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LAFONTANT v. CITIGROUP GLOBAL MARKETS INC.

November 3, 2005.

MARTI LAFONTANT, Plaintiff,
v.
CITIGROUP GLOBAL MARKETS INC. f/k/a SALOMON SMITH BARNEY INC., Defendant.



The opinion of the court was delivered by: NAOMI BUCHWALD, District Judge

MEMORANDUM AND ORDER

Plaintiff Marti LaFontant ("LaFontant") brings this complaint alleging that defendant Salomon Smith Barney ("Smith Barney")*fn1 breached a contractual agreement contained in its employee handbook by not submitting her employment dispute to the American Arbitration Association ("AAA").*fn2 Plaintiff further alleges that Smith Barney violated 42 U.S.C. § 1981 by not submitting her claim to the AAA because it was offended by the allegations of race discrimination stated in plaintiff's arbitration claims. Smith Barney now moves for dismissal of the complaint or, in the alternative, for summary judgment.*fn3 Having thoroughly considered the submissions of both parties, we now grant defendant's motion for summary judgment.

FACTS*fn4

  Plaintiff began working for Smith Barney in 1997. On her job commencement date, plaintiff signed a variety of forms, including an arbitration agreement that was limited in scope.*fn5 In 1999, Smith Barney issued an employee handbook ("the handbook"), applicable to all Smith Barney employees hired after September 1, 1992, which provided, inter alia, for the following:
The Firm believes that the resolution of . . . disagreements will be best accomplished by internal dispute resolution and, where that fails, by arbitration conducted under the auspices of the National Association of Securities Dealers Inc. ("NASD"). If, however, the NASD declines the use of its arbitration facilities, the arbitration shall then be conducted under the auspices of the American Arbitration Association ("AAA"). . . .
This Policy makes arbitration the required, and exclusive, forum for the resolution of all disputes based on legally protected rights (i.e., statutory, contractual or common law rights) that may arise between an employee or former employee and the Firm or its affiliates, officers, directors, employees, and agents . . . including claims, demands or actions under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, [and] the Civil Rights Act of 1991. . . .
Pl. Ex. C, Employment Arbitration Policy. Moreover, the policy specifically provides the method by which an employee must initiate a claim:
Arbitration may be initiated by a written demand for arbitration submitted to the Senior Vice President, Human Resources, along with a check payable to the NASD for the requisite filing fee. . . . [A]n employee whose total compensation for the previous calendar year was $100,000 or less . . . need only submit a check for $50.00 payable to Salomon Smith Barney.
The demand shall set forth the claim, including the alleged act or omission at issue and the name of all persons involved in the act or omission. Within ten business days of receiving such demand, the Firm shall file the demand with the NASD, together with the applicable filing fee as provided for by the NASD's fee schedule. The employee or former employee will be required to sign a submission agreement.
Id. (emphasis added).

  Plaintiff resigned in October 2000. That same month, plaintiff and Smith Barney negotiated a settlement through the Equal Employment Opportunity Commission ("EEOC") concerning plaintiff's allegations of race and sex discrimination. See Vazquez v. Salomon Smith Barney Inc., 01 Civ. 2895 (JSM), 2002 WL 10493 at *1 (S.D.N.Y. Jan. 4, 2002).*fn6 On April 25, 2001, plaintiff filed a complaint alleging that Smith Barney had breached the terms of that agreement by not implementing an employee management and supervision training program provided for in the agreement. See id. On summary judgment, Judge Martin found that plaintiff's complaint alleging non-compliance with the negotiated settlement failed to state a claim under 42 U.S.C. § 1981, but permitted her breach of contract claim to proceed. See Vazquez v. Salomon Smith Barney Inc., 01 Civ. 2895 (JSM), 2003 WL 21242902 at *2 (May 29, 2003). The latter claim was settled by the parties December 17, 2003.

  In another action, on October 22, 2001, Karla Rivera, formerly a co-plaintiff in this action, filed a complaint seeking a declaration of her rights under the same arbitration agreement at issue here. After an amended complaint was filed, Judge Sweet held that the action for declaratory judgment was not ripe, as no case or controversy yet existed. See Rivera v. Salomon Smith Barney Inc., 01 Civ. 9282 (RWS), 2002 WL 31106418 (S.D.N.Y. Sep. 20, 2002). In denying a motion for reconsideration, Judge Sweet noted that although plaintiff's attorney sought to add LaFontant to the action for declaratory judgment, doing so "would not change the analysis in the [earlier] Opinion that [the] declaratory judgment action is not ripe." See Rivera v. Salomon Smith Barney Inc., 01 Civ. 9282 (RWS), 2003 WL 222249 (Jan. 30, 2003).

  Meanwhile, on April 11, 2002, plaintiff served Smith Barney with an arbitration claim alleging various race and sex discrimination claims. See Robert S. Whitman ("Whitman") Decl. Ex. 4. Her complaint listed twelve causes of action, generally alleging that Smith Barney and several of its executives discriminated against plaintiff, and ultimately demanded her resignation, because of her race and sex and because she had filed a sex discrimination complaint against one of her supervisors.*fn7 Plaintiff's attorney submitted her arbitration claim, along with the required $50 filing fee,*fn8 to Smith Barney's legal department "for commencement of an action before the National Association of Securities Dealers, Inc." Whitman Decl. Ex. 4, Letter of Chinyere Okoronkwo ("Okoronkwo"), dated April 11, 2002. On April 24, 2002, A. Marilyn Leconte-Peck ("Leconte-Peck") from Smith Barney's Office of General Counsel sent plaintiff a Uniform Submission Agreement and requested that she sign it, in accordance with the handbook's requirements. See Whitman Decl. Ex. 5, Letter of Leconte-Peck, dated April 24, 2002. On June 13, 2002, a legal assistant at NASD informed Smith Barney that it could not assert jurisdiction over plaintiff's claims unless it received a submission agreement signed by both parties by June 28. Whitman Decl. Ex. 12, Letter of Chauni M. Lee ("Lee"), dated June 13, 2002. After receiving this letter from NASD, Smith Barney's outside counsel contacted plaintiff's counsel on June 17, 2002, explaining that signing "the Agreement is a prerequisite to the initiation of this matter . . . [and] failure to submit the Agreement . . . will result in the dismissal of the matter by the NASD." Whitman Decl. Ex. 13, Letter of Rene Kathawala ("Kathawala"), dated June 17, 2002. One week later, plaintiff's attorney responded to Smith Barney with a letter contending that the effect of the letter dated June 13 was that "NASD has ruled that it lacks jurisdiction over [plaintiff]'s claims." Whitman Decl. Ex. 14, Letter of Okoronkwo, dated June 24, 2002.*fn9 Plaintiff's counsel also stated she would seek a declaratory judgment regarding the validity of the arbitration agreement, notwithstanding her statement earlier in the same letter that "[plaintiff] has admitted that she executed an arbitration agreement with [Smith Barney]." Id. Moreover, plaintiff stated that if the NASD declined jurisdiction, Smith Barney must either "tender [plaintiff]'s complaint to the American Arbitration Association, or to consent [sic] to her transferring the case to federal court." Id. at 2.

  Three letters relevant to this dispute were sent the next day, June 25, 2002. First, Smith Barney's outside counsel responded to the letter from plaintiff's counsel, explaining that plaintiff's refusal to sign the submission agreement was the only obstacle to the NASD asserting jurisdiction. See Whitman Decl. Ex. 16, Letter of Kathawala, dated June 25, 2002. Smith Barney also sent a letter to NASD relating the fact that plaintiff was apparently refusing to sign the agreement. Whitman Decl. Ex. 15, Letter of Kathawala, dated June 25, 2002. Finally, plaintiff's counsel responded to Smith Barney's outside counsel, asserting that, "[n]o provision of [Smith Barney]'s employee handbook constitutes a waiver of employee's right to refuse to arbitrate claims . . . [and] no provision of [Smith Barney]'s employee handbook empowers an arbitral forum to compel [plaintiff] to arbitrate claims against individuals who no longer are employed by the company." Whitman Decl. Ex. 17, Letter of Okoronkwo, dated June 25, 2002. Plaintiff's counsel further stated that her client "remains steadfast in her position that she will not consent to voluntary arbitration of her Section 1981 claims against [Smith Barney]. . . ." Id. About two months later, plaintiff's counsel sent a letter to the NASD, inquiring into the status of her client's case, and requesting a decision from the NASD on whether it had jurisdiction to hear the dispute. See Whitman Decl. Ex. 18, Letter of Okoronkwo, dated August 19, 2002. On August 29, 2002, NASD sent a letter to Smith Barney's outside counsel and plaintiff's counsel requesting an explanation for Smith Barney's "inability to produce the acknowledgment form signed by [plaintiff]." Whitman Decl. Ex. 19, Letter of Lee, dated August 29, 2002. In the ensuing flurry of letters, Smith Barney reasserted its position that the only thing preventing NASD from asserting jurisdiction was plaintiff's refusal to sign a submission agreement. See Whitman Decl. Ex. 21, Letter of Kathawala, dated September 16, 2002. Plaintiff's counsel then sent a letter to the NASD, where she asserted, inter alia, that Judge Sweet had held that Smith Barney's arbitration policy "makes no reference to claims arising under 42 U.S.C. Section 1981."*fn10 Whitman Decl. Ex. 22, Letter of Okoronkwo, dated September 30, 2002. Moreover, she asserted that Smith Barney's "policy does not expressly or impliedly mandate that a complainant arbitrate of [sic] claims against former employees."*fn11 Id. In this letter, plaintiff's counsel called into question whether plaintiff actually received and acknowledged the policy, see id., despite her earlier statement that "[plaintiff] has admitted that she executed an arbitration agreement with [Salomon]." Whitman Decl. Ex. 14, Letter of Okoronkwo, dated June 24, 2002. She further asserted that Smith Barney was required to give consideration in order for plaintiff to sign the submission agreement, arguing it constituted a "new agreement."*fn12 Whitman Decl. Ex. 22, Letter of Okoronkwo, dated September 30, 2002. Lastly, plaintiff's counsel demanded that Smith Barney confer jurisdiction over the dispute to the AAA, charging the NASD with "aiding and abetting Smith Barney's breach of the Policy," "violating its own rules and regulations," and "compromising [plaintiff]'s procedural due process rights." Id.

  On October 10, 2003, the NASD formally advised plaintiff that the "time to cure the deficiencies has expired," so it had "removed this case from its docket." Whitman Decl. Ex. 26, Letter of Lee, dated October 10, 2003. Thereafter, Smith Barney's outside counsel informed plaintiff that it would not refer the dispute to AAA, as plaintiff's counsel had previously requested, "because the NASD is the appropriate dispute-resolution forum." Whitman Decl. Ex. 27, Letter of Whitman, dated December 3, 2003. Smith Barney reiterated that it was still willing to go before the NASD if plaintiff would sign the submission agreement. See id. Plaintiff continued to refuse to do so.

  Plaintiff filed her complaint in the instant matter on November 29, 2004. Her amended complaint, filed May 25, 2005, makes two claims: first, that Smith Barney's refusal to send her arbitration claims to AAA breached the arbitration agreement; and second, that Smith Barney's refusal to do so was because it "was offended" by the underlying claims alleging race discrimination, in violation of 42 U.S.C. § 1981. Plaintiff does not challenge the validity of the arbitration policy contained in the employee handbook.*fn13

  DISCUSSION

  A motion for summary judgment must be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In deciding a motion for summary judgment, the evidence submitted must be viewed in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). While credibility determinations, weighing evidence and drawing legitimate inferences from facts are functions that the Court must leave to the jury, if the nonmoving party does not present evidence from which a reasonable jury could return a favorable verdict, then summary judgment is appropriate. See, e.g., Golden Pacific Bancorp. v. F.D.I.C., 375 F.3d 196, 200 (2nd Cir. 2004).

  A. Breach of Contract

  Plaintiff alleges that Smith Barney "preemptively deprived Ms. LaFontant of the right to present the merits of her arbitration claims to AAA," thus denying her "the contractual right to seek redress of alleged injuries through arbitration and without judicial intervention." Am. Compl. ¶ 30. Plaintiff further asserts that she "was not complicit" in Smith Barney's ...


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