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TISCHMANN v. ITT/SHERATON CORP.

April 7, 1995

PETER TISCHMANN, Plaintiff, against ITT/SHERATON CORPORATION, Defendant.


The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this diversity action arising out of an allegedly wrongful termination of employment, defendant ITT/Sheraton Corporation ("Sheraton") moves, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for summary judgment dismissing the amended complaint. Plaintiff Peter Tischmann ("Tischmann") opposes the motion. For the reasons set forth below, Sheraton's motion is granted in part and denied in part.

 BACKGROUND *fn1"

 I. The Parties

 Defendant Sheraton, a Delaware corporation headquartered in Massachusetts, owns and operates one of the leading hotel chains in the world. The St. Regis Hotel (the "St. Regis") is Sheraton's flagship hotel in New York City.

 In 1972, Tischmann commenced employment at Sheraton, working in various positions for approximately twenty years. In July 1985, after working at several Sheraton hotels around the world, Tischmann was appointed general manager of the St. Regis. As general manager, Tischmann's responsibilities included managing the St. Regis staff and supervising the hotel's daily operations.

 Initially, Tischmann served as general manager pursuant to a written employment agreement dated November 24, 1986 (the "Contract"). The Contract, covering the period of December 1, 1986 through November 30, 1988, provided a base salary of $ 92,000 per year. In addition to his base salary, Tischmann received: (1) substantial performance bonuses; (2) a rent-free apartment; (3) a partial college scholarship for his daughter; (4) participation in Sheraton's Investment and Savings Plan; (5) participation in Sheraton's Retirement Plan; (6) life insurance; (7) stock options; and (8) various other perquisites. The Contract expressly provided that the "agreement will be governed by and construed in accordance with laws of the State of Massachusetts." Contract, annexed to Pl.'s Resp. to Def.'s Rule 3(g) Statement as Exh. "7," at 3.

 Tischmann was also eligible to participate in Sheraton's Incentive Compensation Plan (the "Incentive Plan"). Under the Incentive Plan, general managers were awarded bonuses commensurate with the performance of their hotels. The Incentive Plan defined successful management as "encompassing both achievement of your own individual objectives and contribution as a team member toward overall ITT Sheraton objectives." Incentive Plan, annexed to Def.'s Exhibits as Exh. "18," at 1.

 Sheraton and Tischmann renewed the Contract for two one-year periods, effectively extending the Contract through November 30, 1990. At that time, however, Sheraton decided not to enter into or extend employment contracts with any of its employees. See Affidavit of James P. Smith, sworn to on 4/14/94, at P 15. As a result, the Contract expired on November 30, 1990 and Tischmann continued to work at Sheraton without a written employment agreement.

 II. The Severance Plan

 
If during the period an Executive is receiving Salary Continuation, the Executive (i) engages in any activity which is inimical to the best interests of the Company; . . . or (vi) fails to comply with applicable provisions of the ITT Code of Conduct or applicable ITT Corporate Policies or any applicable ITT Subsidiary Code or policies, then the Company will have no further obligation to provide severance pay.

 Id. at 3. The Severance Plan also noted that it is "not a contract of employment, does not guarantee the Executive employment for any specified period and does not limit the right of the Company to terminate the employment of the Executive at any time." Id. at 5.

 III. Sexual Harassment Charges

 During the relevant time period, Sheraton had in place a Code of Corporate Conduct (the "Code of Conduct") as well as a policy against sexual harassment (the "Sexual Harassment Policy"). The Code of Conduct provided, in relevant part:

 
Sexual harassment in any form will not be tolerated. All supervisors, managers, and executives of ITT must be alert to the possible presence of sexual harassment in the workplace, take appropriate steps to prevent it, and take action if such harassment occurs. Appropriate action may range from the issuance of a warning to dismissal.

 Code of Conduct, annexed to Def.'s Exhibits as Exh. "6," at 5. The Sexual Harassment Policy, printed in Sheraton's Personnel Policy and Procedure Manual (the "Personnel Manual"), stated:

 
It will be the responsibility of the management team of each hotel to ensure that all hotel employees are allowed to work in an environment free of sexual harassment. Hotel staff will be informed of this policy and made aware of what steps to take if they feel they are being harassed. When notified of an alleged violation, management will react immediately, investigate the allegation(s) and take appropriate action. It should be made clear to all staff members that sexual harassment will not be tolerated.

 Sexual Harassment Policy, annexed to Def.'s Exhibits as Exh. "8."

 In July 1988, the St. Regis closed for extensive renovations and Tischmann and other St. Regis staff worked at the Sheraton Center in New York City on assignments related to the anticipated re-opening of the St. Regis in September 1991. At that time, Sheraton decided to name Tischmann as managing director of the newly-renovated St. Regis. Shortly thereafter, Tischmann hired other management-level employees, including Ann Power ("Power") for the position of director of human resources and Sarah Cannon ("Cannon") for the position of assistant director of human resources.

 In February 1992, Mary Ann Palmer ("Palmer"), Sheraton's vice president and director of human resources for Sheraton North America-East, notified James P. Smith ("Smith"), Sheraton's executive vice president and director of administration, that Power and Cannon had come forward with complaints that Tischmann had sexually harassed them at work.

 Power and Cannon were instructed to submit written statements to Smith, describing their allegations in detail. In her written statement, Power alleged six separate incidents in which Tischmann had either touched her buttocks, requested kisses, inquired about her sex life or otherwise behaved inappropriately. Similarly, Power's written statement alleged that Tischmann had touched her inappropriately and made several sexually suggestive remarks. Upon receiving the written submissions, Smith consulted with John Kapioltas ("Kapioltas"), Sheraton's president, who decided to assign Carl J. Madda ("Madda"), Sheraton's vice president and director of labor relations, to investigate the charges against Tischmann.

 On March 5, 1992, Madda began an on-site investigation at the St. Regis. Madda immediately advised Tischmann that he had been assigned to investigate sexual harassment complaints levied against him by certain female workers at the hotel. Madda proceeded to interview Power and Cannon, who described several incidents of sexual harassment perpetrated by Tischmann.

 During the investigation, Madda interviewed other St. Regis employees, including Eleanor Ribaudo and Anne Barzola, who complained that Tischmann had engaged in unwelcome conduct towards them as well. Madda also interviewed two other management-level employees at the St. Regis, who confirmed certain of Power's and Cannon's accounts. At about the same time, Denise Flanders ("Flanders"), a former Sheraton employee, came forward with complaints of similar conduct by Tischmann. On March 6, 1992, Madda compiled the results of his investigation and submitted a written report to Smith.

 Smith reviewed Madda's report with Kapioltas, who decided that Sheraton's personnel committee, composed of several members of Sheraton's board of directors, should consider the charges and determine an appropriate remedy. On March 12, 1992, the personnel committee, reviewed the charges against Tischmann. The personnel committee determined that the charges were credible and, as Tischmann's conduct was in violation of the Code of Conduct and the Sexual Harassment Policy, his employment should be terminated.

 After the meeting, Ralph W. Pausig ("Pausig") and Smith, two members of the personnel committee, met with Power and Cannon separately as a final verification of their allegations. Pausig and Smith then confronted Tischmann with the charges and terminated his employment. Although Sheraton claims that Tischmann did not dispute the substance of the complaints, Tischmann maintains that he consistently has denied all allegations of sexual harassment. *fn2" See Deposition of Peter Tischmann, undated, annexed to Def.'s Rule 3(g) Statement as Exh. "3," at 348. *fn3"

 In addition to terminating Tischmann's employment, Sheraton determined not to pay him any bonus under the Incentive Plan for 1991. According to Sheraton, as the St. Regis was under construction throughout most of 1991, it could not calculate Tischmann's bonus based on the hotel's performance, but instead was forced to base his bonus on personal performance. In light of Sheraton's determination that Tischmann had violated the Code of Conduct and the Sexual Harassment Policy, it decided that a bonus under the Incentive Plan was not warranted. Tischmann disputes this claim and points out that, prior to the ...


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