Judge vacates fees granted in FINRA arbitration.

Byline: Eric T. Berkman

An arbitration panel erred in awarding attorneys' fees to a broker in a wrongful termination and defamation case she successfully brought against the securities firm that fired her, a U.S. District Court judge has decided.

The broker, Cheryle Anne Brady, claimed her assistant made trades without client consent or her permission, and she ordered him to remedy the situation.

The employer, Ameriprise Financial Services, terminated Brady after she allegedly falsely claimed during an internal investigation that the clients had actually authorized the trades.

However, Ameriprise, maintaining that Brady approved the transactions, reported to FINRA that she was terminated "for cause" due to unauthorized trading.

When a FINRA arbitration panel awarded her $675,000 for wrongful termination and another $123,000 in attorneys' fees, Ameriprise sought to vacate in federal District Court.

Regarding the fee award, Ameriprise pointed out that its arbitration agreement with Brady provided only for statutory attorneys' fees and that G.L.c. 93A, 11, the fee-shifting statute that comprised part of Brady's claim, did not apply in the case.

Judge Douglas P. Woodlock agreed.

"The Panel did not have authority to award attorney fees pursuant to M.G.L.c. 93A, 11," Woodlock wrote. "The Supreme Judicial Court of Massachusetts has made clear that 11 covers 'individuals acting in a business context in their dealings with other business persons ...' and 'does not provide a remedy for disputes arising out of an employer-employee relationship. ...'"

Woodlock did uphold the $675,000 wrongful termination award, rejecting Ameriprise's arguments that because one of the arbitrators was a plaintiffs-side employment lawyer, it did not have an impartial panel.

The 27-page decision is Ameriprise Financial Services, Inc. v. Brady, Lawyers Weekly No. 02-446-18. The full text of the ruling can be found here.

Reasonable award

Peter M. Bizinkauskas of Taunton, who represented the fired broker in the arbitration, said though he respected Woodlock's decision, he maintained the fee award was reasonable. In addition to his client requesting fees, Ameriprise requested counsel fees in its own claim to recover balances due on loans the broker had taken out from the company. The promissory notes stated the broker would be responsible for any costs Ameriprise incurred collecting on them.

"Ms. Brady's argument during the arbitration for attorneys' fees was that since both...

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