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A Manhattan Supreme Court justice has called for a trial in a case over whether a brokerage house “poached” the employees of a competitor in violation of a contract not to do so. Justice Barry A. Cozier denied summary judgment to plaintiffs, saying there were two key triable issues of material fact in the case: whether the alleged “poacher” or the employees themselves initiated job discussions, and whether the plaintiff breached any contractual promise, thereby freeing its employees to seek jobs with a competitor. In Cantor Fitzgerald International v. Liberty Brokerage Investment Corp., 600318/97, the plaintiff, Cantor Fitzgerald International, sought damages stemming from the loss of a group of London-based bond traders to the competitor, Liberty Brokerage Investment Corp. In 1996, Cantor and Liberty, which had been sharp competitors for the services of top brokers, entered into an agreement not to solicit or hire each other’s employees. The “no poaching” agreement settled a number of outstanding disputes concerning the employees of both brokerage houses, Justice Cozier wrote. Cantor accused Liberty of recruiting its employees and inducing a group of traders of German bonds to resign all at once and without providing notice. Cantor said that the resignations and subsequent employment with its competitor amounted to breaches of the brokers’ own employment contracts as well as the “no poaching” agreement between the brokerages. The dispute with the individual brokers has been settled under a confidential agreement in an English court, Justice Cozier said. The court said that there are facts to support either party’s scenario as to who initiated the recruitment. “Cantor’s allegations that Liberty made the initial overtures to solicit the employment of Cantor’s German [bond trading] team prior to the . . . brokers’ admitted solicitation of employment from Liberty, is nothing more than speculation, which is supported only by disputed issues of fact,” Justice Cozier said. Liberty also raises the defense that the actions of Cantor may have constituted a breach of its employment contracts with the brokers. Liberty contends that the “cumulative misconduct [of Cantor] destroyed the . . . brokers’ trust and confidence in Cantor.” Such a breach would be a violation of the brokers’ employment contracts, Liberty’s attorneys argued. And changes in Cantor’s business practices may have made it harder for the brokers to trade, they said. One of those changes was the public disclosure of “off screen” trades, making it impossible for customers to trade bonds confidentially. The move led to the loss of many of Cantor’s European customers, according to the court. A refusal by Cantor to pay taxes on forgivable loans to its brokers may also have been a breach, Justice Cozier said, ruling that the issue of repudiation of the employment contracts must be tested at trial. Representing Cantor was Ellen A. Harnick, of Friedman, Kaplan & Seiler in Manhattan. The name of Liberty’s attorney was unavailable.

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