Amy Miller v. Levi & Korsinsky, LLP

Background

Amy Miller sued Levi & Korsinsky, LLP (L&K), Eduard Korsinsky, and Joseph Levi. Her complaint alleged sex, familial-status, and caregiver-status discrimination, retaliation, unequal pay, and breach of contract under federal, New York State, and New York City laws. The opinion describes allegations that Miller was not paid commissions received by male partners, received bonuses equal to or lower than bonuses paid to less senior male attorneys she supervised, had complex cases reassigned, experienced discriminatory comments, and was terminated in March 2019.

L&K asserted two counterclaims against Miller. First, it alleged that she provided faithless and disloyal service by agreeing to a fee arrangement that exceeded her authority and allegedly harmed L&K, and by making disparaging remarks to a client. Second, it alleged that she tortiously interfered with L&K’s prospective economic advantage by causing the client to change counsel to the firm of one of Miller’s mentors.

Miller’s Motion

Miller moved under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(1) concerns the court’s subject-matter jurisdiction, while Rule 12(b)(6) tests whether the pleaded facts state a legally sufficient claim.

Miller argued that L&K’s counterclaims did not arise from the same transaction or occurrence as her claims. The court rejected that argument. Because Miller sought compensation and L&K asserted that her alleged disloyal service affected her right to compensation, the claims shared enough factual overlap to form part of the same constitutional case or controversy. The court therefore held that it had supplemental jurisdiction and denied the Rule 12(b)(1) portion of Miller’s motion.

Faithless-Servant Counterclaim

Under New York law, an employee who breaches a duty of loyalty may forfeit compensation, but the doctrine applies to substantial disloyalty or conduct that is adverse to the employer in a transaction. The court noted that the doctrine’s remedies are severe and generally are not triggered by minor or isolated workplace misconduct.

The court first concluded that L&K had abandoned the part of its faithless-servant theory based on Miller’s alleged disparaging remarks because L&K did not defend that theory in opposition to the motion. The court then explained that, even if L&K had not abandoned it, the allegations would not state a plausible claim.

The court reasoned that L&K’s allegations suggested it knew about and tolerated Miller’s conduct. L&K did not allege that it disciplined her or raised concerns about the fee arrangement when it learned of it. L&K also alleged that Miller’s conduct was intended, at least partly, to increase business flowing to her and L&K, rather than to provide her with an identified improper personal benefit such as a kickback or job offer. The court further noted that L&K offered Miller a severance agreement when it terminated her, which weighed against treating the alleged conduct as requiring forfeiture of all later compensation.

The court held that L&K failed to state a claim under the faithless-servant doctrine and dismissed that counterclaim under Rule 12(b)(6).

Tortious-Interference Counterclaim

Under New York law, a claim for tortious interference with prospective economic advantage generally requires a business relationship with a third party, the defendant’s knowledge and intentional interference, conduct motivated solely by malice or involving dishonest, unfair, or improper means, and injury to the relationship. The court explained that the conduct generally must amount to a crime, an independent tort, or sufficiently wrongful means.

The court held that L&K had not plausibly alleged that Miller acted solely to harm L&K. L&K’s allegations indicated that Miller was motivated at least partly by economic interests connected to business flowing to her and L&K. The court also held that L&K had not adequately alleged wrongful means. It had not alleged that Miller’s remarks were false or that she used fraud, misrepresentation, or other sufficiently unlawful conduct.

Finally, the court found that L&K’s allegations of causation and injury were conclusory. L&K alleged that Miller’s remarks directly caused the client to end its relationship with L&K and that Miller orchestrated the change in counsel, but it supplied insufficient factual support for those conclusions. The court dismissed the tortious-interference counterclaim under Rule 12(b)(6).

Disposition

Judge Loretta A. Preska granted Miller’s motion to dismiss L&K’s counterclaims. The Rule 12(b)(1) request was denied because the court had supplemental jurisdiction. Both counterclaims were dismissed under Rule 12(b)(6): the faithless-servant counterclaim and the tortious-interference counterclaim. The opinion did not rule on the merits of Miller’s underlying discrimination, retaliation, compensation, or contract claims. The court directed counsel to confer and report by letter on the status of the action, and directed the clerk to close the open motion.