Following a three and a half week trial in the Commercial Court, Mr Justice Calver ruled in favour of the Claimant, Robert Gagliardi, awarding him USD$5.385m in damages (plus interest), determining that his former employer, US hedge fund Evolution Capital Management LLC, had breached its contractual obligations in failing to award him any discretionary bonus for his trading in 2021, which had delivered over USD$60m in profit and 97% of the revenue, to the fund.
Mr Justice Calver ruled that, properly construed the hedge fund’s contractual discretion (which was governed by Delaware law) whether to award Mr Gagliardi a bonus was not broad and unfettered, and was subject to prescribed contractual criteria. Further to the agreed position that English law principles governed the exercise of the contractual discretion, Mr Justice Calver held that no reasonable decision-maker, faced with the profit delivered by Mr Gagliardi would have refused to grant him a bonus, and that the proper exercise of discretion warranted a bonus award at the top end of the contractual range. Mr Justice Calver awarded the Claimant USD5.385m in damages, representing the discretionary bonus he considered Mr Gagliardi ought to have been awarded.
In the course of assessing the reasonableness of the exercise of Evolution Capital Management’s discretion, Mr Justice Calver held that all but one of the grounds now relied on by the fund for withholding the bonus were “meritless post hoc justifications” that were not genuinely considered to be material to the decision to withhold a bonus from Mr Gagliardi. The one matter that was considered at the time, the existence of a broad market investigation by the SEC/ DOJ into block trading which included Mr Gagliardi and other key market participants, was found not to constitute proof of any wrongdoing, and did not justify refusing payment of a discretionary bonus.
The counterclaim filed by Evolution Capital Management seeking to recover other fixed bonus payments from Mr Gagliardi as a result of alleged wrongdoing by Mr Gagliardi was dismissed. Mr Justice Calver found that the key allegations of wrongdoing had been improperly pleaded, were abusive, and that the Defendant had failed to establish an evidential basis (including at trial) of any case of wrongdoing against Mr Gagliardi.
The Claimant was represented at trial by Andrew Legg and Gretta Schumacher, instructed by PCB Byrne LLP.
The judgment is accessible here.
