Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Navigant Consulting, Inc. v. Kostakis

October 3, 2007


The opinion of the court was delivered by: Charles P. Sifton (electronically signed) United States District Judge


Plaintiff Navigant Consulting ("plaintiff" or "Navigant") filed a complaint ("Complaint") against defendant Konstantine Kostakis ("defendant" or Kostakis") on June 7, 2007.*fn1 Defendant filed an answer ("Answer") and counterclaims ("Counterclaims") on July 3, 2007, and Navigant filed a motion to dismiss the Counterclaims on July 23, 2007. Thereafter, Kostakis filed an amended answer ("Amended Answer") and counterclaims ("Amended Counterclaims) on August 6, 2007. Navigant and Kostakis agreed that the filing of the Amended Answer and Amended Counterclaims mooted Navigant's July 23, 2007 motion to dismiss and Navigant withdrew its motion on August 28, 2007. On August 20, 2007, it filed a motion to dismiss the Amended Counterclaims. It is this motion that is now before the Court. For the reasons set forth below, Navigant's motion is denied.


Navigant's complaint states claims against Kostakis for breach of fiduciary duty, breach of contract, and for recovery of a portion of Kostakis's signing bonus. Navigant alleges that Kostakis, while employed by Navigant, breached various agreements entered into between Navigant and Kostakis and violated his fiduciary duty, by soliciting and recruiting Navigant employees for a new business venture, depriving Navigant of corporate opportunities, and by failing to return a pro-rated portion of his signing bonus when he left Navigant.

In response, Kostakis filed counterclaims for fraudulent inducement and breach of contract against Navigant, alleging that Navigant engages in a systematic, fraudulent practice of soliciting individuals from other companies and thereby induces those individuals, including plaintiff, to join Navigant by making false and fraudulent promises it never intends to keep.

Kostakis alleges that in 2005 Navigant decided to develop a new practice area in capital markets - an area in which Navigant had little or no prior experience. Navigant is said to have first recruited Jess Varughese ("Varughese"), under whom Kostakis worked as a Senior Manager at a company called Bearing Point. On July 15, 2005, Varughese accepted Navigant's offer of employment.

During the summer of 2005, Navigant began actively soliciting Kostakis to leave his position with Bearing Point and to join Varughese at Navigant. On or about June 16, 2005, Kostakis met with Doug Reichert, Navigant's Executive Managing Director, and others, to discuss this subject. Reichert told Kostakis that Navigant was interested in having Kostakis join Navigant, and that Navigant was prepared to do whatever it could to have Kostakis join the company.

Subsequent discussions occurred between June 20, 2005 and the end of that month. In the last week of June 2005, Kostakis explained to Reichert that he was reluctant to leave Bearing Point because had a senior management role at the company and because Bearing Point was planning, imminently, to promote Kostakis to be a Managing Director. Reichert responded by promising Kostakis that, if he joined Navigant, he would be named a Managing Director within a year. Reichert also promised Kostakis that he would receive $400,000 in compensation and represented to Kostakis that if the $400,000 figure was in excess of the amount that he was to receive from his base salary and any other compensation from Navigant, Navigant would make up the difference to ensure he received the $400,000. Kostakis alleges that Navigant never intended to keep these promises.

On September 2, 2005, Navigant sent Kostakis an offer of employment ("Offer Letter").*fn2*fn3 Navigant's Offer Letter contained provisions concerning certain employment terms, including Kostakis's base salary, $245,000, and eligibility to participate in Navigant's discretionary bonus program. On September 7, 2005, Kostakis accepted Navigant's offer of employment by signing and returning the Offer Letter. On the same date, Kostakis also signed a separate employment incentive recovery agreement ("Recovery Agreement")*fn4 and an agreement entitled "Agreement Regarding Confidential Information, Intellectual Property, and Non-Solicitation." On September 13, 2005, Kostakis signed a second Confidentiality and Property Agreement ("Confidentiality Agreement"). He also received, but never signed, a stock award agreement ("Stock Award Agreement").*fn5*fn6 Kostakis alleges that both parties also understood that Kostakis's employment agreement included additional terms, to which the parties orally agreed, that Kostakis's total annual compensation would be at least $400,000 and that he would be promoted to Managing Director within a year.

Kostakis began employment at Navigant on September 13, 2005. Kostakis alleges that he was instrumental in helping Varguhese build a successful capital markets practice at Navigant and that the company did not possess any expertise in the area prior to Kostakis's and Varughese's arrivals. In 2006 and the period of January through the end of April 2007, the practice exceeded its revenue goals.

After Kostakis began working at Navigant, Navigant, in early 2006, is alleged to have again orally promised to pay Kostakis a total annual compensation package of at least $400,000. Kostakis accepted this renewed promise, but the $400,000 was never paid. Although Kostakis's division is alleged to have generated approximately $7-8 million in net revenue in 2006, Kostakis's total compensation for 2006 was approximately $300,000. Nor did Navigant name Kostakis a Managing Director.

Only the Long-Term Incentive Plan is referred to in the Stock Award Agreement. Kostakis alleges that he later learned that Navigant made similar promises of high compensation packages to induce prospective hires to join Navigant without any intent to fulfill such promises, and that such failure has caused widespread discontent among Navigant's workforce.


In considering a motion pursuant to Rule 12(b)(6), a court should construe the complaint liberally, "drawing all reasonable inferences in the plaintiff's favor," Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002) (citing Gregory v. Daly, 243 F.3d 687, 691 (2d Cir. 2001)), although "mere conclusions of law or unwarranted deductions" need not be accepted. First Nationwide Bank v. Helt Funding Corp., 27 F.3d 763, 771 (2d Cir. 1994). Indeed, conclusory allegations "will not suffice to prevent a motion to dismiss." Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir. 2002). On a motion to dismiss, "[t]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995).

Nevertheless, to survive a 12(b)(6) motion to dismiss, the allegations in the complaint must meet the standard of "plausibility." See Bell Atl. Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955, 1970, 167 L.Ed.2d 929 (2007). Although the complaint need not provide "detailed factual allegations," id. at 1964; see also ATSI Commc'ns v. Shaar Fund, Ltd., 493 F.3d 87, 98 n. 2 (2d Cir. 2007) (applying the standard of plausibility outside Twombly's anti-trust context), it must "amplify a claim with some factual allegations . . . to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-158 (2d Cir. 2007) (emphasis in original) (holding that the plaintiff's complaint adequately alleged the personal involvement of the Attorney General because it was plausible that officials of the Department of Justice would be aware of policies concerning individuals arrested after 9/11). The test is no longer whether there is "no set of facts" that plaintiff could prove "which would entitle him to relief." Bell Atlantic, 127 S.Ct. at 1969 (quoting Conley v. Gibson, 355 U.S. 45-46 (1957)) ("[t]he phrase is best forgotten as an incomplete, negative gloss on ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.