In June 2011, an arbitration panel of the Financial Industry Regulatory Authority, Inc. (“FINRA”) in New York awarded compensatory damages of $493,906, plus costs, to a high yield trader formerly employed by respondent Citigroup Global Markets, Inc. (“Citigroup Global Markets” or “CGMI”), for breach of an implied contract to pay the trader a bonus for 2008. Sabri v. Citigroup Global Markets, Inc., Case No. 09-01121 (June 9, 2011).
Citigroup Global Markets, Inc. is a subsidiary of Citigroup Inc.
The Sabri arbitration award is a positive development for, among others, traders or brokers whom Citigroup Global Markets or other financial services firms fired in late 2008 or early 2009 without paying the traders or brokers any bonuses for 2008.
In Sabri, the claimant, Yasir A. Sabri, successfully maintained that Citigroup Global Markets, through its words or its course of conduct, implicitly agreed to pay to the claimant a bonus for 2008. In November 2008, CGMI terminated the claimant’s employment. CGMI, in contravention of the parties’ agreement, refused to pay to the claimant a bonus for the ten-plus months that the claimant worked for CGMI in 2008.
The claimant in Sabri was a high yield trader who joined Citigroup Global Markets in July 2005. In the FINRA arbitration, the claimant brought causes of action for quantum meruit and unjust enrichment against CGMI for failing to pay, to the claimant, a bonus for work performed by him in 2008. The claimant sought damages of about $750,000 from CGMI on his quantum meruit and unjust enrichment claims.
In the Sabri arbitration, Citigroup Global Markets unsuccessfully argued that any payment by CGMI to the claimant of a bonus for 2008 was solely within CGMI’s discretion. The Sabri panel, flatly rejecting CGMI’s stance, awarded, to the claimant, compensatory damages of $493,906, plus costs. The arbitration award specified that these compensatory damages included statutory interest for a 28-month period.
The Sabri arbitration award is based on at least two well-established principles which I have discussed in two recent articles, linked here and here. First, New York state courts, the Second Circuit, and federal district courts sitting in New York have determined, in numerous lawsuits by professionals in the financial industry or in other fields, that the course of dealing between the parties evinces an implied promise that yearly or semi-yearly bonus payments are a part of the plaintiff’s compensation.
Second, FINRA, NASD, and NYSE panels predominantly have found that discharged employees are entitled to full or proportionate bonuses for a previous year or years’ work, despite employers’ assertions that the terms of employment-related documents make such bonuses wholly discretionary.
If you are a professional who suspects that your former employer is unlawfully refusing to pay you a bonus or incentive compensation owed to you and you live in the New York City area, call Attorney David S. Rich at (212) 209-3972.