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TAGARE v. NYNEX NETWORK SYS. CO.

December 8, 1997

NEIL TAGARE, Plaintiff, against NYNEX NETWORK SYSTEMS COMPANY, FLAG LIMITED, NYNEX NETWORK SYSTEMS (BERMUDA) LIMITED, NYNEX CORPORATION, NYNEX WORLDWIDE SERVICES GROUP, JOSEPH TIMPANARO, GABRIEL YACKANICH, JOHN PARRY and NICHOLAS REDA, Defendants.

William C. Conner, Senior United States District Judge.


The opinion of the court was delivered by: CONNER

Conner, Senior D.J.:

 Plaintiff Sunil ("Neil") Tagare brings this employment discrimination and breach of contract action against several defendants -- NYNEX Network Systems Company ("NNS"), NYNEX Network Systems (Bermuda) Limited ("NNS(B)"), FLAG Limited ("FLAG"), NYNEX Corporation ("NYNEX"), NYNEX Worldwide Services Group ("Worldwide"), *fn1" Joseph Timpanaro, Gabriel Yackanich, John Parry, and Nicholas Reda. Tagare asserts claims under Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq. and the New York State Human Rights Law ("NYSHRL"), N.Y. Exec. Law § 296, on the grounds that defendants allegedly discriminated against him on the basis of his national origin and skin color and in retaliation for his opposition to such discrimination. He also asserts a breach of contract claim.

 This Court has previously determined that (1) the Title VII claim runs against defendants NNS, NNS(B), FLAG, NYNEX, and Worldwide only; (2) the NYSHRL claim runs against all defendants; and (3) the breach of contract claim runs against defendant NNS only. See Tagare v. NYNEX Network Systems Co., 921 F. Supp. 1146 (S.D.N.Y. 1996) (WCC).

 Defendants now move for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. As explained in greater detail below, we grant summary judgment in favor of defendants with respect to all claims. *fn2"

 BACKGROUND

 Plaintiff Tagare is a native of India, a citizen of the United States, and a domiciliary of New Jersey. Defendant NNS(B) is a subsidiary of defendant NNS, which is a subsidiary of defendant Worldwide, which in turn is a subsidiary of defendant NYNEX. NNS, Worldwide, and NYNEX are Delaware corporations whose principal places of business are in New York. NNS(B) has its principal place of business in Bermuda, where it is incorporated. Defendant FLAG is a Bermuda corporation, with its principal place of business in Bermuda, in which NNS owns stock. NNS(B) serves as the exclusive marketing agent for FLAG and receives commissions based on sales of capacity on FLAG's submarine cable. Individual defendants Timpanaro, Yackanich, Parry, and Reda were, at all relevant times, executives of various corporate defendants. They are all domiciled in either New York or Bermuda.

 In the late 1980s, Tagare developed the concept of privatizing undersea fiberoptic cable projects for the purpose of establishing an international telecommunications system. NNS undertook the project -- called the Fiberoptic Link Around the Globe (the "FLAG Project") -- around 1990.

 Beginning in 1991, Tagare entered into a series of four successive contracts with NNS. Only the fourth and final contract -- the "Agreement for Consulting Services" -- is at issue in this action. The Agreement was signed on August 13, 1993 by Tagare on his own behalf and as president of his company, Telematics Business Development Company ("Telematics"), and by defendant Timpanaro on behalf of NNS. The Agreement ran from August 1, 1993 to July 31, 1994, at which point it was renewed through July 31, 1996.

 As background, we will briefly describe the Agreement, the actual relationship between Tagare and the defendants, and Tagare's breach of contract claim.

 A. The Agreement

 The Agreement called for Tagare, through Telematics, to "perform certain marketing and business development activities with respect to the [FLAG Project] and to undertake certain defined activities relative to the sale of cable capacity." (Berg Aff., Exh. 3, p.1 (hereinafter "Pl. Exh. 3").) More specifically, the Agreement provided that Tagare, as a "Vice President of Marketing and Business Development" for Project FLAG, would (1) "supervise the sales and marketing team provided by [NNS] and plan/implement the Marketing Plan"; (2) "travel worldwide as required to conduct the sales, marketing and business development activities in accordance with the Marketing Plan"; and (3) "plan and conduct Data Gathering Meetings and other marketing activities as authorized by [NNS]." (Pl. Exh. 3, Schedule 1, P I(1)-(4).)

 The Agreement expressly stated that Telematics/Tagare would be considered an independent contractor rather than an employee:

 
Such WORK as CONSULTANT renders under this Agreement shall be rendered in its capacity as an independent contractor.
 
* * *
 
CONSULTANT acknowledges that it or its associates and/or employees shall not by reason of this Agreement or performance of services under this Agreement be considered an employee of [NNS] or entitled to any [NNS] benefits.
 
* * *
 
CONSULTANT acknowledges that its relationship with [NNS] under the Agreement is exclusively that of an independent contractor for [NNS] and not any other relationship, including partner, agent, or employee.

 (Id. PP 14, 21.)

 The Agreement provided that Telematics and Tagare "shall work exclusively for [NNS] on Project FLAG during the terms of this Agreement or any renewal thereof." (Id. P 2.) As an exception to this exclusivity clause, Tagare was permitted to work with Telematics or Overseas Communication Corporation (both of which he was president) on a book or report on undersea fiberoptic cable systems. (Id. PP 2, 7.)

 At least nominally, Telematics was given wide latitude in fulfilling its contractual obligations:

 
Subject to the terms of this Agreement, CONSULTANT shall remain free to determine the manner in which it shall perform its services under this Agreement.
 
* * *
 
[NNS] representatives shall exercise no supervisory control or guidance of CONSULTANT but shall be available for consultation and advice.

 (Id. P 14.) However, the Agreement also named "representative[s] for authorizing WORK to be performed," (id. P 28), and stated that "CONSULTANT is engaged solely to provide professional consulting services and . . . all actions and decision related to the implementation or utilization of the WORK shall be solely the actions and decision of [NNS]," (id. P 21). In addition, NNS had to authorize Tagare's marketing activities and reimbursed him only for "such marketing and business development activities which it has authorized." (Id., Sched. 1, P I(4), (5).)

 Under the Agreement, Telematics also was free to determine which of its employees would carry out the agreed services, provided that it "acknowledge[] that Mr. Tagare's skill, time and energies are key to the success of the WORK under this Agreement" and consequently agree that Tagare would devote himself full-time to the FLAG Project. (Id. P 14.) At the same time, however, the Agreement provided that NNS would provide Tagare with his sales and marketing team. (Id., Sched. 1, P I(2).)

 The Agreement also called for payment of incidentals such as a stipend for apartment rental; up to three weeks of paid vacation; expenses (up to $ 10,000) "for two weeks of travel to any part of the world for Mr. & Mrs. Tagare"; reimbursement of tuition and other expenses related to an executive MBA program; reimbursement for reasonable out-of-pocket expenses (including travel, entertainment, and lodging); reasonable legal fees for Tagare's naturalization as a United States citizen; and "reimbursement of medical insurance for Mr. & Mrs. Tagare." (Id., Sched. 2.)

 In addition, the Agreement outlined bonuses dependent upon the status of the FLAG Project and upon Telematics' sales performance. These bonuses increased Telematics' potential fee by as much as $ 2.3 million. (Id., Sched. 2.) For purposes of this action, the most significant bonus was the capacity sales incentive, by which NNS would pay Telematics a bonus of $ 500,000 for $ 800 million in capacity sales, an additional $ 600,000 bonus for $ 1.0 billion in sales, and an additional $ 700,000 bonus for $ 1.2 billion in sales. The Agreement defined "sales" as "fully executed agreements." (Id., Sched. 2, P 16.)

 With respect to its fees, Telematics expressly agreed "that it is liable for and will pay for federal, state, local or other governmental income tax, withholding tax, social security taxes, excise, sales or other service taxes and the like, or any other taxes relative to the compensation and expenses paid to CONSULTANT under this Agreement." (Id. P 14.)

 NNS could terminate the Agreement before the expiration of its term only "for cause," defined as a judicial finding of illegal activity on the part of Telematics, a judicial finding of the Agreement's unlawfulness, or the bankruptcy, liquidation, or insolvency of Telematics. (Id. P 16.)

 B. Employment Relationship

 Tagare contends that he was an "employee" within the meaning of Title VII and the NYSHRL; defendants assert that Tagare was an independent contractor to whom those statutes do not apply. As discussed below, the determination of Tagare's employment status involves a detailed, fact-intensive inquiry of several factors. Accordingly, to avoid repetition, the facts relevant to this inquiry will be set out below in Part II.A. of the Discussion rather than here.

 C. Breach of the Agreement

 Tagare contends that NNS breached the Agreement by violating the implied covenant of good faith and fair dealing. In essence, he asserts that NNS interfered with his ability to earn the maximum bonus of $ 1.8 million under Schedule 2, P 16 of the Agreement by (1) providing him with inadequate staffing, (2) restricting his travel, and (3) denying him necessary information.

 DISCUSSION

 I. Summary Judgment ...


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