TAU EPSILON RHO TO CONVENE IN FLORIDA

by

ALAN M. TEPPER, Esq.

          The Westin Ft. Lauderdale will host Tau Epsilon Rho's 78th Annual Convention.  The convention begins on Sunday, December 27, 1998, and runs through Friday, January 1, 1999.  The convention will feature an opening night dinner and get-together on Sunday, December 27, and an Installation Dinner of newly-elected officers on Wednesday, December 30.  The convention will also host the winter National Council Meeting and several Continuing Legal Education programs.  Of course, the convention will also feature our customary nightly Hospitality Suite.  Depending on interest, we may make a group dinner reservation at a local restaurant for New Year's Eve (otherwise, you are free to make your own plans for New Year's Eve).  The Convention, dinners, meetings, and programs are open to any member of T.E.R. in good standing (and spouses, children, and guests, subject to certain exceptions). We have obtained a fabulous room rate of $95.00 per night, single or double occupancy, and $85.00 per night for a second room; and these rates are available both before and after the convention dates.  The Convention fee is $325.00 per couple.

          The Westin Ft; Lauderdale is a four-star luxury hotel set in a business park approximately 15 minutes north of the Ft. Lauderdale/Hollywood International Airport.  It is conveniently located at the Cypress Creek exit off I-95.  Although the Westin is not a resort, it does feature a health club, Olympic-size swimming pool, jogging trails, and paddle boating on a large lagoon immediately adjacent to the hotel.  The hotel is approximately 5 miles from the Atlantic Ocean.  The Westin also has arrangements with a nearby private club for golf and tennis facilities.

          For more information, please consult the Convention mailing you received in October, or contact the Convention Chairman, David B. Liner, at 2100 Van Born Road, Taylor, MI  48180; (313) 792-6237; dave_liner@mascohq.com.

 

CHANCELLOR'S CORNER DAVID S. LEYTON, National Chancellor I lost. It's not an easy thing to write, but it's true.  I lost the Democratic primary election for the Michigan House of Representative - by 552 votes.  We worked from April through primary election day, August 4; from sunrise past sunset no days off.  Therese and I gave up our summer; our annual trip to Northern Michigan, backyard barbecues, lounging by the pool at our club, golf, tennis...the list goes on and on.  We knocked on doors until our knuckles ached.  We pounded yard signs until our hands were blistered.  We talked about my candidacy until we were hoarse.  In the end,.we came up short. The emotional reaction to losing an election is similar to the feeling you have when a no-cause verdict is delivered (you can tell I'm a plaintiff's lawyer) in a very BIG case, that you've worked on for years.  Election Day is like waiting for the jury to come back with its decision.  In this case, the jury is the electorate (those who show up to vote; voters turnout in my election was only 15%).  And the aftermath is reeling you feel drained, you second-guess every decision you made and these feelings don't disappear when the sun rises the morning after.  It takes time; in our case, a lot of time.  Writing this column helps. Did anything good come from losing this election?  Well, for one thing, I don't have to be on the same ticket at Geoffrey Feiger, the Michigan democratic Party gubernatorial nominee who, I predict, will lose overwhelmingly.  Additionally, I don't have to attend endless fundraisers, answer the media's never ending questions, and knock doors in 40-degree weather.  I'm back in my law office, rebuilding my practice and cracking the whip on my partner and support staff.  And most importantly, I have time to spend with Therese and the kids.  In the end, it was not to be (at least at this time). Will I do it again?  You need ask?

I want to encourage all of you to attend our annual convention  Our Convention Planner, David Liner, is renowned for finding wonderful spots where we can enjoy long-lasting friendships and create new ones.  TER is family and, even if you've never attended a convention, I promise that when the convention ends, you'll feel like part of the family.     The Summons A Publication of Tau Epsilon Rho Law Society BARRY L. LIPPITT, National Editor Volume 98. No. 2 November 1998 Send Submissions, Correspondence, and Address Corrections to: BARRY L. LIPPITT, National Editor 29777 Telegraph Road, Suite 2500 Southfield, MI 48034 (248) 357-0002 * Fax (248) 746-9746 E-Mail:  BarryLippitt@abanet.org  WEBSITE UPDATE Work on the T.E.R. website continues, and it should be up and running by the convention.  Check it out at www.ter-law.org.  In the meantime, if you'd like your email address listed in the site member directory, send and email to bob Bowytz at BowLawGrp@aol.com, and include your name, chapter, and email address.  You must be current in 1998 or exempt from dues to be listed.

 

FROM THE DIRECTOR'S DESK ALAN M. TEPPER, National Director The sun and surf of Ft. Lauderdale, FL, eagerly awaits the arrival of the masses attending Tau Epsilon Rho Law Society's 78th Annual National Convention, at the Westin Ft. Lauderdale Hotel from December 27, 1998 through January 1, 1999.  What else can I say about the fabulous deal David Liner arranged for us for this year's convention?!  $95.00 per night for a double or single room for the period between Christmas and New year's is a phenomenal deal, and David deserves our profound gratitude for making these arrangements, Full convention details have already been mailed to the membership, and if you need additional details, call David (313-792-6237) or me (609) 429-3901). We are expecting a great turnout, and I look forward to seeing you in sunny Florida. As National Executive Director of TER, I am always being asked, "What does TER do for me?"  Obviously, because of our small size (in and of itself a benefit), we cannot do for you what the larger bar associations and trade associations do by way of benefits such as complex legal seminars on varied topics of the law, discounts on car rentals, all types of insurance, and the like.  TER is a small, close knit group of attorneys and judges who have bonded together more in friendship than strictly for a professional reason.  Personally, I belong, or have belonged, to state and local bar associations in New Jersey and Pennsylvania; I also belong to "trial lawyers" associations such as the Philadelphia Trial Lawyers Association and ATLA-NJ, and the benefits received from these organizations toward aiding my practice is tremendous.  However, TER is different. As a result of my membership in TER, which I joined several years ago while attending temple law School, I have gone to numerous National Conventions, in Miami, Ft. Lauderdale, Naples, Hutchinson Island, St. Pete's Beach, San Diego, Jamaica, Freeport, Philadelphia, Chicago, Detroit, Nashville, Tucson and Cleveland.  In many of these cities I have met and become friends with several local attorneys that I can truly call good friends. I know that they can be relied upon to assist me with a legal problem a client of mine experiences in that foreign jurisdiction.

And that relationship goes both ways, so I will get that call about a problem a client is having in New jersey or Philadelphia, and I am ready to help that TER member with advice, or accept a referral of that matter, or direct him to another attorney specializing inat area of the law. How many of you can say that you personally know attorneys throughout the United States that you can call on a whim who would be willing to spend their time assisting you with a legal problem pertaining to their local jurisdiction. That is what TER is all about. Get active and meet members of TER from all over the country. DO IT!!  Attend this year's convention. Really learn what TER is all about. See you in Florida in December. -0-0-0-0- We memorialized the following members of T.E.R. at the Atlanta National Council Meeting: Louis Berwitt, Cleveland; Alexander Betz (Past National Chancellor); John Sklar, Detroit; Robert D. Abrahams, Hon. Paul Chalfin, Hon, J. Sydney Hoffman, Hon. Edward Rosenwald, Philadelphia; Max W. Gibbs, Broomall PA; Joseph Arthur Siegel, Toledo, OH.

 

PRACTICE POINTERS Securities Arbitration By: JOEL H. KAUFMAN 31275 Northwestern Highway, Suite 140 Farmington Hills, Michigan 48334 (248) 851-3171   (Ed. Note: This is the second part of an article that began in the May 1998 issue. Citations and references are available from the author.)   VII. ARBITRATION AWARD AND APPEAL In theory, arbitrators are supposed to apply the same substantive measure of damages that would be used by a judge in state or federal court. In practice however, arbitrators apply "rough justice" on perceived equities. Arbitrators do not have to follow or even know the law. Often, arbitration fairness depends almost entirely on which arbitrators hear your case. Arbitrators are not required to disclose or explain the reasons underlying an award. Arbitrators generally do not spell out the reason for their rulings in writing. Judicial Review of Arbitration Awards is extremely limited and almost impossible to vacate. A party must show corruption, fraud, bias or where arbitrators exhibited manifest disregard of law in making an award or where the award is arbitrary and capricious. Appeals are almost never successful. A few weeks after a hearing concludes the arbitrators generally issue their binding, written decision, usually a summary of the parties' contentions and a few sentences stating only the amount of the award and how much the parties owe and hearing session fees. All Monetary awards must be paid within 30 days of receipt of award.

VIII. NASD MEDIATION (NEW) The NASD offers an informal, voluntary process that employs an impartial person *the mediator) to facilitate negotiations between disputing parties. The mediation is non-binding ane no settlement is imposed upon the parties. The Mediator is to help the parties more clearly define and understand the issues and each side's interest. Mediation can run separately from and/or concurrently with the arbitration case. Each party signs a Mediation Submission Agreement. The parties submit a Mediation Summary to familiarize the mediator with the dispute and their interest. Once a Settlement Agreement is signed, it is final and binding on the parties and no party can bring any action in court or arbitration. The mediation fee schedule for a customer dispute is $150.00 per party. In addition, the charge for the mediators' time is $600.00 to be shared equally between the parties. Additional mediation sessions are at the rate of $150.00 per hour.   IX. SIMPLIFIED ARBITRATION Any dispute involving a dollar amount not exceeding $10,000.00 must be arbitrated under Simplified Arbitration Rules. A hearing is optional (at customer's request) and the dispute is decided on the basis of a written Statement of Claim and Exhibits. N There is a single public arbitrator who decides the claim. The customer pays a non-refundable filing fee and hearing session deposit as set forth in prior schedule.   X. LEGAL THEORIES First and foremost a securities broker is a salesperson who earns a living by fenerating commission through the purchase and sale of securities. The stockbroker makes his money based on how much and how often their customers buy and sell, not how well their customers do. In addition, a broker is an investment counselor who give advice. Generally, an investor sues both the individual broker and the brokerage company which supervises the activity of the broker.

 

Three (3) of the most common types of investment related misconduct resulting in customer lawsuits in arbitration proceedings against security brokers and their brokerage firm employers are excessive trading or "churning," unsuitable trading, and unauthorized trading. Such conduct is plead as a unique legal theory, but the same facts violate both federal and state statutes and common law and are incorporated into other causes of action.   CHURNING. Churning is excessive trading in light of the size and character of the account. Arbitrators consider the nature of the account and the customer's investment objectives, whether broker exercised control over the account, and whether the broker acted with willful or reckless disregard to the customer's best interest.   UNSUITABLE INVESTMENTS. Broker has a duty to recommend only those transactions which are consistent with the customer's financial situation, needs and investment experience and objectives, The broker must make reasonable efforts to obtain information concerning the customer's financial status, the customer's tax status, the customer's investment objectives, and such other information used or considered to be reasonable in recommending a transaction.   UNAUTHORIZED TRADING. Trading without consent or authorization.   OTHER STOCK BROKER CLAIMS. Legal theories in the Statement of Claim may include: Breach of Contract, Negligence (Stockbroker Malpractice), Violation of the Michigan Consumer Protection act, Breach of Fiduciary Duty, Intentional Infliction of Emotional Distress, Common Law Fraud, Federal and State Security Law Violations of the Anti-Fraud SEC Rule 10(B)(5) and Michigan blue Sky Law, MCLA 451.501 et seq., violation of rules of the National Securities Exchange, etc. COMMON DEFENSES: 1. Inherent risks in stock market investments. Losses are due to legitimate market influences. 2. Ratification. (The customer expressly consented, approved, participated in and ratified the acts complained of.) 3. Opinion vs. Fact: Sales "puffing," i.e., statements of opinion such as shares prices at $8.00 will be worth $25.00 in a year are statements of opinion and generally not a basis for a claim unless a guarantee

or promise. Difficult to sue for bad advice (For example: broker advised client to buy and stock went down, advised client to sell and stock went up, etc.).   XI DAMAGES OUT OF POCKET COSTS. Generally, a customer may recover "Portfolio Damages" which is damage to the value of the account caused by the broker's mismanagement. Out of pocket losses are calculated by comparing the value of the account before, and after the broker's misconduct. Look to the difference between the value of the investment at the time of purchase and the current value, the projected sum the investor would have earned had the account been properly invested, lost interest, commissions.   ATTORNEY FEES/STATUTORY VIOLATIONS: Under Michigan Law, attorney fees are recoverable under the Michigan Uniform Securities Act. A person who offers or sells securities in violation of the Michigan Uniform Securities Act is liable for reasonable attorney fees. MCLA 451.810 (A)(3). Further, a person who suffers a loss as a result of a violation of the Michigan Consumer Protection Act, MCLA 445.901 et seq., may recover reasonable attorney fees. See MCLA 445.911 (2). Violation of the Act may not be willful to recover attorney fees. Temborius vs. Slatkin, 157 Mich App 587 (1986). Punitive Damages. See Mastrobuono vs. Shearson, Lehman, Hutton, Inc. 514 U.S. 52 (1995). Generally, punitive damages are awarded where the broker's conduct is reprehensible, fraudulent, or in blatant violation of law or policy or involves acts or omission that evidence reckless or callas disregard or indifference to a customer's rights.   RESCISSION: Rescission (in appropriate circumstances) involves returning an improper investment to the brokerage firm in exchange for its purchase price, is a particularly appropriate form of damages in cases of unauthorized trading where the securities are still in the customer's account.   COMMISSIONS AND LOST INTEREST. (i.e., the amount of commissions and other costs incurred as a result of the broker's misconduct) may be recovered. (Joel H. Kaufman is in private practice in Farmington Hills, MI, specializing in Securities-related and other business litigation. He is a Past National Chancellor of the Society. Questions may be addressed to him at attyjoel@aol.com. A copy of Arbitration Guidelines is also available.)

 

CLE CONTRIBUTORS NEEDED We are still looking for some CLE presenters for the National Convention. If you are interested, please contact the Convention Chairman, David B. Liner, at: Phone: (313) 792-6237; or Email: dave_liner@mascohq.com.   COUNCIL CLIPPINGS   Highlights of the Atlanta National Council Meeting held in July: Congratulations to Todd M. Berk, Philadelphia, appointed by the Council to the vacant office of Chancellor-Elect. You can read Todd at: 260 S. Broad St., Ste. 1410, Philadelphia, PA 19102; (215) 731-1213; Fax (215) 731-1217; toddberk@juno.com. Proposed revisions of the National Constitution and by-laws were referred to a committee chaired by Barry L. Lippitt, Detroit, for final revision and reporting to the next national Council Meeting.

CHAPTER CONNECTION   DETROIT The Detroit Graduate Chapter has continued to revitalize itself, recently holding a dinner featuring member Prof. Robert A. Sedler, Wayne State University School of Law speaking on "The Constitution and Impeachment." Prof. Sedler is a constitutional scholar of national renown. We also continued our ongoing breakfast seriesm "Uncensored and Unplugged," with separate programs featuring Hon. Edward Sosnick, Oakland County (MI) Circuit Court Judge, and Hon. Arthur Tarnow, U.S.D.C. 0 E.D. Mich., the most recent appointee to the local federal bench. In November, we are sponsoring lawyer/author Brad Meltzer, author of The Tenth Justice and the recently-released Dead Even at the Detroit Jewish Community Center's Annual Jewish Book Fair. We are also in the middle of a recruiting drive for new membership.   CLEVELAND Congratulations to member and former U.S. Senator Howard M. Metzenbaum. In May, the U.S. Courthouse in Public Square was renamed the Howard M. Metzenbaum U.S. Courthouse in his honor.

THE LAST WORD
BARRY L. LIPPITT, National Editor

IF I WERE KING (OR AT LEAST A HIGHLY PAID PUBLIC OFFICIAL)

Writing on election eve, I have been considering the assault on our senses and tender feelings represented by the season's political ads. As most (vocal) critics decry the mean-spiritedness and non-relevance of most of these offerings, I have been looking for a solution, and think I have found one.

As our political structure now admires the creation of independent political fiefdoms, rather than creation of new cabinet-level offices (suggesting to me at least that solutions for the represented problems cannot be reached by consensus, but require autocratic, unilateral action), I propose the office of Elections Czar, and present myself as candidate, with the following platform:

• No "negative" ads. The First Amendment obviously was not intended to protect non-constructive invective.
  

• All candidates must fund campaigns out of their own pockets, and all campaign expenses must be paid C.O.D. No credit.
  

• Candidates who refuse to participate in open (albeit moderated) debate without prior submission of questions will not be allowed to take office (of course, they can continue to run at their own expense and run their mouths; they just won't be allowed to win the election).
  

• Any office that does not generate a contested election (at least 2 candidates) will go unfilled. No unchallenged candidate could be that good.
  

• No staged scenes for discussion of candidates and issues in TV and radio spots. Discussing the merits of candidates and their backgrounds while fishing would only scare the fish away. And neighbors don't come over to was dishes and badmouth candidates.
  

• No candidate may describe themselves as "incumbent," if the voting populace doesn't know they're the incumbent, they haven't been doing their job very well.
  

• Any personal question posed by the media must first be answered by the media member posing the question (with supporting affidavits).
  

• Judicial candidates may not solicit campaign contributions from lawyers who practice before them. Or, perhaps better, allow the solicitation, but restrict the cap for lawyers to $5.00 per contested seat. And publish the list of contributions.
  

• Resolution of personal attacks on a candidate or a candidate's family will be resolved through use of the code duello.
  

• No billboards. Has everyone forgotten Ladybird Johnson?
  

• Finally, no congressional oversight of my actions. After all, if I have to spend time explaining myself to them, I won't have time to do my job.