Opinion
99 Civ. 8636 (KMW)(JCF)
May 9, 2002
REPORT AND RECOMMENDATION
The plaintiffs in this action, Harold Hofmann and Anthony Lawson, allege that they were terminated from their employment with District Council 37, American Federation of State, County, and Municipal Employees, AFL-CIO ("DC37") and/or the DC37 Benefits Trust Fund ("BFT") on the basis of their age in violation of the Age Discrimination in Employment Act (the "ADEA"), 29 U.S.C. § 621 et seq., and New York Human Rights Law, N.Y. Exec. Law § 296, and in breach of their contractual rights. The plaintiffs have also sued Perot Systems Corporation and several of its employees (collectively referred to as the "Perot Defendants") for tortious interference with contract, tortious interference with business relationships, and defamation on the ground that the Perot Defendants contributed to the termination of the plaintiffs by making false statements critical of their performance. The Perot Defendants now move to dismiss the claims against them, and for the following reasons I recommend that the motion be granted in part and denied in part.
The individual Perot employees named as defendants are John Bavis, David McKay, Dick Meyer, Jack Demme, and Mitch Cohn.
Background
From 1988 to 1998, Harold Hofmann was Director of Information Systems for DC37 and/or BFT, and Anthony Lawson was Associate Director. (Fourth Amended Complaint ("Fourth Am. Compl.") ¶¶ 3-4) In late 1997, DC37 began an effort to upgrade its computer systems and accomplish year 2000 ("Y2K") remediation. (Fourth Am. Compl. ¶ 49). Part of the responsibility for these tasks was contracted out to Perot, which began work in early 1998. (Fourth Am. Compl. ¶¶ 50-60). According to the plaintiffs, the project was plagued by cost overruns, the incompetence of Perot personnel, and the failure of Perot to communicate with DC37. (Fourth Am. Compl. ¶¶ 64-67, 70, 73). Moreover, Perot employees blamed the problems on the plaintiffs. The plaintiffs further claim that the Perot Defendants falsely stated that the plaintiffs lacked competence, that they had been informed of the incipient problems but had withheld that information, that they had attempted to cover up the difficulties, and that the plaintiffs had been provided technical data that they failed to incorporate in the project. (Fourth Am. Compl. ¶¶ 73, 74, 76, 77, 81-85). The Perot employees also allegedly urged that Mr. Hofmann be taken off the project and terminated. (Fourth Am. Compl. ¶¶ 75, 81).
On August 11, 1998, both plaintiffs were discharged. (Fourth Am. Compl. ¶¶ 90-91). Although they contend that they were entitled to severance pay, a longevity bonus, pay for unused vacation and sick days, and pension payments, the plaintiffs have received no such benefits. (Fourth Am. Compl. ¶¶ 96-97).
After first presenting their age discrimination claims to the United States Equal Employment Opportunity Commission (the "EEOC") and the New York State Division of Human Rights, the plaintiffs filed the instant action. In an Order dated March 23, 2000, the Court, among other things, dismissed the plaintiffs' breach of contract claims but permitted them to replead. After the plaintiffs had amended the complaint, the defendants again filed a partial motion to dismiss. By Order dated February 23, 2001 (the "Feb. 23, 2001 Order"), the Court granted the motion with respect to the contract claims, finding that the plaintiffs were at-will employees and had failed to establish that the employer had an express written policy limiting its right of discharge. (Feb. 23, 2001 Order at 11-13). Then, in an Order dated June 12, 2000 (the "June 12, 2001 Order") the Court denied reconsideration of its decision on the contract claims, though it did permit the plaintiffs to file a Second Amended Complaint. (June 12, 2001 Order at 4-6). Finally, by Order dated August 31, 2001 (the "Aug. 31, 2001 Order"), the Court rejected the plaintiffs' effort to replead their breach of contract claim with respect to their termination. (Aug. 31, 2001 Order at 8-13). However, the Court determinedsua sponte that the plaintiffs had stated a valid breach of contract claim with respect to BFT's alleged failure to pay certain promised benefits at the time of termination. The Court found that "[a]lthough such promises do not affect plaintiffs' at will status, or suggest that plaintiffs had an employment contract, these promises may represent binding commitments on the part of DC 37 BFT." (Aug. 31, 2001 Order at 13)
The plaintiffs then filed a Third and, subsequently, a Fourth Amended Complaint. The Seventh and Eighth causes of Action allege that the Perot Defendants engaged in tortious interference with contract with respect to each of the plaintiffs. The Ninth and Tenth Causes of Action charge that the Perot Defendants tortiously interfered with the business relationships of each plaintiff. And, finally, the Eleventh and Twelfth Causes of Actions accuse the Perot Defendants of defamation. The Perot Defendants now move to dismiss each of these claims.
These two pleadings are identical with respect to the claims asserted against the Perot Defendants.
Discussion
A. Legal Framework
In considering a motion to dismiss, the court must accept as true all factual allegations in the complaint and must draw all inferences in favor of the plaintiff. Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 164 (1993); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Todd v. Exxon Corp. 275 F.3d 191, 197 (2d Cir. 2001). The complaint should be read generously, and dismissal is not warranted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Todd, 275 F.3d at 297-98 (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
B. Defamation
The Perot Defendants argue that the defamation claims should be dismissed as time-barred. Under New York Civil Practice Law and Rules ("CPLR"), the statute of limitations for an intentional tort, including libel or slander, is one year. CPLR § 215(3); see David J. Gold, P.C. v. Berkin, No. 00 Civ. 7940, 2001 WL 121940, at 3 (S.D.N.Y. Feb. 13, 2001); Losco Group v. Yonkers Residential Center, Inc., 276 A.D.2d 532, 533, 716 N.Y.S.2d 577, 578 (2d Dep't 2000). That one-year period runs from the date that the defamatory statement is published. See Gold, 2001 WL 121940, at 3; Van Buskirk v. New York Times Co., No. 99 Civ. 4265, 2000 WL 1206732, at 1 (S.D.N.Y. Aug. 24, 2000). In this case, the last allegedly defamatory statement was made on July 28, 1998 (Fourth Am. Compl. ¶¶ 82-87), and the action was commenced on August 4, 1999, more than a year later. Thus, it would indeed appear to be time barred.
The Perot Defendants also challenge the defamation claims on a variety of other grounds that need not be addressed.
The plaintiffs contend, however, that the limitations period tolled for sixty days. A plaintiff claiming age discrimination under the ADEA may not file a civil action until sixty days after he or she has filed an administrative complaint with the EEOC. At the same time, CPLR § 204(a) provides that:
Where the commencement of an action has been stayed by a court or by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced.
Accordingly, the plaintiffs contend that they were effectively subject to a statute of limitations of one year and sixty days and that the defamation claims were therefore timely.
The plaintiffs are mistaken. The tolling provisions of CPLR § 204(a) apply only insofar as a statute or court order stays commencement of the same action that is subject to the limitations period. See Oshinsky v. New York City Housing Authority, No. 98 Civ. 5467, 2000 WL 1225796, at 7 (S.D.N.Y. Aug. 28, 2000) (filing claim with state Division of Human Rights does not toll statute of limitations on tort claim);Stordeur v. Computer Associates International, Inc., 995 F. Supp. 94, 99 (E.D.N.Y. 1998) ("there is no provision that tolls the time for filing a cause of action during the period in which a litigant pursues an independent, though related, cause of action"); Katt v. New York City Police Department, No. 95 Civ. 8283, 1996 WL 744870, at 3-4 (S.D.N Y Dec. 31, 1996) (pending EEOC proceeding does not toll limitations period for state tort claims). While the pendency of their EEOC charges precluded the plaintiffs from initiating a lawsuit based on an ADEA claim, it did not prevent them from filing an action for defamation. Therefore, the Eleventh and Twelfth Causes of Action should be dismissed.
C. Tortious Interference With Contract
New York recognizes a claim for tortious interference with contract, including contracts of employment. The elements of such a claim are: "(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." Finley v. Giacobbe, 79 F.3d 1285, 1294 (2d Cir. 1996) (citations omitted). However, an employee working at will has no enforceable employment agreement and thus cannot bring a claim for tortious interference with contract. See Albert v. Loksen, 239 F.3d 256, 274 (2d Cir. 2001); Cohen v. Davis, 926 F. Supp. 399, 403 (S.D.N Y 1996); Ingle v. Glamore Motor Sales, Inc., 73 N.Y.2d 183, 188-89, 538 N.Y.S.2d 771, 773-74 (1989). Since the Court here has already determined that the plaintiffs were at-will employees, they cannot bring a tortious interference with contract claim on the basis of their termination.
They argue, however, that they can bring such a claim in connection with their contractual rights to receive benefits. "Under New York law, an employer's virtually unfettered power to terminate an at-will employee does not negate its duty to abide by promises made prior to termination."Parker v. Columbia Pictures Industries, 204 F.3d 326, 339 (2d Cir. 2000) (citation omitted) Thus, "a company benefits plan may constitute a binding promise regardless of the employee's status," id. (citation omitted), and the Court previously determined that that may be the case here.
But even if the plaintiffs can meet the "valid contract" requirement in this respect, there is no indication that they satisfy the other elements. As already noted, an employee's status is distinct from any obligation to pay benefits. And, while the plaintiffs have asserted that the Perot Defendants intentionally interfered with their employment relations by urging their termination, they have not suggested that these defendants interfered with or were even aware of the benefits that the plaintiffs were purportedly denied. Accordingly, the Seventh and Eighth Causes of Action should also be dismissed.
The plaintiffs should, however, be permitted to replead these claims if, consistent with their obligations under Rule 11 of the Federal Rules of Civil Procedure, they can allege that the Perot Defendants did know of the agreement to provide the plaintiffs with severance and other benefits and intentionally interfered with that commitment.
D. Tortious Interference With Business Relationships
A plaintiff who does not have an employment contract may not "`evade the employment at-will rule and relationship by recasting [a] cause of action in the garb of tortious interference with . . . employment.'"Albert, 239 F.3d at 274 (quoting Ingle, 73 N.Y.2d at 189, 538 N.Y.S.2d at 774); see also Miller v. Richman, 184 A.D.2d 191, 192, 592 N.Y.S.2d 201, 202 (4th Dep't 1992) ("Plaintiff cannot circumvent the employment at-will rule by asserting causes of action for defamation, injurious falsehood and tortious interference with her employment.")
An at-will employee may maintain a tortious interference claim, however, in "certain limited situations." Finley, 79 F.3d at 1295; see also Mansour v. Abrams, 120 A.D.2d 933, 934, 502 N.Y.S.2d 877, 878 (4th Dep't 1986). To do so, he or she must establish that a "third party used wrongful means to effect the termination such as fraud, misrepresentation, or threats, that the means used violated a duty owned by the defendant to the plaintiff, or that the defendant acted with malice." Cohen v. Davis, 926 F. Supp. 399, 403 (S.D.N.Y. 1996) (citing New York cases).Albert, 239 F.3d at 274.
In this context, "malice" refers to "act[ing] with the sole purpose of harming plaintiffs." Schoettle v. Taylor, 282 A.D.2d 411, 412, 723 N.Y.S.2d 665, 666 (1st Dep't 2001); accord Scalise v. Adler, 267 A.D.2d 295, 296, 700 N.Y.S.2d 49, 51 (2d Dep't 1999). Here, the complaint implies that the Perot Defendants interfered with the plaintiffs' employment relationship not out of mere malice, but to achieve more project responsibility and profit for themselves. This would negate malice as a basis of liability for tortious interference. See Besicorp Ltd. v. Kahn, 290 A.D.2d 708, ___, 736 N.Y.S.2d 708, 711-12 (3d Dep't 2002) (desire to maximize financial gain precludes finding of malice as sole motivation).
But even if the complaint does not adequately allege malice, it does assert that the Perot Defendants utilized improper means to encourage DC37 and BFT to terminate the plaintiffs. Specifically, the plaintiffs assert that these defendants defamed them by presenting false criticisms of their performance and that this resulted in their being fired. Such allegations are sufficient to support a claim of intentional interference with business relationships. See Cohen, 926 F. Supp. at 403-04 (false and misleading reports about plaintiff); Coliniatis v. Dimas, 848 F. Supp. 462, 470 (S.D.N.Y. 1994) (allegedly defamatory letter would constitute wrongful means); Freedman v. Pearlman, 271 A.D.2d 301, 305, 706 N.Y.S.2d 405, 409 (1st Dep't 2000) (intentionally false communication with prospective employer). Therefore, the Ninth and Tenth Causes of Action should not be dismissed.
Conclusion
For the reasons set forth above, I recommend that the Perot Defendants' motion to dismiss be granted to the extent of dismissing the defamation and intentional interference with contract claims but be denied with respect to the claims of intentional interference with business relationships. Pursuant to Rule 72 of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from this date to file written objections to this Report and Recommendation. Such objections shall be filed with the Clerk of the Court, with extra copies delivered to the chambers of the Honorable Kimba M. Wood, Room 1610, and to the undersigned, Room 1960, 500 Pearl Street, New York, New York 10007.
Respectfully submitted,