Take a deep breath. Okay . . . ready? . . . now, start reading this sentence: First there was a dispute between a brokerage firm and an employee that was settled pursuant to a Settlement Agreement, which itself was subsequently disputed and that second falling-out apparently prompted the brokerage firm to sue its former employee, who then Counterclaimed and went through two lawyers before defending herself pro se, and, after she lost the arbitration, the whole mess wound up on appeal in federal court.
(1) failed to recuse itself after reviewing the terms of the 2013 Contract;(2) refused to hear relevant evidence and testimony;(3) denied her request for postponement; and(4) committed fraud by failing to rule on her motion for discovery sanctions.The 2009 AgreementThe FINRA Arbitration Decision made, at best, a passing reference to the March 2009 Settlement Agreement and did not fully set forth many of the underlying issues that prompted the arbitration. In the Court's Opinion and Order, we are offered some helpful context:
[T]he parties entered into a settlement agreement on March 10, 2009 (the "Effective Date"). (Id.; Doc #: 1-2 (2009 Agreement).) The 2009 Agreement included a provision that precluded Facsina from raising claims, or evidence about claims, against MSSB that accrued, or could have accrued, before the Effective Date ("the release-of-claims provision").Included in the 2009 Agreement was a promissory note ("Note"), which extended Facsina a loan of $280,000.00. (Id. at 20.) Facsina agreed to repay the Note in yearly installments of $35,000 with 2 % interest beginning on March 4, 2010. (Id.) The Note also stipulated that, in the event Facsina terminated her employment before she repaid the loan, MSSB could immediately collect on the remaining balance. (Id.)In October 2010, Facsina resigned from her position at MSSB with an outstanding loan balance of $245,000 plus interest. (Opp'n at 5.) MSSB immediately sought to collect on the loan but, when Facsina refused to comply, filed a breach of contract claim with the Federal Industry Regulatory Authority ("FINRA") to resolve the dispute through arbitration. (Id.) The parties thereafter engaged in settlement negotiations; however, they dispute whether or not they reached a deal in May 2013 ("2013 Contract"). (Comp. H 13.) MSSB contends that the parties did in fact reach a settlement, and added another breach-of-contract claim to the pending arbitration proceeding. (Opp'n at 6-7.).Pages 1 - 2 of the Court Opinion and OrderProcedural DisputesIn offering us further insight into the procedural dispute that beset the FINRA Arbitration, the Court explains that on October 17, Facsina moved the FINRA Arbitration Panel to sanction Respondents for violating the discovery deadline. Eleven days before the scheduled arbitration hearing, Facsina's counsel filed a motion for orders of appearance to call witnesses to the hearing. On October 15, Facsina's counsel represented to Respondents that five to seven witnesses would appear at the hearing. One day before the FINRA Arbitration hearing, however, Facsina's counsel withdrew.On the morning of the first day of hearings, October 21, 2014, Facsina, representing herself, told the Panel that she had not received the orders of appearance and asked for a postponement to provide her with time to call her witnesses. In response to her request, the Panel stated that it would send the orders to her later that day but refused her request for a continuance. It was apparently contemplated by the arbitrators that the hearing would extend over multiple sessions.Two Openings And One Early ExitThe Court noted that during the first day of the Arbitration Hearings, both Respondents and Facsina gave opening statements. Facsina argued that she should not be restricted to offering evidence that had accrued before the 2009 Agreement and that the Panel recuse itself because it was privy to the terms of a 2013 Contract that set forth the terms of the now- disputed settlement. The Panel denied both requests.At the conclusion of her opening argument before the FINRA arbitrators, Facsina apparently declared that she was declining to further participate in the hearing. In response the arbitrators tried to dissuade her and admonished that she would be unable to assert her defenses and claims. Notwithstanding, Facsina left the hearing room and following Claimants' presentation, the arbitrators rendered their Award in the firms' favor.RationaleIn setting the stage for its findings, the Court notes that under the Federal Arbitration Act, 9 U.S.C. § § 1 et seq. ("FAA"), a court's review of an arbitrator's decision is very limited, and as such, its vacatur of an arbitration award occurs "only in very unusual circumstances." Pointedly, the Court states that:
Section § 10 of the FAA provides district courts with four grounds upon which to vacate 4 arbitration awards: (1) where the award was procured by corruption, fraud or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. 9 U.S.C. §§ 10(a)(1)-(4).Page 4 - 5 of the Court Opinion and OrderAmorphous Institutional BiasAs to Facsina's claims that the FINRA Arbitration Panel was biased in favor of Respondents, the Court dismissed that contention as merely alleging an amorphous institutional bias that did not rise to the necessary standard of bias. Not So FormalAs to her contentions that the Panel may have engaged in misconduct for declining to postpone the hearing, the Court reiterated the long-held position that arbitrators are not bound by formal rules of evidence or procedure, and that the proper inquiry by a court when confronted with such an allegation is whether arbitrators' conduct denied the party a fundamentally fair hearing. Pointedly, the Court found that Facsina had failed to prove by clear and convincing evidence that the arbitrators had abused their discretion and had no reasonable basis for declining to postpone the hearing.An Unmade EffortThe Court suggests that Facsina may have done herself a far better service in terms of buttressing her appeal if she had waited an additional day to obtain the witness orders and then attempted service - even if there may have been insufficient time for that gesture to have accomplished its intent:
Since she chose not to receive the witness orders, and therefore made no attempt to serve them, she has forfeited any argument that the Panel deprived her of the opportunity to call witnesses or present a defense.Page 6 of the Court Opinion and OrderConfirmation Granted And Vacatur DeniedAccordingly the Court granted Defendants' Motion to Confirm and denied Plaintiff's Motion to Vacate. READ the Court Opinion and Order