Conahan v. medQuest LTD

Background

Cindy Conahan sued MedQuest Ltd., Leslie Inzunza, and Elliot Stone under the New York State Human Rights Law and New York City Human Rights Law. She asserted claims for age discrimination, gender discrimination, and retaliation. The defendants filed a counterclaim alleging that Conahan breached her fiduciary duty by taking company funds, writing checks to herself or cash for personal expenses, and taking TransitChek vouchers or debit cards to which she was not entitled.

The parties filed cross-motions for summary judgment. Conahan sought judgment on the breach-of-fiduciary-duty counterclaim. The defendants sought judgment on all of Conahan’s discrimination and retaliation claims. Summary judgment is appropriate only when the evidence shows no genuine dispute about a fact that could affect the result; if a reasonable jury could decide for the opposing party, the claim must proceed to trial.

Breach-of-Fiduciary-Duty Counterclaim

The court rejected Conahan’s argument that the counterclaim was entirely time-barred. Under New York law, the defendants’ claim seeking monetary damages was subject to a three-year limitations period, and the period generally began when the alleged breach occurred. The court ruled that conduct before April 24, 2017 could not independently support a timely claim, but the counterclaim also alleged conduct involving the TransitChek program between April 2017 and August 2019.

The court found sufficient evidence for a jury to decide whether Conahan breached her duties. The evidence included a claimed discrepancy between employee payroll deductions and payments to the TransitChek program, more than $20,000 in allegedly missing TransitChek debit cards and vouchers, Conahan’s control over the program, and checks that she allegedly wrote to herself or cash without authorization. The court did not decide certain issues concerning the faithless-servant theory because the parties had not adequately briefed them.

The court therefore denied Conahan’s motion for summary judgment on the defendants’ counterclaim.

Age Discrimination

The court held that Conahan presented enough evidence to create a jury question on age discrimination. She testified that Inzunza told her she was “too old to commute” to New York. Inzunza also wrote that Conahan could leave the company if she felt too tired to learn new systems. The court considered the timing of those comments, the discussion between Inzunza and Stone about terminating Conahan, and Stone’s termination of Conahan shortly after returning from vacation.

The defendants presented evidence that Conahan’s termination resulted from confrontational interactions with employees and prior warnings about her conduct. But the court concluded that a reasonable jury could view that explanation as a pretext, or an excuse masking discrimination, given the comments and the close timing between the meeting and the termination.

The court denied the defendants’ motion for summary judgment on the age-discrimination claims.

Gender Discrimination

The court granted the defendants’ motion for summary judgment on Conahan’s gender-discrimination claims. Conahan relied on male employees whom she said received more favorable treatment, including employees accused of other misconduct. The court found that the proposed comparators had different jobs, engaged in different conduct, or were accused of less serious conduct. The court also noted that one employee Conahan identified had eventually been terminated.

Because Conahan did not provide enough evidence to support a basic inference of gender discrimination, the gender-discrimination claims did not present a genuine issue for trial.

Retaliation

The court denied summary judgment on Conahan’s age-based retaliation claims. Conahan testified that she told Stone, immediately after her meeting with Inzunza, that Inzunza had said she was “too old to commute to the city.” The court held that a complaint need not use specific legal terms or “magic words” if it reasonably put the employer on notice that the employee was opposing age discrimination.

The court also rejected the defendants’ argument that Inzunza’s status as a possible independent contractor defeated the retaliation claims. Under the New York City law, a natural person working as an independent contractor for an employer’s business is counted as an employee for this purpose. Under the New York State law, the evidence could support a finding that Inzunza acted as a MedQuest employee. The court further stated that Conahan could have engaged in protected activity based on a good-faith, reasonable belief that the conduct was unlawful, even if the conduct ultimately did not violate the statute.

The court granted summary judgment for the defendants on the retaliation theory based on Conahan’s filing of this lawsuit and the defendants’ later filing of their counterclaim. The court held that the counterclaim was not totally baseless and that, because Conahan filed the lawsuit before the counterclaim was filed, the counterclaim could not have deterred her from filing that lawsuit. The court also found insufficient evidence of retaliatory intent under that theory.

The court rejected the argument that Inzunza and Stone could not be individually liable for retaliation. It stated that individuals may be liable under the New York State or New York City laws when they participate in the conduct underlying the discrimination or retaliation claim.

Disposition

Judge Lewis J. Liman denied Conahan’s motion for summary judgment. He granted in part and denied in part the defendants’ motion for summary judgment. The age-discrimination and some retaliation claims, along with the breach-of-fiduciary-duty counterclaim, remained for trial. The defendants obtained summary judgment on the gender-discrimination claims and on the retaliation theory based on the filing of the counterclaim. The court also ordered that most of Conahan’s Social Security number in a filed exhibit remain sealed under the federal civil-procedure rule governing personal identifiers.