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United States District Court, Southern District of New York

July 15, 1991


The opinion of the court was delivered by: Kimba M. Wood, District Judge.


Plaintiff Robert Nagle ("Nagle") filed this action on August 6, 1990, alleging that his employment with defendant John Hancock Mutual Life Insurance Company was terminated in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. ("ADEA" or "the Act") ("Count 1") and the age discrimination provisions of the New York State Human Rights Law, N.Y. Exec. Law § 296 ("Human Rights claim" or "Count 2"). Defendants move: (1) to dismiss the pendent state law Human Rights claim, Count 2, for lack of subject matter jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1); or (2) for judgment on the pleadings on Count 2, pursuant to Fed.R.Civ.P. 12(c); and (3) for sanctions pursuant to Fed.R.Civ.P. 11 and 28 U.S.C. § 1927. For the reasons set forth below, the court grants defendants' motion to dismiss Count 2, but denies defendants' motion for sanctions.*fn1


Defendants move to dismiss the complaint pursuant to Rule 12(b)(1), lack of subject matter jurisdiction or for judgment on the pleadings, pursuant to Rule 12(c). Because defendants move to dismiss in lieu of an answer, the court must rely solely upon the pleadings, must presume all factual allegations of the complaint to be true, and must draw all factual inferences in favor of the non-moving plaintiff. See 2A Moore, Moore's Federal Practice, ¶ 12.07 at 12-63 (1989); 5 Wright and Miller, Federal Practice and Procedure, § 1357 at 594-597 (1969).

Defendants' Motion to Dismiss

Under federal law, a person wishing to commence an age discrimination action in court must first file a complaint with the Equal Employment Opportunity Commission ("EEOC"). 29 U.S.C. § 626(d) (1985). In a state such as New York that has a law prohibiting age discrimination in employment and that has authorized a state agency to grant relief from such discriminatory practice, the EEOC may first refer the complaint to the state agency. 29 C.F.R. § 1626.9 (1990); 29 U.S.C. § 633(b) (1985).

New York requires parties claiming age discrimination to make a binding choice. They may pursue their state claim either directly through the courts or through the administrative agency. According to the Human Rights Law's election of remedies provision, N.Y.Exec. Law § 297(9) (McKinney's 1982) (the "election of remedies provision"), however, if the administrative route is chosen it provides the sole avenue of relief. The election of remedies provision states, in pertinent part:

  [a]ny person claiming to be aggrieved by an
  unlawful discriminatory practice shall have a
  cause of action in any court of appropriate
  jurisdiction for damages and such other remedies
  as may be appropriate, unless such person had
  filed a complaint hereunder [with the State
  Division of Human Rights] or with any local
  commission on human rights, . . .

  provided that, where the division has dismissed
  such complaint on the grounds of administrative
  convenience, such person shall maintain all rights
  to bring suit as if no complaint had been filed.

(emphasis added). Therefore, a party filing with the State Division of Human Rights ("SDHR"), is precluded from pursuing his or her state discrimination claim in court unless that claim is dismissed on the ground of "administrative convenience."

In this case, presuming the allegations in the complaint to be true, plaintiff filed his complaint with both the EEOC and the SDHR. Complaint ¶ 7 ("ROBERT NAGLE timely filed on September 2, 1989 a Charge of Discrimination with the New York Department of Human Relations [sic] and with the Equal Employment Opportunity Commission"). The SDHR never dismissed plaintiff's complaint on the ground of "administrative convenience." Therefore, his pendent state law claim is barred by the election of remedies provision.*fn2


Defendants move for sanctions pursuant to both Rule 11 and 28 U.S.C. § 1927 ("§ 1927"). Rule 11 requires that requires every pleading be signed by a party or his or her attorney. That signature

  constitutes a certificate by the signer that the
  signer has read the pleading, motion, or other
  paper; that to the best of the signer's knowledge,
  information, and belief formed after a reasonable
  inquiry it is well grounded in fact and is
  warranted by existing law or a good faith argument
  for the extension, modification, or reversal of
  existing law, and that it is not interposed for
  any improper purpose, such as to harass or to
  cause unnecessary delay or needless increase in
  the cost of litigation.


  If a pleading, motion, or other paper is signed in
  violation of this rule, the court, upon motion or
  upon its own initiative, shall impose upon the
  person who signed it, a represented party, or
  both, an appropriate sanction, which may include
  an order to pay to the other party or parties the
  amount of the reasonable expenses incurred because
  of the filing of the pleading, motion, or other
  paper, including reasonable attorney's fee.

In determining whether Rule 11 sanctions should be imposed against an attorney, the court applies a "test of objective reasonableness" rather than a test of subjective bad faith. See Cross & Cross Properties, Ltd. v. Everett Allied Co., 886 F.2d 497, 504 (2d Cir. 1989); Greenberg v. Hilton International Co., 870 F.2d 926, 934 (2d Cir.), remanded, on reh'g, 875 F.2d 39 (2d Cir. 1989). Similarly, if a represented party signs a pleading, motion, or other paper, whether the party's signature is required or is provided voluntarily, the court applies a test of objective reasonableness under the circumstances and may award sanctions against the party if the party did not conduct a reasonable inquiry. Business Guides v. Chromatic Communications, ___ U.S. ___, 111 S.Ct. 922, 112 L.Ed.2d 1140 (1991).

In applying a test of objective reasonableness with respect to an attorney's actions, the Second Circuit has held that sanctions are warranted where:

  it is clear that: (1) a reasonable inquiry into
  the basis for a pleading has not been made; (2)
  under existing precedents there is no chance of
  success; and (3) no reasonable argument has been
  advanced to extend, modify or reverse the law as
  it stands.

Princess Fabrics, Inc. v. CHF, Inc., 922 F.2d 99, 104 (2d Cir. 1990) (citation omitted); Mareno v. Rowe, 910 F.2d 1043, 1047 (2d Cir. 1990), cert. denied, ___ U.S. ___, 111 S.Ct. 681, 112 L.Ed.2d 673 (1991).

Thus, "sanctions shall be imposed when it appears that a competent attorney could not form the requisite reasonable belief as to the validity of what is asserted in the papers. . . ." Oliveri v. Thompson, 803 F.2d 1265, 1275 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987) (citations omitted). See also O'Malley v. New York City Transit Authority, 896 F.2d 704, 706 (2d Cir. 1990).

Finally, in determining the appropriateness of imposing Rule 11 sanctions, the Second Circuit in Cross held that the objective merits of each individual claim must be examined and that sanctions may not be avoided because the pleading as a whole has merit.Cross, supra, 886 F.2d at 504-505.

Section 1927 provides:

  Any attorney or other person admitted to conduct
  cases in any court of the United States or any
  Territory thereof who so multiplies the
  proceedings in any case unreasonably and
  vexatiously may be required by the court to
  satisfy personally the excess costs, expenses, and
  attorneys' fees reasonably incurred because of
  such conduct.

However, "an award made under § 1927 must be supported by a finding of bad faith similar to that necessary to invoke the court's inherent power." Oliveri, 803 F.2d at 1273 (citation omitted).

Defendants argue that plaintiff's counsel, Mr. William R. Amlong, did not conduct a reasonable inquiry into the law regarding New York's election of remedies provision in bringing and maintaining plaintiff's Human Rights claim. Defense counsel also contends that maintaining this claim in the fact of adverse precedent was done in bad faith. To support this allegation, defendants point to Mr. Amlong's letter to defense counsel, dated January 24, 1991, in which he states, "[a]lthough I previously objected to your request for Mr. Nagle's medical records, that request and objection appears to merge [sic] on being moot in light of the likely dismissal of the state law count involving emotional distress" (emphasis added).

First, the court declines to find bad faith here. Although plaintiff's counsel expressed doubt on January 14, 1991 about the viability of Count 2, after further research or reflection plaintiff's counsel may have changed his mind between the time of the letter and the date he filed his opposition to defendants' motion to dismiss, February 28, 1991. Therefore, this evidence alone is not sufficient to warrant an inference of bad faith under § 1927.

Second, although the court grants defendants' motion to dismiss plaintiff's Human Rights claim, the law in this Circuit is quite uncertain in areas closely related enough to the question at hand to confuse counsel; the district courts are split over whether to exercise pendent jurisdiction over a Human Rights claim due to: (1) the election of remedies provision when a party files his or her claim first with the EEOC, which subsequently refers the claim to the SDHR,*fn3 and (2) the potential for jury confusion.*fn4 Given the pervasive uncertainty of the law in the area of federal jurisdiction over this type of state law claim, it was not unreasonable for plaintiff's counsel to persist, albeit mistakenly, in his claim. Therefore, the court declines to award Rule 11 sanctions.


For the reasons stated above, the court grants defendants' motion to dismiss and denies defendants' motion for sanctions. The parties should adhere to the schedule ordered by the court on June 20, 1991 and be ready for trial on or after August 12, 1991.


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