We reported in SAAs 2022-31 (Aug. 11) & -30 (Aug. 4) that the Georgia Court of Appeals had “unvacated” the Award in the so-called “rigged panels” case. The Alert’s readers are very familiar with this saga, which we’ve covered extensively and blogged about on February 2, 9, 25, and June 29. We also provided in-depth coverage of the appellate decision in an August 10 Alert Blog post, Expanded Coverage: Unanimous Georgia Court of Appeals Tosses Trial Court’s Award Vacatur in “Rigged Panels” Case.
Brief History: Award Vacated
To review succinctly, Fulton County Superior Court Judge Belinda E. Edwards in Leggett v. Wells Fargo Clearing Services, LLC, No. 2019CV328949 (Ga. Super Jan. 25, 2022), vacated the Award in what might be considered a primer on the basic Federal Arbitration Act grounds for vacating an award (i.e., fraud, arbitrator bias, arbitrator misconduct in not hearing relevant or material evidence or failing to grant a reasonable postponement request; or the panel exceeding authority). Although the Trial Court found multiple bases for vacating the Award, Judge Edwards weighed in on interference with the Neutral List Selection System with some scathing verbiage:
The Court’s factual review of the record evidence leads to its finding that Wells Fargo and its counsel manipulated the FINRA arbitrator selection process in violation of the FINRA Code of Arbitration Procedure, denying the Investors’ their contractual right to a neutral, computer-generated list of potential arbitrators. Wells Fargo and its counsel, Terry Weiss, admit that FINRA provides any client Terry Weiss represents with a subset of arbitrators in which certain arbitrators (at least three, but perhaps more) are removed from the list Wells Fargo agreed, by contract, to provide to the Investors in the event of a dispute. Permitting one lawyer to secretly red line the neutral list makes the list anything but neutral, and calls into question the entire fairness of the arbitral forum.
Award “Unvacated”
Wells appealed, and in a unanimous decision the Georgia Court of Appeals reinstated the Award in Wells Fargo Clearing Services, LLC v. Leggett, No. A22A1149 (Ga. Ct. App. Aug. 2, 2022). The unanimous decision rejects all bases upon which Judge Edwards vacated the Award. As to “secret deals” between FINRA and Wells’ then-attorney Terry Weiss, the Court says:
Nothing indicates that Wells Fargo ‘manipulated’ the arbitrator pool. It simply asked that [Arbitrator] Pinckney be removed under FINRA Rule 12407. We fail to see how the Director’s decision to grant that request — which was made after all parties had a chance to address the issue — constituted manipulation by Wells Fargo.[] Although the investors claim that a ‘secret agreement’ existed between FINRA and Weiss to automatically exclude the Postell arbitrators from any arbitrator list generated on a case involving Weiss, there is no evidence that such agreement was at play here, given Pinckney’s inclusion on the initial list. Even if an agreement exists, the investors have not shown that it impacted this arbitration.”
Appeal to Georgia Supreme Court Filed
Our editorial comment in # 31 was: “Dare we say it? Barring further appeals, this might be the end of this one ….” Alas, Leggett on August 22 filed a Petition for Certiorari, seeking review by the Georgia Supreme Court. The case is No. S23C0074 and can be found at https://www.gasupreme.us/docket-search/. The case was set for argument in December.
(ed: We can’t say we are surprised.)
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