Corey v. New York Stock Exchange

Gordon Wright, an account executive for Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch), had a paralyzing stroke but returned to work after recovering. After Wright returned, George Corey (plaintiff) invested heavily in the market with Wright’s guidance. Wright retired due to medical concerns, and Corey’s account was transferred to another employee. Corey’s account depreciated heavily and lost a substantial amount of money. Merrill Lynch was a member of the New York Stock Exchange (stock exchange) (defendant), and the stock exchange’s constitution allowed nonmembers like Corey to initiate arbitration proceedings against members instead of litigating. Corey filed a claim against Merrill Lynch, arguing that his losses resulted from Wright’s impaired judgment and that the corporation was negligent in bringing Wright back to work to advise clients after his stroke. The stock exchange sponsored the arbitration proceedings and selected the arbitration panel. Two hearings were held, and Corey appeared at both without counsel. The panel dismissed Corey’s claim and sent Corey a copy of the decision. Corey was not informed of his right to appeal, and he did not appeal the award using the Federal Arbitration Act (FAA) appeal process. Instead, Corey filed suit in state court against the stock exchange. Corey claimed that the arbitrators denied him a fair hearing through the arbitrator-selection process and by exploiting several arbitration procedures. Corey argued that the stock exchange was vicariously liable for its arbitrators’ actions. The stock exchange removed the case to federal district court, which granted summary judgment to the stock exchange. Corey appealed to the Sixth Circuit.