Garrity v. Credit Suisse Securities LLC

Background

James D. Garrity worked as an investment adviser and relationship manager for Credit Suisse from 2009 until December 2, 2015. His compensation included deferred equity and cash awards governed by award certificates and a master share plan. The award certificates provided that deferred compensation vested immediately if he was terminated without cause, but was canceled if he resigned.

Credit Suisse announced that it was closing its U.S. Private Banking unit and told relationship managers that it intended to characterize their departures as voluntary resignations. Garrity sent his manager a letter stating that he was resigning effective immediately and joined Morgan Stanley the next day. Credit Suisse later canceled 28,896 of his unvested shares and $55,994 in unvested cash awards.

Garrity began FINRA arbitration in December 2020. He alleged breach of contract, breach of the implied promise of good faith and fair dealing, fraud, unjust enrichment, and false or misleading statements in his employment-termination notice filed with FINRA. He sought $1,124,836 and asked that the notice be amended. The arbitration panel denied Credit Suisse’s motions to dismiss the claims as untimely and later awarded Garrity $1,347,719.09 in compensatory damages and pre-judgment interest, after a $34,150 set-off for damages the panel found Garrity owed Credit Suisse.

The Competing Court Cases

Garrity filed one action seeking confirmation of the arbitration award under the Federal Arbitration Act. Credit Suisse filed a separate action seeking to vacate the award. The court treated the competing requests like cross-motions for summary judgment, which asks whether there is any genuine dispute about an important fact and whether one side is entitled to judgment under the law.

Credit Suisse argued that the arbitration panel exceeded its authority and disregarded the law by refusing to dismiss Garrity’s claims as untimely. It relied on the Employment Dispute Resolution Program’s time limit and argued that the claims were barred under the laws of the District of Columbia, Maryland, or New York. Credit Suisse also argued that the panel exceeded its authority by awarding an extra-contractual remedy based on fairness rather than the parties’ contracts. It pointed to the panel’s refusal to order a change to Garrity’s FINRA termination notice.

Court’s Analysis

Judge Failla explained that judicial review of arbitration awards is extremely limited. Under the Federal Arbitration Act, a court generally must confirm an award unless one of the statute’s specific grounds for vacatur applies, such as corruption, arbitrator misconduct, or the arbitrators exceeding their authority. The court’s role is not to decide whether the arbitrators interpreted the contract correctly, but whether they had authority to decide the issue and provided at least a minimally plausible basis for their decision.

The court held that the panel had authority to decide whether Garrity’s claims were timely. Both parties had submitted that issue to arbitration, and the panel had considered the parties’ arguments, contracts, legal authorities, and other materials. The court found no evidence that the panel considered an issue barred by law or the parties’ agreements, or that it knowingly and deliberately ignored controlling law.

The court also held that the panel had not exceeded its authority in making the award. The arbitration agreement did not require the panel to amend Garrity’s FINRA termination notice before awarding monetary damages. The court found that the award had at least a minimally plausible basis in the evidence, including testimony about industry compensation practices and a detailed valuation of Garrity’s canceled shares. The court therefore declined to set aside the award merely because Credit Suisse disagreed with the panel’s reasoning or remedy.

Disposition

The court granted Garrity’s motion for summary judgment confirming the award. It directed the Clerk of Court to enter judgment in Garrity’s favor for $1,347,719.09, with pre-judgment interest accruing from the date of the award through the opinion’s date at the statutory rate and post-judgment interest accruing at the statutory rate. The court denied Credit Suisse’s cross-motion for summary judgment seeking to vacate the award. The court directed that the opinion be docketed in both cases, terminated the pending motions, and closed both cases.