FINRA arbitrator removed from panel for salty language.

Posted by on Jan 30, 2014 in Marc's Blog | Comments(0)

I’ve seen impatience.  I’ve seen incompetence.  I’ve seen boredom.  And, yes, I’ve seen arbitrators who have fallen asleep.  But a couple of weeks ago, in a FINRA securities arbitration, I witnessed something unlike I had ever seen.

I was supposed to be in an arbitration last week, but over a month ago the Claimants asked for a postponement of the hearing, among other things.  The issue was argued with a Response from us and a Reply to the Response.  It was fully fleshed out in the moving papers.  A telephonic conference was set for 3 weeks ago.  All the arbitrators and lawyers were on the telephone conference.  It was confirmed that everyone was on the call.  The Chairperson made his introduction and preliminary remarks.  He turned the focus to Claimants’ counsel, who started to present her argument.  Then, it happened.

The industry arbitrator, with whom I am not familiar, interrupted the lawyer.  He directly addressed the Chairperson.  He told the Chairperson that he was opposed to any adjournment.  And, he added, it was time for the Claimants to “shit or get off the pot.”  You could sense that everyone on the call was caught off-guard.  I felt like I was reliving a Janet Jackson Super Bowl performance, saying to myself “Did that just happen?”  The Chairperson took control and advised the industry panelist that the parties were going to make their presentation and then there would be deliberation.  Wrong.

By the end of the day, Claimants’ counsel had filed a motion to recuse the arbitrator.  The following day, we were asked by FINRA to respond quickly, which we did.  And we said that the arbitrator was merely saying what everyone was thinking — it’s time to try this case.  He could have chosen better language, perhaps, but everyone certainly got the message.  The Claimants claimed that he had prejudged their position.  My response to that? So what.  It’s an adjournment request.  There was a Motion, a Response and a Reply.  What more was going to be said that had not already been written? Nothing.

The arbitrator was presented with the motion and our response early in the afternoon of the day after the hearing.  He declined to recuse himself.  Within a couple of hours, the Director of FINRA Arbitration had removed the arbitrator pursuant to FINRA Rule 12407.  In order to do this, the Director must find “that the arbitrator is biased, lacks impartiality, or has a direct or indirect interest in the outcome of the arbitration.”  Apparently, coming to a conclusion based on the written submissions of competent counsel, then voicing one’s opinion using colorful language, makes one based or lacking in impartiality.  So what, then, is the purpose of the written submissions if not to sway the opinion of the arbitrators?  Are arbitrators required to ignore the arguments and not find anything persuasive, regardless of how obvious the issue is?  Frankly, the Director’s decision wreaked of political correctness but not the facts.  And those who know me, know that I don’t play the PC card.

So we have a new arbitrator and the Claimants got their postponement.  We’ll see how this plays out.

That’s the view of one lawyer in Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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