WELLS FARGO ADVISORS, LLC. v. WATTS

WELLS FARGO ADVISORS, LLC, Claimant,

v.

CLIFFORD J. WATTS, III, Respondent. 

No. 5:11cv48.

United States District Court, W.D. North Carolina, Charlotte Division.

March 9, 2012.

Clifford John Watts, Respondent, represented by Matthew Kyle Rogers.

Wells Fargo Advisors, LLC, Claimant, represented by Charles E. Raynal, IV, Parker Poe Adams & Bernstein, LLP, Matthew Hilton Mall, Parker Poe Adams & Bernstein LLP, Brady James Hermann,, Michaels, Ward & Rabinovitz, LLP, Pro Hac Vice & Deborah Gale Evans,, Michaels, Ward & Rabinovitz, LLP, Pro Hac Vice.

MEMORANDUM OF DECISION AND ORDER

MAX O. COGBURN, Jr., District Judge.

Review and confirmation of the arbitration process by the federal courts has reached the point that when this court observed, in a hearing on the claimant bank's motion to confirm an arbitration award, that the court could refuse to enforce an illegal contract, counsel for the claimant bank immediately challenged the court's statement. Hrg. Tr. 71, docket no. 33. As counsel's open challenge to the court's review authority makes clear, arbitration under the Federal Arbitration Act is a process that, although retaining the appearance of constitutionality by involving the courts in confirming an award, does not even attempt to retain the appearance of fairness.¹ In the hearing before this court on the claimant bank's motion to confirm an arbitration award, counsel for the claimant bank noted that the bank handles hundreds of arbitrations a year and that counsel herself handles 30 to 40 a year and that she, by the way, has never lost a single case. Tr. 52 ("I've never lost one and I've never not gotten attorney's fees. I always win these cases.") (emphasis added). Now there's a level playing field.

Because of its constant and prolific participation in FAA arbitration, the claimant bank enjoys a clear advantage over the individual employee or customer. That is, the arbitration company or arbiter knows that the bank will participate in hundreds of arbitrations a year, whereas an individual employee or customer may participate in arbitration only once in their lifetime, if ever. The bank will know from experience, then, which arbiters are the most likely to favor the bank; therefore, the bank will naturally choose that arbiter to arbitrate the bank's case. The individual, on the other hand, has very limited knowledge of the arbiter. Couple that with the proposition that the arbiter's mistakes of facts or law are not reviewable by the courts and the result is a process in which, as in this case, counsel for the bank can remain undefeated 30 or 40 times a year. Tr. 52.

Counsel's argument that the parties voluntarily agreed to arbitration and that the process saves money is also disingenuous. Since financial institutions and large employers have virtually all of the available lending capital and a large number of the jobs, individuals have no recourse but to agree to an arbitration clause. Further, since the individuals seldom win and are forced to reimburse costs and attorney fees, the only ones saving money are large institutions like the claimant.

Had the contract in this case been an illegal one, this court would have refused to confirm the award. However, as the contract is not illegal, the court has reviewed the award under current applicable law and finds that the bank is entitled to have its award confirmed. The court will not, however, confirm the award of attorney's fees for the reasons stated below.