Nixon Peabody wins round in multimillion-dollar fight with ex-partners
9/30/20 REUTERS LEGAL 22:48:12
Copyright (c) 2020 Thomson Reuters
David Thomas
REUTERS LEGAL
September 30, 2020
A New York state judge sided with Nixon Peabody on Wednesday in a fight with five of its former partners, rejecting their bid to force the firm to mediate their multimillion-dollar compensation claims.
The one-page ruling from New York Supreme Court Justice Jennifer Schecter means plaintiffs Thomas Gaynor, Abigail Reardon, Jinjian Huang, Stephen Reil and Maria Swiatek are likely stuck arbitrating their dispute with Nixon Peabody.
The firm, which has sought to claw back bonuses of at least $100,000 it gave the partners months before they defected to DLA Piper in July 2019, struck a confident tone in a statement on the ruling.
"This was a pointless detour and simply the most recent effort to cause delay," the firm said. "We look forward to proceeding with the arbitration and ultimately having our former colleagues comply with their partnership obligations."
The plaintiffs accused Nixon Peabody of trying to railroad them by not mediating their bonus dispute first. The firm countered that it made efforts to mediate, but the plaintiffs insisted on having an in-person session during the pandemic. Nixon Peabody then sought to move the dispute to arbitration, which the plaintiffs have challenged as overly costly.
Schecter in her ruling found that Nixon Peabody's partnership agreement "makes clear that the arbitrator would resolve disputes" around the mediation process.
Her ruling comes 15 days after the ex-Nixon Peabody partners sued the firm in New York state court, asserting the firm used an overly restrictive partnership agreement to "punish" departing lawyers.
Although the plaintiffs accused the firm of not paying them millions of dollars in wages, equity and capital, and maintaining an unenforceable partnership agreement, the lawsuit was directed to the question of mediation and did not bring compensation or partnership claims directly. As a result, neither Nixon Peabody nor Schecter have addressed them in the litigation.
Andrew Celli, Jr., a partner at Emery Celli Brinckerhoff Abady Ward & Maazel who is representing the plaintiffs, said they would continue to press their claims against Nixon Peabody.
"Today, the court made clear that a New York arbitrator should determine whether Nixon Peabody did or didn't breach its obligation to mediate under New York law," Celli said in a statement. "While we would obviously have preferred to have had the court answer that question in the affirmative for itself, we look forward to the day when our contractual rights and New York's rules of ethics are vindicated by a fair-minded neutral."
A Nixon Peabody spokesman said the firm paid the ex-partners all they were owed.
The case is Thomas E. Gaynor, et al., v. Nixon Peabody LLP, Supreme Court of the State of New York, County of New York, No. 654451/2020.
For plaintiffs: Andrew G. Celli Jr. and Samuel Shapiro of Emery Celli Brinckerhoff Abady Ward & Maazel
For defendants: Richard McGuirk of Nixon Peabody
Note: This story has been updated with comment from plaintiffs' attorney.
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