Badgerow v. REJ Properties, Inc. et al

RESPONSE/MEMORANDUM in Opposition

E.D. La.February 27, 2019

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA PLAINTIFF’S MEMORANDUM IN OPPOSITION TO DEFENDANTS REJ PROPPERTIES MOTION TO CONFIRM ARBITRATION AWARD MAY IT PLEASE THE COURT, through the undersigned counsel, comes Plaintiff Denise Badgerow, who respectfully files this Memorandum in Opposition to REJ Properties Motion to Confirm Arbitration Award. REJ’s Motion is asserted pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (“FAA”), to confirm the arbitration award dated December 27, 2018. Defendant asserts that arbitration was agreed to amongst the parties based on the AFG, AFA and U4 agreements that the individual respondents, Walters, Meyer, and Trosclair, and Plaintiff signed. This Court, however, denied REJ’s Motion to Compel Arbitration (R. Doc. 47) ruling REJ Properties, Inc. was not a party to the arbitration agreements. The Court ruled in pertinent part as follows: …According to Ameriprise, and this point is undisputed, it had no contractual relationship with an entity called REJ Properties much less WMT, which again is the defendant in this case. Neither Walters nor any of the other WMT principals have suggested that they should have been sued personally as Badgerow’s employer. Nonetheless, the Ameriprise agreements that contain the arbitration clauses could not be clearer in that the only two parties to those agreements are Badgerow and Ameriprise. Neither Walters nor REJ Properties nor WMT are DENISE A. BADGEROW, on behalf of herself and a class of those similarly situated, Plaintiffs, v. REJ PROPERTIES, INC. D/B/A WALTERS, MEYER TROSCLAIR & ASSOCIATES, AND AMERIPRISE FINANCIAL SERVICES, INC. **************************************** * * * * * * * * * * * * * CIVIL ACTION NO.: 2:17-CV-9492 JUDGE: JAY C. ZAINEY MAGISTRATE: JOSEPH C. WILKINSON, JR. SECTION: A/2 ********************************* Case 2:17-cv-09492-JCZ-JCW Document 105 Filed 02/27/19 Page 1 of 5 2 parties to those agreements. The stay was granted and the claims Badgerow asserted in FINRA against Ameriprise, Walters, Trosclair and Meyer were arbitrated by a FINRA panel. However, the award rendered fails to make any ruling against REJ Properties, Plaintiff’s actual employer, a fact noted by this Court. Defendants assert that all Badgerow’s claims should be dismissed pursuant to the Order, however, the Order does not indicate such. It appears that the panel declined jurisdiction for the claims against REJ Properties, Inc., as a non-party. REJ Properties, Inc. could not be made party in the FINRA arbitration because it was an unregistered entity, as was stated in Badgerow’s Arbitration Statement of Claim. The FINRA panel’s ruling creates confusion and no final award should be confirmed because the panel so imperfectly executed their powers and failed to address the claims presented to it regarding REJ Properties, Inc. REJ Properties, Inc. is not a registered person under FINRA rules, however under Article V, Section 4, FINRA retains jurisdiction over an unregistered person for purposes of requesting documents, information, and testimony, and filing a complaint, for “two years after the date upon which such person ceased to be associated with the member.” In the case of unregistered persons, the two-year period is absolute, and cannot be extended. The panel, therefore, had the ability to execute jurisdiction against REJ Properties but failed to indicate as much or to note its reasons for declining jurisdiction, only stating that REJ Properties was a non-party. The Federal Arbitration Act, 9 U.S.C. §10(a) permits a district court to vacate or overturn an arbitration award if it finds that one of the following occurred: (1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; Case 2:17-cv-09492-JCZ-JCW Document 105 Filed 02/27/19 Page 2 of 5 3 (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. Here, 9 USC 10(a)(4), where the arbitrators so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made, applies and warrants that the award be vacated. Plaintiff’s FINRA Statement of Claim included claims against REJ Properties, Inc.. One claim involved individual respondents’ illegal activity when they paid Badgerow commission through REJ Properties, an entity that is not a registered broker dealer. Another claim asserted involves the unfair practice engaged in by REJ Properties, Inc. in failing to provide Badgerow with a written compensation agreement, as required by law. Accordingly, these issues as they pertain to REJ Properties, Inc. were not addressed by the panel. The award is so vague and the arbitrators so imperfectly executed their powers that a mutual final, and definite award was not made. Accordingly, REJ’s Motion should be denied, the award should be vacated, or at a minimum the award should be remanded with a request that the panel address whether it executed jurisdiction against REJ Properties, Inc. and if it made a determination to REJ Properties, Inc. conduct via the individual respondents Walters, Meyer, and Trosclair. The standard for granting a motion to vacate under § 10(a)(4) is whether a party’s rights were prejudiced by an arbitrator who, in making the award, exceeded his or her powers or so imperfectly executed them that a final and definite award on the subject matter submitted was not Case 2:17-cv-09492-JCZ-JCW Document 105 Filed 02/27/19 Page 3 of 5 4 made. Similarly, vacatur motions have been made based on the arbitrators’ failure to decide all of the claims submitted to them, which generally might be characterized as the arbitrators having imperfectly exercised their powers. Courts have even ruled that an award be remanded to the FINRA panel to explain the award so that a mutual, final, and definite award can be rendered.1 CONCLUSION Plaintiff requests that this Honorable Court issue an order denying Defendant’s Motion to Confirm Arbitration Award and issue a further order vacating the arbitration award pursuant to ( USC 10(a)(4), or alternatively, remanding the matter back to the FINRA panel for clarification as to REJ Properties, Inc., and specifically whether FINRA has jurisdiction over REJ Properties, Inc., as an unregistered person. Respectfully Submitted: BUSINESS LAW GROUP, LLC By: /s/ Amanda J. Butler Amanda J. Butler (T.A.) LSBA # 31644 abutler@lawgroup.biz Stephanie Dovalina LSBA# 31137 sdovalina@lawgroup.biz 700 Camp St., Ste. 405 New Orleans, LA 70130 Telephone: (504) 528-9500 Facsimile: (504) 754-7776 CERTIFICATE OF SERVICE 1 See UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ASPIC ENGINEERING AND CONSTRUCTION COMPANY, Plaintiff-Appellant, v. ECC CENTCOM CONSTRUCTORS LLC; ECC INTERNATIONAL LLC, Defendants-Appellees. No. 17-16510 D.C. No. 4:17-cv-00224- YGR Case 2:17-cv-09492-JCZ-JCW Document 105 Filed 02/27/19 Page 4 of 5 5 I hereby certify that on February 27, 2919, a copy of the above and foregoing has been served upon counsel for all parties by electronic means and filed electronically with the Clerk of Court using the CM/ECF system. /s/ Amanda J. Butler Amanda J. Butler, Esq. Business Law Group Case 2:17-cv-09492-JCZ-JCW Document 105 Filed 02/27/19 Page 5 of 5