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holding that a plaintiff alleging wrongful termination by a subsidiary board had not established that related parent entities controlled his employment through dually-employed directors, as the plaintiff had not rebutted "the presumption that directors with affiliations to more than one corporation 'change hats' in order to fulfill their obligations to each entity."
Summary of this case from Anwar v. Dow Chem. Co.Opinion
10 Civ. 9308 (JSR)
05-23-2011
BURTON T. FRIED, Plaintiff, v. LVI SERVICES, INC.; LVI PARENT CORP., CODE HENNESSEY SIMMONS LLC d/b/a CHS PRIVATE EQUITY V LP; APOLLO INVESTMENT CORP.; SCOTT E. STATE, in his official and individual capacities; BRIAN SIMMONS, in his official and individual capacities; RAJAY BAGARIA, in his official and individual capacities; GERALD J. GIRARDI, in his official and individual capacities, Defendants.
MEMORANDUM
Plaintiff Burton T. Fried brings this age discrimination action against the following defendants: LVI Services, Inc. ("LVI"); LVI Parent Corp. (the "Parent"); Code Hennessy Simmons LLC d/b/a CHS Private Equity V LP ("CHS"); Apollo Investment Corp. ("Apollo"); Scott E. State, in his official and individual capacities; Brian Simmons, in his official and individual capacities; Rajay Bagaria, in his official and individual capacities; and Gerald J. Girardi, in his official and individual capacities.
Defendants note that defendant "CHS" is actually CHS Private Equity V LP. See Memorandum of Law in Support of Defendants' Motion for Partial Dismissal of the Amended Complaint at 1.
Plaintiff's Amended Complaint, filed February 3, 2011, pleads the following causes of action: (1) Discrimination in Violation of the Age Discrimination in Employment Act ("ADEA") (against the "Corporate Defendants"); (2) Retaliation in Violation of the ADEA (against the Corporate Defendants); (3) Discrimination in Violation of New York City Human Rights Law ("NYCHRL") (against all defendants); (4) Retaliation in Violation of NYCHRL (against all defendants); (5) Aiding and Abetting Violations of NYCHRL (against Parent, CHS, Apollo, and the "Individual Defendants"); (6) Breach of Contract (against the "LVI Defendants"); (7) Breach of Implied Covenant of Good Faith and Fair Dealing (against the LVI Defendants); and (8) Tortious Interference with Employment and/or Contractual Relations (against all defendants).
The "Corporate Defendants" are LVI, the Parent, CHS, and Apollo.
The "Individual Defendants" are Scott E. State, Brian Simmons, Rajay Bagaria, and Gerald J. Girardi.
The "LVI Defendants" are LVI and the Parent.
Two separate motions to dismiss were filed on February 14, 2011. Defendant Apollo Investment Corp. filed a motion arguing that the complaint should be dismissed in its entirety against Apollo because, inter alia, it fails to plead that Apollo engaged in culpable conduct, that Apollo is either a single or joint employer, that Apollo aided and abetted any other defendant, or that Apollo tortiously interfered with plaintiff's employment contract. See Memorandum in Support of Defendant Apollo Investment Corporation's Motion to Dismiss the Complaint ("Apollo Mem."). The remaining defendants filed a separate motion arguing that the Court should dismiss "the claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and tortious interference with employment and/or contractual relations with respect to all Defendants." Memorandum of Law in Support of Defendants' Motion for Partial Dismissal of the Amended Complaint ("Def. Mem.") at 1, Further, they argue that the Court should dismiss all claims against CHS, for largely the same reasons stated by Apollo. Id.
Plaintiff filed papers in opposition to both motions on February 25, 2011; defendants filed reply papers on March 4, 2011; and the Court heard oral argument on March 11, 2011. After careful consideration, the Court issued a bottom-line order granting both motions on April 1, 2011. This Memorandum Order states the reasons for the Court's decision.
The allegations of the Amended Complaint are as follows. Plaintiff Burton T. Fried, who is currently 70 years old, began working at LVI in 1986. Am. Comp. ¶¶ 25-26. He served as LVI's General Counsel for three years and its President and CEO for seventeen years. Id. ¶ 26. On November 16, 2005, CHS purchased a majority equity stake in LVI. Id. ¶ 30. Plaintiff had been actively seeking a successor as President and CEO prior to the equity stake purchase by CHS and, upon purchase by CHS, Brian Simmons, a managing partner of CHS, asked Fried to continue the search. Id.
Plaintiff's agreement to remain as President and CEO in the meantime was memorialized in a November 16, 2005 contract between LVI and Fried (the "Employment Contract"). Id. ¶ 31. The Employment Contract contains, among other terms, the following provision:
You will continue to serve as President and Chief Executive Officer of the Company and Buyer until a replacement President and Chief Executive Officer is hired to oversee and conduct the day to day business of the Company and Buyer. You will be expected to perform such services as are customary for such positions, including such duties and responsibilities as are assigned from time to time by the board of directors (the "Board") of the Company and Buyer. After a new President and Chief Executive Officer is hired, you will serve as the Chairman of the Company and Buyer with primary responsibility for strategic growth.See Employment Contract, Affirmation of Joanne Seltzer, dated February 14, 2011 ("Seltzer Affirm") Ex. B at 1.
In June 2006, Robert McNamara was hired as President and CEO of LVI, and plaintiff became Chairman of LVI. Am. Compl. ¶ 32. Although plaintiff's day-to-day responsibilities were somewhat reduced, he "remained engaged in myriad different areas of the Company's operation." Id. ¶ 34.
In April 2010, McNamara resigned from his position, and CHS again asked Fried to serve as interim President and CEO until a permanent replacement could be found. Id. ¶ 37. During the search, defendant Scott E. State approached plaintiff and asked to be considered for the position. Id. ¶ 39. Plaintiff "introduced . . . State to Russell Reynolds, the executive search firm hired by the Company, and Russell Reynolds introduced Defendant State to CHS and two investment firms that were poised to become new equity partners of the Company, Apollo and Falcon Strategic Partners III, LP ('Falcon')." Id. State was hired as President and CEO on October 1, 2010, and Apollo and Falcon became minority stakeholders in LVI Parent on October 8, 2010. Id. ¶¶ 39, 41, 43. As a minority shareholder, Apollo gained two seats on the nine-member Board of Directors of LVI Parent, which were filled by Rajay Bagaria and Gerald J. Girardi, two employees of Apollo's investment manager, Apollo Investment Management, L.P. Id. ¶ 41. CHS was given a minority equity stake in LVI Parent, as well as two seats on its Board of Directors, one of which is held by Simmons, the managing partner of CHS. See Memorandum of Law in Opposition to Defendants' Motion for Partial Dismissal of the Complaint ("Pl. Opp'n to Def. Mem.") at 3.
Although the Amended Complaint does not allege that Bagaria and Girardi were employed by Apollo's investment manager, this fact is conceded by Apollo in its Memorandum. See Apollo Mem. at 3.
On October 19, 2010, plaintiff met with State to discuss his continuing role as Chairman of LVI. Id. ¶ 44. However, State refused to engage in discussion with plaintiff and instead stated that all of plaintiff's responsibilities would be transitioned to LVI's managers. Id. ¶ 45. When plaintiff asked why his duties were being reduced so drastically, State responded: "You are 71 years old. How long do you expect to continue working?" Id. ¶ 46.
On November 2, 2010, Simmons indicated that State and the members of the Board wanted to terminate plaintiff's Employment Contract and transition his job duties to LVI managers, while allowing him to remain at the Company pursuant to a proposed "consulting agreement." Id. ¶ 49.
On November 4, 2010 the entire Board met in closed session at Apollo's New York City offices to discuss Fried's employment status. Id. ¶ 51. During this meeting, the Board members from Apollo and CHS "were especially vocal about the right of the Board to eliminate all of Plaintiff's responsibilities as Chairman . . . . In particular, Defendant Bagaria emphasized that Plaintiff would no longer be performing his substantive job duties and that the Board had sole discretion to determine Mr. Fried's responsibilities." Id. ¶ 53. Indeed, "Bagaria conferred with the President of Defendant Apollo before the November 4 Board meeting and was directed to strip Mr. Fried of his substantive responsibilities." Id. ¶ 54.
On November 10, 2010, plaintiff was notified that the Board had determined that he would have no day-to-day involvement in LVI. Id. ¶ 58. On November 15, 2010, plaintiff sent a letter to State "opposing the discriminatory conduct to which he was subjected." Id. ¶ 59. On November 16, 2010, Simmons, on behalf of the Board, notified plaintiff in a written letter that his employment with LVI would terminate effective November 30, 2010. Id. ¶ 60. Additionally, "[e]ven after termination of Plaintiff's employment, the LVI Defendants continued their retaliatory actions against Mr. Fried by terminating the employment of his daughter, Shari Dembin." Id. ¶ 64.
With these factual allegations in mind, the Court first turns to the arguments advanced by Apollo and CHS in support of their respective motions to dismiss. With regard to the discrimination and retaliation claims against these entities (the first four causes of action), Apollo and CHS argue that only employers may be held liable for such claims under both the ADEA and NYCHRL, see 29 U.S.C. § 623; N.Y.C. Admin. Code § 8-107(1)(a), and that plaintiff's employer during the relevant period was LVI. Plaintiff argues, however, that Apollo and CHS can be held liable either as "single employers" or "joint employers." See Am. Compl. ¶¶ 80-111.
Since both Apollo and CHS are minority equity shareholders in LVI Parent with two seats each on the nine-member Board, the arguments applicable to one apply with equal force to the other.
As to the "single employer" argument, the Second Circuit has held that "the term 'employer,' as it is used in Title VII, is sufficiently broad to encompass any party who significantly affects access of any individual to employment opportunities, regardless of whether that party may technically be described as an 'employer' of an aggrieved individual as that term has generally been defined at common law." Spirt v. Teachers Ins. & Annuity Ass'n, 691 F.2d 1054 (2d Cir. 1982) (citations omitted), vacated and remanded on other grounds, 463 U.S. 1223 (1983). In Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1240 (2d Cir. 1995), the Second Circuit adopted a four-part test "aimed at determining the degree of interrelationship between . . . two entities" such that they might be considered to be a single employer for these purposes. Id. Under that test, a "parent and subsidiary cannot be found to represent a single, integrated enterprise in the absence of evidence of (1) interrelation of operations, (2) centralized control of labor relations, (3) common management, and (4) common ownership or financial control." Id. at 1240 (citation omitted). Courts applying this four-part standard in discrimination cases have especially focused on the second factor: centralized control of labor relations. Id. The critical question in this respect is: "What entity made the final decisions regarding employment matters related to the person claiming discrimination?" Id. (citation omitted).
Plaintiff argues that "the well-pleaded allegations of the Complaint demonstrate that Apollo should be held liable as a single employer under all four relevant factors, and particularly with respect to its exercise of control over LVI's labor relations." Memorandum of Law in Opposition to Defendant Apollo Investment Corporation's Motion to Dismiss the Complaint ("Pl. Opp'n to Apollo Mem.") at 7. Specifically, plaintiff highlights the following allegations:
[E]ven before Apollo became a shareholder in LVI Parent, it was involved in the search for a new President and CEO and approved the hire of State. (Compl. ¶ 42). Further, Simmons, a managing partner of CHS, consulted with Bagaria and Girardi, Apollo employees and representatives on the Board, regarding the transition Mr. Fried's job duties to other LVI managers and the desire to replace Mr. Fried's employment agreement with a consulting agreement. (Id. ¶ 49). During the Board meeting on November 4, 2010, Bagaria and Girardi made clear that they shared State's discriminatory intent and strongly reiterated State's desire to strip Plaintiff of his substantive job duties. (Id. ¶¶ 51, 53). . . . All of the relevant conduct by Bagaria and Girardi was undertaken on behalf of Apollo and in concert with other Board members, including State and representatives from CHS. Although the Board operated as though it had the authority to dictate the terms and conditions of employment for LVI employees, no such
authority existed. (Id. ¶ 76). Thus, Bagaria and Girardi could not have effectuated the transition of Mr. Fried's duties and termination of Mr. Fried's employment in their capacities as members of the Board, and could only have undertaken this discriminatory conduct at the direction and with the consent of Apollo. These factors, evidencing the extent of Apollo's control over labor relations at LVI, demonstrate that Apollo, together with LVI Parent (the sole shareholder of LVI), made the final decisions regarding the terms and conditions of Mr. Fried's employment.Id. at 7-8. Plaintiff also asserts that Apollo and LVI are commonly managed and owned, as Apollo has two seats on the Board and Apollo is a minority shareholder in LVI Parent. Id. at 8.
Plaintiff makes substantially similar arguments with respect to CHS, pointing out that the Amended Complaint "specifically alleges that CHS, through its participation on the Board, made final decisions regarding Mr. Fried's employment. Moreover, the involvement of CHS in labor relations at LVI antedates the discriminatory actions taken against Mr. Fried, as Simmons, a managing partner at CHS, was also involved in the search for the preceding President and CEO." Pl. Opp'n to Def. Mem. at 7 (internal citations omitted). Further, plaintiff notes that it was Simmons who informed plaintiff of LVI's wish to transition his job duties, and it was Simmons who sent plaintiff written notification of the termination of his employment. Id. at 7-8. Additionally, plaintiff has alleged that "[a]ll of the relevant conduct by Simmons was undertaken on behalf of the CHS and in concert with other Board members, including State and representatives from Apollo," and that CHS and LVI are commonly managed and owned. Id. at 8.
Plaintiff's Amended Complaint also includes sections entitled "A Single Employer Relationship Exists Between the Company and Apollo" and "A Single Employer Relationship Exists Between the Company and CHS." The allegations under these headings include such statements as: "the Company and Apollo operated as a single, integrated enterprise"; "the Company and Apollo have an interrelation of operations, centralized control over labor relations, common management and common ownership"; and "Defendants Apollo and CHS, through their status as controlling shareholders of Parent, controlled the day-to-day operations of the LVI Defendants and the terms and conditions of Plaintiff's employment." See Am. Compl. ¶¶ 80-85; 94-99.
In their motions to dismiss, Apollo and CHS first point out, quite correctly, that conclusory, ipse dixit assertions are insufficient to satisfy the pleading standards of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). Defendants must do more than simply state legal conclusions and recite the elements of the "single employer" standard to survive a motion to dismiss. Rather, plaintiff's complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 129 S. Ct. at 1949 (internal quotation marks omitted).
In this case, plaintiff has failed to plead any facts sufficient to allege that Apollo and CHS, both minority shareholders in LVI Parent, exercised control over LVI's labor relations. Reduced to its essence, plaintiff's theory in this case is that Apollo and CHS exercised control over plaintiff's employment through the actions of the representative directors that Apollo and CHS appointed to the Board of LVI Parent. This theory is utterly without merit. It is a "well established principle of corporate law that directors and officers holding positions with a parent and its subsidiary can and do 'change hats' to represent the two corporations separately, despite their common ownership." United States v. Bestfoods, 524 U.S. 51, 69 (1998) (brackets and citations omitted). Notwithstanding plaintiff's conclusory allegations to the contrary, see, e.g., Am. Compl. ¶¶ 80-85, plaintiff has plead no facts to rebut the presumption that directors with affiliations to more than one corporation "change hats" in order to fulfill their obligations to each entity. In other words, when the representative directors took the alleged actions complained of in the Amended Complaint, they were acting in their capacities as board members of LVI Parent, not as employees or agents of Apollo/CHS. Indeed, courts applying Delaware law, which governs the question of whether liability may be imposed on the shareholders of LVI Parent, have squarely rejected attempts to hold shareholders liable on a respondeat superior theory. See, e.g., US Airways Group, Inc. v. British Airways PLC, 989 F. Supp. 482, 494 (S.D.N.Y. 1997) ("the imposition of respondeat superior liability on a corporation for breach of fiduciary duty by its directors on the board of another corporation would completely undermine Delaware corporate law . . . ."). Similarly, it is a well established principle that an employer may not be held liable for the acts of an employee unless it is established that the employee was acting within the scope of his duties. See, e.g., TD Ameritrade, Inc. v. McLaughlin, 953 A.2d 726, 735 (Del. Ch. 2008).
See also American Protein Corp. v. AB Volvo, 844 F.2d 56, 57 (2d Cir. 1988) ("it is entirely appropriate for directors of a parent corporation to serve as directors of its subsidiary, and that fact alone may not serve to expose the parent corporation to liability for its subsidiary's acts").
"[U]nder New York choice of law principles, the law of the state of incorporation determines when the corporate form will be disregarded and liability will be imposed on shareholders." Fletcher v. Atex, Inc., 68 F.3d 1451, 1456 (2d. Cir. 1995) (internal quotation marks omitted). In this case, LVI Parent is a Delaware corporation. Am. Compl. ¶ 17.
In this case, plaintiff has offered no well-pled allegations to suggest that the representative directors in this case were acting at the behest of either Apollo or CHS. The best he can muster is the vague assertion that "Bagaria conferred with the President of Defendant Apollo before the November 4 Board meeting and was directed to strip Mr. Fried of his substantive responsibilities." Id. ¶ 54. This hearsay allegation is wholly insufficient. The Amended Complaint contains no factual allegations suggesting that the supposed instructions of Apollo's unnamed President were approved by Apollo itself, or that the President was acting within the scope of his authority as an officer of Apollo. Moreover, this allegation is simply insufficient to rebut the presumption that, when sitting on the board of directors of LVI Parent, Bagaria acted as a board member of LVI Parent and not as an employee or agent of Apollo. The remainder of plaintiff's allegations are pure ipse dixit, and are therefore insufficient to overcome the elementary principles of corporate law discussed above.
See, e.g., Am. Compl. ¶ 96 ("With its seats on the Board, CHS participates in the hiring of officers of both the LVI Defendants and operates with the authority to change the terms of employment for employees of the Company, including terminating their employment.").
But even assuming arguendo that plaintiff could allege facts sufficient to establish that the representative directors acted pursuant to the control and direction of Apollo and CHS, it is undisputed these entities are minority shareholders in LVI Parent. As such, they are incapable, by definition, of controlling the actions of either LVI Parent or LVI. Plaintiff must therefore rely on his allegation that "[t]he votes of the representatives of two minority shareholders, CHS and Apollo, along with the vote of Defendant State, control the decision-making process of the Board and all of its decisions." Am. Compl. ¶ 97. Again, this allegation is entirely conclusory, especially as plaintiff has alleged no facts indicating that Apollo and CHS were somehow acting in concert with each other, let alone with defendant State. Accordingly, plaintiff's claim that Apollo and CHS are "single employers" with LVI is meritless for multiple reasons.
Plaintiff's claim that Apollo and CHS may be held liable as "joint employers" fails for essentially the same reasons. This Court has summarized the "joint employer" doctrine as follows:
[T]he "joint employer" doctrine applies when separate legal entities have "chosen to handle certain aspects of their employer-employee relationships jointly." Gore, 2008 U.S. Dist. LEXIS 25912, 2008 WL 857530, at *3 (citations and internal quotation marks omitted) . . . . Here, courts look at "commonality of hiring, firing, discipline, pay, insurance, records, and supervision" to determine whether an entity is a joint employer. . . .
The joint employer doctrine has been applied to temporary employment or staffing agencies and their client entities; it has also been applied to contractors and subcontractors and other scenarios where two separate entities have control over an employee's employment. . . .
Even where two companies are deemed a joint employer, however, it is not necessarily the case that both are liable for discriminatory conduct in violation of Title VII. Though the Second Circuit has not ruled on the issue, other courts
have found that even when a plaintiff establishes an entity's status as part of a joint employer, the plaintiff must still show "that the joint employer knew or should have known of the [discriminatory] conduct and failed to take corrective measures within its control." Watson v. Adecco Empl. Servs., Inc., 252 F. Supp. 2d 1347, 1356-57 (M.D. Fla. 2003).Lima v. Addeco, 634 F. Supp. 2d 394, 400 (S.D.N.Y. 2009), aff'd, Lima v. Adecco, No. 09-2573-cv, 2010 U.S. App. LEXIS 8679, at *3 (2d Cir. Apr. 27, 2010) (summary order) ("We also agree with the District Court that even if Adecco and Platform could be considered a 'joint employer,' Adecco could not be held liable to plaintiff based on that legal theory because there is no evidence that Adecco either knew or should have known about any of the alleged discrimination.").
Plaintiff's complaint alleges that "Apollo [and CHS], through [their] seats on the Board, along with LVI, jointly controlled the terms and conditions of Mr. Fried's employment with the Company." Am. Compl. ¶¶ 87, 101. Beyond this and other similarly conclusory allegations, however, plaintiff pleads no facts demonstrating that there was a "commonality of hiring, firing, discipline, pay, insurance, records, and supervision" between LVI on the one hand and Apollo/CHS on the other. Nor are there any well-pled allegations in the Amended Complaint establishing that Apollo and CHS knew or should have known about the alleged discrimination. Plaintiff's attempt to link Apollo and CHS to the alleged acts of their representative directors on the Board of LVI Parent fail as a matter of law for the reasons stated above.
Accordingly, the Court concludes that plaintiff has failed to demonstrate that Apollo and CHS were either single or joint employers with LVI, and that Counts One through Four must therefore be dismissed with respect to these defendants.
Plaintiff next alleges that Apollo and CHS aided and abetted violations of the New York City Human Rights Law. See Am. Compl. at p. 27. Under the Executive Law of New York State, it is "an unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under this article or to attempt to do so." N.Y. Exec. Law § 296(6) (McKinney 2001). The Administrative Code of New York City uses virtually identical language, see N.Y. City Admin. Code § 8-107(6), and is subject to the same analysis as the Executive Law for these purposes, Dunson v. Tri-Maint. & Contractors, Inc., 171 F. Supp. 2d 103, 113-14 (E.D.N.Y. 2001). Courts have interpreted these provisions to require "a showing that the defendant actually participated in the conduct giving rise to the claim of discrimination." Brice v. Sec. Operations Sys., Inc., No. 00 Civ. 2438(GEL), 2001 WL 185136, at *4 (S.D.N.Y. Feb. 26, 2001). "Aiding and abetting liability requires that the aider and abettor share the intent or purpose of the principal actor, and there can be no partnership in an act where there is no community of purpose. Consequently, to find that a defendant actually participated in the discriminatory conduct requires a showing of direct, purposeful participation." Id. (internal quotation marks and citations omitted).
Again, largely for the reasons already explained, the Amended Complaint contains no well-pled allegations that either Apollo or CHS directly participated in any of the purported discriminatory actions against the plaintiff. Plaintiff cannot establish this element merely by alleging that these entities were minority shareholders in LVI Parent and appointed two board members each to its Board of Directors. Moreover, as Apollo points out, "[p]laintiff provides no allegations in the Complaint that go to [Apollo's] state of mind, much less that [Apollo] shared some allegedly discriminatory animus with other defendants." Apollo Mem. at 18. Accordingly, the fifth cause of action pled in plaintiff's Amended Complaint is hereby dismissed with respect to Apollo and CHS.
With the issues specific to Apollo and CHS resolved, the Court now turns to the motion of all defendants to dismiss all of plaintiff's common law claims. In the first such claim, plaintiff alleges that LVI and LVI Parent (the "LVI Defendants") "willfully and wantonly breached the Employment Contract by stripping Plaintiff of his substantive responsibilities and terminating his employment." Am. Compl. ¶ 142. The glaring problem with this argument, however, is that plaintiff was an at-will employee, a point plaintiff himself concedes. See Pl. Opp'n to Def. Mem. at 17; see also Employment Contract, Seltzer Affirm Ex. B (specifying no time period for plaintiff's continued employment). New York law does not recognize a breach of contract claim arising from the termination of an at-will employment. See, e.g., Benson v. North Shore-Long Island Jewish Health Systs., 482 F. Supp. 2d 320, 331 (E.D.N.Y. 2007) ("Although it is unlawful for an employer to terminate an employee for discriminatory reasons, the proper remedy for a person aggrieved in this matter is not a cause of action for breach of contract."); Abdullah v. Skandinaviska Enskilda Banken Corp., No. 98 Civ. 7398 (JSR), 1999 WL 945238, at *9 (S.D.N.Y. Oct. 19, 1999) ("Under New York law, absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will terminable at any time by either party.") (internal quotation marks and brackets omitted); Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 333 (1987) ("It is still settled law in New York that, absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will, terminable at any time by either party . . . .").
Plaintiff does not dispute this basic principle, but instead responds that "a breach of contract claim may arise in the context of an at-will employment relationship, provided that the claim arises out of an underlying employment agreement." Pl. Opp'n to Def. Mem. at 17. Whatever this argument may mean, it is clear that the cases plaintiff cites to support it are inapposite. In Dreyfuss v. eTelecare Global Solutions-US, Inc., No. 08-CV-1115 (RJS), 2010 WL 4058143 (S.D.N.Y. Sept. 30, 2010), the court found that "an employer may terminate an at-will employee, but he cannot retroactively change the terms of the employment agreement he entered into with that employee. Rather, the employer is entitled to change the terms of the employment agreement only prospectively, subject to the employee's right to leave the employment if the new terms are unacceptable." Id. at *4 (internal quotation marks, brackets, and citation omitted). Plaintiff in this case does not allege that the LVI Defendants retroactively altered the terms of plaintiff's employment (i.e., by refusing to pay him for commissions owed, for example, as in Dreyfuss), but rather that they terminated his employment contract going forward. Similarly, Arakelian v. Omnicare, Inc., 735 F. Supp. 2d 22, 25 (S.D.N.Y. 2010) involved a failure to pay severance benefits, a claim that is easily distinguishable from the instant case. Accordingly, the Court concludes that plaintiff's claim for breach of contract is without merit.
It follows that plaintiff's seventh cause of action for breach of the covenant of good faith and fair dealing must be dismissed as well. New York courts have consistently refused to imply the existence of any such covenant in the context of an at-will employment relationship. See, e.g., Zaitz v. Wells Fargo Home Mtge, No. 08 Civ. 11225 (BSJ), 2010 WL 3026536, at * 5 (S.D.N.Y. Aug. 2, 2010) ("Under New York law, there is no obligation of good faith and fair dealing implied in at-will employment contracts, as doing so would be incompatible with the at-will nature of the relationship."); Graff v. Enodis Corp., No. 02 Civ. 5922 (JSR), 2003 WL 1702026, at * 1 n.2 (S.D.N.Y. Mar. 28, 2003) ("no such duty of good faith and fair dealing is owed plaintiff as an at-will employee").
Finally, plaintiff's eighth cause of action pleads "Tortious Interference with Employment and/or Contractual Relations." Plaintiff appears to assert this claim against all defendants. See Am. Compl. ¶ 150. Under New York law, tortious interference with contract requires plaintiff to show: "(a) that a valid contract exists; (b) that a 'third party' had knowledge of the contract; (c) that the third party intentionally and improperly procured the breach of the contract; and (d) that the breach resulted in damage to the plaintiff." Albert v. Loksen, 239 F.3d 256, 274 (2d Cir. 2001) (citation omitted). An at-will employee may maintain a tortious interference claim only in the "limited situation[]" when he can "establish that a third party used wrongful means to effect the terminations such as fraud, misrepresentation, or threats, that the means used violated a duty owed by the defendant to plaintiff, or that the defendant acted with malice." Donofrio-Ferrezza v. Nier, No. 04 Civ. 1162 (PKC), 2005 U.S. Dist. LEXIS 21103, at *46-47 (S.D.N.Y. Sept. 21, 2005).
This claim is easily dispensed with as against certain defendants. First, plaintiff cannot maintain this action against LVI itself because it is not a third party to the employment relationship. TVT Records v. Island Def Jam Music Group, 412 F.3d 82, 88 (2d Cir. 2005) (holding that a plaintiff may not sue a party to a contract for tortious interference with that contract). Second, plaintiff's claim for tortious interference must be dismissed as against Apollo and the CHS because, as discussed extensively above, the Amended Complaint contains no well-pled allegations that either entity played any role whatsoever in plaintiff's termination.
The remaining defendants to this claim are the Individual Defendants and LVI Parent. Plaintiff alleges that these defendants "were motivated solely by malice and/or a desire to inflict injury on Plaintiff by unlawful means." Am. Compl. ¶ 152. Again, this allegation is entirely conclusory and insufficient to survive a motion to dismiss. More generally, courts in this District have held that allegations of employment discrimination cannot be transmuted, without more, into claims of tortious interference. See, e.g., Price v. Cushman & Wakefield, Inc., No. 08 Civ. 8900, 2009 WL 3075599, at *6 (S.D.N.Y. Sept. 26, 2009); Baguer v. Spanish Broadcasting Sys., Inc., No. 04-CV-8393 (KMK), 2007 WL 2780390, at *3-*4 (S.D.N.Y. Sept. 20, 2007) ("alleged violations of federal, state, and city anti-discrimination laws are not torts under New York law."). The Baguer Court, in turn, cites the following cases in support of its conclusion: Rivera v. Heyman, 157 F.3d 101, 105 (2d Cir.1998) (noting that "discrimination claims under the [New York] Human Rights Laws" are not tort claims); Treanor v. Metro. Transp. Auth., 414 F. Supp. 2d 297, 303 (S.D.N.Y. 2005) ("New York cases reason [ ] that a discrimination claim is not a tort because it is 'a new statutory cause of action which was not cognizable at common law.'" (quoting Picciano v. Nassau Co. Civil Serv. Comm'n, 736 N.Y.S.2d 55, 60 (App. Div. 2001))); Bauman v. Garfinkle, 652 N.Y.S.2d 32, 33 (App. Div. 1997) ("The Federal court claims for breach of contract and discrimination are not in tort."); Lane-Weber v. Plainedge Union Free Sch. Dist., 624 N.Y.S.2d 185, 186 (App. Div. 1995) ("[A]n action brought pursuant to [New York's employment discrimination statute] is not a tort claim."). The Court adopts the reasoning of the line of cases cited above and hereby dismisses plaintiff's claim for tortious interference with employment relations against all defendants.
For the foregoing reasons, the Court affirms its April 1, 2011 bottom-line Order in all respects.
/s/_________
JED S. RAKOFF, U.S.D.J. Dated: New York, New York
May 23, 2011