Union Planters' Austerity Program May Cut Costs, but It Brings Lawsuits: Two Claim Breach of Contract and Seek a Total of More Than $2 Million

American Banker, March 5, 1985 | Go to article overview

Union Planters' Austerity Program May Cut Costs, but It Brings Lawsuits: Two Claim Breach of Contract and Seek a Total of More Than $2 Million


MEMPHIS -- One of the effects of the austerity program undertaken by Union Planters Corp. last year was the exodus -- not always voluntary -- of top executives.

Another has been lawsuits filed by some of those executives.

Two of the five executives who recently have left, or who have announced their resignations, are suing Union Planters, Company officials have not commented on any of the cases.

The resignations, the lay-offs, and the lawsuits are all related to Union Planters' decision in November to lay off about 200 officers and managers. Although first-quarter earnings won't be reported for two months, Union Planters expects to save $6.5 million in 1985 from those lay-offs. The austerity program was prompted by reported third-quarter 1984 losses of $14.9 million and losses for last year totaling $18.8 million.

One of those suing is James G. Steed, co-founder and former vice president of Brenner-Steed Inc., Union Planters' discount brokerage subsidiary. In a suit filed in Circuit Court here, Mr. Steed asked for $2 million in compensatory and punitive damages.

And in a Chancery Court action, also filed in Memphis, Mr. Steed sued -- for an unspecified amount -- for breach of a six-year employment contract with Union Planters.

Both action resulted from his Dec. 19, 1984, firing and a suit filed against him eight days later by Union Planters and Brenner-Steed.

In the Chancery Court suit, Mr. Steed lodged a count-by-count denial of the Union Planters suit against him. Court papers indicate he was dismissed, in part, over an incident involving James W. Walker, who was a bond salesman at Brenner-Steed until late last year when he left to work for First Tennessee Bank.

A suit by Union Planters and Brenner-Steed against Mr. Walker and First Tennessee was filed at the same time as the action against Mr. Steed. Union Planters charges that Mr. Walker took his "call book" of customers and prospects when he left and that that information belonged to Brenner-Steed.

In his answer to the Union Planters suit, Mr. Steed denied he conspired with Mr. Walker, Mr. Steed said he "faithfully and tirelessly" did his job in accordance with the agreement under which Union Planters bought Brenner-Steed in 1982, and in accordance with his employement contract with the Memphis-based bank holding company.

He charged Union Planters breached his employment agreement and wrongfully discharged him. He said in the court papers that he was not guilty of any wrongdoing that could have justified his dismissal.

Union Planters had charged that Mr. Steed and Mr. Walker had a close personal and business relationship. The company's suit alleged that Mr. Steed gave Mr. Walker information that gave him an unfair advantage over other bond salesmen at the brokerage, which disrupted morale and normal operation of the business.

Mr. Steed denied those charges.

He conceded, as Union Planters charged in its suit, that he had become dissatisfied with his job in midsummer 1984. But, Mr. Steed said in his answer, that was because of "continually increasing pressure as the result of personnel cutbacks" in the wake of losses Union Planters was suffering. He also alleged in his suit that his firing was part of an austerity program aimed at eliminating employees with high salaries.

He denied in the suit that he ever discussed with Mr. Walker or others at Brenner-Steed the possibility of leaving to form another business to compete with Union Planters. He also denied suggesting that Mr. Walker leave to take a job at First Tennessee, and he denied advising Mr. Walker against signing a confidentiality agreement. Union Planters was requiring Brenner-Steed salesmen to sign such agreements.

Mr. Steed acknowledged that he talked twice to First Tennessee executives about a job there. He also said it was "common practice" for salesmen to take call books with them when they changed jobs. …

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