Lunsford v. RBC Dain Rauscher

RBC Dain Rauscher, Inc. (RBC) (defendant) was a securities clearinghouse helping brokerage firms establish securities accounts. Nations Financial Group, Inc. (Nations) (defendant) was a brokerage firm that utilized RBC’s services and that employed Tom Leechin (defendant). Leechin was the broker-representative who managed Nations’ securities accounts for Roger Lunsford and other prisoners (prisoners) (plaintiffs) at the Federal Correctional Institute in Edgeville, South Carolina. The prisoners signed customer agreements with the brokerage firm that contained an arbitration agreement. A dispute arose between the prisoners and the securities companies, and the prisoners filed suit in federal district court. The securities companies moved to compel arbitration, citing the signed agreements. The court granted the motion. During the arbitration hearing, the prisoners did not request to subpoena the opposing parties and did not cross-examine RBC, Nations, or Leechin. The arbitration panel denied the prisoners’ request to subpoena phone-call recordings with Leechin on relevance grounds, and the panel did not consider Nations’ compliance manuals as evidence. The manuals allegedly contained information regarding the recorded phone calls with Leechin and were similarly found irrelevant. The panel issued an award to RBC, Nations, and Leechin, and the prisoners filed a petition with the court to vacate the award. The prisoners asserted that the award should be vacated because the arbitrators failed to hear evidence and did not allow cross-examination of RBC, Nations, and Leechin.