835 F. Supp. 2d 1098
D. Colo.2011Background
- Petitioners Hosier, Brush Creek, and Murdock filed a FINRA arbitration claim against CGMI seeking damages for alleged misrepresentations and related claims tied to CGMI-invested products.
- Petitioners asserted multiple state-law causes of action (breach of fiduciary duty, breach of written contract, constructive fraud, FINRA rule violations, unsuitability, failure to supervise, respondeat superior).
- CGMI argued the claims were barred by signed risk-disclosure subscriptions CGMI provided to Petitioners.
- Arbitration hearing before a FINRA Panel lasted nine days (March–April 2011) with evidence, testimony, and closing arguments; all parties signed submission agreements.
- Panel issued an Arbitration Award: compensatory damages to Hosier, Brush Creek, and Murdock; plus punitive damages and attorneys’ fees; Petitioners moved to confirm; CGMI moved to vacate under FAA §10.
- Court denies CGMI’s Motion to Vacate and confirms the Arbitration Award; Petitioners may seek an award of costs/fees within 14 days and certain related awards (expert fees, court reporter costs, and filing fee reimbursement) were noted against CGMI.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Panel manifestly disregarded the law | Hosier argues Panel acted with willful inattentiveness to law. | CGMI contends Panel ignored controlling law (Zobrist). | No manifest disregard; Panel did not willfully ignore controlling law. |
| Whether the Panel exceeded its authority by awarding punitive damages | Petitioners argue punitive damages allowed under Colorado law. | CGMI contends Panel misapplied Colorado law and failed to follow FINRA procedures. | Panel did not exceed authority; punitive damages upheld and procedural concerns addressed. |
| Whether the Panel exceeded its authority by awarding attorneys’ fees | Petitioners sought attorneys’ fees under CSA § 11-51-604 via submission. | CGMI argues fees not properly within scope since CSA claim not in SOC; objection waived. | Panel authorized by submission and FINRA rules; no authority exceedance; fees upheld. |
| Whether the award should be vacated under FAA §10 for other grounds | N/A | N/A | FAA §10 grounds not shown; award confirmed. |
Key Cases Cited
- Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (FAA grounds for review are exclusive)
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (U.S. 1987) (arbitration review limited to statutory grounds)
- U.S. Energy Corp. v. Nukem, Inc., 400 F.3d 822 (10th Cir. 2005) (review highly deferential to arbitral awards)
- Hollem v. Wachovia Sec., Inc., 458 F.3d 1169 (10th Cir. 2006) (manifest disregard standard discussed; deference to arbitration)
- Denver & Rio Grande W. R.R. v. Union Pac. R.R., 119 F.3d 847 (10th Cir.1997) (finality of arbitration weighed heavily in favor of confirmation)