Milazzo v. Bank of New York Mellon Corporation

What the court ordered

The court ordered the parties to submit letters of no more than three single-spaced pages by August 8, 2025. The order requests focused briefing on the legal and factual issues identified below. It does not resolve the claims, the counterclaim, or the parties’ arguments.

Questions for Bank of New York Mellon Corporation

The bank must explain what kind of legal claim its counterclaim asserts—such as breach of contract or a request for a declaration of rights—and identify the factual basis for each required part of that claim. It must also identify the strongest authority supporting the availability of the relief it seeks.

Regarding Milazzo’s breach-of-contract claim, the bank must identify which part of the agreement’s definition of “Cause” it contends applies and explain the factual basis for that position.

The bank must address whether the language of the agreement would allow it to forfeit or recover an employee’s restricted stock units for no reason, or for a discriminatory reason, based on its argument that its discretion is unlimited. The court also asks whether public policy places limits on what the bank may do under its contracts.

Questions for Milazzo

Milazzo must address whether the bank can be held responsible for unlawful retaliation based on efforts to obtain repayment of vested restricted stock units. If so, he must identify the strongest authority for treating this type of conduct after termination as retaliation.

Milazzo must also identify the strongest authority for applying a “cat’s paw” theory in this type of case. That theory can, in appropriate circumstances, attribute a decisionmaker’s action to another person who influenced the decision. The opinion asks Milazzo to address the theory but does not determine whether it applies.

Finally, Milazzo must identify whether any court has held that an employee-benefit plan like the restricted-stock-unit agreements is unconscionable, meaning unfairly one-sided or oppressive under applicable contract law.

Question for both parties

Both parties must address the meaning of the agreements’ discretion provisions. The bank relies on Moran v. Elk and later decisions for the position that there is no implied duty of good faith and fair dealing in the restricted-stock-unit context and that the bank has absolute discretion. The court notes that Cordero v. Transamerica reaffirmed the implied duty even when a contract gives one party discretion, and that Moran turned on the contract and parties in that case. The parties must identify the strongest case, based on the actual agreement language here, showing whether the bank has “sole and absolute” discretion.

Hearing and settlement discussion

The principal decisionmakers for both parties must attend the August 12, 2025 hearing. The parties should be prepared to discuss settlement if neither side objects.

Disposition

This is a procedural case-management order requiring additional briefing and attendance at a hearing. Judge Arun Subramanian did not grant or deny a merits motion and did not decide who is right on the underlying contract, retaliation, or related issues.