Bass, Berry & Sims attorney Chris Lazarini provided insight on a case in which a broker sought to vacate an adverse arbitration award on grounds of arbitrator misconduct. The Court found that the broker's lengthy delay in retaining counsel was not "good cause" to delay the hearing and confirmed the arbitrator's denial of the broker's motion to postpone the hearing and the adverse award. Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.
Cavaliere vs. Ameriprise Financial Services, Inc., No. 8:15-cv-1665 (M.D. Fla., 10/5/15)
*Arbitrators have wide latitude in conducting the hearings.
**A broker's lengthy delay in obtaining counsel is not "good cause" to delay a hearing, and an arbitrator who denies a late-filed postponement request is not guilty of misconduct warranting vacatur.
In November 2013, Ameriprise initiated a FINRA arbitration against Cavaliere, seeking to collect the balance due on a promissory note. Cavaliere appeared pro se, filing an answer and participating in the initial pre-hearing conference, during which an April 2015 hearing date was set. Three days before the hearing was to start, Cavaliere asked the FINRA case administrator for a continuance so that he could retain counsel. The case administrator told him to file a motion to postpone. At the start of the hearing, Cavaliere requested a postponement. The single Arbitrator denied the motion, the hearing proceeded, and the Arbitrator awarded Ameriprise the amount due on the note, plus interest and attorneys' fees (ID #13-03508 (Tampa, 4/28/15). Cavaliere moved to vacate, arguing that the Arbitrator's denial of his motion to postpone deprived him of his ability to be represented by counsel and his right to a fair and equitable hearing. Ameriprise filed a cross-motion to confirm the Award.
The Court finds that Cavaliere failed to demonstrate arbitrator misconduct and confirms the Award. Arbitrators have wide latitude in conducting the hearings, the Court states, and the Award will not be vacated except upon a showing that no reasonable grounds existed for the arbitrator's decision. The Court notes that, under FINRA Rule 13601, arbitrators may not postpone a hearing within 10 days of the scheduled start, absent good cause. The Court concludes that the Arbitrator reasonably determined that Cavaliere's 17-month delay in seeking counsel and his late-filed motion were insufficient reasons to postpone the hearing. Further, the Court finds that Cavaliere was given a full and fair opportunity to present his facts and defenses to the Arbitrator and that no issues or evidence were excluded because of Cavaliere not having counsel. Finally, the Court finds that Cavaliere failed to support any claim of bias or other improper influence tainting the Arbitrator's decision.
It appears that the arbitration proceeded under FINRA Rule 13806 which streamlines the process for most promissory note cases. Notably, under that Rule, the Director will appoint a single arbitrator if the broker does not answer, files an answer with no counterclaims or third-party claims, or files counterclaims or third-party claims seeking not more than $100,000 in damages.