Broker-Dealer Litigation - Greenberg Traurig LLP

4. Motions to Vacate or to Enjoin
a. Punitive Damages
N.4.a
Hosier v. Citigroup Global Mkts., Inc., 2011 U.S. Dist. LEXIS 146670 (D. Colo. Dec. 21, 2011).
Defendant moved to vacate an arbitration award on the grounds that the panel manifestly
disregarded the law and exceeded its powers by failing to follow FINRA procedures and
Colorado law for awarding punitive damages and attorneys’ fees. The district court held that the
panel did not manifestly disregard the law where defendant did not show that the panel knew
about and ignored the cited case law. The district court found that it could not review the panel’s
decision based on whether there was sufficient evidence to prove wanton conduct. On punitive
damages, the Arbitrator’s Manual does not obligate the panel to provide a basis for punitive
damages, but rather recommends that the panel do so. Defendant did not provide a case, nor did
the district court find a case, which held that the failure to follow a recommended, but not
mandatory, FINRA procedural rule justified vacating an arbitration award. Lastly, defendant
argued that the panel exceeded its authority by granting attorneys’ fees under the Colorado
Securities Act (“CSA”) when plaintiff did not allege claims against defendant under the CSA.
The district court held that defendant’s contention that it had no advance warning or opportunity
to respond to the CSA claims was disingenuous since the elements of common law and statutory
fraud claims are almost identical and defendant referenced the CSA at the hearing. Additionally,
the district court held that by failing to object to the request for attorneys’ fees at the hearing,
defendant waived its right to later contest the attorneys’ fees.
b. Attorneys’ Fees
N.4.b
Wells Fargo Bank, N.A. v. WMR e-Pin, LLC, 653 F.3d 702 (8th Cir. 2011).
Plaintiff brought claims for breach of contract and for misappropriation of trade secrets
against a corporation with which it entered into agreements to provide plaintiff consulting
services and software products. The Consulting Agreement governing the software at issue
reserved certain intellectual property rights for plaintiff. The panel found in plaintiff’s favor for
breach of the Agreement and for misappropriation of the software trade secrets, and also
awarded attorneys’ fees and costs and permanently enjoined the corporation from using or
disclosing the software trade secrets. Defendant moved to vacate the arbitration award on the
grounds that: (1) the district court, which confirmed the award, lacked subject matter
jurisdiction; and (2) the panel lacked authority to grant injunctive relief, determine the inventor
of the software, and award attorneys’ fees. The Eighth Circuit noted a circuit split on
determining jurisdiction for national banks and concluded that a national bank is a citizen only of
the state in which its main office is located. Therefore, on the facts of this case, diversity
jurisdiction was established. The Eighth Circuit held that defendant waived its right to argue that
the panel lacked authority where defendant itself argued for injunctive relief, that it was the
rightful owner of the software, and sought an award of attorneys’ fees. The Circuit Court also
held that, under Federal Rule of Civil Procedure 60(b)(5), an injunction is only subject to
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