Curious Case Of A Wall Street Wrongful Resignation Lawsuit

March 14, 2016

You've likely heard about a so-called "wrongful termination" in which a former employee alleges an improper firing; in today's Blog, however, we have a rare mirror-image of that allegation: wrongful resignation. If you think about it, why not? After all, what's good for the goose is good for the gander, except . . . ahhh, there's that one word that causes so much friction . . . except, we have all come to accept that there are laws and rules imposed upon employers as to whom they may fire and when and under what circumstances. The fact that we all may have a good laugh about how someone gave the boss the finger on the way out the door doesn't mean that all resignations are without legal and/or financial consequence. Consider two FINRA consolidated arbitrations in which the cost of a disputed resignation ran into seven figures.

The Meridian Claim

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in January 2011, Claimant Meridian Equity Partners asserted breaches of contract, fiduciary duties, and implied covenants of good faith and fair dealing; tortious interference; and indemnification. In Amended and Second Amended Statements of Claim, Claimant Meridian added causes of action for promissory estoppel and unjust enrichment.

In addition to seeking permanent injunctive relief, Claimant Meridian ultimately sought at least $1.665 million compensatory damages with respect to Respondent Niles's allegedly "wrongful resignation from Claimant four months into his two year contract term." Claimant Meridian asserted that Respondent Niles had allegedly committed a "breach of his duty of loyalty to Claimant, such as his  interference with and/or solicitation of Claimant's relationships with its associated persons . . ." Claimant sought to enforce the indemnification provision in Respondent Niles's employment agreement; and also asked for attorneys' fees, costs, and 9% interest. In the Matter of the FINRA Arbitrations Between Meridian Equity Partners, Inc., Claimant, vs. Joseph W. Niles, New Albion Partners LLC (f/k/a Casey Professional Services, LLC) and Casey Securities, LLC, Respondents (FINRA Arbitration 11-00248, March 2, 2016) (the "Meridian Claim").

Respondent Niles, New Albion, and Casey Securities generally denied the allegations and asserted various affirmative defenses. Respondent Niles filed an initial and Amended Counterclaim asserting violations of California Labor Code Section 970;  California Business and Professions Code Section 17200 (unfair competition: negligent misrepresentation; fraud, and unfair business practices); and New York Law Section 190 et seq. (for unpaid wages).

The Casey Claim

In a FINRA Arbitration Statement of Claim filed in April 2011, Claimant Casey Professional Services asserted intentional interference with contract and misappropriation of trade secrets. Claimant Niles sought unspecified damages. In the Matter of the FINRA Arbitrations Between Casey Professional Services, LLC, Claimant, vs. Meridian Equity Partners, Inc., Respondent (FINRA Arbitration 11-01631 (March 2, 2016). (the "Casey Claim").

Respondent Meridian generally denied the allegations, asserted various affirmative defenses, and filed a Counterclaim asserting indemnification and intentional interference.


The FINRA Arbitration Decision characterizes the Meridian Claim and the Casey Claim as constituting the following characteristics:

11-00248: Member vs. Member, Associated Person, and Non-Member
11-01631: Member vs. Member

By Order dated August 3, 2011, the FINRA Arbitration Panel consolidated the two cases.


The FINRA Arbitration Panel found:
  • Niles, New Albion, and Casey Securities jointly and severally liable to and ordered them to pay to Meridian:
    • $1,351,339.00 compensatory damages plus 4.5% interest from December 14, 2010 until the date of the award and, thereafter, 9% interest until the award is paid.
    • Niles liable to and ordered him to pay Meridian:
      • $449,975.88 in attorneys' fees pursuant to that provision in his employment contract.
    • Meridian liable to and ordered it to pay to Niles:
      • $91,250.00 compensatory damages plus $20,801.25 interest on that amount.
    The Panel offset its $112,051.25 award ($91,250 plus $20, 801.25) to Niles by the $449,975.88 attorneys' fees awarded against Niles to Meridian; consequently, the Panel deemed Niles solely liable to and ordered him to pay to Meridian the net amount of $337,924.63 ($449,975.88 - $112,051.25). This offsetting was in addition to Niles's joint and several liability to Meridian for the $1.35 million plus interest Award.

    Bill Singer's Comment

    By way of a glimpse behind the curtain of FINRA intra-industry arbitration, consider that these consolidated cases required three pre-hearing sessions before one arbitrator in June and September 2012; followed by 12 pre-hearing sessions before the three-member Panel from June 2011 through March 2014; and 72 full-fledged hearing sessions from January 2013 through August 2015.  The cost to the parties of various hearing sessions was a whopping $102,150.00, which was essentially divided on the basis of 50% to Meridian and 50% to the other parties.

    I truly wish that we learned more about the underlying disputes than is presented in the FINRA Arbitration Decision. About all that we can infer is that Niles left the employ of Meridian after a mere five months on terms that were not satisfactory to his former employer. Although there are assertions that Niles attempted to interfere with Meridian's relationship with other employees, there is no statement by the arbitrators that they found such misconduct had actually occurred. We are told virtually nothing about what prompted Niles's resignation and what constituted the facts attendant to the "wrongful" nature of that departure. Sure, we have conclusory allegations of purportedly improper contacts with Meridian's employees but that comes off more as titillation than revelation. How exactly did Niles injure Meridian and how did those injuries rise to the astronomical sum of $1.7 million?

    To be clear -- to be very clear -- I am NOT even remotely suggesting that Niles may not have engaged in injurious conduct or that the Panel got anything wrong in terms of liability or damages. I have personally handled many cases during my three-decades of Wall Street lawyering where a former employee has grievously harmed a former employer. What I am asserting is that this FINRA Arbitration Decision fails to spell out what happened and fails to offer the calculus by which the damages were computed. As I often lament, this Decision suffers from a lack of content and context. If you think that I am overstating the matter, please read the FINRA Arbitration Decision for yourself at:

    If you read the Decision, let me try to make my point by asking you to answer two questions:
    • What was Niles job title at Meridian -- what was he supposed to do? 
    • Why did Niles resign?
    Consider that Niles's LinkedIn "Biography" asserts that from:
    • November 2003 to September 2010, he was an "Equity Derivatives Sales Trader" with Casey Professional Services;
    • August 2010 to December 2010, he was "Managing Director Equity Derivatives" for Meridian Equity Partners;
    • December 2010 to January 2015, he was a "Partner/CEO" at New Albion Partners; and
    • currently "Director - Equity Derivatives" at Elevation LLC.