An attorney for Laidlaw & Co was warned he could be sanctioned by SDNY’s Judge Woods today in an employment relationation lawsuit involving an African American stockbroker, George Calhoun, who sued the New York-based broker dealer for racial discrimination and having to work in a hostile environment. The attorney, Christopher Milazzo, of CMP LLP, and his partner Ross Carmel both represent Laidlaw and were former lawyers at Sichenzia Ross Ference. Milazzo was trying to argue to throw out the retaliation claim before a December court ordered mediation hearing because the lawsuit says the retaliation happen after Calhoun was an employee at Laidlaw. But after Judge Woods heard Milazzo argue the incorrect legal standard of employment retaliation vs. discrimination, according to New York state and NYC law, he spanked attorney Milazzo with a strong verbal warning that he would have no problem using Rule 11 and issue sanctions for filing a brief with a frivolous argument not based on any actual legal foundation or case law. This is the second time Judge Woods has questioned Milazzo on arguments for Laidlaw where he could not site a single case to support what appears to be his clients version of mickey mouse law.
Calhoun initially went through pre-lawsuit litigation against Laidlaw last year, via mediation, which was not public that detailed horrendous racial comments, acts and behavior by multiple Laidlaw executives which include the President’s brother, according to people familiar with the event. Laidlaw folded and settled after their insurance heard what had happen to Calhoun, according to people familiar with the situation. Laidlaw agreed to give a whopping $650,000, with at least a third going to his lawyers at New York-based Nesenoff & Miltenberg llp, for alleged employment discrimination at Laidlaw. One of the actions previously reported by this journalist involved stockbroker manager Todd Cirella sending a text of a black man being hanged in a text conversation about Calhoun, this text was mentioned as coming out in discovery in a public hearing held last month for this case, according to a transcript obtained by this journalist.
Laidlaw’s president, Matt Eitner, has been front and center in the discrimination claims by Laidlaw staff and has been accused of not supervising or taking appropriate management actions when he became aware of the racist behavior and complaints of his staff. Eitner is also currently being investigated by FINRA for supervising securities fraud at Laidlaw, according to FINRA records, which was first reported by this journalist. According to multiple people who have spoken with Eitner after the discrimination claims became public he is deeply offended that he could be called or considered a racist for allowing the alleged behavior at his firm continue for years. Eitner is not a named defendant in the retaliation case. Retaliation claims are filed usually against a company.
After the discrimination claims settled Laidlaw went and withheld $125,000 from Calhoun’s settlement check after they had told Calhoun’s counsel they wouldn’t do that, according to the new lawsuit for retaliation and breach of contract filed in New York federal court this summer. Laidlaw claimed the $125k was taken out for a settlement with a customer who complained about being sold unsuitable investments but at a court hearing last month attorney Milazzo admitted no such settlement has even taken place yet. Additionally, there is no customer complaint filed with FINRA yet against Calhoun as is the customary practice, according to Broker Check. It’s these actions that Judge Woods grilled Milazzo on in justifying where in New York case law is this legal to withhold money from a settlement, especially after you said you wouldn’t do that.
The court transcript reads like Judge Woods sees the clear breach of contract by withholding the money and warned attorney Milazzo that discovery could be justified to show how these actions by Laidlaw aren’t retaliation for George Calhoun complaining about racism in the workplace.
Malizzo’s current law firm, where he is a named partner with former SRF LLP lawyers, braggs about the firm being ‘aggressive’ lawyers for securities litigation and business disputes. But in Calhoun’s new lawsuit it appears Judge Woods isn’t having any of their legal tactics or will allow their client to make stuff up.
Additionally, Malizzo and Carmel’s former law partner Peter DiChiara was charged by the SEC in September for assisting in a microcap stock scheme. DiChaira settled the charges with the SEC.
SRF llp, where attorney Malizzo worked for a decade, is the law firm that was sued for malpractice in the Barry Honig pump and dump scheme and recently paid out a settlement to one of the SEC’s victim companies for alleged bad legal practices by its former partner Harvey Kesner. SRF also reps Laidlaw in FINRA complaints and advises the broker dealer on securities law.
Today’s hearing ended with Judge Woods again encouraging Laidlaw to settle with Calhoun and not waste legal fees on this dispute. He specially said he likes to see money go to the aggrieved instead of the lawyers. That’s likely because Calhoun’s lawyers have a broad legal standard in their case because of New York City Human Rights law. All they have to do to prove the retaliation claim is show Laidlaw engaged in conduct that is reasonably likely to deter a person from making a discrimination claim.
Calhoun’s attornies, Nicolas Lewis and Gabrielle Vinci, wrote in a response letter to Judge Woods about Laidlaw trying to throw out the retaliation claim, “A reasonable jury could certainly find that the unilateral withholding of a substantial sum of money from an agreed upon settlement payout for reasons proven false by Defendant’s own statements would persuade a reasonable employee from engaging in the protected conduct that led Plaintiff to this point, i.e. would deter a reasonable employee from making a claim of discrimination.”
NYC and NY state law will also allow Calhoun to get a bigger payout if the retaliation claim survives. There have been some cases where an extra six figures was awarded for employment retaliation which means Laidlaw could be faced with paying Calhoun double what they withheld.
Editors Note: Below is a copy of a court transcript which shows Judge Woods grilling Laidlaw’s lawyers on their lack of court cases to support their legal arguments and also mentions what documented evidence of racial discrimination is likely to come out if this case moves to discovery. It’s a fun read for legal nerds.
Attornies Milazzo and Carmel did not respond for comment. Matt Eitner at Laidlaw did not respond to an email with questions about the ethics and legal issues in the Calhoun case.
Calhoun Letter to Court 11.1.20 Laidlaw Retaliation Case by Teri Buhl on Scribd
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