Tanjutco v. NYLife Securities LLC

Background

Carolina P. Tanjutco filed this action under the Federal Arbitration Act seeking to confirm part of, and vacate part of, an arbitration award issued by a Financial Industry Regulatory Authority (FINRA) arbitration panel. The underlying arbitration involved Tanjutco, NYLife Securities LLC (NYLife), and New York Life Insurance Company (NYLIC). The panel was chaired by public arbitrator Carol Maria Luttati.

In the operative petition, Tanjutco named NYLife, NYLIC, FINRA, and the Securities and Exchange Commission as respondents. Although the petition mentioned Luttati in connection with alleged grounds for vacating parts of the award, it did not name her as a respondent, assert a personal claim against her, or seek damages or other relief from her.

Motions concerning Luttati

FINRA filed a motion under Federal Rule of Civil Procedure 21 to drop Luttati as a party. Rule 21 allows a court, on a motion or on its own, to add or drop a party. Tanjutco did not oppose that motion. She later filed a motion under Rule 15(a) asking to correct the case heading to include Luttati. Because Tanjutco was representing herself, the court read that motion broadly as a request for permission to file a second amended petition naming Luttati as a respondent.

The court denied Tanjutco’s motion for two reasons. First, she did not provide a proposed amended petition. Second, the court considered whether her existing petition could be read as stating a claim against Luttati and concluded that it could not. Tanjutco’s allegations concerned decisions by the arbitration panel and its chair, including alleged bias, refusal to hear evidence, disregard of FINRA rules, and exceeding the panel’s authority. The court said those allegations could relate to Tanjutco’s effort to vacate parts of the arbitration award, but they did not state a personal claim against Luttati.

The court also held that Luttati had absolute arbitral immunity for the challenged conduct because she acted as an arbitrator within the arbitration process. The court therefore concluded that any amendment adding a claim against Luttati would be futile, meaning the proposed claim could not survive a motion to dismiss.

Ruling

Judge Barbara Moses granted FINRA’s motion to drop Luttati as a party and denied Tanjutco’s motion to include Luttati. The Clerk of Court was directed to terminate Carol Maria Luttati as a respondent.

The court did not decide FINRA’s separate motion under Rule 12(b)(6), which asks whether a pleading states a legally sufficient claim. That motion remained pending. The court ordered FINRA to file a supplemental brief by April 1, 2024, addressing the effect of FINRA Rule 2080(b), and allowed Tanjutco to respond by April 15, 2024, limited to that issue. This order did not decide whether the arbitration award should be confirmed or vacated.