$2 Million RBC FINRA Employment Arbitrations: Did Everyone Lose?

June 28, 2011

Sometimes everyone is a loser in a FINRA Arbitration

As a result of the allegedly improper termination of employment and the attendant loss of bonus compensation, Claimant Laird filed a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim in March 2010, that asserted causes of action for:

  • breach of contract;
  • unjust enrichment;
  • promissory estoppel;
  • wrongful termination;
  • intentional interference with a contractual relationship;
  • intentional interference with prospective economic advantage;
  • defamation;
  • violation of Minn. Stat. §181.932;
  • violation of Employee Retirement Income Security Act; and
  • conversion.

At the FINRA Arbitration hearing, Claimant Laird requested compensatory damages of $1,825,422.38, as well as other compensation and relief. In the Matter of the FINRA Arbitration Between Thomas Laird, Claimant,vs. RBC Capital Markets Corporation, Gerry Means Hairgrove, James John Tricolli, and Stephen Jerome Yanisch, Respondents (FINRA Arbitration 10-01502, June 21, 2011).

Respondents generally denied the allegations and asserted various affirmative defenses.


The FINRA Arbitration Panel dismissed with prejudice Claimant Laird's claims against individual Respondents Hairgrove, Tricolli, and Yanisch. However, the Panel found Respondent RBC liable and ordered it to pay to Claimant Laird:

  • $50,201.00 in compensatory damages;
  • $14,303.00 in pre-Award interest;
  • 10% per annum interest on the above Award from and including June 7, 2011, through and including the date of full payment; and
  • various forum fees.

Bill Singer's Comment

Did Claimant Laird over-play his hand in asking for the big bucks that he did? Maybe, maybe not - that question requires a nuanced answer.

These FINRA employment arbitrations prompt a lot of second-guessing, hindsight, and academic debate - all of which is outrageously annoying to the parties and their legal counsel who were in the trenches, battling for their positions. Having been in those pitched battles many times during my legal career, I know that those dissecting these arbitrations often perform post-mortems that are way off base.  My effort here may fare no better.

The Stratospheric Demand

Some lawyers love to load up the damages.  The old joke is that when we lawyers calculate the dollar amount to demand from our adversary, we carefully arrive at the real number and then add at least one or two zeroes. Of course, while that practice does exist, there's also the equally common variant in which the client rages against his/her own lawyer for not pumping up the claim -  I wanna pound them into the ground! They made me suffer. I want to ask for at least $10 million. They have the bucks. Why are you being such a wuz?

One reason not to submit an overly inflated claim for damages is that Claimant Laird's $1.8 million demand might have unintentionally laid the groundwork for the relatively paltry $65,000-plus Award because the FINRA Panel might have decided that his demand was so stratospheric as to lack any meaningful credibility - and, as such, lacking helpful guidance, the Panel might simply taken out their calculators and fashioned what they thought was fair.

For opponents of excessive damages demands, the better game theory in Laird might have been  to submit a demand for, say, $400,000, with the intention of prompting an award for something like $250,000, rather than the roughly $65,000 that was ordered in Laird.  Okay, it's all a fun exercise to wonder what if this or what if that. 

Lost amidst this post-game analysis, is that Laird's damages may well have been $1.8 million - or, even more confounding, his actual losses may have been the roughly $65,000 that he was awarded.  So, now where does that put all of the Monday morning quarterbacking?

Goosing the Dollars

On the other hand, but for his nearly multi-million dollar damage claim, Claimant Laird may well have walked away with nothing or, at best, a few thousand. In this scenario, the Panel may have gauged their Award by using the $1.8 million claim as requiring at least a five- or six-figure award rather than something far less. To understand this mentality, think of a baseball Umpire who knows that he blew that last called strike and his conscience says that he owes the batter the next close one.  In a case where you're largely arguing a matter of principle with not much in the way of provable damages, ratcheting up the damages can be an effective way to goose the numbers in the Award.


Some may argue that Claimant Laird should have asked for a more "reasonable" amount of dollars - let's say, completely chosen at random, $250,000. For all we know, Claimant may have attempted to settle for that amount, but the Respondents told him to shove it. For all we know, Claimant and his counsel may have decided that by asking for nearly $2 million in damages, they could force a better settlement - the hope for which did not prove out. For all we know, the nearly $2 million in damages was a spot-on, reasonable demand but the FINRA Panel inexplicably slashed the Award.  All of which is what goes on under the hood  - and if you don't lift that sucker and prod around in the engine, you're not going to have much of an idea as to why the car is in the ditch on the side of the road.

Arbitration is as much about gamesmanship as any litigation. The prelude to filing the claim, the negotiations, and the jockeying for advantage all prompt each side to make demands that others might subsequently approve or reject.  In the end it's simply about the end - does the client feel that he or she won.

Parting Shot at FINRA

The issues raised above are not intended as criticisms of the parties or the Panel. I wasn't at the hearing. I have no idea as to the merits of the case. I have no knowledge as to the credibility of the witnesses. The dollars awarded may be outrageously high (or even low), or could be spot on. All those allowances being granted, it's still somewhat disappointing that the FINRA Arbitration Panel failed to offer some insight and rationalization for its ruling. We are left with the infuriatingly frustrating situation of a Decision that, on its face, appears to be in Claimant Laird's favor but for the fact that he was awarded a mere fraction of the damages he sought. Although a very common outcome, the lack of rationale from the Panel as to the disparity is  unfortunate.