When Actor Larry Hagman (Dallas and I Dream of Jeanie) sued Citigroup for mismanagement of his investments, and won, the case made headlines. Of course there was the story that JR Ewing sued his financial advisor, but then there was the amount of the award - $1.1 million in damages, and $10 million in punitive damages.
But the award has been used in the press to argue that arbitration is bad - you see, Citigroup appealed! Imagine that, a punitive damage award that is 10 times the compensatory damages and they had the nerve to appeal!
Some commentators seem to forget that customers, and firms, have a RIGHT to appeal an arbitration award. It is a right that is rarely excerised, and is rarely successful, but it is a right. And given such a significant punitive damage award, that would be tossed by most judges if a jury imposed such an amount, it was not a surprise to see Citigroup appeal the award. Add to that the fact that the arbitrators tacked on an additional $400,000 in attorneys fees, and an appeal was almost a guarantee.
What was even more newsworthy, but completely overlooked by those same commentators, was the fact that Citigroup WON the appeal. The arbitration award was thrown out. I have not been able to locate the decision, but Bloomberg reported that the award was vacated because one of the arbitrators failed to disclose that he had been involved in a similar lawsuit in 2007. Sounds like Citigroup was well within its rights to appeal the decision.
But we will never know the outcome. The NYT is reporting that Hagman and Citigroup settled their dispute - Shades of J.R. Ewing: Citigroup and Larry Hagman Reach Accord - NYTimes.com
