SCOTUS Again Declines to Review Case Involving FINRA Award

This article was first published on the Securities Arbitration Alert blog, here.

For the second time in a few months, the Supreme Court has refused to take up a case involving a FINRA arbitration award.

We reported in SAA 2022-41 (Nov. 3) and blogged that the Supreme Court on October 31, 2022 denied Certiorari in Caputo v. Wells Fargo, No. 22-265, a case involving a FINRA Award. We analyzed in SAA 2022-19 (May 19) the underlying Third Circuit decision, Caputo v. Wells Fargo Advisors, LLC, No. 20-3059 (3rd Cir. May 9), reh’g den. (Jun. 17, 2022). There, a unanimous Court held that, even if a FINRA Panel’s Award was legally erroneous, this alone did not meet the stringent standard for a finding of “manifest disregard of the law.” The September 2022 Certiorari Petition in Caputo had presented these issues:

1. Whether this Court’s public policy exception is inapplicable to an arbitral award enforcing contractual provisions that are expressly illegal, void, and unenforceable under applicable statutes, on the supposition that such statutes do not embody sufficiently well-defined and dominant public policy.
2. Whether this Court’s public policy exception to judicial deference toward arbitral awards is displaced by a deferential manifest-disregard-of-law standard of judicial review where, as here, the public policy issue was presented to the arbitrators.
3. Whether this Court’s public policy exception is applicable under the FAA in light of Hall Street Associates v. Mattel, 552 U.S. 576 (2008) (holding that grounds set out in the FAA for vacating arbitral awards are exclusive), as to which lower courts are split.

SCOTUS: The Answer is Still “No”

The Court on January 9 again declined to take up the case, denying a November 2022 Petition for Rehearing filed by Caputo. As usual, SCOTUS provides no explanation.

(ed: *The case appears on page 19 of the Order List. **The FINRA case is FINRA ID No. 15-0204 (Newark, NJ, Jul. 26, 2019). ***We had thought the Court might want to take up issue # 3.)

George Friedman

George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA…