Salomon Smith Barney took another hit today as the Superior Court of the State of California "ordered" publication that the state became the fifth separate class-action lawsuit to be certified against the firm's Capital Accumulation Plan (CAP), according to Los Angeles attorney Ashley Posner.
The suit in California was filed by David B. Schachter, a former Salomon Smith Barney broker who is challenging the firm's CAP program, under which brokers and executives forfeit a portion of their contributions to the plan if they quit or are terminated before becoming fully vested.
In other news involving the case, Posner says a hearing is scheduled for Friday in Superior Court in Boston, seeking depositions of Citigroup executives.
Spokesperson Susan Thompson of Salomon Smith Barney said, "Our statement is the same statement that we've issued in the past [in regards to the class-action suits certified against the firm]." Salomon Smith Barney believes the CAP "is well within the letter of state law," according to Thompson, who also said the firm "is pleased that the courts are handling the suits on a case-by-case basic rather than giving it national status."
The reason the case has not been given national status is because "most employment issues are based on state law, not federal law," Posner says.
Five separate class-action lawsuits have now been certified against SSB's CAP.
The California suit, originally filed on May 22, 1998, contends that the forfeiture provisions of SSB's CAP "are illegal under California law" and that the firm's enforcement of the provisions violates California's Labor and Business and Professions Codes, according to Posner.
Salomon Smith Barney denies the allegations.
Meanwhile, lawyers for defendants in Mississippi are continuing to seek certification. Texas and Illinois may be next to join the class-action suit, according to Bruce Nagel, an attorney with Nagel Rice Dreifuss and Mazie of Livingston N.J. Nagel says "billions of dollars" are at stake in the combined claims against the firm.