Arbitration – Annuity

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Where an arbitration panel awarded a petitioner $1.24 million, the award should be confirmed despite the respondents’ contention that the panel (1) awarded damages that were neither claimed by the petitioner nor supported by the evidence, (2) awarded damages in a manner and amount that was contrary to clear law and (3) denied the respondents a fair opportunity to obtain material evidence through discovery.

“… Put simply, a party seeking to overturn an arbitration award faces a very steep uphill climb; that is true even if the award is against the great weight of the evidence or otherwise unreasonable or wrongly decided. Respondents here have not satisfied that demanding legal standard. …

“In early 2010, petitioner Cindy-Marie Rogers was offered an early retirement buyout package from her employer, Verizon Communications. In considering whether to take the offer, Rogers consulted with respondent Joan Norton, a financial advisor and registered representative of respondent Ausdal Financial Partners. Following that consultation, Rogers accepted the buyout package offer from Verizon, purchased a Prudential variable annuity through Rogers and Ausdal, and retired. …

“Rogers eventually became dissatisfied with the annuity’s performance. …

“Respondents’ argument has two parts: first, they contend that the arbitrators awarded damages on a claim or issue not before the panel; and second, they contend that the panel’s damages calculation was contrary to controlling law. …

“Here, the panel’s brief award, made without explanation or elaboration at the request of the parties, makes it difficult (if not impossible) to determine the reasons for the specific amount the panel awarded to Rogers. However, as respondents themselves note, the panel ‘could have reached the damage award of $1,240,000 [by assuming] Ms. Rogers would not have retired at age 49 ½ and would have worked to age 65 (15 ½ more years) and would earn $80,000 per year in each of those years.’ … The question, then, is whether Rogers presented such a claim to the panel. The record demonstrates that she did so, or at least in a manner sufficient to satisfy the applicable standard. …

“Respondents’ second contention under section10(a)(4) is that the panel exceeded its powers by awarding a damages amount that was contrary to controlling law. Specifically, respondents contend that the panel failed to reduce the damages award to present value, and failed to adjust the damages to take into account Rogers’s duty to mitigate damages by working elsewhere.

“It is well-established that arbitrators are not generally required to give the reasoning behind an award. … Although the panel may have arrived at the number awarded simply by estimating Rogers’s lost future earnings, without more, it is also possible that the panel employed a different methodology. …

“Ultimately, the question before the Court is not whether the arbitrators made the correct decision, or even whether the arbitrators were rational or fair. Instead, it is whether the arbitrators had the authority to decide as they did. … Respondents’ own customer agreement specifically empowered the panel to hear ‘any controversy’ between Rogers and respondents. … Respondents have raised serious questions about the reasonableness and fairness of the award, but they have not demonstrated that the panel exceeded its legal powers. …

“Respondents’ primary contention that section10(a)(3) was violated centers on the panel’s denial of respondents’ request to issue subpoenas to non-parties, including Verizon. …

“Here, the panel may well have acted unfairly. It appears that the chair denied respondents the right to obtain the Verizon information, then concluded that the same information ‘seems to be important.’ Presumably, the panel could not and did not take that information into account, as it was not part of the record. However, the panel was acting within its legal authority when it reviewed and denied respondents’ requests for subpoenas and this Court is without the power to vacate the award on that basis. …

“Respondents further challenge the award under section10(a)(2) on the ground that the panel displayed evident partiality towards Rogers and against respondents. …

“In effect, respondents ask the Court to infer partiality not from the existence of undisclosed bias or facts indicating an improper motive on the part of the panel, but from the panel’s award of damages. Respondents have not submitted any facts demonstrating that the alleged ‘partiality’ was based on anything other than the facts and argument presented by the parties. Thus, a reasonable person certainly would not have to conclude that the panel was partial to Rogers.”

Rogers v. Ausdal Financial Partners, Inc., et al. (Lawyers Weekly No. 02-108-16) (16 pages) (Saylor, J.) (USDC) (Civil Action No. 15-12899-FDS) (March 9, 2016).

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