Linklaters has scored a landmark High Court ruling for JPMorgan against its former trader Daniel Ridgway, who sued the bank for $3.5m (£1.8m) in an alleged loss of bonus.
The case is the first to go before the courts since the Court of Appeal decision in Commerzbank v Keen (2006), in which Commerzbank successfully defended a claim against another trader that his bonus was too small.
In Keen the Court laid down guidelines and the case today (8 June) is the first to put them into effect.
Ridgway’s situation came about after he resigned claiming constructive dismissal as he could not be offered his role after he went on an unpaid sabbatical.
The former trader then pursued a claim against JPMorgan that included compensation for unvested stock awards he lost as a result of resigning, as well as compensation in lieu of receiving a nil bonus for the year he was largely on sabbatical.
The High Court today dismissed all of Mr Ridgway’s claims against JPMorgan, including Ridgway’s allegation that the bank’s bonus process was lacking in fairness.
Mr Justice Forbes stated that the bank had followed a fair bonus assessment process and accepted that Mr Ridgway’s line managers were entitled to award him a nil bonus after taking into account his personal circumstances, including the fact that he had been on sabbatical for most of the year.
On unvested stock, Forbes J said that Ridgway’s stock was properly forfeited after he refused to return to work despite being offered a suitable alternative role.
Employment counsel Darren Isaacs, Linklaters’ lead lawyer for JPMorgan, said this decision shows that banks’ bonus procedures are not something courts will rush to intervene in.
Isaacs added: “This case has one important difference from Keen and that is that the nil bonus is a more common one, so the ramifications of the ruling could be much broader.”
Isaacs instructed Andrew Hochhauser QC of Essex Court as lead counsel for JPMorgan, while partner David Williams from Kemp Little, who was not available for comment, instructed Andrew Stafford QC of Littleton chambers.