Preview
Electronically Filed 11/08/2013 11:40:42 AM ET
CFN: 20130896728 BOOK 28908 PAGE 21
DATE:11/12/2013 09:46:36 PM
HARVEY RUVIN, CLERK OF COURT, MIA-DADE CTY
IN THE CIRCUIT COURT OF THE
11" JUDICIAL CIRCUIT IN AND FOR
MIAMI-DADE COUNTY, FLORIDA
BERNETTA DESHAZIOR,
Respondent/Appellant, CASE NO.: 13-28368-CA-25
Vv,
PFS INVESTMENTS INC., a
foreign corporation, and
LAWRENCE MAURICE COOK,
Petitioners/Appellees,
NOTICE OF APPEAL
NOTICE IS GIVEN that Respondent / Appellant, Bernetta DeShazior, appeals to the District
Court of Appeal of Florida, Third District, the following orders of this Court: (i) Order Granting
Motion for Entry of Final Order, rendered November 6, 2013 (copy attached hereto as Exhibit “A”);
Gi) Order Granting Petitioners’ Application and Motion to Vacate Arbitration Award and Denying
Respondent’s Motion to Confirm, rendered October 10, 2013 (copy attached hereto as Exhibit “B”);
and (iii) all subsidiary orders entered (copy attached hereto as Composite Exhibit “C”). The nature of
these orders are a final order vacating an arbitration award, appealable pursuant to Rules
9.030(b)(1)(A), and non-final orders appealed together with the final order.
Respectfully submitted,
RODRIGUEZ TRAMONT LEVINE KELLOGG LEHMAN
GUERRA & NUNEZ, P.A. SCHNEIER + GROSSMAN LLP
}
a i
FRANK R. RODRIGUEZ, ESO LAWRENCE KELLOGG. ESO.
Florida Bar No.: 348988 Florida Bar No.: 328601
Email: fir@rtgn-law.com Email: lak@lkisg.com
CFN: 20130896728 BOOK 28908 PAGE 22
CASE NO.: 13-28368-CA-25
ANDREW V. TRAMONT, ESQ. JASON KELLOGG, ESQ.
Florida Bar No.: 322830 Florida Bar No.: 578401
Email: avt@rtgn-l. m Email: jk@Iklsg.com
PAULINO A. NU IR., ESQ. 201 South Biscayne Boulevard
Florida Bar No.: 814806 22nd Floor, Miami Center
Email: an(@rtgn-law.commM Miami, FL 33131
STEPHANIE THERESE NUNEZ, ESQ. Telephone: 305-403-8788
Florida Bar No.: 099588 Facsimile: 305-403-8789
Email: stn@rtgn-law.com
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and foregoing was
emailed and mailed on this
sit, day of November, 2013, to: Mark F. Raymond, Esq.,
a
(mraymond@broadandeassel.com); Amy Steele Donner, Esq. (: adonner@broadandcassel.com and
lschwartz@broadandc:
sschwartz(@/broadan om); and Shane P. Martin, Esq. ( smartin@broadandcassel.com and
msanchez@broadandeassel.com), Broad and Cassel, 2 S Biscayne Blvd., Suite 2100, Miami,
Florida 331311811.
- 2
Andrew V. Tramont
CFN: 20130896728 BOOK 28908 PAGE 23
IN THE CIRCUIT COURT OF THE
11" JUDICIAL CIRCUIT IN AND FOR
MIAMI-DADE COUNTY, FLORIDA
PFS INVESTMENTS INC., a
foreign corporation, and
LAWRENCE MAURICE COOK,
Petitioners,
CASE NO.: 13-28368-CA-25
Vv,
BERNETTA DESHAZIOR,
Respondent.
FINAL ORDER
THIS CAUSE came before the Court upon Respondent Bernetta DeShazior’s Emergency
Motion for Entry of Final Order (“Motion for Entry of Final Order”) and Respondent Bernetta
DeShazior’s Amended Notice of Intent to Not Re-file Arbitration (“Notice of Intent”). The
Court, having considered the Motion for Entry of Final Order, the Notice of Intent and
Petitioners’ Memorandum in Opposition to the Motion for Entry of Final Order, having reviewed
the court file, having heard argument of all counsel, and being otherwise fully advised in the
premises, hereby
ORDERS and ADJUDGES as follows:
1 The Motion for Entry of Final Order is GRANTED.
2. In the Court’s Order Granting Petitioners’ Application and Motion to Vacate
Arbitration Award and Denying Respondent’s Motion to Confirm (“Order Vacating Award”),
the Court vacated the FINRA Arbitration Award and directed that the matter be reheard before a
new three member FINRA arbitration panel. Respondent, through her Notice of Intent, has now
CHIBI
fFoa
CFN: 20130896728 BOOK 28908 PAGE 24
CASE NO.: 13-28368-CA-25
unequivocally represented that she will not seek a rehearing or file a new arbitration case in
FINRA and FINRA has advised the Court that the underlying arbitration, FINRA Case No.12-
00361, is closed and may not be re-opened.
3 In accordance with the Order Vacating Award, the Award is hereby vacated. All
other findings and conclusions in the Order Vacating Award remain in place, except that: (a)
Respondent shall not file or seek further rehearing or a new hearing before FINRA consistent
with paragraph 2 of this Order; and (b) the Order Vacating the Arbitration Award is hereby
deemed final.
4. Nothing herein shall be deemed to affect any right of Petitioners, PFS
Investments, Inc. and Lawrence Maurice Cook, to seek any affirmative relief they may deem
appropriate, including “expungement” or any other relief that may be available to Petitioners
under the FINRA rules or otherwise.
DONE AND ORDERED in Chambers at Miami-Dade County, Florida, on 11/06/13.
JORGE ie
CIRC!
BETO
OU ‘T JUDGE
The parties served with this Order are indj id in the accompanying 11th Circuit email
confirmation which includes all emails provided by the submitter. The movant shall
IMMEDIATELY serve a true and correct copy of this Order, by mail, facsimile, email or
hand-delivery, to all parties/counsel of record for whom service is not indicated by the
accompanying 11th Circuit confirmation, and file proof of service with the Clerk of
Court.
Signed original order sent electronically to the Clerk of Courts for filing in the Court file.
Copies furnished to:
Amy Steele Donner, Esq., Counsel for Petitioners
Mark F. Raymond, P.A., Counsel for Petitioners
Andrew V. Tramont, Esq., Counsel for Respondent
Frank R. Rodriguez, Esq. Counsel for Respondent
CFN: 20130896728 BOOK 28908 PAGE 25
CASE NO.: 13-28368-CA-25
Paulino A. Nunez, Esq., Counsel for Respondent
Lawrence A. Kellogg, Esq., Counsel for Respondent
CFN: 20130896728 BOOK 28908 PAGE 26
IN THE CIRCUIT COURT OF THE
11° JUDICIAL CIRCUIT IN AND FOR
MIAMI-DADE COUNTY, FLORIDA
PFS INVESTMENTS INC., a
foreign corporation, and
LAWRENCE MAURICE COOK,
Petitioners,
CASE NO.: 13-28368-CA-25
v.
BERNETTA DESHAZIOR,
Respondent.
ORDER GRANTING PETITIONER’S APPLICATION
AND MOTION TO VACATE ARITRATION AWARD and DENYING RESPONDENT'S
MOTION TO CONFIRM
THIS CAUSE came before the Court upon the Application and Motion to Vacate
Arbitration Award ("Motion to Vacate") filed by Petitioners PFS Investments Inc. ("PFSI") and
Lawrence Cook on July 3, 2013. Respondent answered the Motion to Vacate by filing the
following: (1) Motion to Confirm Arbitration Award (under Case No. 13-24667-CA-25) on July
19, 2013; (2) Response to Motion to Vacate and Counter-Motion to Confirm Arbitration Award
on September 26, 2013; and (3) Memorandum in Opposition to Motion to Vacate and in Support
of Counter-Motion to Confirm Arbitration Award on September 26, 2013. Petitioners responded
by filing the following: (1) Motion to Dismiss or, in the alternative, to Abate with Supporting
Memorandum of Law (under Case No. 13-24667-CA-25) on August 27, 2013; and (2)
Memorandum in Support of Application and Motion to Vacate Arbitration Award on September
26, 2013.
me SHEE!
&)
CFN: 20130896728 BOOK 28908 PAGE 27
CASE NO.: 13-28368-CA-25
On October 4, 2013, this court conducted a 6 hour evidentiary hearing. Additionally,
after the hearing, the court thoroughly reviewed the entire transcript of the arbitration. The
parties were afforded the opportunity to submit any additional memoranda to the court by 5 pm,
Wednesday, October 9, 2013. Respondent filed additional memoranda after the filing deadline,
but the court agreed to accept the late-filed material and gave it due consideration in reaching its
decision.
BACKGROUND
In February 2012, Respondent Beretta DeShazior ("Respondent") filed an arbitration
against PFSI and Lawrence Cook (collectively, "Petitioners") with the Financial Industry
Regulatory Authority ("FINRA"), Bernetta DeShazior v. PFS Investments Inc. and Lawrence M.
Cook, FINRA Case No. 12-00361 ("DeShazior Arbitration"). In April 2012 Petitioners filed
their answer in response.
FINRA provided Petitioners with the Arbitrator Ranking Form, which included the
Arbitrator Disclosure Reports ("ADR") for the arbitrators listed on the form. Among the ADR's
provided were those of William Alheim and Thomas Czinner dated April 19, 2012.
Thereafter, FINRA advised Petitioners of the appointment of the Arbitrator Panel in
FINRA Case Number 12-00361, including William Alheim as Chairperson, Thomas Czinner as
Arbitrator, and Allen P. Wilson as Arbitrator. At some time Arbitrator Wilson withdrew from
the Panel and FINRA provided Petitioners with a Short List of Arbitrators to select a
replacement. The Short List included Paul Chemis among others. FINRA also provided
Petitioners with the July 13, 2012, 2012 ADR of Paul Chernis. And, FINRA appointed Paul
Chernis as the replacement arbitrator.
CFN: 20130896728 BOOK 28908 PAGE 28
CASE NO.: 13-28368-CA-25
Upon the appointment of the arbitrator panel, each arbitrator was required to disclose
"any circumstances which might preclude [him] from rendering an objective and impartial
determination in the proceeding." FINRA Rule 12405(a). The FINRA Arbitrator's Guide states:
"[i}f you need to think about whether a disclosure is appropriate, then it is: make the disclosure."
FINRA Arbitrator's Guide at pages 16-17. As a "reminder to the arbitrator to consider all
possible disclosures" mandated, FINRA requires arbitrators to complete an Arbitrator Disclosure
Checklist.
FINRA did not provide Petitioners with Arbitrator Disclosure Checklists for the Panel
until June 7, 2013, after the DeShazior Arbitration award was issued.
Chairperson Alheim failed to disclose that he shared in a similar experience at issue in
the DeShazior Arbitration - namely that he, like Respondent, was a member of the Florida
Retirement System ("FRS"), and he, like Respondent, had a prior negative personal experience
involving his own employee benefit plan choice in the FRS.
Arbitrator Chernis failed to make adequate disclosures concerning his representation of
claimants in securities litigation like Respondent, as well as a malpractice claim against his law
firm.
The DeShazior Arbitration final hearing commenced on April 8, 2013. At the outset of
the hearing, Chairperson Alheim asked his two colleagues to state on the record whether they
had any additional disclosures to make. No additional disclosures were made. The arbitration
hearing continued over ten (10) days on April 8-12, 25-26, and 29 and May 2 and 3. At no point
during the hearing did Chairperson Alheim or Arbitrator Chernis disclose any matters discussed
above. Petitioners did not learn of the information Chairperson Alheim or Arbitrator Chernis
failed to disclose until after the Panel issued its award.
CFN: 20130896728 BOOK 28908 PAGE 29
CASE NO.: 13-28368-CA-25
EVIDENT PARTIALITY OF ARBITRATORS
The courts have broadly construed the “evident partiality” standard to require only a
showing of the appearance of partiality or bias and not proof of actual partiality: “‘To disqualify
an arbitrator, it need not be shown that bias influenced his judgment, but only that there was a
circumstance tending to bias that judgment.’” Jnternational Ins. Co. v. Schrager, 593 So. 2d
1196 (Fla. 4th DCA 1992) (emphasis in original) (quoting Gaines Construction Co. v. Carol City
Utilities, Inc., 164 So. 2d 270, 272 (Fla. 3d DCA 1964)). The Gaines court further underscored
the level of impartiality required of arbitrators, as follows: "An arbitrator is required to be no less
impartial than a juror sitting in the trial of a cause. If he fails in this his usefulness as an
arbitrator is destroyed." Gaines Construction, 164 So. 2d at 272-73 (emphasis added).
In Citigroup Global Markets, Inc. v. Berghorst, Judge Ryskamp, citing the U.S. Supreme
Court's 1968 opinion in Commonwealth Coatings, noted that: “any tribunal permitted by law to
try cases and controversies not only must be unbiased but also must avoid even the appearance of
bias.” Citigroup Global Markets, Inc. v. Berhorst, No. 11-80250-CIV, WL 5989628, at *3 (S.D.
Fla. Jan. 20, 2012. Furthermore, it is not necessary to show "that an arbitrator had an actual
conflict of interest. It is sufficient if the arbitrator knows of, but fails to disclose, information
which would lead a reasonable person to believe that a potential conflict would exist. When that
showing has beén made, vacatur is required." /d. (internal citations omitted).
The undisclosed circumstances at issue here pertain to the issue of actual or perceived
bias and potential conflict. With respect to Chairperson Alheim, the facts and prior experiences
with his own FRS benefits present a perceived, if not actual, bias and potential conflict
CFN: 20130896728 BOOK 28908 PAGE 30
CASE NO.: 13-28368-CA-25
concerning his evaluation of Respondent's similar claim. Bias and potential conflict is also at
issue due to Arbitrator Chernis's failure to sufficiently disclose that he represented claimants like
Respondent in securities arbitrations against respondents like Petitioners, and that his law firm
had been sued for malpractice resulting from securities-related work.
The failure to disclose these matters was a violation of Chairperson Alheim and
Arbitrator Cheris's continuing disclosure duty under FINRA Rules.
Respondent argues that Petitioners waived their right to object to Chairperson Alheim
and Arbitrator Chernis. Even if their ADR's were deemed adequate to put Petitioners "on notice"
of a potential conflict, such would not be sufficient to support a finding of waiver. Courts have
held that "[w]aiver applies only where a party has acted with full knowledge of the facts."
Middlesex Mut. Ins, Co, v. Levine, 675 F.2d 1197, 1202 (1 cir 1982).
No waiver is present here. Instead, the undisclosed matters create the impression of
possible, if not actual, bias. Indeed, that is presumably why FINRA highlights these issues in its
disclosure questionnaires. At minimum, these facts demonstrate an appearance of partiality,
which is all Petitioners must show to prevail. The arbitration award, therefore, is vacated.
CONCLUSION
THE COURT, having considered arguments of counsel for the parties, the Motion to
Vacate, the parties briefs, reviewed the court file, and being otherwise fully advised in the
premises, hereby
ORDERS and ADJUDGES as follows:
CFN: 20130896728 BOOK 28908 PAGE 31
CASE NO.: 13-28368-CA-25
. The Motion to Vacate is GRANTED. The arbitration award in Bernetta
DeShazior v. PFS Investments Inc. and Lawrence M. Cook, FINRA Case No. 12-00361, is set
aside and VACATED in its entirety, and the findings and conclusions therein are declared null
and void and of no force or effect and shall not be considered by a new arbitrator panel or the
Court in future proceedings.
2. The arbitration of Bernetta DeShazior v. PFS Investments Inc. and Lawrence M.
Cook, FINRA Case No. 12-00361, shall be re-heard before a new neutral three member panel
pursuant to the procedures and rules of the Financial Industry Regulatory Authority ("FINRA").
3 Respondent shall have thirty (30) days from the entry of this Order to submit this
Order to FINRA.
4 the Motion to Confirm Arbitration Award under Case No. 13-24667-CA-25 IS
DENIED.
5 All pending motions are DENIED as MOOT.
6. The Court retains jurisdiction of this matter pending re-hearing.
DONE AND ORDERED in Chambers at Miami-Dade County, Florida, on the 104 day
of October, 2013.
( Vhb-t=
JORG!
CIRC pe0008
The parties served with this Order are ind in the accompanying 11th Circuit email
confirmation which includes all emails pt ided by the submitter. The movant shall
IMMEDIATELY serve a true and correct copy of this Order, by mail, facsimile, email or hand-
delivery, to all parties/counsel of record for whom service is not indicated by the accompanying
11th Circuit confirmation, and file proof of service with the Clerk of Court.
Signed and stamped original Order sent to court file UNDER SEAL by Judge Cueto’s staff.
Copies furnished to:
CFN: 20130896728 BOOK 28908 PAGE 32
CASE NO.: 13-28368-CA-25
Amy Steele Donner, Esq., Counsel for Petitioners
Mark F. Raymond, P.A., Counsel for Petitioners
Andrew V. Tramont, Esq., Counsel for Respondent
Frank R, Rodriguez,
Preview
Electronically Filed 11/08/2013 11:40:42 AM ET CFN: 20130896728 BOOK 28908 PAGE 21 DATE:11/12/2013 09:46:36 PM HARVEY RUVIN, CLERK OF COURT, MIA-DADE CTY IN THE CIRCUIT COURT OF THE 11" JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA BERNETTA DESHAZIOR, Respondent/Appellant, CASE NO.: 13-28368-CA-25 Vv, PFS INVESTMENTS INC., a foreign corporation, and LAWRENCE MAURICE COOK, Petitioners/Appellees, NOTICE OF APPEAL NOTICE IS GIVEN that Respondent / Appellant, Bernetta DeShazior, appeals to the District Court of Appeal of Florida, Third District, the following orders of this Court: (i) Order Granting Motion for Entry of Final Order, rendered November 6, 2013 (copy attached hereto as Exhibit “A”); Gi) Order Granting Petitioners’ Application and Motion to Vacate Arbitration Award and Denying Respondent’s Motion to Confirm, rendered October 10, 2013 (copy attached hereto as Exhibit “B”); and (iii) all subsidiary orders entered (copy attached hereto as Composite Exhibit “C”). The nature of these orders are a final order vacating an arbitration award, appealable pursuant to Rules 9.030(b)(1)(A), and non-final orders appealed together with the final order. Respectfully submitted, RODRIGUEZ TRAMONT LEVINE KELLOGG LEHMAN GUERRA & NUNEZ, P.A. SCHNEIER + GROSSMAN LLP } a i FRANK R. RODRIGUEZ, ESO LAWRENCE KELLOGG. ESO. Florida Bar No.: 348988 Florida Bar No.: 328601 Email: fir@rtgn-law.com Email: lak@lkisg.com CFN: 20130896728 BOOK 28908 PAGE 22 CASE NO.: 13-28368-CA-25 ANDREW V. TRAMONT, ESQ. JASON KELLOGG, ESQ. Florida Bar No.: 322830 Florida Bar No.: 578401 Email: avt@rtgn-l. m Email: jk@Iklsg.com PAULINO A. NU IR., ESQ. 201 South Biscayne Boulevard Florida Bar No.: 814806 22nd Floor, Miami Center Email: an(@rtgn-law.commM Miami, FL 33131 STEPHANIE THERESE NUNEZ, ESQ. Telephone: 305-403-8788 Florida Bar No.: 099588 Facsimile: 305-403-8789 Email: stn@rtgn-law.com CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above and foregoing was emailed and mailed on this sit, day of November, 2013, to: Mark F. Raymond, Esq., a (mraymond@broadandeassel.com); Amy Steele Donner, Esq. (: adonner@broadandcassel.com and lschwartz@broadandc: sschwartz(@/broadan om); and Shane P. Martin, Esq. ( smartin@broadandcassel.com and msanchez@broadandeassel.com), Broad and Cassel, 2 S Biscayne Blvd., Suite 2100, Miami, Florida 331311811. - 2 Andrew V. Tramont CFN: 20130896728 BOOK 28908 PAGE 23 IN THE CIRCUIT COURT OF THE 11" JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA PFS INVESTMENTS INC., a foreign corporation, and LAWRENCE MAURICE COOK, Petitioners, CASE NO.: 13-28368-CA-25 Vv, BERNETTA DESHAZIOR, Respondent. FINAL ORDER THIS CAUSE came before the Court upon Respondent Bernetta DeShazior’s Emergency Motion for Entry of Final Order (“Motion for Entry of Final Order”) and Respondent Bernetta DeShazior’s Amended Notice of Intent to Not Re-file Arbitration (“Notice of Intent”). The Court, having considered the Motion for Entry of Final Order, the Notice of Intent and Petitioners’ Memorandum in Opposition to the Motion for Entry of Final Order, having reviewed the court file, having heard argument of all counsel, and being otherwise fully advised in the premises, hereby ORDERS and ADJUDGES as follows: 1 The Motion for Entry of Final Order is GRANTED. 2. In the Court’s Order Granting Petitioners’ Application and Motion to Vacate Arbitration Award and Denying Respondent’s Motion to Confirm (“Order Vacating Award”), the Court vacated the FINRA Arbitration Award and directed that the matter be reheard before a new three member FINRA arbitration panel. Respondent, through her Notice of Intent, has now CHIBI fFoa CFN: 20130896728 BOOK 28908 PAGE 24 CASE NO.: 13-28368-CA-25 unequivocally represented that she will not seek a rehearing or file a new arbitration case in FINRA and FINRA has advised the Court that the underlying arbitration, FINRA Case No.12- 00361, is closed and may not be re-opened. 3 In accordance with the Order Vacating Award, the Award is hereby vacated. All other findings and conclusions in the Order Vacating Award remain in place, except that: (a) Respondent shall not file or seek further rehearing or a new hearing before FINRA consistent with paragraph 2 of this Order; and (b) the Order Vacating the Arbitration Award is hereby deemed final. 4. Nothing herein shall be deemed to affect any right of Petitioners, PFS Investments, Inc. and Lawrence Maurice Cook, to seek any affirmative relief they may deem appropriate, including “expungement” or any other relief that may be available to Petitioners under the FINRA rules or otherwise. DONE AND ORDERED in Chambers at Miami-Dade County, Florida, on 11/06/13. JORGE ie CIRC! BETO OU ‘T JUDGE The parties served with this Order are indj id in the accompanying 11th Circuit email confirmation which includes all emails provided by the submitter. The movant shall IMMEDIATELY serve a true and correct copy of this Order, by mail, facsimile, email or hand-delivery, to all parties/counsel of record for whom service is not indicated by the accompanying 11th Circuit confirmation, and file proof of service with the Clerk of Court. Signed original order sent electronically to the Clerk of Courts for filing in the Court file. Copies furnished to: Amy Steele Donner, Esq., Counsel for Petitioners Mark F. Raymond, P.A., Counsel for Petitioners Andrew V. Tramont, Esq., Counsel for Respondent Frank R. Rodriguez, Esq. Counsel for Respondent CFN: 20130896728 BOOK 28908 PAGE 25 CASE NO.: 13-28368-CA-25 Paulino A. Nunez, Esq., Counsel for Respondent Lawrence A. Kellogg, Esq., Counsel for Respondent CFN: 20130896728 BOOK 28908 PAGE 26 IN THE CIRCUIT COURT OF THE 11° JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA PFS INVESTMENTS INC., a foreign corporation, and LAWRENCE MAURICE COOK, Petitioners, CASE NO.: 13-28368-CA-25 v. BERNETTA DESHAZIOR, Respondent. ORDER GRANTING PETITIONER’S APPLICATION AND MOTION TO VACATE ARITRATION AWARD and DENYING RESPONDENT'S MOTION TO CONFIRM THIS CAUSE came before the Court upon the Application and Motion to Vacate Arbitration Award ("Motion to Vacate") filed by Petitioners PFS Investments Inc. ("PFSI") and Lawrence Cook on July 3, 2013. Respondent answered the Motion to Vacate by filing the following: (1) Motion to Confirm Arbitration Award (under Case No. 13-24667-CA-25) on July 19, 2013; (2) Response to Motion to Vacate and Counter-Motion to Confirm Arbitration Award on September 26, 2013; and (3) Memorandum in Opposition to Motion to Vacate and in Support of Counter-Motion to Confirm Arbitration Award on September 26, 2013. Petitioners responded by filing the following: (1) Motion to Dismiss or, in the alternative, to Abate with Supporting Memorandum of Law (under Case No. 13-24667-CA-25) on August 27, 2013; and (2) Memorandum in Support of Application and Motion to Vacate Arbitration Award on September 26, 2013. me SHEE! &) CFN: 20130896728 BOOK 28908 PAGE 27 CASE NO.: 13-28368-CA-25 On October 4, 2013, this court conducted a 6 hour evidentiary hearing. Additionally, after the hearing, the court thoroughly reviewed the entire transcript of the arbitration. The parties were afforded the opportunity to submit any additional memoranda to the court by 5 pm, Wednesday, October 9, 2013. Respondent filed additional memoranda after the filing deadline, but the court agreed to accept the late-filed material and gave it due consideration in reaching its decision. BACKGROUND In February 2012, Respondent Beretta DeShazior ("Respondent") filed an arbitration against PFSI and Lawrence Cook (collectively, "Petitioners") with the Financial Industry Regulatory Authority ("FINRA"), Bernetta DeShazior v. PFS Investments Inc. and Lawrence M. Cook, FINRA Case No. 12-00361 ("DeShazior Arbitration"). In April 2012 Petitioners filed their answer in response. FINRA provided Petitioners with the Arbitrator Ranking Form, which included the Arbitrator Disclosure Reports ("ADR") for the arbitrators listed on the form. Among the ADR's provided were those of William Alheim and Thomas Czinner dated April 19, 2012. Thereafter, FINRA advised Petitioners of the appointment of the Arbitrator Panel in FINRA Case Number 12-00361, including William Alheim as Chairperson, Thomas Czinner as Arbitrator, and Allen P. Wilson as Arbitrator. At some time Arbitrator Wilson withdrew from the Panel and FINRA provided Petitioners with a Short List of Arbitrators to select a replacement. The Short List included Paul Chemis among others. FINRA also provided Petitioners with the July 13, 2012, 2012 ADR of Paul Chernis. And, FINRA appointed Paul Chernis as the replacement arbitrator. CFN: 20130896728 BOOK 28908 PAGE 28 CASE NO.: 13-28368-CA-25 Upon the appointment of the arbitrator panel, each arbitrator was required to disclose "any circumstances which might preclude [him] from rendering an objective and impartial determination in the proceeding." FINRA Rule 12405(a). The FINRA Arbitrator's Guide states: "[i}f you need to think about whether a disclosure is appropriate, then it is: make the disclosure." FINRA Arbitrator's Guide at pages 16-17. As a "reminder to the arbitrator to consider all possible disclosures" mandated, FINRA requires arbitrators to complete an Arbitrator Disclosure Checklist. FINRA did not provide Petitioners with Arbitrator Disclosure Checklists for the Panel until June 7, 2013, after the DeShazior Arbitration award was issued. Chairperson Alheim failed to disclose that he shared in a similar experience at issue in the DeShazior Arbitration - namely that he, like Respondent, was a member of the Florida Retirement System ("FRS"), and he, like Respondent, had a prior negative personal experience involving his own employee benefit plan choice in the FRS. Arbitrator Chernis failed to make adequate disclosures concerning his representation of claimants in securities litigation like Respondent, as well as a malpractice claim against his law firm. The DeShazior Arbitration final hearing commenced on April 8, 2013. At the outset of the hearing, Chairperson Alheim asked his two colleagues to state on the record whether they had any additional disclosures to make. No additional disclosures were made. The arbitration hearing continued over ten (10) days on April 8-12, 25-26, and 29 and May 2 and 3. At no point during the hearing did Chairperson Alheim or Arbitrator Chernis disclose any matters discussed above. Petitioners did not learn of the information Chairperson Alheim or Arbitrator Chernis failed to disclose until after the Panel issued its award. CFN: 20130896728 BOOK 28908 PAGE 29 CASE NO.: 13-28368-CA-25 EVIDENT PARTIALITY OF ARBITRATORS The courts have broadly construed the “evident partiality” standard to require only a showing of the appearance of partiality or bias and not proof of actual partiality: “‘To disqualify an arbitrator, it need not be shown that bias influenced his judgment, but only that there was a circumstance tending to bias that judgment.’” Jnternational Ins. Co. v. Schrager, 593 So. 2d 1196 (Fla. 4th DCA 1992) (emphasis in original) (quoting Gaines Construction Co. v. Carol City Utilities, Inc., 164 So. 2d 270, 272 (Fla. 3d DCA 1964)). The Gaines court further underscored the level of impartiality required of arbitrators, as follows: "An arbitrator is required to be no less impartial than a juror sitting in the trial of a cause. If he fails in this his usefulness as an arbitrator is destroyed." Gaines Construction, 164 So. 2d at 272-73 (emphasis added). In Citigroup Global Markets, Inc. v. Berghorst, Judge Ryskamp, citing the U.S. Supreme Court's 1968 opinion in Commonwealth Coatings, noted that: “any tribunal permitted by law to try cases and controversies not only must be unbiased but also must avoid even the appearance of bias.” Citigroup Global Markets, Inc. v. Berhorst, No. 11-80250-CIV, WL 5989628, at *3 (S.D. Fla. Jan. 20, 2012. Furthermore, it is not necessary to show "that an arbitrator had an actual conflict of interest. It is sufficient if the arbitrator knows of, but fails to disclose, information which would lead a reasonable person to believe that a potential conflict would exist. When that showing has beén made, vacatur is required." /d. (internal citations omitted). The undisclosed circumstances at issue here pertain to the issue of actual or perceived bias and potential conflict. With respect to Chairperson Alheim, the facts and prior experiences with his own FRS benefits present a perceived, if not actual, bias and potential conflict CFN: 20130896728 BOOK 28908 PAGE 30 CASE NO.: 13-28368-CA-25 concerning his evaluation of Respondent's similar claim. Bias and potential conflict is also at issue due to Arbitrator Chernis's failure to sufficiently disclose that he represented claimants like Respondent in securities arbitrations against respondents like Petitioners, and that his law firm had been sued for malpractice resulting from securities-related work. The failure to disclose these matters was a violation of Chairperson Alheim and Arbitrator Cheris's continuing disclosure duty under FINRA Rules. Respondent argues that Petitioners waived their right to object to Chairperson Alheim and Arbitrator Chernis. Even if their ADR's were deemed adequate to put Petitioners "on notice" of a potential conflict, such would not be sufficient to support a finding of waiver. Courts have held that "[w]aiver applies only where a party has acted with full knowledge of the facts." Middlesex Mut. Ins, Co, v. Levine, 675 F.2d 1197, 1202 (1 cir 1982). No waiver is present here. Instead, the undisclosed matters create the impression of possible, if not actual, bias. Indeed, that is presumably why FINRA highlights these issues in its disclosure questionnaires. At minimum, these facts demonstrate an appearance of partiality, which is all Petitioners must show to prevail. The arbitration award, therefore, is vacated. CONCLUSION THE COURT, having considered arguments of counsel for the parties, the Motion to Vacate, the parties briefs, reviewed the court file, and being otherwise fully advised in the premises, hereby ORDERS and ADJUDGES as follows: CFN: 20130896728 BOOK 28908 PAGE 31 CASE NO.: 13-28368-CA-25 . The Motion to Vacate is GRANTED. The arbitration award in Bernetta DeShazior v. PFS Investments Inc. and Lawrence M. Cook, FINRA Case No. 12-00361, is set aside and VACATED in its entirety, and the findings and conclusions therein are declared null and void and of no force or effect and shall not be considered by a new arbitrator panel or the Court in future proceedings. 2. The arbitration of Bernetta DeShazior v. PFS Investments Inc. and Lawrence M. Cook, FINRA Case No. 12-00361, shall be re-heard before a new neutral three member panel pursuant to the procedures and rules of the Financial Industry Regulatory Authority ("FINRA"). 3 Respondent shall have thirty (30) days from the entry of this Order to submit this Order to FINRA. 4 the Motion to Confirm Arbitration Award under Case No. 13-24667-CA-25 IS DENIED. 5 All pending motions are DENIED as MOOT. 6. The Court retains jurisdiction of this matter pending re-hearing. DONE AND ORDERED in Chambers at Miami-Dade County, Florida, on the 104 day of October, 2013. ( Vhb-t= JORG! CIRC pe0008 The parties served with this Order are ind in the accompanying 11th Circuit email confirmation which includes all emails pt ided by the submitter. The movant shall IMMEDIATELY serve a true and correct copy of this Order, by mail, facsimile, email or hand- delivery, to all parties/counsel of record for whom service is not indicated by the accompanying 11th Circuit confirmation, and file proof of service with the Clerk of Court. Signed and stamped original Order sent to court file UNDER SEAL by Judge Cueto’s staff. Copies furnished to: CFN: 20130896728 BOOK 28908 PAGE 32 CASE NO.: 13-28368-CA-25 Amy Steele Donner, Esq., Counsel for Petitioners Mark F. Raymond, P.A., Counsel for Petitioners Andrew V. Tramont, Esq., Counsel for Respondent Frank R, Rodriguez,