Posts tagged with "petition"

Court confirms FINRA Arbitration Award for Employee in the amount of $150,000 with interest

Scoble v. Blaylock & Partners, L.P., 2012 U.S. LEXIS 13706 (S.D.N.Y. 2012)

Matthew W. Scoble (“Scoble”) filed a petition against his former employer, Blaylock & Partners, L.P., subsequently known as Blaylock & Company, Inc. (“Blaylock”), to confirm an arbitration award pursuant to § 9 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9.  Scoble claimed that Blaylock breached a contract between the parties by failing to make a severance payment of $150,000 to him after Blaylock terminated his employment without cause.

The Financial Industry Regulatory Authority (“FINRA”) appointed a panel of three arbitrators to hear the matter after both parties agreed to submit the dispute to arbitration for a decision and award.  Both parties participated in the arbitration hearing that lasted several days.  Thereafter, the Arbitration Panel issued an award to Scoble in the amount $150,000 in compensatory damages.  The responsible party, Blaylock, would be liable for post-judgment interest pursuant to FINRA’s Code of Arbitration Procedure if it did not pay the award within thirty days.

The Court found that Scoble’s petition was sufficiently supported and indicated that there was no question of material fact.  Blaylock did not move to modify, vacate or correct the arbitration award and did not submit an opposition to the petition.  The petition to confirm the arbitration award was granted and judgment was entered for Scoble in the amount of $150,000 with post-judgment interest.

Should you have any questions relating to FINRA, arbitration or employment issues generally, please feel free to contact Russell J. Sweeting, Esq. by telephone at (203) 221-3100 or by e-mail at rsweeting@mayalaw.com.

Adoptive Children and Communications with their Biological Parents

Leigh Ryan, Esq. is an attorney with Maya Murphy, P.C., a full service law firm with offices in Westport, CT and New York City. Ms. Ryan is licensed to practice law in Connecticut and New York.

Connecticut telephone number: (203) 221-3100; New York telephone number: (212) 682-5700; Firm url: www. Mayalaw.com; E-mail: LRyan@Mayalaw.com

One of adoptive parents’ principal concerns is that of the role of the biological parents. Can a biological parent change their minds about the adoption? Can the biological parents communicate with the adopted child? Can the adopted child ever find out information about his/her biological parent(s)? All these questions can be nerve-racking for individuals who wish to adopt.

The reality is that in all states, the biological parents have a period of time in which they can revoke their consent to the adoption. In Connecticut, Conn. Gen. Stat. § 45a-719 allows for a birth parent to file a petition to set aside an order voluntarily terminating parental rights at any time before the entry of the final adoption decree. However, a biological parent’s ability to revoke may be terminated in cases of abandonment, failure to support the child, or abuse and neglect. Once the court issues a final decree of adoption, a birth parent’s consent becomes final and irrevocable.

After a final adoption decree, it is possible for the adoptive child and biological parents to communicate. The extent of that communication can be negotiated prior to the final adoption decree. In some cases, biological parents and intended adoptive parents enter into what is known as a Cooperative Postadoption Agreement. This is a written agreement between either or both birth parents and an intended adoptive parent(s) regarding communication or contact contacteither or both birth parents and the adopted child. It is in the Cooperative Postadoption Agreement that the extent of involvement of the birth parents can be defined.

In the case of Cooperative Postadoption Agreements, the identity of the biological parents is known. However, generally, adoption records are sealed and only non-identifying information is provided to the adoptive parents or adopted child (if he/she is an adult) upon request. This non-identifying information includes (1) age of biological parents in years at the birth; (2) heritage of the biological parent or parents; (3) education stated in the number of years of school completed; (4) general physical appearance of the biological parent(s); (5) talents, hobbies and special interests of the biological parent or parents; (6) existence of any other child or children born to either biological parent of the adopted or adoptable person; (7) reasons for placing the child for adoption or for biological parental rights being terminated; (8) religion of biological parent or parents; (9) field of occupation of biological parent or parents in general terms; (10) health history of biological parent or parents and blood relatives; (11) manner in which plans for the adopted or adoptable person’s future were made by biological parent or parents; (12) relationship between the biological parents; (13) any psychological, psychiatric or social evaluations; and (14) any other relevant non-identifying information.

In the event that the adoptive parents or adopted adult child wishes to learn the identity of the biological parents, written consent must first be obtained from the person whose identity is being request. Therefore, the identity of the birth parents (if not already known) will remain unknown unless the birth parent(s) consents.

Given the significant impact that contact with biological parents can have on the adopted child, it is important to have an attorney who is well versed in adoption law.
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Our family law firm in Westport Connecticut serves clients with divorce, matrimonial, and family law issues from all over the state including the towns of: Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best divorce attorneys and family attorneys in CT on staff that can help with your Connecticut divorce or New York divorce today.

If you have any questions or would like to speak to a divorce law attorney about a divorce or familial matter, please don’t hesitate to call our office at (203) 221-3100. We offer free divorce consultation as well as free consultation on all other familial matters. Divorce in CT and divorce in NYC is difficult, but education is power. Call our family law office in CT today.

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The “Manifest Disregard of the Law” Standard for Judicial Review of a FINRA Arbitration Award Excludes Questions of Fact

The “Manifest Disregard of the Law” Standard for Judicial Review of a FINRA Arbitration Award Excludes Questions of Fact

Patrick R. Murray v. Citigroup Global Markets, Inc., 2011 WL 5523680 (N.D. Ohio Nov. 14, 2011)

In a recent case before United States District Court for the Northern District of Ohio, Patrick R. Murray (“Murray”) filed motions to vacate, modify or correct portions of a Financial Industry Regulatory (“FINRA”) arbitration award. Citigroup Global Markets, Inc., (“CGMI”) filed a cross-motion to confirm the arbitration award and to award costs and fees incurred while seeking confirmation. The court denied Murray’s motions to vacate, modify or correct the arbitration award and granted CGMI’s motion to confirm the arbitration award. CGMI’s request for costs and fees was denied.

In July 2000, Murray was hired as a financial advisor in a local Smith Barney office, which was later acquired by CGMI. As required by FINRA rules, Murray executed a Uniform Application for Securities Industry Registration or Transfer (“Form U–4”). He also executed a promissory note for a $1,508,401 forgivable loan, and an addendum to the promissory note that extended the length of the repayment period from seven years to nine years. The instruments provided that the loan was to be repaid in nine equal annual installments commencing on the first anniversary date of its execution and that, if Murray terminated his employment prior to full repayment, the outstanding balance would be immediately payable with interest accruing from the date of termination. In April 2009, Murray resigned after having made eight annual payments on the loan.

In May 2009, Murray sued CGMI in state court alleging that CGMI fraudulently induced him to sign the addendum to the promissory note and illegally confiscated his assets related to a capital accumulation plan account. CGMI removed the case to federal court, where it filed a motion to compel arbitration. The court found that the arbitration clauses in the Form U-4, the promissory note, the addendum to the promissory note and a separate signed acknowledgment of the CGMI employee hand book were valid and enforceable; therefore, it granted CGMI’s motion to compel arbitration. FINRA appointed a panel of three neutral arbitrators to hear the matter. In April 2011, the FINRA panel awarded CGMI compensatory damages of $40,153.00 representing the unpaid balance on the promissory note and awarded Murray compensatory damages of $25,705.95.

Murray filed the instant motion to vacate, modify or correct portions of the arbitration award in federal court and CGMI filed its response and cross-motion to confirm the arbitration award. Murray challenged the arbitration award on the following grounds: (1) the award was irrational; (2) the award did not draw its essence from the contract between the parties; (3) the award violated public policy; and (4) the award manifestly disregarded the law.

The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, defines four limited statutory grounds on which a court may vacate an arbitration award, including instances of fraud or corruption, evident partiality, misbehavior or misconduct and acts exceeding the arbitration panel’s authority. 9 U.S.C. § 10(a). The court found that none of Murray’s first three grounds for vacatur satisfied these statutory requirements.

Several federal circuits, including the Sixth Circuit, have held that an arbitration award can be vacated “if it displays ‘manifest disregard of the law.’ ” Jacada, Ltd. v. Int’l Mktg. Strategies, Inc., 401 F.3d 701, 712 (6th Cir. 2005), overruled on other grounds, (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Jaros, 70 F.3d 718, 421 (6th Cir. 1995)). However, the court found that Murray’s assertions of manifest disregard of the law were based on questions of fact rather than questions of law. A federal court does not have the authority to re-litigate facts when reviewing an arbitration award to determine whether the arbitrators manifestly disregarded the law. See Bd. Of County Commis of Lawrence County, Ohio v. L. Robert Kimball & Assocs., 860 F.2d 683, 688 (6th Cir.1988). Therefore, the court denied Murray’s motion to vacate the arbitration award.

The court additionally determined that, although Murray was incorrect on the merits of his case, he did not engage in the degree of bad faith or vexatious behavior that would compel the court to award CGMI fees and costs for the instant litigation. Therefore, the court confirmed the arbitration award in its entirety without awarding CGMI additional fees and costs.

Should you have any questions relating to FINRA, arbitration or employment issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

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California Court Does Not Compel FINRA Arbitration of Statutory Discrimination Claims

California Court Does Not Compel FINRA Arbitration of Statutory Discrimination Claims

John Simmons v. Morgan Stanley Smith Barney, LLC, et al, 2012 WL 1900110 (S.D. Cal. May 24, 2012)

In January 2008, John Simmons (“Simmons”) was offered employment by Morgan Stanley Smith Barney, LLC (“Morgan Stanley”) as the Executive Director and District Manager in the Global Wealth Management Department. The offer letter stated that Simmons would be entitled to a $1 million forgivable loan, relocation benefits and a stock award. Simmons accepted the employment offer by signing the Morgan Stanley offer letter. In February 2008, Simmons and Morgan Stanley entered into bonus agreement and a promissory note that each contained a clause agreeing to arbitrate disputes related to these instruments in accordance with the Financial Industry Regulatory Authority (“FINRA”) rules. In March 2008, Simmons signed a Uniform Application for Securities Industry Registration or Transfer (“Form U-4”) which also contained an arbitration clause citing FINRA rules. In May 2009, Simmons and Morgan Stanley entered into a second bonus agreement and a second promissory note, each of which contained the same arbitration clauses as the previous instruments. In March 2011, Simmons’s employment with Morgan Stanley was terminated. In September 2011, Morgan Stanley initiated a Statement of Claim with FINRA seeking to arbitrate its claim against Simmons for violation of the bonus agreements and promissory notes.

In December 2011, Simmons initiated an action in California state court asserting statutory claims for discrimination pursuant to Cal. Govt.Code section 12940(a) and for violation of 42 U.S.C. § 2000e (“Title VII”). Simmons claimed that Morgan Stanley employees made disparaging remarks to him regarding his religious beliefs because he was a member of the Church of Jesus Christ of Latter Day Saints. Simmons also alleged that, despite his high level of performance, he was not paid in accordance with the terms of his employment agreement. Finally, the complaint also alleged that, in February 2011, shortly before his termination, Simmons informed his supervisor that he was aware of the fact that he was paid less than other co-workers who performed similar duties but who did not share his religious beliefs. Simmons’s complaint stated that these discrimination claims were “inextricably related” to Morgan Stanley’s allegations that he violated the two promissory notes because he was “illegally terminated before he was able to fully perform his obligations thereunder.” In addition to the two statutory discrimination claims, Simmons’s complaint also asserted non-statutory claims of wrongful termination in violation of public policy, fraud, and breach of contract.

Morgan Stanley removed the matter to the United States District Court for the Southern District of California and filed motions to compel arbitration and stay litigation. Simmons filed a motion for a preliminary injunction asserting that he should not be compelled to arbitrate the claims that Morgan Stanley filed with FINRA in September 2011. Simmons presented five distinct legal arguments for why he should not be compelled to arbitrate with Morgan Stanley. The federal court dedicated the most discussion to Simmons’s argument that the arbitration agreements which he allegedly entered into did not encompass his statutory discrimination claims.

The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, embodies both a fundamental principle that arbitration is based in contract and a federal policy favoring arbitration. A written arbitration agreement “shall be valid, irrevocable and enforceable,” unless the arbitration agreement can be invalidated by a generally applicable contract defense, such as fraud, duress and unconsionability. 9 U.S.C. §2. Therefore, federal courts deciding motions to compel or stay arbitration examine (1) whether a valid arbitration agreement exists; and (2) whether the agreement encompasses the dispute at issue. Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008). Courts apply state contract law to determine whether an arbitration agreement exists and whether such agreement is enforceable. Only if both findings are affirmative can a federal court enforce an arbitration agreement in accordance with its terms.

Causes of action premised on statutory rights are just as subject to contractual arbitration agreements as non-statutory common law claims. However, Congress may pass federal legislation that removes certain claims from the purview of the FAA. Precedent within the Ninth Circuit is that “a Title VII plaintiff may only be forced to forego her statutory remedies and arbitrate her claims if she has knowingly agreed to submit such disputes to arbitration.” Renteria v. Prudential Ins. Co. of Am., 113 F.3d 1104, 1105-06 (9th Cir. 1997)(citing Prudential Ins. Co. of America v. Lai, 42 F.3d 1299, 1305 (9th Cir.1994)). Both the public policy of protecting victims of sexual discrimination and the Congressional intent motivating Title VII legislation required that there be a knowing waiver of statutory remedies for civil rights violations, including employment discrimination based on gender. Id. at 1108. An earlier case within the Ninth Circuit held that parallel state anti-discrimination laws were made part of the Title VII enforcement scheme. Lai, 42 F.3d at 1301 n.1. Because the agreements to arbitrate in the February 2008 and May 2009 promissory notes and bonus agreements did not explicitly state that Simmons waived his right to a jury trial on claims of statutory employment discrimination, the court refused to find that Simmons knowingly waived his statutory remedies on these claims. Therefore, the court concluded that these arbitration provisions did not encompass Simmons’s first claim for violation of Cal. Govt. Code section 12940(a) and his second claim for Title VII violation. However, the court determined that Simmons’s remaining non-statutory claims were encompassed by the existing arbitration agreements.

An arbitration provision may be challenged “upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Under California law, a contract clause is unenforceable only if it is both procedurally and substantively unconscionable. Davis v. O’Melveny & Myers, 485 F.3d 1066, 1072 (9th Cir.2007) Procedural unconscionability analysis focuses on the oppression or surprise of a contract clause. The court found that the arbitration provisions at issue contain a minimal element of procedural unconscionability because they were standard FINRA agreements and clearly visible. Substantive unconscionability considers the effect of the contract clause, specifically whether the clause is so one-sided as to shock the conscience. Id. at 1075. The court found that the arbitration provisions were substantively unconscionable because the rules of FINRA may require Simmons to pay hearing session fees in excess of what he would pay in court. However, the single substantively unconscionable provision can be severed from the arbitration agreements; therefore, the court held that the arbitration agreements in the February 2008 and May 2009 promissory note and bonus agreements were enforceable once the unconscionable provision was severed.

The court granted Morgan Stanley’s motion to compel arbitration on Simmons’s non-statutory claims pursuant to the arbitration provisions set out in the February 2008 and May 2009 promissory note and bonus agreements. Likewise, pursuant to 9 U.S.C. § 3, the court granted Morgan Stanley’s motion to stay litigation on these claims pending arbitration. Because the court found that valid arbitration provisions exist, it denied Simmons’s motion for a preliminary injunction.

With respect to Simmons’s first two claims of employment discrimination under California and federal statutes, the court denied Morgan Stanley’s motions to compel arbitration and stay litigation. Simmons was permitted to litigate these claims in federal district court.

Should you have any questions relating to FINRA, arbitration or employment issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

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Federal Appellate Court Affirms Lower Court Ruling Not to Vacate FINRA Award

Federal Appellate Court Affirms Lower Court Ruling Not to Vacate FINRA Award

Javier Aviles v. Charles Schwab & Co., Inc., 435 Fed.Appx. 824 (11th Cir. 2011) (per curiam)

In a case before the United States Court of Appeals, Eleventh Circuit, Javier Aviles (“Aviles”) appealed a decision by the United States District Court for the Southern District of Florida that confirmed a Financial Industry Regulatory Authority (“FINRA”) arbitration award of $1.4 million in favor of Charles Schwab & Co., Inc. (“Charles Schwab”). The appellate court affirmed the district court ruling.

In 2007, Aviles left his employment with Charles Schwab to join Banc of America Investment Services, Inc. (“BAI”). Later that year, Charles Schwab came to believe that Aviles was improperly soliciting its clients. Schwab filed a Statement of Claims with FINRA against both Aviles and BAI, alleging multiple claims arising from Aviles’s resignation from Charles Schwab and his subsequent employment with BAI: breach of contract, misappropriation and misuse of trade secrets, breach of duty of loyalty, breach of fiduciary duty, tortious interference with contractual and business relations and unfair competition. BAI was later dismissed from the arbitration proceedings. In April 2009, the arbitration panel entered an award finding Aviles liable to Charles Schwab for $1.4 million.

Aviles filed a timely motion to vacate the arbitration award in state court, and Charles Schwab removed to federal court. After removal, Aviles filed a motion to amend in order to add a new claim of arbitrator bias. The district court found that the grounds for vacating the award set out in the original motion were without merit. Additionally, the district court found that the amended motion was not filed in a timely manner and did not relate back to the original motion. Finally, the district court found that the claim of arbitrator bias contained in the proposed amended motion also failed to warrant vacatur of the arbitration award.

Appellate courts do not use a different legal standard to review arbitration related judicial decisions: district court findings of fact are reviewed for clear error and district court legal conclusions are reviewed de novo. The Federal Arbitration Act (“FAA”), 9 U.S.C. § 10(a), provides limited statutory grounds for vacating an arbitration award, including where arbitrators refused to hear evidence pertinent and material to the controversy, or where there was “evident partiality” or corruption in the arbitrator.

When a party seeks vacatur by challenging an evidentiary decision of the arbitration panel, he must show that the arbitrator’s refusal to hear pertinent and material evidence prejudiced the rights of the parties to the arbitration’s proceedings. Rosensweig v. Morgan Stanley & Co., 494 F.3d 1328, 1333 (11th Cir. 2007). Aviles argued that the arbitrators refused to hear evidence material to the controversy because the arbitration panel excluded unsworn declarations completed by former Charles Schwab clients who had followed Aviles to BAI. Aviles asserted that these were material to the controversy because they demonstrated that the clients decided to transfer their accounts to BAI because it was in their personal best interest to maintain the relationship with Aviles. The chair of the arbitration panel stated that he would not allow documents that were not sworn or authenticated; however, he would sign subpoenas to allow Aviles to present this evidence in an acceptable manner and would also permit telephonic testimony if someone was out-of-town or otherwise unable to attend the hearings. The appellate court determined that the exclusion of the unsworn declarations did not prejudice Aviles’s right to present all evidence pertinent and material to the controversy. The chair of the arbitration panel offered Aviles alternate avenues to submit this evidence, and Aviles decided not to avail himself of those options. Therefore, the district court did not err in its ruling that the arbitration award could not be vacated on the grounds that arbitrators refused to hear evidence.

When a party seeks vacatur by challenging the impartiality of the arbitration panel, he must show that the alleged partiality is “direct, definite and capable of demonstration rather than remote, uncertain and speculative.” Gianelli Money Purchase Plan & Trust v. ADM Investor Servs., 146 F.3d 1309, 1312 (11th Cir. 1998). Aviles presented an affidavit from a FINRA arbitrator not serving on his panel indicating that the chair of the arbitration panel made statements illustrating a clear bias against him. Specifically, the affidavit alleges that the chair stated that when a court enters a preliminary injunction or a temporary restraining order against a financial advisor prior to arbitration, the arbitrator’s only remaining task is to quantify and award damages. Aviles had been served with a preliminary injunction prior to the arbitration proceedings. The court found that the statements in the affidavit did not indicate that the chair of the arbitration panel was biased against Aviles. According to the court, the affidavit at most illustrated that the chair of the arbitration panel had an incorrect understanding of a legal issue, which is not enough to demonstrate bias or hostility toward a party. Therefore, the district court did not err in its ruling that the arbitration award could not be vacated on grounds of arbitrator bias.

Because the district court did not err in ruling that there were insufficient grounds to vacate the arbitration award on the basis of refusal to hear evidence and arbitrator bias, the appellate court affirmed the district court ruling denying Aviles’s motion to vacate the arbitration award.

Should you have any questions relating to FINRA, arbitration or employment issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

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Custody and Relocation: How to Request Permission to Move with Minor Children

In the years following divorce, many custodial parents are faced with the challenge – and the associated legal hurdles – of determining whether they are permitted to relocate out of state or across the country with any minor children of the marriage. The non-custodial parent may object to the decision and the move, and if the parties cannot agree, ultimately a judge will be empowered to determine whether the relocation will be allowed. The law governing this decision is set forth in our state statutes and governing case law.

Prior to a change in the law in 2006, the parent seeking a relocation with minor children was required to prove to a court by a preponderance of the evidence that the proposed relocation was for a legitimate purpose, and, further, that the proposed relocation was reasonable in light of that purpose. Only if that burden was met by the moving party, the non-custodial parent (the parent opposed to the relocation) had the burden to demonstrate to the court that the move would not have been in the best interests of the minor child or children. Ireland v. Ireland, 246 Conn. 413, 717 A.2d 676 (1998).

This “burden-shifting” analysis adopted by the Supreme Court in the Ireland case in 1998 was replaced by our Legislature in 2006 with Public Acts 2006, No. 06-168, now set forth in General Statutes § 46b-56d. Section 46b-56d(a) now reads: (a) In any proceeding before the Superior Court arising after the entry of a judgment awarding custody of a minor child and involving the relocation of either parent with the child, where such relocating parent would have a significant impact on an existing parenting plan, the relocating parent shall bear the burden of proving, by a preponderance of the evidence, that (1) the relocation is for a legitimate purpose, (2) the proposed location is reasonable in light of such purpose, and (3) the relocation is in the best interests of the child.

The effect of General Statutes § 46b-56d(a) is essentially to codify the three-part provisions of the Ireland rule, while at the same time relieving the party opposing relocation of its former burden of proving, by a preponderance of the evidence, that despite the moving party’s showing that relocation is for a legitimate purpose and is reasonable in light of that purpose, the relocation nevertheless fails to be in the best interests of the child. Under today’s law, Section 46b-56d(a) now places squarely on the shoulders of the party advocating relocation the entire burden of demonstrating, by a preponderance of the evidence, not only that the relocation is for a legitimate purpose and is reasonable in light of that purpose, but also that the relocation is affirmatively in the best interests of the child.

General Statutes § 46b-56d(b) further enumerates five specific factors that our courts are now statutorily obligated to consider in determining whether to approve a parent’s request to relocate with a child. Section 46b-56d(b) reads: (b) In determining whether to approve the relocation of the child under subsection (a) of this section, the court shall consider, but such consideration shall not be limited to: (1) Each parent’s reasons for seeking or opposing the relocation; (2) the quality of the relationships between the child and each parent; (3) the impact of the relocation on the quantity and the quality of the child’s future contact with the nonrelocating parent; (4) the degree to which the relocating parent’s and the child’s life may be enhanced economically, emotionally and educationally by the relocation; and (5) the feasibility of preserving the relationship between the non-relocating parent and the child through suitable visitation arrangements.

These factors were first adopted by the Ireland court from the New York Court of Appeals case of Tropea v. Tropea, 87 N.Y.2d 727, 665 N.E.2d 145, 642 N.Y.S.2d 575 (1996), under the court’s supervisory authority. Under Ireland, each of the Tropea factors is to be considered, although not exclusively, and no single factor is to be presumed to carry dispositive weight. Ireland v. Ireland, supra, 246 Conn. 434. “Moreover, any other factors or circumstances that could have a bearing on the court’s determination of the child’s best interests should be considered and given the appropriate weight in the court’s analysis.” Ireland v. Ireland, supra, 435. The ultimate goal in considering these and other factors deemed appropriate by the court is to facilitate an accurate case-by-case determination of whether the relocation proposed by the moving party indeed lies in the best interests of the child. Ireland v. Ireland, supra, 433-34.

Whether you are considering or opposing a relocation of minor children after divorce, it is suggested that you consult with family law attorneys who are experienced in these matters. For any further information or confidential inquires regarding this posting, please contact Attorney H. Daniel Murphy at 203-221-3100 or hdmurphy@mayalaw.com.

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Our family law firm in Westport Connecticut serves clients with divorce, matrimonial, and family law issues from all over the state including the towns of: Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best divorce attorneys and family attorneys in CT on staff that can help with your Connecticut divorce or New York divorce today.

If you have any questions or would like to speak to a divorce law attorney about a divorce or familial matter, please don’t hesitate to call our office at (203) 221-3100. We offer free divorce consultation as well as free consultation on all other familial matters. Divorce in CT and divorce in NYC is difficult, but education is power. Call our family law office in CT today.

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Federal Court Narrows the Definition of “Customer” to Limit Compelled Arbitration Under the FINRA Code of Arbitration Procedure for Customer Disputes

Federal Court Narrows the Definition of “Customer” to Limit Compelled Arbitration Under the FINRA Code of Arbitration Procedure for Customer Disputes

Herschel and Mona Zarecor, et al, v. Morgan Keegan & Company, Inc., 2011 WL 5592861 (E.D. Ark. Jul. 29, 2011).

Herschel and Mona Zarecor, et al, v. Morgan Keegan & Company, Inc., 2011 WL 5508860 (E.D. Ark. Nov. 10, 2011)

In a case before the United States District Court for the Eastern District of Arkansas, Herschel and Mona Zarecor (“the Zarecors”) filed a petition to confirm a Financial Industry Regulatory Authority (“FINRA”) arbitration award entered in their favor in October 2010. Morgan Keegan & Company, Inc., (“Morgan Keegan”) filed a counterclaim to vacate the award. The court granted Morgan Keegan’s motion for vacatur. In a later action before the same court, the Zarecors filed a motion for reconsideration. The court denied the motion for reconsideration.

The underlying dispute in this case is based on a Statement of Claims that the Zarecors filed with FINRA to institute an arbitration proceeding against Morgan Keegan. The Zarecors alleged that Morgan Keegan violated state laws by failing to disclose risks associated with the Regions Morgan Keegan funds (“RMK Funds”) that the Zarecors purchased for their individual retirement accounts. The Zarecors alleged that the prospectus and written sales materials for the RMK funds represented these funds as traditional income or bond funds, when these funds were invested instead in risky structured financial products and derivatives. The Zarecors lost over ninety-percent of their original investment in the RMK funds.

In their Statement of Claims, the Zarecors asserted that FINRA had jurisdiction to arbitrate the dispute in absence of a written arbitration agreement because Morgan Keegan was a FINRA member and the Zarecors were public customers. Pursuant to FINRA Rule 12200, a member firm must arbitrate a dispute if: (a) arbitration is required by written agreement or requested by the customer; (b) the dispute is between a FINRA member or associated person of a FINRA member and its customer; and (c) the dispute arises in connection with the business activities of the member or the associated person. Morgan Keegan alleged that the Zarecors did not qualify as their customers because the Zarecors never sought advice from or held accounts with Morgan Keegan; the Zarecors purchased the RMK funds from competitor brokerage firms, held accounts at competitor brokerage firms and had no direct dealings with Morgan Keegan. Morgan Keegan also filed a motion to dismiss under FINRA Rule 12504(a)(6)(B), which the arbitration panel denied after hearing oral arguments from the parties. After three days of arbitration hearings, the FINRA arbitration panel issued an award finding Morgan Keegan liable to the Zarecors for $541,000 in compensatory damages. In November 2010, the Zarecors commenced an action to confirm the award and Morgan Keegan filed a counterclaim to vacate the award.

The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 9-11, provides statutory grounds for judicial review to confirm, vacate or modify an arbitration award. Where there has been an arbitration agreement between the parties, judicial review is severely limited and the arbitration decision may be vacated on very narrowly defined statutory grounds. See 9 U.S.C. § 10(a). Morgan Keegan asked the court to vacate the arbitration award on two grounds: (1) there was no such arbitration agreement between the parties; and (2) the underlying dispute is not subject to mandatory arbitration under FINRA Rule 12200 because the Zarecors were not customers entitled to request arbitration. The Zarecors countered that, because Morgan Keegan had not sought to enjoin the arbitration proceedings and had participated in the arbitration hearings, the firm had waived its right to contest whether the underlying dispute could be submitted for arbitration.

A party opposed to arbitration has several alternatives to preserve the issue for judicial review: (1) object to the arbitrator’s authority, refuse to argue the arbitrability issue, and proceed to the merits of the agreement; (2) seek declaratory or injunctive relief from a court prior to commencement of arbitration; (3) notify the arbitrators of a refusal to arbitrate altogether; or (4) file a timely motion to vacate in district court. See International Broth. of Elec. Workers, Local Union No. 545 v. Hope Elec. Corp., 380 F.3d 1084, 1101–02 (8th Cir. 2004). The court determined that Morgan Keegan did not waive its right to contest arbitrability by failing to enjoin the arbitration proceedings; its motion to dismiss, its objections to the arbitration panel’s jurisdiction during the hearings and its timely motion to vacate the award supported the court’s finding that Morgan Keegan sufficiently preserved its right to contest that the underlying dispute was not subject to FINRA arbitration.

FINRA Rule 12100(i) provides the following definition of a “customer” to be used throughout the FINRA Code of Arbitration Procedure for Customer Disputes: “A customer shall not include a broker or dealer.” The district court was concerned that the definition of a “customer” under this rule not be construed too narrowly, nor be interpreted in a manner that would ignore the reasonable expectations of FINRA members. For the purposes of compelling a member firm to arbitrate a dispute, precedent within the Eighth Circuit limits the definition of a “customer” to “one involved in a business relationship with [a FINRA] member that is related directly to investment or brokerage related services.” Fleet Boston Robertson Stephens, Inc. v. Innovex, Inc., 264 F.3d 770, 772 (8th Cir. 2001). This narrower definition excludes individuals who receive only financial advice, not investment or brokerage services, from the FINRA member. Id. In the instant case, it is undisputed that the Zarecors purchased the RMK Funds from competitor brokers and did not have a direct transactional relationship with Morgan Keegan; however, the Zarecors asserted that they qualified as customers of Morgan Keegan based on phone conversations with Morgan Keegan representatives regarding the funds, including their liquidity and exposure to the sub-prime market. Courts have found a customer relationship based on interactions between an investor and a FINRA member’s representative only where there is conduct on the part of the representative that indicates the existence of a business or investment relationship, such as soliciting a purchase, taking money from an investor, or facilitating investment transactions. See Oppenheimer & Co., Inc. v. Neidhardt, 56 F.3d 352 (2d Cir. 1995). The Zarecors’ interaction with Morgan Keegan did not satisfy this standard. Therefore, the district court determined that there were no connections or customer relations between the parties that would justify compelling arbitration under FINRA Rule 12200.

Because the district court found that the requirements for compelling arbitration under FINRA Rule 12200 were not satisfied, the court denied the Zarecors’ motion for judgment confirming the arbitration award and granted Morgan Keegan’s counterclaim to vacate the award.

In November 2011, the Zarecors filed a motion for reconsideration pursuant to Rule 59(e) of the Rules of Federal Civil Procedure, which permits a district court to correct its own mistakes in the time period immediately following entry of judgment. Rule 59(e) cannot be used to introduce new evidence, tender new legal theories or raise arguments that could have been offered prior to entry of judgment. In their motion for reconsideration, the Zarecors contended that the court overlooked the material fact that Morgan Keegan signed an agreement to submit to arbitration and that this submission agreement had been part of the record. Although the submission agreement was part of the record, the Zarecors failed to reference it or discuss its relevance in briefs filed prior to judgment. The court’s failure to notice the submission agreement, therefore, did not amount to manifest error of law or fact. The Zarecors additionally contended that Morgan Keegan submitted the issue of arbitrability to the arbitration panel for decision. The court considered this argument to be a new legal theory, contradictory to the Zarecors’ previous argument that Morgan Keegan had waived its right to object to arbitrability by failing to contest the issue before the arbitration panel. Therefore, the district court rejected both contentions as sufficient bases for reconsideration under Rule 59(e).

The district court determined that that the Zarecors were not entitled to relief under Rule 59(e) and, therefore, denied their motion for reconsideration. The court’s previous order and judgment to vacate the FINRA arbitration award were undisturbed.

Should you have any questions relating to FINRA or arbitration issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

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Federal Court Enforces FINRA Arbitration Award Based Solely on the Plain Language of the Award Because the Award was not “Patently Ambiguous”

Federal Court Enforces FINRA Arbitration Award Based Solely on the Plain Language of the Award Because the Award was not “Patently Ambiguous”

Luby’s Restaurants Limited Partnership v. Credit Suisse Securities (USA) LLC, 2011 WL 1740196 (S.D. Tex. May 5, 2011)

In a case before the United States District Court for the Southern District of Texas, Luby’s Restaurants Limited Partnership (“Luby’s”) sought to confirm a Financial Industry Regulatory Authority (“FINRA”) arbitration award pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9. In its petition, Luby’s also sought a court ruling to interpret the arbitration award as requiring Credit Suisse Securities (USA) LLC (“Credit Suisse”) to recompense an additional $186,000 in damages. Luby’s originally filed the petition in state court, but Credit Suisse removed to federal court. The federal district court confirmed the arbitration award in Luby’s favor and denied Luby’s petition to order Credit Suisse to pay the additional sum.

The underlying dispute in this case is based on Luby’s purchase of over $30 million in auction rate securities from Credit Suisse. Credit Suisse had falsely represented that these securities were suitable to Luby’s investment goals because they were equivalent to money market funds, highly liquid, and safe investments for short term investing. In October 2008, when Luby’s filed arbitration proceedings, the company had redeemed all but $8.9 million worth of the securities, which could not be sold at par value. In September 2009, after proceedings had been initiated but before the arbitration hearings had begun, Luby’s redeemed one of the remaining securities for less than par value, sustaining a $186,000 loss. In May 2010, the FINRA arbitration panel ruled that Credit Suisse was liable to Luby’s for the re-purchase of the disputed auction rate securities at par value, and that Credit Suisse was also liable to Luby’s for interest on the par purchase price of these securities from a specific date after the arbitration award through the date the award was paid in full.

Pursuant to the terms of the arbitration award, Credit Suisse purchased all of Luby’s remaining securities at par value and paid the required interest. Neither party contested the award and both parties sought its confirmation. However, Luby’s and Credit Suisse disputed whether the award included the $186,000 loss that Luby’s sustained when it sold securities for less than par value after filing for arbitration. Luby’s did not request the court to modify or correct the award, but to confirm the award as written and interpret the writing as including the additional loss. In raising this issue, neither Luby’s nor Credit Suisse argued that FINRA arbitration did not fully resolve their dispute, nor did they assert that the language of the arbitration award created a collateral dispute.

Courts are required to enforce arbitration awards only as written by the arbitrator; therefore, if an arbitration award is ambiguous, it is unenforceable and must be remanded to the arbitrator with instructions to clarify the particular ambiguities. Brown v. Witco Corp., 340 F.3d 209, 216 (5th Cir. 2003) (citing Oil, Chem. & Atomic Workers Int’l Union Local 4–367 v. Rohm & Haas, Tex., Inc., 677 F.2d 492, 495 (5th Cir. 1982). Remand is only appropriate where: (1) an arbitration award is patently ambiguous; (2) the issues submitted to arbitration were not fully resolved; or (3) the language of the arbitration award created a collateral dispute. Oil, Chem. & Atomic Workers, 677 F.2d at 495.

Although both Luby’s and Credit Suisse argued different interpretations of the FINRA arbitration award, the district court did not find that the award itself was patently ambiguous. The plain language of the award makes no mention of additional damages sustained by Luby’s during the pendency of the arbitration hearings. Credit Suisse could clearly not purchase back the securities that were sold because they were no longer in Luby’s possession. The award clearly denied any relief other than that which was expressly granted in its plain language. Additionally, during the arbitration hearings, Luby’s presented this loss as a claim distinct from the claim to buy back the auction rate securities at par. The arbitrators did not include this relief in the arbitration award, thereby effectively denying such relief. Therefore, because the federal district court found the arbitration award to be unambiguous, it confirmed and enforced the award as written.

The court ordered that the final FINRA arbitration award in Luby’s favor be confirmed and adopted as the judgment of the court. Luby’s petition to order Credit Suisse to make additional payment of $186,000 was denied as not having been ordered in the final award of the arbitration panel.

Should you have any questions relating to FINRA or arbitration issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

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FINRA Arbitrators are Immune from Civil Liability When Making Decisions within Their Jurisdiction

FINRA Arbitrators are Immune from Civil Liability When Making Decisions within Their Jurisdiction

Richard Sacks, d/b/a Investors Recovery Service, v. Dean Dietrich and Teri Coster Boesch, 663 F.3d 1065 (9th Cir. 2011)

In a case before the Ninth Circuit, Richard Sacks (“Sacks”), doing business as Investor Recovery Services, appealed a United States District Court ruling dismissing his claims of intentional and negligent interference with contract and negligent interference with prospective economic advantage against Financial Industry Regulatory Authority (“FINRA”) arbitrators Dean Dietrich and Teri Coster Boesch (“the challenged arbitrators”). The Ninth Circuit affirmed the United States District Court for the Northern District of California ruling that Sacks’s claims were barred by arbitral immunity.

Sacks entered into a written contract with a client to represent him in a FINRA securities arbitration proceeding. In order to submit his dispute to FINRA, Sacks’s client signed a FINRA submission agreement. On behalf of his client, Sacks submitted a Statement of Claim, paid filing fees and requested a hearing. FINRA appointed a panel of three arbitrators, including the challenged arbitrators, to hear and decide the claims of Sacks’s client.

After two telephone hearings, the respondents in the arbitration moved to have Sacks disqualified on the grounds that he was ineligible under FINRA Rule 13208, which disallows representation by a person who is not an attorney and who is also “currently suspended or barred from the securities industry in any capacity.” Sacks was not an attorney and was barred from the securities industry in 1991. In his response to the motion to disqualify, Sacks objected to the arbitration panel’s consideration of the issue arguing that the panel did not have the authority to make a decision on his client’s representation and that he had not contracted with the panel to make any such decision. However, Sacks disputed neither the fact that he was not an attorney nor the fact that he had been barred from the securities industry. The challenged arbitrators signed an order disqualifying Sacks from representing his client. The third arbitrator did not join in the order.

Sacks filed a complaint in state court against the challenged arbitrators alleging that, by preventing him from representing his client, the challenged arbitrators exceeded their authority under his client’s FINRA submission agreement, FINRA rules and state law. The challenged arbitrators removed the case to federal district court. The district court ruled that Sacks’s claims were barred by arbitral immunity, granted the challenged arbitrators’ motion to dismiss and entered judgment dismissing all claims with prejudice. Sacks appealed.

The doctrine of arbitral immunity aims to protect decision makers from undue influence and the decision making process from reprisals by dissatisfied litigants. Wasyl, Inc. v. First Boston Corp., 813 F.2d 1579, 1582 (9th Cir.1987). The doctrine only applies to claims that effectively seek to challenge the decisional act of an arbitrator or an arbitration panel. More specifically, it limits arbitrators’ immunity to “civil liability for acts within their jurisdiction arising out of their arbitral functions in contractually agreed upon arbitration hearings.” Id. at 1582.

Sacks argued that the doctrine of arbitral immunity was inapplicable to bar his claims because the challenged arbitrators exceeded their jurisdiction. The first basis for this argument was that FINRA rules and applicable law prevented the challenged arbitrators from deciding a representational issue. Specifically, Sacks argued that FINRA Rule 13208 itself did not give arbitrators the authority to prohibit him from representing his client. However, the appellate court determined that, taken as a whole, FINRA rules and applicable law dictate that the challenged arbitrators were acting within their jurisdiction. FINRA Rule 13413 grants the arbitration panel authority to interpret and determine the applicability of FINRA rules and provides that “[s]uch interpretations are final and binding upon the parties.” There was no issue regarding Sacks’s lack of qualification under FINRA Rule 13208 because it was undisputed that he was not an attorney and had been barred from the securities industry. Therefore, the challenged arbitrators did not exceed their authority in issuing the disqualification order.

The second basis for Sacks’s argument that the challenged arbitrators exceeded their authority is that he could not be bound by the arbitration panel because he was not a party to the arbitration agreement. The appellate court determined that Sacks was still bound by the arbitration agreement under ordinary contract and agency principles. When Sacks’s client submitted his claim to FINRA, the FINRA arbitrators had jurisdiction to issue binding interpretations of FINRA rules. Therefore, because the challenged arbitrators acted with full authority under the client’s arbitration agreement, they could not be subject to suit by a party representative.

The appellate court determined that the arbitrators were acting within their jurisdiction and Sacks’s claims arose out of a decisional act. Therefore, the district court properly applied the doctrine of arbitral immunity to bar Sacks’s claims. The appellate court affirmed the district court rulings.

Should you have any questions relating to FINRA or arbitration issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

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