An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Arbitrator Angered By Childish, Repetitive,Whining, Contemptible, Scurrilous Conduct
August 30, 2013
The fact that litigants are pissed off isn't a newsflash -- hell, if the adverse parties were happy campers, we wouldn't be in court or arbitration. On the other hand, it's not everyday that judges and arbitrators get pissed off and let us know about it. Consider this recent FINRA intra-industry arbitration in which the sole Arbitrator is not amused by some of the antics pulled by the parties and their counsel.
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2012, Claimant BOSC alleged failure of consideration; breach of warranty; promissory estoppel; and unjust enrichment in connection with the termination of Respondents employment. Claimant alleged that Respondents had failed to repay signing bonuses and sought $60,000 in compensatory damages plus interest, attorneys' fees, and costs. In the Matter of the FINRA Arbitration Between BOSC, Inc., an Oklahoma Corporation, Claimant, vs. Jay Goldberg, Carey Kesner, and Brandon Henry, Respondents (Amended Award, FINRA Arbitration 12-01127, August 21, 2013).
Respondents generally denied the allegations and asserted affirmative defenses.
Disqualification
Far beyond my mortal power to add or detract, how about we just agree that this employment dispute was a nasty and contentious bit of business. For example, in November 2012, Respondents filed a Motion to Disqualify Claimant's Counsel and sought attorneys' fee for the motion and an order precluding the law firm (cited in the Decision as "Frederick Dorwart, Lawyers" ) from participating in this case. The basis for the motion seems seems to have been an allegation of some misrepresentations made by Erica Dorwart to the Respondents, and Respondents' purported collective belief that Erica Dorwart and the Dorwart law firm were representing them before the arbitration Statement of Claim was filed.
In considering the arguments pro and con for disqualification, the sole FINRA Arbitrator noted in the Decision that the Dorwart Law Firm's attorney, gave a "a passionate but unconvincing argument" during a January 29, 2013, pre-hearing teleconference. The Arbitrator ordered substitute legal representation to replace the Dorwart firm and that Claimant pay the fees, costs, and expenses for the motion.
Courting Disaster?
Claimant's new attorney, Jeter, filed a Motion to Stay Arbitration, dated May 1, 2013, and the Dorwart Law Firm moved to vacate the the arbitrator's order in in Tulsa County Oklahoma District Court. Thereafter, the Arbitrator held a July 10, 2013, telephonic hearing in order to hear arguments regarding the Tulsa court's jurisdiction. Lawyer Jeter represented the Claimant at that FINRA arbitration telephonic hearing. Thereafter the Arbitrator denied Claimant's motion and granted Respondents' Motion for Sanctions, which awarded $20,000 each to Respondents Goldberg, Kesner, and Henry.
Total Abandonment
How pissed off was the sole FINRA Arbitrator? Consider these excerpts from the Decision (with highlights added by me):
After considering the pleadings, the testimony, and the evidence presented at the prehearing conferences, the sole FINRA Arbitrator reached the following decision:Despite BOSC's invocation and acceptance of FINRA's Dispute Resolution Arbitration process when it submitted its claim, BOSC and its attorneys have repeatedly shown contempt for FINRA and its Arbitrator's rulings. Their childishly repetitive arguments, whining, and complaints and their inability to take "no" as an answer have now resulted in their near total abandonment of the tribunal by which they promised to abide.[C]onsidering the source of the evidence described in BOSC's Statement of Claim and the fact that an attorney representing BOSC in this case would have to testify regarding both her acquisition of that evidence and her opinions of its relevance, the Arbitrator wondered why the law firm did not inform BOSC ab initio of the potential for conflict and insist upon the resolution of that conflict. The answer to that question is, of course, privileged, but regardless of its answer, the Arbitrator chose to disqualify BOSC's attorneys and presumed that, upon the naming of Ms. Jeter, the case would proceed through discovery to a final hearing.. . .The disqualified Dorwart law firm has now extended its pattern of repeatedly and contemptibly sidetracking the case by bringing an interlocutory appeal to a court with no apparent jurisdiction. As a result, discovery has once again ceased; not by order of the Arbitrator. but due the capriciousness of the Claimant . . . A review of the law shows that the Tulsa County District Court has no jurisdiction of an interlocutory order such as the one being appealed. A review of the Motion to Vacate reveals a number of misrepresentations of the orders being appealed and the FINRA proceedings resulting in those orders. The baseless arguments and scurrilous accusations in the Motion to Vacate provide evidence of the contempt the Claimant has for the FINRA process. For these reasons, the Motion to Abate Is hereby DENIED.Because it appears to the Arbitrator that the BOSC's case is not being pursued at FINRA for the purpose of achieving a justiciable outcome, it is necessary to approach Respondents' Motion for Sanctions with an understanding that previous sanctions already ordered against BOSC in this case have been ignored and ineffective. . .
- Claimant BOSC's claims were dismissed with prejudice.
- Claimant BOSC was found liable and ordered to pay to respondents Goldberg, Kesner, and Henry, $20,000 each as sanctions as noted above.
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