December 12, 2014
When BrokeAndBroker.com Blog's Bill Singer describes a FINRA Arbitration Decision as a "disgrace," you have to know that he's really worked up and angry. Today, his ire is focused on an award of over $7.5 Million in an employment dispute between what appears to have been former military service veterans against Goldman Sachs & Co. As Bill so often asks in exasperation with FINRA: What the hell happened here and why won't you tell us?
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2010, Claimants Barra and Sampedro sought $7 million in damages, fees, and interest in connection with the following causes of action attendant to their employment termination by Respondent Goldman Sachs:
- violations of the Uniformed Services Employment and Re-Employment Rights Act ("USERRA");
- wrongful withholding of compensation;
- breach of contract;
- breach of the duty of good faith and fair dealing;
- fraud and misrepresentation;
- quantum meruit and unjust enrichment;
- breach of fiduciary duty;
- violation of federal and California labor and wage laws; and
- wrongful termination (this last cause was added pursuant to a motion made during April 2013 hearings, and granted by the FINRA Arbitration Panel).
In the Matter of the FINRA Arbitration Between Christopher Zigmund Barra and Luis Miguel Sampedro, Claimants, vs. Goldman, Sachs & Co., Respondent (FINRA Arbitration 10-02659, December 5, 2014).
Respondent Goldman Sachs generally denied the allegations.
SIDE BAR: The Uniform Services Employment and Reemployment Rights Act (USERRA) requires, among other things, employers to re-employ a service member returning from military service in a position he or she would have attained had they not been called away for military service. After re-employing a service member, an employer also must retain that individual in employment for a year unless there is good cause to terminate the employment, and, as such, that obligation to maintain employment alters the "at will"doctrine status under which many individuals are typically employed.
To learn more about USERRA and how to contact the local Veterans' Employment and Training Service ("VETS") office:
The FINRA Arbitration Panel (which included two replacement arbitrators, found Respondent Goldman Sachs liable to and ordered it to pay to Claimants
The Panel found Respondent Goldman Sachs liable on Claimant Barra's USERRA claim and ordered it to pay to him $100,000 plus 10% per annum interest until paid.
- $5,241,700.00 in compensatory damages plus 10% per annum interest until paid;
- $2,000,000.00 in punitive damages plus 10% per annum interest until paid pursuant to California Civil Code §3294;
- $300,000.00 in attorneys' fees pursuant to California Civil Code §1717;
- $200 reimbursement of filing fee.
The Panel denied Claimant Sampedro's USERRA claim.
Bill Singer's Comment
Two aspects of this FINRA arbitration jumped out at me. One, we have the unusual scenario of two apparently unrelated Claimants. Two, we have unexplained USERRA claims.
Typically, two unrelated Claimants are permitted to join their claims when there is a common element to their cases -- what is termed a "nexus" in legalese -- and that common issue is of such an extent that it is appropriate to adjudicate the two or more Claimants' claim within the context of the same case. The nexus must be such that it essentially permeates the fabric of the dispute and, generally, does not impose an undue burden upon the respondent. What nexus existed in Barra and Sampedro's case against Goldman Sachs is not explained in the Decision. Frankly, given the circumstances, the absence of such an explanation is ridiculous.
More annoying is the emergence of USERRA claims by each Claimant that are not explained at all by the Decision. Given that the arbitrators saw fit to award Claimant Barra $100,000 on his USERRA claim but deny any relief to Claimant Sampedro on his USERRA claim, it is frustrating that we were not provided with any detail as to what each cause of action alleged and why the Panel ruled as it did. Not only does the general investing public and the industry deserve more of an explanation but the lack of disclosure and commentary in the Decision does a particular disservice to Wall Street's military veterans by depriving them of guidance.
Finally, and let me leave no doubt as to my feelings. When FINRA adjudicates a "wrongful termination" dispute involving two veterans against one of Wall Street's best known brokerage firms and a FINRA Arbitration Panel awards over $7.5 Million in damages including a portion for violation of a federal law designed to protect veterans, it is a disgrace and absolutely unacceptable to present that dispute without any meaningful explanation of the underlying facts or the Panel's rationale.