A panel of the Second Circuit has, in an unpublished summary order, emphasized the high bar that must be cleared by a party seeking to vacate an arbitration award. The matter arose from the decision of a financial advisor not to follow instructions from a client to transfer all assets from a trust for the benefit of their children to one for the benefit of the client’s wife. After the client passed away, Ms. Pfeffer (the deceased client’s wife) sued the advisor before a FINRA arbitration panel, alleging that this failure to follow instructions constituted a breach of fiduciary duty. The advisor responded that the client’s instructions were not followed due to concerns that he was not competent, a concern supported by the opinion of two physicians.
The panel denied Ms. Pfeffer’s claim, and she moved to vacate the award in federal district court, alleging that this decision “was procured by undue means, evident partiality, and misconduct because the Panel was intimidated by defense counsel and refused to consider relevant evidence.” The district court confirmed the award, and Ms. Pfeffer appealed. The Second Circuit emphasized that it “does not recognize manifest disregard of the evidence as a proper ground for vacating an arbitration panelʹs award, and will only find a manifest disregard for the law where there is no colorable justification for a panelʹs conclusion.” Finding no evidence in the transcript of the arbitration proceeding “that the award was produced by undue means, evident partiality, or misconduct,” or that “the Panel failed to abate defense counsel’s abrasive manner . . . [or] was intimidated by him,” the court found no support for the conclusion that the panel had manifestly disregarded the law and affirmed the lower court’s decision confirming the award.
Pfeffer v. Well Fargo Advisors, LLC, et al., No. 17-1819-cv (2d. Cir. Feb. 15, 2018).
This post written by Jason Brost.
See our disclaimer.