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CAMPBELL v. CANTOR FITZGERALD & CO.

September 24, 1998

MARY TERESE CAMPBELL, Petitioner, against CANTOR FITZGERALD & CO., INC., et al., Respondents.


The opinion of the court was delivered by: CHIN

MEMORANDUM DECISION

 CHIN, D.J.

 In this case, Mary Terese Campbell ("Campbell") petitions the Court to vacate an arbitration award rendered by a three-member National Association of Securities Dealers ("NASD") panel on March 5, 1998. Respondents oppose the petition. For the following reasons, the petition to vacate is denied and the arbitration award is confirmed. In addition, the separate suit filed by petitioner pending before the Court, Campbell v. Cantor Fitzgerald & Co., Inc., et al., No. 98 Civ. 4547 (DC), is dismissed with prejudice.

 BACKGROUND

 Campbell was employed by respondent Cantor Fitzgerald & Co., Inc. ("Cantor Fitzgerald") as an institutional sales person from October 19, 1987 until March 25, 1992, when she was discharged. (Resp. Mem. at 3). On April 20, 1992, Cantor Fitzgerald filed with the NASD a Form U-5, a termination notice that stock brokerages must file with the NASD when the employment of certain employees is terminated, reporting that Campbell had been "discharged" for "FAILURE TO FOLLOW FIRM PROCEDURES." (Knopf Aff. Ex. A).

 On March 25, 1995, Campbell initiated an arbitration proceeding against respondents before the NASD. Campbell alleged that she was wrongfully discharged and that she was defamed by the notation on her Form U-5. After initiating arbitration, Campbell amended her claim. *fn1" Shortly thereafter, respondents moved to dismiss it. (Resp. Mem. at 6). The arbitration panel reserved decision on the motion and Campbell was permitted to present her case to the panel. What follows is a brief synopsis of the parties' accounts of the events precipitating the termination of Campbell's employment.

 Until 1991, both Campbell and her husband worked at Cantor Fitzgerald. (Pet. PP 1-3).In January 1991, Campbell's husband learned of a U.S. Treasury notification concerning certain restrictions on agreements to sell or dispose of U.S. Treasury securities. (Id. P 5). Campbell's husband repeatedly brought what he believed were violations of the notice to the attention of Cantor Fitzgerald's chairman and chief executive officer, who allegedly ignored him. (Id. P 8). Because Cantor Fitzgerald purportedly refused to comply with the procedures, Campbell's husband "felt compelled to resign" and did so in June 1991. (Id. PP 10-13).

 Later that year, the Securities & Exchange Commission (the "SEC") initiated an investigation of Cantor Fitzgerald's handling of the auction trading of U.S. Treasury issues. (Id. P 16-17). Shortly after an article appeared in the Wall Street Journal about the SEC investigation on March 11, 1992, Campbell was informed that she had been placed on "administrative leave" and should not report to work again until further notice was given. (Id. PP 18-19). Campbell's employment was then terminated at a March 25, 1992 meeting during which she was accused of violating firm procedures because she had allegedly disclosed confidential information and undercharged Chase Securities, where her husband then worked. (Id. P 20).

 Respondents claimed that Campbell's allegation of wrongful termination was a tactic to obscure her own violations of firm procedures. (Resp. Mem. at 3-4). Respondents maintained that Campbell's employment was terminated for cause because she disclosed proprietary and confidential customer information to Chase, the disclosure of which was transcribed in a telephone conversation between Campbell and her husband on August 21, 1991. In addition, Campbell purportedly undercharged commissions to a Chase customer account managed by her husband. (Id. at 4). Respondents analyzed Campbell's Chase cash trades from July 1991 to March 1992 (the "Ramos Report") and concluded that she charged commissions totalling only $ 3,928.64 on trades involving $ 505 million of U.S. Government securities when the commissions should have been $ 13,882.52. (Id.). Campbell maintains that the Ramos Report was flawed and that respondents fabricated the reasons for the termination of her employment.

 Campbell's hearings before the NASD began in April 1996 and concluded in August 1997. (Pet. Mem. P 7). The panel conducted thirty hearing sessions that generated 2200 pages of testimony. (Pet. Ex. A; Resp. Mem. at 7). The panel heard the testimony of four fact witnesses and one expert witness, and received 24 exhibits. (Resp. Mem. at 7). Testimony and documents concerning the SEC investigation of Cantor Fitzgerald was also allowed into evidence and considered by the panel despite respondents' contention that such evidence was irrelevant. (Id. at 18).

 When Campbell rested, respondents renewed their motion to dismiss. The panel issued its award on March 5, 1998 granting respondent's motion to dismiss as to the "wrongful termination and all other claims sounding in wrongful termination" because Campbell was an at-will employee whose employment could be terminated for any or no reason. (Pet. Ex. A). As to Campbell's other claims, including her defamation claim, the panel held that she "failed to sustain her burden of proof." (Id.). The panel also assessed fees in the amount of $ 45,000 ($ 1,500 for each of 30 hearing sessions) against Campbell pursuant to Rule 10205(c) of the Code of Arbitration Procedure. (Id.).

 This petition followed.

 DISCUSSION

 A. Judicial Review of Arbitration Awards

 "The party seeking to vacate or modify an arbitration award bears the burden of proof, and the showing required of that party in order to avoid summary affirmance of the award is high." DeGaetano v. Smith Barney, Inc., 983 F. Supp. 459, 461 (S.D.N.Y. 1997) (citation omitted); see also Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d Cir. 1987); Folkways Music Publishers v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993). Arbitration awards are subject to "very limited review" to avoid undermining the goals of arbitration, namely, settling disputes efficiently and avoiding lengthy and expensive litigation. Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997) (quoting Folkways Music, 989 F.2d at 111). "The court's function in confirming or vacating an arbitration award is severely limited." Areca, Inc. et al. v. Oppenheimer & Co., ...


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