IN RE: Joseph Todd LERNER et al. (2021)

Order, Supreme Court, New York County (Andrea Masley, J.), entered July 17, 2020, which, to the extent appealed from as limited by the briefs, granted petitioners Joseph Todd Lerner and Anna Sarai Winderbaum's petition to confirm and denied respondent Credit Suisse Securities (USA) LLC's cross petition to vacate an arbitration award insofar as it awarded liquidated damages and attorneys' fees under Labor Law § 198(1–a), unanimously reversed, on the law, without costs, and the cross petition granted.

Order, Supreme Court, New York County (Carol R. Edmead, J.), entered on or about September 30, 2020, which, to the extent appealed from as limited by the briefs, denied petitioner Credit Suisse Securities (USA) LLC's petition and respondents Richard DellaRusso and Mark Sullivan's cross motion to vacate an arbitration award insofar as it awarded attorneys' fees under Labor Law § 198(1–a) and prejudgment interest at a rate of 4%, rather than 9%, unanimously modified, on the law, to grant the cross motion to the extent of vacating the award for attorneys' fees under Labor Law § 198(1–a), and otherwise affirmed, without costs.

The arbitration panels manifestly disregarded the law in determining that the Labor Law applied and awarding liquidated damages and/or attorneys' fees thereunder.  The subject deferred equity-based compensation did not constitute “wages” within the meaning of Labor Law § 190(1) because, although it was initially awarded in recognition of each employee's personal performance, its ultimate value was dependent on the future market value of the company stock (see Truelove v. Northeast Capital & Advisory, Inc., 95 N.Y.2d 220, 223–224, 715 N.Y.S.2d 366, 738 N.E.2d 770 [2000];  Beach v. Touradji Capital Mgt., LP, 128 A.D.3d 501, 7 N.Y.S.3d 895 [1st Dept. 2015];  Guiry v. Goldman, Sachs & Co., 31 A.D.3d 70, 814 N.Y.S.2d 617 [1st Dept. 2006], appeal withdrawn 7 N.Y.3d 809, 822 N.Y.S.2d 483, 855 N.E.2d 799 [2006]).  The fact that the employees' rights to this compensation had already vested is irrelevant (see Schoenbach v. Insight Venture Mgt., LLC, 2019 N.Y. Slip Op. 30473(U), *7–9 and n. 2, 2019 WL 954758 [Sup. Ct., N.Y. County 2019];  Gunthel v. Deutsche Bank AG, 2005 N.Y. Slip Op. 30361(U), *18 [Sup. Ct., Genesee County 2005], revd in part on other grounds 32 A.D.3d 335, 821 N.Y.S.2d 160 [1st Dept. 2006];  Gilman v. Marsh & McLennan Cos., Inc., 868 F. Supp. 2d 118, 127, 135–136 [S.D. N.Y.2012], affd 654 Fed. Appx. 16 [2d Cir.2016];  International Bus. Machs. Corp. v. Martson, 37 F. Supp. 2d 613, 617–618 [S.D. N.Y.1999]).

However, DellaRusso and Sullivan failed to demonstrate that the arbitral panel refused to apply or ignored “well defined, explicit, and clearly applicable” law (Zurich Am. Ins. Co. v. Team Tankers A.S., 811 F.3d 584, 589 [2d Cir.2016] [internal quotation marks omitted]) in awarding prejudgment interest at a rate of 4% rather than the statutory 9% (see Labor Law § 198[1–a];  CPLR 5001;  CPLR 5004;  Oracle Corp. v. Wilson, 276 F. Supp. 3d 22, 33–34 [S.D. N.Y.2017], appeal withdrawn 2017 WL 8289590 [2d Cir.2017];  Coastal Caisson Corp. v. E.E. Cruz/NAB/Frontier–Kemper, 2007 WL 2285936, *7–8, 2007 U.S. Dist LEXIS 58114 [S.D. N.Y.2007], reversed in part on other grounds 346 Fed. Appx. 717, 2009 WL 3028321 [2d Cir.2009];  Nicoletti v. E.F. Hutton & Co., Inc., 761 F. Supp. 312, 314–315 [S.D. N.Y.1991]).