Clients must be counseled that even if their Motion to Dismiss based upon lack of eligibility is successful that they may still face a claim in state or federal court, but the Defendant would still have the defense of the statute of limitations. However, it is typically more expensive to litigate a claim in court versus arbitration and the client may find that it was more expensive and much less efficient to litigate the matter in court if the Motion to Dismiss was granted. Another potential pitfall with respect to the Motion to Dismiss for eligibility is that we are seeing that arbitration panels deny the Motions without prejudice with the right to the moving party to re-raise the Motion at the conclusion of the Claimant's case-in-chief. Essentially, Claimant's counsel argues that there needs to be additional evidence presented to the panel outside of the pleadings in order for the panel to properly determine a Motion to Dismiss for eligibility. However, if the panel were to require the Respondents to prepare for and attend the Claimant's case-in-chief before granting the Motion, then this would essentially require that Respondents litigate the claim twice. They would first have to litigate the claim over the course of a number of days at arbitration and also subsequently re-litigate the claim in court. Again, this type of ruling is significantly more costly to the client then simply litigating the entire case at arbitration.

 

 

 

 
Claimant's counsel also argue that there were ongoing misrepresentations or omissions after the initial investment date and that such ongoing misrepresentations or omissions constitute the event upon which the Statement of Claim is based and that such claims are eligible for arbitration. These "misrepresentations" often relate to alleged statements of the representative to "hold the course" and not sell the investments which later decline and lead to losses in the account. In fact, there are some cases which Claimants invariably cite which stand for the proposition that such claims are independent and eligible. However, there are other cases which stand for the proposition that the event or occurrence is the actual purchase date and not any subsequent alleged misrepresentations or omissions. Once this issue is fully briefed before the panel, the panel is left to make a decision based upon the pleadings and the case law presented. Arbitration panels often determine that the purchase date event is the event or occurrence and thus claims based upon the purchase date are ineligible for arbitration but that subsequent misrepresentations are eligible for arbitration. These decisions essentially bifurcate the claim and Claimants often protest the inefficiencies of such a bifurcation.

 

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