Labor & Employment Law Daily Wrap Up, CLASS ACTIONS—3d Cir.: Dismissal of challenge to Cantor Fitzgerald’s noncompete clauses affirmed, (Dec 17, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Separated former limited partners claims that they were deterred from seeking jobs after their departures were inconsistent with their claims that they had found jobs.

The Third Circuit has affirmed the dismissal of a putative class action lawsuit brought by former limited partners of Cantor Fitzgerald entities alleging wrongful withholding of distributions following their departures. The appeals court found that the former limited partners had not alleged antitrust injury and therefore did not have antitrust standing to bring the lawsuit. The court also found that the alleged breach of the implied covenant of good faith and fair dealing did not pertain under Delaware law under the circumstances. The objectives behind Cantor Fitzgerald's partnership agreement conditions upon post-departure distributions "might be unsavory, but they are not anticompetitive" (McLoughlin v. Cantor Fitzgerald L.P., No. 24-3346 (3d Cir. Dec. 15, 2025)).

Background: Cantor Fitzgerald L.P. has ownership interests in many financial services, investment banking, brokerage, and real estate investment limited partnership subsidiaries. The partnership agreements of each of these limited partnership entities include provisions for payments to separating partners, to be paid annually for four years following the partner's departure. The amounts of separation payments are based upon performance while active as partners, and are conditioned upon the separated partners not engaging in any "competitive activity" during the four years following separation. Engagement in "competitive activity" results in denial of any remaining annual payments that otherwise would be payable to the separated partner.

The partnership agreements (1) give broad definition to the term "competitive activity;" and (2) repose "sole and absolute discretion" in the entity's general partner to make a good faith "final and binding" determination as to whether the former partner had conducted "competitive activity" as defined in the partnership agreement.

The general partner entities in the instant case were all controlled by then-Cantor Fitzgerald L.P. chair Howard Lutnick (who subsequently resigned his position at Cantor Fitzgerald L.P. upon becoming U.S. Secretary of Commerce in early 2025).

Seven individuals (Former Partners) who had been limited partners at Cantor Fitzgerald L.P. or its controlled subsidiaries BGC Holdings L.P. or Newmark Holdings L.P. (collectively, CF) had their separation payments curtailed by the respective general partner of their CF entity based upon a determination that the Former Partner had engaged in competitive activity. The Former Partners together filed a putative class action lawsuit in federal district court against CF (but not against Lutnick personally, notwithstanding the allegations in the complaint that he had played a major role in making and imposing the consequences of the competitive activity determinations). The complaint alleged counts of (1) Sherman Act violations; (2) breach of contract; (3) breach of implied covenant of good faith and fair dealing, along with a declaratory judgment count.

The district court dismissed the complaint. The seven named Former Partner plaintiffs appealed the dismissal to the Third Circuit.

Antitrust standing. The appellate court upheld the district court's ruling that the Former Partners lacked antitrust standing.

The Former Partners had essentially alleged that CF had used the injuries sustained by the Former Partners to attain anticompetitive objectives. Such injuries must be "inextricably intertwined" with CF's alleged anticompetitive scheme. Here, the Former Partners' contention that CF's separation payment scheme "harms and disrupts the proper function of the wage-setting mechanism of a free labor market" was unsupported, and specifically was at odds with their allegations that they did in fact successfully compete in the relevant labor markets. The injuries alleged were not adequately tied to negative effects upon competition in the relevant labor markets as a whole. Moreover, the Former Partners' allegations that CF's separation payment scheme increased the costs of labor to prospective employers did not allege harm to the Former Partners themselves.

Having found that the Former Partners did not plausibly plead that they themselves had incurred antitrust injury, the court found it unnecessary to further weigh and analyze any other factors regarding antitrust standing.

Implied Covenant of Good Faith and Fair Dealing. The appellate court upheld the district court's dismissal of the implied covenant of good faith and fair dealing claims asserted by two of the Former Partners. Under Delaware law, this covenant addresses "developments or contractual gaps that the asserting party pleads neither party anticipated." The broadly detailed and exacting terms of the partnership agreements left no gaps to fill. Moreover, the written agreements provided that changes to them can only be made "in writing," so the oral assurances received from Lutnick by the Former Partners that their contemplated actions would not be determined to be "competitive activity" did not create any gap that needed to be filled by invoking the implied covenant.

The Case is No. 24-3346.

Judge: Montgomery-Reeves, T.

Attorneys: Blake A. Bennett (Cooch & Taylor) for Shawn McLoughlin. Tacy F. Flint (Sidley Austin) for Cantor Fitzgerald LP.

Companies: Cantor Fitzgerald LP

Cases: ClassActions TortClaims ContractClaims DelawareNews NewJerseyNews PennsylvaniaNews