Ex-COO Sues Shutts & Bowen Over Unpaid Bonus After He Decamped for Competitor
Frederick O'Malley argued his annual bonus, which averaged just shy of $200,000 the last five years, was part of his contracted compensation package and not discretionary.
June 22, 2020 at 07:29 PM
4 minute read
The longtime chief operating officer at Shutts & Bowen has sued to collect a 2019 bonus he alleges the Am Law 200 firm refuses to pay him after he resigned to take a job at competitor Carlton Fields.
Shutts & Bowen won't pay him the bonus, Frederick O'Malley alleges in a complaint filed June 16, "to punish him solely because he resigned from his at-will position in January 2020, and started working at another law firm."
The ex-COO alleges his 2019 bonus would have been substantially more than the $200,000 bonus he was paid for 2018, because Shutts & Bowen had "just completed the most successful year in the firm's history," and his performance was "exemplary by all accounts."
In 2019, the Am Law 200 firm posted its 21st year in a row of revenue and profit growth. Profits per equity partner hit $937,000 in 2019, up 7.3% from 2018.
Jonathan Cohen, a Shutts & Bowen partner in Miami who is the firm's general counsel, said in an email that O'Malley agreed to submit any employment disputes to confidential binding arbitration. Cohen said the firm will have no further comment on the suit.
However, O'Malley's attorney said in an interview Monday that his client never signed an arbitration agreement.
"This will not be going to arbitration," said Steven Schwarzberg, a solo practitioner in West Palm Beach.
As alleged in the complaint filed in Circuit Court of the Fifteenth judicial Circuit in Palm Beach County, O'Malley started working as chief financial officer at Shutts & Bowen in 2007, and his title was later changed to COO. He alleged that his compensation was a combination of base salary and bonus "in a range that would approximate [his] entire salary."
Beginning in 2017, O'Malley alleges, the firm informed him that instead of giving him annual salary increases, those increases would be rolled into his annual bonus. He said his annual bonuses averaged $188,000 over the last five years.
"Payment of the annual bonus was an express term of his employment, to which the firm was contractually bound … It did not have the discretion to dishonor that obligation by paying him a zero bonus," the complaint alleges.
O'Malley alleges he resigned Jan. 2, effective at the end of the month, and he inquired on that day, and again Jan. 7, about the status of his bonus. On Jan. 8, however, the firm's executive committee informed him that his resignation was being accepted immediately, he alleges.
It was not until May 14 that the executive committee notified O'Malley that it had decided against paying him a bonus, contending it is discretionary and not deferred compensation.
O'Malley said the firm never communicated to him that if he resigned to take a job with another firm that he would forfeit his bonus.
"If Mr. O'Malley ever thought that the firm would dishonorably renege, he would have waited until after he was paid the bonus before resigning," the petition alleges.
He adds that Shutts & Bowen punished him "out of spite and malice, depriving him of what he had worked hard to earn and which was rightfully his."
He brings breach of oral contract, unpaid wages, promissory estoppel and quantum meruit causes off action against the firm.
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