Claimant's Attorney In ER, Claimant's Wife Gives Birth, but FINRA Arbitrators Won't Postpone Hearing

Claimant amended the Statement of Claim prior to service of the claim. Although the claim is entitled Amended Statement of Claim, it is deemed the only Statement of Claim filed in this case. 

For Claimant Bradley Aaron Sayre ("Claimant): Kevin J. Mirch, Esq., Mirch Law Firm LLP, San Diego, California  

For Respondent J.P. Morgan Securities LLC ("Respondent): Jeffrey S. Dunlap, Esq., Ulmer & Berne LLP, Cleveland, Ohio  

[M]s. Marie Mirch, an attorney and wife of Mr. Mirch, Claimant's counsel, then informed all the parties that she had to take Mr. Mirch to see a doctor and that Claimant himself had left to be with his wife who was giving birth. Ms. Mirch made an oral motion for an indefinite postponement of the hearing. Respondents counsel objected to the postponement request. The Panel recessed the hearing to deliberate its ruling on the motion. The Panel reconvened the hearing and requested Ms. Mirch return the following day at 9:00 a.m. with information on Mr. Mirch's medical condition and when Mr. Mirch would be available to continue the hearing. Ms. Mirch stated that she did not believe she could represent the Claimant, although she had acted on the case previously. At this time, the Panel did not take any action on Ms. Mirch's oral motion for an indefinite postponement of the hearing. The session concluded at approximately 2:00 p.m. 

Following the closing of the session, in an executive session, the Panel discussed the possible actions available, including: 

 

1. Granting the motion and any parameters to be set to assure the integrity of the process;  

2. Denying the motion and any parameters to be set to assure the integrity of the process;   

3. Dismissing the case without prejudice;  

4. Dismissing the case with prejudice; and  

5. Any other possible action.  

The Panel wanted to confirm that all parties received proper consideration, the integrity of the hearing process would be assured, and that the final action of the Panel would stand up to scrutiny.  

On July 19, 2017 at 9:00 a.m., the Panel, Respondent's counsel, and Ms. Mirch were available to convene the session. Ms. Mirch was asked for the information previously requested, the medical condition of Mr. Mirch and his availability for resuming the hearing. The Panel also requested information on Claimant's failure to appear and the Claimants future availability as a participant in the hearing. Ms. Mirch responded that she had not brought her husband to the doctor as yet. The Panel informed Ms. Mirch that the information was still required, and that the Panel would conclude this session. Ms. Mirch was instructed to provide the requested information for the afternoon session which would convene at 3:00 p.m. The session was concluded at approximately 9:30 a.m.  

The Panel retired to executive session spending time individually and as a Panel, examining Claimants exhibits, Claimant's Statement of Claim, FINRA Rules, and other appropriate documents in the case file. The Panel continued in this activity with a break only for lunch.  

That same day at 3:00 p.m., the Panel and Respondents counsel were available to convene the session. Ms. Mirch arrived at approximately 3:10 p.m. and the session was convened. Ms. Mirch brought two memos, marked M-1 and M-2. The memo from the Claimant indicated that he was attending to his wife and new child, and would not be available for 12 weeks. The memo regarding Mr. Mirch's health gave no date of actual availability to return, but indicated that he could not return for the remainder of this week, i.e. through July 21, 2017. Ms. Mirch again made an oral motion for an indefinite postponement of the hearing and reiterated that she could not represent the Claimant. Respondent's counsel again objected to Ms. Mirch's motion. The Panel recessed the session to go into executive session to rule on the oral motion.  

During the executive session, the Panel discussed if there was sufficient evidence presented by Claimant's counsel, both witness testimony and the written exhibits, to assure that the Panel could make an honest, impartial, and comprehensive evaluation of Claimant's case. The Panel also considered Claimant's memo concerning his voluntary absence from the hearing. By unanimous vote, the Panel affirmed that the Panel could and would make an honest, impartial, and comprehensive evaluation of Claimant's case. The unanimous vote was to deny the request for an indefinite postponement.  

That same day at approximately 3:25 p.m., the session was reconvened and the Panel announced the decision to deny the oral motion. Ms. Mirch stated her objection to the denial and left the hearing. Respondent's counsel requested a directed verdict, which the Panel denied. Respondent's counsel was offered the same option as Claimant's counsel had -- to submit his exhibit books to the Panel to be accepted as evidence. Respondent did not have a witness testify, and did not cross-examine Claimants witness. Respondent's counsel then submitted exhibit books and the Panel accepted the exhibit books into evidence. Respondent's counsel made his closing statement and the session was adjourned at approximately 3:35 p.m.  

[T]he reason for the request was Mr. Mirch's poor health, and the need to get him to a doctor. Id. Mrs. Mirch explained that there was no another attorney that could try the case. Id. . Erin Hanson, who had worked on the case, was no longer with the Mirch Law Firm. Mrs. Mirch had not worked on the case and was not familiar with it to be able to competently represent Mr. Sayre. She explained that it would violate her ethical duties to undertake his representation for the hearing. Id. Mr. Mirch was the attorney who had worked on the case for over two years and was trial counsel. The Panel granted the motion. 

. . .

Mrs. Mirch took Mr. Mirch to the doctor again on July 19, 2017. He was seen at a Kaiser urgent care facility. Dr. Alison Cybele-Harden sent Mr. Mirch to the ER department at Kaiser hospital. She wrote a note for Mr. Mirch not to work from July 19-21, 2017. The ER department would follow up with determine the amount of additional time Mr. Mirch would need. Dr. Cybele Harden told Mr. Mirch he had to get to the ER right away. She wanted Mr. Mirch to be transported in an ambulance, but Mrs. Mirch agreed to transport him directly to the ER. Mrs. Mirch dropped Mr. Mirch off at the Kaiser ER, and then went to the hearing that was reconvening at 3:00

p.m. . . .

Mrs. Mirch presented the documents that the arbitrators asked for, a note from the Kaiser Doctor, which said that Mr. Mirch could not work and required further evaluation in the emergency room of the hospital that could not be provided in the Urgent Care. Exhibit 2, Emergency Motion at Ex 1. 

Mrs. Mirch also submitted a statement from Brad Sayre, explaining that he was not available to appear at the remainder of the hearing because his wife was going to have a baby and he was to be home to care for her and his new baby for 12 weeks as he is allowed under the California Family and Medical Leave Act. (FMLA). Exhibit 2, Emergency Motion at Exhibit 2. 

Mrs. Mirch told the panel that she had just dropped her husband off at the ER and needed to get back to the hospital as soon as possible. . . .

[P]etitioner Bradley Sayre's ("Mr. Sayre") Petition to Vacate or Modify Arbitration Award in Sayre v. J.P. Morgan Securities LLC, 17-CV-2285, ("Petition," ECF No. 1). Respondent J.P. Morgan Securities LLC ("JMPS") filed a Response to the Petition, ("Petition Opp'n," ECF No. 7), and Mr. Sayre filed a Reply in Support of the Petition, ("Petition Reply," ECF No. 10).

Pending in Sayre v. JP Morgan Chase & Co., 17-CV-449 is Defendants JPMorgan Chase & Co. and J.P. Morgan Securities LLC's ("Defendants") Motion to Dismiss or to Stay Plaintiff's First Amended Complaint, or, in the Alternative, Motion for Summary Judgment, ("MTN," ECF No. 8-1). Mr. Sayre filed an Opposition to the Motion, ("Opp'n," ECF No. 10), and Defendants filed a Reply in Support of the Motion, ("Reply, ECF No. 12). Defendants also requested leave to file supplemental briefing in support of their Motion, which the Court granted. (See ECF Nos. 14, 17.) Defendants filed their supplemental brief, ("Supp. Brief," ECF No. 17), Mr. Sayre filed an Opposition, ("Supp. Opp'n," ECF No. 18), and Defendants filed a Reply, ("Supp. Reply," ECF No. 21).

[T]he Panel determined it could make an impartial decision with or without Mr. Sayer and Mr. Mirch's presence. The Panel reviewed the evidence submitted by both Parties. The Panel reasonably found an indefinite postponement of the arbitration hearing was unnecessary given there was sufficient evidence available that would allow it to make a fair and impartial decision. The Parties had both made opening statements, Mr. Sayre's first witness had been examined, and both Parties' exhibit books were to be admitted into evidence. (ECF No. 11-5, at 3, 5.) Although the arbitration hearing continued in Mr. Sayre and Mr. Mirch's absence, "[JPMS] did not have a witness testify, and did not cross-examine [Mr. Sayre's] witness. . . . [JPMS's] counsel made his closing statement and the session was adjourned." (Id. at 5.)

Plaintiff first argues that claims arising under the Dodd-Frank Act are not subject to arbitration because the Act disallows arbitration for whistleblower claims. (Supp. Opp'n 4.) Plaintiff has misread the Dodd-Frank statute under which he brings his claim, 15 U.S.C. § 78u-6(h). (See Compl. ¶¶ 123-136.) The Dodd-Frank Act disallows arbitration for whistleblower claims brought under other statutes; it does not in fact disallow arbitration for Dodd-Frank whistleblower claims. See Khazin v. TD Ameritrade Holding Corp., 773 F.3d 488, 491 (3d Cir. 2014) (holding the Dodd-Frank Act added the Anti-Arbitration Provision to the Sarbanes-Oxley cause of action and "[t]he text and structure of Dodd-Frank compel the conclusion that whistleblower retaliation claims brought pursuant to 15 U.S.C. § 78u-6(h) are not exempt from predispute arbitration agreements"); Beard v. Santander Consumer USA, Inc., No. 1:11-cv-11-1815 LJO-BAM, 2012 WL 1292576, at *6 (E.D. Cal. Apr. 16, 2012) ("Provisions of the Dodd-Frank Act amend the whistleblower provisions of the Sarbanes-Oxley Act to make unenforceable any predispute arbitration clause for disputes arising under those whistleblower sections."); Ruhe v. Masimo Corp., No. SACV 11-734-CJC(JCGx), 2011 WL 4442790, at *4 (C.D. Cal. Sept. 16, 2011) ("The Dodd-Frank Act's whistleblower amendments to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act both contain provisions that render pre-dispute arbitration agreements unenforceable for claims brought under these two sections. Unlike these other whistleblower provisions of the Dodd-Frank Act, Section 78-u contains no such provision."). Thus, Plaintiff was not barred from bringing his Dodd-Frank Act whistleblower claims in arbitration.⁵

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Footnote 5: Plaintiff also argues FINRA rule 13201(b) also precludes disputes arising under a whistleblower statute from arbitration. (Supp. Opp'n 4.) In fact, the rule provides: "A dispute arising under a whistleblower statute that prohibits the use of predispute arbitration agreements is not required to be arbitrated under the Code." As detailed herein, this does not apply to the Dodd-Frank Act because this is not a statute that prohibits the use of predispute arbitration agreements.

This case presents one of the rare instances where an arbitration award must be vacated due to the arbitration panel's arbitrary denial of a reasonable request for postponement. The arbitration panel denied Sayre's counsel's request for a continuance, even though it is undisputed that he had a medical emergency. At the time of the continuance request, only half a day of a scheduled nine-day arbitration hearing had been completed and only a single witness had testified. After denying postponement, the panel proceeded in Sayre's counsel's absence, admitting exhibits into evidence and hearing only the defense's closing argument. The panel then summarily denied Sayre's claims without articulating how it could have rendered a "comprehensive evaluation" based on only a portion of Sayre's case-in-chief and without addressing why it could not have granted a continuance at least for the three days for which the doctor had placed Sayre's counsel off work. 

Because the panel arbitrarily denied Sayre's reasonable request for postponement, see Sheet Metal Workers, 756 F.2d at 746, we reverse and vacate the arbitration award.

I respectfully dissent. In light of all the circumstances before the arbitration panel-including Sayre's last-minute announcement that he would be unavailable for 12 weeks-and the extremely deferential standard of review accorded to an arbitration panel's decision, I cannot say the district court erred by denying Sayre's motion to vacate the arbitration award.

• FINRA
• Arbitration
• Postponement
• continuance
• SDCA 9Cir
• res judicata
• Dodd Frank
• wrongful termination
• BrokeAndBroker
• Bill Singer