Reported / Citable
Background
LPL Financial LLC, a FINRA-member broker-dealer, engaged Eileen Law Cure as an independent contractor and registered representative from 2018 to 2021. Cure signed two promissory notes requiring immediate repayment if the relationship ended, along with agreements requiring FINRA arbitration. The notes and representative agreement also authorized recovery of reasonable attorney fees in enforcement litigation.
After LPL ended the relationship, litigation followed and the Fifth Circuit compelled arbitration. Cure and her counsel did not appear at several arbitration hearings, including the principal evidentiary hearing. The FINRA panel found Cure had failed to repay the notes and awarded LPL compensatory damages, interest, arbitration fees, and $640,305.90 in attorney fees, inclusive of an earlier $15,000 sanctions award.
The Court’s Holding
The court granted LPL’s petition to confirm the full $821,504.71 arbitration award and denied Cure’s motion to vacate, modify, or correct its attorney-fee component. The contractual fee provisions and FINRA Rule 13212 supplied a rational contractual basis for the panel’s fee award, so the panel had not exceeded its powers under FAA Section 10.
The panel’s reference to nonexistent California Civil Code Section 1707(a), rather than Section 1717(a), was an immaterial typographical error. Nor did the aggregate fee award warrant relief: arbitrators need not explain their reasoning, and the court could discern a possible rationale. Cure also identified no evident material miscalculation, award on an unsubmitted matter, or nonmerits form defect permitting modification under FAA Section 11.
Key Takeaways
- A court must confirm an arbitration award unless a statutory FAA ground for vacatur or modification is established.
- A mistaken statutory citation did not invalidate a fee award independently supported by the parties’ agreements and FINRA rules.
- Courts will not revisit an arbitrator’s determination that a contractually authorized fee award is reasonable.
Why It Matters
The decision underscores the narrow scope of judicial review of FINRA awards. Even where an award’s explanation contains a clear citation error and does not itemize the basis for its fee total, confirmation remains required when the result is rationally inferable from the parties’ arbitration agreements and no FAA Section 10 or 11 ground is shown.