FILED: NEW YORK COUNTY CLERK 02/07/ :24 PM INDEX NO /2017 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 02/07/2017

Transcription

1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK SUNCICA RELJIC AND TRADITION SECURITIES AND DERIVATIVES, INC. (f/k/a TRADITION ASIEL SECURITIES, INC.) Index No.: /2017 Petitioners/Counterclaim Respondents, v. TULLETT PREBON FINANCIAL SERVICES, LLC Respondent/Counterclaim Petitioner. TULLETT PREBON FINANCIAL SERVICES, LLC S MEMORANDUM OF LAW IN OPPOSITION TO PETITIONERS MOTION TO VACATE AND IN SUPPORT OF ITS CROSS-MOTION TO CONFIRM THE ARBITRATION AWARD SHEPPARD MULLIN RICHTER HAMPTON LLP 30 Rockefeller Plaza New York, New York (212) Attorneys for Respondent/ Counterclaim Petitioner Tullett Prebon Financial Services, LLC 1 of 30

2 TABLE OF CONTENTS Page PRELIMINARY STATEMENT...1 FACTUAL AND PROCEDURAL BACKGROUND...3 ARGUMENT...3 I. The Award Should Be Confirmed as the Arbitrators Did Not Manifestly Disregard the Law and No Other Grounds for Vacatur Exist...3 II. III. IV. The Panel Did Not Hold Tradition Liable for Breach of Contract nor Reljic Liable for Tortious Interference...7 There is No Basis for Petitioners Contention that the Damages Award Is for Liquidated Damages...10 The Panel s Award of Joint and Several Liability for Compensatory Damages Was Not in Manifest Disregard of the Law...14 V. The Panel Ruled Correctly In Finding Tradition Jointly and Severally Liable on Attorneys Fees...17 VI. The Panel Correctly Did Not Award Sanctions to Petitioners...20 CONCLUSION i- 2 of 30

3 TABLE OF AUTHORITIES Cases Page(s) Advanced Aerofoil Techs., AG v. Todaro No. 13 Civ. 7181(RWS), 2014 WL (S.D.N.Y. Apr. 16, 2014)...10 In re Arbitration Between Gen. Sec. Nat. Ins. Co. and Aequicap Program Adm rs 785 F. Supp. 2d 411 (S.D.N.Y. 2011)...20 Barbier v. Shearson Lehman Hutton 752 F. Supp. 151 (S.D.N.Y. 1990)...14 Bd. of Educ. of Central Sch. Dist. No. 1 of the Towns of Niagara, Wheatfield, Lewiston & Cambria v. Niagara-Wheatfield Teachers Assoc. 46 N.Y.2d 553 (1979)...13 Bear Stearns & Co., Inc. v. Fulco 21 Misc. 3d 823 (N.Y. Sup. Ct. 2008)...5, 10, 19 Bear Stearns & Co. Inc. v. Int l Capital & Mgmt. Co. LLC 926 N.Y.S.2d 826 (2011), amended and superseded to account for party s name change, 2011 WL , aff d 99 A.D.3d 402 (N.Y. App. Div. 1st Dep t 2011)...20 Brown & Williamson Tobacco Corp. v. Chesley 7 A.D. 368 (N.Y. App. Div. 1st Dep t 2004)...9 Cantor Fitzgerald & Co. v. Pritchard 107 A.D.3d 476 (NY. App. Div. 1st Dep t 2013)...20 Cardinale v. 267 Sixth Street LLC No. 13 Civ. 4845(JFK), 2014 WL (S.D.N.Y. Sept. 26, 2014)...8 Cellu-Beep Inc. v. Telecorp Commc ns, Inc. No. 13 Civ. 7236(NRB), 2014 WL (S.D.N.Y. July 18, 2014)...4, 9 CF Global Trading, LLC v. Wassenaar No. 13 Civ. 766 (KPF), 2013 WL (S.D.N.Y. Oct. 8, 2013)...19 Cheng v. Oxford Health Plans 45 A.D.3d 356 (N.Y. App. Div. 1st Dep t 2007)...6 D.H. Blair & Co., Inc. v. Gottdiener 426 F.3d 95 (2d Cir. 2006)...8 Dishner v. Zachs No. 16 Civ (LGS), 2016 WL (S.D.N.Y. Dec. 19, 2016)...8 -ii- 3 of 30

4 Cases Page(s) Duferco Int l Steel Trading v. T. Klaveness Shipping A/S 333 F.3d 383 (2d Cir. 2003)...1, 4, 6, 9 In re Engel (Refco, Inc.) 746 N.Y.S.2d 826 (N.Y. Sup. Ct. 2002)...9, 22 Folkways Music Pub., Inc. v. Weiss 989 F.2d 108 (2d Cir. 1993)...4 GFI Brokers, LLC v. Santana 2008 WL (S.D.N.Y. Aug. 6, 2008)...15 GFI Secs. v. Levin No /08, 2009 WL (N.Y. Sup. Ct. Apr. 6, 2009)...9 In re Goldberg v. Thelen Reid Brown Raysman & Steiner LLP 52 A.D.3d 392 (N.Y. App. Div. 1st Dep t), lv. appeal denied, 11 N.Y.3d 749 (2008)...19 In re J&J Towne Pharmacy, Inc. No. 99cv (DWS), 2000 WL (E.D. Pa. May 5, 2000)...15 Klaff v. Wieboldt Stores, Inc. No. 84cv90, 1988 WL (N.D. Ill. Dec. 23, 1988)...15 Knight v. Chrysler Corp. 134 F. Supp. 598 (D.N.J. 1955)...15 Koch Oil, S.A. v. Transocean Gulf Oil Co. 751 F.2d 551 (2d Cir. 1985)...14 Kurt Orban Co. v. Angeles Metal Sys. 573 F.2d 739 (2d Cir. 1978)...10 Marcus, Stowell & Beye Government Secs., Inc. v. Jefferson Inv. Corp. 797 F.2d 227 (5th Cir. 1986)...15 Murray v. Cornette No /2007, 2008 WL (N.Y. Sup. Ct. Apr. 4, 2008)...5, 22 Nat l Bulk Carriers, Inc. v. Princess Mgmt. Co. 597 F.2d 819 (2d Cir. 1979)...4 Nicholls v. Brookdale Univ. Hosp. & Med Ctr. No. 05-CV-2666, 2005 WL (E.D.N.Y. July 14, 2005) iii- 4 of 30

5 Cases Page(s) NYKCool A.B. v. Pacific Fruit Inc. No. 10-CV-3867, 2011 WL (S.D.N.Y. Aug. 9, 2011), aff d 507 F. App x 83 (2d Cir. 2013)...16 Roganti v. Metropolitan Life 786 F.3d 201 (2d Cir. 2015)...11, 12 Schaad v. Susquehanna Capital Group No. 03 Civ. 9902(LTS)(DFE), 2004 WL (S.D.N.Y. Aug. 10, 2004)...20 Seed Holdings, Inc. v. Jiffy Int l AS 5 F. Supp. 3d 565 (S.D.N.Y. 2014)...5 Silvester Tafuro Design, Inc. v. Sachs No. 96 Civ. No (DC), 1996 WL (S.D.N.Y. May 16, 1996)...19 Spector v. Torenberg 852 F. Supp. 201 (S.D.N.Y. 1994)...3, 15 STMicroelectronics NV v. Credit Suisse Secs. (USA) LLC 648 F.3d 68 (2d Cir. 2011)...10 Stolt-Nielsen SA v. AnimalFeeds Int l Corp. 548 F.3d 85 (2d Cir. 2008), rev d on other grounds, 559 U.S. 662 (2010)...5, 6 Synergy Gas Co. v. Sasso 853 F.2d 59 (2d Cir. 1988)...20 T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc. 592 F.3d 329 (2d Cir. 2010)...8 Telenor Mobile Commc ns AS v. Storm LLC 584 F.2d 396 (2d Cir. 2009)...5 U.S. Elecs., Inc. v. Sirius Satellite Radio, Inc. 73 A.D.3d 497 (N.Y. App. Div. 1st Dep t 2010)...4 Wallace v. Buttar 378 F.3d 182 (2d Cir. 2004)...9, 21 Westerbeke Corp. v. Daihatsu Motor Co., Ltd. 304 F.3d 200 (2d Cir. 2002)...5, 6 Wien & Malkin LLP v. Helmsley-Spear, Inc. 6 N.Y.3d 471 (2006)...5, 6 -iv- 5 of 30

6 Cases Page(s) Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp. 103 F.3d 9 (2d Cir. 1997)...10 Statutes Page(s) Federal Arbitration Act (9 U.S.C. 9)...4 Other Authorities Page(s) CPLR v- 6 of 30

7 PRELIMINARY STATEMENT At the conclusion of an arbitration spanning more than 105 hearing sessions across nearly four years, three experienced FINRA arbitrators issued a final award resolving the claims brought before them with the consent of all parties ( Award ). The Panel ruled in favor of Tullett Prebon Financial Services, LLC ( Tullett ) on its claims for breach of contract against Tullett s former employee, Suncica Reljic ( Reljic ), and for tortious interference with contract against one of Tullett s competitors, Tradition Asiel Securities, Inc. ( Tradition ), and denied all other claims and counterclaims. The FINRA Panel acted appropriately and within its discretion when it awarded Tullett $9.1 million in compensatory damages, attorneys fees and costs, and this Court should not hesitate to confirm the Award. The arbitration was conducted before a distinguished Panel of three arbitrators, each an accomplished attorney with impeccable credentials and more than 25 years of experience practicing law. The Panel arrived at its decision after receiving thousands of pages of legal briefs, hearing two full days of oral summations, and reviewing an ample evidentiary record containing hundreds of exhibits and over 12,000 pages of transcripts. No one disputes that the Panel performed its duties conscientiously, treated the parties courteously, and presided evenhandedly at the hearing. Petitioners do not challenge the impartiality of the Panel or accuse it of bias, fraud, or misconduct. Nonetheless, Petitioners now petition to vacate the Award arguing that the Panel manifestly disregarded the law in several respects. Nothing in the arbitration record or the Award supports their arguments. Indeed, Petitioners fall woefully short of the heavy burden of showing that the award falls within a very narrow set of circumstances delineated by statute and case law. Duferco Int l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003) of 30

8 First, Petitioners contend that the Panel manifestly disregarded the law by holding Tradition liable for breaching Reljic s contract with Tullett and Reljic liable for tortiously interfering with her own contract. In fact, at no point in the arbitration proceedings did Tullett contend that Tradition should be liable for breach of contract or Reljic for tortious interference with contract, and nothing in the Award supports the notion that the Panel held Tradition liable in contract and Reljic liable in tort. Second, Petitioners argue that the Panel manifestly disregarded the law by holding Tradition liable for liquidated damages, a purely contractual remedy. (Petitioners Memorandum of Law in Support of Verified Petition to Vacate Arbitration Award ( Petitioners Memorandum ), p. 1). However, the Award makes clear that the Panel considered Tullett s request for liquidated damages against Reljic and rejected it, and the Award expressly states that Tradition is liable for $4.5 million in compensatory damages. (Kiley Aff., Ex. 1, p. 4). 1 Third, Petitioners argue that the Panel s imposition of joint and several liability against Reljic and Tradition for all compensatory damages was in manifest disregard of the law. In fact, the Panel s imposition of joint and several liability is consistent with the most plausible interpretation of the Panel s Award: that the Panel found Reljic liable for $4.5 million for her breach of contract, Tradition liable for $4.5 million for its tortious interference with contract, and then held the two parties jointly and severally liable for that amount in order to ensure that Tullett receive only $4.5 million total and not two times that amount (as Petitioners had cautioned the Panel against such a double recovery ). 1 Kiley Aff., Ex. refers to exhibits annexed to the Affirmation of John E. Kiley in Opposition to Petition to Vacate Award and in Support of Tullett s Cross-Motion to Confirm Arbitration Award, dated February 7, of 30

9 Fourth, Petitioners argue that the Panel had no basis to find Tradition liable for Tullett s attorneys fees based on Reljic s employment agreement with Tullett. The explicit language of the Award makes clear, however, that the Panel held Tradition liable for such fees because all parties requested attorneys fees and not based on Reljic s employment agreement. The arbitration record leaves no doubt regarding Tradition s repeated requests for attorneys fees, and New York courts offer clear support for arbitration decisions that award attorneys fees where all parties request them. Fifth, Petitioners contend that the Panel manifestly disregarded the law by failing to draw an adverse inference against Tullett for alleged discovery misconduct. The Award does not foreclose the possibility that Panel drew such an inference and, even if it did, the Panel s failure in this regard would have constituted a disregard of evidence, not law. Disregard of evidence is not a basis for vacatur. Given New York s strong public policy of deferring to arbitration awards in all but the most egregious cases, the Award should be confirmed. FACTUAL AND PROCEDURAL BACKGROUND Tullett refers this Court to its Verified Answer to Petition and Counterclaim to Confirm Arbitration Award for a full recitation of the factual and procedural background of this case. (See Kiley Aff., Ex. 2). ARGUMENT I. The Award Should Be Confirmed as the Arbitrators Did Not Manifestly Disregard the Law and No Other Grounds for Vacatur Exist A party moving to vacate an arbitration award has the burden of proof, and the showing required to avoid confirmation is very high. Spector v. Torenberg, 852 F. Supp. 201, 206 (S.D.N.Y. 1994) ( This limited judicial review reflects the desire to avoid undermining the twin -3-9 of 30

10 goals of arbitration, namely settling disputes efficiently and avoiding long and expensive litigation... As the Court of Appeals for the Second Circuit has observed, arbitration cannot achieve the savings in time and money for which it is justly renowned if it becomes merely the first step in lengthy litigation. ) (quoting Folkways Music Pub., Inc. v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993)); Nat l Bulk Carriers, Inc. v. Princess Mgmt. Co., 597 F.2d 819, 825 (2d Cir. 1979)); see also Duferco Int l Steel Trading, 333 F.3d at 388 ( It is well established that courts must grant an arbitration panel s decision great deference. A party petitioning to vacate an arbitral award bears the heavy burden of showing that the award falls within a very narrow set of circumstances delineated by statute and case law. ); U.S. Elecs., Inc. v. Sirius Satellite Radio, Inc., 73 A.D.3d 497, 498 (N.Y. App. Div. 1st Dep t 2010) ( It is axiomatic, however, that judicial review of arbitration awards, whether under state law or the Federal Arbitration Act (9 U.S.C. 9), is extremely limited, and such an award will be upheld where there is even colorable justification for the result, regardless of errors of law or fact committed by the arbitrators. ). Petitioners do not challenge the Award on any statutory basis, such as bias, fraud, misconduct, corruption, or evident partiality on the part of the Panel. Instead, they move to vacate the Panel s Award based solely on allegations that the Panel issued its Award in manifest disregard of the law. To establish manifest disregard, a petitioner must demonstrate: (1) that the law allegedly ignored was clear and explicitly applicable to the matter before the arbitrator; (2) that the law was in fact improperly applied, leading to an erroneous outcome; and (3) that the arbitrator was subjectively aware of the applicable law and chose to disregard it. Cellu-Beep Inc. v. Telecorp Commc ns, Inc., No. 13 Civ. 7236(NRB), 2014 WL , at *4 (S.D.N.Y. July 18, 2014); see also Duferco Int l Steel Trading, 333 F.3d at 389 ( A party seeking vacatur of 30

11 bears the burden of proving that the arbitrators were fully aware of a clearly defined governing legal principle, but refused to apply it, in effect, ignoring it. ). To demonstrate manifest disregard, [i]t is not enough that the moving party provide proof that the arbitrator was aware of the governing legal principle; there must be a specific showing of intent... Thus, a party seeking to vacate an award must show that the arbitrator knew of the relevant principle, appreciated that this principle controlled the outcome of the disputed issue, and nonetheless willfully flouted the governing law by refusing to apply it. Bear Stearns & Co., Inc. v. Fulco, 21 Misc. 3d 823, (N.Y. Sup. Ct. 2008) (quoting Westerbeke Corp. v. Daihatsu Motor Co., Ltd., 304 F.3d 200, 217 (2d Cir. 2002)); see also Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 N.Y.3d 471, 486 (2006) ( [The panel s] analysis shows no evidence of the panel s intent to disregard the law. Therefore, its award on this matter will also stand. ); Murray v. Cornette, No /2007, 2008 WL , at *4 (N.Y. Sup. Ct. Apr. 4, 2008) ( Even if petitioner were able to identify a clearly well-defined applicable law that the arbitrators ignored or refused to apply, manifest disregard of the law would still not be found unless petitioner can meet the very heavy burden of demonstrating that the panel knew when it awarded the respondent the sum of $63, that it was ignoring or refusing to apply said law. ). As applied by New York courts, [t]he manifest disregard of the law standard...is severely limited, highly deferential, and confined to those exceedingly rare instances of egregious impropriety on the part of the arbitrators. Seed Holdings, Inc. v. Jiffy Int l AS, 5 F. Supp. 3d 565, 589 (S.D.N.Y. 2014) (quoting Stolt-Nielsen SA v. AnimalFeeds Int l Corp., 548 F.3d 85, 95 (2d Cir. 2008), rev d on other grounds, 559 U.S. 662 (2010)). Examples of manifest disregard therefore tend to be extreme, such as explicitly reject[ing] controlling of 30

12 precedent or otherwise reaching a decision that strains credulity or lacks even a barely colorable justification. Telenor Mobile Commc ns AS v. Storm LLC, 584 F.2d 396, 407 (2d Cir. 2009) (quoting Stolt-Nielsen, 548 F.3d at 92-93). [T]he manifest disregard standard rarely results in vacatur because it is limited to those rare occurrences of apparent egregious impropriety on the part of the arbitrators... which requires more than a simple error in law or failure to understand or apply it[.] Cheng v. Oxford Health Plans, 45 A.D.3d 356, 357 (N.Y. App. Div. 1st Dep t 2007) (quoting Wien & Malkin, 6 N.Y.3d at 480 (2006)); see also Duferco Int l Steel Trading, 333 F.3d at 389 ( [O]btaining judicial relief for an arbitrators manifest disregard of the law is rare.... Our reluctance over the years to find manifest disregard is a reflection of the fact that it is a doctrine of last resort its use is limited only to those exceedingly rare instances where some egregious impropriety on the part of the arbitrators is apparent, but where none of the provisions of the FAA apply. It should be remembered that arbitrators are hired by parties to reach a result that conforms to industry norms and to the arbitrator s notions of fairness. To interfere with this process would frustrate the intent of the parties, and thwart the usefulness of arbitration, making it the commencement, not the end, of litigation. ) (internal quotations omitted). In Petitioners Memorandum, Petitioners contend that the Panel manifestly disregarded the law in several respects. As the following sections amply demonstrate, Petitioners contention is wrong. However, even if that were not the case, and Petitioners could somehow show that the Panel did disregard the law in some material respect, Petitioners make no attempt to even argue that the Panel was aware of the law and intentionally chose to disregard it. That is hardly surprising as there is no evidence whatsoever that the Panel willfully flouted the governing law by refusing to apply it. See Westerbeke Corp., 304 F. 3d at of 30

13 II. The Panel Did Not Hold Tradition Liable for Breach of Contract nor Reljic Liable for Tortious Interference As a primary basis for their claim that the Panel acted in manifest disregard of the law, Petitioners contend that the Panel held Tradition liable for breaching Reljic s contract with Tullett and Reljic liable for tortiously interfering with her own contract. Nothing in the arbitration record or Award suggests that the Panel reached either of those conclusions. At no point during the hearings did Tullett ever claim, contend or even intimate that the Panel should find Tradition liable for breach of contract or Reljic for tortious interference with contract, and Petitioners have never alleged that Tullett did so. Indeed, in Petitioners Memorandum, Petitioners acknowledge that Tullett s contract claim was against Reljic and its tort claim was against Tradition: On Respondent s claims for breach of contract against Petitioner Ms. Reljic, and for tortious interference with that same contract against Petitioner Tradition (Petitioners Memorandum, p. 1). Thus, as a threshold matter, Petitioners contention that the Panel held Reljic liable in tort and Tradition liable in contract would require this Court to assume that the Panel reached those conclusions entirely of its own accord and without Tullett once advancing such a basis for liability. Such an assumption is wholly unwarranted. Moreover, there is nothing in either the Panel s August 8, 2016 Order (the Interim Award ) or Award that suggests the Panel held Tradition liable in contract or Reljic liable in tort. Rather, the Award makes it clear that the Panel understood that Tullett brought a contract claim against Reljic and a tort claim against Tradition: At the close of the hearing, Claimant requested compensatory damages in the amount of $8,430,700 from Respondent Reljic for breach of contract, and compensatory damages in the amount of $3,969,489 from Respondent Tradition for tortious interference. (Kiley Aff., Ex. 1, p. 3) (emphasis added) of 30

14 The sole basis advanced by Petitioners for their contention that the Panel held Reljic liable in tort and Tradition liable in contract is the Panel s holding that Respondents Tradition and Reljic are jointly and severally liable for and shall pay to Claimant compensatory damages in the amount of $4,500, (Kiley Aff., Ex. 1, p. 4). However, in no way does that statement prove Petitioners point. The fact that the Panel held Tradition and Reljic jointly and severally liable for compensatory damages does not indicate that the Panel held Tradition liable in contract or Reljic liable in tort. A more plausible reading of the statement is that the Panel found Reljic liable for $4.5 million for her breach of contract, Tradition liable for $4.5 million for its tortious interference with the contract, and then held the two parties jointly and severally liable for that amount in order to make clear that the total damages due Tullett is $4.5 million and not two times $4.5 million. In other words, by imposing joint and several liability, the Panel prevented Tullett from collecting $4.5 million from each of Reljic and Tradition. This plausible reading is more than sufficient to meet the standard of review New York courts consistently apply to arbitration awards; namely, that there need be only a barely colorable justification for an arbitration award for it to be confirmed. See, e.g., Cardinale v. 267 Sixth Street LLC, No. 13 Civ. 4845(JFK), 2014 WL , at *4 (S.D.N.Y. Sept. 26, 2014) ( Even if a court disagrees with an award on the merits, the court should reject vacatur if there is a barely colorable justification for the outcome reached ) (quoting T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339 (2d Cir. 2010)); Dishner v. Zachs, No. 16 Civ (LGS), 2016 WL , at *1 (S.D.N.Y. Dec. 19, 2016) ( The arbitrator s rationale for an award need not be explained, and the award should be confirmed if a ground for the arbitrator s decision can be inferred from the facts of the case. A barely colorable justification for the arbitrator s decision is sufficient to meet that standard. ) (quoting D.H. Blair & Co., Inc of 30

15 v. Gottdiener, 426 F.3d 95, 110 (2d Cir. 2006)); Duferco Int l Steel Trading, 333 F.3d at 385 ( For us to vacate an arbitral award on the grounds of manifest disregard of the law a step we very seldom take we must be persuaded that the arbitrators understood but chose to disregard a clearly defined law or legal principle applicable to the case before them... Any plausible reading of an award that fits within the law will sustain it. ); GFI Secs. v. Levin, No /08, 2009 WL , at *8 (N.Y. Sup. Ct. Apr. 6, 2009) ( [U]nder New York law, an arbitrator s award cannot be vacated if there exists any plausible basis for it ) (quoting Brown & Williamson Tobacco Corp. v. Chesley, 7 A.D. 368, 372 (N.Y. App. Div. 1st Dep t 2004)); Cellu- Beep Inc., 2014 WL at *4 ( When the legal question resolved by the arbitrator is one where reasonable minds may differ, a petitioner s claim of manifest disregard cannot succeed. ); In re Engel (Refco, Inc.), 746 N.Y.S.2d 826, 838 (N.Y. Sup. Ct. 2002) ( Moreover, where, as here, arbitrators have not articulated an explanation for their award, courts must nonetheless confirm their determination if a ground for the decision can be inferred from the facts; and, provided there is even a barely colorable justification for the outcome reached, it will be upheld. ) (citations omitted); Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004) ( A federal court cannot vacate an arbitral award merely because it is convinced that the arbitration panel made the wrong call on the law. On the contrary, the award should be enforced, despite a court s disagreement with it on the merits, if there is a barely colorable justification for the outcome reached. ) (internal quotations omitted). The fact that the Panel did not explain its Award in more detail is not grounds to set aside the Award. New York courts have made clear that the Panel has no obligation to provide an explanation for its Award. See, e.g., Duferco Int l Steel Trading, 333 F.3d at 390 ( Even where explanation for an award is deficient or non-existent, we will confirm it if a justifiable ground for of 30

16 the decision can be inferred from the facts of the case. ); STMicroelectronics NV v. Credit Suisse Secs. (USA) LLC, 648 F.3d 68, 78 (2d Cir. 2011) ( Where, as here, the arbitrators do not explain the reason for their decision, we will uphold it if we can discern any valid ground for it. ); Fulco, 21 Misc. 3d at 832 ( Arbitrators are not required to disclose the basis upon which their awards are made...thus, as long as some ground for the arbitrators award can be inferred from the facts, the award should be confirmed. ) (quoting Kurt Orban Co. v. Angeles Metal Sys., 573 F.2d 739, 740 (2d Cir. 1978)); Advanced Aerofoil Techs., AG v. Todaro, No. 13 Civ. 7181(RWS), 2014 WL , at *6 (S.D.N.Y. Apr. 16, 2014) ( [I]nsofar as Petitioners claim manifest disregard based on the insufficiency of the Arbitrator s reasoning in the Awards, arbitrators are not required to provide an explanation for their decision. ) (quoting Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997)). III. There is No Basis for Petitioners Contention that the Damages Award Is for Liquidated Damages Petitioners also argue that the Panel manifestly disregarded the law by holding Tradition liable for $4.5 million because, in doing so, it found a non-party to a contract liable for liquidated damages, a purely contractual remedy. (Petitioners Memorandum, p. 1). Once again, the premise advanced by Petitioners is wrong. The Panel did not award Tullett liquidated damages. The Award itself makes that clear: Respondents Tradition and Reljic are jointly and severally liable for and shall pay to Claimant compensatory damages in the amount of $4,500, (Kiley Aff., Ex. 1, p. 4) (emphasis added). In addition to compensatory damages, the Panel awarded Tullett its attorneys fees, related costs and expenses in the amount of $4,508, and costs in the amount of $108, (Id.). The only mention of liquidated damages in the Award is in the Relief Requested section, which reads in pertinent part: In the Statement of Claim, Claimant requested unspecified compensatory damages, of 30

17 punitive damages, liquidated damages, attorneys fees, costs and such other and further relief as deemed just and proper. (Id. at p. 3). The fact that in the Award section (Id. at p. 4) the Panel grants only certain types of the relief requested (i.e., compensatory damages, attorneys fees and costs) leaves no doubt that it considered Tullett s request for liquidated damages and rejected it. This is evidenced further by the last line in the Award section: Any and all relief not specifically addressed herein, including punitive damages, is denied. (Id.). The Second Circuit s decision in Roganti v. Metropolitan Life, 786 F.3d 201 (2d Cir. 2015) is instructive on this point. In Roganti, the plaintiff in a FINRA arbitration sought various types of damages, including back pay, compensatory damages, and liquidated damages. Id. at After the FINRA Panel awarded the plaintiff $2.5 million in compensatory damages but did not specify in the award what that term encompassed or the basis for liability, the plaintiff argued that compensatory damages was meant to encompass the other types of relief requested. Id. The Second Circuit disagreed, reasoning that, because compensatory damages was one of several types of damages specifically requested, the award of only compensatory damages necessarily precluded a finding that the arbitrator awarded any other type of requested relief: The award specifically stated both that it represented compensatory damages and that [a]ny and all relief not specifically addressed herein was denied. The award itself therefore undermined [plaintiff s] argument that it was backpay, which both [plaintiff] and the panel apparently viewed as a separate damages category that was not specifically awarded and thus denied. Id. at The Second Circuit noted further that it is undisputed that [plaintiff] offered no direct evidence that the FINRA award represents backpay. Id. at 213. The Roganti court s findings are persuasive here. Like the plaintiff in Roganti, Petitioners here offer no direct evidence that the Panel s award represents liquidated damages. And like the arbitrator in of 30

18 Roganti, the Panel here granted certain types of specifically requested relief (e.g., compensatory damages) while not granting other requested relief (e.g., liquidated damages). As the Roganti court aptly stated: The award s opacity was not merely a source of uncertainty; the omission of particulars that would have been necessary to implement [Petitioners ] version of the award s meaning constituted evidence against [Petitioners ] claim. Id. at 215. The fact that the Panel did not award $8.4 million the number that a liquidated damages calculation done in accordance with the terms of Reljic s employment agreement with Tullett yielded is further proof that the $4.5 million award is not liquidated damages. As Petitioners acknowledge, liquidated damages are a stipulated sum intended to serve as a replacement for actual damages, not a component or a measure of them. (Petitioners Memorandum, p ). Once calculated according to the parties contract, a liquidated damages amount constitutes an absolute, all-or-nothing figure which cannot be varied if liquidated damages is to form the basis for an award. Thus, the Panel s award of $4.5 million is clearly not liquidated damages, but rather its determination of the actual damages that Tullett suffered as a result of Reljic s breach of contract and Tradition s tortious interference with that contract. While the $4.5 million award deviates somewhat from the actual damages calculated by Tullett, there are plausible justifications for the Panel s conclusion that $4.5 million is the appropriate measure of actual damages. For example, if the Panel (as argued by Petitioners) chose not to credit the six month restrictive covenant period (set forth in Reljic s employment agreement) in its calculation of the actual damages caused by Reljic s departure, then it is plausible the Panel arrived at the $4.5 million figure by multiplying Reljic s monthly gross revenue (approximately $450,000) by the number of full months remaining on her contract (10). (Kiley Aff., Ex. 6, Tr ). Alternatively, the Panel may have arrived at $4.5 million if it of 30

19 took the total revenue generated by Reljic and her assistant, Asha Piotrowska, in 2009 ($5,426,292) and pro-rated it for the remaining 10 full months of Reljic s contract ($4.521 million). (Kiley Aff., Ex. 3). Both of these scenarios are plausible explanations for the Panel s award of $4.5 million in compensatory damages, neither of which having anything to do with liquidated damages. Even if the Panel arrived at the $4.5 million number by a less plausible and more speculative route, that remedy would still deserve deference from this Court. See Bd. of Educ. of Central Sch. Dist. No. 1 of the Towns of Niagara, Wheatfield, Lewiston & Cambria v. Niagara- Wheatfield Teachers Assoc., 46 N.Y.2d 553, 557 (1979) ( [M]uch of the laudatory value of arbitration lies in the arbitrator s power to construct a remedy best suited to the situation without regard to the restrictions on traditional relief in a court of law. Merely because the computation of damages may be so speculative as to be unsupportable if awarded by a court does not make the award infirm, for, as we have firmly stated, arbitrators are not bound by rules of substantive law, or, indeed, rules of evidence. ) (internal citations omitted). Lastly, Petitioners, in their own memorandum, acknowledge the lack of support for their contention that the $4.5 million compensatory damages award was liquidated damages. At page 22 of Petitioners Memorandum, Petitioners state: [B]ecause the Panel did not give a reasoned explanation for its Award (which the Panel was not required to give), it is impossible to tell what role, if any, the liquidated damages clause in Ms. Reljic s employment agreement played in the award or even how the Panel arrived at the $4,500,000 liability figure. Petitioners also acknowledge that the Panel had no obligation to provide such a basis because the Panel could render a lump sum award without disclosing its rationale. (Petitioners Memorandum, p. 15). Indeed, the Panel s decision to issue a lump sum damages award cannot, absent proof of of 30

20 something more, provide a basis to find the arbitrators rendered the award in manifest disregard of the law. See, e.g., Koch Oil, S.A. v. Transocean Gulf Oil Co., 751 F.2d 551, 554 (2d Cir. 1985) ( It is settled law in this circuit that arbitrators may render a lump sum award without disclosing their rationale for it, and that when they do, courts will not inquire into the basis of the award unless they believe that the arbitrators rendered it in manifest disregard of the law or unless the facts of the case fail to support it ); Barbier v. Shearson Lehman Hutton, 752 F. Supp. 151, 163 (S.D.N.Y. 1990) ( In the absence of any indication that an award was made in manifest disregard of the law, courts will not look beyond even a lump sum award in an attempt to analyze the reasoning processes of the arbitrators. ). For all the foregoing reasons, the notion that the $4.5 million award represents liquidated damages is erroneous and Petitioners assertion that the Panel manifestly disregarded the law by holding Tradition liable for liquidated damages is meritless. IV. The Panel s Award of Joint and Several Liability for Compensatory Damages Was Not in Manifest Disregard of the Law As another basis for vacatur, Petitioners argue that the Panel manifestly disregarded the law by holding Tradition and Reljic jointly and several liable for compensatory damages. As noted above, the most plausible interpretation of this aspect of the Award is that the Panel found the actual damages suffered by Tullett as a result of Reljic s breach of contract and Tradition s tortious interference with contract to be the same $4.5 million. That conclusion is logical given that the actual damages caused by the breach and the inducement to breach was the same lost revenue caused by Reljic s premature departure. And while the Panel did not explain why it held Reljic and Tradition jointly and severally liable for those actual damages, it had rational reasons to do so. One such reason invokes the single economic injury principle Petitioners themselves referenced in footnote 4 of Petitioners of 30

21 Memorandum: There are, to be sure, cases holding that breach of contract and tortious interference cause a single economic injury. (Petitioners Memorandum, p. 19, n. 4) (citing Marcus, Stowell & Beye Government Secs., Inc. v. Jefferson Inv. Corp., 797 F.2d 227 (5th Cir. 1986); In re J&J Towne Pharmacy, Inc., No. 99cv (DWS), 2000 WL , *10 (E.D. Pa. May 5, 2000); Klaff v. Wieboldt Stores, Inc., No. 84cv90, 1988 WL (N.D. Ill. Dec. 23, 1988); Knight v. Chrysler Corp., 134 F. Supp. 598, 601 (D.N.J. 1955)). The presence of a single economic injury caused by both Reljic s breach and Tradition s tort provides a plausible basis for the Panel to have found Petitioners jointly and severally liable. Indeed, at least one New York court refused to vacate an arbitration award that assigned joint and several liability on the basis of a single, indivisible injury. See Spector, 852 F. Supp. at (finding no manifest disregard of the law and noting that [s]eparate wrongs resulting in a single, indivisible injury, as here, create joint and several liability for the whole harm ) (internal citations and quotations omitted). GFI Brokers, LLC v. Santana, the case cited most extensively by Petitioners throughout their memorandum, also offers support for the Panel s determination of joint and several liability. Nos. 06cv3988 (GEL), 06cv4611 (GEL), 2008 WL , at *15 (S.D.N.Y. Aug. 6, 2008). While Petitioners correctly note the GFI Brokers court s view that even if the complaint had sought liquidated damages against the non-contracting parties, those damages would have been beyond the court s power to award, the court is equally clear that it is able to find those non-contracting parties liable for actual damages stemming from their tortious interference with contract. Id. at *15 ( Under New York law, tort damages are recoverable only for those injuries that flow directly from, and are the probable and natural consequences of, the wrong alleged. ) (internal citations omitted). Thus, where the actual damages caused by Tradition s tortious of 30

22 conduct mirror the damages caused by Reljic s breach of contract, a finding of joint and several liability against Petitioners constitutes not simply a plausible holding, but a rational one. A second rational explanation for the Panel s imposition of joint and several liability is a desire to avoid the double recovery that Petitioners cautioned the Panel against. On August 8, 2016, the Panel issued its Interim Award, stating that it would be issuing an Award finding for Tullett on its claims of breach of contract and tortious interference with contract, and denying all other claims, counterclaims and claims for relief. (Kiley Aff., Ex. 4). On August 16, 2016, Petitioners (writing jointly as the Tradition Parties ) 2 responded to the Interim Award with a letter noting that Petitioners take serious issue with the Tullett Parties analysis of the law and application of the facts to the law as presented in their Post-Hearing Memorandum. (Kiley Aff., Ex. 5, p. 1). Petitioners argued that the Tullett Parties conflate multiple categories of damages and are seeking an impermissible windfall and double-counting of various components of their alleged damages when the law allows for singular recovery only. In addition, the way that the Tullett Parties add millions of dollars of alleged damages by seeking monetary recovery from Tradition for the same damages that they separately seek from Ms. Reljic, for the same wrong, is impermissible under applicable law. (Id.). 2 Petitioners joint representation by a single law firm may have further inclined the Panel toward a finding of joint and several liability. Where two defendants, like Petitioners, were (and continue to be) jointly represented at the arbitration (and in this Court) by one law firm and presented a joint defense in which they: (1) relied on the same evidence [and] (2) consistently referred to themselves as [a single joint entity], such an arrangement constitutes a factor supporting an arbitration panel s finding that [the defendants] are jointly and severally liable to [claimant]. NYKCool A.B. v. Pacific Fruit Inc., No. 10-CV-3867, 2011 WL , at *3 (S.D.N.Y. Aug. 9, 2011), aff d 507 F. App x 83 (2d Cir. 2013). Here, Petitioners were (and continue to be) jointly represented by Winston & Strawn, with the attorney for each allegedly separate entity having often taken turns arguing points or examining witnesses for the other entity. They also relied on the same evidence to support their overlapping defenses against Tullett s claims and, by the close of hearings, referred to themselves as the Tradition Parties. (Kiley Aff., Ex. 5, p. 1) of 30

23 Given Petitioners warning against an improper double recovery, it is plausible that the Panel imposed joint and several liability for the explicit purpose of preventing that impermissible windfall. V. The Panel Ruled Correctly In Finding Tradition Jointly and Severally Liable on Attorneys Fees The Panel had ample authority to find Tradition jointly and severally liable for Tullett s attorneys fees and costs. Petitioners incorrectly assert that [p]er Ms. Reljic s contract, the Panel further awarded Respondent $4,508, in attorneys fees and $108, in costs, both also jointly and severally. (Petitioners Memorandum, p. 1) (emphasis added). Petitioners then contend that Tradition, having never agreed to the attorneys fee provision in Ms. Reljic s contract, cannot be jointly and severally liable for any fees awarded based on that contract. (Id. at 20). Petitioners argument is predicated on a false premise, as Reljic s contract did not form the basis of the Panel s award of attorneys fees. Rather, as stated explicitly in the Award, The Panel awarded attorneys fees as all parties requested attorneys fees. (Kiley Aff., Ex. 1, p. 4) (emphasis added). The Panel s determination that all parties requested attorneys fees, as well as its belief that this provided a basis for its award, find abundant support in the record and the law. Chairman Friedman noted numerous times throughout the hearings, without objection from Petitioners, that all parties requested attorneys fees and that such requests provided sufficient grounds for the Panel to award the fees requested by the prevailing party: THE CHAIRMAN: Has everybody made a demand for attorneys' fees? MR. BRATTI [attorney for Reljic]: I don't know if everybody has. I thought we had made a demand for attorney's fees of 30

24 MR. SMITH [attorney for Tullett]: You asked whether the parties had sought attorneys' fees. In fact, the Tullett parties had sought attorneys' fees on a contractual basis against Ms. Reljic. 3 THE CHAIRMAN: You know, I'm referring back to the usual rule that, unless there is a statutory basis for it, then you don't award attorneys' fees unless all the parties have asked for it -- MR. LEVIN [attorney for Tradition]: With regard to the first question, which is whether we are seeking attorneys' fees, we are, indeed, and I believe all the parties are; so that should answer that question simply. (Kiley Aff., Ex. 6, Tr , ) (emphasis added). THE CHAIRMAN: [B]oth sides are requesting attorneys' fees; correct? MR. KILEY [attorney for Tullett]: Yes. THE CHAIRMAN: I don't remember right now what the authority for attorneys' fees -- other than the fact that both sides are requesting them, that is normally a sufficient basis. But there's probably something -- I just don't remember at the moment whether it is in the contract, but I'm sure there is a basis for attorneys' fees. (Kiley Aff., Ex. 6, Tr. 3200) (emphasis added). Petitioners requested their attorneys fees from the opening moment of the arbitration: Respondent respectfully requests this Arbitration Panel dismiss these proceedings and to enter an award granting Respondent Tradition Asiel reimbursement of its attorney's fees, costs and disbursements, together with such other relief as the panel deems proper in the circumstances. (Kiley Aff., Ex. 7, p. 13) (emphasis added). Ms. Reljic respectfully requests this Arbitration Panel dismiss these proceedings and enter an award granting Respondent Ms. Reljic reimbursement of her attorney's fees, costs and disbursements, together with such other relief as the panel deems proper in the circumstances, and denying all claims and requests for judgment by Claimant. (Kiley Aff., Ex. 8, p. 23) (emphasis added). Notably, Respondents did not simply include their request for attorneys fees as boilerplate language within their Answers and then decline to pursue the matter further. Instead, 3 In addition to seeking attorneys fees from Reljic based on Reljic s employment agreement, Tullett explicitly requested attorneys fees from Tradition based on the mutual requests for attorneys fees made by all parties. (Kiley Aff., Ex. 14, p ) of 30

25 Respondents repeatedly asserted their right to recover attorneys fees throughout the hearings, in their post-hearing submissions to the Panel following the close of hearings, and even in their submissions following closing arguments. (See Kiley Aff., Ex. 6, Tr , (quoted above); Kiley Aff., Ex. 9, pp ( Indeed, if found to be the prevailing parties, both Ms. Reljic and Tradition are entitled to their reasonable attorneys fees, including those fees and costs accumulated by Tradition s in-house counsel. ); Kiley Aff., Ex. 10, p (requesting an award from the Panel assess[ing] all of Respondents attorneys fees against Tullett ); Kiley Aff., Ex. 11, p.1 and Ex. 12, p. 1 ( [W]e submit for the Panel s consideration an accounting of attorneys fees and costs accrued by the Tradition Parties ); Kiley Aff., Ex. 13, p.1 (reiterating request from the Tradition Parties to recover attorneys fees and costs)). New York courts have uniformly held that mutual demands for counsel fees in an arbitration proceeding constitute, in effect, an agreement to submit the issue to arbitration, with the resultant award being valid and enforceable. In re Goldberg v. Thelen Reid Brown Raysman & Steiner LLP, 52 A.D.3d 392, (N.Y. App. Div. 1st Dep t), lv. appeal denied, 11 N.Y.3d 749 (2008); see also CF Global Trading, LLC v. Wassenaar, No. 13 Civ. 766 (KPF), 2013 WL , at *8-9 (S.D.N.Y. Oct. 8, 2013) ( FINRA's rules and procedures instruct arbitrators that attorneys' fees may be awarded where all of the parties request such fees. ) (internal citations and quotations omitted); Silvester Tafuro Design, Inc. v. Sachs, No. 96 Civ. No (DC), 1996 WL , at *4 (S.D.N.Y. May 16, 1996) ( [B]oth parties included a demand for attorneys' fees in their submissions to the arbitrator. By so doing, the parties placed that issue before the arbitrator regardless of the terms of the Contract. ); Fulco, 21 Misc. 3d at 830 (arbitrators have authority to award attorneys fees when the record shows that the parties have acquiesced in the awarding of attorneys' fees by their conduct during the arbitration, including by of 30

26 demanding attorneys' fees in their submissions ); Bear Stearns & Co. Inc. v. Int l Capital & Mgmt. Co. LLC, 926 N.Y.S.2d 826, 830 (2011), amended and superseded to account for party s name change, 2011 WL , aff d 99 A.D.3d 402 (N.Y. App. Div. 1st Dep t 2011) ( Parties may acquiesce in the award of attorneys fees by their conduct during the arbitration, including demanding attorneys fees in their submissions. ); Cantor Fitzgerald & Co. v. Pritchard, 107 A.D.3d 476 (NY. App. Div. 1st Dep t 2013) ( Although the contract between the parties contained a unilateral fee provision that might normally have precluded the panel from considering the issue, here, by both word and action, petitioner acquiesced to the panel's consideration of the issue...[when it] requested attorneys' fees in its answer, amended answer, pre-hearing brief and opening statement ); Schaad v. Susquehanna Capital Group, No. 03 Civ. 9902(LTS)(DFE), 2004 WL , at *6 (S.D.N.Y. Aug. 10, 2004) ( The Second Circuit has recognized an arbitrator's authority to grant legal fees absent a specific prohibition so long as the parties have agreed to submit the issue to arbitration. By requesting costs and attorneys' fees in their submissions to the NASD prior to the arbitration proceeding, Petitioner and Respondents submitted the issue to the arbitrators, who were thus empowered to decide it. ) (citing Synergy Gas Co. v. Sasso, 853 F.2d 59, 64 (2d Cir. 1988)); In re Arbitration Between Gen. Sec. Nat. Ins. Co. and Aequicap Program Adm rs, 785 F. Supp. 2d 411, 419 n.6, (S.D.N.Y. 2011) (rejecting argument of manifest disregard where case law showing that parties may acquiesce to a fee award by demanding attorneys fees during an arbitration far exceeds the requirement that there be a barely colorable justification for the Panel s outcome ). VI. The Panel Correctly Did Not Award Sanctions to Petitioners Petitioners' final frivolous contention that the Panel manifestly disregarded the law takes aim at the Panel s treatment of Petitioners allegations of spoliation and discovery misconduct by Tullett. Petitioners argue that the Panel s failure to find for Reljic on her hostile work of 30

27 environment claim proves that it did not draw an adverse inference against Tullett which, in turn, can only mean that the Panel disregarded the law and so erred in its evaluation of the evidence. (Petitioners Memorandum, p. 25). Petitioners argument is flawed for several reasons. First, regardless of what, in fact, the Panel decided with respect to Petitioners application for sanctions, that decision cannot form the basis for vacatur as it stemmed from an evidentiary assessment of the facts and not a determination or application of any legal principle. Petitioners admit as much when they assert that the Panel s failure to draw an adverse inference against Tullett based on the alleged discovery abuse can only mean that the Panel disregarded the law and so erred in its evaluation of the evidence. (Id.) (emphasis added). New York courts explicitly reject such reviews of the evidentiary record in the context of a motion to vacate an award. See, e.g., Nicholls v. Brookdale Univ. Hosp. & Med Ctr., No. 05-CV-2666, 2005 WL , at *10 (E.D.N.Y. July 14, 2005) ( A plaintiff seeking vacatur under the manifest disregard of law doctrine bears the burden of proving that the arbitrators were fully aware of the existence of a clearly defined governing legal principle, but refused to apply it, in effect, ignoring it. This is not the same as alleging a manifest disregard of evidence, which is not a proper ground for vacating an arbitral award. Courts do not reassess the evidentiary record of an arbitration proceeding; they ascertain whether there is a colorable basis for the award. ) (internal citations and quotations omitted); Wallace, 378 F.3d at 193 ( To the extent that a federal court may look upon the evidentiary record of an arbitration proceeding at all, it may do so only for the purpose of discerning whether a colorable basis exists for the panel s award so as to assure that the award cannot be said to be the result of the panel s manifest disregard of the law. A federal court may not conduct a reassessment of the evidentiary record, as did the district court here, upon the principle that an arbitral award may be vacated when it runs contrary to strong evidence of 30