Courts have certified three class-action lawsuits challenging Citigroup's Capital Accumulation Plan (CAP).
In August, Los Angeles Superior Court Judge Aurelio Munoz granted class-action status to a lawsuit filed against Citigroup by a former Salomon Smith Barney broker in 1998 (see Feb. 2000 RR, Page 28). Judge Munoz's certification of the California case means the lawyers for the plaintiff have the right to represent 535 former Salomon Smith Barney brokers and other Citigroup employees in California who have left money behind in CAP accounts.
Class members were identified during the discovery process, says plaintiff's attorney Ashley Posner in Los Angeles, one of the attorneys representing plaintiffs in the California case. About 90% of CAP participants are SSB brokers, Posner says, and others are mostly Travelers executives.
Former employees who have been identified as class members should receive information in the mail by the end of this year, Posner says.
Brokers who think they may do better pursuing their case in arbitration can opt out of the class-action lawsuit. Notice of the suit sent to class members should give instructions on how to opt out, as well as how to submit information to support a claim.
All together, former employees in California left about $35 million in CAP accounts, according to Posner. He is seeking the $35 million, which he claims is the full amount due, plus interest and attorney's fees.
Another class-action lawsuit challenging Citigroup's CAP plan is also (certified) under way in New Jersey. The case is being heard by judge Edith Payne at Superior Court in Essex County, N.J. The lawsuit is in the discovery phase and depositions are being taken, says plaintiffs' attorney Andrew Bronsnick of Nagel Rice Dreifuss & Mazie in Livingston, N.J.
Bronsnick says he expects the judge to assign a trial date before the end of the year. About 115 former employees are represented in the case, with about $9 million in dispute, he says.
Meanwhile, in Boston, U.S. District Court Judge Robert Keeton is overseeing a consolidated action that incorporates class-action lawsuits filed against Citigroup in federal courts in Connecticut, Massachusetts, Mississippi and Florida. There are roughly 250 class members seeking about $50 million in these cases, says the plaintiffs' lawyer in the case, Mike Collora of Dwyer & Collora in Boston. Collora is seeking permission to give notice to class members in Connecticut and Massachusetts, and to file motions for summary judgment. He says Citigroup is opposing a motion to grant nationwide status to CAP lawsuits.
Citigroup is appealing Judge Keeton's certification of that lawsuit as a class action.
“It is important to remember that there has not been a definitive ruling on the merits of any of these cases anywhere in the country, yet,” says Bronsnick.
Citigroup's CAP program allows employees to buy company stock at a discount, using pretax dollars. At issue is SSB's insistence that employees who leave before the two-year vesting period forfeit their right to the assets in those accounts. Plaintiffs' lawyers call that policy an illegal confiscation of wages.
“We continue to believe that CAP is valid under applicable law,” says an SSB spokesperson, declining further comment.