The author in this article discusses cases where members of credentialing organizations sue the organization for injunctive relief and monetary damages. He discusses the role of the arbitrator and causes that appear to prompt members to pursue redress through the court once sanctioned.

Introduction

As I mentioned in my first article for QuickRead, my experience as an Arbitrator includes presiding over three disputes between aggrieved members, as well as an aggrieved, expelled member of more than one credentialing organization, fortunately not including NACVA. These disgruntled and disciplined members sued for both injunctive and monetary relief. In the spirit of the old television show, “Dragnet,” I will either leave out or substitute generic name(s) for the credentialing organizations and refer to the member complainants by a Number, e.g., “Complainant No. 1” in order “to protect the innocent” or is it to protect the guilty?

The pattern of these cases and the complaints from disgruntled and intentionally disciplined members, which generated them demonstrated a distinct pattern of allegations, which although factually based and heavily disputed, essentially claimed that the procedures set forth in the governing documents which governed the rules and regulations of the credentialing organizations were not procedurally and/or substantially fair as applied to the complainant and the personnel whom the organization’s management designated to administer those rules, and any disciplinary proceedings resulting from their application were biased against the complainant for various reasons. The complainant cases, therefore, in a nutshell, were always that he or she had been “deprived of due process” because of this combination of unfair application of rules and biased administration. The relief requested almost always was restoration of whatever membership privileges had been suspended or terminated both as interim and final relief, as well as ultimately a monetary award for any compensatory or consequential damages allegedly suffered because of the denial of due process.

The Legal Standard

Most of the proceedings are governed by the applicable rules of procedure of the American Arbitration Association (AAA), or the Financial Independent Regulatory Authority (FINRA) and the bylaws of the credentialing organization which usually specify that the dispute once the mandatory internal procedures and remedies are exhausted must be arbitrated by the rules of one of these alternative dispute resolution provider services, which in turn, reference the particular federal or state law which governs the parties and their cost.

Emergency Relief

To grant “emergency relief,” the arbitrator must, in accordance with almost every state’s law, be satisfied that the complainant has shown by “clear and convincing evidence” that immediate and irreparable loss or damage will result absent the emergency relief being granted. Even if that burden is met, most state law, e.g., Delaware the most likely source of law in these cases, say only that “emergency relief may be granted.” And only where the complainant not only demonstrates the “irreparable harm,” but also proves that his or her case has “a reasonable probability of success on the merits,” and “a balance of equities in favor of granting relief.” Even then, numerous Delaware cases have said injunctive relief can only be issued “in a clear case free from doubt” and “with confidence of findings of fact made after trial or on undisputed facts.”

Analysis

In each of the three cases that I arbitrated, the credentialing organization had either suspended or terminated the complainant’s membership.

In one case, the credentialing organization had terminated the complainant’s membership and thereby his credentialed status because of behavior which violated the organization’s bylaws and ethical guidelines. These violations took place before the complainant became a member of the organization. The complainant, therefore, took the position that he was not bound by the organization’s governing rules and regulations and ethics guidelines, and also that the credentialing organization was barred by the statute of limitations from taking any action. Accordingly, he argued that he could not be disciplined for his violations.

I, as the Arbitrator, found that there was, and is, no organization bylaw and nothing in Delaware statutes or case law that precluded the credentialing organization from investigating and taking action based in this case on finding of the U.S. Bankruptcy Court and the upholding of those findings by the Federal Tenth Circuit Court of Appeals, regarding the complainant’s behavior, regardless of the complainant’s membership status, or lack thereof, and regardless of when the behavior occurred. Bottom line—the credentialing organization, a private organization, is not bound by their bylaws or otherwise to limit their disciplinary authority and activities to the time prescribed in the statute of limitations imposed on claims brought in a legal setting.

This ruling was based on the constitution and bylaws of the credentialing organization that, like that of NACVA, explicitly required all members to be of “good character” and that the organization “may deny or terminate a member who engages in conduct detrimental, to be unethical or determined to that purpose.”

Finally, in all the cases that I arbitrated, although there were allegations that the internal processes of the credentialing organizations and the personnel administering them were biased, they were just that and nothing more—allegations without any evidence to prove them. In each of these cases, the use by complainants and their respective counsel of language designed to inflame the fact-finder—ME—such as “Hit Job,” “I was ramrodded,” “I was confused,” “the Board had already made up their minds” not only did not convince this arbitrator but created an inference to the contrary.

That said, the easiest, and in these cases, only element of their cases was that the termination and, in some cases, suspension of membership in the subject credentialing organizations according to complainants “ruined” them. Since I found that the cause of their “ruin” was their own professional, and in some cases, personal misconduct, not the loss of their credential by the respondent organization that element of proof while probably shown, did not produce the relief requested. Ironically, it did constitute a tribute to the important, indeed essential, functions that the respondent credentialing organization and other similar situated organizations such as NACVA provide in a world where increasingly true expertise must be demonstrated to skeptical, and in some cases, cynical fact-finders both internal and external in order to discover the TRUTH.

Senior Maryland Circuit Court Judge Steven I. Platt has served in the Maryland Judiciary for over 35 years. He is the acknowledged architect of the Maryland Business & Technology Case Management Program. Currently, he is recalled as a judge in all circuits in Maryland and is the Founder of and Managing Member of a Private ADR Group found on the Web at www.theplattgroup.com.

Judge Platt (Ret.) may be contacted at (301) 780-8858 or by e-mail to info@theplattgroup.com.