Opinion
04 Civ. 9340 (NRB).
November 3, 2005
Chinyere Okoronkwo, Esq., New York, NY, Counsel for Plaintiffs.
Robert S. Whitman, Esq., Lisa Swanson, Esq., Orrick, Herrington Sutcliffe LLP, New York, NY, Counsel for Defendant.
MEMORANDUM AND ORDER
Plaintiff Marti LaFontant ("LaFontant") brings this complaint alleging that defendant Salomon Smith Barney ("Smith Barney") breached a contractual agreement contained in its employee handbook by not submitting her employment dispute to the American Arbitration Association ("AAA"). Plaintiff further alleges that Smith Barney violated 42 U.S.C. § 1981 by not submitting her claim to the AAA because it was offended by the allegations of race discrimination stated in plaintiff's arbitration claims. Smith Barney now moves for dismissal of the complaint or, in the alternative, for summary judgment. Having thoroughly considered the submissions of both parties, we now grant defendant's motion for summary judgment.
Plaintiff's employer at the time this claim arose was Smith Barney, the brokerage arm of defendant Citigroup Global Markets, Inc. ("Citigroup"). To avoid confusion, we will refer throughout this opinion only to Smith Barney, plaintiff's former employer.
Plaintiff Karla Rivera was terminated from this action on May 25, 2005.
We have decided to treat the motion as one for summary judgment because of the parties' reliance on letters exchanged between them and the National Association of Securities Dealers, Inc. ("NASD").
FACTS
Because we must draw all reasonable inferences in favor of plaintiff, all facts are derived from plaintiff's submissions except for copies of certain letters exclusively provided by defendant. However, those letters are referenced in plaintiff's complaint, and their validity and accuracy are undisputed.
Plaintiff began working for Smith Barney in 1997. On her job commencement date, plaintiff signed a variety of forms, including an arbitration agreement that was limited in scope. In 1999, Smith Barney issued an employee handbook ("the handbook"), applicable to all Smith Barney employees hired after September 1, 1992, which provided, inter alia, for the following:
Plaintiff has failed to produce a copy of this agreement or suggest the limitations it contained. However, the terms of that agreement do not affect our decision to grant summary judgment.
The Firm believes that the resolution of . . . disagreements will be best accomplished by internal dispute resolution and, where that fails, by arbitration conducted under the auspices of the National Association of Securities Dealers Inc. ("NASD"). If, however, the NASD declines the use of its arbitration facilities, the arbitration shall then be conducted under the auspices of the American Arbitration Association ("AAA"). . . .
This Policy makes arbitration the required, and exclusive, forum for the resolution of all disputes based on legally protected rights (i.e., statutory, contractual or common law rights) that may arise between an employee or former employee and the Firm or its affiliates, officers, directors, employees, and agents . . . including claims, demands or actions under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, [and] the Civil Rights Act of 1991. . . .
Pl. Ex. C, Employment Arbitration Policy. Moreover, the policy specifically provides the method by which an employee must initiate a claim:
Arbitration may be initiated by a written demand for arbitration submitted to the Senior Vice President, Human Resources, along with a check payable to the NASD for the requisite filing fee. . . . [A]n employee whose total compensation for the previous calendar year was $100,000 or less . . . need only submit a check for $50.00 payable to Salomon Smith Barney.
The demand shall set forth the claim, including the alleged act or omission at issue and the name of all persons involved in the act or omission. Within ten business days of receiving such demand, the Firm shall file the demand with the NASD, together with the applicable filing fee as provided for by the NASD's fee schedule. The employee or former employee will be required to sign a submission agreement.Id. (emphasis added).
Plaintiff resigned in October 2000. That same month, plaintiff and Smith Barney negotiated a settlement through the Equal Employment Opportunity Commission ("EEOC") concerning plaintiff's allegations of race and sex discrimination. See Vazquez v. Salomon Smith Barney Inc., 01 Civ. 2895 (JSM), 2002 WL 10493 at *1 (S.D.N.Y. Jan. 4, 2002). On April 25, 2001, plaintiff filed a complaint alleging that Smith Barney had breached the terms of that agreement by not implementing an employee management and supervision training program provided for in the agreement. See id. On summary judgment, Judge Martin found that plaintiff's complaint alleging non-compliance with the negotiated settlement failed to state a claim under 42 U.S.C. § 1981, but permitted her breach of contract claim to proceed.See Vazquez v. Salomon Smith Barney Inc., 01 Civ. 2895 (JSM), 2003 WL 21242902 at *2 (May 29, 2003). The latter claim was settled by the parties December 17, 2003.
Plaintiff has recently married and consequently has changed her last name from Vazquez to LaFontant.
In another action, on October 22, 2001, Karla Rivera, formerly a co-plaintiff in this action, filed a complaint seeking a declaration of her rights under the same arbitration agreement at issue here. After an amended complaint was filed, Judge Sweet held that the action for declaratory judgment was not ripe, as no case or controversy yet existed. See Rivera v. Salomon Smith Barney Inc., 01 Civ. 9282 (RWS), 2002 WL 31106418 (S.D.N.Y. Sep. 20, 2002). In denying a motion for reconsideration, Judge Sweet noted that although plaintiff's attorney sought to add LaFontant to the action for declaratory judgment, doing so "would not change the analysis in the [earlier] Opinion that [the] declaratory judgment action is not ripe." See Rivera v. Salomon Smith Barney Inc., 01 Civ. 9282 (RWS), 2003 WL 222249 (Jan. 30, 2003).
Meanwhile, on April 11, 2002, plaintiff served Smith Barney with an arbitration claim alleging various race and sex discrimination claims. See Robert S. Whitman ("Whitman") Decl. Ex. 4. Her complaint listed twelve causes of action, generally alleging that Smith Barney and several of its executives discriminated against plaintiff, and ultimately demanded her resignation, because of her race and sex and because she had filed a sex discrimination complaint against one of her supervisors. Plaintiff's attorney submitted her arbitration claim, along with the required $50 filing fee, to Smith Barney's legal department "for commencement of an action before the National Association of Securities Dealers, Inc." Whitman Decl. Ex. 4, Letter of Chinyere Okoronkwo ("Okoronkwo"), dated April 11, 2002. On April 24, 2002, A. Marilyn Leconte-Peck ("Leconte-Peck") from Smith Barney's Office of General Counsel sent plaintiff a Uniform Submission Agreement and requested that she sign it, in accordance with the handbook's requirements. See Whitman Decl. Ex. 5, Letter of Leconte-Peck, dated April 24, 2002. On June 13, 2002, a legal assistant at NASD informed Smith Barney that it could not assert jurisdiction over plaintiff's claims unless it received a submission agreement signed by both parties by June 28. Whitman Decl. Ex. 12, Letter of Chauni M. Lee ("Lee"), dated June 13, 2002. After receiving this letter from NASD, Smith Barney's outside counsel contacted plaintiff's counsel on June 17, 2002, explaining that signing "the Agreement is a prerequisite to the initiation of this matter . . . [and] failure to submit the Agreement . . . will result in the dismissal of the matter by the NASD." Whitman Decl. Ex. 13, Letter of Rene Kathawala ("Kathawala"), dated June 17, 2002. One week later, plaintiff's attorney responded to Smith Barney with a letter contending that the effect of the letter dated June 13 was that "NASD has ruled that it lacks jurisdiction over [plaintiff]'s claims." Whitman Decl. Ex. 14, Letter of Okoronkwo, dated June 24, 2002. Plaintiff's counsel also stated she would seek a declaratory judgment regarding the validity of the arbitration agreement, notwithstanding her statement earlier in the same letter that "[plaintiff] has admitted that she executed an arbitration agreement with [Smith Barney]." Id. Moreover, plaintiff stated that if the NASD declined jurisdiction, Smith Barney must either "tender [plaintiff]'s complaint to the American Arbitration Association, or to consent [sic] to her transferring the case to federal court." Id. at 2.
Because we have not been provided with information concerning the scope of the earlier negotiated settlement, we are unclear about how plaintiff's arbitration claims differ than those covered by that settlement. However, any overlap between the two sets of claims or possible release issues do not affect our decision here.
Plaintiff earned less than $100,000, and thus only needed to pay the minimum filing fee specified in the handbook.
It is entirely unclear to the Court how plaintiff's attorney could have interpreted NASD's letter in this way. The letter stated only that NASD would have jurisdiction if the parties would submit the signed forms. At the time plaintiff's attorney wrote her June 24 letter, plaintiff still had four days to return the submission agreement to NASD under the terms of the June 13 letter.
Three letters relevant to this dispute were sent the next day, June 25, 2002. First, Smith Barney's outside counsel responded to the letter from plaintiff's counsel, explaining that plaintiff's refusal to sign the submission agreement was the only obstacle to the NASD asserting jurisdiction. See Whitman Decl. Ex. 16, Letter of Kathawala, dated June 25, 2002. Smith Barney also sent a letter to NASD relating the fact that plaintiff was apparently refusing to sign the agreement. Whitman Decl. Ex. 15, Letter of Kathawala, dated June 25, 2002. Finally, plaintiff's counsel responded to Smith Barney's outside counsel, asserting that, "[n]o provision of [Smith Barney]'s employee handbook constitutes a waiver of employee's right to refuse to arbitrate claims . . . [and] no provision of [Smith Barney]'s employee handbook empowers an arbitral forum to compel [plaintiff] to arbitrate claims against individuals who no longer are employed by the company." Whitman Decl. Ex. 17, Letter of Okoronkwo, dated June 25, 2002. Plaintiff's counsel further stated that her client "remains steadfast in her position that she will not consent to voluntary arbitration of her Section 1981 claims against [Smith Barney]. . . ." Id.
About two months later, plaintiff's counsel sent a letter to the NASD, inquiring into the status of her client's case, and requesting a decision from the NASD on whether it had jurisdiction to hear the dispute. See Whitman Decl. Ex. 18, Letter of Okoronkwo, dated August 19, 2002. On August 29, 2002, NASD sent a letter to Smith Barney's outside counsel and plaintiff's counsel requesting an explanation for Smith Barney's "inability to produce the acknowledgment form signed by [plaintiff]." Whitman Decl. Ex. 19, Letter of Lee, dated August 29, 2002. In the ensuing flurry of letters, Smith Barney reasserted its position that the only thing preventing NASD from asserting jurisdiction was plaintiff's refusal to sign a submission agreement. See Whitman Decl. Ex. 21, Letter of Kathawala, dated September 16, 2002. Plaintiff's counsel then sent a letter to the NASD, where she asserted, inter alia, that Judge Sweet had held that Smith Barney's arbitration policy "makes no reference to claims arising under 42 U.S.C. Section 1981." Whitman Decl. Ex. 22, Letter of Okoronkwo, dated September 30, 2002. Moreover, she asserted that Smith Barney's "policy does not expressly or impliedly mandate that a complainant arbitrate of [sic] claims against former employees." Id. In this letter, plaintiff's counsel called into question whether plaintiff actually received and acknowledged the policy, see id., despite her earlier statement that "[plaintiff] has admitted that she executed an arbitration agreement with [Salomon]." Whitman Decl. Ex. 14, Letter of Okoronkwo, dated June 24, 2002. She further asserted that Smith Barney was required to give consideration in order for plaintiff to sign the submission agreement, arguing it constituted a "new agreement." Whitman Decl. Ex. 22, Letter of Okoronkwo, dated September 30, 2002. Lastly, plaintiff's counsel demanded that Smith Barney confer jurisdiction over the dispute to the AAA, charging the NASD with "aiding and abetting Smith Barney's breach of the Policy," "violating its own rules and regulations," and "compromising [plaintiff]'s procedural due process rights." Id.
In fact, Judge Sweet refrained from ruling on the scope of the policy, as he found the dispute was not ripe. See Rivera, 2003 WL 31106418 at *4 ("Rivera's declaratory judgment action is not ripe and will be dismissed"). Moreover, the policy specifically references the Civil Rights Act of 1991, which is codified at 42 U.S.C. § 1981.
This assertion is also directly contradicted by the policy's language, which makes arbitration the exclusive avenue for the resolution of all disputes "between an employee or former employee and the Firm or its affiliates, officers, directors, employees and agents. . . ." Pl. Ex. C (emphasis added). When plaintiff lodged her complaint, she was a former employee seeking to bring claims against Smith Barney and its current employees. Her situation thus squarely fell within the language of the policy.
Again, the handbook explicitly states that employees will be required to sign a submission agreement. See Pl. Ex. C ("The employee or former employee will be required to sign a submission agreement.").
On October 10, 2003, the NASD formally advised plaintiff that the "time to cure the deficiencies has expired," so it had "removed this case from its docket." Whitman Decl. Ex. 26, Letter of Lee, dated October 10, 2003. Thereafter, Smith Barney's outside counsel informed plaintiff that it would not refer the dispute to AAA, as plaintiff's counsel had previously requested, "because the NASD is the appropriate dispute-resolution forum." Whitman Decl. Ex. 27, Letter of Whitman, dated December 3, 2003. Smith Barney reiterated that it was still willing to go before the NASD if plaintiff would sign the submission agreement. See id. Plaintiff continued to refuse to do so.
Plaintiff filed her complaint in the instant matter on November 29, 2004. Her amended complaint, filed May 25, 2005, makes two claims: first, that Smith Barney's refusal to send her arbitration claims to AAA breached the arbitration agreement; and second, that Smith Barney's refusal to do so was because it "was offended" by the underlying claims alleging race discrimination, in violation of 42 U.S.C. § 1981. Plaintiff does not challenge the validity of the arbitration policy contained in the employee handbook.
In her complaint, plaintiff acknowledges that the handbook "governs Smith Barney's actions with respect to its existing and former employees . . . [and] [p]laintiff gave consideration for the contractual commitment memorialized in the employee handbook." Am. Compl. ¶¶ 24-25.
DISCUSSION
A motion for summary judgment must be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In deciding a motion for summary judgment, the evidence submitted must be viewed in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). While credibility determinations, weighing evidence and drawing legitimate inferences from facts are functions that the Court must leave to the jury, if the nonmoving party does not present evidence from which a reasonable jury could return a favorable verdict, then summary judgment is appropriate. See, e.g., Golden Pacific Bancorp. v. F.D.I.C., 375 F.3d 196, 200 (2nd Cir. 2004).A. Breach of Contract
Plaintiff alleges that Smith Barney "preemptively deprived Ms. LaFontant of the right to present the merits of her arbitration claims to AAA," thus denying her "the contractual right to seek redress of alleged injuries through arbitration and without judicial intervention." Am. Compl. ¶ 30. Plaintiff further asserts that she "was not complicit" in Smith Barney's alleged failure to "submit a copy of the employer-employee arbitration agreement to NASD Dispute Resolution." Id.
These allegations are entirely without merit. The employee handbook unambiguously requires that a current or former employee sign a submission agreement in order for her claims to proceed before an arbitrator. Plaintiff never did so. In fact, plaintiff made clear that she never intended to sign the agreement. See Whitman Decl. Ex. 25, Letter of Okoronkwo, dated October 7, 2002 ("[Plaintiff] will not execute a submission agreement. . . ."). The Court simply fails to see how plaintiff can allege that she was not complicit in the failure to arbitrate when she was repeatedly informed that she had to sign a submission agreement, and was in fact encouraged to do so by Smith Barney long after the NASD informed her it could not exercise jurisdiction until plaintiff signed a submission agreement. If plaintiff indeed desired arbitration, as her complaint suggests she did, Smith Barney, by explaining the prerequisites for arbitration to her, did more for plaintiff than her own counsel.
The amended complaint states that, "[t]hrough no fault of Ms. Lafontant [sic], Smith Barney failed to produce the employer-employee arbitration agreement that would have met the threshold jurisdictional requirement. NASD Dispute Resolution did not excuse Smith Barney for failing to submit a mandatory arbitration agreement." Am. Compl. ¶ 17. Of course, the only reason Smith Barney did not submit the agreement is because it could not without plaintiff's signature. We simply fail to understand how plaintiff can blame Smith Barney for her own failure to follow a straightforward procedure.
Plaintiff's argument boils down to this: because NASD did not exercise jurisdiction over the dispute and the handbook requires that Smith Barney refer disputes to the AAA if the NASD declines jurisdiction, Smith Barney breached its contractual obligation to refer plaintiff's claim to the AAA. Plaintiff attempts to create an issue of fact over the meaning of the following language contained in the handbook: "If . . . the NASD declines the use of its arbitration facilities, the arbitration shall then be conducted under the auspices of the American Arbitration Association ("AAA"). . . ." Pl. Ex. C. Specifically, plaintiff maintains that, notwithstanding her refusal to sign the submission agreement, Smith Barney had an obligation to refer her claim to the AAA once the NASD informed the parties that it could not exercise jurisdiction.
This argument has no basis in fact, as the policy nowhere imposes such a requirement. Plaintiff's effort to transform an unambiguous contractual provision into an issue of fact thus fails. In order to find that plaintiff has stated a claim for breach of contract, we would have to altogether ignore the language requiring that "the employee or former employee . . . sign a submission agreement." Id. Plaintiff's deliberate refusal to comply with the handbook's requirements was the only reason that the NASD did not arbitrate her complaint. Because plaintiff agrees that she was bound by the policies contained in the handbook, she has no excuse for not complying with its affirmative obligations. Plaintiff cannot try to game the system by compelling Smith Barney to transfer her claims to the AAA when the agreement clearly provides that the NASD is the default forum. In short, plaintiff, not Smith Barney, breached the agreement by refusing to comply with the requirement that she sign the submission agreement. She cannot now blame Smith Barney for non-performance when she failed to satisfy her own obligations under the agreement. B. 42 U.S.C. § 1981
While plaintiff's counsel now may regret her strategic decision not to arbitrate her client's claims before the NASD, that does not justify bringing this frivolous action. Moreover, it is evident that Ms. Okoronkwo did not research the applicable law, as courts in this district have specifically held that employers may require their employees to arbitrate claims before the NASD. See, e.g., Benson v. Lehman Bros., 04 Civ. 7323 (DLC), 2005 WL 1107061 at *3 (S.D.N.Y. May 9, 2005) (rejecting argument that requiring arbitration of Title VII claims before the NASD or New York Stock Exchange deprives "employees of a neutral arbitral forum due to structural bias in the selected arbitration fora"); see also Litaker v. Lehman Bros. Holdings, Inc., No. 97 Civ. 1607 (DC), 1999 WL 619638, at *5 (S.D.N.Y. Aug. 16, 1999) (also rejecting "structural bias" argument as applied to NASD). Ms. Okoronkwo simply did not have a legal basis to advise her client that she was not required to arbitrate her claims against Smith Barney.
Ms. Okoronkwo has now brought three claims arising out of the same employment dispute, with diminishing merit each time. Although we are not initiating Rule 11 sanctions here, we are not entirely convinced they are unwarranted. If Ms. Okoronkwo decides to file a subsequent action, we will strongly consider imposing sanctions.
Plaintiff further alleges that Smith Barney's refusal to submit her claim to the AAA constitutes a violation of 42 U.S.C § 1981, arguing that Smith Barney was unlawfully retaliating against plaintiff due to her engaging in protected activities. Plaintiff specifically argues that the alleged breach of contract occurred because Smith Barney was "offended by the allegations of race discrimination stated in the Arbitration Claims." Am. Compl. ¶ 36. Section 1981 provides, in relevant part, that "[a]ll persons within the jurisdiction of the United States shall have the same right . . . to make and enforce contracts," and that this right "includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." 42 U.S.C. § 1981(a), (b).
This claim is meritless. As we have just found, it was plaintiff's activities, not Smith Barney's, which resulted in the arbitration not proceeding before the NASD, the primary arbitral forum. In the absence of a meaningful refusal of the NASD to hear the claim, the alternative forum of the AAA does not enter the picture. Moreover, plaintiff has not produced even a scintilla of evidence suggesting that any racial animus was involved in Smith Barney's insistence that plaintiff comply with the arbitration policy contained in the employee handbook. In fact, plaintiff has provided no information whatsoever regarding the manner in which Smith Barney has handled any dispute other than her own.
1. Elements of a § 1981 Retaliation Claim
The requirements for stating a cause of action for retaliation under § 1981 are the same as those under Title VII of the 1964 Civil Rights Act. See Taitt v. Chemical Bank, 849 F.2d 775, 777 (2nd Cir. 1988); Bedden-Hurley v. New York City Bd. of Educ., 03 Civ. 1507 (RCC), 2005 WL 53282 at *4 (S.D.N.Y. Jan. 11, 2005). We thus analyze plaintiff's claims under the three-step burden-shifting procedure set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). First, the plaintiff must establish a prima facie case of retaliation; second, if plaintiff meets that burden, the defendant must articulate a legitimate non-retaliatory reason for the retaliation; and third, if defendant meets its burden, plaintiff must adduce evidence "sufficient to raise a fact issue as to whether [the employer]'s reason was merely a pretext for retaliation." Shepard v. Frontier Commun. Servs., Inc., 92 F.Supp.2d 279, 290 (S.D.N.Y. 2000) (citation omitted).
2. Prima Facie Retaliation Case
In order to establish a prima facie case of retaliation, a plaintiff must show four things: first, that she was engaged in protected activity; second, that the employer was aware of the activity; third, that the employee suffered an adverse employment action; and fourth, that there was a causal connection between the protected activity and the adverse employment action. See Wyatt v. Zuckerman, 93 Civ. 8027 (LTS), 2005 WL 525256 at *11 (S.D.N.Y. Mar. 7, 2005).
Plaintiff plainly cannot meet these requirements. First, because plaintiff was not a Smith Barney employee at the time of the alleged wrong, she cannot state a prima facie case of retaliation. A § 1981 plaintiff must show that her employer's action altered the conditions of her employment; it necessarily follows that an employer cannot retaliate against a former employee. See Evans v. Port Authority, 00 Civ. 5753 (LAK), 2002 WL 77074 at *2 (S.D.N.Y. Jan. 22, 2002) (Section 1981 "requires an adverse action sufficient to alter the conditions of a plaintiff's employment. Unless that threshold is crossed, the employee's right to make and enforce contracts . . . has not been prejudiced.").
Moreover, plaintiff alleges no materially adverse employment action that she suffered as a consequence of Smith Barney's alleged wrongdoing. Instead, she merely insists that, "[h]ad Smith Barney transferred the Arbitration Claims to AAA, . . . Ms. LaFontant may have succeeded in demonstrating the merit of her claims. . . ." Am. Compl. ¶ 32. This alleged injury does not constitute an adverse employment action. First, plaintiff offers no argument as to why she feels the AAA might have granted her relief, whereas the NASD would not have. Second, even if she could make a showing as to why she believes this is the case, having one arbitral forum resolve her dispute rather than another is not cognizable as an adverse employment action. An action is materially adverse only if it is "more disruptive than a mere inconvenience or an alteration of job responsibilities." Galabya v. New York City Bd. of Educ., 202 F.3d 636, 640 (2nd Cir. 2000) (quotations and citation omitted). Examples of materially adverse actions include "termination of employment, a demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices . . . unique to a particular situation." Id. Plaintiff simply does not claim that the alleged injury she suffered involved anything more than a personal preference as to which arbitral forum heard her dispute, and, as noted earlier, her personal preference does not trump Smith Barney's clearly established right to enforce a valid arbitration agreement.
Although plaintiff's failure to state a prima facie case is itself fatal to her § 1981 claim, we note that defendant has offered a legitimate non-retaliatory explanation for its actions, as the arguments offered by Smith Barney in connection with its motion for summary judgment on plaintiff's breach of contract claim are equally persuasive in this context. Plaintiff has thus failed to offer a plausible argument that defendant's actions were a pretext for discrimination and, in fact, has failed altogether to establish a causal connection between the substance of her claims against Smith Barney and Smith Barney's decision not to send her claims to the AAA. In short, plaintiff's § 1981 claim is wholly without merit.
CONCLUSION
For the reasons set forth above, defendant's motion for summary judgment is granted.SO ORDERED.