UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW …1).… · Mihir Patel and Auriga USA, LLC,...

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------------------- x

Case No. 18-cv-__________ PETITION FOR RELIEF PURSUANT TO 9 U.S.C. § l0(a) TO VACATE ARBITRATION AWARD

In the Matter of Arbitration of Certain Controversies between,

ODEON CAPITAL GROUP LLC,

Petitioner,

— and — AURIGA USA, LLC,

Respondent.

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1. Petitioner Odeon Capital Group, LLC (“Odeon” or “Petitioner”), having

engaged in an arbitration proceeding, captioned, Odeon Capital Group, LLC v. Mihir

Patel and Auriga USA, LLC, before the FINRA Office of Dispute Resolution, FINRA

Case Number 16-00033 (the “Arbitration”), through the undersigned attorneys, files this

petition to vacate the portion of the arbitration award issued in the Arbitration, dated

January 12, 2018 (the “Award”) that favors Auriga USA, LLC (“Auriga” or

“Respondent”) on the grounds that the Arbitration Panel exceeded their powers as

arbitrators in making such award against Odeon in Auriga’s favor pursuant to Rule 10 of

the Federal Arbitration Act (9 U.S.C. § 10, “FAA”),.

2. The Arbitration relates to breach of contract, specifically breach of certain

restrictive covenants, between Petitioner and its former employee, Mihir J. Patel. Odeon

further alleged that Auriga tortuously interfered with Patel’s contractual restrictive

covenants both prior and subsequent to hiring Patel following his resignation from Odeon.

3. Odeon sought damages for Auriga’s conduct while Auriga sought, among

other things, “attorneys’ fees as a sanction against Odeon” for filing a frivolous lawsuit.

Case 1:18-cv-01238 Document 1 Filed 02/12/18 Page 1 of 7

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4. Auriga did not seek attorneys’ fees other than as a sanction against Odeon.

5. In the Arbitration Award, the Panel denied Auriga’s motion for sanctions,

thus obviating any basis for Auriga to be awarded attorneys’ fees since there is no state

prescribing such relief and because there is no agreement between Odeon and Auriga for

the award of such relief.

6. Nonetheless, despite that lacking of any foundation in fact or law, the Panel

awarded Auriga expenses and attorneys’ fees to be assessed against Odeon, stating,

falsely, that “Claimant and Respondent Auriga both requested attorneys’ fees.” Such basis by

the Panel is unsupported by the record and submissions.

7. Thus, this Petition is a narrow application pursuant to 9 U.S.C. § 10(a) to

vacate a portion of the Arbitration Award on the grounds that FINRA Panel exceeded

their powers as arbitrators in awarding Auriga attorneys’ fees and costs, which was not

authorized by statute, agreed upon by the parties, and or requested by Auriga other than as

a sanction, which was specifically denied.

PARTIES

8. Petitioner Odeon is a Delaware limited liability company with its principal

place of business at 750 Lexington Avenue, 27th Floor, New York, New York 10022,

which is located in the County of New York.

9. Respondent Auriga USA, LLC, CRD No. 121731, a New York limited

liability company, was and is a registered broker/dealer with its principal place of business

located at 54 West 21st Street, Suite 801, New York, NY 10010. Respondent is a member firm

in good standing of FINRA. Respondent has offices in New York, New York, located in the


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Southern District of New York, and services clients located within the Southern District of

New York.

JURISDICTION AND VENUE

10. This Court has subject matter jurisdiction to hear this action and adjudicate

the claims asserted herein pursuant to 28 U.S.C. § 1331 and 9 U.S.C. § 10(a).

11. Venue is appropriate in the Southern District of New York because

Respondent is doing business and may be served with process therein.

PROCEDURAL HISTORY OF THE ARBITRATION

12. Petitioner initiated the FINRA Arbitration by filing a Statement of Claim,

and signing the Submission Agreement, dated December 30, 2015. (Stern Dec., Ex. A).

13. In its Statement of Claim, Petitioner asserted numerous causes of actions

against Mihir J. Patel (“Patel”) in connection with his employment at Odeon including,

breach of express written contract; breach of fiduciary duty; breach of covenant of good faith

and fair dealing; action for an accounting; constructive trust; unjust enrichment/disgorgement;

specific performance, and conversion. (Stern Dec., Ex. A).

14. Petitioner also asserted two causes of action against Mr. Patel’s current

employer, Auriga, for tortious interference and unfair competition. (Stern Dec., Ex. A).

15. On March 21, 2016, Auriga signed a Submission Agreement, and on March

25, 2016, filed a Statement of Answer (the “Answer”). (Stern Dec., Exs. B and C).

16. In its Answer, Auriga requested from the FINRA Panel certain relief but

limited its request for attorneys’ fees to an award of sanctions to be found against Odeon.

17. Auriga’s Answer states the following, in relevant part:


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For the foregoing reasons, Auriga respectfully requests that the Panel dismiss this action, or in the alternative, deny all of Odeon's claims against it, and award Auriga such relief as it deems just and proper. Including reasonable attorneys' fees and costs as a sanction against Odeon for filing a frivolous Claim against Auriga.

(Stern Dec., Ex. C) (emphasis added).

18. On or about September 8, 2016, Auriga filed a Motion to Compel

Production and Motion to Impose Discovery Sanctions. (Stern Dec., Ex. D)

19. On or about October 31, 2016, Auriga filed a Supplemental Motion to

Compel Production and Motion to Impose Discovery Sanctions. (Stern Dec., Ex. E)

20. On or about January 17, 2017, Auriga filed a Motion to Dismiss Statement

of Claim for Material and Intentional Failures to Comply with the Panel's Discovery

Order, wherein, like in its previous discovery motions, Auriga requested attorneys’ fees

and costs only as a sanction pursuant to FINRA Rule 13212. (Stern Dec., Ex. F)

21. By Order, dated March 21, 2017, the Panel, among other things, denied

Auriga’s (1) Motion to Dismiss and (2) Auriga’s Motion for Sanctions with leave to renew at

the Hearings. (Stern Dec., Ex. G).

THE ARBITRATION HEARING 22. On May 2, 2017, the parties commenced the Arbitration Hearings in this

matter.

23. After the completion of Petitioner’s case-in-chief, Auriga made an oral Motion

to Dismiss Claimant’s tortious interference claims against Auriga and renewed their Motion

for Sanctions.

24. At the July 19, 2017 Hearing, the Panel granted Auriga’s Motion to Dismiss as


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to Odeon’s tortious interference claim but reserved its ruling on Auriga’s motion for an award

of its attorneys’ fees and expenses as a sanction against Odeon, and instructed Auriga to

submit documentation of its attorneys’ fees and expenses. (Stern Dec., Ex. H).

25. On July 24, 2017, Auriga’s counsel, Jeffrey Plotkin of Finn Dixon &

Herling LLP submitted documentation of its attorneys’ fees and expenses, wherein Auriga

requested attorneys’ fees and expenses in the amount of $494,655.00. (Stern Dec., Ex. H).

THE AWARD 26. On January 12, 2018, Petitioner received the Executed Award and the

Award Service Letter from the FINRA Office of Dispute Resolution. (Stern Dec., Exs. I

and J).

27. In relevant part, the FINRA Panel determined and Ordered that (1)

“[Odeon] is liable for and shall pay to Respondent Auriga attorneys’ fees in the amount of

$353,290.00”; and (2) “Auriga’s Motion for Sanctions is denied.” (Stern Dec., Ex. J).

28. The FINRA Panel also Ordered that “[Odeon] is liable for and shall pay to

Respondent Auriga expenses in the amount of $47,994.00.” (Stern Dec., Ex. J).

29. As set forth in the accompanying memorandum of law, the Panel exceeded

their powers as arbitrators in making such award against Odeon in Auriga’s favor

because: (1) Auriga’s request for attorneys’ fees was made for the limited purpose of only to

serve as a sanction against Odeon for filing a frivolous lawsuit; and (2) the FINRA Panel

specifically denied, in the Award, Auriga’s request for sanctions.

30. Having no lawful basis, either by agreement or by statute to award Auriga


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its attorneys’ fees, except possibly as a sanction, the FINRA Panel exceeded their powers as

arbitrator’s in making such award against Odeon in Auriga’s favor because it specifically

denied Auriga’s Motion for Sanctions.


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WHEREFORE, Petitioner Odeon Capital Group, LLC respectfully requests the

following:

I. An Order and Judgment pursuant to 9 U.S.C. § 10, the Federal Arbitration Act,

vacating, in part, the arbitration award against Petitioner served on January 12,

2018 in the Financial Industry Regulatory Association, Inc. (“FINRA”)

arbitration, bearing the caption Odeon Capital Group, LLC v. Mihir Patel and

Auriga USA, LLC, FINRA Case Number 16-00033; and

II. Such other and further relief as to this Court deems just, proper and equitable.

Dated: February 12, 2018 New York, New York

By: Eric R. Stern, Esq. Sack & Sack, LLP

70 East 55th Street, 10th Floor New York, NY 10022 (212) 702-9000 Attorneys for Petitioner Odeon Capital Group, LLC



Case No. 18-cv-__________



Petitioner,


Respondent.

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MEMORANDUM OF LAW IN SUPPORT OF PETITIONER’S MOTION TO VACATE ARBITRATION AWARD

S A C K & S A C K , L L P

A t t o r n e y s f o r P e t i t i o n e r

7 0 E a s t 5 5 t h S t r e e t , 1 0 t h F l o o r N e w Y o r k , N e w Y o r k 1 0 0 2 2 - 2 0 5 0

( 2 1 2 ) 7 0 2 - 9 0 0 0


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TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................................................................................... II

PRELIMINARY STATEMENT .................................................................................................. 1

STATEMENT OF FACTS ........................................................................................................... 2

ARGUMENT ................................................................................................................................. 3

I. BECAUSE THE PANEL EXCEEDED ITS AUTHORITY IN AWARDING AURIGA ATTORNEYS’ FEES, SUCH AWARD MUST BE VACATED .................. 3

A. This Court Is Authorized To Vacate The Arbitration Award ........................................... 3

B. Auriga’s Request for Attorneys’ Fees “As A Sanction” Cannot be Construed as a Request for Attorneys’ Fees Absent A Sanction .............................................................. 4

a. Auriga’s Limited Request for Attorneys’ Fees As A Sanction Precludes Any Inference Of Mutual Agreement Or Acquiescence to An Award of Attorneys’ Fees Outside Such Request .................................................................................................... 6

b. The Panel’s Denial of Sanctions Forecloses Panel’s Authority to Award Attorneys’ Fees .............................................................................................................................. 11

CONCLUSION ............................................................................................................................ 12


II

TABLE OF AUTHORITIES

CASES

Asturiana De Zinc Mktg., Inc. v. LaSalle Rolling Mills, Inc., 20 F. Supp 2d 670, 674–75 (S.D.N.Y. 1998) ........................................................................................................................... 4

Bank de Seguos del Estado v. Mutual Marine Office, Inc., 344 F.3d 255, 262 (2d Cir.2003) ....... 3

Bank of New York v. Fleet Bank, N.A., 176 Misc.2d 21, 671 N.Y.S.2d 945, 948 (Sup.Ct.N.Y.Cty.1998) ................................................................................................................ 5

Caro v. Fid. Brokerage Services, LLC, 2014 WL 3907920, at *12 (D. Conn. Aug. 11, 2014) ............................................................................................................................................... 7, 10

DigiTelCom, Ltd. v. Tele2 Sverige AB, No. 12 Civ. 3082, 2012 WL 3065345, at *2–*3 (S.D.N.Y. July 25, 2012) ............................................................................................................. 3

First Interregional Equity Corp. v. Haughton, 842 F.Supp. 105, 112 (S.D.N.Y.1994) ................... 6

Grand Union Co. v. Cord Meyer Development Co., 761 F.2d 141, 147 (2d Cir. 1985) ................. 5

Marotta v. Blau, 241 A.D.2d 664, 659 N.Y.S.2d 586, 586 (3d Dep't 1997) ................................... 4

Matter of Matza v. Oshman, Helfenstein & Matza, 33 A.D.3d 493, 823 N.Y.S.2d 47 (2006) ....... 6

Orlowski v. Koroleski, 234 A.D.2d 436, 651 N.Y.S.2d 137, 137 (2d Dep't 1996) ......................... 4

Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d Cir. 1987) ............................................................. 3

Sammi Line Co. v. Altamar Navegacion S.A., 605 F.Supp. 72, 73–74 (S.D.N.Y.1985) ................ 5

Silvester Tafuro Design, Inc. v. Sachs, No. 96 cv 1271 (DC), 1996 WL 257668, *4 (S.D.N.Y. May 16, 1996) .............................................................................................................................. 5

Synergy Gas Co. v. Sasso, 853 F.2d 59, 64–65 (2d Cir. 1988) ....................................................... 6

TiVo Inc. v. Goldwasser, 13–2180–CV, 2014 WL 998194, at *5 (2d Cir. Mar. 17, 2014) ...... 3, 10

U.S. Offshore, Inc. v. Seabulk Offshore, Ltd., 753 F. Supp. 86, 92 (S.D.N.Y. 1990) .................... 6


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PRELIMINARY STATEMENT

Petitioner Odeon Capital Group, LLC, (“Odeon” or “Petitioner”) respectfully submit this

Memorandum of Law in Support of Petitioner’s Motion to Vacate the Arbitration Award

rendered in an arbitration before the Financial Industry Regulatory Authority (“FINRA”),

Odeon Capital Group LLC v. Mihir J. Patel and Auriga USA, LLC v. Mathew Van Alstyne and

Evan Schwartzberg, FINRA No. 16-00033 (the “Arbitration”). The Arbitration Award must be

vacated pursuant to Section 10 of the Federal Arbitration Act and applicable case law, on the

grounds that the arbitration panel presiding over the Arbitration (“Arbitration Panel”) exceeded

its authority and manifestly disregarded the law in awarding attorney fees’ to Auriga USA, LLC

(“Auriga” or “Respondent”).

In sum, the Panel awarded relief to Auriga in the form of payment of its expenses and

attorneys’ fees by Odeon even though such relief was never requested.

Specifically, Auriga’s request for relief with respect to attorneys’ fees and expenses was

very specific – “as a sanction against Odeon.” Since the Award specifically denied Auriga’s

Motion and request for sanctions, the Panel lacks authority to grant Auriga relief it never sought

and Odeon never agreed to arbitrate.

In its July 24, 2017 submission for attorneys’ fees, Auriga states “At the July 19, 2017

hearing, the Panel granted Auriga’s Motion to Dismiss claimant Odeon’s claims against

Auriga. Also at the July 19, 2017 hearing, the Panel reserved its ruling on Auriga’s motion for

an award of its attorney’s fees and expenses as a sanction against Odeon, and instructed Auriga

to promptly submit documentation of its attorneys’ fees and expenses incurred in this matter.”

Despite this specific request, the Panel denied Auriga’s motion for sanctions and granted

attorneys fees because “Claimant and Respondent Auriga both requested attorneys’ fees.” (See,

Award #3). This statement is completely FALSE.


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The Panel makes an award for attorneys’ fees even though everywhere else in the Award

where it references Auriga’s request for attorneys’ fees, it specifies that such request is made

pursuant to a request for sanctions – which requests, both Pre-Hearing and during the Hearing,

were specifically DENIED.

The Award states the following about Auriga’s request for sanctions throughout this

matter, and the Panel’s decision concerning such sanction requests:

Page 3: In the Statement of Answer, Respondent Auriga requested dismissal of the Statement of Claim in its entirety; and such relief as the Panel deems just and proper, including attorneys’ fees and costs as a sanction against Claimant for filing a frivolous Claim. Page 3: By correspondence dated September 8, 2016, Respondent Auriga filed a Motion for Sanctions. Claimant objected to Respondent Auriga’s Motion. Page 3: By correspondence dated October 31, 2016, Respondent Auriga filed a Supplemental Motion for Discovery Sanctions and Claimant objected. Page 4: By Order dated March 21, 2017, the Panel … denied Respondent Auriga’s Motion to Dismiss; denied Respondent Auriga’s Motion for Sanctions with leave to renew at the hearings… Page 5: Award Item #8: Respondent Auriga’s Motion for Sanctions is denied. Page 5: Award Item #11: Any and all claims for relief not specifically addressed herein, including punitive damages, are denied.

Thus, because there is no lawful basis - by agreement or by statute - to award Auriga its

attorneys’ fees except arguably as a sanction, AND the award specifies the Panel’s decision to

deny Auriga’s Motion for Sanctions, then this Court must find that the Panel exceeded their

powers as arbitrators in making such award against Odeon in Auriga’s favor and thus vacate

such Award.

STATEMENT OF FACTS

Petitioner respectfully refers the Court to the Declaration of Eris R. Stern in Support of

Petition to Vacate the Arbitration Award, sworn to February 12, 2012 (“Stern Dec.”), together

with the exhibits attached thereto and the Petition to Vacate the Arbitration Award, which


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accompanies this Memorandum of Law, for a complete recitation of the facts and circumstances

giving rise to this Petition to Vacate.

ARGUMENT

I. BECAUSE THE PANEL EXCEEDED ITS AUTHORITY IN AWARDING AURIGA ATTORNEYS’ FEES, SUCH AWARD MUST BE VACATED A. This Court Is Authorized To Vacate The Arbitration Award

Section 10(a)(4) under Rule 10 of the Federal Arbitration Act (9 U.S.C. § 10, “FAA”),

provides for vacatur of an arbitration award “where the arbitrators exceeded their powers.”

Under the FAA, the Second Circuit has held that the “inquiry focuses on whether the

arbitrators had the power based on the parties' submissions or the arbitration agreement, to reach

a certain issue.” Bank de Seguos del Estado v. Mutual Marine Office, Inc., 344 F.3d 255, 262 (2d

Cir.2003) (internal quotation omitted); DigiTelCom, Ltd. v. Tele2 Sverige AB, No. 12 Civ.

3082, 2012 WL 3065345, at *2–*3 (S.D.N.Y. July 25, 2012).

“[T]he scope of authority of arbitrators generally depends on the intention of the parties

to an arbitration and is determined by the agreement or submission.” Ottley v. Schwartzberg, 819

F.2d 373, 376 (2d Cir. 1987).

Courts have found arbitrators exceeded their authority “where arbitrators went beyond

alternative reasoning [not presented by the parties] and instead awarded relief not requested by

the parties.” TiVo Inc. v. Goldwasser, 13–2180–CV, 2014 WL 998194, at *5 (2d Cir. Mar. 17,

2014).

In its Petition, Odeon seeks to vacate the portion of the Award that awards Respondent

Auriga attorneys’ fees and expenses simply because the Panel did not have the authority to grant

such relief.


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Specifically, the Panel awarded Auriga payment of its expenses and attorneys’ fees by

Odeon. See, Award, page 4 of 7, Items 2 and 3. The Award states as a basis for granting

attorneys’ fees, “Claimant and Respondent Auriga both requested attorneys’ fees.”

Because Auriga never requested attorneys’ fees – either in pleadings or by motion, but

rather only as a sanction under FINRA Rules, which sanctions were specifically denied per the

Award, the Panel granted Auriga relief it never requested thus warranting vacatur of that portion

of the Award.

Accordingly, Odeon respectfully requests that the Award be modified to exclude payment

of Auriga’s expenses ($47,994) and attorneys’ fees ($353,290) for a total of $401,284.

B. Auriga’s Request for Attorneys’ Fees “As A Sanction” Cannot be Construed as a Request for Attorneys’ Fees Absent A Sanction

Auriga is unable to demonstrate that the FINRA Panel had any authority to award

attorneys’ fees. Even though in awarding attorneys’ fees to Auriga, the FINRA Panel set forth in

the Award – “Claimant is liable for and shall pay to Respondent Auriga attorneys’ fees in the

amount of $353,290.00 [] Claimant and Respondent Auriga both requested attorneys’ fees” –

there is no record of any submission by Auriga wherein it seeks an award of attorneys’ fees other

than “as a sanction”, which relief was specifically denied by the Panel in the Award.

New York Law Requires Agreement to Award Attorneys’ Fees

Absent a specific agreement to award attorneys’ fees in the event of a disposition in an

arbitration, New York follows the prevailing “American Rule” on fee-shifting, which permits an

award of fees only where “specifically provided for by statute or contract.” Asturiana De Zinc

Mktg., Inc. v. LaSalle Rolling Mills, Inc., 20 F. Supp 2d 670, 674–75 (S.D.N.Y. 1998), quoting,

Marotta v. Blau, 241 A.D.2d 664, 659 N.Y.S.2d 586, 586 (3d Dep't 1997); see, Orlowski v.

Koroleski, 234 A.D.2d 436, 651 N.Y.S.2d 137, 137 (2d Dep't 1996) (stating that generally


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attorneys' fees may not be awarded “unless an award is authorized by express agreement between

the parties, by statute, or by court rule”); Bank of New York v. Fleet Bank, N.A., 176 Misc.2d

21, 671 N.Y.S.2d 945, 948 (Sup.Ct.N.Y.Cty.1998) (stating that “the court should not infer a

party's intention to waive the benefit of the [fee] rule unless the intention to do so is

unmistakenly [sic] clear from the language of the promise” (internal quotation marks omitted));

see, also, Grand Union Co. v. Cord Meyer Development Co., 761 F.2d 141, 147 (2d Cir.

1985)(stating that New York state law “requires, in the absence of an agreement among the

parties, statutory authorization for such an award”).

Because the traditional American Rule dictates that attorneys' fees are generally not

awarded, it is the burden of the party seeking attorneys' fees, in this case Auriga, to demonstrate

that the arbitrator had the authority to award those fees. Sammi Line Co. v. Altamar Navegacion

S.A., 605 F.Supp. 72, 73–74 (S.D.N.Y.1985); Silvester Tafuro Design, Inc. v. Sachs, No. 96 cv

1271 (DC), 1996 WL 257668, *4 (S.D.N.Y. May 16, 1996) (citing same).

FINRA Rules Requires Agreement to Award Attorneys’ Fees

Similarly, absent a statutory entitlement or agreement, FINRA Code of Arbitration

procedure follow the same principles.

The only provision of the FINRA Code that specifically empowers the Panel to award

attorneys’ fees is within the context of the imposition of sanctions. See, FINRA Rule 13212, and

Section __, infra.

Even according to the FINRA Arbitrator’s Guide (October 2017), a Panel “may award

attorneys’ fees when, for example: 1) the parties’ contract includes a clause that provides for

attorneys’ fees; 2) the governing law provides for attorneys’ fees when all of the parties request


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or agree to such fees; 3) the fees are required or permitted as part of a statutory claim; or 4) as

otherwise provided by law.” (Stern Dec., Ex. K at 70).

For there to be an agreement to award attorneys’ fees, such agreement must be mutual.

Matter of Matza v. Oshman, Helfenstein & Matza, 33 A.D.3d 493, 823 N.Y.S.2d 47 (2006) (the

award of attorneys’ fees was not authorized by New York law, because no statute provided for

such an award and it was neither authorized by an express provision of the arbitration agreement

nor requested by both parties); U.S. Offshore, Inc. v. Seabulk Offshore, Ltd., 753 F. Supp. 86, 92

(S.D.N.Y. 1990) ("If both parties [seek] attorney's fees... then both parties agree[] pro tanto to

submit that issue to arbitration, and the arbitrators ha[ve] jurisdiction to consider that issue and to

award them").

In the instant case, there was neither a mutual agreement for the award of attorneys’ fees

nor a mutual request for an award of attorneys’ fees.

Nowhere in the FINRA Arbitration record – either by agreement or through its

submissions – did Auriga request of the Panel an award of attorneys’ fees other than specifically

as a sanction to be imposed upon Odeon for filing a frivolous lawsuit. Because the Panel denied

Auriga’s request for sanctions, there is no other rational or lawful basis for awarding attorneys’’

fees to Auriga.

An arbitrator has the authority to award attorneys' fees if the parties' agreement to

arbitrate grants such authority. Synergy Gas Co. v. Sasso, 853 F.2d 59, 64–65 (2d Cir. 1988);

First Interregional Equity Corp. v. Haughton, 842 F.Supp. 105, 112 (S.D.N.Y.1994).

a. Auriga’s Limited Request for Attorneys’ Fees As A Sanction Precludes Any Inference Of Mutual Agreement Or Acquiescence to An Award of Attorneys’ Fees Outside Such Request

From the moment Auriga entered this case, Auriga’s only request for attorneys’ fees was

made in explicit connection with its request for sanctions. This limitation on its own request for


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attorneys’ fees cannot be baselessly expanded by the Panel to infer a request for attorneys’ fees

separate and apart from a finding for sanctions. Thus, there can be no inference from such

request that Odeon agreed to pay Auriga’s attorneys’ fees. Such extension of Auriga’s requests

for relief is an abuse of the Panel’s authority.

Instructive on this precise analysis is another case within this Circuit, Caro v. Fid.

Brokerage Services, LLC, 2014 WL 3907920, at *12 (D. Conn. Aug. 11, 2014).

In Caro, Senior District Court Judge Haught concluded “without difficulty that the

basic premise underlying the arbitrators’ award of attorneys’’ fees to [Respondent] is flawed”

and they exceeded their powers in awarding attorneys’ fees because the parties did not explicitly

agree for the imposition of such fees. Id.

Specifically, the basis for the Court’s finding that the Panel exceed their authority to

grant attorneys’ fees was that the request for attorneys’ fees was limited to a specific set of

circumstances that did not apply, and thus, no inference of an agreement to award attorneys’ fees

could be drawn from such request.

The Caro Court, in holding that the Panel exceeded their powers by awarding attorneys’

fees to the Respondent, ruled that, “[T]o be liable for such an award, Claimants had to agree in

advance to pay the fees of the attorneys who represented [Respondent] during the arbitration

proceedings. Not only is there no evidence in the record that [Claimant] made such an

agreement, the evidence negates that proposition.” Caro, 32014 WL 3907920, at *12.

Based upon the Court’s analysis of the parties’ agreement with respect to attorneys’ fees

and the Panel’s Award in Caro, this Court has all the more reason to vacate the portion of the

Award in favor of Auriga.


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For instance, in Caro, the Respondents requested attorneys’ fees in their pleadings and

other documents as an open ended relief. Here, Auriga never made any request for relief to

include attorneys’ fees except for the limited purpose for seeking sanctions against Odeon for

filing a frivolous lawsuit.

Moreover, the Award in Caro is silent as to the imposition of sanctions as a possibility

that the Panel had the authority to impose attorneys’ fees under some rule or agreement. Here,

the Panel specifically denied Auriga’s request for sanctions, which is the only relief they sought

in order to impose attorneys’ fees. (See, Auriga’s Statement of Answer, Stern Dec., Ex. C)

(Auriga only asked for attorneys’ fees “as a sanction against Odeon for filing a frivolous Claim

against Auriga.”)

Furthermore, in the Award itself, the Panel confirms that the only request for attorneys’

fees by Auriga is through the finding of a sanction against Odeon and cites nowhere in the

record that Auriga sought the award of attorneys’ fees apart from the granting of a motion

of sanctions. (Stern Dec., Ex. J).

Amazingly, the Award falsely misstates without any support from the submissions or

its own Award that “Claimant and Respondent Auriga both requested attorneys’ fees”.

It is a complete falsity and is not supported by the record.

In the “Relief Requested” Section of the Award, the Panel observed that “In the

Statement of Answer, Respondent Auriga requested dismissal of the Statement of Claim in its

entirety; and such relief as the Panel deems just and proper, including attorneys’ fees and costs

as a sanction against Claimant for filing a frivolous Claim.” (Stern Dec., Ex. J).


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(To contrast the Relief Requested by Auriga, the Panel included various forms of relief

sought by both Odeon and Mihir Patel against each other, which included, inter alia, attorneys’

fees without any limitation “as a sanction.”)

In the Section of the Award, “Other Issues Considered and Decided,” the Panel noted

Auriga’s continuing request for attorneys’ fees as a sanction.1

The Award confirms that, “By Order dated March 21, 2017, the Panel … denied

Respondent Auriga’s Motion to Dismiss and denied Respondent Auriga’s Motion for Sanctions

with leave to renew at the hearings…” (Stern Dec., Ex. J).

The Award specifies that at the Hearing Respondent Auriga renewed its motion to

dismiss and motion for sanctions and that “after due deliberation, the Panel granted Auriga’s

Motion to Dismiss on count 8 of Claimant’s Claim.” (Stern Dec., Ex. J).

This ruling from the Panel came on July 19, 2017, at which time, as Auriga admits, “the

Panel reserved its ruling on Auriga’s motion for an award of attorneys’ fees and expenses as a

sanction against Odeon, and instructed Auriga to promptly submit documentation of its

attorneys’ fees and expenses incurred in this matter.” (Stern Dec., Ex. H)

Ultimately, the Panel ruled on Auriga’s motion for sanctions.

In the “Award” section of the award, the Panel ruled as follows, in relevant part:

“After considering the pleadings, the testimony and evidence presented at the hearing, and the post-hearing submissions, the Panel has decided in full and final resolution of the issues submitted for determination as follows:”

2. Claimant is liable for and shall pay to Respondent Auriga expenses in the amount of $47,994.00.

1 “By correspondence dated September 8, 2016, Respondent Auriga filed a Motion for Sanctions. Claimant objected to Respondent Auriga’s Motion.” And “By correspondence dated October 31, 2016, Respondent Auriga filed a Supplemental Motion for Discovery Sanctions and Claimant objected.” (Stern Dec., Ex. J).


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3. Claimant is liable for and shall pay to Respondent Auriga attorneys’ fees in the amount of $353,290.00. Claimant and Respondent Auriga both requested attorneys’ fees.

8. Respondent Auriga’s Motion for Sanctions is denied.

11. Any and all claims for relief not specifically addressed herein, including punitive damages, are denied.

(Stern Dec., Ex. J) (emphasis added).

Because Auriga’s only request for attorneys’ fees was be awarded was “as a sanction”

against Odeon for filing a frivolous claim, there is no basis to conclude that Odeon agreed to pay

Auriga’s attorneys’ fees for any other reason once the motion for sanctions is denied.

Furthermore, there is no expectation by Auriga that it believed it would be entitled to

receive such award of attorneys’ fees outside of its request for sanctions since there is no

agreement for Odeon to pay such fees, there is no statute entitling Auriga to such fees, and, most

simply, Auriga never asked for such fees.

Under these circumstances, this Court should rule consistently with the Caro Court in

finding that Auriga’s request for attorneys’ fees “as a sanction” cannot be inferred as a request

for anything more expansive. See, Caro, 32014 WL 3907920, at *13 (“It is manifestly

unreasonable, bordering on the fanciful, for the arbitrators to construe this phrase as a request by

Claimants for attorneys' fees incurred during the arbitration, or (more to the point) as an implicit

agreement to pay attorneys' fees if Claimants lost the arbitration. No other agreement by

Claimants can be discerned in the record, and [Respondent] recognizes there is none”).

Since Auriga never sought attorneys’ fees beyond the imposition of sanctions, the Panel

exceeded its powers in granting Auriga relief not specifically sought in the arbitration. See,

TiVo Inc. v. Goldwasser, 2014 WL 998194, at *5.


11

b. The Panel’s Denial of Sanctions Forecloses Panel’s Authority to Award Attorneys’ Fees

Not only is Auriga unable to cite to any mutual agreement for the imposition of

attorneys’ fees in the event Odeon’s claims are dismissed, but the Panel’s Award specifically

denying sanctions forecloses any other lawful entitlement.

The only provision under FINRA Code that specifically warrants the imposition of

attorneys’’ fees is the Panel’s authority to impose sanctions under FINRA rules. Consistent with

this truth, Auriga only sought attorneys’ fees pursuant to this very FINRA rule when it made its

request for attorenys’ fee specifically only “as a sanction”.

Finra Rule 3212 (“Sanctions”) provides, “(a) The panel may sanction a party for failure

to comply with any provision in the Code, or any order of the panel or single arbitrator

authorized to act on behalf of the panel. Unless prohibited by applicable law, sanctions may

include, but are not limited to … [a]ssessing attorneys' fees, costs and expenses…”

According to the Award, the Panel considered Auriga’s numerous requests for sanctions,

as well as Claimant’s objections. Ultimately, the Panel ruled that “Respondent Auriga’s Motion

for Sanctions is denied.” See, Award, Item #6. Furthermore, the Panel also ruled that “Any and

all claims for relief not specifically addressed herein, including punitive damages, are denied.”

Consequently, by denying the only relief under which Auriga sought the imposition of

attorneys’ fees and otherwise foreclosing all other relief, the Panel exceeded its powers by

ordering that Odeon pay Auriga’s attorneys’ fees without Auriga even asking for such relief.

Accordingly, Auriga’s entitlement to expenses and fees must be vacated.


12

CONCLUSION

For the reasons stated above, Petitioner respectfully requests that this Court grant its Motion

to Vacate and/or Modify the Arbitration Award, and for such other relief as this Court deems just

and proper.


By: Eric R. Stern, Esq. Sack And Sack, LLP




Case No. 18-cv-__________



Petitioner,


Respondent.

: : : : : : : : : : :

---------------------------------------------------------------------------- x

DECLARATION OF ERIC R. STER IN SUPPORT OF PETITION TO VACATE ARBITRATION AWARD

1. I, ERIC STERN, pursuant to 28 U.S.C. § 1746 declare the following under

the penalty of perjury:

2. I am a partner in the law firm of Sack and Sack, LLP, attorneys for Petitioner

Odeon Capital Group LLC, and as such I am fully familiar with the facts and circumstances

contained herein.

3. I submit this Declaration in support of Petitioner' Petition to Vacate the

arbitration award rendered in the arbitration proceeding administered before the Financial

Industry Regulatory Authority, Inc. (“FINRA”), captioned, Odeon Capital Group, LLC v.

Mihir Patel and Auriga USA, LLC, before the FINRA Office of Dispute Resolution,

FINRA Case Number 16-00033 (the “Arbitration”).

4. Attached hereto as Exhibit A is a true and complete copy of Petitioner’s

Statement of Claim, dated December 30, 2015.

5. Attached hereto as Exhibit B is a true and complete copy of Respondent


Auriga’s Submission Agreement, dated March 21, 2016.

6. Attached hereto as Exhibit C is a true and complete copy of Respondent

Auriga’s Statement of Answer, dated March 25, 2016.

7. Attached hereto as Exhibit D is a true and complete copy of Respondent

Motion to Compel Production and Motion to Impose Discovery Sanctions, dated, September

8, 2016.

8. Attached hereto as Exhibit E is a true and complete copy of Respondent’s

Supplemental Motion to Compel Production and Motion to Impose Discovery Sanctions,

dated, October 31, 2016.

9. Attached hereto as Exhibit F is a true and complete copy of Respondent’s

Motion to Dismiss Statement of Claim for Material and Intentional Failures to Comply

with the Panel's Discovery Order, dated January 17, 2017.

10. Attached hereto as Exhibit G is a true and complete copy of the FINRA

Arbitration Panel’s Order, dated, March 21, 2017, which denied both Auriga’s Motion to

Dismiss and Auriga’s Motion for Sanctions.

11. Attached hereto as Exhibit H is a true and complete copy of Auriga’s

submission for attorneys’ fees and expenses, dated July 24, 2017.

12. Attached hereto as Exhibit I is a true and complete copy of the Award Service

letter sent by FINRA Dispute Office of Resolution to Petitioner.

13. Attached hereto as Exhibit J is a true and complete copy of the Executed

Arbitration Award.

14. Attached hereto as Exhibit K is a true and complete copy of the FINRA

Arbitrator’s Guide (October 2017).



By: Eric R. Stern, Esq. Sack And Sack, LLP



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