Opinion
No. 04 Civ. 1751 (JSR).
February 14, 2005
MEMORANDUM ORDER
Plaintiff Chaskie Rosenberg alleges that his former employer, defendants MetLife, Inc., Metropolitan Life Insurance Company, and MetLife Securities, Inc. (collectively "MetLife") discriminated against him in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the New York State Human Rights Law, N.Y. Exec. Law § 296 et seq., and the New York City Administrative Code § 8-107, because he is a Hasidic Jew. Plaintiff also alleges that MetLife libeled him by filing a negative Form U-5 with the National Association of Securities Dealers, Inc. following his termination, fraudulently misrepresented to him that MetLife would not do so, and improperly denied his right to various commissions and bonus income in breach of contract. MetLife has moved for summary judgment on all of these claims. For the reasons stated below, the motion is granted in part and denied in part.
The pertinent facts, either undisputed or, where disputed, taken most favorably to the plaintiff, are as follows. In August 1997, Rosenberg was hired by MetLife as a Financial Services Representative in MetLife's All-Boro (New York) Agency, located in Brooklyn and primarily servicing the Brooklyn community of Hasidic Jews. Deposition of Chaskie J. Rosenberg 8/3/04 ("Rosenberg Dep.") attached as Exhibit B to Certification of Steven Yarusinsky dated September 10, 2004 ("Yaruinsky Cert."), at 50. There were approximately 25 Financial Services Representatives working at this agency, of whom 15-20 were Hasidic Jews, including Rosenberg. Id. at 50-51. During the early period of Rosenberg's employ, MetLife actively solicited the business of Hasidic Jews and advertised the heavily Hasidic staff of the All-Boro Agency in newspapers targeted to the Hasidic community. Affirmation of Maurice W. Heller dated September 28, 2004 ("Heller Aff.") Ex. JJJ (print advertisement with photographs of All-Boro staff).
Beginning in 1998, however, MetLife initiated inquiries into the use of third-party checks to pay the premiums due on policies issued by the All-Boro Agency. Deposition of Joseph G. Gormley 8/26/04 ("Gormley Dep."), attached as Exhibit C to the Yarusinsky Cert., at 41-43; Deposition of Charles Locasto 8/24/04 ("Locasto Dep."), attached as Exhibit D to the Yarusinsky Cert., at 23-24. Although MetLife contends that it was concerned that Financial Services Representatives in the All-Boro Agency were selling policies as a form of speculative insurance (in which a policy does not protect an insurable interest but rather serves as a form of investment for a third party), see Rosenberg Dep. at 67; Gormley Dep. at 42-44, Rosenberg avers that MetLife consciously ignored the role of the Hasidic institution of the Gemach, or free loan society, in which individuals pay into a shared fund that lends out money on an as-needed basis to those individuals. Affirmation of Chaskie J. Rosenberg dated 9/28/04 ("Rosenberg Aff."), at ¶¶ 10-14. As a result of the utilization of the Gemach, while the checks used to pay insurance premiums may have been drawn on accounts with names that were not the policy holders' names the money was, in effect, the policy holders' money. Id. There was thus no third-party problem, even if there had been MetLife policies in place that prohibited third-party payment, which Rosenberg also contests. Id. at ¶ 20.
The 1998 inquiries grew into a full-scale audit of the entire All-Boro Agency in 1999, followed by a further audit in March of 2000. Locasto Dep. at 23; MetLife Corporate Internal Auditing Report 00-20019 attached as Exhibit PP to Yarusinsky Cert. Rosenberg avers that these audits were purposely targeted, in discriminatory fashion, against Hasidic Jews, either as Financial Services Representatives or as policy holders, or both. Among the evidence of this discriminatory intent were the following:
• An email from a senior manager entitled "Issues re Orthodox Sales Practices," marked by another senior manager with a "do not forward," which refers to the "Hasidic/Orthodox representatives" as a "group" whose "future transgressions" should be "anticipate[d]" by new measures. E-mail from Vince Vitiello to Richard Leist, Ann Reid, and David Holtzer, 2/19/03, attached as Exhibit Q to Heller Aff.
• An email from a second senior manager that sets forth a theory of a "tight community" that engages in illegal actions through "free loan societies" and "check cashing services" and that utilizes insiders in the insurance industry to launder money. E-mail from Richard Leist to Robert J. Cordier, 2/26/03, attached as Exhibit R to Heller Aff.
• An email from a third senior manager that notes the focus on Hasidic Financial Services Representatives in the audit and expresses fears that "we may be questioned on whether a fair and balanced review was conducted." E-mail from David Holtzer to Joan Benn, 3/9/03, attached as Exhibit LL to Heller Aff.
• A handwritten note, author unknown, that asks, "What about non-orth. bus." Heller Aff. Ex. B.
• A letter from one senior manager to another summarizing the complaints of another Hasidic agent, Sarah Mandel, that Hasidic agents are being targeted in the audit, with a handwritten note (author unknown) on the letter that asks "are these 12 [agents being targeted] coincidentally hasidic [?]." Letter from Charles Locasto to "Richard," 12/23/02, attached as Exhibit II to Heller Aff.
After the March 2000 audit, MetLife decided to close the All-Boro Agency, which it did in May 2000. Gormley Dep. at 89. At this time, several Financial Services Representatives resigned or were terminated, and the remaining Financial Services Representatives, including Rosenberg, were transferred to the Shore Road Agency. Rosenberg Dep. at 85-89.
In 2002, MetLife conducted an audit of the Shore Road Agency. Locasto Dep. at 92-93; MetLife Corporate Internal Auditing Report A75A-02163-001, attached as Exhibit RR to Yarusinsky Cert. Rosenberg contends that this further audit focused only on Hasidic Jews and on what one MetLife manager referred to as "Orthodox Sales Practices." Rosenberg Aff. ¶¶ 21-22; Heller Aff. Ex. Q.
Rosenberg himself was one of the Financial Services Representatives selected for review in the 2002 audit. Sales Agent Case Outline, attached as Exhibit QQ to Yarusinsky Cert. The auditors focused on nine policies of the nearly 170 that Rosenberg had written between January 2000 and August 2002, in part because the premiums on these nine policies were paid from accounts bearing names other than the policy holders' names.Id. One of Rosenberg's managers, Jimmy Fay, questioned Rosenberg about the nine policies; Fay wrote down Rosenberg's oral answers, and Rosenberg signed the final version. Rosenberg Aff. ¶¶ 32-33. Rosenberg explains that, at the insistence of Fay, who did not want to leave any answers blank or uncertain, he approximated certain answers, such as the exact address of the Gemach-sponsoring congregation, and certain work or business relationships of policy holders and the organizations that paid their premiums. Id. ¶¶ 33-37. Rosenberg further suggests that Fay knew and accepted that these answers were innocent approximations. Id.
On April 29, 2003, Rosenberg was informed by a MetLife manager named Victor Muro that MetLife was terminating Rosenberg's employment as a result of his handling of these nine policies and his allegedly false answers to the questionnaire. Rosenberg Aff. ¶ 42. Rosenberg says that Muro told him that the Form U-5, which MetLife was required to file with the National Association of Securities Dealers ("NASD") in explanation of his termination, would not say anything about the investigation of Rosenberg or allege any wrongdoing on Rosenberg's part. Id. ¶ 46. However, the Form U-5 that MetLife eventually filed with the NASD said that Rosenberg was terminated because he "[a]ppeared to have violated company policies and procedures involving speculative insurance sales and possible accessory to money laundering."Id. ¶ 113.
From the foregoing account, it is clear that issues of material fact remain in genuine dispute as to whether Rosenberg was fired for cause or whether he was one object of a more general MetLife campaign against Hasidic agents. Subordinate but equally genuine disputes also remain as to whether Rosenberg was treated differently from non-Hasidic agents, see, e.g., Deposition of Richard Kearns, 8/19/04, attached as Exhibit TI to Heller Aff., at 74-89, 149-51; Deposition of Ann Reed, 8/17/04, attached as Exhibit TJ to Heller Aff., at 123-25, and as to whether the company policies that Rosenberg supposedly violated were not in place at the relevant times, see, e.g., Monetary Instrument Third-Party Payment FAQs, attached as Exhibit O to Heller Aff. (which Rosenberg interprets as introducing the ban on third-party premium payments only as of November 10, 2003).
Accordingly, Rosenberg's claims of discrimination survive, if barely, MetLife's motion for summary judgment.
The same is not true of Rosenberg's libel claim since, under New York law (which governs this claim), statements in a Form U-5 are absolutely privileged. See Herzfeld Stern, Inc. v. Beck, 572 N.Y.S.2d 683 (1st Dep't 1991); Culver v. Merrill Lynch Co., 1995 U.S. Dist. LEXIS 10017, *16 (S.D.N.Y. Jul. 17, 1995). "If the privilege is absolute, it confers immunity from liability regardless of motive." Park Knoll Assoc v. Schmidt, 59 N.Y.2d 205, 209 (1983). Accordingly, Rosenberg's libel claim must be dismissed.
Fahnestock v. Waltman, 935 F.2d 512 (2d Cir. 1991), on which Rosenberg relies and which applied a qualified rather than absolute privilege, was decided prior to Herzfeld and its progeny. See, e.g., Hogan v. John Nuveen Co., Index No. 107950/01, slip op. at 8 (N.Y.Sup.Ct., N.Y. County, June 21, 2002); Hessel v. Goldman, Sachs Co., 722 N.Y.S.2d 21 (1st Dep't 2001); Tuttle v. Fid. Brokerage Servs., Inc., Index No. 241145/200, slip op. at 9 (N.Y.Sup.Ct., Suffolk County, Mar. 29, 2001); Dunn v. Ladenburg Thalmann Co., 686 N.Y.S.2d 471, 472 (2d Dep't 1999); Grieve v. Barclays Capital Sec. Ltd., No. 602820/1998, 1999 WL 1680654, at *6-7 (N.Y.Sup.Ct., N.Y. County Sept. 10, 1999). In light of the overwhelming authority in the New York courts, Fahnestock, and the Southern District cases that have applied it, see Jordan v. Metropolitan Life Ins. Co., 280 F.Supp. 2d 104, 109 (S.D.N.Y. 2003); Acciardo v. Millennium Securities Corp., 83 F.Supp. 2d 413, 419 (S.D.N.Y. 2000), can no longer be regarded as good law.
Likewise, Rosenberg's fraudulent misrepresentation claim cannot survive. To prove fraud under New York law, "a plaintiff must show that (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance."Bridgestone/Firestone, Inc. v. Recovery Credit Servs., 98 F.3d 13, 19-20 (2d Cir. 1996), quoting Banque Arabe et Internationale D'Investissement v. Maryland Nat'l Bank, 57 F.3d 146, 153 (2d Cir. 1995). Even if, as Rosenberg alleges, his manager told him that the Form U-5 would not mention anything negative about his termination, Rosenberg cannot demonstrate intent, reliance, or damages. Where a purportedly fraudulent "promise" is alleged, the plaintiff "must demonstrate that promises were made to him with a present intent not to perform the promised acts." Murray v. Xerox Corp., 811 F.2d 118, 121 (2d Cir. 1987). "[F]raudulent intent is not demonstrated by evidence of mere non-performance of a promise." Id. Rosenberg has brought forward no evidence other than his own statement, which is not based on any first-hand knowledge, that there was such a present intent. Rosenberg Affirmation ¶ 46. Further, Rosenberg never says what he would have done differently had he known the form said what it said, so he has failed to establish any reliance on his manager's assurances. As to establishing damages, Rosenberg says that it took him nearly half a year without income to find a new job as a result of the Form U-5, and that he was "humiliated and embarrassed" when a prospective employer informed him of what was in the Form U-5. Rosenberg Affirmation ¶ 46. Yet any damages he suffered were as a result of what was in the Form U-5 itself rather than any misrepresentation of what the company would include therein. Accordingly, the fraudulent misrepresentation claim must be dismissed.
As for Rosenberg's two breach of contract claims, the first alleges that MetLife wrongfully refused to pay him bonus income and his share of pooled first year premium commissions that he had already earned. Amended Complaint ¶¶ 80-81. A MetLife document entitled "When You Are No Longer Active," which by MetLife's own admission governs the terms of Rosenberg's termination, suggests that plaintiff might in fact be entitled to these payments. See "When You Are No Longer Active," attached as Exhibit B to Affidavit of Joseph Franklin dated October 7, 2004. Accordingly, summary judgment on this claim must be denied.
In contrast stands Rosenberg's other breach of contract claim, which is for renewal premium commissions not yet earned but already credited. The document "When You Are No Longer Active,"supra, does suggest that, in some situations, renewal premium commissions that have already been credited and accumulated in an agent's account may be paid after termination. But Rosenberg has provided no evidence whatever, not even in his Affirmation, that any renewal premiums had actually accrued in this fashion. Accordingly, his second claim for breach of contract must be dismissed.
For the foregoing reasons, defendant's motion for summary judgment is granted as to plaintiff's claims of libel, fraudulent misrepresentation, and breach of contract for renewal premium commissions, and denied as to plaintiff's discrimination claims and plaintiff's breach of contract claim for earned bonuses and his share of pooled first year premium commissions.
Counsel for the parties should jointly telephone the Court by no later than February 28, 2005 to set a date for the trial of plaintiff's remaining claims.
SO ORDERED.