R.M. Stark Co. v. Owoyemi
Posted on Categories Court Decisions, Securities Arbitration

By Jill I. Gross

Neither arbitrator’s refusal to compel discovery from Claimant or postpone hearing, nor panel’s assisting a pro se Claimant during the hearing, warrant vacatur under New York’s CPLR.

R.M. Stark Co. vs. Owoyemi, No. 652065/2019, 2019 NY Slip Op 32339(U) (N.Y. Sup. Ct., NY Cty., 7/31/19).

Claimant Owoyemi filed a FINRA arbitration pro se against Respondent R.M. Stark for unpaid commissions and unjust enrichment, among other things. During the pre-hearing process, the Arbitrators denied Respondent’s motion to compel Claimant to produce certain documents about his financial and employment background. The Panel also refused to adjourn the hearing as a result of Claimant’s alleged incomplete discovery responses. In addition, during the hearing, the Panel provided some assistance to the Claimant, who was not represented, in questioning a witness. After Claimant secured a $30,725.00 award plus interest, Respondent petitioned in New York state court to vacate the Award, citing both New York’s and the FAA’s grounds for vacatur. Claimant opposed the petition and asked the Court to confirm the Award instead. Citing New York’s CPLR grounds, the Court denies the motion to vacate. First, the Court concludes that the Panel’s denial of Respondent’s discovery request was not arbitrator misconduct warranting vacatur. Arbitrators have wide discretion in managing the discovery process and the documents requested were not directly relevant to the Claimant’s claims for unpaid commissions.

Second, even though the Panel assisted the Claimant with some procedures during the hearing, they were doing so because he was proceeding pro se. Thus, the Arbitrators did not commit misconduct. Furthermore, Respondent failed to preserve the objection to that assistance during the hearing and cannot raise it now. Accordingly, the Court confirms the award.

(J. Gross: Notably, NY Supreme Court bases its holding on New York’s grounds for vacatur under the CPLR, even though the losing party cites to both New York and federal grounds. State courts are divided as to whether the FAA’s grounds for vacatur or state grounds apply to a motion to vacate a FINRA arbitration Award brought in state court. Clearly a dispute filed in FINRA arbitration arises out of an agreement “involving commerce,” and therefore the FAA governs the agreement to arbitrate. However, the Supreme Court has never held that FAA section 10, which is procedural and provides allowable grounds for vacatur, applies in state court.)

(SOLA Ref. No. 2019-47-02)

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