Prospective clients frequently ask me about their “chances” in securities arbitration. Let’s look at the statistics: FINRA reported that as of July 2014, the number of newly filed FINRA arbitration cases was 2,383. By comparison, 3,714 arbitration cases were filed with FINRA in 2013, 4,299 cases were filed in 2012, and 4,729 cases were filed in 2011. For the past decade, the “win” rate of customer initiated arbitrations has never been more 47%. A “win” is a customer case decided by the arbitrators in a hearing or on paper where the customer is awarded some amount of monetary damages or non-monetary relief even if it is only a fraction of the damages or relief sought. Thus, a “win” is any amount awarded to a claimant even if it is only 10% of the damages sought. In the late 80s and early 90s, the “win” rate was occasionally in the 51% – 54% range. For cases that were decided by the FINRA arbitrators at a hearing or on paper from January through July 2014, 42% were classified as a “win” for customers. For all of 2013, the “win” statistic was 42%. For all of 2012, the “win” statistic was 45%. For 2011, the “win” statistic was 44%. For 2010, the “win” statistic was 47%. The “win” percentages are not very high. However, one reason is that the better cases for claimants settle before going to hearing and the weaker cases actually get tried and decided by the arbitrators. For a link to the 2014 and earlier FINRA statistics, click here: http://www.finra.org/ArbitrationAndMediation/FINRADisputeResolution/AdditionalResources/Statistics/...
In February 2009, I reported that in Micron Technology, Inc. v. Rambus Inc., 255 F.R.D. 135 (D. Del. 2009), the U.S. District Court for the District of Delaware held that Rambus could not enforce 12 patents against Micron because it had intentionally destroyed documents prior to filing its lawsuit. The destruction of documents in the context of anticipated or ongoing litigation is call “spoliation of evidence.” Here, Rambus’ spoliation was extensive and in bad faith. Rambus adopted a company wide document retention policy and employees participated in a “Shred Day”. After retaining outside patent counsel and identifying potential litigation targets, Rambus instructed its outside counsel to purge their patent files and Rambus employees participated in a second “Shred Day.” The District Court found that the document retention policy was adopted with litigation in mind, and Rambus should have known that some of the documents being destroyed in the second “Shred Day” would have been material and discoverable in the litigation against Micron. The duty to preserve evidence begins when litigation is pending or reasonably foreseeable. The District Court found that Rambus had a duty to preserve the relevant documents instead of purging them. The sanction entered against Rambus for its bad faith spoliation of evidence was an order barring Rambus from enforcing its patents against Micron. Update: On appeal, the U.S. Court of Appeals for the Federal Circuit upheld the District Court’s finding that Rambus shred the documents knowing that litigation was foreseeable, but remanded the case to the District Court to determine whether Micron proved bad faith or prejudice, perquisites to imposition of the harshest sanction of dismissal. Micron Technology, Inc....
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