Thursday, October 8, 2020
Here's something you don't see every day: In Warfield v. Icon Advisors, the federal District Court for the Western District of North Carolina struck down an arbitral award finding that the arbitration panel had, in part, exceeded its authority.
Plaintiff James Warfield was a mutual funds wholesaler employed at-will by the defendant. After six months, ICON terminated Warfield. Warfield was a broker regulated by the Financial Industry Regulatory Authority (FINRA), and when he was terminated, ICON provided grounds for his termination on a Form U5 filed with FINRA. Warfield brought an arbitration, alleging that the U5 was false and defamatory, and also alleging that ICON engaged in deceptive trade practices. He sought $5 million in relief.
The arbitration panel awarded him about $1.2 million, finding that he had been unjustly terminated without just cause. Citing to § 10(a)(4) of the Federal Arbitration Act, the District Court vacated the award in part, finding that the panel exceeded its powers. It did so because it recognized a cause of action for wrongful termination without cause, and no such cause of action exists under North Carolina law for at-will employees. The court upheld the portion of the arbitral award that directed ICON to expunge allegedly defamatory language from the U5 form.
H/T Charles Calleros