Court of Appeal’s decision entitles employee to participate in company’s initial public offering
Goldman Sachs employed Bruce Gillies as a fixed-income security salesperson for more than four and half years. Mr. Gillies went to work with Goldman Sachs after being recruited away from another firm with whom he had been steadily employed for 13 years. When he was hired he was told that he would be a candidate for a sales manager position and that there was security of tenure at Goldman Sachs. Initially Mr. Gillies worked at Goldman Sachs’ Toronto location.
In 1996 Mr. Gillies was offered a position by another firm in Vancouver. Mr. Gillies decided to accept this position and offered his letter of resignation to Goldman Sachs. This prompted Goldman Sachs to offer him a position in its Vancouver office where the volume of institutional fixed-income business was not great and there was already another salesman who would continue in the lead position. Mr. Gillies accepted this transfer and moved to Vancouver continuing his employment with Goldman Sachs.
On April 22, 1998, Mr. Gillies was informed that Goldman Sachs was being reorganized and his employment would be ending. On April 29, 1998, Mr. Gillies received a letter of termination to be effective June 30, 1998.
In June 1998 Goldman Sachs, then a partnership, decided to incorporate and become a publicly traded company. Implementation of the plan was delayed and the prospectus for the initial public officering (IPO) was filed on May 3, 1999. All employees of record on March 30, 1999, who were in good standing on May 3, 1999, participated in the share offering. If Mr. Gillies had not been dismissed he would have been entitled to participate.
Following his termination Mr. Gillies filed an action for wrongful dismissal. Goldman Sachs did not allege cause for dismissal so the only issue at trial was damages. The trial judge held that Mr. Gillies was entitled to damages equivalent to twelve months’ notice.
In assessing the appropriate period of notice the trial judge considered such factors as character of employment, length of service, age of Mr. Gillies and the availability of similar employment. In additional to these the trial judge took into consideration the fact that Mr. Gillies was recruited by Goldman Sachs and various inducements were made to persuade him to come work for them including relative security of tenure. Another factor was the actions of Goldman Sachs in persuading Mr. Gillies to stay with them when he was offered a position with another firm in Vancouver.
The finding extended Mr. Gillies’ notice period to three days before the IPO of Goldman Sachs shares. The trial judge did not compensate Mr. Gillies for the lost opportunity to participate in the IPO.
Mr. Gillies appealed the findings of the trial judge, arguing that the judge erred in failing to extend the notice period to a date following the IPO and failing to compensate him for participation in the IPO. Mr. Gillies further argued that the judge erred in his assessment of reasonable notice.
Mr. Gillies argued that the trial judge did correctly refer to the traditional criteria in assessing reasonable notice, but that the award of 12 months for notice was below the range for these circumstances. He argued that the judge failed to adequately consider the senior position he held, his age, the nature of the position and limited opportunity for similar employment, that Goldman Sachs dissuaded him from taking alternate employment with a firm in Vancouver thereby closing the door on a possible employer, and the inducement of security of tenure which was a factor in his decision to leave his previous employer.
The Court of Appeal concurred with Mr. Gillies’ argument that 12 months is at the low end of the range of reasonable notice in these circumstances. The Court extended the notice period to 13 months, thus entitling Mr. Gillies to participate in the IPO. The issue of whether specific performance (delivery of the shares) should be ordered or compensation paid in lieu was referred back to the trial judge.
For more information:
• Gilles v. Goldman Sachs Canada Inc., 2001 BCCA 683.
In 1996 Mr. Gillies was offered a position by another firm in Vancouver. Mr. Gillies decided to accept this position and offered his letter of resignation to Goldman Sachs. This prompted Goldman Sachs to offer him a position in its Vancouver office where the volume of institutional fixed-income business was not great and there was already another salesman who would continue in the lead position. Mr. Gillies accepted this transfer and moved to Vancouver continuing his employment with Goldman Sachs.
On April 22, 1998, Mr. Gillies was informed that Goldman Sachs was being reorganized and his employment would be ending. On April 29, 1998, Mr. Gillies received a letter of termination to be effective June 30, 1998.
In June 1998 Goldman Sachs, then a partnership, decided to incorporate and become a publicly traded company. Implementation of the plan was delayed and the prospectus for the initial public officering (IPO) was filed on May 3, 1999. All employees of record on March 30, 1999, who were in good standing on May 3, 1999, participated in the share offering. If Mr. Gillies had not been dismissed he would have been entitled to participate.
Following his termination Mr. Gillies filed an action for wrongful dismissal. Goldman Sachs did not allege cause for dismissal so the only issue at trial was damages. The trial judge held that Mr. Gillies was entitled to damages equivalent to twelve months’ notice.
In assessing the appropriate period of notice the trial judge considered such factors as character of employment, length of service, age of Mr. Gillies and the availability of similar employment. In additional to these the trial judge took into consideration the fact that Mr. Gillies was recruited by Goldman Sachs and various inducements were made to persuade him to come work for them including relative security of tenure. Another factor was the actions of Goldman Sachs in persuading Mr. Gillies to stay with them when he was offered a position with another firm in Vancouver.
The finding extended Mr. Gillies’ notice period to three days before the IPO of Goldman Sachs shares. The trial judge did not compensate Mr. Gillies for the lost opportunity to participate in the IPO.
Mr. Gillies appealed the findings of the trial judge, arguing that the judge erred in failing to extend the notice period to a date following the IPO and failing to compensate him for participation in the IPO. Mr. Gillies further argued that the judge erred in his assessment of reasonable notice.
Mr. Gillies argued that the trial judge did correctly refer to the traditional criteria in assessing reasonable notice, but that the award of 12 months for notice was below the range for these circumstances. He argued that the judge failed to adequately consider the senior position he held, his age, the nature of the position and limited opportunity for similar employment, that Goldman Sachs dissuaded him from taking alternate employment with a firm in Vancouver thereby closing the door on a possible employer, and the inducement of security of tenure which was a factor in his decision to leave his previous employer.
The Court of Appeal concurred with Mr. Gillies’ argument that 12 months is at the low end of the range of reasonable notice in these circumstances. The Court extended the notice period to 13 months, thus entitling Mr. Gillies to participate in the IPO. The issue of whether specific performance (delivery of the shares) should be ordered or compensation paid in lieu was referred back to the trial judge.
For more information:
• Gilles v. Goldman Sachs Canada Inc., 2001 BCCA 683.
