Finn v. Ballentine Partners

Roy Ballentine (defendant) and Alice Finn (plaintiff) founded Ballentine Finn & Company, Inc. (company) (defendant), and four other individuals became shareholders of the company (defendants). Finn signed a shareholder agreement that included an arbitration clause. The agreement allowed the company to buy a shareholder’s shares in the business after termination. The agreement also included a provision stating that if a shareholder sold shares to the company and the company resold the shares at a higher value, the shareholder was entitled to part of the additional profit. The shareholders terminated Finn allegedly for cause and purchased her shares in the business. Finn initiated arbitration to dispute her termination, and the arbitrator found that Finn’s termination was unlawful, awarding her money for the purchased stock and money for lost wages. The company lacked the funds to pay and set up a payment plan. The company formed Ballentine Partners, LLC (Partners) (defendant), a separate company, and changed its own name to Ballentine & Company, Inc. The company sold shares in Partners to raise funds for Finn’s payments. Finn sued the company, Partners, Ballentine, and the shareholders in state court and filed a motion to compel arbitration, claiming breach of contract and unjust enrichment. The company filed a motion to dismiss, arguing that Finn’s claim was barred by res judicata. The trial court stayed the proceedings and compelled arbitration. The second arbitration panel dismissed Finn’s breach claim but issued an award based on the company’s unjust enrichment from the sales. The company moved to vacate the second award, claiming that the arbitrator made a plain mistake of law under New Hampshire law. The trial court vacated the award due to the arbitrator’s plain mistake, finding that given the first award, res judicata barred Finn’s unjust-enrichment claim under state law. Finn appealed, arguing that the Federal Arbitration Act (FAA) preempted state law, among other arguments.