Fellus v. Sterne, Agee & Leach, Inc.
2011 U.S. Dist. LEXIS 33704
S.D.N.Y.2011Background
- Fellus was SAL's Senior Managing Director in New York from Jan. 1, 2006 to Apr. 9, 2008, when SAL terminated him.
- Fellus sought damages in Jan. 2009 before a FINRA arbitration panel alleging termination without cause under their employment agreement.
- The arbitration hearing occurred Oct. 2010 in Birmingham, Alabama; Fellus submitted a revenues exhibit over SAL's objection.
- Arbitrators awarded Fellus $5,695,124 on Nov. 1, 2010 but did not provide rationale for the award.
- SAL sought to vacate/modify the award or transfer venue; FINRA declined to amend the record; Fellus moved to confirm the award in New York County Supreme Court, which SAL removed to federal court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether venue should be transferred under 1404(a). | Fellus argues his New York forum is most convenient and SAL bears burden to show transfer warranted. | SAL argues Alabama is more convenient due to arbitration situs and location of records. | Transfer denied; factors favor Fellus's forum choice and no compelling showing for transfer. |
| Whether the arbitration award should be vacated under 10(a)(3) for misconduct. | SAL contends denial of presenting revenue evidence at end harmed fairness. | Arbitrators have broad discretion and heard extensive arguments on revenues. | Vacatur denied; no denial of fundamental fairness. |
| Whether the award should be vacated under 10(a)(4) for exceedance of powers. | SAL asserts misapprehension of revenue numbers shows arbitrators exceeded authority. | Arbitrators had power to decide relevant issues based on submissions; did not exceed powers. | Vacatur denied; arbitrators had authority to award damages. |
| Whether modification under 11(a) is warranted for evident miscalculation. | SAL claims misapplication of revenue numbers would change outcome. | 11(a) requires obvious facial miscalculation; the award's rationale is not disclosed. | Modification denied; no obvious facial miscalculation; merits review disallowed. |
| Whether the award should be confirmed. | Fellus seeks enforcement under FAA. | SAL requests vacatur/modify or transfer; but not favorable to enforcement. | Award confirmed; SAL's vacatur/modify and transfer requests denied. |
Key Cases Cited
- Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (U.S. 1988) (venue transfer discretion and jurisdictional standards; arbitration context cited)
- Citigroup, Inc. v. City Holding Co., 971 F. Supp. 2d 549 (S.D.N.Y. 2000) (broad discretion in transfer analyses; totality of circumstances)
- In re Griffin, 58 F. Supp. 2d 212 (S.D.N.Y. 1999) (evident miscalculation or fairness considerations in arbitration-related review)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 131 S. Ct. 1758 (U.S. 2010) (limits on arbitrators' authority; reliance on statutory submissions)
- Iragorri v. United Techs. Corp., 274 F.3d 65 (2d Cir. 2001) (several factors for 1404(a) venue transfer analysis)
- Pollux Holding, Ltd. v. Chase Manhattan Bank, 329 F.3d 64 (2d Cir. 2003) (strong deference to plaintiff's forum choice in transfer analysis)