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Eschelbach v. CCF Charterhouse/Credit Commercial de France

January 4, 2006


The opinion of the court was delivered by: Frank Maas, United States Magistrate Judge.


I. Introduction

In this wrongful termination suit, plaintiff Karl Eschelbach ("Eschelbach") alleges that his former employer, CCF Charterhouse/Credit Commercial de France, now known as HSBC/Credit Commercial de France ("CCF"), breached the terms of its employment agreement with him in violation of common law contract principles, the New York State Labor Law, and French law. Eschelbach further contends that CCF discriminated against him based on his national origin in violation of the New York State Human Rights Law, N.Y. Exec. Law § 296, and the New York City Human Rights Law, N.Y.C. Admin. Code § 8-101, et seq. CCF has now moved for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, on all of Eschelbach's claims other than a portion of his contract claim. For the reasons set forth below, CCF's motion is granted in part and denied in part.*fn1

II. Facts

Unless otherwise noted, the following facts are set forth in the light most favorable to Eschelbach.

A. The Parties

Eschelbach is an attorney and certified public accountant who lives and works in New York. (Dep. of Karl Eschelbach, taken on Nov. 20, 2001 ("Eschelbach Dep."), at 7, 13; CCF R. 56.1 Stmt. ¶ 6).

CCF is a banking corporation organized under the laws of France with its principal place of business in Paris, France. (CCF R. 56.1 Stmt. ¶ 2).

B. Eschelbach's Employment at CCF

1. Hiring of Eschelbach

In 1994, CCF hired Eschelbach as head of its Structured Finance section team ("Team") in New York. (Eschelbach Dep. at 25, 41; CCF R. 56.1 Stmt. ¶ 3). The offer letter that CCF sent to Eschelbach ("1994 Letter") stated that Eschelbach would receive a starting salary of $100,000, plus other benefits, including a bonus of fifty percent of his salary during his first year. (Aff. of M. Christine Carty, Esq., sworn to on June 21, 2002 ("Carty Aff."), Ex. D at 1). The 1994 Letter further stated that it was not a contract of employment; hence Eschelbach could be terminated by CCF at any time and "with or without cause." (Id. at 2).

While he was at CCF, Eschelbach worked in the Madison Avenue office, where he and other members of his Team developed and implemented tax-advantaged transactions for CCF's clients. (CCF R. 56.1 Stmt. ¶ 6; Eschelbach Dep. at 16). The clients for whom Eschelbach created these tax-advantaged products included Merck, Hewlett-Packard, Pfizer, Deutsche Bank, Merrill Lynch, Disney, Marriott and AIG. (CCF R. 56.1 Stmt. ¶ 41; Eschelbach Dep. at 62-63).

2. Employment Agreement

In early 2000, as a result of press reports indicating that CCF was a target, Eschelbach became concerned that CCF might be acquired by another entity. (Eschelbach Dep. at 41-42; Dep. of Denis Fontaine-Besset, taken on May 15, 2001 ("Fontaine-Besset Dep."), at 22-23; Dep. of Francois Fournier, taken on May 29, 2002 ("Fournier Dep."), at 27-28). Eschelbach voiced his concerns to Francois Fournier, CCF's head of structured finance, and "asked . . . if he could arrange for contracts for the members of his [Team]." (Eschelbach Dep. at 43). According to Eschelbach, Fournier responded enthusiastically to this request because he "wanted to ensure that the [Team] remained in place following an acquisition" to facilitate future "cross-border deals." (Id. at 45, 48).

Eschelbach subsequently negotiated with Fournier not only on behalf of himself, but also for Steven Donn Broad and Henry Stow Lovejoy, two other Team members. (Id. at 47). Both Broad and Lovejoy are Americans. (Id. at 156; CCF R. 56.1 Stmt. ¶ 31). Eschelbach and Fournier discussed specific contract terms, including a formula to calculate the bonuses of Team members and severance to ensure that they received the highest possible severance consistent with CCF policy and French law. (Eschelbach Dep. at 46). At times, these discussions also involved other senior executives from the French office of CCF, including Denis Fontaine-Besset, Henri DesDeserts, Jean-Paul Foity and Stuart Fraser. (Id. at 49, 51). Both DesDeserts and Fournier, in turn, discussed the proposed Team contracts with the CCF vice-chairman, Charles-Henri Filippi, and the CCF chairman, Charles de Croisset. (Id. at 52).

On or about April 5, 2000, Eschelbach, Broad and Lovejoy each received a letter from Fournier ("2000 Letter"), which confirmed the results of "recent discussions regarding [their] compensation package[s]." (Aff. of Sheryl B. Galler, Esq., sworn to on July 5, 2002 ("Galler Aff."), Exs. C, K, M). The 2000 Letters purported to set forth "clear rules for bonus payments" to be made by CCF in 2001 and 2002, confirmed that the recipients' fringe benefits would be "maintained unchanged," and stated that their severance packages would be consistent with "CCF Charterhouse*fn2 policy" and the requirements of French law. (Id.).

Notwithstanding the reference to "clear rules," the bonus provisions of the 2000 Letters are, in fact, fairly complicated. One principle underlying the payments, however, is that they would be "computed as a percentage of the operating income generated by new deals closed in year 2000, except for [a Hewlett-Packard] transaction closed in February [2000] that ha[d] already been taken into consideration for the bonus paid in year 2000."*fn3 (Id. at 1) (emphasis added).

The 2000 Letter further provided that Eschelbach's year 2000 bonus would not exceed U.S. $330,000 and would be paid on "January 15, 2001 provided [he was] still employed by [CCF,] irrespective of any reorganization of the CCF Group." (Id. Ex. C at 1) (emphasis added). If Eschelbach was dismissed for any reason other than gross negligence or willful misconduct or resigned voluntarily to avoid a forced relocation outside the New York metropolitan area, the 2000 Letter stated that he would receive his bonus payments for 2000 and 2001 no later than fifteen days after his termination. (Id.).

In addition to its provisions regarding bonuses, Eschelbach's 2000 Letter described the severance payments to which he would be entitled in the event of his termination. (Id. at 2). The Letter provided that if he was terminated before December 31, 2000, his severance would not be less than US $175,000; if he was terminated after that date, he was to receive the equivalent of not less than nine months of his salary (excluding any bonuses). (Id.).

3. Competing Employment Offer

On April 4, 2000, the day before CCF sent Eschelbach the 2000 Letter, Credit Lyonnais offered him a position as Director of the Structured Tax Products Group of the United States branch of Credit Lyonnais. (Galler Aff. Ex. F; Eschelbach Dep. at 117). In his amended complaint, Eschelbach alleges that the total compensation package proposed by Credit Lyonnais exceeded what CCF was offering him. (Am. Compl. ¶ 12). Eschelbach nevertheless declined the Credit Lyonnais offer since he wanted to remain with CCF. (Id. ¶ 13).

4. CCF's Integration into HSBC

Throughout the spring of 2000, as the proposed merger was progressing, Eschelbach attended a series of meetings with senior HSBC executives regarding the future of his Team. (Eschelbach Dep. at 116, 122). During these discussions, Eschelbach formed the impression that the HSBC executives disagreed with "the basic proposition that the [Team] would be maintained as a separate and distinct unit within HSBC." (Id. at 125).

As Eschelbach correctly sensed, between May and July of 2000, there was a "shift in the integration plans," such that the CCF Team was going to be "absorbed directly into the HSBC team as opposed to remaining . . . independent." (Id. at 127).

Despite this change, the American members of the Team -- Eschelbach, Broad and Lovejoy -- each wished to pursue employment with HSBC. (Id. at 130).

In the course of attempting to achieve a smooth transition, Eschelbach met with Lee Resseguie, an American who was the head of HSBC's Structured Finance department in the United States, and Gail Burlane, the head of HSBC's Human Resources department. (Id. at 132). At the meeting, Burlane seemed reluctant to accept the provisions of the 2000 Letter regarding severance, and Resseguie seemed "uncomfortable" with the fixed percentage bonus. (Id. at 133).

In an attempt to be conciliatory, Eschelbach was willing to forego some of the provisions of his 2000 Letter, as evidenced by a proposed employment contract that he drafted and sent to either Resseguie or Burlane. (Id. at 133-34). In his draft, Eschelbach proposed that HSBC adopt the terms of the 2000 Letter, but that there be "some sort of sunset provision," so that he would become an at-will employee of HSBC "at some point in the not-too-distant future." (Id. at 134).

5. Eschelbach's Termination

On September 6, 2000, Eschelbach was instructed to go to the office of Jean-Jacques Salomon, the general manager of the CCF New York branch, ostensibly to discuss a financial transaction that would utilize the branch's net operating loss. (Id. at 136). When he arrived, Eschelbach was presented with a letter from Salomon which explained that Eschelbach was not going to be offered a position with HSBC, and that his employment by CCF was being terminated effective immediately. (Galler Aff. Ex. D; Eschelbach Dep. at 137). The letter also directed Eschelbach to meet with Navnit Singh of HSBC's Human Resources Department to ...

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