Lanza v. Financial Industry Regulatory Authority, No. 18-2057 (1st Cir. 2020)
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In this dispute over the handling of brokerage accounts the First Circuit affirmed the judgment of the federal district court dismissing Plaintiffs' complaint against the Financial Industry Regulatory Authority (FINRA) for failure to state a claim, holding that Plaintiffs' complaint failed to state a plausible claim for breach of the covenant of good faith and fair dealing implied under Massachusetts law.
Plaintiffs, a married couple, submitted their dispute with their quondam stockbroker over the handling of their brokerage accounts to FINRA for arbitration. A panel of arbitrators summarily dismissed Plaintiffs' claims. Plaintiffs then brought this action claiming that the arbitrators' failure to state an explained decision breached the implied covenant of good faith and fair dealing. The First Circuit affirmed, holding that the district court appropriately dismissed Plaintiffs' complaint because Plaintiffs did not plausibly allege a breach of the implied covenant.
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