Alphonse Fletcher Jr.'s 1991 complaint against Kidder Peabody

8/7/2019 Alphonse Fletcher Jr.'s 1991 complaint against Kidder Peabody

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1Ei!I. C 1 9 9 -Su mmo n s without !l>4otice. Supreme Coun. , 87 3 BY JULIUS BLUMBERG. INC ..

. • . , ' I' Personal or Substituted Service. 8-88 PUBLISHER. NY C 100 ' 3

&uprttttt Cltnurt nf t ~ &tatt nf Ntltt InrkIndex No.

Cltnuutg nf NEW YORKPlaintifI designates

New York

County as the place of trialALPHONSE FLETCHER, JR. ,

Th e basis of the venue is

A ll P a r t i e s ' ResidencePlaintiH

against

&umttUlun

KIDDER PEABODY & COMPANY, INC., PlaintifI resides at

330 Eas t 38th S t r ee t

New York, NYDefendant

County of New York

To the above named Defendant

inu arr ~ 2 r r h ! J 5ummnnrb to answer th e complaint in this action and to serve

a copy of your answer, or, ifthe complaint

isno t

servedwith this summons, to

servea notice

ofappearance, on the Plaintiff's A ttorney(s) within 20 days after the service of this summons, exclusive

of the day of service (o r within 30 days after the service is complete if this summons is not personally

delivered to you within the State of New York); and in case of your failure to appear or answer, judg-

ment will be taken against yo u by default for the relief demanded in the complaint.

Dated, New York, New YorkJune 13, 1991

Defendant's address:A ttorney(s ) for Plaintiff

Kidder Peabody & Co. , Inc . CHADBOURNE & PARKEPost OHice Address

10 Hanover SquareNew York, New York 10005 30 Rockefe l l e r P laza

New York, New York 10112

(212) 408-1142



SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

--------------------------------------xALPHONSE FLETCHER, JR. ,

P l a i n t i f f ,VERIFIED COMPLAINT

-and-

KIDDER PEABODY & COMPANY, INC.,

Defendant.

--------------------------------------x

P l a i n t i f f ALPHONSE FLETCHER, JR. , by h is a t to rneys ,

Chadbourne & Parke , 30 Rockefel ler Plaza,New

York,New

York,

10112, br ings t h i s ac t ion aga ins t defendant , Kidder Peabody &

Company, Inc . ("Kidder") , and complains and a l leges as fo l lows:

THE PARTIES, JURISDICTION AND VENUE

1. Pl a i n t i f f Alphonse Fle tcher , J r . ("Mr. Fle tcher")

re s ides a t 330 Eas t 38th St ree t , New York, New York. Mr.

Fle tche r i s cur ren t ly an owner and th e ch ie f execu t ive of f i c e r of

Fle tche r Asset Management, Inc . From November 1989 to March 18,

1991, Mr. Fle tcher was employed by Kidder . Mr. Fle tche r i s

black .

2. Defendant Kidder i s a corporat ion engaged in th e

s e c ur i t i e s bus iness with i t s pr inc ip le o f f i ce a t 10 Hanover

Square, New York, New York.

3. Mr. Fle tcher i s 25 years old . He graduated in

1983 from Water ford High School in Connect icu t , where he was

c l a s s pres iden t and champion of an i n t e r n a t i o n a l o ra t o r i c a l

con tes t . He en tered Harvard Col lege in 1983 and was c ross



en ro l l ed a t th e Massachuse t t s I n s t i t u t e o f Technology. While a t

Harvard he was e l ec t ed c l a s s p res i d en t and played v a r s i t y

fo o t b a l l . He _graduated in 1987 with a degree in app l ied

mathemat ics .

BACKGROUND

4. From 1987 to November 1989, Mr. Fl e t ch e r was

employed by Bear s t ea rns & Co. ("Bear s t e a rn s " ) . While a t Bear

s t e a rn s , Mr. Fl e t ch e r sp ec i a l i zed i n t h e a rea o f equ i ty

a rb i t r a g e . In approximate ly October 1989, Mr. Fl e t ch e r

determined to l eave Bear s t ea rns and to seek employment a t

ano ther se c u r i t i e s f i rm. Kidder was among th e f i rms wi th which

Mr. Fl e t ch e r sought employment.

5. In o rd e r to induce Mr. Fle tcher to accep t

employment with it, Kidder agreed to ce r t a in employment te rms.

S p e c i f i c a l l y , on o r about November 8, 1989, Mr. P e t e r Kle in , a

managing d i r ec to r o f Kidder , agreed to pay Mr. Fl e t ch e r , as h is

t o t a l year ly compensat ion , no l e s s than 20% and up to 25% of th e

p r o f i t s , inc lud ing tax b e n e f i t s , genera ted by Mr. F le t ch e r ' s

t r ad ing a c t i v i t i e s . It was agreed t h a t Mr. F le t ch e r ' s t o t a l

compensat ion would c o n s i s t o f sa l a ry and bonus , and t h a t a l l

bonus payments fo r 1990 would be pa id no l a t e r t han e a r l y 1991.

It was fu r t h e r agreed t h a t whether Kidder would pay th e minimum

o f 20% of p r o f i t s o r some ad d i t i o n a l amount up to 25% o f p ro f i t s

would depend, in s u b s t a n t i a l p a r t , on th e success o f Mr.

F l e t c h e r ' s t r ad i n g a c t i v i t i e s .

2



6. Based on th e agreement descr ibed above, Mr.

Fle tcher commenced employment with Kidder in November 1989. Mr.

Fle tcher proved to be an extremely hard-working, competent and

su ccess fu l employee. During 1990 he generated n e t t r ad ing

p r o f i t s fo r Kidder in excess o f $25,500,000 and was th e l ead ing

producer o f pro f i t s in Kidder ' s equi ty t rading depar tment .

7. When th e enormous success and pro f i t ab i l i t y o f Mr.

Fle tcher ' s t rading a c t i v i t i e s became apparent , Kidder r ea l i zed

t h a t pursuan t to i t s employment agreement with Mr. Fle tcher it

would be obl iga ted to pay him from $5 to $6.5 mil l ion fo r h is

t r ad ing a c t i v i t i e s . At a t ime unknown to Mr. Fle tcher b u t in no

even t l a t e r than October 1990, Kidder determined t h a t th e amount

it was obl iga ted to pay Mr. Fle tcher was simply too much money to

pay a young black man. Accordingly, Kidder ' s management began to

search fo r ways to decrease Mr. F le t ch e r ' s compensation. The

e f f o r t to decrease Mr. Fle tcher ' s compensat ion in a

discr imina to ry manner was led by Mr. F le t ch e r ' s supe r io r s , Thomas

Ryan, who i s a member o f a country c lub t h a t , on informat ion and

be l i e f , d i sc r i mi n a t e s on th e bas i s of race and r e l i g io n , and

Pe te r Klein. The e f f o r t was under taken with th e f u l l knOWledge

o f , and was condoned by, Kidder ' s management.

8. As p a r t o f Kidder ' s scheme to reduce Mr.

F l e t c h e r ' s compensation, on o r about October 1, 1990, Kidder

del ivered to Mr. Fle tcher a l e t t e r t h a t purported to confirm th e

v e rb a l employment agreement reached approximately one year

e a r l i e r , bu t t h a t , in f ac t , mate r i a l ly a l t e red th e t erms o f t h a t

3



agreement . While Kidder had agreed in November 1989 to pay Mr.

Fle tcher a l l o f h is 1990 compensation by ea r ly 1991, th e October

1, 1990 l e t t e ~ provided for the payment of only 50% of Mr.

Fle tcher ' s bonus compensation in ea r ly 1991 and purpor ted to

de fe r th e payment o f h is remaining bonus compensation fo r up to

eighteen months. Upon in format ion and b e l i e f , Kidder ' s proposed

d e f e r r a l of Mr. Fle tcher ' s compensation fa r exceeded th e defe r ra l

o f compensation appl ied to Kidder ' s o t h e r equi ty t r a d e r s , a l l o f

whom were white . Pursuant to th e October 1, 1990 l e t t e r , Kidder

was purport ing to withhold more than $2,000,000 o f Mr. Fle tcher ' s

compensation in d i r e c t v io l a t i o n of Mr. Fle tcher ' s employment

agreement with Kidder .

9 . The October 1, 1990 l e t t e r conta ined othe r onerous

prov i s ions t h a t were not p a r t of Mr. F le t ch e r ' s employment

agreement and which demonst rated t h a t Kidder had abandoned a l l

p r e t ex t o f deal ing with Mr. Fle tcher in a non-d iscr iminato ry

manner . For example, al though Mr. Fle tcher was to rece ive only

20¢ to 25¢ fo r every do l l a r of t rading pro f i t s , th e October 1 ,

1990 l e t t e r provided t h a t Mr. Fle tcher would have to pay fo r

t r ad ing los se s on a d o l l a r fo r do l l a r bas i s . The e f f e c t of t h i s

prov i s ion would have been t h a t Mr. Fl e t ch e r would be t r ad ing as

an employee fo r purposes of p r o f i t s b ut as a p r in c ip a l with

re spec t to los ses . On in format ion and b e l i e f , t h i s prov i s ion was

not app l ied to other employees of Kidder engaged i n t r ad ing

a c t i v i t i e s - - inc lud ing those whose ac t i v i t i e s en t a i l ed a

SUbstan t i a l ly higher degree of r i sk . Ins tead , it was to be

4



app l ied unique ly to Mr. Fle tche r , who was th e only black

profe s s iona l among 200 o r more profess iona l s in the 400 person

equ i ty t r ad ing depar tment headed by Ryan. The October 1 , 1990

l e t t e r madeit

c l e a r t h a t , because Mr. F le t ch e r ' s immediate

super io rs resen ted a young black man being paid more than they,

Kidder ' s management determined to p ut Mr. Fle tcher in h is place

by reducing h is l ev e l of compensation.

10. Because th e October 1, 1990 l e t t e r f a i l ed t o

conform wi th Mr. F le t ch e r ' s employment agreement with Kidder , Mr.

Fle tche r proper ly and unders tandably re j ec t ed it. In o rd e r to

demonst ra te t h a t he was never the less in te res ted in a long- te rn

r e la t ionsh ip with Kidder and in shar ing in Kidder ' s f a i l u re s o r

successes in th e same proport ion as o t h e r Kidder employees, Mr.

Fl e t ch e r o f f e red to d e fe r h is 1990 bonus compensat ion to th e same

ex ten t such defe r ra l would be app l ied to o t h e r employees under a

f i rm-wide d e f e r r a l plan .

11. Rather than accep t Mr. F le t ch e r ' s reasonab le o f f e r

to modify h is employment agreement so t h a t he would be t r e a t ed

l i k e othe r Kidder employees, Kidder cont inued to renege on i t s

obl iga t ions to Mr. Fle tcher . Thus, in a fu r t h e r e f f o r t to

disc r imina te aga ins t Mr. Fl e t ch e r with r e sp ec t to h is te rms o f

employment, Kidder sen t Mr. Fl e t ch e r a l e t t e r , dated February 25,

1991, which departed even fu r the r from th e te rms of the o r i ~ i n a l employment agreement than did Kidder ' s October 1 , 1990 l e t t e r .

S p ec i f i c a l l y , Kidder ' s February 25, 1991 l e t t e r not only ca l l ed

fo r th e d e f e r r a l o f approximately 50% o f Mr. Fl e t c h e r ' s

5



compensation, bu t a lso purpor ted to make approximately one - th i rd

of Mr. Fle tcher ' s compensat ion payable so le ly a t Kidder ' s

d i s c r e t i o n . Moreover, th e f igures used by Kidder in i t s February

25, 1991 l e t t e r made it c l e a r t h a t it had improperly ca lcu la t ed

th e n et t rad ing pro f i t s genera ted by Mr. Fl e t ch e r .

12. The discr imina to ry e f f o r t to reduce Mr. Fle tcher ' s

l eve l of compensation was under taken with th e knowledge and

acquiescence of Kidder ' s h i g h es t management. For example, during

February 1991, Mr. Fle tcher brought the d i scr imina to ry a c t i v i t i e s

of h is supe r io r s to th e a t t en t i o n o f Granvi l le Bowie, Kidder ' s

head of human resources, who was th e o f f i c e r p r in c ip a l l y charged

with e f f ec t i n g Kidder ' s equal employment oppor tun i ty p o l i c i e s .

In words o r substance, Mr. Bowie acknowledged to Mr. Fle tche r

t h a t Kidder was behind th e t imes with respec t to race r e l a t i o n s .

Mr. Bowie fu r ther to ld Mr. Fle tcher t h a t he had no reason to

complain s ince he was "one o f th e h ighes t paid b lack males" in

th e count ry .

13. Faced with Kidder ' s r e fusa l to honor i t s

employment agreement, i t s acknowledged backwardness with r e sp ec t

to race r e l a t i o n s and th e r e fu s a l of sen io r management to c o r r e c

h is discr imina to ry t rea tment , Mr. Fle tche r res igned from Kidder

on March 18, 1991. Mr. Fle tcher ' s re s igna t ion cons t i tu ted a

cons t ruc t ive discharge o f Mr. Fle tcherby Kidder .

14. After h is res igna t ion , the t rading a c t i v i t i e s Mr.

Fle tche r had conducted a t Kidder were under taken, in p a r t , by a

white co l league . On informat ion and be l i e f , one o f th e f i r s t

6



ac t s o f Thomas Ryan, Mr. Fle tcher ' s former super ior a t Kidder,

with re spec t to Mr. Fle tcher ' s replacement was to obta in fo r the

replacement a ~ e m b e r s h i p in Ryan 's a l l -whi te country c lub , which

on informat ion and b e l i e f , discr imina tes on th e bas i s of race and

r e l i g io n .

15. By reason of Kidder ' s d i scr imina to ry a c t i v i t i e s ,

Mr. F l e t c h e r ' s compensation fo r th e per iod from January 1 , 1990

to March 15, 1991, was reduced by no l e ss than $3,900,000.

AS AND FOR A FIRST CAUSE

OF ACTION PLAINTIFF

ALLEGES

16. Pl a i n t i f f repea t s and rea l l eges paragraphs 1

through 15.

17. By reason of th e foregoing, Kidder has unlawful ly

discr imina ted aga ins t Mr. Fle tcher with respec t to h i s

cons t ruc t ive discharge , h is compensation and in the terms,

cond i t ions and pr iv i l eges of h is employment in v io l a t i o n o f New

York's Human Rights Law. N.Y. Exec. Law § 296[1. (a)] (McKinney

1982) .

WHEREFORE, p l a i n t i f f demands jUdgment:

A. Awarding p l a i n t i f f compensory damages in an amoun

to be ca lcu la t ed a f t e r t r i a l , bu t in no event l e ss than

$3,900,000, with i n t e r e s t from February 15, 1991;

B. Awarding p l a i n t i f f puni t ive damages in an amount

no l e s s than $25,000,000;

7



STATE OF NEW YORK,s s . :

COUNTY OF NEW YORK.

ALPHONSE FLETCHER, JR. , being duly sworn, deposes and

says t h a t he i s th e p l a i n t i f f in the with in ac t ion : t h a t he has

read th e foregoing complain t and knows the con ten t s t he reof : t h a t

th e same a re t r u e to h i s own knowledge, excep t as to th e mat t e r s

a l l eged on informat ion and b e l i e f , and t h a t as to those mat te rs

he bel ieves them to be t r u e .

J r .

Sworn to before me t h i s13th day o f June, 1991

~ ~ C ~ J - - t - . a - __Notary Publ ic

DAWN BEST

Notary Public, State of New YoM<

No. 24.4949935,,1\,) 0\..c; ' - Qualified in County

eommission Exp",s Al"'il 17. 199..:2



ss.:

COUNTY OF

, being duly sworn, deposes and says tha t he is

the in the within action; that he has read the fore

going and knows the contents thereof; that the same is true to depon

ent's own knowledge, except as to the matters therein stated to be alleged on information and belief, and that as to those

matters he believes it to be true.

Sworn to before me this

day of , 19

STATE OFss.:

COUNTY OF

, being duly sworn, deposes and says that he is

the ofthe corporation named in the within entitled action; that he has read the foregoing

and knows the contents thereof; and that the same is true to deponent's own knowledge, except as to the matters therein stated to be alleged upon information and belief, and as to those matters he believes itto be true.

Deponent further says that the reason this verification is no t made by ,but by deponent, is that the is a corporation and the sources of deponent'sinformation and the grounds of deponent's belief as to all matters therein no t stated upon his knowledge are as follows:Statements and reports of other officers and employees of the company, and documents and correspondence in the possession of said company.

Sworn to beforeme

thisday of ,1 9

AFFIDAVIT OF PERSONAL SERVICE AFFIDAVIT OF SERVICE BY MAIL

STATE OF NEW YORK STATE OF NEW YORK

ss.: ss.:

COUNTY OF COUNTY OF

being duly sworn, deposes and says that he is over being duly sworn, deposes an d says that he is in the employ

the age of eighteen years. That on th e of CHADBOURNE & PARKE, attorneys for th e above named

herein, and that he isday of 19 ,a t No.over the age of eighteen years. That on the day of

, 19 he served the withinin the Borough of ,City of Newupon

York, he served the foregoingthe attorney for th e above named

uponby depositing a true copy of the same securely enclosed

the in a post-paid wrapper in the Post-Office - a B r ~ n c h Post-Office-Station -Sub-Station - Finance Station - LetterBox-Mail Chute-Qfficial Depository maintained and ex

in this action, by delivering to and leaving personally clusively controlled by the United States atwith said

directed to said attorney for thea true copy thereof.

at No.Deponent further says, that he knew the person served

N.Y., that being the. address within the State designatedas aforesaid, to be by h for that purpose upon the preceding papers

the person mentioned and described in said in this action, or the place where h then kept anoffice between which places there then was and now is a

as th e regular communication by mail.therein.

Sworn to before me this Sworn to before me this

day of ,19 day of ,19

Notary Public Notary Public

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Alphonse Fletcher Jr.'s 1991 complaint against Kidder Peabody

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