Dissent would have awarded to Claimant about $155,640.80 in damages and fees sought, namely:

  • $41,280.72 in compensatory damages;
  • $35,560.03 in interest; and
  • $78,800.00 in attorneys' fees and costs.

Bill Singer's Comment

Sadly, the Arbitration Decision just doesn't provide us with much in the way of background or facts - about all we know is what I have set forth: We have a dispute over wages, some allegations about discrimination and harassment, and something involving overtime.  The interesting aspect of this case is the manner in which the Panel chose to accept (and reject) the discrepancies in Claimant's proposed damages calculation.  Claimant seems to have initially asked for an Award in the neighborhood of $221,000; the majority of the Panel gave her about $70,000; and the dissenting panelist would have awarded about $155,000. Ultimately, we would have to know what Respondents' last, best settlement offer (if any) was to figure out whether Claimant came away a happy winner or a disgruntled loser.

The takeaway from the evolution of the claim to Award is that you always need to be careful about reaching for the Moon because you could wind up flat on your face in the mud. Now, clearly, Claimant did not wind up on Earth with this outcome; to the contrary, she emerged victorious, even if only in orbit around our planet rather than having landed on the lunar landscape.  The question - and probably the Monday Morning quarterbacking between Claimant and her lawyers - is whether the manner in which the case was presented to the arbitrators somewhat backfired and resulted in a lesser award; or, whether the decision in this case was more a function of the inherent quirks of any given FINRA arbitration panel. Among the more painful verdicts for any lawyer to deal with is one such as in this case - you "win" on liability but the damages come in on the soft side.  Why?  Why?? Why???

Having argued many arbitration cases and also having sat as a panelist and Chair on others, I know that sometimes the final verdict may be more a product of the personality dynamics of a given panel than a testament to superb or atrocious lawyering. You win cases that you never thought you should have; and you lose cases that no one understands why. The same puzzling conundrum exists before all panels, judges, and juries. In the end, you often feel like you're rolling the dice and takin' your chances. Sometimes Lady Luck smiles. Sometimes she frowns.

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