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STUDINT v. LASALLE ICE CREAM CO.

October 2, 1985

RICHARD STUDINT, Individually and in the name of LASALLE ICE CREAM CO., INC., Plaintiff,
v.
LASALLE ICE CREAM CO., INC., STEVEN KISSEL and SALLY KISSEL, Defendants



The opinion of the court was delivered by: MCLAUGHLIN

ORDER

Plaintiff, a former employee of defendant LaSalle Ice Cream Co. ("LaSalle"), brings this action for damages and other relief arising from the conditions of his former employment and his status as a shareholder of LaSalle. Plaintiff alleges violations of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. ยง 626, the common law of New York, and the New York Penal Law.

 Defendants move to dismiss the complaint for failure to state a claim, Fed. R. Civ. P. 12(b)(6). In the alternative, defendants contend that principles of pendent jurisdiction preclude adjudication by this Court of certain of the state claims alleged in the complaint. For the reasons discussed below, defendants' motion is granted in part and denied in part.

 Facts

 Plaintiff is a shareholder and a former director, officer and employee of LaSalle. The individual defendants are officers or shareholders of the company. Plaintiff and defendants are parties to several written agreements, including an employment contract and a shareholders' agreement.

 In this action, plaintiff alleges that defendant "constructively terminated" plaintiff's employment in violation of the ADEA, the employment contract, and state law, by denying him the right to participate in the management and operations of LaSalle; altering the nature and extent of his duties; humiliating, harassing and demoralizing him; and demanding that he undertake extensive demanding and menial chores.

 In addition, plaintiff asserts several claims, including five stockholder's derivative claims, charging defendants with waste, mismanagement, diversion of corporate funds and business opportunities, and refusal to allow plaintiff to inspect the books. The remedies sought by this latter class of claims include dissolution of the corporation, appointment of a receiver, accounting and damages.

 Finally, it should be noted that an action commenced by LaSalle against plaintiff (wherein LaSalle alleges that plaintiff breached the agreements between the parties) is pending in state court. LaSalle Ice Cream Co., Inc. v. Richard Studint, Supreme Court, Nassau County, Index No. 3080/85. That action has been stayed pending a decision on this motion.

 Discussion

 With respect to defendants' motion to dismiss the age discrimination claims under Rule 12(b)(6), I cannot say as a matter of law that "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957) (footnote omitted). Accordingly, the motion to dismiss counts one and two is denied.

 Defendants argue, however, that this Court should exercise its discretion and dismiss the fifteen pendent state claims as bearing little relationship to the underlying ADEA claim. United Mine Workers of America v. Gibbs, 383 U.S. 715, 726-27, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966) ("Gibbs ").

 In Gibbs, the Supreme Court held that a federal court has the power to hear a pendent state claim if (a) the federal claim is substantial enough to confer subject matter jurisdiction on the court, and (b) the federal and state claims derive from a common nucleus of operative fact. Gibbs, supra, 383 U.S. at 725. Thus, clearly this Court has the power to decide plaintiff's state claims since the ADEA claim is substantial enough to confer jurisdiction on the Court, and since, arguably, the federal and state claims derive from the common nucleus of the parties' business and employment relationship.

 The Gibbs Court stressed, however, that the mere existence of the power to hear state claims does not guarantee its exercise in every case:

 
It has consistently been recognized that pendent jurisdiction is a doctrine of discretion, not of plaintiff's right. Its justification lies in consideration of judicial economy, convenience and fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claims, even though bound to apply state law to them . . . . Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law . . . . [I]f it appears that the state issues substantially predominate, whether in terms of proof, of the ...

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