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CHEUNG v. MERRILL LYNCH

January 22, 1996

PAUL CHEUNG and EDMOND CHEUNG, Plaintiffs,
v.
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., MARK TULLY, and FRANK SULLIVAN, Defendants.



The opinion of the court was delivered by: STANTON

 Defendants move pursuant to Fed. R. Civ. P. 12(b)(6) for dismissal of the complaint, which alleges that defendants refused to open an investment account for plaintiffs for unlawful discriminatory reasons.

 BACKGROUND

 The complaint alleges the following:

 Paul and Edmond Cheung, who are father and son, sought to open an investment account at Merrill Lynch's 200 Park Avenue office. They spoke by telephone with Mark Tully, a financial consultant at that office, and then met with him to discuss investment alternatives. The Cheungs told Tully that although they were not sure how they wanted to invest their money, they wanted to open an account at Merrill Lynch.

 Tully told them their account was open but not yet active and that to activate their account they would only need to make a phone call. It was agreed that the Cheungs would tell Tully how they wished to invest the money. Tully assured the Cheungs that there were no obstacles--including Paul Cheung's Canadian citizenship--which would prevent them from opening an account. (Complaint, PP 10-12.)

 The Cheungs met with Tully again about a month later at the 200 Park Avenue office for the purpose of giving Tully a check for $ 100,000 and telling him how they wanted to invest it. Tully left the conference room in which they were meeting to prepare power of attorney documents for the Cheungs' signature.

 Frank Sullivan, the branch manager of the 200 Park Avenue office, entered the room. He "became hostile, and demanded that Plaintiffs state their business." He picked up Paul Cheung's Canadian passport and asked whether he was a Canadian citizen. Mr. Cheung answered affirmatively. Sullivan picked up the Cheungs' completed application, which had been signed at the earlier meeting, reviewed it, and left the room. (Id. PP 14-19.)

 When Tully returned, he told the Cheungs that Sullivan had instructed him to terminate the meeting, and that the Cheungs would not be permitted to open an account with Merrill Lynch because they were not United States citizens. The Cheungs pointed out that Edmond Cheung was a U.S. citizen and that they could open the account under his name. After conferring again with Sullivan, Tully told the Cheungs that they could not open an account under Edmond's name because he hadn't been a citizen "long enough." Tully refused to discuss the matter further. The Cheungs left the office. (Id. PP 20-24.)

 The Cheungs assert claims under 42 U.S.C. ┬ž 1981, the New York State Human Rights Law ("NYSHRL"), the New York City Administrative Code and New York common law. Paul Cheung claims defendants discriminated against him on the basis of his Canadian citizenship, race, sexual orientation and disability--specifically, defendants' perception that he was infected with the human immunodeficiency virus (HIV). Edmond Cheung claims defendants discriminated against him because they thought he was not a U.S. citizen and on the basis of his race and relationship to someone perceived to have a disability. Both assert claims under New York state law for intentional infliction of emotional distress.

 DISCUSSION

 Defendants contend that particular types of discrimination are not prohibited by some of the statutes under which plaintiffs sue. With respect to the race discrimination claims, they urge that the complaint fails to set forth facts from which discriminatory motive can be inferred.

 Defendants argue that the claims under the New York City Administrative Code must be dismissed because plaintiffs did not comply with that Code's pre-filing requirement.

 Alternatively, defendants seek dismissal of all claims against Tully on the ground that the complaint alleges that he carried out others' instructions and thus himself lacked the necessary discriminatory motive.

 In considering a motion to dismiss under Fed. R. Civ. P 12(b)(6), "a court must accept the allegations contained in the complaint as true, and draw all reasonable inferences in favor of the non-movant; it should not dismiss the complaint "'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Sheppard v. Beerman, 18 F.3d 147, 150 (2nd Cir.), cert. denied, 130 L. Ed. 2d 28, 115 S. Ct. 73 (1994) (citations omitted).

 I.

 COVERAGE

 A. Section 1981

 Defendants argue that the Cheungs' citizenship discrimination claims are not cognizable under 42 U.S.C. section ...


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