ADDITIONAL CASES Credit Suisse Securities (USA) LLC, Petitioner v. James D. Garrity, Respondent; 23 Civ. 1830 (KPF). OPINION AND ORDER On February 2, 2023, a FINRA arbitral panel issued an award (the “Award”) in the matter of James D. Garrity v. Credit Suisse Securities (USA) LLC, FINRA Case No. 20-03957 (the “Arbitration”). The parties to the Arbitration then filed competing lawsuits in this District seeking to confirm, or to vacate, the Award; both cases were assigned to this Court, and because they are effectively mirror-images of each other, the Court refers only to the earlier-filed case except where explicitly noted. Now pending before the Court are Petitioner James D. Garrity’s motion to confirm the Award, and Respondent Credit Suisse Securities (USA) LLC’s (“Credit Suisse”) competing motion to vacate the Award. For the reasons set forth in the remainder of this Opinion, the Court grants Petitioner’s motion to confirm and denies Respondent’s motion to vacate. BACKGROUND1 A. Factual Background 1. Petitioner’s Employment and Compensation Respondent Credit Suisse is a registered broker-dealer and an indirect subsidiary of Credit Suisse Group AG (“CSGAG”). (Resp. 56.1 31). Credit Suisse formerly offered financial services in the United States to ultra-high and high net worth individuals and family offices through its Private Banking unit (“PB-USA”). (Id. 33). As a broker-dealer, Respondent is a member of the Financial Industry Regulatory Authority (“FINRA”). (Pet. 56.1 2). Petitioner James D. Garrity was an investment advisor (“Relationship Manager” or “RM”) employed by Credit Suisse in PB-USA from 2009 until December 2, 2015. (Id. 3). The parties’ dispute arises from Respondent’s cancellation of Petitioner’s deferred compensation when his employment at Credit Suisse ended. As is common in the financial services industry, Petitioner was required to defer a portion of his monthly compensation, primarily in the form of equity and cash awards (“Awards”). (Pet. 56.1 4). Each Award was governed by an Award Certificate and the CSGAG Master Share Plan (the “Plan”). (Id.). Pursuant to Section 4 of the Award Certificate, Petitioner’s deferred compensation vested immediately in the event of termination without cause and was cancelled immediately in the event of resignation. (Id. 5). On October 20, 2015, Credit Suisse announced that it was closing PB-USA and terminating its non-RM workforce. (Pet. 56.1 6). Credit Suisse concurrently announced that it had entered into an “exclusive recruiting agreement” to transition RMs to Wells Fargo and indicated that RMs had until December 7, 2015, to commit to Wells Fargo. (Id. 6; Resp. 56.1 6). The next day, Credit Suisse notified the RMs that it intended to characterize each of their terminations — which, it bears noting, were precipitated by Credit Suisse’s closure of their division — as a “voluntary resignation,” either to join Wells Fargo pursuant to the “exclusive recruiting agreement,” or to seek employment with another third party. (Pet. 56.1 7). Once an RM departed, any unvested deferred awards would be cancelled immediately. (Resp. 56.1 7). However, Credit Suisse RMs who joined Wells Fargo would receive an “Onboarding Award,” which mirrored the value amount of their cancelled deferred awards. (Id.). If an RM did not join Wells Fargo, the Onboarding Award was not available. (Id.). On December 2, 2015, Petitioner sent an email to his manager, attaching a letter informing the manager of Petitioner’s “resignation effective immediately.” (Resp. 56.1 9). The next day, Petitioner joined Morgan Stanley. (Pet. 56.1 8). As required by FINRA, Credit Suisse subsequently filed a Uniform Termination Notice for Securities Industry Registration (“Form U-5″), notifying FINRA that Petitioner’s employment at Credit Suisse had ended and that his termination had been “voluntary.” (Resp. 56.1
99, 100). Thereafter, on December 30, 2015, Credit Suisse notified Petitioner that his deferred compensation awards had been cancelled retroactive to December 3, 2015. (Id. 97). Petitioner’s 28,896 unvested shares were cancelled, as was $55,994 in unvested non-equity cash awards. (Id. 98). On December 2, 2020, Petitioner commenced the Arbitration, alleging claims based upon Credit Suisse’s cancellation of Petitioner’s deferred compensation, including breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, unjust enrichment, and false and misleading statements in Petitioner’s Form U-5. (Pet. 56.1 11). Petitioner claimed $1,124,836 in damages and requested that his Form U-5 be amended to accurately reflect his termination. (Id.; Resp. 56.1 121). Petitioner, a resident of Maryland, filed with FINRA’s New York office and selected an arbitration in New York, where his branch (as well as Credit Suisse’s U.S. wealth management business and U.S. headquarters) was located. (Pet. 56.1 12; Resp. 56.1 12). FINRA administratively assigned the arbitration to its District of Columbia office. (Id.). 2. The Arbitration Petitioner and Respondent each signed and submitted a Uniform FINRA Arbitration Submission Agreement on December 2, 2020, and January 22, 2021, respectively, agreeing that: The undersigned parties (“parties”) hereby submit the present matter in controversy, as set forth in the attached statement of claim, answers, and all related cross claims, counterclaims and/or third-party claims which may be asserted, to arbitration in accordance with the FINRA By-Laws, Rules, and Code of Arbitration Procedure. The parties agree to abide by and perform any award(s) rendered pursuant to this Submission Agreement. The parties further agree that a judgment and any interest due thereon, may be entered upon such award(s) and, for these purposes, the parties hereby voluntarily consent to submit to the jurisdiction of any court of competent jurisdiction which may properly enter such judgment. (Pet. 56.1 16). Petitioner submitted his Statement of Claim on December 2, 2020. (Pet. 56.1 16). In it, he asserted that Credit Suisse had breached the terms of his Award Certificates when it failed to vest his deferred compensation, because Petitioner had been involuntarily discharged, whether actually or constructively. (Resp. 56.1 107). Respondent submitted a Statement of Answer and Counterclaims on January 22, 2021, denying the substantive allegations and asserting defenses, including that Petitioner’s action was barred by the applicable statute of limitations. (Pet. 56.1 18; Resp. 56.1 109). Petitioner submitted his Statement of Answer and Affirmative Defenses to the Counterclaims on February 11, 2021. (Pet. 56.1 19). On March 16, 2021, FINRA appointed Marni E. Byrum, Julius P. Terrell, and Martin V. Franks (collectively, the “Panel”), who subscribed and swore to the oath of arbitration as required by law. (Pet. 56.1 20). On April 22, 2021, during the initial pre-hearing conference, the parties expressly accepted the composition and authority of the Panel. (Id.). On December 10, 2021, prior to presentation of Petitioner’s case, Respondent moved to dismiss all of Petitioner’s claims, asserting that they were time-barred. (Pet. 56.1 20). In particular, Respondent argued that Petitioner, as a former employee of Credit Suisse, was required to arbitrate his claims pursuant to the Credit Suisse’s Employment Dispute Resolution Program (“EDRP”). (Resp. 56.1 21). As relevant here, the EDRP requires that a request for arbitration be “filed within six months of the time of the complained of action or actions took place, or during such longer period as is allowed by any statute of limitations applicable to the Employment-Related Claim in question,” or the employee “will forfeit any right to make use of the Program and will be foreclosed from bringing an action in any court[.]” (Id.). Having been filed five years after the alleged breach of contract, Respondent argued that Petitioner’s claims were barred by incorporation of the applicable statute of limitations of the District of Columbia, Maryland, or New York. (Id.).2 Petitioner opposed Respondent’s motion to dismiss on multiple grounds, including that it violated FINRA’s Rule 13504 (which, generally speaking, prohibited motions to dismiss prior to the conclusion of the claimant’s or counterclaimant’s case in chief); that statutes of limitations are generally inapplicable in arbitration; and that, to the extent that any statute of limitation was applicable, New York’s six-year statute of limitations applied to the claims. (Pet. 56.1 22). On March 28, 2022, the Panel denied Credit Suisse’s Motion to Dismiss with prejudice. (Pet. 56.1 23). On June 28, 2022, Petitioner and Respondent submitted pre-hearing briefs. (Resp. 56.1 25). The arbitration proceedings took place by Zoom videoconference over seventeen days, beginning on August 15, 2022, and concluding on December 2, 2022. (Pet. 56.1 25). The parties called or designated prior testimony from sixteen witnesses, including three experts, and introduced hundreds of exhibits. (Id. 26). Thereafter, the Panel took closing arguments and accepted post-hearing briefs from both parties. (Id. 27). On November 28, 2022, after Petitioner’s case in chief concluded, Respondent filed a letter and memorandum of law pursuant to FINRA Rule 13504(a)(8) and (b), seeking the Panel’s permission to renew or reargue its motion to dismiss. (Resp. 56.1 24). Petitioner orally opposed the application, arguing that the Panel could not entertain any motion that had already been denied with prejudice. (Id. 116). The Panel subsequently denied the motion to file the renewed motion to dismiss, but authorized Respondent to submit any new arguments in support of its motion with its post-hearing submission. (Id.
