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FINRA Firm Sues for $5.6 Million in Unfair Competition Arbitration
January 18, 2018
As readers of the BrokeAndBroker.com Blog know, we frequently discuss the dangers of filing lawsuits -- as in the risk of you suing someone over something that maybe you shouldn't have hired a lawyer for and wasted your time and, go figure, not only do you lose your case but to add insult to injury, the guy you sued turned around, sued you, and, omigod, you really got hammered with damages, interest, cost, and fees.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in December 2015, Claimant Odeon Capital Group asserted breaches of express written contract, fiduciary duty and the covenant of good faith and fair dealing; action for an accounting; constructive trust; unjust enrichment/ disgorgement; specific performance; tortious interference of contract; unfair competition; and conversion. Claimant Odeon sought $5,653,415.00 in liquidated damages; pre-judgment interest; costs; punitive damages; attorneys' fees; accounting fees; and an Order that Respondent Patel return all Claimant's property in his possession, custody, and control, including, but not limited to, computer equipment. In the Matter of the FINRA Arbitration Between Odeon Capital Group LLC, Claimant, vs. Auriga USA, LLC, Respondent, and Mihir Jaimini Patel, Respondent/Third-Party Claimant, vs. Evan Schwartzberg and Mathew Hadlock Van Alstyne, Third-Party Respondent (FINRA Arbitration 16-00033, January 1, 2018).
Defenses And Counters
Respondents Auriga and Patel generally denied the allegations and asserted various affirmative defenses.
Respondent Auriga sought fees and costs as a sanction against Claimant's alleged filing of a frivolous claim.
Respondent Patel filed a Counterclaim and Amended Counterclaim in which he asserted violation of Labor Law sections 198 and 215; breach of compensation; and wrongful termination. Also, Respondent Patel filed a Third-Party Claim and an Amended Third-Party Claim asserting violation of Labor Law sections 198 and 215. In his Counterclaim and as amended, Respondent Patel requested $4,146,830.00 in compensatory damages; interest; attorneys' fees; costs ; forum fees, and $20,000.00 in Labor Law section 215 liquidated damages; $800,000.00 in combined emotional distress and punitive damages. In his Third-Party Claim and as amended, Respondent Patel sought $427,570.00 in compensatory damages; interest; attorneys' fees, $20,000.00 in Labor Law section 215 liquidated damages.
SIDE BAR: Although not specified in the FINRA Arbitration Decision, the "Labor Law" being cited is New York Labor Law.
Award
The FINRA Panel of Arbitrators denied Claimant Odeon's claims and found Odeon liable for and ordered it to pay to:
Respondent Auriga $47,994.00 in expenses and $353,290.00 in attorneys' fees;
Respondent Patel $173,975.00 in compensatory damages with 9% per annum interest from October 31 2016, until paid, plus $4,591.00 in expenses and $283,284.00 in attorneys' fees.
Bill Singer's Comment
You remember that part of the lawsuit in which Claimant Odeon sought $5,653,415.00 in liquidated damages; pre-judgment interest; costs; punitive damages; attorneys' fees; accounting fees; and an Order that Respondent Patel return all Claimant's property in his possession, custody, and control, including, but not limited to, computer equipment? Well, doesn't look like Odeon's gonna get what it was looking for. What Odeon is gonna get is a bill from Auriga for about $401,000 and a bill from Patel for about $461,000. As such, Odeon's $5.6 million lawsuit fizzles and explodes in its fact for over $862,000. And the costs of this in-hindsight folly ain't done.
The FINRA Office of Dispute Resolution assessed an Initial Claim Filing Fee of $4,000 and a Counterclaim Filing Fee of $2,000. Additionally FINRA member firms are each charged a $3,000 Member Surcharge and a $6,800 Member Process Fee. Finally, the Panel assessed $54,450 in 37 hearing sessions fees solely against Claimant Odeon.
Now don't get me wrong. I'm a lawyer. I charge by the hour. I loooooove lawsuits. So . . . lemme see here, among the more common questions I'm asked is how much it's gonna cost to hire a lawyer to handle an intra-industry FINRA Arbitration. Auriga got about $353,000 in attorneys' fees and Patel got about $283,000 in attorneys' fees . . . so that's a total of $636,000 in attorneys' fees divided by two for an average bill of $318,000. Will that be cash of charge and I'm gonna need two forms of photo ID regardless. No, I don't take Bitcoin. No, you can't pay me $1 a year or 318,000 years.