Cantor Defeats Ex-Partners’ Suit Alleging It Withheld Bonuses
Cantor Fitzgerald LP persuaded a judge to throw out a lawsuit targeting non-compete restrictions in its partnership agreements that some ex-partners say were misused to improperly withhold at least $10 million in bonuses after they left the firm.
U.S. District Judge Colm Connolly concluded Monday that more than half a dozen former Cantor partners who complained restrictive language in partnership agreements was unfairly used to deny them payments couldn’t make out proper antitrust and fair-dealing claims.
Connolly said in his 12-page ruling the partners “failed as a matter of law” to make legitimate arguments that the restrictive language violated antitrust and Delaware employment laws. Howard Lutnick – Cantor’s board chairman and chief executive officer – has been nominated by President-Elect Donald Trump as secretary of the Commerce Department.
It’s at least the second win this year for Cantor in challenges to the wording of its partnership agreements. In January, the Delaware Supreme Court threw out a $9 million award to separate group of ex-Cantor partners who alleged the firm’s non-compete agreements applied to an overly expansive range of “competitive activity.” The state’s highest court found the restrictions were legally valid as written.
Erica Chase, a Cantor spokeswoman, didn’t immediately respond to an email after regular business hours seeking comment on Connolly’s ruling.
The suit – which sought class-action status — also targeted partnership pacts for BGC Holdings LP and Newmark Holdings LP, which are tied to Cantor and contain the same restrictions.
The suit was led by Shawn McLoughlin, the ex-chief executive officer of a unit of BGC, a brokerage spun off from Cantor in 2004. He and the other plaintiffs argued the firms’ non-competes are supposed to dole out payments for bonuses and equity stakes over a four-year period after an employee’s departure or death.
But they contend Lutnick, who is also chairman of BGC’s parent, has denied payments to ex-partners who aren’t competing with Cantor or its units along with the “widow of a former partner” who died just after leaving the firm.
Connolly found that the harms alleged by McLoughlin and other former Cantor partners “cannot qualify as an antitrust injury” for which damages could be awarded. That means the plaintiffs “failed to allege a cognizable antitrust claim,” the judge ruled.
Connolly also said it wasn’t an overreach for Cantor to invoke the restrictive language for former partners who went to work for competing firms.
“It cannot be said that defendants’ decision to enforce the non-compete provisions in their partnership and separation agreements with plaintiffs was beyond the bounds of reasonable judgment,” he wrote.
The case is McLoughlin v. Cantor Fitzgerald LP, 23-cv-256, US District Court, District of Delaware (Wilmington).
Top photo: It’s at least the second win this year for Cantor in challenges to the wording of its partnership agreements. Photographer: David Paul Morris/Bloomberg.