September 24, 2014
Lawyers often tell their clients to "get it in writing." The old legal joke is that a written contract is worth the paper it's written on. None of which is to suggest -- even remotely -- that there are not valid, enforceable oral contracts and, at times, even mere promises. Of course, when it's your word against an employer and all that you have are unwritten words at that, good luck with those facts. Here is a recent arbitration case in which a former employee is seeking recovery of both a bonus and severance, and he's largely coming into the hearing armed with little more than his recollection of what he asserts was said and promised to him.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2013, Claimant alleged causes of action including breaches of contract, implied contract, and the covenant of good faith. Claimant sought $585,326.00 in compensatory damages plus New York State Labor Law damages, liquidated damages, punitive damages, attorneys' fees, interest, and costs. In the Matter of the FINRA Arbitration Between XXX, Claimant, vs. Nomura Securities International, Inc., Respondent (FINRA Arbitration 13-01760, September 17, 2014). [Ed: Claimant's name redacted at sole discretion of BrokeAndBroker.com]
Respondent Nomura generally denied the allegations and asserted various affirmative defenses.
A Test Of (At) Wills
As more fully explained in the FINRA Arbitration Decision, prior to his employment with Respondent Nomura, Claimant (who had a Master of Business Administration, 2007), had acted as a Trader at Bank of America and Jeffries & Company. In September 2009, he executed an employment agreement with Respondent Nomura that asserted:
(i) Claimant would be an at-will-employee following the conclusion of the Agreement's term and (ii) at that time he "shall have no right to any specified bonuses beyond those provided for [in the Agreement]." On the first day of his actual employment at Respondent, Claimant acknowledged in writing that
... I have been granted access to the Nomura Employee Handbook and certify that I have been instructed to read all provisions contained in the Handbook....
I also understand that no one other than the Chief Executive Officer, Chief Legal Officer or a Director of Human Resources has any authority to make any promises to me or enter into any agreements with me concerning any terms or conditions of my employment that may differ from those contained in the Handbook....
As such, the arbitrators were confronted with what the facts suggested was an "at will" employee with no bonus entitlement following the conclusion of the term of the Agreement. Moreover, the arbitrators had been urged by the employer to accept the fact that only the firm's CEO, CLO, or Director of Human Resources could bind the firm to any employment promise beyond those set forth in the Employee Handbook.
In So Many Words
In contradistinction to the arguments of his former employer, Claimant contended that Respondent Nomura had breached an "oral agreement" to pay him a "2011 Formulaic Payment," which is further characterized as a "bonus." Further, Claimant claimed that the firm failed to pay him severance.
In considering Claimant's demand for a bonus, the Panel took into account the restrictions in the Agreement and the Handbook, and found that:
Claimant does not allege that either the Chief Executive Officer, the Chief Legal officer or a Director of Human Resources made any promises to him or entered into any agreement(s) with him concerning any terms or conditions of his employment that differed from those contained in the Handbook subsequent to the expiration of the Agreement or that he was other than an employee-at will from and after the said termination. Respondent considered Claimant an underperforming employee who failed to meet their expectations, rated him as "below track" in his reviews, terminated his employment with them for "redundancy" on November 16, 2011 and has not engaged anyone to fill his position since that time. . ."
In expanding upon their rationale, the arbitrators found that Claimant had failed to demonstrate that the alleged oral agreement had been reached. Moreover, the arbitrators concluded that Respondent Nomura had retained "sole and absolute discretion' as to the payment (or not) of any bonus. Similarly, the arbitrators noted that Claimant's employment had, in fact, ended in excess of four months before the fiscal year end, at which time bonuses are determined (a circumstance purportedly set forth in the Handbook).
Finally, as to the severance claim, the arbitrators found that Claimant "had no right to such severance and has not produced any evidence, testimonial or documentary, to show otherwise."
Accordingly, the FINRA Arbitration Panel denied Claimant's claims.