An Illinois federal court has ruled in line with the Seventh Circuit and says it will impose sanctions on a party that tried to get an arbitration award vacated because he only put forth frivolous arguments. The case is Halim v. Great Gatsby’s Auction Gallery, Inc.
Cameel A. Halim purchased items via an auction that Great Gatsby’s Auction Gallery had put together. Halim eventually sued the gallery. He claims that the items he bought were not as they had been described in the catalog. Per their agreement, the parties went into arbitration.
The arbitrator had told the parties to cooperate in good faith when discovery disputes were first brought before him. The arbitrator would go on to refer the parties to the earlier order as the disputes ensued.
The arbitrator denied the claims made by Halim, who then tried to get the award vacated. Gatsby responded by filing a confirmation motion and a motion for sanctions because it contended that Halim’s motion was frivolous and therefore violated the Federal Rules of Civil Procedure’s Rule 11.
Halim presented two arguments for his motion. He said the arbitrator acted in manifest disregard of the law by (1) not resolving a discovery dispute when he told the parties to turn back to the earlier order and (2) by not issuing a reasoned award. The court said these arguments were frivolous.
The court also imposed sanctions on Halim after determining that there was no evidence to support his contentions. Halim has been ordered to reimburse Gatbsy’s legal fees from when it had to move for sanctions and oppose the motion to vacate.
Congress is currently considering a bill to prevent companies from forcing arbitration of consumer disputes by using arbitration agreements contained in contracts. However, Wall Street’s influence will likely cause securities arbitration to be exempted from the bill.
The best way to ensure a successful outcome when you are involved in a case that is being disputed through securities arbitration is to retain the services of Shepherd Smith Edwards & Kantas LTD LLP. We have helped thousands of investors recover losses resulting from improper sales transactions.
Related Web Resources:
Read the Memorandum Opinion filed on February 15, 2007 (PDF)