FEDERAL JUDGE SETS BOUNDARIES IN EX-COUNSEL’S CASE VS. PUTNAM: REINS IN COMPLAINT, CLEARING THE WAY FOR LONG-AWAITED TRIAL

A federal judge in Boston has narrowed the scope of a lawsuit brought against Putnam Investments by a former staff lawyer.

Edward A.H. Siedle filed suit last year, seeking $40 million in damages. He alleged defamation, breach of contract, interference with contractual and business relations and conversion of Mr. Siedle’s property for its own use.

The Boston-based mutual fund company countersued, alleging, among other things, abuse of process, breach of fiduciary duty, breach of contract, interference with business relations and defamation.

On Putnam’s motion, U.S. District Court Judge Joseph Tauro dismissed portions of Mr. Siedle’s complaint.

He ruled that Mr. Siedle could sue the firm for saying that it had fired him, but he dismissed a part of his defamation charge and another charge alleging breach of contract.

The trial can proceed as early as this month as a result.

a letter to the editor

Mr. Siedle sued the money manager after a Putnam official had written a letter to the editor in the May 26, 1997, issue of InvestmentNews’ sister publication Pensions & Investments.

Mitchell Schultz, Putnam’s director of compensation, wrote that Mr. Siedle had been “fired” nine years earlier and that Mr. Siedle was trying to get more than was owed him from a mistake in calculating his 401(k) benefit.

The letter followed a May 12 article in Pensions & Investments in which Mr. Siedle said Putnam had shortchanged him in the benefit.

In his March 25 ruling, Judge Tauro said Putnam and Mr. Siedle had agreed to tell all future employers that Mr. Siedle left Putnam because “it was mutually agreed that it was in his best interest to.”

The judge, as a result, denied Putnam’s motion for dismissal.

But he dismissed Mr. Siedle’s claim that he was defamed when Putnam said his apparent motive was to get more money. “Under Massachusetts law, it is well-settled that statements of opinion cannot be defamatory, and that the determination of whether a statement is one of ‘fact’ or ‘opinion’ is a question of law which may be resolved by a motion to dismiss,” Judge Tauro wrote.

He also dismissed Mr. Siedle’s allegation of breach of contract, saying “where a party alleging breach of contract first breached the same contract, his claim must fail.”

As part of Mr. Siedle’s separation agreement with Putnam, both parties agreed to “refrain from making any adverse public or private comments about the other.”

“Plaintiff admits, however, that he did not keep this promise,” the judge wrote, citing the Pensions & Investments article submitted as an exhibit by Mr. Siedle.

He allowed all other complaints to proceed to trial.

Putnam’s countersuit also alleges that Mr. Siedle violated the attorney-client relationship, and that he tried to extort money from the company.

Putnam’s claims center on Mr. Siedle’s release of internal documents to the Wall Street Journal about personal trading by senior investment professionals in the 1980s.

Putnam successfully appealed to have the personal trading documents sealed.

Admits 401(k) error

In a related matter, Putnam acknowledged to the Department of Labor that it had made more than one error in calculating the 401(k) benefits of employees.

Mr. Schultz, in his letter to the editor, said the mistake calculating Mr. Siedle’s benefit was “the only one.” Putnam acknowledged three others.

“This examination of all 5,200 participant records disclosed that only four participant records (including Mr. Siedle’s) required adjustments to input a termination code, which impacted their vesting percentage,” reads a letter written by Putnam’s director of benefits, Donald E. Mullen, to the Pension and Welfare Benefits Administration.

A Putnam spokeswoman says the additional errors came to Putnam’s attention after the Pensions & Investments story and followed a change in the record-keeping system used for the company’s 401(k) plan.

Nancy Fisher, the spokeswoman, says the error amounted to a total of about $15,000 for all four employees.

Crain News Service