Pyrrhic Victory: Brokers Win One, Lose Two
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Two mortgage brokers in Pennsylvania might want to consult the Wikipedia entry on Pyrrhus of Epirus after their experience with arbitration and a federal court.
Law.com carries their story in a post by Gina Passarella (“Brokers’ Employment Suit Backfires, Defendant Awarded $1.6 million) of the Legal Intelligerncer. It is an interesting, well written story, about Field v. Gateway Funding, and we won’t go into details since the full story is available by clicking on the title or here.
Essentially, the brokers sued because they claimed the mortgage company infringed on their promised, exclusive sales territory. The case went to arbitration and they won well over $300,000. Problem: the defendant won too, on two claims that: (1) the brokers took advances they did not earn and (2) they provided confidential information when they went to work for a competitor. A federal court confirmed the arbitration award. The net award against the brokers: $1.6 million.
A few general lessons:
1. The case illustrates the inherent uncertainty of litigation.
2. It is possible that the brokers knew they would be sued so they sued first but, in fact had to litigate. It is also possible the brokers should have had a better understanding or acceptance of their position before commencing litigation. We don’t have the actual back story. But, it sure looks like if they had quit while ahead, they would have been way ahead.
3. The case illustrates the general nature of arbitration. It is a more efficient, less costly way to resolve disputes and mandatory under some contracts. But, once the arbitrator makes a decision, the courts will generally confirm it. Exceptions are very narrow and hard to get.
Clients will sometimes resist the suggestion to settle or drop a claim. They want a victory. But, a pyrrhic victory is a costly one.
Image: Pyrrhus of Epirus, from Wikipedia Commons
