Facts

Claimants Michael Grable and Evan Herring were employed as brokers for Bank of America Corp. and/or Bank of America Investment Services Inc. (bank), in the Private Client Services (PCS) department. The bank began restructuring the PCS department. Claimants filed a complaint against the bank, and three management employees, Kyle Delaney, Michael Conn and Alan Rappaport. Their claims were heard by an NASD arbitration panel.

CONTENTIONS:
Claimants asserted two distinct lines of legal injury. They first asserted injuries arising from the respondent's implementation of the restructuring of PCS, and the way they handled the repercussions that followed. The second dealt with sums of money allegedly due to claimants in unpaid compensation. They alleged breach of contract, breach of the covenant of good faith and fair dealing, fraud, negligent misrepresentation, interference with contract, interference with prospective business advantage, violations of the Labor Code, and accounting. Respondents denied any wrongdoing or any liability. They also asserted various affirmative defenses.

Damages

On the causes of action for breach of contract, breach of the covenant of good faith and fair dealing, for respondent's failure to pay commissions, fees, expenses and damages, subject to proof, Grable sought over $449,000 and Herring sought over $58,000. On the causes of action for breach of contract, breach of the covenant of good faith and fair dealing, for respondent's failure to pay the claimants' Equity Incentive Program, subject to proof, Grable sought over $573,000 plus interest, and Herring sought over $3,000 plus interest. On the causes of action for breach of contract, breach of the covenant of good faith and fair dealing, for respondent's failure to pay Grable's stock options, subject to proof, Grable sought over $296,000. Claimants also sought an accounting on their claims. Further, Grable sought over $302,000 plus interest and Herring sought over $15,000 plus interest for a penalty of 30-days wages under Labor Code Section 203. For their causes of action for fraud, negligent misrepresentation, tortious interference with contract, tortious interference with prospective economic advantage, lost income and lost opportunities, claimants requested over $7,140,000. They also requested $15 million in punitive damages, pre-judgment interest, attorney fees, costs of suit, and any other relief deemed proper. Respondents requested denial of claimants' claims in their entirety, an award of their expenses, and any other relief deemed proper.

Result

During the arbitration hearings, the parties reached a stipulated agreement that the claimants were due $367,704 in commissions. Bank of America Corp. and Bank of America Investment Services Inc. were found jointly and severally liable for the stipulated $367,704 in commissions, plus $84,520 in interest until Oct. 31, 2006, and daily interest at a rate of $100.74 per day thereafter until payment is made in full. Bank of America Corp. and Bank of America Investment Services Inc. were found jointly and severally liable for $306,420 in "waiting time penalties." Bank of America Corp. and Bank of America Investment Services Inc. were found jointly and severally liable for $120,000 in attorney fees on these causes of action. Bank of America Corp. and Bank of America Investment Services Inc. were found jointly and severally liable for $482,754 for wrongfully withholding payment on claimants' Equity Incentive Plan, plus $108,620 in interest through Sept. 26, 2006, and daily interest at a rate of $132.26 per day until payment is made in full, but not for waiting-time penalties. Bank of America Corp. and Bank of America Investment Services Inc. were found jointly and severally liable for $120,000 in attorney fees on this cause of action as well. Bank of America Corp. and Bank of America Investment Services Inc. were found jointly and severally liable for $113,000 in discovery sanctions, and $20,000 in costs. The individual respondents were not held liable for any of the awards. Claimants' stock option claim, interference claim, and misrepresentation claim were decided against them. The claimants' request for punitive damages was denied.

Other Information

Arbitrators were Paul F. Faberman, F. Conger Fawcett and James D. Murray.