Schwab and Charles Goldman take fight to arbitration

The Charles Schwab Corp. and former executive vice president Charles Goldman agreed to meet with a private mediator next month to discuss his demand for $736,000 in severance pay following his dismissal in 2008 as head of the firm’s business for registered investment advisers.
The attempt to find an out-of-court resolution follows a federal judge’s rulings in San Francisco last week that was a mixed victory for both parties, according to Russ Leibson, a lawyer who is representing Mr. Goldman. Schwab spokesman Greg Gable declined to comment.
The judge upheld two of Schwab’s motions and denied one.
Mr. Goldman, who sued for his benefits last April, cannot claim that Schwab wrongfully interfered with his rights under the Employee Retirement Income Security Act of 1974 because he agreed he was initially fired in a company-wide “streamlining” that gave him access to the benefits, U.S. District Court Judge Maxine Chesney ruled.
Schwab later denied his benefits, a decision it attributed to violations of company expense and travel policies and that Mr. Goldman traces to retaliation for his decision to join Fidelity Investments to run its RIA and correspondent clearing businesses.
Judge Chesney’s Aug. 3 ruling also said that Mr. Goldman cannot cite arbitration awards made to other ex-employees in non-ERISA cases as evidence of bias and “gross negligence” within Schwab’s human resources department. His lawsuit cited a $1.5 million punitive payment that a Financial Industry Regulatory Authority Inc. arbitration panel awarded a former cashier at a Schwab branch in Orlando, Fla., earlier this year.
But the judge ruled that Mr. Goldman can press his claim that Schwab is subject to statutory penalties under ERISA for allegedly withholding documents and other records used by its review panel in deciding to deny his benefits.
Mr. Leibson also noted that a footnote in the ruling said examples of arbitration rulings in non-ERISA fraud cases might be cited in potential appeals of her decision. “Schwab will try to oppose discovery, but the footnote pretty much opens the door t to me to find out about other employees,” he said.
As part of the wrongful interference claim that the judge denied, Mr. Goldman sought to require Jay Allen, head of Schwab’s human resource and management committee, to step down for five years as administrator of the company’s retirement plan.
Mr. Leibson said he’s cautiously optimistic that the two sides will make progress in their September meeting with Charles Legge, a former federal judge in California’s northern district who is now an arbitrator with JAMS Arbitration and Mediation Services. But he also said he is moving ahead with a full-blown prosecution of Mr. Goldman’s claims.
“They won some skirmishes, but in the grand scheme of things, the claim that they wrongfully denied Charles’s benefits is untouched,” Mr. Leibson said.

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