Case 5.1 Daniel Ryan v. Kellogg Partners Institutional Services No. 37 2012 N.Y. LEXIS 545 (NY Court of Appeals) The issue is whether the bonuses promised to the employee were an integral component of his employment contract or discretionary. READ, J. In early 2003, plaintiff Daniel Ryan was approached about leaving his employment with the brokerage firm where he had worked since 2000 to join Kellogg Partners Institutional Services, LLC (Kellogg), a broker-dealer then being formed to trade stocks for institutional investors. In 2002, Ryan earned roughly $270,000, consisting of salary and a bonus for work performed ed approximately in 2001, paid out in February 2002; for the first 6 months of 2003, he earned approxi $195,000 in salary and a bonus for work performed in 2002, paid out in February 2003. Ry tified that he told Kellogg's managing partner that he wanted a package of $350,000" to ch jobs. According to Ryan, the managing partner assured him this would not be a problem." asked him if he would accept his compensation for calendar year 2003 split into two parts, sisting of a salary of $175,000 and a guaranteed bonus of $175,000, which would be paid out late 2003 or early 2004. Ryan agreed, and began work at Kellogg on July 14, 2003, as head floor broker. On June 21, 2003, before starting his employment at Kellogg but after he accepted the job, Ryan signed an employment application. A section captioned "Acknowledgments" declares a follows: "I understand that [Kellogg Group, LLC] and I fully expect that I shall have a successful career with the firm, but I further understand that is neither an offer of employment nor employment itself, nor any of (Kellogg Group, LLC's) policies and procedures, carry any guarantee of employment for any length of time and that my employment, compensation and benefits are at will and can be terminated, with or without cause or notice, at any time, at the option of [Kellogg Group, LLC) or myself." Similarly, Kellogg Group LLC's employee handbook includes a "Receipt" signed by Ryan on February 18, 2004, which states that "I understand that Kellogg Group LLC is an 'at will employer and as such() employ ment with Kellogg Group LLC is not for a fixed term or definite period and may be terminated at the will of either party, with or without cause, and without any prior notice. No supervisor or other representative of the company (except the President) has the authority to enter into any agreement for employment for any specified pe- riod of time, or to make any agreement contrary to the above. In addition, I under stand that this Handbook states Kellogg Group LLC's policies and practices in effect on the date of publication. I understand that nothing contained in the Handbook may be construed as creating a promise of future benefits or a binding contract with Kellogg Group LLC for benefits or any other purpose." Nenogg Group LLC for benefits or any other purpose." Kellogg did not begin trading operations on the floor of the New York Stock Excha until October 2003. Ryan received an extra two weeks' pay in late 2003, but no other bal payment was forthcoming. According to Ryan, he and the managing partner had "a few conven sations" about this. Then in February 2004, the managing partner asked Ryan if he would be will ing to forego the agreed-upon bonus for a year, and accept it for work performed in 2004 instead to be paid out in late 2004 or early 2005. The managing partner gave as his reason that Kellopu had started up "a little bit later than anticipated. Ryan replied that he "wasn't very happy about it," but would "take one for the team and take the guarantee for the 2004 year instead of 2003." At the time, business at Kellogg was "steadily improving, picking up new accounts." Ryan claims to have discussed with the managing partner "many times" in late 2004 and early 2005 that he was "waiting for (his] bonus." The managing partner put him off, telling him to [r]elax" and reassuring him that Kellogg was "going to get to) the bonuses soon." Then, on February 3, 2005, the managing partner offered Ryan a $20,000 bonus for work performed in 2004. Ryan rejected this overture as unacceptable. Five days later, on February 8, 2005, the managing partner fired Ryan at a meeting also attended by the chief compliance officer. Ryan was handed a separation agreement, which provided for a payment to him of $20,000 and included a release of Kellogg from any and all claims or causes of action. Ryan refused to sign this document. On March 9, 2005, Kellogg filed a Uniform Termination Notice for Securities Industry Registration (Form U-5) with the National Association of Securities Dealers, Inc. (NASD), in: dicating that Ryan's employment had been terminated for cause; namely, insubordination and disparagement of Kellogg. The managing partner testified that he learned before February 8, 2005, that Ryan had made derogatory comments about him and the firm subsequent to February 3, 2005, but chose not to mention this at the termination meeting. Instead, he "spoke about the importance of chemistry in the firm and how (he) did not feel that (his) vision of what them was all about and where it was going was consistent with [Ryan's) vision." being accused of bad-mou testified that he was "shocked" when he learned the day after he was fired that he was cused of bad-mouthing Kellogg. While the managing partner and the chief compliance urged him to sign the separation agreement so as to avoid the filing of a negative U-5 Ryan declined because $20,000 "was a fraction of what he was owed," and he did not Citfair that (he) was being pressured to sign something so (Kellogg] wouldn't put some- no false" on the Form. For his part, the managing partner countered that he just "wanted to ve Ryan) the opportunity to resign" rather than "have on his record that he was terminated." In a complaint filed May 26, 2005, Ryan alleged, as relevant to this appeal, causes of action for failure to pay wages in violation of Labor Law SS 190-198 and breach of contract. Supreme Court conducted a jury trial in the spring of 2009. The judge submitted Ryan's Labor Law and contract claims to the jury, which unanimously found that Kellogg had breached an oral agree- ment to pay Ryan a guaranteed bonus of $175,000. ho The parties agree that Ryan worked at Kellogg as an at-will employee with an annual base salary of $175,000; they also agree that Ryan and the managing partner reached an oral agree- ment about how much Ryan would be paid in 2003 if he joined Kellogg-i.e., there was no writ- ing memorializing Ryan's bargained-for compensation. What is contested is whether, as a matter of fact, this job offer included a guarantee to pay Ryan a non-discretionary bonus of $175,000 in late 2003 or early 2004 in order to attract him from an established securities firm to Kellogg, a start-up venture at the time; and whether the managing partner in early 2004 asked for and re- ceived Ryan's consent to delay this bonus payment for a year until late 2004 or early 2005 on the understanding that Ryan would remain at Kellogg through 2004. Ryan testified that this is what happened; the managing partner claimed that Ryan was making it all up. The jurors clearly believed Ryan. Kellogg now pursues two principal lines of argument to convince us that we should nevertheless reverse the Appellate Division's order and dismiss the complaint or, alternatively, order a new trial: first, that there was insufficient evidence to sup- port the jury's verdict because statements in the employment application and employee hand- book negate Ryan's alleged expectation of or entitlement to a guaranteed or non-discretionary bonus; second, that the oral agreements respecting the bonus, if, in fact, entered into by the par- ties (which Kellogg strenuously denies), are unenforceable because the General Obligations Law mandates that any such agreements would have to have been reduced to a writing by an agent of Kellogg in order to be valid. The "Acknowledgments" section of the application, signed by Ryan on June 21, 2003, con- firms his understanding that he was going to work at Kellogg as an at-will employee-i.e., that he vind ties (whichi Melug! mandates that any su firms his understandin was not guaranteed emplov uously unles), are unenforceable because the General Obligations Law ut, Cileu Into by the par- hat any such agreements would have to have been reduced to a writing by an agent of Kellogg in order to be valid. Acknowledgments" section of the application, signed by Ryan on June 21, 2003, con- sunderstanding that he was going to work at Kellogg as an at-will employeei.e., that he quaranteed employment for any period of time, and that his employment, compensation and benefits were nefits were subject to termination by either party at any time and for any reason or for no con at all. But in this lawsuit, Ryan does not assert or rely on any alleged right to continued ployment, compensation or benefits from Kellogg; rather, he asks to be paid the compensa- that he says he was promised by Kellogg at the outset of his employment in 2003, and again in early 2004, in exchange for work that he thereafter performed in reliance on these promises. Nothing in the application allows Kellogg to escape paying an at-will employee such as Ryan the remuneration he claims to have earned before he was fired. Similarly, the "Receipt" in the employee handbook, signed by Ryan on February 18, 2004, only confirms his understanding that he was an at-will employee; specifically, Ryan acknowl- edged that his employment at Kellogg Group, LLC was not for a fixed term or specified period of time and might be "terminated at the will of either party, with or without cause, and without any prior notice" unless Kellogg Group, LLC's President agreed otherwise. The handbook does not say that oral compensation agreements are unenforceable, or mention bonuses at all, although there is no dispute that Kellogg awarded annual bonuses. In short, there are no statements in the handbook that bar Ryan's recovery on his breach-of-contract and Labor Law claims for compen- sation alleged to be due and owing him. Next, assuming Kellogg did not waive any defenses to Ryan's breach-of-contract and Labor Law claims, the statutory provisions he adduces specify that certain kinds of agreements must be expressed in a signed writing in order to bind the party against whom enforcement is sought- agreements incapable of being performed within a year of their making. The oral agreements ved by Ryan to the jury, though, do not fit into any of these categories; therefore, Kellogg Hot successfully defend against their enforcement on the ground there was no signed writing. Ryan testified that he left his well-paying job at another securities firm to join Kellogg in upon the managing partner's promise that his compensation package for 2003 would Ryan testi reliance upon the me Hlationship and Procedure might assert a future FELA claim; (2) the employer had knowledge of the plaintife FELA claim or of the fact that he sustained a work-related injury for which he mi file a FELA claim: (3) the employer terminated the plaintiff's employment; and causal connection exists between the protected activity or injury and the terminat Once a plaintiff makes this showing the burden shifts to the employer to articulate al mate, non-retaliatory reason for the termination. If the employer articulates such a reason presumption of discrimination "simply drops out of the picture." At that point, the plaintiff the full burden of showing that the employer acted illegitimately, which he may satisfy by da! onstrating by a preponderance of the evidence that the employer's proffered reason is The district court found Mr. Hysten's claim to be fatally flawed because: (1) he failed in establish a prima facie case of retaliation: and (2) he did not offer evidence demonstrating the BNSF's proffered reason for termination was pretextual. We may uphold a district court's jude ment on any ground for which there is a record to permit conclusions of law. Mr. Hysten does not dispute that BNSF has offered a legitimate, non-retaliatory reason for his termination: specifically, his alleged threats of violence in the workplace. The burden, a result, rests with Mr. Hysten to offer evidence showing that this explanation was "mere pretext." "An articulated motivating reason is not converted into pretext merely because, with the benefit of hindsight, it turned out to be poor business judgment." Mr. Hysten first argues that language in the dismissal letter-specifically, the statement that "li)n assessing discipline, consideration was given to your personal record-could lead a reason able jury to conclude that BNSF's purported reason for dismissing Mr. Hysten was pretextual. Even assuming that Mr. Davison was aware that Mr. Hysten was previously dismissed in connection with a personal injury, the statement in the dismissal letter is insufficient to establish that Mr. Hysten's violent threat was merely a pretextual ground for his dismissal. Although Mr. Hysten's personal record includes the 1999 dismissal that precipitated his FELA claim, it also includes 120 total demerits, which Mr. Hysten received while employed by BNSF. There is no evidence in the record that the dismissal letter's general statement regarding Mr. Hysten's per sonal record" somehow refers to the 1999 injury-related dismissal, as opposed to the numerous other infractions for which Mr. Hysten was disciplined. As such, Mr. Hysten offers nothing mort than mere conjecture that the reference to his personal record" was meant to refer to the 19 dismissal that led to his FELA-related claim. For the foregoing reasons, we AFFIRM the district court's order granting summary juos ment in favor of BNSF. Judgment for Burlington Northern. Case Commentary The 10th Circuit ruled that Hysten's dismissal was justified because he had received num demerits. Case Questions 1. Are you in agreement with the court's decision? 2. Why would Hysten believe his wrongful actions would be overlooked? 3. Is there an ethical resolution to this case