Sept. 20 (Bloomberg) -- Commerzbank AG, Germany’s second-biggest bank, won dismissal of appeals cases filed by 14 former Dresdner Kleinwort investment bank employees over their bonuses.
The Frankfurt labor appeals court today backed a lower tribunal which dismissed the suits last year. The employees seek bonuses for 2008 ranging from about 29,000 euros ($37,987) to 450,000 euros. Commerzbank acquired Dresdner Bank AG last year and faces similar suits in London.
Commerzbank, which was forced to tap Germany for 18.2 billion euros of capital during the credit crisis, cut prospective 2008 bonuses for Dresdner employees by as much as 90 percent after the unit posted an operating loss of 6.3 billion euros that year.
“Like the lower court, we think that the Dec. 19 letter didn’t say that the lender wanted to promise a specific amount as bonus,” Presiding Judge Georg Schaefer said. “Quite the contrary, in a very clear manner it expressed that the prospect to get a bonus was a preliminary one which was subject to a later review of the results.”
Today’s ruling is the first by a German appeals court over the dispute and Manuel Rhotert, a lawyer for some the plaintiffs, said he will appeal the decision.
“This is an important legal issue that needs to be clarified by Germany’s top labor court,” said Rhotert.
Commerzbank spokesman Thomas Bonk said the bank welcomed the ruling “which totally backs our view of the issue.”
The court rejected the employees’ argument that Frankfurt-based Commerzbank was obliged to pay higher bonuses because employees on Dec. 19, 2008, received a letter from Dresdner Bank AG, the former parent of Dresdner Kleinwort, informing them of the value of bonuses they may receive.
The letter, which set preliminary bonuses as much as 90 percent higher than the amount paid out later by Commerzbank, merely informed employees of the bank’s tentative plans on bonus payments and wasn’t binding, according to the court.
“Neither based on the wording of the letter, nor from the context and the lender’s statements made in context with handing out the letters, could the plaintiffs believe this would be the last word about the amount of bonus they would get,” Schaefer said. “That’s why Commerzbank was allowed the cut them by 90 percent when it reviewed the results.”
Allianz SE, the insurer that sold the Dresdner to Commerzbank, in early 2008 had earmarked about 400 million euros for Dresdner bonuses, including retention payments. In October of that year the bank told the employees their bonus would be individually set on Dec. 19.
The letter they received that day used the term “preliminary” several times and added that the final amount would only be determined after a review of results in February 2009.
A London court in May dismissed a bid by Commerzbank to halt a similar case brought by 100 former and current Dresdner employees saying it hadn’t been given enough evidence to dismiss the matter. The court also ruled workers’ claims based solely on events prior to a December letter to staff regarding bonuses would have “no realistic chance of success” if they went to trial.
Commerzbank lost several other London cases brought by former senior staff of Dresdner and settled others. Most of those managers, whose bonuses and severance payments were also withheld after the takeover, were on the bank’s executive committee and had agreements that guaranteed the payments.
Commerzbank in October last year was ordered by the Frankfurt labor court to pay 1.5 million euros in severance to Jens-Peter Neumann, the former head of capital markets at Dresdner. Neumann had been promised the payment by Dresdner as part of an agreement to leave the investment bank after the Commerzbank takeover.
Today’s cases are Hess. LAG, 7 Sa 2082/09 u.a.
To contact the reporter on this story: Karin Matussek in Frankfurt via firstname.lastname@example.org
To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.