Opinion
No. 03 Civ. 8419 (LTS)(HBP).
September 20, 2004
MEMORANDUM OPINION AND ORDER
Plaintiff, Raul Loli ("Loli"), brings this action against his former employer, Defendant Standard Chartered Bank ("SCB"), for alleged violation of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. § 1831j, and for breach of an employment contract. The Court has jurisdiction of this case pursuant to 28 U.S.C. § 1332. This matter first came before the Court on Defendant's motion to dismiss the Amended Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Because the parties presented matters outside the pleadings, the Court, at the June 29, 2004 pretrial conference, pursuant to Rule 12(b), converted the motion to dismiss the Amended Complaint to a motion for summary judgment and directed the parties to provide supplemental briefing pertinent to the motion.
The Court has considered thoroughly all of the parties' submissions regarding the motion for summary judgment. For the reasons set forth below, Plaintiff's First Cause of Action, being withdrawn, is dismissed with prejudice, and Defendant's motion for summary judgment is granted.
BACKGROUND
Plaintiff's principal material allegations, and the undisputed facts pertinent to the instant motion, can be summarized as follows. The summary takes as true the allegations and undisputed factual assertions, but does not in any way constitute factual findings by the Court. Defendant SCB is an international banking corporation with several branches, largely located in Asia, Africa, and the Middle East. (Am. Compl. ¶ 9.) SCB is organized pursuant to the laws of the United Kingdom, with its principal place of business in London; the bank maintains a U.S. branch in New York. (Id. ¶¶ 7-8.) SCB acquired First Interstate Bank in the 1980s and Banco Exterior de España y de los Andes (Extebandes — renamed Banco Standard Chartered (("BSC")) in 1998. (Id. ¶ 10.) Plaintiff began his employment at SCB in March 1999 as Country Head of Group Special Assets Management ("GSAM") in Peru, where his primary duties were the management and collection of the local distressed portfolio. (Id. ¶ 14.) His direct supervisors were Luis-Jose Giove ("Giove"), the Peru Country Manager, and Jose Lapadula ("Lapadula"), the Head of GSAM Latin America. (Id.) Giove was closely aligned with Frank Robleto ("Robleto"), CEO of the Latin American division, and Julio Rojas ("Rojas"); the three managers were known collectively within SCB as the "Mafia." (Id. ¶ 13.)Plaintiff was quite successful in his position and was considered to be a high potential manager and potential successor to Lapadula. (Id. ¶ 15.) In 2001, Plaintiff was awarded approximately $20,000 worth of SCB shares for his performance, with the condition that he complete three more years of service to SCB. (Id.) There were also e-mails praising Plaintiff for his work. (Id.)
Around this time, however, SCB's Latin America units were experiencing financial difficulties as a result of an economic downturn. (Id. ¶ 16.) Because the Corporate Banking Divisions were under pressure to generate income, Giove directed Plaintiff to misrepresent GSAM Peru's collections as profits in order to improve SCB Peru's profile within SCB. (Id.) When Plaintiff refused to comply, Giove began to harass him. (Id.)
In June 2001, Plaintiff told Lapadula that a GSAM account manager whom Plaintiff supervised, Carlos Ponce ("Ponce"), had reported in May that he had found evidence that Giove had granted $1.2 million in advances to Pensur SA without following the correct approval procedures. (Id. ¶ 17.) John K. North, SCB's Regional Head C I Audit UK/Americas conducted an investigation of the allegations regarding Pensur SA, but his findings were inconclusive. (Id. ¶ 18; Loli Certification, Ex. B.)
Among SCB's official policies was a December 1, 1997, publication entitled, "Group Instruction, Speaking Up — Policy", which instructed "staff who have genuine suspicions about wrongdoing to speak up" and advised staff that "any report which you make will be listened to, investigated, and treated in confidence. Victimisation of anyone who comes forward will not be tolerated." (Am. Compl. ¶ 21; Loli Certification, Ex. C.) The policy states that "Speaking Up is an essential principle of our compliance policy" and further instructs employees that:
a. Employees should speak up about `[a]ny actual or planned wrongdoing or bad practice which:
— is against the law.
— is against banking regulations,
— does not comply with Group rules of the Code of Conduct,' and to do so `they should speak to [their] line manager.'
b. `[Employees] don't have to be 100% sure' of their facts. `If you have a genuine suspicion, then come forward . . .'
c. `[Employees'] actions will be viewed as courageous, not malicious.'
d. `[SCB] will not mention your involvement to your line manager or anyone else implicated without your consent.'
e. `[Employees] will not be blamed for speaking up or for any failure to speak up earlier. Staff may have taken time to form their suspicions, or to build up the courage to act on them.'
(Id.) (emphasis in original)
Plaintiff was further harassed after speaking out about the potential wrongdoing. Such harassment included a request for his functional manager to fire him, discrediting him with customers and within the larger Peruvian financial system, publicly humiliating him in front of SCB executives by dismissing him from Management Committee meetings or asking him to attend the meetings on such short notice that he was unable to prepare, denying some approvals for business trips and expenses, and forbidding him to drink water on the Management Floor as had been his practice before the harassing conduct began. (Id. ¶ 23.)
The Complaint does not specify who engaged in the harassing conduct.
In order to remove Loli from the situation at SCB Peru, Jake Williams ("Williams"), Group Head of GSAM Hong Kong, suggested that Loli be transferred to another SCB location in Africa, London, the Middle East, or the Far East. (Id. ¶¶ 25, 27.) Williams wrote an email Frank Robleto, then Head of Institutional Banking for the Americas, and Rojas, CEO of BSC, Country Head of Peru, and Head of the Andean region, on September 27, 2001, stating that he had "agreed to move Raul for the overall good of Standard Chartered Bank." (Id. ¶¶ 29, 31.) On September 28, Williams wrote to Lapadula, Rojas, and Robleto, explaining that he would withdraw from managing Loli's transfer to another country and
fully delegate to you managing Raul's move and replacement . . . I emphasized . . . the delicate balance we have in managing the perception of our treatment of Raul: We cannot be perceived as treating him overly well . . . we also cannot be perceived as punishing him when he has generally performed well . . . We also must be careful not to be perceived to be punishing him as he . . . was, to a degree, a `whistle-blower' . . .
(Id. ¶ 30; Loli Certification, Ex. F.) Around that same time, Williams told Loli that the last steps were being taken to complete Loli's transfer to London or Malaysia. (Am. Compl. ¶ 30.)
After Williams withdrew from managing Loli's transfer, Loli was subjected to increased harassment from other supervisors. One e-mail from Robert Munro to Williams stated that " [Loli] has been under relentless psychological pressure from the mafia, who are conducting a character assassination campaign without mercy." (Id. ¶ 32; Loli Certification, Ex. G) (emphasis in Am. Compl.). Loli also complained to Lapadula that his management authority was called into question by the Country Manager in front of other institutions and that one customer was told that Loli would no longer be managing that customer's case. (Am. Compl. ¶ 33.)
The Complaint does not specify Munro's position.
In March 2002, Neil McCauley ("McCauley"), then Head of GSAM The Americas, invited Loli to work for him in New York for two years with the justification that it would increase Loli's marketability until other opportunities became available in GSAM. McCauley asked that Loli reject other offers to work in London or Malaysia, noting that "your first hand experience will be valuable to me as the focus increases on Latin America." (Id. ¶ 35.) Williams encouraged Loli to take the New York position and told him that he would be transferred to the Middle East after the New York assignment. (Id. ¶ 36.) Williams also told Loli that the transfer to New York was intended to protect him from the "Mafia," who were calling for Loli's dismissal. In May 2002, however, McCauley told Loli that the "Mafia" members had insisted that Loli not be allowed to work on any Latin America matters. (Id.)
Before he was transferred to the New York position, Loli was dismissed from his position as GSAM Head in Peru on May 13, 2002, and in late May 2002, SCB forced Loli to take fifteen days of vacation. (Id. ¶ 37.) He subsequently received an offer letter from SCB regarding the position in New York on May 20, 2002, providing for an annual salary of $85,600 plus allowances and "International Terms." (Id. ¶ 38.) SCB, however, sent a May 28, 2002 letter to the United States Consulate in Peru in order to obtain a visa for Loli reciting that he would be transferred to New York for thirty-six months at an annual salary of $192,674 plus benefits. (Id. ¶ 39; Loli Certification, Ex. H.) SCB then sent Loli a letter on June 14, 2002, offering him the position in New York at a salary of $135,000 with "Local Terms," which Loli accepted. (Am. Compl. ¶ 40.) Loli began working at SCB New York on July 1, 2002. (Id. ¶ 41.)
Individuals at SCB continued to speak poorly of Loli's performance in Peru even after he began working in New York, and Loli encountered further problems with his new supervisor in New York, Neil McCauley. (Id. ¶ 42.) Among other things, McCauley encouraged Loli to upgrade accounts under his supervision, such as Tyco International Group SA and Xerox Corporation, Inc., in an effort to obscure the poor state of the Americas portfolio. (Id.) Loli was forbidden from attending management meetings even though his colleagues were permitted to attend, and Loli functioned as a manager and negotiator rather than as an analyst. (Id. ¶ 45.) McCauley also verbally harassed Loli, making comments such as "[t]he only thing I have to do to resolve my problems is to fire you," and commenting to Loli that a member of the "Mafia" had asked for McCauley's help in convincing Williams that Loli was a "bad individual." (Id. ¶ 43.) In addition, although McCauley gave Loli a satisfactory rating in his first performance report (fourth quarter 2002), McCauley was overheard saying that Loli's performance as an analyst was unsatisfactory. (Id. ¶ 45.) Jake Williams later told Loli that after one year in New York, Loli would be transferred to another unit, likely Dubai, to replace another staff member. (Id. ¶ 46.) On January 15, 2003, however, SCB terminated Loli. (Id. ¶ 47.) Although SCB stated that Loli was terminated as part of a downsizing effort, SCB announced on January 22, 2003, that Donna Duke was to move from the Hong Kong office to replace another employee, Elizabeth Newmann, whom Loli believes he could have replaced. (Id. ¶ 52.)
As a result of anxiety following his termination, Loli went to a neurologist and was diagnosed with clinical depression which required him to take medication. (Id. ¶ 54.) Loli's medication dosage has increased since he began taking it, and his neurologist has indicated that Loli may need to take medication permanently. (Id.)
DISCUSSION
Summary judgment is to be granted in favor of a moving party where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of establishing that there is no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). A fact is considered material for summary judgment purposes "if it might affect the outcome of the suit under the governing law," and an issue of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Holtz v. Rockefeller Co., 258 F.3d 62, 69 (2d Cir. 2001) (internal citation omitted). The Second Circuit has explained, however, that the "party against whom summary judgment is sought . . . `must do more than simply show that there is some metaphysical doubt as to the material facts. . . . The nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.'"Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (quoting Matshushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)).
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)
Plaintiff concedes in his opposition to the motion for summary judgment that, because SCB is not a federally insured depository institution or other federal banking agency as defined by FIRREA, Plaintiff cannot state a valid cause of action under the statute.See 12 U.S.C.A. § 1831j(a) (West 2001). Plaintiff's application to withdraw his FIRREA claim is granted, and his First Cause of Action is dismissed with prejudice. Breach of contract
See Pltf. Mem. in Opp'n to Summ. Judgment, at 1.
In Plaintiff's Second Cause of Action, for breach of contract, he asserts that he had an employment contract with SCB, and that the contract was breached. New York courts are extremely reluctant to recognize employment contracts. Without an agreement establishing a fixed duration of employment, the employment relationship is presumed to be one of at-will employment, terminable by either party at any time. Sabetay v. Sterling Drug, Inc., 506 N.E.2d 919, 920 (N.Y.Ct.App. 1987). As the Second Circuit and the New York Court of Appeals have explained, the trier of fact must look to the totality of the circumstances in determining whether the presumption of employment at will has been rebutted. Jones v. Dunkirk Radiator Corp., 21 F.3d 18, 22 (2d Cir. 1994) (discussing Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458 (N.Y.Ct.App. 1982)).
In Weiner, however, several factors combined to create an employment contract, namely: Weiner was induced to leave Prentice Hall with the assurance that the new employer, McGraw-Hill, would not discharge him without cause; that promise was incorporated into the employment application; Weiner rejected other offers of employment based on that promise; and Weiner was reminded of the need to comply with the handbook and policy manual procedures when dealing with subordinates because they could only be discharged for good cause, and he was told that McGraw-Hill would incur legal liability if he failed to follow the handbook procedures. Sabetay, 506 N.E.2d at 921-22 (discussing Weiner factors).
The circumstances of the instant case are quite different. Plaintiff asserts that SCB's policy entitled "Group Instruction, Speaking Up — Policy," creates an employment contract upon which Plaintiff relied. (Loli Certification ¶¶ 30-31; Pltf. Mem. in Opp'n to Summ. Judgment, at 5.) In arguing that he falls into the narrow exception from New York's employment-at-will presumption, Plaintiff relies on Wolde-Meskel v. Tremont Commonwealth Council, TCC, No. 93 CIV 6515 (LMM), 1994 WL 167977, at *1 (S.D.N.Y. Apr. 29, 1994). Wolde-Meskel is, however, distinguishable from the instant matter because the employment manual in that case set forth certain procedures to be followed prior to an employee's termination. Although the "Speaking Up" policy at issue here encourages employees to speak out against wrongdoing and assures that employees will not be punished or retaliated against for doing so, there is nothing in the policy discussing grounds or procedures for discharge at SCB generally, nor does the policy state that employees will only be discharged for just cause. (Am. Compl. ¶ 21; Loli Certification, Ex. C.) The New York Court of Appeals has explained that "[r]outinely issued employee manuals, handbooks, and policy statements should not be lightly converted into binding employment agreements." Lobosco v. New York Telephone Co./NYNEX, 751 N.E.2d 462, 465 (N.Y.Ct.App. 2001). Employer policies that encourage employees to report wrongdoing and promise protection for doing so do not, in and of themselves, create an employment contract. See Albert v. Loksen, 239 F.3d 256, 264-65 (2d Cir. 2001); Lobosco, 751 N.E.2d at 465; De Petris v. Union Settlement Assoc., 657 N.E.2d 269, 272 (N.Y.Ct.App. 1995); Sabetay, 506 N.E.2d at 923.
Moreover, although Plaintiff was invited to work in the New York office instead of the London or Malaysia offices, all of the work involved the same employer, SCB. Plaintiff does not allege that he rejected work for a different employer based on assurances from SCB or otherwise detrimentally relied on promises from SCB. (Am. Compl. ¶ 35.) In fact, Plaintiff alleges that his move among SCB offices was designed to protect him from supervisors by whom he was being harassed. (Id. ¶ 36.) Likewise, although Plaintiff emphasizes that the offer to work in the New York office was for two years, this does not create an employment contract for a fixed duration sufficient to rebut the at-will presumption because the work, whether in New York or another city, was for the same employer, SCB, and Plaintiff has not alleged that he relied to his detriment on a particular position within the bank. On the contrary, he asserts that he took the position in New York because, having been dismissed from the Peru office, he had no other option. (Loli Certification ¶¶ 32, 35.)
Also in contrast to Weiner, Plaintiff does not allege that there was a written assurance in an employment application (or any other relevant written instrument) that he would only be discharged for cause . He merely makes reference to offer letters inviting him to work in the New York office with "International Terms" or "Local Terms" and stating his annual salary. (Id. ¶¶ 38-41.) Such offer letters are insufficient to overcome the presumption of at-will employment.
Thus, the undisputed facts of record and Plaintiff's allegations, even when read in the light most favorable to Plaintiff, are insufficient to support a judgment in Plaintiff's favor on his breach of contact claim.
Plaintiff's Application Pursuant to Rule 56(f) to Continue Discovery
In the absence of any evidence establishing a genuine issue of material fact, Plaintiff requests, pursuant to Rule 56(f), that he be permitted to conduct further discovery. In order to establish that continued discovery is appropriate, a party must file an affidavit setting forth "the nature of the uncompleted discovery; how the facts sought are reasonably expected to create a genuine issue of material fact; what efforts the affiant has made to obtain those facts; and why those efforts were unsuccessful." Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994). Aside from the fact that Plaintiff simply argues for continuance of discovery in his opposition to the motion for summary judgment rather than filing a proper Rule 56(f) affidavit, which alone provides sufficient grounds to reject such an application, Plaintiff does not proffer facts sufficient to meet the elements as explained in Paddington. Id. at 1137-38. Plaintiff simply states a desire to explore the intent behind SCB's "Speaking Up" policy; Plaintiff does not explain why such intent is material. Indeed, the facts as presented in this matter are sufficient for the Court to determine that the totality of the circumstances are such that Plaintiff cannot overcome the presumption of at-will employment. Plaintiff's employment was therefore terminable at any time, and Defendant's motion for summary judgment as to the claim for breach of contract is granted.
CONCLUSION
For the foregoing reasons, Plaintiff's request for further discovery pursuant to Federal Rule of Civil Procedure 56(f) is denied; Plaintiff's request to withdraw his First Cause of Action is granted, and that claim is dismissed with prejudice; and Defendant's motion for summary judgment is granted as to Plaintiff's Second Cause of Action. The Clerk of Court is directed to enter judgment in Defendant's favor and close this case.SO ORDERED.