Mancuso v. L'oreal USA, Inc.

Background

Rachael Mancuso worked for IT Cosmetics, which became a subsidiary of L’Oreal in 2016. She had signed a noncompetition and confidentiality agreement that restricted competitive work for two years after separation. She later signed an employee retention agreement with L’Oreal and resigned on January 31, 2020, to pursue her own consulting business.

After her resignation, L’Oreal offered Mancuso consulting work. She alleges that L’Oreal offered her half the consulting fee paid to a male consultant performing at a substantially equivalent level. Mancuso also signed an agreement to provide brand-development services to Glamsquad. L’Oreal initially said it would enforce the noncompetition agreement, then offered to pay Mancuso her base salary for 12 months while enforcing the restriction. Mancuso accepted those terms and gave up the Glamsquad opportunity. L’Oreal later said it would no longer enforce the restriction against Glamsquad, stopped paying Mancuso, and stated that it would resume payments only if it later determined that the restriction applied to another position.

Rule 12(b)(6) standard

L’Oreal and IT Cosmetics moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not allege enough facts to support a legally plausible claim. At this stage, the court generally accepts the complaint’s factual allegations as true and resolves contractual ambiguities in the plaintiff’s favor.

Breach of contract

The court denied dismissal of Mancuso’s breach-of-contract claim. The parties agreed that the email exchange creating the Separation Agreement was a binding contract. The dispute concerned the meaning of the promise that Mancuso would receive her base pay during the “period of enforcement.”

The court concluded that the language could refer to the 12-month period during which L’Oreal said it would enforce the noncompetition agreement, rather than only to a period when Mancuso had accepted a competing job offer. Because Mancuso plausibly alleged that L’Oreal breached that agreement by stopping her salary and benefits, the claim could not be resolved against her on the pleadings.

Promissory estoppel

The court dismissed the promissory-estoppel claim. Promissory estoppel is a claim based on reliance on a clear promise when contract remedies may not apply. Here, the alleged promise to pay salary and benefits was contained in the same valid contract as the breach-of-contract claim. The court therefore found the promissory-estoppel claim duplicative.

Good faith and fair dealing

The court dismissed the claim for breach of the implied duty of good faith and fair dealing. Under New York law, a separate claim generally cannot proceed when it is based on the same facts as a breach-of-contract claim. Mancuso’s claim relied on the same allegations as her contract claim and was therefore redundant.

Tortious interference

The court dismissed Mancuso’s tortious-interference claim. Such a claim requires allegations that the defendant directly caused or induced a third party to breach a contract or decline a business relationship. Mancuso alleged that she herself withdrew from the Glamsquad arrangement after accepting L’Oreal’s terms. She did not allege that L’Oreal caused Glamsquad to breach the agreement or that L’Oreal directly acted toward Glamsquad to prevent the relationship.

New Jersey Wage Payment Law

The court dismissed Mancuso’s claim under the New Jersey Wage Payment Law for two independent reasons. First, the court held that the law generally does not cover employees who live and work outside New Jersey. Mancuso alleged that she lived and worked in South Dakota and only attended periodic meetings in New Jersey.

Second, the court held that the payments described in the Separation Agreement were not “wages” under the statute. The payments were exchanged for Mancuso’s future promise not to work for a competitor, rather than compensation for services she had already performed.

Conscientious Employee Protection Act

The court dismissed Mancuso’s claim under New Jersey’s Conscientious Employee Protection Act, commonly called the state whistleblower law. The court held that Mancuso did not allege an adverse employment action because she had already resigned from L’Oreal when the company withdrew the consulting offer and allegedly failed to make payments under the Separation Agreement. She therefore was no longer an employee when the challenged actions occurred.

Disposition

Judge Lewis J. Liman granted in part and denied in part the defendants’ motion to dismiss. The breach-of-contract claim remained pending, while the claims for promissory estoppel, breach of the duty of good faith and fair dealing, tortious interference, violation of the New Jersey Wage Payment Law, and violation of the Conscientious Employee Protection Act were dismissed. The clerk was directed to terminate the motion.