Posts tagged with "unfairness"

To Be Qualified for a Position, an Employee Must Also Be Eligible

Most employees are familiar with the proposition that for them to prevail in a discrimination case they must prove several things, including that they were “qualified” for the position sought (and denied).  Most people equate being “qualified” with “possessing the qualifications to perform the job” and this is correct.  But there is more.  In addition to being technically competent, the employee must also be eligible to apply for the position.

In a recent decision, a Physician’s Assistant (“PA”) voluntarily chose to transfer from a hospital Department of Surgery to its Department of Medicine in order to avoid impending “on call” obligations.  When a Lead PA position was posted in the Department of Surgery it was hospital policy to offer it first to PA’s within the Department (of which there was one) and absent interest, to open the position to other Departments.  When the Lead PA position was offered to and accepted by the lone PA in the Department of Surgery the former Department PA sued on a variety of grounds, including race and gender discrimination.

After a jury initially found for the disappointed PA, a reviewing court found that the jury’s determination that he was qualified for the position found no support in the record.  The court framed the relevant inquiry as “whether he would have been eligible to apply as a non-departmental candidate when there was an internal candidate willing to take the . . . position.”  The court answered this question in the negative and judgment was entered in favor of the defendant hospital.

Parenthetically, the court also found that the plaintiff PA did not suffer any adverse employment action and that the circumstances of the case did not give rise to an inference of gender discrimination.  Noteworthy, too, was the court’s observation that “unfairness is not the equivalent of gender discrimination.”  The court’s sole concern is “whether unlawful discriminatory animus motivates a challenged employment decision.”  Thus, a successful plaintiff must produce evidence from which such motivation can reasonably be inferred.

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues. Please contact our Westport office at 203-221-3100.

 

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Colorado Court Confirms FINRA Arbitration Award Denying Relief for Service Member’s USERRA Claims

Michael H. Ohlfs v.Charles Schwab & Co., Inc., 2012 WL 202776 (D. Colo. Jan. 24, 2012)

In a recent case before the Colorado federal district court, Michael Ohlfs (“Ohlfs”), an investment professional employed by Charles Schwab & Co., Inc., (“Charles Schwab”), filed a motion to vacate a Financial Industry Regulatory Authority (“FINRA”) arbitration award decided in favor of Charles Schwab in August 2011. Charles Schwab petitioned the court to confirm the arbitration award and enter judgment pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9. The court dismissed Ohlfs claims with prejudice and entered judgment for Charles Schwab.

The underlying dispute in this case arose when Ohlfs returned from post 9/11 active duty military service to a Grade 56 Investment Representative position with Charles Schwab, which was lower than the Grade 57 Senior Investment Specialist he held prior to his military service. The Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. § 4301, et seq., (“USERRA”) prohibits employment discrimination against military personnel deployed for active duty. Ohlfs initially filed his USERRA claims in federal district court; however, the court ordered the parties to FINRA arbitration pursuant to the agreement that Ohlfs executed when he registered as a securities broker.

FINRA appointed an arbitration panel of three arbitrators to hear the matter after Ohlfs executed a FINRA Arbitration Submission Agreement, which included an agreement to be bound by the award. Ohlfs’s claims against Charles Schwab included allegations that his re-employment in 2003 and 2004 were both in violation of USERRA § 4312, that he was discriminated against by failure to promote in violation of USERRA § 4311, and that he was discriminated against for filing a Department of Labor complaint. After ten days of hearings, the FINRA arbitration panel denied all Ohlfs’s statutory claims and all relief requested with prejudice.

Ohlfs filed a motion in federal court to vacate the FINRA arbitration award on several grounds, including unfair treatment by the FINRA arbitration panel, violation of the well-established USERRA public policy, and manifest disregard of the law.

Federal courts may vacate an arbitration award under four narrowly defined statutory grounds, 9 U.S.C. § 10(a), including “evident partiality” on the part of the arbitrators. An arbitration award may also be vacated for a limited number of judicially created reasons, such as violations of public policy, manifest disregard of the law, and denial of a fundamentally fair hearing. Sheldon v. Vermonty, 269 F.3d 1202, 1206 (10th Cir. 2001). Errors in the arbitration panel’s findings of fact, interpretation of the law, or application of the law do not justify vacating an award unless such errors correlate to a manifest disregard for the law. See Hollern v. Wachovia Sec., Inc., 458 F.3d 1169, 1172 (10th Cir. 2006).

To support his allegation of evident partiality by the arbitration panel, Ohlfs cited nine deficiencies in the arbitration process. The court determined that these allegations, viewed both separately and cumulatively, were insufficient to satisfy Ohlfs’s burden of demonstrating that the panel was unfair to him or partial to Charles Schwab. One of the key allegations was that two arbitrators were biased toward Charles Schwab because of their connections to the company. Two members of the arbitration disclosed their connections to Charles Schwab prior to hearing and deciding Ohlfs’s claims. Because he had knowledge of facts suggesting arbitrator bias or partiality but failed to object to their participation until after the entry of the award, the court determined that Ohlfs waived his right to claim arbitrator bias on these grounds. Another key allegation was that the arbitration panel refused to consider, or otherwise disregarded evidence, that Ohlfs presented regarding having gone from a Grade 57 Senior Investment Specialist to a Grade 56 Investment Representative following his post–9/11 military service. Without supporting transcripts from the arbitration hearing, the court determined it had no basis on which to find unfairness or partiality.

Courts have limited authority to vacate an arbitration award for non-statutory reasons. An arbitration award may be set aside on public policy grounds if: (1) the award creates an explicit conflict with other laws and legal precedents as opposed to general considerations of supposed public interests; and (2) the violation of such public policy is clearly shown. United Paperworkers Int’l Union, AFL–CIO v. Misco, Inc., 484 U.S. 29, 43 (1987). Ohlfs argued that the FINRA arbitration award in favor of his employer clearly violated USERRA’s well-defined public policy of protecting members of the armed forces from employment discrimination because the award absolved the employer of any wrongdoing without determining the merits of Ohlfs’s claims. The court determined that this argument was an attempt to attack the arbitration award on the basis of the arbitration panel’s failure to issue a reasoned decision. FINRA Rule 1304(g) provides for an “explained decision” that sets forth the general reasons for the arbitration award. However, such a decision is provided only in the event that the parties jointly request such a decision twenty days prior to the first scheduled hearing. FINRA Rule 13514(d). An explained decision was not required in this case under FINRA’s rules because the parties did not jointly request such a decision. Therefore, Ohlfs failed to carry his burden of proof on the matter.

In order to vacate an arbitration award based on the arbitrators’ manifest disregard of the law, “the record [must] show the arbitrator[s] knew the law and explicitly disregarded it.” Dominion Video Satellite, Inc. v. Echostar Satellite, L.L.C., 430 F.3d 1269, 1275 (10th Cir. 2005). The court determined that, in the absence of an explanation for the award, Ohlfs cannot demonstrate that the panel manifestly disregarded the law under USERRA based on the fact that it found for Charles Schwab on his claims. The award itself provided no basis to find an “explicit” disregard of the law. Charles Schwab presented substantial evidence in its defense during the arbitration, and the court cannot second guess the panel’s factual findings.

The court denied Ohlfs’s motion for vacatur and entered judgment in favor of Charles Schwab as set forth in the FINRA arbitration award dated August 9, 2011.

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 Appellate Court Upholds Vacatur of FINRA Arbitration Award Based on Denial of Due Process

California Appellate Court Upholds Vacatur of FINRA Arbitration Award Based on Denial of Due Process

Roland Hansalik v. Wells Fargo Advisors, LLC, 2012 WL 1423014 (Cal. Ct. App. April 25, 2012)

In a recent case before the California Court of Appeals, Wells Fargo Advisors, LLC (“Wells Fargo”) appealed the trial court order to vacate the Financial Industry Regulatory Authority (“FINRA”) award in its favor against Ronald Hansalik (“Hansalik”). The appellate court found no error in the trial court ruling and affirmed the decision.

The underlying dispute in this case arose from Wells Fargo’s action to collect from Hansalik the unpaid balance of $1,239,044.16 due on a promissory note that contained a clause agreeing to arbitrate before FINRA. Prior to the initiation of arbitration proceedings, Hansalik moved from California to Switzerland, and failed to notify FINRA of his change of address as required by a notice sent to all members of FINRA’s predecessor, the National Association of Securities Dealers (“NASD”). FINRA mailed Wells Fargo’s Statement of Claim and other notices to Hansalik’s prior residential address in California. The post office notified FINRA that Hansalik’s forwarding address was an incomplete address in Zurich, Switzerland. Wells Fargo provided FINRA with the street address of the private bank where Hansalik worked in Switzerland. FINRA continued to mail arbitration notices to Hansalik’s former residential address in California. In April 2010, FINRA issued a default award against Hansalik for the principal sum of $1,297,694.14, plus interest, costs and attorney fees. The award also stated that the arbitrator determined that Hansalik had been properly served notice of the Statement of Claim and Notification of the Arbitrator.

After the award, Wells Fargo hired a Swiss attorney who demanded payment from Hansalik. Hansalik immediately filed a petition to vacate the FINRA arbitration award under the relevant provisions of California law, claiming that he never received notice and challenging the fundamental fairness of the entire arbitration proceeding. The trial court granted the petition on the grounds that Hansalik was not properly served under FINRA rules and that he was denied due process. Wells Fargo appealed contending that the arbitrator found that service complied with FINRA rules, that Hansalik was not denied due process, and that there was substantial evidence that Hansalik received actual notice of the arbitration.

Under California law, the limited grounds for vacating an arbitration award include instances when an arbitrator exceeds his authority by denying the litigant a fair hearing. Code Civ. Proc. § 1286.2, subd. (a)(4). This is substantially similar to the statutory grounds for vacatur in the Federal Arbitration Act (“FAA”), 9 U.S.C. § 10(a). California case law provides precedent for reversal of an arbitration award when the arbitrator “did not give appellant notice of any hearing, nor did he give it any opportunity to be heard.” Smith v. Campbell & Facciolla, Inc. 202 Cal.App.2d 134, 135 (1962).

FINRA Rule 13301(a) requires that the initial Statement of Claim be served on the individual at his residential address or “usual place of abode.” The rule further provides that if service cannot be completed at this address, the initial Statement of Claim will be served at the person’s business address. The appellate court concurred with the trial court determination that FINRA did not give Hansalik notice and an opportunity to be heard because it knowingly sent notices to his previous residential address instead of sending them to the current business address provided by Wells Fargo. Furthermore, the appellate court concurred that even if Hansalik had actual notice of the initial Statement of Claim from Wells Fargo via Federal Express and e-mail, he was entitled to such notice from FINRA.

FINRA Rule 13413 provides that the arbitration panel has the authority to interpret and determine the applicability of all provisions under the FINRA rules. The appellate court held that proper notice is so intrinsic to the fundamental fairness of a hearing that it denied Wells Fargo’s argument that this rule gave the arbitrator the power to interpret the FINRA notice rule and determine if service was proper under FINRA rules.

In light of FINRA’s unfair procedure and Hansalik’s lack of actual notice, the appellate court determined that the trial court properly vacated the FINRA arbitration award.

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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