Ricardo v. The Segal Group, Inc.

Background

Ricardo DiBartolo sued The Segal Group, Inc. and its Chief Executive Officer, David Blumenstein. He asserted an age-discrimination claim under the New York City Human Rights Law and a breach-of-contract claim based on a Confidentiality/Non-Solicitation Agreement that allegedly required the Company to pay severance after an involuntary termination.

According to the Complaint, DiBartolo had been Segal’s Senior Vice President and Chief Financial Officer for more than 26 years. He alleged that, after Blumenstein became Chief Executive Officer, Blumenstein pressured him to retire, repeatedly asked when he planned to retire, shifted his duties to a younger outside consultant, fabricated performance issues, and required him to announce his retirement in order to receive a prior-year bonus and remain paid through the end of 2021. DiBartolo alleged that he was replaced by Joseph Fristachi, who was approximately 49 years old.

DiBartolo also alleged that Segal and he had agreed to severance of eight months’ salary, which he identified as approximately $230,000. He alleged that Defendants refused to offer that amount and instead offered $100,000 in exchange for silence and a release of claims.

Motion-to-dismiss standard and documents considered

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. At this stage, the Court accepted well-pleaded factual allegations as true and drew reasonable inferences for DiBartolo, but disregarded conclusory allegations and legal conclusions.

The Court considered the Transition Agreement and the Confidentiality/Non-Solicitation Agreement. It found the Transition Agreement integral to the Complaint because DiBartolo’s claims relied heavily on its terms and effect, and because he did not dispute its authenticity, accuracy, or relevance. The Court did not consider three pages of notes from an unidentified person attached to the Transition Agreement because the defendants said they were not relying on those notes as a basis for dismissal.

New York City Human Rights Law claim

The Court denied the motion to dismiss the age-discrimination claim in its entirety. Under the New York City Human Rights Law, a plaintiff must plausibly allege differential treatment of any degree based on a discriminatory motive; age may be an actual or perceived basis for discrimination.

The Court found that DiBartolo adequately alleged that he was qualified and within the statute’s protection. It also found that he plausibly alleged a constructive discharge, meaning that the employer intentionally created working conditions so difficult or unpleasant that a reasonable person would have felt compelled to resign.

The Court viewed the alleged conditions cumulatively. They included the threatened loss of a bonus of more than $200,000, the transfer of key responsibilities to a younger consultant, and repeated pressure to retire. Taken together, those allegations plausibly showed that DiBartolo had no choice but to accept Blumenstein’s demand that he retire.

The Court also found that DiBartolo plausibly alleged an inference of age discrimination because he was replaced by Joseph Fristachi, who was approximately 49 years old. The Court said it did not need to reach DiBartolo’s additional allegations about a company trend of replacing older employees with younger employees or Blumenstein’s comments about handing the company to the next generation.

Breach-of-contract claim

The Court granted the motion to dismiss the contract claim against Blumenstein. The Confidentiality/Non-Solicitation Agreement was signed by DiBartolo and the Company, but not by Blumenstein in his individual capacity. The Court found no allegation that Blumenstein assented to the agreement, intended to be personally bound by it, or otherwise fell within an exception that could impose contract liability on a nonsignatory.

The Court denied the motion to dismiss the contract claim against the Company. DiBartolo adequately alleged an agreement, his own performance, the Company’s breach, and damages. The Court rejected the Company’s argument that DiBartolo failed to allege performance because the severance plan required him to sign a release. The Court concluded that DiBartolo plausibly alleged that the Company prevented that condition from occurring by refusing to offer the contractually required severance amount in exchange for the release.

The Court also rejected the argument that the Transition Agreement established a $100,000 payment or superseded the earlier severance agreement. The Transition Agreement referred to a lump-sum payment in an amount to be determined and did not state that the payment would be $100,000. The Court did not decide whether the Transition Agreement otherwise replaced the Confidentiality/Non-Solicitation Agreement.

Disposition

Judge Jennifer H. Rearden ordered that the defendants’ motion to dismiss be denied as to DiBartolo’s New York City Human Rights Law claim. The motion was granted as to DiBartolo’s breach-of-contract claim against Blumenstein and denied as to that claim against The Segal Group, Inc. The Clerk of Court was directed to terminate the motion.