US Bancorp Investments Employment Dispute Ends With Mixed Result

February 11, 2016

In marriage and employment, the honeymoon may be short and the relationship ends in an acrimonious and bitter divorce. In one of the great quirks of law, the divorce proceedings often last as long or longer than the marriage. Following about a one-year employment relationship, a former U.S. Bancorp Investments employee sued the firm and, thereafter, it took about a year for the arbitration proceedings to end with a decision. The odd thing about the outcome of the case, both parties sort of won and both parties sort of loss. Sounds a lot like the post-game analysis by many divorced couples, no?

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 2015, Claimant Farris asserted that between August 2013 and August 2014, he had worked as a financial advisor for Respondent U.S. Bancorp Investments, Inc. ("USBI"), where he purports to have exceeded all performance thresholds and, accordingly, qualified for bonuses. Claimant alleges that after applying for a USBI management position, he was harassed by both his direct supervisor and Respondent USBI "regarding a series of questionable and unsubstantiated Letters of Caution that had been previously issued and laid to rest."

Following Claimant Farris's termination, he alleges that Respondent USBI made "false, subjective, and malicious statements on his Form U5." In furtherance of the aforementioned issues, Claimant asserted causes of action for defamation, defamation per se, tortious interference, and false light, Also, Claimant requested an expungement of his industry record. In terms of damages, Claimant asked for $500,000 in compensatory damages; $1.5 million in punitive damages; interest, attorneys' fees, and costs. In the Matter of the FINRA Arbitration Between Steven Farris, Claimant, vs. U.S. Bancorp Investments, Inc., Respondent (FINRA Arbitration 15-00337, February 2, 2016).

Denial and Counterclaim

Respondent USBI generally denied Farris's allegations, asserted various affirmative defenses, and filed a Counterclaim. The Counterclaim asserts that on or about July 31, 2013, Claimant Farris executed a Repayment Agreement and a Confidentiality and Non-Solicitation Agreement. Following Farris's termination around October 8, 2014, USBI asserts that pursuant to the Repayment Agreement, the firm had demanded repayment of 2/3 of a cash advance in the amount of $107,088. The Counterclaim asserts that despite numerous repayment demands, Farris failed to pay the balance. In furtherance of its Counterclaim, USBI asserted causes of action for breach of contract (repayment agreement), unjust enrichment, attorneys' fees, breach of contract (confidentiality and non-solicitation agreement), misappropriation of USBI's confidential information, and tortious interference. USBI asked for $107,088.00 in compensatory damages, interest, attorneys' fee, and costs.


The FINRA Arbitration Panel found:

  • USBI liable to and ordered it to pay to Respondent Farris $100,000 in compensatory damages on Count I: Defamation.
Although the Panel left unchanged the Reason for Termination on Farris's Form U5, the arbitrators recommended the expungement of the Termination Explanation based upon their finding that it was defamatory in nature. The Panel recommended that the Termination Explanation be replaced with:

Failure to keep management advised of the status of arbitration with a former employer; difficulty in accepting supervision; loss of confidence.

  • Farris liable to and ordered him to pay to USBI $107,088.00 in compensatory damages for Count II in the Counterclaim: Unjust Enrichment.

As a consequence of the offset of the awards, Farris was ordered to pay to USBI the net award of $7,088.

Bill Singer's Comment

Who won this case? Frankly, we would need to speak with Farris and USBI to figure out what each party was hoping to accomplish by taking this to a hearing. Similarly, we would need to determine whether there were any viable settlement offers on the table, and, from the vantage point of hindsight, figure out if one of the parties should have taken what was being offered.

If we simply look at the dollars at issue, about $107,000 in a demanded repayment of a loan by USBI, Farris seems to have won that battle because he only winds up having to pay $7,088. On the other hand, if we consider Farris's demand for $500,000 in compensatory damages and $1.5 million in punitive damages, then USBI may be deemed the victor.

Beyond the financial claims, there is the issue about the wording of the circumstances attendant to Farris's termination by USBI. In light of the fact that the FINRA Arbitration Decision doesn't set forth what USBI had submitted as the original Reason for Termination, we are left to wonder as to how nasty the write-up was because the FINRA Arbitration Panel deemed it "defamatory." That being said, I don't think Farris walks away with a wonderful revision by way of the Panel's recommended language because he is depicted as having failed to keep management updated on a prior employment arbitration, is described as having difficulty accepting supervision, and, finally, is characterized as causing his employer to lose confidence in him.