Gonna Take My Arbitration Problem to the United Nations

February 13, 2018

Most of the time what fascinates me about a lawsuit are the facts in dispute. The whole he-said-she-said thing. Then, as we read about the evidence and testimony, we learn that what was black became white and what was clear became cloudy and what was the irrefutable truth became refutable and a lie. Sometimes it's not about the facts, however, and what entices me to read about a lawsuit is the process. There are cases that quickly come to trial and there are those that meander and digress and ramble. When we find ourselves aboard a detoured lawsuit, the scenery is often entrancing and the little side-trips may take us to lovely settings or dead-ends. Join the BrokeAndBroker.com Blog caravan as we start out upon the interstate, get re-routed to a highway, take a detour along a county road, and wind up in a cul-de-sac from which we can't turn around.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2015, public customer Claimant Fang asserted breaches of fiduciary duty and contract in connection with her investment in at least 5,000 shares of  Peet's Coffee & Tea, Inc. Claimant Fang sought unspecified compensatory, punitive, and exemplary damages plus restitution, disgorgement, attorneys' fees, and costs.  In the Matter of the FINRA Arbitration Between Winnie B. Fang, Claimant, vs. Merrill Lynch Pierce Fenner & Smith Inc., Respondent (FINRA Arbitration 15-01322, February 9, 2018).

Respondent Merrill Lynch generally denied the allegations and asserted various affirmative defense.

Motion to Postpone

On October 4, 2016, Claimant Fang filed a Motion to Continue/Postpone the deadline for the exchange of witness lists and submission of the arbitration briefs. The FINRA Arbitration Decision states that the "Motion was emailed ex parte directly to the Panel, in violation of the Initial Pre-hearing Conference Scheduling Order issued by the Panel on November 11, 2015." 

During oral argument on the motion on October 12, 2016, Claimant argued that the previously scheduled October 24, 2016, hearing should be postponed because:
  • Respondent did not produce certain documents during discovery; and 
  • Claimant was planning to file a class action dealing with the same claims. 
In deliberating the merits of the motion, the arbitrators noted that Claimant Fang had not moved to compel discovery and had not filed any proof of the certification of a class for the alleged action. On October 12, 2016, the Panel denied Claimant's motion and ordered Fang to submit witness lists and her pre-hearing brief by October 14, 2016.

Motions to Dismiss and Reconsider

On October 12, 2016, Claimant Fang moved to dismiss without prejudice. On October 13, 2016, Claimant also moved to reconsider the previously denied Motion to Postpone. Further, Claimant requested the Panel to withdraw its order setting a new witness lists and brief submission. 

On October 18, 2016, the Panel issued an order requiring that Claimant file her arbitration brief and witness list by October 20, 2016.  On October 19, 2016, the Panel ruled that Claimant's motions to reconsider and dismiss would be heard on October 24, 2016. 

Class Action

On October 20, 2016, Claimant purportedly filed a class action in the United States District court for the Northern District of California covering the same claims as in the FINRA arbitration. The FINRA Arbitration Decision asserts that after 9 p.m. on  October 23, 2016, and, thereafter,  around 10 a.m. on October 24, 2016, Claimant Fang:

delivered to the Panel, ex parte, an Amended Notice of Motion and Motion for Temporary Restraining Order and/or Preliminary Injunction (the "Motion for the TRO") which was intended to enjoin the arbitration from proceeding but which, at that point, appeared not to have been filed with any court. In both the Complaint filed in the District Court and the Motion for the TRO, Claimant represented to the Court that the Panel had assessed attorneys' fees against Claimant in its order denying the original Motion to Postpone. The Order issued by the Panel assessed forum fees and did not in any way refer to attorneys' fees.

October 24th Hearing

At the October 24, 2016, FINRA Arbitration evidentiary hearing, Claimant Fang did not appear to argue her motions to dismiss and reconsider, or to argue the merits of the case. Respondent appeared and argued both motions, however, and moved to recover costs. The FINRA Arbitration Panel suspended the arbitration proceeding pending the outcome of the Motion for the TRO. As set forth in the FINRA Arbitration Decision:

[O]n October 26, 2016, Claimant's counsel emailed the Panel, ex parte, asserting that the District Court had issued a TRO. In fact, the District Court denied Claimant's request for a TRO on November 10, 2016. On December 5, 2016, Claimant appealed the denial of the TRO to the Ninth Circuit, and on December 8, 2016, the Panel issued an order suspending the arbitration proceeding further until the Ninth Circuit decided the appeal. On July 24, 2017, the Ninth Circuit upheld the District Court's ruling. Respondent submitted a copy of the Ninth Circuit's decision to FINRA. On August 3, Claimant filed a "Responsive Pleading" to Respondent's submission of the Ninth Circuit decision, which the Panel interpreted to be a Motion to Dismiss Without Prejudice (the "Motion"). On August 8, 2017, Respondent filed a response to Claimant's Responsive Pleading.

September 2017 Suspension of Arbitration Decision

After hearing oral argument on September 13, 2017, the FINRA Arbitration Panel ordered the suspension of its decision on Claimant's motion until the District Court ruled on the class certification. 

I'm gonna take my problem to the United Nations

On November 27, 2017, Respondent filed a Motion for Panel to Issue Award, to which it attached a November 21, 2017, Order of the District Court staying the case in its entirety on August 21, 2017, so that the FINRA proceedings could be completed, and vacating all scheduled dates and terminating without prejudice all motions filed by the parties in violation of the stay order. 

Following receipt of Claimant's response, the FINRA Arbitration Panel held a conference on December 18, 2017, which was postponed to January 17, 2018, at which time:

[C]ounsel represented that, in Claimant's Motion to Continue the October 25 (sic), 2016 Hearing dated October 4, 2016 (the "Motion"), Claimant's counsel had argued that he needed the arbitration hearing to be postponed because he had to appear in a matter for the United Nations on October 24, 2016. However, that Motion does not refer to any particular conflict on October 24, 2016, only that "Claimant's counsel is under contract with the United Nations and was absent during July/August 2016, and must return to the South Pacific during the first and second weeks of November."

The Panel denied Claimant's  Motion to Dismiss. Thereafter, the Panel denied Claimant's claims and found Claimant liable to and ordered it to pay to Respondent $6,000 in expert witness fees.  

Bill Singer's Comment

I'm car sick. Let me offa this bus. That was one helluva a trip!

And just what the hell is with that United Nations Hymn? That's the best they can do?  Elative? Optative? What the hell is optative? Maybe we can get the U.N. to adopt "Summertime Blues" as its anthem?  The cincture of the sound?  Isn't that where they start a colonoscopy?