November 3, 2021
In these pandemic times, FINRA arbitrations have resorted to virtual hearings, or required proof of vaccination or a negative Covid test within 72 hours of the start of live hearings. Further, FINRA implemented various safety protocols for in-person hearings. Notwithstanding those efforts to best respond to the health crisis, you're still going to have moments when parties or counsel are feeling ill. What happens if that occurs on the eve of a scheduled hearing?
Case in Point
In a FINRA Arbitration Statement of Claim filed in February 2020 and as amended, public customer Claimant Christine Kearney asserted misrepresentation and fraud, breach of fiduciary duty, failure to supervise, and respondeat superior. The FINRA Arbitration Award characterizes the causes of action as relating to a variable annuity.
In the Matter of the Arbitration Between Christine Kearney, Claimant, v. LPL Financial LLC and Gregory William Kearney, Respondents (FINRA Arbitration Award 20-00478)
The FINRA Arbitration Award states that:
In the Amended Statement of Claim, Claimant requested compensatory damages in the amount of
$89,788.00 plus accumulated interest and dividends; compensatory damages in the amount of
$30,000.00 from actions by the Financial Advisor plus interest and dividends; interest at the
statutory rate of 9% per annum from March 29, 2019; costs and attorneys' fees; punitive damages
in the amount of $250,000.00; and such other and further relief as the Panel deems appropriate.
Respondent LPL and Respondent Gregory Kearney generally denied the allegations and asserted affirmative defenses' and Kearney sought the expungement of the matter from his Central Registration Depository record ("CRD").
Claimant's Counsel Feels Ill
Shortly before the onset of the October 2021 evidentiary hearings, the Award discloses the following:
On October 7, 2021, Claimant filed a Motion to Postpone the hearing scheduled for October 12 - 15, 2021 based upon Claimant's counsel feeling ill. On the same day, Respondent filed a
response opposing the Motion to Postpone. By Order dated October 8, 2021, the Panel denied
Claimant's Motion to Postpone and ordered Claimant's counsel to provide FINRA Dispute
Resolution Services with a Covid19 test result within 72 hours of the hearing. The Order stated
that if the test is positive, the hearing in this matter will be postponed, and if the test is negative,
the hearing shall take place as scheduled.
Subsequent to the Panel's Order, Claimant submitted additional correspondence in further
support of the Motion to Postpone. By a second Order dated October 8, 2021, the Panel
reaffirmed its decision to deny the postponement request as Claimant failed to provide any
additional new reason to reverse the Panel's prior decision, such as medical records. The Panel
stated that if additional documentation or medical records are provided, the Panel may
reconsider the request. By email dated October 11, 2021, Claimant's counsel advised FINRA
Dispute Resolution Services of a negative Covid19 test result.
At the conclusion of Claimant's case-in-chief, Respondents made a Motion to Dismiss based
upon Claimant's failure to prove liability on Respondents. After due deliberation, the Panel
denied the Motion.
The FINRA Arbitration Panel denied Claimant Christine Kearney's claims and also denied Respondent Gregory Kearney's requested expungement.
Bill Singer's Comment
A sign of these pandemic time -- Claimant's counsel requested a postponement of a hearing because of feeling ill and was required to submit a Covid test result. As a general proposition, customer Claimants want to get to a hearing as soon as possible, so counsel's feelings of illness strike a somewhat sincere chord. On the other hand, many industry respondents might see the ill-feelings scenario as merely an 11th-hour ploy, and that cynicism is also a sign of the times.
Given that the evidentiary hearings began on October 12th and extended through the 13th and the 14th, it's clear the the FINRA Arbitration Panel stuck to its guns in light of the negative Covid test results. By way of a practice pointer for litigants and their counsel, note the testing protocol implemented by this Panel of three Public Arbitrators: Proof of a negative test 72 hours before the scheduled evidentiary hearing or no postponement will be granted. Unstated in the Award was whether any request was made or consideration given to conducting virtual hearings.
Curiosity having gotten the better of me, I looked up this arbitration on FINRA's online BrokerCheck database -- after all, the Claimant and the individual Respondent are both named "Kearney," and I was wondering if there was a marital or familial connection. Unfortunately, I was unable to resolve that question because the only substantive disclosure about the arbitration is that it involved allegations that:
Claimant alleges she was improperly removed as a beneficiary of an account belonging the her deceased mothers [sic].