1Ei!I.

. • . , ' I' •
C 1 99-Summons without !l>4otice. Supreme Coun.
Personal or Substituted Service. 8-88
~ , 873 BY JULIUS BLUMBERG. INC..
PUBLISHER. NYC 100' 3

&uprttttt Cltnurt nf t~r &tatt nf Ntltt Inrk

Index No.
Cltnuutg nf NEW YORK
PlaintifI designates
New York
ALPHONSE FLETCHER, JR., County as the place of trial

The basis of the venue is

All Parties' Residence
PlaintiH
against

&umttUlun
KIDDER PEABODY & COMPANY, INC., PlaintifI resides at
330 East 38th Street
New York, NY
Defendant
County of New York
To the above named Defendant

inu arr ~2rrh!J 5ummnnrb to answer the complaint in this action and to serve
a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of
appearance, on the Plaintiff's A ttorney( s) within 20 days after the service of this summons, exclusive
of the day of service (or within 30 days after the service is complete if this summons is not personally
delivered to you within the State of New York); and in case of your failure to appear or answer, judg­
ment will be taken against you by default for the relief demanded in the complaint.
Dated, New York, New York
June 13, 1991
Defendant's address:
A ttorney( s) for Plaintiff

Kidder Peabody & Co., Inc. CHADBOURNE & PARKE

Post OHice Address
10 Hanover Square
New York, New York 10005 30 Rockefeller Plaza
New York, New York 10112
(212) 408-1142
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
--------------------------------------x
ALPHONSE FLETCHER, JR.,

Plaintiff,
VERIFIED COMPLAINT
-and-

KIDDER PEABODY & COMPANY, INC.,

Defendant.

--------------------------------------x
Plaintiff ALPHONSE FLETCHER, JR., by his attorneys,

Chadbourne & Parke, 30 Rockefeller Plaza, New York, New York,

10112, brings this action against defendant, Kidder Peabody &

Company, Inc. ("Kidder"), and complains and alleges as follows:

THE PARTIES, JURISDICTION AND VENUE

1. Plaintiff Alphonse Fletcher, Jr. ("Mr. Fletcher")

resides at 330 East 38th Street, New York, New York. Mr.

Fletcher is currently an owner and the chief executive officer of

Fletcher Asset Management, Inc. From November 1989 to March 18,

1991, Mr. Fletcher was employed by Kidder. Mr. Fletcher is

black.

2. Defendant Kidder is a corporation engaged in the

securities business with its principle office at 10 Hanover

Square, New York, New York.

3. Mr. Fletcher is 25 years old. He graduated in

1983 from Waterford High School in Connecticut, where he was

class president and champion of an international oratorical

contest. He entered Harvard College in 1983 and was cross­

enrolled at the Massachusetts Institute of Technology. While at

Harvard he was elected class president and played varsity

football. He _graduated in 1987 with a degree in applied

mathematics.

BACKGROUND

4. From 1987 to November 1989, Mr. Fletcher was

employed by Bear stearns & Co. ("Bear stearns"). While at Bear

stearns, Mr. Fletcher specialized in the area of equity

arbitrage. In approximately October 1989, Mr. Fletcher

determined to leave Bear stearns and to seek employment at

another securities firm. Kidder was among the firms with which

Mr. Fletcher sought employment.

5. In order to induce Mr. Fletcher to accept

employment with it, Kidder agreed to certain employment terms.

Specifically, on or about November 8, 1989, Mr. Peter Klein, a

managing director of Kidder, agreed to pay Mr. Fletcher, as his

total yearly compensation, no less than 20% and up to 25% of the

profits, including tax benefits, generated by Mr. Fletcher's

trading activities. It was agreed that Mr. Fletcher's total

compensation would consist of salary and bonus, and that all

bonus payments for 1990 would be paid no later than early 1991.

It was further agreed that whether Kidder would pay the minimum

of 20% of profits or some additional amount up to 25% of profits

would depend, in substantial part, on the success of Mr.

Fletcher's trading activities.

2
 6. Based on the agreement described above, Mr.

Fletcher commenced employment with Kidder in November 1989. Mr.

Fletcher proved to be an extremely hard-working, competent and

successful employee. During 1990 he generated net trading

profits for Kidder in excess of $25,500,000 and was the leading

producer of profits in Kidder's equity trading department.

7. When the enormous success and profitability of Mr.

Fletcher's trading activities became apparent, Kidder realized

that pursuant to its employment agreement with Mr. Fletcher it

would be obligated to pay him from $5 to $6.5 million for his

trading activities. At a time unknown to Mr. Fletcher but in no

event later than October 1990, Kidder determined that the amount

it was obligated to pay Mr. Fletcher was simply too much money to

pay a young black man. Accordingly, Kidder's management began to

search for ways to decrease Mr. Fletcher's compensation. The

effort to decrease Mr. Fletcher's compensation in a

discriminatory manner was led by Mr. Fletcher's superiors, Thomas

Ryan, who is a member of a country club that, on information and

belief, discriminates on the basis of race and religion, and

Peter Klein. The effort was undertaken with the full knOWledge

of, and was condoned by, Kidder's management.

8. As part of Kidder's scheme to reduce Mr.

Fletcher's compensation, on or about October 1, 1990, Kidder

delivered to Mr. Fletcher a letter that purported to confirm the

verbal employment agreement reached approximately one year

earlier, but that, in fact, materially altered the terms of that

3
agreement. While Kidder had agreed in November 1989 to pay Mr.

Fletcher all of his 1990 compensation by early 1991, the October

1, 1990 lette~ provided for the payment of only 50% of Mr.

Fletcher's bonus compensation in early 1991 and purported to

defer the payment of his remaining bonus compensation for up to

eighteen months. Upon information and belief, Kidder's proposed

deferral of Mr. Fletcher's compensation far exceeded the deferral

of compensation applied to Kidder's other equity traders, all of

whom were white. Pursuant to the October 1, 1990 letter, Kidder

was purporting to withhold more than $2,000,000 of Mr. Fletcher's

compensation in direct violation of Mr. Fletcher's employment

agreement with Kidder.

9. The October 1, 1990 letter contained other onerous

provisions that were not part of Mr. Fletcher's employment

agreement and which demonstrated that Kidder had abandoned all

pretext of dealing with Mr. Fletcher in a non-discriminatory

manner. For example, although Mr. Fletcher was to receive only

20¢ to 25¢ for every dollar of trading profits, the October 1,

1990 letter provided that Mr. Fletcher would have to pay for

trading losses on a dollar for dollar basis. The effect of this

provision would have been that Mr. Fletcher would be trading as

an employee for purposes of profits but as a principal with

respect to losses. On information and belief, this provision was

not applied to other employees of Kidder engaged in trading

activities -- including those whose activities entailed a

SUbstantially higher degree of risk. Instead, it was to be

applied uniquely to Mr. Fletcher, who was the only black

professional among 200 or more professionals in the 400 person

equity trading department headed by Ryan. The October 1, 1990

letter made it clear that, because Mr. Fletcher's immediate

superiors resented a young black man being paid more than they,

Kidder's management determined to put Mr. Fletcher in his place

by reducing his level of compensation.

10. Because the October 1, 1990 letter failed to

conform with Mr. Fletcher's employment agreement with Kidder, Mr.

Fletcher properly and understandably rejected it. In order to

demonstrate that he was nevertheless interested in a long-tern

relationship with Kidder and in sharing in Kidder's failures or

successes in the same proportion as other Kidder employees, Mr.

Fletcher offered to defer his 1990 bonus compensation to the same

extent such deferral would be applied to other employees under a

firm-wide deferral plan.

11. Rather than accept Mr. Fletcher's reasonable offer

to modify his employment agreement so that he would be treated

like other Kidder employees, Kidder continued to renege on its

obligations to Mr. Fletcher. Thus, in a further effort to

discriminate against Mr. Fletcher with respect to his terms of

employment, Kidder sent Mr. Fletcher a letter, dated February 25,

1991, which departed even further from the terms of the ori~inal

employment agreement than did Kidder's October 1, 1990 letter.

Specifically, Kidder's February 25, 1991 letter not only called

for the deferral of approximately 50% of Mr. Fletcher's

compensation, but also purported to make approximately one-third

of Mr. Fletcher's compensation payable solely at Kidder's

discretion. Moreover, the figures used by Kidder in its February

25, 1991 letter made it clear that it had improperly calculated

the net trading profits generated by Mr. Fletcher.

12. The discriminatory effort to reduce Mr. Fletcher's

level of compensation was undertaken with the knowledge and

acquiescence of Kidder's highest management. For example, during

February 1991, Mr. Fletcher brought the discriminatory activities

of his superiors to the attention of Granville Bowie, Kidder's

head of human resources, who was the officer principally charged

with effecting Kidder's equal employment opportunity policies.

In words or substance, Mr. Bowie acknowledged to Mr. Fletcher

that Kidder was behind the times with respect to race relations.

Mr. Bowie further told Mr. Fletcher that he had no reason to

complain since he was "one of the highest paid black males" in

the country.

13. Faced with Kidder's refusal to honor its

employment agreement, its acknowledged backwardness with respect

to race relations and the refusal of senior management to correct

his discriminatory treatment, Mr. Fletcher resigned from Kidder

on March 18, 1991. Mr. Fletcher's resignation constituted a

constructive discharge of Mr. Fletcher by Kidder.

14. After his resignation, the trading activities Mr.

Fletcher had conducted at Kidder were undertaken, in part, by a

white colleague. On information and belief, one of the first

6
acts of Thomas Ryan, Mr. Fletcher's former superior at Kidder,

with respect to Mr. Fletcher's replacement was to obtain for the

replacement a ~embership in Ryan's all-white country club, which

on information and belief, discriminates on the basis of race and

religion.

15. By reason of Kidder's discriminatory activities,

Mr. Fletcher's compensation for the period from January 1, 1990

to March 15, 1991, was reduced by no less than $3,900,000.

AS AND FOR A FIRST CAUSE

OF ACTION PLAINTIFF
ALLEGES

16. Plaintiff repeats and realleges paragraphs 1

through 15.

17. By reason of the foregoing, Kidder has unlawfully

discriminated against Mr. Fletcher with respect to his

constructive discharge, his compensation and in the terms,

conditions and privileges of his employment in violation of New

York's Human Rights Law. N.Y. Exec. Law § 296[1. (a)] (McKinney

1982) .

WHEREFORE, plaintiff demands jUdgment:

A. Awarding plaintiff compensory damages in an amount

to be calculated after trial, but in no event less than

$3,900,000, with interest from February 15, 1991;

B. Awarding plaintiff punitive damages in an amount

no less than $25,000,000;

7
STATE OF NEW YORK,
ss. :
COUNTY OF NEW YORK.

ALPHONSE FLETCHER, JR., being duly sworn, deposes and

says that he is the plaintiff in the within action: that he has

read the foregoing complaint and knows the contents thereof: that

the same are true to his own knowledge, except as to the matters

alleged on information and belief, and that as to those matters

he believes them to be true.

Jr.

Sworn to before me this

13th day of June, 1991

~~C~J--t-.a- _ _
Notary Public
DAWN BEST
Notary Public, State of New YoM<
No. 24.4949935,,1\,) 0\.. c; ~ '- ~
Qualified in ~ County
eommission Exp",s Al"'il 17. 199..:2
 ss.:
COUNTY OF
, being duly sworn, deposes and says that he is
the in the within action; that he has read the fore­
going and knows the contents thereof; that the same is true to depon­
ent's own knowledge, except as to the matters therein stated to be alleged on information and belief, and that as to those
matters he believes it to be true.
Sworn to before me this
day of , 19

STATE OF
ss.:
COUNTY OF
, being duly sworn, deposes and says that he is
the of
the corporation named in the within entitled action; that he has read the foregoing
and knows the contents thereof; and that the same is true to deponent's own knowl­
edge, except as to the matters therein stated to be alleged upon information and belief, and as to those matters he believes it
to be true.
Deponent further says that the reason this verification is not made by ,
but by deponent, is that the is a corporation and the sources of deponent's
information and the grounds of deponent's belief as to all matters therein not stated upon his knowledge are as follows:
Statements and reports of other officers and employees of the company, and documents and correspondence in the posses­
sion of said company.
Sworn to before me this
day of ,19

AFFIDAVIT OF PERSONAL SERVICE AFFIDAVIT OF SERVICE BY MAIL

STATE OF NEW YORK STATE OF NEW YORK

ss.: ss.:
COUNTY OF COUNTY OF

being duly sworn, deposes and says that he is over being duly sworn, deposes and says that he is in the employ
the age of eighteen years. That on the of CHADBOURNE & PARKE, attorneys for the above named
day of 19 ,at No. herein, and that he is
over the age of eighteen years. That on the day of
, 19 he served the within
in the Borough of ,City of New
upon
York, he served the foregoing
the attorney for the above named
upon by depositing a true copy of the same securely enclosed
the in a post-paid wrapper in the Post-Office - a Br~nch
Post-Office-Station-Sub-Station - Finance Station - Letter
Box-Mail Chute-Qfficial Depository maintained and ex­
in this action, by delivering to and leaving personally clusively controlled by the United States at
with said
directed to said attorney for the
a true copy thereof.
at No.
Deponent further says, that he knew the person served N.Y., that being the. address within the State designated
as aforesaid, to be by h for that purpose upon the preceding papers
the person mentioned and described in said in this action, or the place where h then kept an
office between which places there then was and now is a
as the regular communication by mail.
therein.

Sworn to before me this Sworn to before me this

day of ,19 day of ,19

Notary Public Notary Public