So I spent last week – the whole week – doing an arbitration with JAMS. It involved some of the typical elements of a FINRA claim, e.g., allegations of the sale of an unregistered security, of an “investment” gone bad, of misrepresentations and omissions in connection with the “sale” of that “investment,” but for reasons not pertinent here, the case did not have to be heard in the FINRA arbitral forum. Anyway – and I acknowledge that I am painting with an awfully broad brush here – it was a remarkably different, and by different of course I mean better – experience than most any FINRA arbitration. Let me count the ways.
First, and most important, was the quality of the arbitrator. My case was heard by a retired Federal District Court judge. Someone who had sat on the bench for over 27 years. He has seen and heard it all during that time. So, even handicapped by having to conduct the hearing through the sometimes glitchy auspices of Zoom, I was always confident that he understood the issues, was listening to hear what he knew would ultimately be relevant to his eventual decision, and could easily filter out the BS (whether from witnesses or counsel). I would not be able to say the same, unfortunately, about some FINRA hearing panels I have appeared before. What clearly seemed to matter to the judge were the facts and the law, period. Well, and, maybe, an effort to be “fair” to both sides.
He was unimpressed by anything that served to waste his time as factfinder. Both sides were given ample, but hardly unfettered, latitude to put on their cases. If a line of questioning seemed to be of dubious relevance, he didn’t wait for an objection; rather, he would ask counsel, proactively, what was the point. If a lawyer had already made his point, he would tell us, with a gentle admonition to move on. He did not need witnesses or lawyers simply to read (sometimes dramatically) from exhibits when the documents were in the record and he could read them himself. Closing arguments? Bah, waste of time.
He was not hesitant to make rulings, or to enforce them after the fact. I find that too often, FINRA chairpersons can be decision-averse, hesitating before ruling, perhaps hoping that the parties will simply figure it out for themselves and move on. As a former judge, he was quick to decide any issue that arose, whether substantive or evidentiary. Indeed, regarding the latter, when’s the last time you had an in-depth discussion with a FINRA arbitrator about the interplay between Rules 404 and 608 of the Federal Rules of Evidence? I am going to venture to guess that the answer is “never.” And while the rules of evidence don’t “strictly apply” in JAMS any more than they do in FINRA, that doesn’t mean such rules should be ignored, either, so it was really helpful to have an arbitrator who knew the lingo.
It was also heartening as counsel for the respondent not to have be concerned about the typical arguments that claimants make about arbitration being an equitable forum, so the arbitration panel should feel free simply “to do what’s right” and, well, law shmaw. This former judge seemed singularly unimpressed by repeated efforts by claimant to evoke sympathy for his claimed plight, or to paint — using a very colorful verbal palette — my clients as greedy bad guys who took advantage of claimant’s feigned naivete. I mean, he sat there and listened closely to all the testimony, but what he was listening for were facts, not emotional diatribes.
Second was the nature of the discovery we were permitted to conduct. Specifically, the ability to take select depositions. Having done arbitrations for the past four decades, I am, by now, pretty good at conducting “blind” cross-examinations, i.e., cross-exams of witnesses who I have not previously deposed. (Indeed, that’s my standard retort to “litigators” who occasionally insist that doing an arbitration is somehow not as difficult as conducting a court trial: hey, man, when’s the last time you cross-examined an expert witness without having first deposed him/her, or at least had the chance to pore over a written report? Well, I do that every day.) With that said, if you offered me the chance to depose a claimant, or a claimant’s expert witness, in advance of the hearing, I cannot imagine the case where I would decline such an opportunity (even at the price of having to produce my own client for opposing counsel to depose).
Here, we got to depose not only the claimant, but his expert, as well as a couple of people who we knew would be called as witnesses. It made the cross-exams at the hearing quicker, cleaner, and damning, frankly, every time the previously deposed witness attempted to pivot from prior sworn testimony. (Just as it’s supposed to be in court.) With no surprise answers to deal with, it really was a fairer hearing for all involved, including the judge, than one where impeachment can be difficult in the absence of some document that contradicts the testimony.
I know what you’re going to say: arbitration is designed to be quicker and cheaper than going to court, and adding depositions to the list of permissible discovery tools would run counter to both of those goals. Well, I suppose I would have to agree with you. But, I would still vote in favor. The ultimate goal, after all, is to have everyone who participates in the process agree that they have been treated fairly, and got an equal chance to develop and then present their case. Allowing the parties some deposition discovery – not unlimited, but some key witnesses – would, in my assessment, greatly increase the likelihood of achieving that end. Too many times after an arbitration I am forced to look my client in the eye and vainly attempt to argue that what we both just endured was not, in fact, a free-for-all or, worse, a total s***show. Allowing depositions could at least help avoid these difficult conversations.
Finally, it’s worth noting that JAMS tries really, really hard to provide a smooth experience for all parties. They are accommodating and attentive. (And when you do JAMS hearings in person, they have all kinds of snacks! Including fresh baked cookies, yum.) I am not necessarily saying this in any relative sense, that is, I am not necessarily saying that JAMS is more accommodating and more attentive than FINRA; I will let you reach your own conclusions about that. Many FINRA Case Administrators are super at their jobs, and take very seriously their obligation to ensure that the cases run their course without a hitch. But, with that said, I can’t tell you how many hearings I have participated in that didn’t start on time because the tape recorder failed to show up, and we were dealing with a Case Administrator who was hundreds of miles away, trying to figure out over the phone what hotel employee had supposedly signed for the FedEx package.
JAMS is pricey, no doubt about it. That alone will be enough to dissuade a lot of people from considering it. And there are no free rides: you will not get your final Decision unless/until all fees have been paid. But, you simply have to agree that some of the fundamental things about FINRA arbitrations that are the most troubling – the qualifications of the arbitrators, the ability to prepare the case properly for hearing, and then a fast-paced, smoothly run hearing – are most assuredly not issues in JAMS. Of course, let me remind you that a few blog posts ago, I told you that I’d be perfectly content if we just ditched arbitrations altogether in customer cases, since I know that many claimants’ counsel simply could not survive in that environment. Maybe JAMS represents a decent compromise.