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ARROUET v. BROWN BROTHERS HARRIMAN & CO.

United States District Court, Southern District of New York


September 8, 2003

MARCEL J. ARROUET, PLAINTIFF, AGAINST BROWN BROTHERS HARRIMAN & CO., A PARTNERSHIP, AND ITS PARTNERS, DEFENDANTS

The opinion of the court was delivered by: Thomas Griesa, Senior District Judge

OPINION

Plaintiff Marcel J. Arrouet sues Brown Brothers Harriman & Co., claiming that Brown Brothers breached a contract under which it was to pay him certain sales commissions and fulfill certain conditions of employment. Arrouet also seeks to collect on an account stated. Arrouet further seeks damages for constructive termination of employment in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621-34 ("ADEA").

Brown Brothers has moved to dismiss Arrouet's complaint, or in the alternative, to dismiss Arrouet's breach of contract and account stated claims while staying his age discrimination claim. Brown Brothers' motion to dismiss is brought pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Its motion to stay is brought pursuant to 29.U.S.C. § 626(d). Page 2

The Court has diversity jurisdiction over Arrouet's breach of contract and account stated claims. His age discrimination claim falls under the Court's federal question jurisdiction.

Arrouet has attempted to convert Brown Brothers' motion to dismiss into a motion for summary judgment under Fed.R.Civ.P. 56, asserting that matters have been submitted outside the complaint. Arrouet has submitted his own affidavit, an affidavit by his counsel, and two documents that are annexed to the latter. However, Arrouet's affidavit contains a basic repetition of the various conclusory allegations found in his complaint. The affidavit of Arrouet's attorney and the letters similarly add nothing of substance to the complaint. The information contained in Arrouet's supplemental submissions does not constitute grounds for converting the present motion into one for summary judgment.

Brown Brothers' motion to dismiss is granted as to Arrouet's account stated and age discrimination claims, but denied as to his breach of contract claim. Page 3

Brown Brothers' request for a stay of Arrouet's age discrimination claim is denied. This has to do with Arrouet's EEOC fling. But there is now no issue in this regard.

The Complaint

The following is a summary of the relevant allegations contained in Arrouet's complaint.

First Cause of Action

Arrouet is a 62 year-old male whom Brown Brothers has employed since 1979 as a salesperson marketing Brown Brothers products to institutional investors.

When Arrouet joined Brown Brothers in 1979, the firm offered to compensate him with a fixed salary plus a commission on his sales. Brown Brothers further specified that the amount of Arrouet's commission would be at its discretion. Arrouet accepted these terms.

In approximately 1989 Brown Brothers offered to compensate Arrouet with a fixed salary along with a commission equaling 20% of the gross sales he generated. Arrouet accepted these terms. Page 4

The gravamen of Arrouet's breach of contract claim is contained in the following allegations.

12. In approximately 1997 or 1998, BBH changed its offer of compensation. BBH offered Arrouet, who accepted, a fixed salary plus a commission of twenty per cent on the first $500,000 of sales, twenty-five per cent on the next $250,000 in sales, thirty per cent of the next $250,000, and thirty-five per cent on all sales over $1 million.
13. In 2001, BBH breached the 1997/1998 compensation agreement, and demanded that Arrouet accept a fixed salary and commissions only if BBH chose to pay them to him.
The complaint goes on to allege specific commissions which should have been paid to Arrouet under the 1997/1998 compensation agreement but were not. Arrouet alleges that in 2001 he was denied $72,939 in commissions on the Alliance Capital and UBS Global Asset Management accounts. He also alleges that in 2002 he was entitled to commissions on $800,000 in sales as of the time of the complaint (November 4, 2002). The complaint alleges that Arrouet would be entitled to payment of the commissions no later than February 15, 2003, but that BBH had communicated to him that the commissions would not be paid because of Arrouet's violation of BBH rules.

In the motion papers, Arrouet's attorney advises that in fact the 2002 commissions have not been paid. Page 5

There are other allegations included in Arrouet's breach of contract claim, but they need not be described in connection with the present motion.

Second Cause of Action

This cause of action is set forth as follows:

34. On or about September 1, 2002, an account was stated between plaintiff and defendants and upon such account stated a balance of $270,171 is due and agreed to be due to plaintiff from defendants to be fully paid no later than February 15, 2003.
35. No part of the account stated in the amount of $270,171 has been paid, despite repeated demands for payment and BBH has communicated overtly its intention not to pay the commissions to Arrouet.
The complaint does not allege anything about the form in which the so-called "account stated" was rendered.

Third Cause of Action

In the introductory portion of the complaint, Arrouet alleges that he is seeking "damages for constructive termination of employment" in violation of the federal age discrimination law. However, Arrouet is still employed by BBH, and has not been discharged nor has he resigned.

In any event, the Third Cause of Action alleges that certain actions were taken by Brown Brothers to favor younger employees over older Page 6 employees, and specifically to favor certain younger employees over Arrouet himself. He goes on to allege that all this is being done "to end his employment prematurely against his will so that BBH may employ and continue to employ younger employees to replace Arrouet." The relevant paragraphs in the complaint are as follows:

37. On May 31, 2000, BBH discharged without cause all BBH employees within the equity research and sales department, except for Arrouet, and replaced them with fewer, but younger employees.
38. The May 31, 2000 discharge of all BBH employees within the equity research and sales department, and the replacement of them with fewer but younger employees, constitutes an act of unlawful employment discrimination against Arrouet based on his age. Such unlawful discrimination is continuing since it has deprived and continues to deprive Arrouet of the market research he needs to sell securities intelligently to customers.
39. In 2001 BBH removed Arrouet from handling the Fidelity account and replaced him on the account with two younger employees of BBH; later BBH substituted two younger women on the Fidelity account, including one who is unlicenced to sell securities.
47. BBH has engaged in the conduct described above in an effort to force Arrouet to end his employment prematurely against his will so that BBH may employ and continue to employ younger employees to replace Arrouet and to avoid paying Arrouet the commissions that are due to him by BBH and a severance payment that BBH has agreed to pay to employees upon the termination of their employment with BBH.
48. The conduct BBH engaged in constitutes unlawful discrimination against Arrouet based on his age, and is an unlawful effort to force Arrouet to end his employment prematurely against his will so that BBH may employ and continue to employ younger Page 7 employees to replace Arrouet and to avoid paying Arrouet the commissions that it contractually obligated itself to pay him.
Discussion

A court may grant a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). "In deciding whether a complaint states a claim a court must accept the material facts alleged in the complaint as true and construe all reasonable inferences in the plaintiff's favor." Phelps v. Kapnolas, 308 F.3d 180, 184 (2d Cir. 2002).

Breach of Contract

In the view of the court there is a sufficient pleading of a contract entered into in 1997 or 1998 to pay a salary plus commissions, with a revised schedule of commissions. It is further alleged that BBH failed to pay commissions under this schedule.

These allegations are sufficient to withstand a motion to dismiss the first cause of action. Page 8

Account Stated

The claim for an account stated is asserted in the most conclusory form. Nothing is alleged to indicate that there was indeed a statement of account that was created or rendered in any manner which could give rise to liability on the part of Brown Brothers on the theory asserted. This is particularly true in view of the allegations in the earlier part of the complaint that Brown Brothers refused to pay the amounts of commissions now sought by Arrouet, and that such refusal was caused, at least in part, by Brown Brothers' views of Arrouet's conduct at the firm.

Age Discrimination

Although the claim is for constructive discharge, Arrouet is still employed by BBH. Nevertheless, he alleges, as shown in the paragraphs quoted above, that younger employees have been preferred over older employees and that certain younger employees had been preferred over Arrouet himself. He alleges that all this is being done to force him to leave BBH prematurely.

The allegations about preferences to younger employees are simply too conclusory, and too lacking in any reasonable degree of specificity, to constitute a sufficient pleading of age discrimination. There is also the point Page 9 that the claim is for constructive discharge, whereas there has been no termination of Arrouet's employment in any form. Moreover, no basis exists for converting the claim into some different theory not pleaded by Arrouet.

Conclusion

For the foregoing reasons, the court dismisses the second and third causes of action in the complaint. The motion to dismiss the first cause of action is denied. The motion for a stay is denied.

SO ORDERED.

20030908

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