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MIANO v. AC&R ADVERTISING

January 23, 1995

LOUIS MIANO, Plaintiff,
v.
AC&R ADVERTISING, INC., Defendant. MICHAEL R. WIDENER, Plaintiff, v. AC&R ADVERTISING, INC., Defendant. MORTON WEINSTEIN, Plaintiff, v. AC&R ADVERTISING, INC., Defendant.



The opinion of the court was delivered by: BERNARD NEWMAN

 OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW

 BERNARD NEWMAN, Senior Judge : *fn1"

 In this consolidated action, three former advertising executives allege that they were unlawfully terminated by reason of their age. The case was assigned to the writer, sitting without a jury, for the purpose of determining whether, under Ford Motor Company v. EEOC, 458 U.S. 219, 73 L. Ed. 2d 721, 102 S. Ct. 3057 (1982), plaintiffs should be precluded from recovering back pay accruing after the date when they rejected offers of reinstatement made to them by defendant during the pendency of this litigation, as well as front pay. The remaining issues in the case, namely liability and the quantum of damages, will be decided in a jury trial at a future date. *fn2"

 The reinstatement hearing was tried in two phases. The first phase commenced on September 12, 1994 and ran through September 23, 1994, at which time the court adjourned until October 11, 1994. The second phase began on October 11 and concluded on October 19, 1994. The record of the hearing, totalling fifteen days, was broken down into a September record and an October record. References to the first part of the record will hereafter be preceded by the letter "S", followed by a page reference. Page references to the October record will be introduced by the letter "O". The final post-trial submissions were received on December 22, 1994.

 The court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331, and the provisions of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. ("ADEA"). Jurisdiction over plaintiffs' claims under the New York Executive Law, § 296 et seq. arises pursuant to the court's supplemental jurisdiction, 28 U.S.C. § 1367. The following constitute the court's findings of fact and conclusions of law in accordance with Fed. R. Civ. P. 52(a).

 FINDINGS OF FACT

 Plaintiffs are individuals residing in New York City. Defendant AC&R Advertising, Inc. is a corporation organized and existing under the laws of the State of New York, and maintains an office in the City, County and State of New York. AC&R was acquired by the Ted Bates advertising agency in 1966 and is now known as Bates Manhattan, a division of Bates. The Bates agency is in turn owned by Saatchi & Saatchi. Defendant will be hereafter referred to as AC&R for convenience.

 Plaintiff Louis Miano ("Miano") commenced employment with AC&R on May 27, 1966 as a junior copywriter. Miano was promoted to Copy Chief shortly thereafter and was named Creative Director in September 1970. Miano was a member of the Executive Committee of AC&R since its inception. As Creative Director, Miano was responsible for the oversight and creation of ad campaigns, including slogans, scripts and headlines. As a necessary part of his duties at AC&R, Miano had direct client contact at briefings, meetings and presentations for and on behalf of AC&R. Miano represented AC&R at meetings, including new business meetings, in the United States and around the world. At the time of his termination, Miano held the title of Vice Chairman, Director of Creative Services. On May 1, 1990 Miano was dismissed by Stephen Rose ("Rose"), Chairman of the Executive Committee and the Chief Executive Officer ("CEO") of AC&R. At the time of his termination from employment, Miano's annual salary was $ 215,000. In 1989, Miano received a bonus of $ 25,000. Miano was fifty-five years of age at the time that Rose discharged him.

 Miano filed a charge of age discrimination with the Equal Employment Opportunity Commission on or about December 17, 1990. Subsequently, on February 21, 1991, Miano instituted an action in this court, and at his request, the EEOC advised that it had terminated its investigation of Miano's charge of age discrimination based upon the commencement of the instant action. The EEOC had not commenced any civil action at such time.

 Plaintiff Michael Widener ("Widener") began his employment with AC&R on January 5, 1981 as Vice President, Media Director. On August 16, 1984 Widener was promoted to Senior Vice President. At the direction of Rose, Widener was dismissed from his position by plaintiff Morton Weinstein ("Weinstein") who at that time was the Executive Vice President and Director of Marketing Services and the person to whom Widener directly reported. At the time of his termination from employment, Widener's annual base salary was $ 76,000. When he was discharged, Widener was fifty-five years of age.

 As Media Director, Widener was for ten years the person with direct and principal oversight responsibility for media planning and buying, the designing of media strategies and new business. In addition to Widener's administrative duties as Media Director, his responsibilities frequently required him to make presentations in meetings where AC&R's clients were present.

 Widener filed a charge of age discrimination with the EEOC on or about January 7, 1991. On March 11, 1991, Widener commenced an action in this court against AC&R, and the EEOC by letter dated April 30, 1991 advised that it had terminated its investigation based upon the commencement of this action. No civil action had been commenced by the EEOC at that time.

 Weinstein began his employment with AC&R on September 3, 1973 as Vice President, Media Director. Weinstein was promoted to Senior Vice President on or about August 16, 1977, and to Executive Vice President, Director of Marketing Services on or about October 11, 1983. Weinstein had supervisory responsibility over the Media, Research and Marketing Departments, became a member of the Executive Committee shortly after it was created, and later became Secretary. At times during his employment with AC&R, Weinstein represented the defendant at meetings in the United States and abroad, often making presentations to AC&R's clients.

 On October 3, 1990, Rose terminated Weinstein. At that time, the position held by Weinstein was abolished and its responsibilities were divided among the account executives. Weinstein was the Executive Vice President and Director of Marketing Services of AC&R, and was fifty-three years of age when he was fired. As of the time of his termination, Weinstein's annual base salary was $ 130,000. In 1989, Weinstein received a bonus of $ 25,000.

 Weinstein filed his charge of age discrimination with the EEOC on or about March 6, 1991. Thereafter, Weinstein commenced an action against AC&R on June 11, 1991, and by letter dated June 17, 1991, the EEOC advised that it had terminated its investigation in the matter of Weinstein's dismissal based upon the filing of this action. *fn3" Prior thereto, no civil action had been commenced by the EEOC.

 The positions that plaintiffs held at the time that Rose dismissed them shared several important common characteristics. All three plaintiffs had direct client contact, made presentations in client meetings, and required as a necessary part of their positions the confidence of AC&R's clients. Similarly, their ability to function at AC&R required the trust and confidence of their colleagues in senior management, with whom they worked closely, as well as the respect of the people who reported to them directly.

 Prior to terminating plaintiffs, Rose approached Alvin Chereskin ("Chereskin"), then the Vice Chairman of AC&R, Harry Koenig ("Koenig"), the Chief Financial Officer, and other members of the Executive Committee. Chereskin consented to the proposed action, as did the other members of the Executive Committee. Plaintiffs did not have personal knowledge that Chereskin had acquiesced in their termination, however, and believed that Chereskin did not participate in the decision. S:918; 1014. Koenig claimed at trial that he had endeavored to dissuade Rose from terminating Weinstein, albeit solely out of concern for the company's long-term interests. S:266; 734-35.

 AC&R's clients were advised concerning the termination of plaintiffs. O:338. The termination of plaintiffs and the subsequent litigation caused the agency's clients to be concerned about the stability of the agency. O:400-05; 500.

 Following Miano's dismissal, Rose promoted two men who had previously reported to Miano, Robert Goolrick and Richard Cohn, to the position of Co-Directors of Creative Services. Goolrick and Cohn were informed by Karen Amorelli, then the President of AC&R's New York office, that they would have to compete with each other for the position of Director of Creative Services. By mid-April, Cohn was terminated and Goolrick remained as the sole Director of Creative Services. O:537. Goolrick had previously experienced a strained working relationship with Miano, displaying some degree of hostility as well as impatience with some of Miano's orders. O:48-49

 Rose replaced Widener with Randy Novick ("Novick"), whom he regarded as being more adept at making presentations to clients than Widener. However, the management at AC&R came to believe that Novick did not possess Widener's administrative ability, and Harry Koenig, now the Chief Operating Officer, determined that the Media Department had fallen into disarray.

 In May 1990, shortly after his termination by Rose, Miano had a meeting with Koenig, then the Chief Financial Officer to address personnel matters in connection with his departure. At that meeting, Koenig encouraged Miano to file an age discrimination suit and assured him, somewhat cryptically, that proof existed to support his claim. S:1210. Koenig did not immediately elaborate on this revelation. However, Koenig met Miano over lunch on several subsequent occasions throughout the year, during which meetings Koenig related names of certain individuals who were present at a meeting in Irvine, California, where Rose discussed recent personnel changes in New York and allegedly made statements about his termination of plaintiffs and the subsequent promotion of Goolrick, Cohn and Novick. The content of those statements, if ultimately found to have been made by Rose, would be evidence that plaintiffs were terminated by reason of their age. *fn4" Koenig discussed with Miano who, if anyone, should be sued in addition to AC&R. S:1215. Koenig even mentioned that his own daughter was a labor lawyer and suggested that Miano retain her for the case at bar! Id.

 The court need not find nor, indeed, can it determine what motivated Koenig to expend so much effort secretly launching the Miano action at a time when Koenig was still a highly placed officer of defendant. Koenig's sudden alliance with Miano is all the more puzzling when one considers that the two men were not friends. S:1209. Moreover, during the 1980's, Koenig had behaved abusively to members of Miano's staff, including Miano's assistant, Elaine Vetter. Miano ultimately confronted Koenig angrily on one occasion and even asked Rose to discipline Koenig for his behavior. S:1202; O:53. In any event, whatever the motive may have been for Koenig's assistance to Miano, Koenig later came to regret his indiscretion.

 Weinstein's dealings with Koenig were similarly marked by mutual antagonism. S:1041. During Weinstein's tenure at AC&R, he dealt with Koenig purely in administrative matters involving personnel, finances and business operations, but did not report to Koenig. O:1017. Weinstein experienced numerous conflicts with Koenig over a fifteen year period, and on occasion expressed his grievances directly to Rose. O:1035. As a result, Weinstein learned that Koenig had referred to him within the company as a "backstabber," among other personal insults. Weinstein returned the insult, calling Koenig a "vantz", meaning a bug, or a nobody. S:336-37.

 Koenig's malevolent behaviour toward Weinstein continued unabated after Weinstein was discharged. For several weeks after Rose fired him, Weinstein was permitted to maintain an office in AC&R's annex, apparently to assist him in securing new employment. During that period, however, Koenig cut off Weinstein's use of photocopy, computer and telephone facilities. Weinstein protested, but Koenig laughed at Weinstein and responded by waiving his daughter's business card with the suggestion that Weinstein take the matter up with her. S:1073.

 Moreover, and during the same period, Weinstein experienced a similar chill in his other relationships at AC&R. Weinstein testified that he was "ostracized" by members of the Executive Committee while he was at the annex. Additionally, although Chereskin initially undertook to assist Weinstein in securing a position at Spielvogel Bates, Chereskin then broke off contact with Weinstein. O:1036.

 In mid-December, Rose announced his retirement from AC&R, shortly after his failure to persuade Saatchi & Saatchi to accept a management buyback bid led by him and other members of the Executive Committee.

 The date when Rose stepped down as CEO and when his successor, Chereskin, assumed the title and function of CEO became the subject of considerable controversy during the trial. Plaintiffs insisted that Chereskin became the CEO in title and in reality by Christmas of 1990. Accordingly, plaintiffs argue, there was reason to doubt the bona fides of defendant's offer of reinstatement. Defendant sought to prove that Rose continued to hold the title of CEO until the expiration of his employment contract on March 31, 1991, and that due to a long-standing "cold war" between the two men, Chereskin refused to exercise the function of CEO until Rose left the premises of AC&R. *fn5"

 For the reasons that follow, the court resolves this dispute in favor of plaintiffs.

 Rose admitted at trial that he had little or nothing to do with AC&R after December 1990. O:93. He informed Saatchi & Saatchi of his resignation on December 10, 1990, which was confirmed about a week later. O:106. What happened subsequently was less clear. It appears that Rose remained physically on the premises of AC&R for some of the time until March 31, 1991, during which period he was available to answer occasional questions and give some degree of advice to Koenig, who had been elevated to the position of Chief Operating Officer and assumed many of the responsibilities ordinarily exercised by the CEO. S:355, 361. Rose was otherwise uninvolved with the management of AC&R as of early January 1991.

 Chereskin stated that he did not decide to accept the position of CEO until January, and did not actually acquire the job until April 1991. S:93. Koenig corroborated this testimony, stating that Chereskin refused to assume the role of CEO "until Mr. Rose stepped out of the building and did not show up again," presumably because, as far as Chereskin was concerned, Rose was still CEO until his contract expired on March 31, 1991. S:355-56. However, the balance of the credible evidence contradicts the testimony of defendant's witnesses on this point.

 The former President of AC&R, Patrick King ("King") testified at the trial concerning a series of conversations that he held with Rose and other executives in mid December on the subject of Rose's retirement. His account of those conversations was detailed and extremely credible. King first testified that on or about December 14, 1990 he flew at Rose's behest to New York from AC&R's West Coast offices, where he was then based. O:224. He then had a dinner meeting with Rose, Koenig and another executive of AC&R, Karen Amorelli ("Amorelli") at which time Rose informed King that he would be stepping down as CEO immediately and that he would be succeeded by Chereskin. Following the dinner meeting, Koenig and Amorelli confirmed to King that Chereskin was in charge of AC&R and would be officially so as of January 1, 1991. O:222.

 The following day, King met Rose at the New York office, where Rose repeated that he was no longer running the company and that Chereskin would be taking over immediately, although an official announcement would not be released to the advertising media until January. O:225.

 It appears that King did not return to the West Coast until January, at which time he conferred by telephone with Rose, who was then preparing the press release. At Rose's request, King advised the management at the Los Angeles and Irvine, California offices concerning the imminent public announcement of Rose's departure. Subsequently in early January, King spoke with Chereskin, who acknowledged that he was CEO. O:227.

 On January 10, 1991, the following press release was disseminated:

 PRESS RELEASE

 (for release on January 10, 1991)

 
Stephen Rose will retire as Chief Executive Officer of AC&R Advertising, it was announced today by Robert Louis-Dreyfus, Chief Executive Officer of Saatchi & Saatchi Company in London. * * * *
 
He will be replaced immediately as Chief Executive Officer of AC&R by Alvin Chereskin, presently its Vice Chairman.

 Plaintiffs Exhibit 40.

 Additional evidence demonstrates that Chereskin began to assert his leadership of AC&R at a meeting of the Executive Committee on January 1991. *fn6"

 King did not speak again with Chereskin until early March of 1991, at which time Chereskin and Koenig came to see King in Los Angeles. O:229. They met at a restaurant in Malibu, where they discussed the recently filed lawsuits against AC&R, and ...


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