First Command Suffers Casualty, Failing to Restrain Arbitration After Adverse Ruling

  • Jun 1 2021


June 1, 2021 – Reif Law Group, P.C., California’s preeminent boutique trial and litigation law firm for securities and business disputes, is prosecuting a copyright claim and tort and contract claims related to the wrongful discharge of financial advisors Joachim W. Exner and Claudia Exner by First Command Financial Services, Inc. (N.D. Tex. Case Nos. 4:19-cv-00508 and 4:21-cv-00621).

In the latest development of the case, the Arbitrator denied First Command’s motion to dismiss the intellectual property claims, and in response, First Command’s legal team filed an “Emergency Motion for Temporary Restraining Order” in the Northern District of Texas federal court seeking to invalidate the arbitrator’s ruling they did not like. 

The Exner’s are attempting to arbitrate their claims, including a Digital Millennium Copyright Act (“DMCA”) claim on numerous copyrighted works that Exner created from 2007 to 2014 to assist with customized and educational financial planning services. A First Command registered principal described Exner’s materials as “badly needed sales training” and the “most scalable planning platform that I’ve seen in my time with FC.” A First Command senior officer described Exner’s materials as “very useful tools.”

Despite glowing accolades about Exner’s materials, Exner claims that First Command struck his copyright legend on registered copyrighted material and demanded “superior intellectual property rights in all materials” even though First Command treated Exner as an independent contractor and approved Exner’s ownership of the entity that owned the intellectual property. When Exner refused to surrender his intellectual property rights to First Command, he claims that the securities firm retaliated by dispatching personnel to his office to interrogate his employees, to purge information from his personal computer and smart phone and to fire him and his wife in a reputationally damaging fashion.

The federal court “twice denied First Command’s Emergency Motion for a TRO,” said Brandon S. Reif at Reif Law Group, P.C.

Mr. Reif explained: “Within days of defeating First Command on a major arbitrator motion, it filed a retaliatory federal court lawsuit seeking to overturn the arbitrator’s ruling. This type of sour behavior is beyond the pale: the entity that drafted the broad arbitration clause now challenges the arbitrator’s authority to rule because it did not go their way.” 

First Command’s legal team did not provide any advance notice and were forced to refile it as a noticed Motion for Preliminary Injunction. First Command is the same federal court defendant that compelled certain claims in the federal court lawsuit to arbitration and the same defendants that then filed the motion with the AAA arbitrator that resulted in the ruling against First Command. 

The financial advisors intend to seek sanctions from the federal court and from the arbitrator for unlawfully challenging the arbitrator’s ruling.

This is not the first time that First Command has found itself embroiled in legal issues. In 2004, First Command consented to the entry of findings with the United States Securities and Exchange Commission with a $12 million fine as restitution to all customers who purchased a systematic investment plan during certain years and to improve “investor education.” First Command also agreed to retain an independent consultant to review and make recommendations concerning the adequacy of training materials, sales scripts, advertising, sales literature and sales training systems and procedures. (SEC adv. First Command, Admin. Proc. File No. 3-11770).

About Reif Law Group, P.C.

Reif Law Group, P.C. is California’s preeminent boutique trial and litigation law firm for securities and business disputes. The firm prosecutes and defends court and arbitration actions involving securities, investments and real estate, professional liability, corporate and shareholder, financial abuse, workplace misconduct involving harassment, discrimination, recruitment and Form U5, and business disruption and restraining order actions involving non-compete, non-solicit and confidentiality clauses.

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Emergency Motion for Temporary Restraining Order dated May 8, 2021

Order Denying TRO dated May 12, 2021

Order Denying TRO dated May 10, 2021

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