# Katalyst Securities LLC v. Marker Therapeutics, Inc.

> District Court, S.D. New York · March 9, 2022

URL: https://www.frixlaw.com/law-library/cases/10339327

## Case

- **Court:** District Court, S.D. New York
- **Decided:** March 9, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
KATALYST SECURITIES, LLC,
Petitioner,
21-CV-08005-LTS
-against-
MARKER THERAPEUTICS, INC.,
Respondent

MEMORANDUM ORDER

In this removed action, petitioner Katalyst Securities, LLC (“Katalyst”, or the
“Petitioner”) seeks confirmation of an arbitration award (the “Award”) rendered by a panel of
Financial Industry Regulatory Authority (“FINRA”) arbitrators (the “Panel”) against respondent
Marker Therapeutics (“Marker”, or the “Respondent”), on August 16, 2021, as well as pre-
judgment and post-judgment interest and costs (docket entry no. 1, Ex. A (the “Petition”) at 4-5.)
Marker’s motion to vacate the award (docket entry no. 12, “Resp. Mem.”) is now before the
Court. Marker argues that the panel of arbitrators lacked jurisdiction to arbitrate the dispute
between the two parties and, in the alternative, that the FINRA panel’s award demonstrated a
manifest disregard of the applicable law. (Resp. Mem.) Katalyst opposes the motion and
requests the entry of judgment granting its petition. The Court has jurisdiction of this action
pursuant to 28 U.S.C. section 1332 and 28 U.S.C. section 1441.
The Court has reviewed the parties’ submissions thoroughly and, for the following
reasons, Katalyst’s Petition to confirm the Award is granted. Marker’s motion to vacate the
Award is denied.
BACKGROUND
This dispute arises from a contract (Docket entry no. 13, Ex. 2 (the “Agreement”))
entered into between Petitioner Katalyst, a registered broker-dealer and FINRA member
(Agreement at 1) and Marker, a publicly traded immune-oncology company1 (together, the

“Parties”). (Id.) Under the terms of the Agreement, Marker appointed Katalyst “to assist the
Company in finding qualified subscribers” for the private placement of Marker’s securities in
exchange for a fee to be paid in cash and in warrants to purchase shares in Marker’s stock.
(Agreement at 1 & ¶ 3(a-b).) The Agreement also contained a clause providing that Katalyst
would be entitled to an additional fee should any investor “introduced” by Katalyst to Marker
“consummate” financing for Marker during a one-year “tail period” following the 2017 private
placement. (Agreement ¶ 3(c).)
The Agreement contained a two-stage dispute resolution mechanism. In the event
of a dispute, the Parties agreed to first “submit the matter for resolution to a mediator, acceptable
to all parties.” (Agreement ¶ 13.) If mediation failed, the parties agreed that “the matter will be

resolved by arbitration.” (Id.) As to arbitration, the Agreement provided as follows:
The parties hereto agree to submit all controversies to the exclusive
jurisdiction of FINRA arbitration in accordance with the provisions set
forth below and understand that . . . arbitration is final and binding on all
parties . . . and all controversies which may arise between the parties
concerning this agreement shall be determined by arbitration pursuant to
the rules then pertaining to FINRA.

(Agreement ¶ 13, the “Arbitration Clause”.) The Arbitration Clause also included a
choice of law provision, stating that “[a]ll questions concerning the construction, validity,

1 The parties to the Agreement are Katalyst and TapImmune Inc., Marker’s predecessor-in-
interest. (Docket entry no. 12 (“Resp. Mem.”) at 3 n. 1.) For purposes of clarity, and
consonant with the usage of the Parties, the Court will refer to the Respondent only as
Marker.
enforcement, and interpretation of this agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.” (Id.)
A controversy subsequently arose when Katalyst claimed that Marker had
obtained financing during the “tail period” from investors that Katalyst had “introduced,” as

defined by the Agreement, to Marker. (Resp. Mem. at 2.) Marker denied any contractual
obligation to compensate Katalyst in connection with that later financing, and the matter was
referred to mediation as required under the Agreement’s terms. (Docket entry no. 15 (the
“Oppenheimer Decl.”), Ex. 3 at 16.) Mediation failed to resolve the dispute, and on May 20,
2019, Katalyst submitted a Statement of Claim to FINRA for arbitration. (Oppenheimer Decl.,
Ex. 2.) During the arbitration process, Marker “repeatedly objected” to FINRA’s assertion of
jurisdiction over the dispute, despite the terms of the Arbitration Clause. (Resp. Mem. at 5.)
Each time, Marker’s objection was overruled. (See docket entry no. 13 (the “Kuwana Decl.”), at
Ex. 4.) (Containing an e-mail from the Panel to the Parties, stating “The Panel has determined
that FINRA has jurisdiction over this matter pursuant to the terms of the parties’ agreement.”)

On August 16, 2021, FINRA issued a decision, awarding Katalyst $1,798,501.00 in
compensatory damages, $450,000.00 in attorney’s fees, and pre-award interest. (Kuwana Decl.,
Ex. 3. (the “Award”). Katalyst subsequently filed the Petition in the Supreme Court of New
York, New York County, seeking confirmation of the Award, and Marker removed the action to
this Court.
DISCUSSION

Jurisdiction
“Arbitration is a matter of contract between the parties; it is a way to resolve
disputes – but only those disputes – that the parties have agreed to submit to arbitration.” DDK
Hotels, LLC v. Williams-Sonoma, Inc., 6 F.4th 308, 316 (2d Cir. 2021) (quotation and citation
omitted). “Just as the parties may elect through their contract to have arbitrators (rather than a
court) resolve categories of disputes between them, they may similarly contract to have
arbitrators (rather than a court) decide whether a particular dispute is to be arbitrated under the
terms of the contract.” Metro Life Ins. Co. v. Bucsek, 919 F.3d 184, 189-90 (2d Cir. 2019).

“[T]he question of who decides arbitrability is itself a question of contract.” Henry Schein, Inc.
v. Archer and White Sales, Inc., 139 S. Ct. 524, 527 (2019). “When the parties’ contract
delegates the arbitrability question to an arbitrator, the courts must respect the parties’ decision as
embodied in the contract.” Id. at 528. “In determining whether the arbitrability of a dispute is to
be resolved by the court or the arbitrator, the arbitration agreement is determinative.” DDK
Hotels, 6 F.4th at 318 (citing First Options of Chicago, Inc. v. Kaplan, 115 S. Ct. 1920 (1995)).
In reviewing an arbitration agreement, “[c]ourts should not assume that parties
agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.”
First Options, 115 S. Ct. at 1924 (internal quotation omitted). “Rarely, however, do arbitration

agreements directly state whether the arbitrator or the court will decide the issue of arbitrability.”
DDK Hotels, 6 F.4th at 318 (internal modifications and quotation omitted). “In the absence of
such clear language, ‘courts must look to other provisions of the agreements to see what
contractual intention can be discerned from them.’” Id. (quoting Bucsek, 919 F.3d at 191.) If the
parties “clearly and unmistakably agreed to have” the issue of arbitration resolved by the
arbitrator, “it is the obligation of the court to enforce their agreement.” Bucsek, 919 F.3d at 191.
Courts in the Second Circuit have repeatedly “found the clear and unmistakable
provision [standard] satisfied where a broad arbitration clause expressly commits all disputes to

arbitration, concluding that all disputes necessarily includes disputes as to arbitrability,”
NASDAQ OMX Group, Inc. v. UBS Securities, LLC, 770 F.3d 1010, 1031 (2d Cir. 2014)
(internal quotation and citation omitted) (emphasis in original); see also Wells Fargo Advisors,
LLC v. Sappington, 884 F.3d 392, 396 n. 3 (2d Cir. 2018) (“[A] referral of ‘any and all’
controversies to arbitration suffices to reflect such a broad grant of power to the arbitrators as to
evidence the parties’ clear intent to arbitrate issues of arbitrability.”); see also Smith Barney
Shearson Inc. v. Sacharow, 91 N.Y.2d 39, 43, 46 (1997) (holding that an agreement stating that
“[a]ny controversy . . . shall be settled by arbitration” and containing a choice of law provision
stating that the agreement “shall be governed by the laws of the State of New York’” clearly and
unmistakably authorizes the arbitrator to determine arbitrability); but see DDK Hotels, 6 F.4th

318-19 (2d Cir. 2021) (holding that a broad grant of authority to the arbitrator constitutes such
clear and unmistakable evidence of intent when coupled with incorporation of rules that
expressly empower an arbitrator to decide issues of arbitrability). Here, the Arbitration Clause
delegates resolution of “all disputes” to the “exclusive jurisdiction” of FINRA Arbitration. The
Court finds that “the meaning of this provision is plain indeed: any and all controversies are to be
determined by arbitration. The wording is inclusive, categorical, unconditional, and unlimited.”
PaineWebber v. Bybyk, 81 F.3d 1193, 1199 (2d Cir. 1996). The Court finds that the Arbitration
Clause itself thus provides clear and unmistakable evidence of the Parties’ intent to delegate the
question of arbitrability to the arbitrator.
Having so found, the Court is bound to defer to the Panel’s determination that the
dispute was amenable to arbitration. The record demonstrates that Marker repeatedly brought
that question before the Panel, and that the Panel decided that FINRA did have jurisdiction over
the dispute. (Docket entry no. 15 (“Oppenheim Decl.”), Ex. 8 (in which the Panel notifies both

Parties that “[t]he Panel has determined that FINRA has jurisdiction over this matter pursuant to
the terms of the parties’ agreement.”).) Because the Court is bound by this determination,
Marker’s motion to vacate the Award on the basis of lack of jurisdiction is denied.

Manifest Disregard for the Law
“The showing required to avoid summary confirmation of an arbitration award is
a lofty one, and the party moving to vacate the award bears a heavy burden of proof.” Manios v.
Zachariou, No. 14-CV-331-LTS, 2015 WL 1455696, at *2 (S.D.N.Y. Mar. 31, 2015) (citing
Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir.
1997)). “The review of arbitration awards is very limited in order to avoid undermining the twin
goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive
litigation.” Beijing Shougang Mining Inv. Co., Ltd. v. Mongolia, 11 F.4th 144, 160 (2d Cir.
2021) (internal modifications and quotation omitted). In furtherance of these goals, “it is well
established that courts must grant an arbitrator’s decision great deference.” Duferco Intern. Steel
Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003). “With respect to

contract interpretation, this standard essentially bars review of whether an arbitrator
misconstrued a contract.” T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339
(2d Cir. 2010).
Against this exacting standard, a litigant may seek vacatur based on alleged
“manifest disregard” of the law. The “manifest disregard” exception is an exceedingly narrow
one. “[W]e have . . . described it ‘as a doctrine of last resort – its use is limited only to those
exceedingly rare instances where some egregious impropriety on the part of the arbitrators is
apparent, but where none of the provisions of the [Federal Arbitration Act] apply.’” Wallace v.
Buttar, 378 F.3d 182, 189 (2d Cir. 2004) (quoting Duferco, 333 F.3d at 389). “Mere error in the

law or failure on the part of the arbitrator to understand or apply the law is not sufficient to
establish manifest disregard of the law.” Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc.,
126 F.3d 15, 23 (2d Cir. 1997). For an award to be deemed issued in manifest disregard of the
law,
[t]he error must have been obvious and capable of being readily and
instantly perceived by the average person qualified to serve as an
arbitrator. Moreover, the term disregard implies that the arbitrator
appreciates the existence of a governing principle but decides to ignore or
pay no attention to it.

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933 (2d Cir. 1996). In
evaluating claims of manifest disregard of the law, the Second Circuit follows a three-part test:
(1) the law allegedly ignored must have been clear and explicitly applicable to the matter before
the arbitrators; (2) disregard of the law must have led to an erroneous outcome; and (3) the
arbitrators must have known of the law’s existence and its applicability to the case, and must
have disregarded it intentionally. See T.Co. Metals 592 F.3d at 339 (2d Cir. 2010).
Applying this standard, the Court finds that Marker’s argument falls well short.
Marker argues that the Panel exhibited manifest disregard for the law by misinterpreting the
contractual term “consummate,” resulting in an incorrect determination of the duration of the
“tail period” during which Katalyst was, under specified circumstances, entitled to additional
fees from Marker. (Pl. Mem. at 11.) Having relied on this interpretation in deciding in
Katalyst’s favor, the Panel, Marker theorizes, “manifestly disregarded the parties’ contract and
New York contract law.” (Id. at 12.) Regarding the first factor, Marker fails entirely to support
its argument that the Panel’s interpretation ignored clear and explicitly applicable law, asserting
instead, without citation, that “[t]he parade of dictionary definitions and case law that Marker
provided to the FINRA Panel left no doubt” that Marker’s proposed interpretation was correct.

(Reply at 10.) Nor does Marker offer any evidence of subjective intent, on the part of the Panel,
to disregard the law, as required under test’s third factor. See T.Co Metals, 592 F.3d at 339, infra
at 8 (“[T]he arbitrators must have known of the law’s existence and applicability to the case, and
must have disregarded it intentionally”).
On the contrary, Marker asks the Court to find manifest disregard for the law in
the Panel’s resolution of a straightforward dispute over contractual interpretation, which is
precisely the sort of Panel determination to which the Court is required to defer. “Even if a court
. . . were to disagree with the arbitrator’s findings of fact, or had a difference of opinion about the
correct interpretation of the contract, an arbitration award would still be subject to confirmation.”
Trustees of New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity

Fund, and Apprenticeship, Journeyman, Retraining, Educational and Industry Fund et al. v.
Windham Construction Corp., No. 17-CV-4630-VSB, 2017 WL 9472944, at *1 (S.D.N.Y. Dec.
27, 2017), report and recommendation adopted, 2018 WL 2338790 (S.D.N.Y. May 22, 2018).
The Court therefore finds that Marker has failed to make the showings necessary to warrant
vacatur on the basis of the doctrine of manifest disregard for the law, and Marker’s motion is
therefore denied in its entirety.

Confirmation of the Award
Respondent Marker having failed to identify any proper basis for vacatur of the
Award and Petitioner having established that confirmation of the Award is warranted, the Court
hereby confirms the arbitration award at issue in this action and will direct the entry of judgment
in favor of Katalyst in the amount found by the Panel: $1,798,501.00 in compensatory damages
and $450,000.00 in attorneys’ fees, plus a total of $154,433.26 in interest accrued at a rate of 3%
per annum on: (1) the amount of $234,751.00 from May 14, 2018, to August 16, 2021, the date

of the Award, and (2) the amount of $1,563,750.00 from October 17, 2018, through the date of
the Award. (Award at 2.) The Court also awards Katalyst pre-judgment interest pursuant to NY
CPLR section 5001 from the date of the Award, as requested in the Petition. (Petition at 4.)
“Post-award, pre-judgment interest is generally awarded at the discretion of the district court,
and there is a presumption in favor of awarding such interest.” In re Arbitration Between
Westchester Ins. Co. v. Massmont Ins. Agency, Inc., 420 F.Supp.2d 223, 226 (S.D.N.Y. Nov. 22,
2005) (citing In re Waterside Ocean Navigation Co. v. Int’l Navigation, Ltd., 73 F.2d 150, 153-
154 (2d Cir. 1984)). “In diversity actions, interest is to be calculated according to the statutory
rate prescribed by the law governing the contract . . . even where, as here, federal law governs
enforcement of the arbitration award.” Id. Here, pursuant to the Arbitration Clause’s choice of

law provision, (Arbitration Clause), the rate of prejudgment interest is governed by New York
law, and is therefore set at nine percent. “Interest shall be at the rate of nine per centum per
annum, except where otherwise provided by statute.” NY CPLR § 5004 (McKinney’s 2022).
The Court also grants Petitioners’ request for an award of post-judgment interest,
but only to the extent that interest shall accrue at the rate specified in 28 U.S.C. section 1961.
See 28 U.S.C. § 1961(a) (Westlaw current through P.L. 117-80) (“[i]nterest shall be allowed on
any money judgment in a civil case recovered in a district court”). “[U]nder [28 U.S.C.] § 1961,
federal district courts must apply the federal rate of post-judgment interest to judgments rendered
in diversity actions, even when those judgments have been docketed in state court.” Capiello v.
ICD Publications, Inc., 720 F.3d 109, 112 (2d Cir. 2013). Accordingly, the post-judgment
interest rate shall be calculated according to 28 U.S.C. section 1961(a), rather than CPLR section
5004, as requested the Petition. (Petition at 4.) Therefore, the Court awards post-judgment
interest at the above-mentioned statutory rate from the date on which judgment is entered until

the date payment is made. The Court also grants Katalyst’s request for costs in accordance with
Fed. R. Civ. P. 54(d).

CONCLUSION
For the reasons discussed above, Petitioner Katalyst’s petition to confirm the
arbitration award is granted, and Respondent Marker’s motion to vacate the arbitration award is
denied. The Clerk of Court is respectfully directed to enter judgment for Petitioner in the total
amount of $2,524,397.87 ($2,402,934.00 arbitration award plus $121,463.37 pre-judgment
interest thereon at the annual rate of 9% from August 16, 2021, through the date of this
Memorandum Order). Post-judgment interest will accrue in accordance with 28 U.S.C. section
1961. This resolves docket entry no. 11. The Clerk of Court is respectfully directed to close this
case following entry of judgment.

SO ORDERED.
Dated: New York, New York
March 9, 2021

/s/ Laura Taylor Swain_______
LAURA TAYLOR SWAIN
Chief United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10339327. Public record. Not legal advice.