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MITEVA v. THIRD POINT MANAGEMENT COMPANY

July 1, 2004.

YOULIA MITEVA, Plaintiff,
v.
THIRD POINT MANAGEMENT COMPANY, L.L.C. and DANIEL S. LOEB, Defendants.



The opinion of the court was delivered by: VICTOR MARRERO, District Judge

DECISION AND ORDER

Plaintiff Youlia Miteva ("Miteva"), a former analyst for Third Point Management, L.L.C. ("Third Point"), brought this action against Third Point and Daniel Loeb ("Loeb"), the sole owner, chief operating officer, and Managing Member of Third Point (and together with Third Point collectively "Defendants"). Miteva asserts claims under the New York Labor Law as well as breach of contract and other common law causes of action, one of which Miteva voluntarily dismissed. Defendants move for partial summary judgment on all but the breach of contract claim. The Court rejects Defendants' theory that the New York Labor Law does not apply to Miteva's claim, and finds that there is sufficient evidence in the record to maintain the remaining common law claims. Accordingly, Defendants' motion is denied. I. FACTS AND PRIOR PROCEEDINGS

In the spring of 2000, Loeb hired Miteva to work at Third Point as an analyst with a starting salary of $75,000 plus a discretionary bonus.

  In July 2000, just a few months after hiring Miteva, a Bulgarian citizen residing in New York, Loeb increased her salary from $75,000 to $100,000, and promised her a year-end bonus of approximately $240,000, of which she received $160,000 up front, with the remaining $80,000 to be paid on a deferred basis in December 2002. He also promised to sponsor her application for status as a permanent resident alien in the United States. In January 2001, Loeb told Miteva he would raise her 2001 year-end bonus by 60 percent over her 2000 bonus. In February of 2002, however, Loeb gave Miteva only an $80,000 bonus for 2001, a decline of 66 percent from her 2000 bonus. As a result, Miteva told Loeb that she was resigning immediately. Loeb induced Miteva to stay by offering her a flat bonus of $300,000 for her performance in 2001, again to be paid on a partly deferred basis: $80,000 immediately, $70,000 in June 2002, and $140,00 in December 2003, with $10,000 to be invested through Third Point in Miteva's name. Despite alleged reservations regarding the delayed payment schedule, Miteva agreed not to resign.

  In March 2002, Miteva again contemplated resigning from Third Point, but decided to wait until after she received her 2001 delayed bonus of $70,000, which was due in June 2002. After she collected the bonus, Miteva told Loeb that she was resigning due to concerns over the way he ran the company. Again Loeb promised to increase her compensation if she would stay. Miteva agreed to stay at Third Point, conditioned upon a contract that specified that she would receive a bonus of $650,000 for her performance during 2002, and that her compensation for 2003 would be tied directly to the performance of a $10 million fund that Miteva would manage.

  Unbeknownst to Miteva, Loeb regularly expressed dislike for Third Point's analysts, and specifically for Miteva, in ongoing email exchanges with Robert Chapman ("Chapman"), a friend and fellow hedge fund manager. In one exchange, referring to the Third Point analysts, Loeb told Chapman, "[I] hate them intensely." (Email from Loeb to Chapman dated Aug. 5, 2002, attached as Ex. 5 to Declaration of Eric Hecker dated Apr. 2, 2004 ("Hecker Dec.").) In August 2002, Loeb sent an email to Chapman on the subject of firing employees, and stated, "I need to conduct a pogrom around here." (Email from Loeb to Chapman dated August 15, 2002, attached as Ex. 6 to Hecker Dec.) In November 2002, Loeb, apparently sarcastically, wrote to Chapman that Miteva deserved a million dollars, and outlined a script in which he would offer her the money, never give it to her, "and then deny that i [Loeb] said it just to make her nuts." (Email from Loeb to Chapman dated Nov. 18, 2001, attached as Ex. 4 to Hecker Dec.)

  Third Point's profitability declined drastically in late 2002, and Loeb fired Miteva on December 27, four days before her 2002 performance bonus of $650,000 was due. Shortly before firing Miteva, Loeb sent Chapman an email referencing a violent scene from the movie "The Godfather" and stated that he was "settling his score" by terminating Miteva's employment. (Email from Loeb to Chapman dated Dec. 27, 2002, attached as Ex. 8 to Hecker Dec.) A few minutes before firing Miteva, Loeb wrote to Chapman that the "nuclear submarine launch sequence" had been "initiated," and was "headed for [E]astern [E]urope," a seeming reference to Miteva's Bulgarian nationality. (Email from Loeb to Chapman dated Dec. 27, 2002, attached as Ex. 9 to Hecker Dec.) Chapman then responded, "has target located ICBM on radar yet?," which appears to be an inquiry as to whether Miteva knew she was going to be fired. (Email from Chapman to Loeb dated Dec. 27, 2002, attached as Ex. 9 to Hecker Dec.) In response, Loeb wrote that "the eagle has landed," and that the firing was "very uneventful." (Email from Loeb to Chapman dated Dec. 27, 2002, attached as Ex. 9 to Hecker Dec.) The next day, Loeb wrote another email to Chapman expressing his anger towards Miteva, stating, "I woke up at least 10 times tossing and turning about this. Miteva was so happy i [fired] her." (Email from Loeb to Chapman dated Dec. 28, 2003, attached as Ex. 10 to Hecker Dec.) Loeb told Chapman that he had heard Miteva planned to take a three-month vacation, and then wrote, "[im]agine that, she loses me millions and now i pay for her travels for 3 [months]!" Id.

  On April 25, 2003 in an email to Alan Fournier ("Fournier"), a friend and hedge fund manager, Loeb, using a particularly vulgar epithet in referring to Miteva as a woman, told Fournier, "she said you were `dumb as a truck driver'. . . . I guess it's better to be a dumb employed truck driver than a brilliant unemployed former analyst." (Email from Loeb to Fournier dated Apr. 25, 2003, attached as Ex. 17 to Hecker Dec.) Miteva denies that she ever made the remark about Fournier that Loeb ascribes to her.

  Loeb apparently became angry when he suspected that, had she not been fired, Miteva had planned to leave Third Point voluntarily after receiving her 2002 year-end bonus. He contacted Bloomberg L.P. ("Bloomberg"), which handles Third Point's email archives, to request a transcript of every email Miteva sent after December 31, 2001. In doing so, Loeb stated that "[t]his request is regarding a current employee and is being made solely for a legitimate securities or regulatory compliance purpose." (Letter from Loeb to Bloomberg dated Dec. 30, 2002, attached as Ex. 11 to Hecker Dec.) Miteva was no longer a "current employee" of Third Point because Loeb had fired her three days earlier. Loeb used the information that he received from Bloomberg in a letter he wrote to another hedge fund manager, Jon Brooks ("Brooks"), in which he accused Brooks of conspiring with Miteva and another former Third Point employee to help them find alternate employment. In that letter, Loeb included emails he had obtained from Bloomberg sent by Miteva disparaging Brooks to a third party. Loeb wrote to Brooks, "I hope that you had not acted out of malice at the time you clandestinely assisted my employees abandon ship." (Letter from Loeb to Brooks dated Jan. 2, 2003, attached as Ex. 13 to Hecker Dec.)

  After Third Point fired her, Miteva interviewed with SAC Capital Management ("SAC"), another investment management firm, and SAC offered her a position as an analyst on March 5, 2003. Will Patty ("Patty") from SAC, who was conducting due diligence on Miteva, then contacted Loeb to ask for a reference. Patty asked Loeb several questions about Miteva, but Loeb would only confirm the dates of her employment. Loeb refused to answer any further questions from Patty about Miteva, but offered to answer questions about any other Third Point employees.

  After speaking with Patty, Loeb called Thomas Conheeney ("Conheeney"), the chief operating officer of SAC, explained that he had been contacted by Patty, and offered to talk to Conheeney about Miteva. Conheeney did not know who Miteva was. Conheeney spoke with Patty and then returned Loeb's phone call. According to Conheeney, Loeb told him that although Miteva was bright, her ideas consistently lost money for Third Point, and that she wanted to be more of a portfolio manager than an analyst. Conheeney stated in his deposition that SAC rescinded Miteva's job offer because of Conheeney's conversation with Loeb. This action followed.

  Miteva asserted claims against Defendants for breach of contract, breach of the covenant of good faith and fair dealing, violation of the New York Labor Law, and tortious interference with prospective business relations. Defendants now move for summary judgment on the breach of implied covenant of good faith and fair dealing claim, the New York Labor Law claims, and the tortious interference with prospective business relations claim. They also seek to preclude Miteva from demanding punitive damages in connection with her tortious interference claim, should that claim survive summary judgment. Miteva has consented to the dismissal of her implied covenant of good faith and fair dealing claim. The breach of contract claim is not a subject of the present motion.

  II. DISCUSSION

  A. STANDARD OF REVIEW

  Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." Fed.R.Civ.P. 56(c); Williams v. R.H. Donnelley, Corp., 368 F.3d 123, 126 (2d Cir. 2004). When ruling on a motion for summary judgment, the Court construes the evidence in the light most favorable to the non-moving party and draws all reasonable inferences in its favor. Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998).

  To defeat a motion for summary judgment, the non-moving party must present "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. 586. "Conclusory allegations, conjecture, and speculation" will not establish a genuine issue of fact for trial. Kerzer, 156 F.3d at 400.

  B. NEW YORK LABOR LAW CLAIMS

  Article 6 ("Article 6") of the New York Labor Law (the "Labor Law") regulates the payment of wages by employers to employees. Miteva makes substantive claims under Labor Law Article 6, § 191(3) and § 193, and a claim for damages and attorney's fees under § 198. Specifically, Miteva alleges that Defendants failed to pay her in a timely manner, that Defendants made illegal deductions from her salary, and that, as a result, she is entitled to liquidated damages equal to twenty-five percent of any wages owed to her, plus attorney's fees. Defendants argue that the definitions in § 190 of Article 6 exclude individuals employed in an "executive, managerial or administrative capacity" from recovery under Article 6. (Defendants' Memorandum of Law in Support of Their Motion for Partial Summary Judgment, dated March 12, 2004, ("Def. Memo.") at 11.) Defendants further argue that they are entitled to summary judgment on Miteva's Labor Law claims because at the time relevant to this claim, Miteva was an "executive or professional" as defined under § 190 and therefore is barred from recovery under Article 6. (Id. at 12.)

  There is significant disagreement among courts in New York about whether executives, managers, administrators, supervisors, and professionals are "employees" for the purpose of Article 6. Arguably, the New York Court of Appeals tangentially addressed the question in Gottlieb v. Kenneth D. Laub & Co., Inc., 626 N.E.2d 29 (N.Y. 1993). Nonetheless, lower courts, both federal and state, since then have debated and diverged over Gottlieb's applicability to the issue.

  1. Article 6 of the Labor Law

  Section 190 of the Labor Law sets forth definitions that apply specifically and exclusively to Article 6. Sub-section 190(2) defines "employee" as "any person employed for hire by an employer in any employment," and § 190(3) defines "employer" to "include[] any person, corporation, limited liability company, or association employing any individual in any occupation, industry, trade, business, or service. The term `employer' shall not include a governmental agency." Section 190 then defines four specific sub-categories of employees: "manual worker," "railroad worker," "commission salesman," and "clerical or other worker" to which the various provisions of Article 6 apply. Id. §§ 190(4) — (7). "Commission salesman" is defined as "any employee whose principal activity is the selling of any goods, wares, merchandise, services, real estate, securities, insurance or any article or thing and whose earnings are based in whole or in part on commissions. The term `commission salesman' does not include an employee whose principal activity is of a supervisory, managerial, executive or administrative nature." Id. § 190(6). Following the definitions of manual worker, railroad worker and commission salesman in §§ 190(4) — (6), § 190(7) of the statute defines "clerical or other worker" as "all employees not included in [§§ ...


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