The Tennessee Supreme Court has ruled that the Court of Appeals has the authority to review a Shelby County trial court’s decision to void a $912,160 arbitration award and to require the parties to conduct a second arbitration.
William Smythe invested thousands of dollars in certain bond funds offered by Morgan Keegan & Company. After those bond funds failed, Mr. Smythe filed a claim for arbitration with the Financial Industry Regulatory Authority (FINRA). A three-person FINRA arbitration panel heard the case and ruled in Mr. Smythe’s favor.
Morgan Keegan requested the Chancery Court for Shelby County invalidate the award, arguing that two members of the arbitration panel were biased against the firm. The trial court agreed with Morgan Keegan and returned the case to a new FINRA arbitration panel. Mr. Smythe appealed the trial court’s order to the Court of Appeals. In March 2011, the Court of Appeals dismissed the case, ruling the Tennessee Uniform Arbitration Act did not give the court jurisdiction over an order that voids an arbitration award and directs a rehearing.
In a unanimous opinion, the Tennessee Supreme Court reversed the Court of Appeals. The Supreme Court ruled that the trial court’s order was appealable under a provision of the Tennessee Uniform Arbitration Act that authorizes appeals from orders that deny confirmation of an arbitration award. The case was sent back to the Court of Appeals to decide whether the trial court’s order was proper.