Oppenheimer and Euro Pacific Duke It Out In $35 Million Unfair Competition Arbitration

April 11, 2018

Today's BrokeAndBroker.com Blog presents an old-fashioned knock-down-drag-out fight involving former employer Euro Pacific Capital, its former employee Steven Savoy, and his new employer Oppenheimer & Co. From the opening bell, it's obvious that there's more than a tad of bad blood between the former employer and employee. We got Euro Pacific comin' out swingin' and seeking to land a knock-out in the form of an extensive permanent injunction. In fact, before Euro even gets into the FINRA arbitration ring, the firm gets in a few shots during a preliminary bout in federal court. The fans were expecting a tag team between Oppenheimer and Savoy but the latter was nowhere to be found. 

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2015 and as amended thereafter, Claimant Euro Pacific Capital, Inc.,  asserted misappropriation of trade secrets, violation of the Uniform Trade Secrets Act, tortious interference, replevin, aiding and abetting breach of fiduciary duty, unfair competition, civil conspiracy, aiding and abetting breach of contract, unjust enrichment, slander per se, violation of FINRA Rule 2010, RICO violation, and injunction, and accounting. Initially, Claimant sought unspecified compensatory, treble, and punitive damages, attorneys' fees, costs, and interest; however, at the close of the hearing, Claimant sought $35,000,000.00 in compensatory damages . Additionally, as set forth in the FINRA Arbitration Decision, Claimant sought the following permanent injunction:

1. Permanently enjoin Oppco and Savoy and anyone action in concert with them, from directly or indirectly soliciting any customer or client of EPC to transfer their business from EPC to any other person or entity, effective immediately; 

2. Permanently enjoin Oppco and Savoy to return all of EPC's proprietary information, whether in original, copied, computerized, handwritten, or in any other form, including but not limited to all confidential client and financial information - including all copies thereof to EPC; 

3. Permanently enjoin Oppco and Savoy from retaining, using, or disclosing any of EPC's proprietary information and from contacting EPC's clients and prospective clients or any other clients whose identities Savoy learned as a result of his employment with EPC, including but not limited to for the purpose of inviting, encouraging, or requesting the transfer of any client's business from EPC to Oppenheimer; 

4. Permanently enjoin Oppco and Savoy from further misappropriation of any of EPC's trade secrets and confidential proprietary information; 

5. Permanently enjoin Oppco and Savoy from destroying, erasing, or otherwise making unavailable for further proceedings in this matter, any records or documents (including data or information maintained in computer files or other electronic storage media) in their possession or control which were obtained from, or contain information derived from any of EPC's clients, or which relate to any of the events alleged in the Statement of Claim;

6. Permanently enjoin Oppco and Savoy from continued interference with EPC's client relationships and probably future business relationships from which EPC reasonably expected financial benefit; 

7. Order Oppco and Savoy to produce to EPC all communications, including call logs, emails, and correspondence between Oppco and Savoy and EPC's clients and client prospects

In the Matter of the FINRA Arbitration Between Euro Pacific Capital, Inc., Claimant, vs. Oppenheimer & Co. Inc. Respondent/Third-Party Claimant and Steven E. Savoy, Respondent/Third-Party Respondent (FINRA Arbitration 15-01484, April 4, 2018).

SIDE BAR: The FINRA Arbitration Decision references a "Consented to Restraining Order entered on June 24, 2015 before the United States District Court for the District of Connecticut." As such, I infer that the FINRA arbitration was preceded by some action in federal court whereby a Restraining Order was implemented prior to the deliberations of the FINRA Arbitration Panel. Frankly, this procedural aspect of the parties' dispute should have been set forth with a bit more clarity in the FINRA Arbitration Decision.

Savoy Stompin'

Steven E. Savoy did not submit an Answer or sign the Submission Agreement. In July 2015, Claimant  Euro Pacific Capital and Savoy settled. In September 2015, Savoy filed a Motion to Strike the Third-Party Claim, which the FINRA Arbitration Panel denied in November 2015. Around November 17, 2015, Savoy filed for bankruptcy, which stayed all claims against him and the Panel made no determination with respect to any claims against him.

Respondent Oppenheimer generally denied the allegations, asserted various affirmative defenses, and filed a Third-Party Claim against Savoy asserting fraud, indemnification, and contribution.


I'm a bit lost as to how this case ended. It's not clear to me whether the parties settled, stipulated to an Award, or left the final resolution up to the arbitrators. Be that as it may, the FINRA Arbitration Panel appears to have made permanent some previously instituted federal court Restraining Order (which is not spelled out in the FINRA Arbitration Decision) as follows:

After considering the pleadings, the testimony and evidence presented at the hearing,
and the post-hearing submissions, the Panel has decided in full and final resolution of the issues submitted for determination as follows:

1. On consent of the parties the Consented to Restraining Order entered on June 24, 2015 before the United States District Court for the District of Connecticut is made permanent as follows: 

a. Oppenheimer is permanently enjoined, along with its agents, employees, and representatives, from i) using or disclosing in any way any of the documents, electronically stored information and storage media that Oppenheimer obtained directly or indirectly from EPC ("Proprietary Information") to solicit EPC Customers, and ii) furnishing to anyone (other than to its attorneys, experts, the arbitrators in this matter, regulators or pursuant to lawful process to any duly constituted court)and any of the Proprietary Information; 

b. Oppenheimer is permanently enjoined, along with its agents, employees,
and representatives from soliciting, or attempting to solicit, directly or indirectly any customer Savoy served or whose name became known to Savoy while in the employ of EPC, providing that nothing herein shall prevent Oppenheimer from properly servicing any customer account in
existence as of June 22, 2015; 

c. Oppenheimer is directed, along with its agents, employees, and representatives to segregate and permanently sequester any and all documents concerning EPC clients that Oppenheimer cannot purge pursuant to its regulatory obligations, other than documents or information produced or obtained during discovery this matter, which remain subject to the Confidential Agreement entered ion [sic] or about December 18, 2015; 

d. Oppenheimer is directed, along with its agents, employees, and representatives, to preserve all documents and electronically stored information relevant to or discoverable in this FINRA arbitration as required by FINRA and SEC rule and regulations. 

2. Oppenheimer is liable for and shall pay to EPC compensatory damages in the amount of $128,574.00. 

3. Oppenheimer is liable for and shall pay to EPC attorneys' fees in the amount of $200,000.00. The Panel granted attorneys' fees on the basis that both parties made the request. 

4. Oppenheimer is liable for and shall pay to EPC costs in the amount of $35,000.00. 

5. EPC is liable for and shall pay to Oppenheimer $250,000.00 for sanctions assessed against EPC. 

6. Oppenheimer's award in the amount of $250,000 is offset to EPC's award. As such, Oppenheimer is liable for and shall pay to EPC in the amount of $363,574.00 minus $250,000.00 awarded to Oppenheimer, for a net amount of $113,574.00. 

7. By letter dated January 16, 2018, Anderson Kill PC ("Anderson Kill"), counsel of record for the hearing and former firm of the lead counsel for EPC, notified Oppenheimer that Anderson Kill is asserting "any and all available statutory and common law liens" arising from the failure of EPC to pay Anderson Kill "in full for legal services rendered and disbursements incurred in the course of the representation" of EPC. Anderson Kill contends its purported lien attaches to "a verdict, report, determination, decision, judgment or final order in EPC's favor, and the proceeds therefore in whatever hands they may come". Oppenheimer disputes the validity of said lien, and the Panel has neither been asked to, nor did it, determine the validity of the lien. To protect Oppenheimer from the possibility of a double recovery, or being subject to inconsistent claims, Oppenheimer shall not be required to pay the final award in this matter pursuant to Article VI, Section 3 of the FINRA By-Laws or FINRA rules (including Rules 9554 and 13904), and no interest shall accrue on the Award, until i) thirty days after Anderson Kill notifies counsel for Oppenheimer in writing that it has released the aforesaid lien, and any and all claims associated therewith, with prejudice, or ii) thirty days after Oppenheimer receives this Award, or iii) thirty days after the Award is confirmed in a final, non-appealable judgment, whichever may occur last. 

8. Any and all claims for relief not specifically addressed herein, including punitive and treble damages, are denied. 

Bill Singer's Comment

An interesting aspect of  the arbitration is that although the arbitrators entered a permanent injunction against Oppenheimer and ordered the firm to pay $363,574 (compensatory damages, attorneys' fees, and costs) to Euro Pacific, that award was offset by an order to Euro Pacific to pay $250,000.00 in sanctions to Oppenheimer, resulting in a net award to Euro Pacific of $113,574.00. 

Another interesting wrinkle in this case is that the FINRA Arbitration Decision discloses that Claimant Euro Pacific Capital was represented by the law firm of "Robin Kaplan LLP" but the Award notes that the firm's former law firm "Anderson Kill PC" asserted a lien on the award because of the client's purported failure to pay its legal fees. To the arbitrators credit, they sought to prevent Oppenheimer from being subject to a double recovery of said legal fees by instituting a 30-day-notice-period during which payment of the Award is tolled to permit the release of the lien or confirmation of the Award, whichever occurs last.

In researching the genesis of this FINRA arbitration I found Euro Pacific Capital, Inc., Plaintiff, v. Steven Savoy and Oppenheimer & Co., Inc. Defendants (Verified Complaint, 15-CV-00950 / June 19, 2015) http://brokeandbroker.com/PDF/EuroPacificDCTComplaint.pdf As set forth in the opening paragraph of the Verified Complaint:

Plaintiff Euro Pacific Capital Inc. ("Euro Pacific", the "Firm" or "Plaintiff"), by and through its attorney, brings this complaint for temporary and preliminary relief pending arbitration on the merits against Steven Savoy ("Savoy") and Oppenheimer & Co. Inc. ("Oppenheimer") (collectively, "Defendants"), in connection with Savoy's unlawful misappropriation and continued use of Euro Pacific's confidential proprietary information and unlawful solicitation of Euro Pacific clients to transfer their accounts to his new employer, Oppenheimer, in violation of his common-law and contractual obligations to Euro Pacific. Upon information and belief, Oppenheimer is complicit in Savoy's violations of his contractual obligations and misappropriation of Euro Pacific's confidential proprietary information. Taken together, Defendants' conduct constitutes an egregious breach of contract, misappropriation of trade secrets, tortious interference with business relations, unfair competition, slander per se, and civil conspiracy. . . .