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Brady v. Calyon Securities

December 17, 2007


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


Plaintiff Charles J. Brady brings this action against his former employer, Calyon Securities (USA) (formerly known as Credit Lyonnais Securities (USA)), its French parent company, Calyon, previously Credit Agricole, S.A. ("Credit Agricole"), and two individual officers and managers. Plaintiff alleges, inter alia, that his discharge constituted a breach of contract, and that defendants discriminated against him based on his national origin, age, and prior military service. Defendants move for summary judgment, arguing, inter alia, that they did not breach any implied contract with plaintiff, and that plaintiff was discharged for legitimate, non-discriminatory, and non-retaliatory reasons. Defendants' motion will be granted in part and denied in part.


For purposes of deciding this summary judgment motion, the Court relies only on those facts that are undisputed, and on those facts that a reasonable fact-finder, taking the evidence in the light most favorable to the plaintiff, could find. The account below sets forth the undisputed facts, and identifies those matters on which the evidence is conflicting.

Plaintiff Charles J. Brady is a 54-year-old graduate of the United States Military Academy at West Point, and a "Vietnam War Era Veteran." (Brady Aff. ¶¶ 3-4.)*fn1 After his military service, he earned an MBA degree from the University of Chicago School of Business. (Id. ¶ 5.) Brady currently holds multiple licenses to work in the securities industry, and is registered with and licensed by both the New York Stock Exchange ("NYSE") and National Association of Securities Dealers ("NASD"). (Id. ¶ 6.)

In February 1999, Brady was hired by Credit Lyonnais Securities (USA) ("CLS"), a broker-dealer incorporated in New York, as an equity analyst covering the automotive and related industries. (Id. ¶ 7; Brady Dep. 74.) When he was hired, Brady was 45 years old. (Hayes Aff. ¶ 15.) In May 2004, the corporate parent of CLS was acquired by a French company, Credit Agricole, S.A. As a result of the merger, Calyon was born, and CLS was renamed Calyon Securities (USA).*fn2 (Pages Aff. ¶ 2.) Francois Pages was the Chief Executive Officer of CLS at all times during Brady's employment.*fn3 (Id. ¶ 3.)

When he was hired, Brady signed an offer letter that set his compensation and certain revenue-based additional compensation for 1999 only, and provided that he would be "eligible for a discretionary bonus in 1999." (Brady Dep. Ex. F.) Brady was also provided an Employment Handbook and signed an acknowledgment agreeing to be bound by its policies. (Brady Dep. 277.) However, with the exception of the limited offer letter, CLS did not provide Brady with a written employment contract. (Hayes Dep. 83.)

When he was hired, CLS also provided Brady with a Compliance Manual (Brady Dep. 278), which "memorialized [CLS's] adherence to [the NYSE's and NASD's] rules and regulations" (Howard Dep. 35-36). The Compliance Manual also instructed employees to speak with George Howard, CLS's Director of Compliance, if they had questions or needed help in understanding the NYSE and NASD rules as they applied to CLS. The Compliance Manual has been amended a number of times since Brady was hired. (Billet Dep. 32; see Howard Dep. 36-37 (stating that the Compliance Manual is updated "[a]ll the time").)

Brady received favorable performance evaluations in 2000 and 2001. (Pl. Exs. P & Q.) In 2001, CLS promoted Brady, then age 48, to the position of Director of Research. (Pages Aff. ¶ 4; Hayes Aff. ¶ 8.) In that position, Brady had a staff of research analysts reporting to him (Schindler Dep. 33-34), and Brady in turn reported directly to Eric Schindler. (Brady Aff. ¶ 16; Schindler Dep. 29, 31-32; Hayes Dep. 143; Howard Dep. 64; Pages Dep. 87-88.) Although Schindler's official title is in dispute, it is undisputed that Schindler had supervisory responsibilities over the staff in both the Investment Banking Department and Research Department, including Brady.*fn4 (See Pages Dep. 46-47; Schindler Dep. 53.)

According to Brady, the environment at CLS became increasingly tense during the first days of the U.S. invasion of Iraq. When France announced in early 2003 that it would not support the U.S. invasion, CLS's Human Resources Department received a report of inappropriate jokes by CLS employees relating to the controversy. (Hayes Dep. 56.) In response, CLS Human Resources distributed a memo reminding CLS employees that "inappropriate and unlawful behavior," including anti-American, anti-French, and anti-Semitic remarks, "would not be tolerated." (Brady Dep. Ex. JJ.) Although Human Resources did not conduct an official investigation into the accusations, there were no further reports of "inappropriate and unlawful behavior" after circulation of the memo. (Hayes Aff. ¶ 9.)

Around the same time, Brady told Pages that as a West Point graduate, he received emails from his former classmates discussing the Iraq situation. (Brady Dep. 251; Howard Dep. Ex. 9; Pages Aff. ¶ 5.) On April 9, 2003, Brady forwarded one of those emails to Pages with the note, "[t]hought you might be interested . . . ." (Howard Dep. Ex. 9.) According to Brady, the relationship between himself, Pages, and Schindler became increasingly strained during this time due in part to their differing opinions on the war. (Brady Dep. 253-55; id. 292-94; Brady Aff. ¶ 20.)

Also around the same time, CLS began cutting staff in anticipation of the merger of its parent with Credit Agricole. (Pages Aff. ¶ 6.) Schindler, who supervised the departments that were being downsized, was responsible for making the cuts. (Brady Dep. 81.) Nearly 100 employees were terminated in early 2003, including a number of research analysts in Brady's department, and thereafter a hiring freeze was imposed. (Hayes Aff. ¶ 10; Pages Aff. ¶ 6; see id. ¶ 12 (claiming that Brady had "vigorously fought any reduction of his staff and was openly critical of institutional business decisions and strategy during a difficult period").)

In June 2003, Brady began looking for other jobs. (Brady Dep. 132.) He received an offer from Independent Research, another securities firm. (Id.) On June 22, 2003, Brady met with Pages to submit his resignation. (Id. 136-37; Pages Aff. ¶ 7.) However, Brady retracted his resignation when Pages agreed to increase his salary to $200,000 and recommend him for a bonus of $300,000, for a total compensation of $500,000.*fn5 (Pages Dep. 93-95; Pages Aff. ¶ 7.) Schindler supported the decision to promote Brady (Schindler Dep. 100), although he did not consult with Pages prior to the promotion (id. 114).

According to Brady, Pages also agreed during their June 22 conversation to respond to concerns Brady allegedly expressed about his reporting directly to Schindler. Brady claims that he told Pages at the June 22 meeting that his reporting relationship to Schindler violated NYSE and NASD rules prohibiting the same person from supervising both the investment banking and research functions of a broker-dealer firm. (Brady Dep. 137-44.) Brady claims that he decided to remain at CLS only because Pages assured him that he "would immediately take corrective action so that the Research Department and [Brady] in particular would not be subject to the supervision and control of Eric Schindler." (Brady Aff. ¶ 21.) Pages denies that he made any such promise to Brady, or that Brady raised that concern either during their June 22 conversation or at any time during Brady's employment. (Pages Dep. .) Both Howard and Schindler also deny that Brady ever made any such complaints before the day he was terminated. (See Howard Aff. ¶ 8; Schindler Dep. 74; see also Billet Aff. ¶ 10.)

On February 5, 2004, Brady received a performance grade for 2003 of "minus 3," indicating that his performance in 2003 had been less than satisfactory. (Brady Dep. Ex. Z.) Schindler, as Brady's direct supervisor, had originally given Brady a grade of "3," and suggested several ways in which Brady could improve his performance. (Id.; see Schindler Dep. 144, 180-81.) Pages added the "minus" to Brady's grade, to reflect that Pages "expect[ed] much more from Charles as a leader of the Research department . . . ." (Pages Aff. ¶ 11; see id. ¶ 12 ("In lowering [Brady's] rating, I was mindful that in June 2003 [Brady] had made demands for promotion and additional compensation, and I expected a significantly higher level of performance from [Brady] to correspond to his higher title and compensation level.").) The 2003 review was Brady's first performance review since 2001, and the first review he received at CLS that was not above average. (Brady Dep. Exs. P-Q.) However, despite the less than satisfactory performance review, on March 12, 2004, Brady received a $300,000 bonus, as discussed at the June 22 meeting. (Pl. Ex. 17.) Bonuses at CLS are discretionary, based on a variety of factors, including "the way someone performs." (Hayes Dep. 24-25.)

On July 1, 2004, Brady gave Howard a handwritten, undated, unaddressed, unsigned letter. (Pl. Ex. 19.) The letter complained about the alleged "reporting impropriety" Brady claimed to have discussed with Pages in June 2003. (Id.) Specifically, Brady stated that he, "as head of research . . . should not be reporting to Eric Schindler, . . . [as] head of banking," and that he had been "castigated" for taking the issue "to [Pages's] attention." (Id.) Brady also claimed in the letter that Pages had promised him at the June 2003 meeting to "resolve[]" the reporting issue, but the issue had not been resolved. (Id.) Finally, Brady accused Schindler of telling Brady that he would "pay for running to [Pages] and complaining last summer." (Id. (internal quotation marks omitted).) Brady -- then age 50 -- was terminated later that day and immediately replaced by Michael Weinstein, a 45-year-old American who had previously been a Director of Research at another firm.*fn6 (Pages Aff. ¶¶ 15, 17.)

Brady was offered $50,000 in severance in return for signing a general release, including a release of any legal claims Brady might have against CLS, by August 1, 2004. (Pl. Ex. 11; see Hayes Dep. 199.) Brady did not sign the release by August 1, and as a result, CLS rescinded the offer. (Id.) On August 13, 2004, CLS filed a Form-U-5 with NASD stating the reason for Brady's termination as "performance."*fn7 (Brady Dep. Ex. UU; see Hayes Dep. 146 (claiming that Pages had terminated Brady "because of his leadership skills").)

On April 4, 2005, Brady filed suit in this Court, contending that defendants (1) unlawfully retaliated against him in violation of NYSE and NASD regulations, and in violation of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A; (2) breached their implied contract with Brady by wrongfully discharging him in violation of both the Employee Handbook and the Compliance Manual's whistleblower provision; (3) discriminated against him on the basis of age, national origin, and military status; (4) tortiously interfered with his ability to secure new employment; (5) fraudulently induced him to remain in his job in June 2003; and (6) failed to pay him for his unused vacation days after his termination.

On November 8, 2005, the Court dismissed plaintiff's retaliation claims, finding, inter alia, that the regulations at issue did not provide for a private right of action, and that, as an employee of a non-publicly traded company, Brady was not protected by the Sarbanes-Oxley Act. Brady v. Calyon Secs. (USA), 406 F. Supp. 2d 307, 312-14, 317-19 (S.D.N.Y. 2005). In addition, the Court dismissed plaintiff's tortious interference and fraudulent inducement claims, finding that plaintiff had not stated a claim for either cause of action. Id. at 314, 317. Finally, the Court dismissed Brady's breach of implied contract claim insofar as it was based on an alleged violation of the Employee Handbook, finding that Brady was an at-will employee and that the Handbook did not create an implied contractual relationship between CLS and Brady. Id. at 315. However, although the Court noted that defendants had "persuasively" argued that the Compliance Manual's whistleblower provision similarly did not create an implied contract between CLS and Brady, the Court declined to dismiss that claim to provide plaintiff the opportunity to take discovery on the issue. Id.

On May 14, 2007, defendants moved for summary judgment on plaintiff's remaining breach of contract and discrimination claims, arguing, inter alia, that the evidence uncovered during discovery conclusively establishes that Brady was not protected from termination by the whistleblower provision, and that he was terminated for legitimate, non-discriminatory reasons. Plaintiff responded on June 15, 2007; the motion was fully briefed as of June 25, 2007.


I. Summary Judgment Standard

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56©. The Court's responsibility is to determine whether there is a genuine issue to be tried, and not to resolve disputed issues of fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The Court must draw all reasonable inferences and resolve all ambiguities in the nonmoving party's favor, and construe the facts in the light most favorable to the nonmoving party. Id. at 254-55. However, "[i]f the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50 (citations omitted).

The party seeking summary judgment bears the burden of showing that no genuine factual dispute exists. See Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d Cir. 1995). Once the moving party has made a showing that there are no genuine issues of material fact, the burden shifts to the nonmoving party to raise triable issues of fact. Anderson, 477 U.S. at 250. A genuine issue for trial exists if, based on the record as a whole, a reasonable jury could find in favor of the nonmoving party. Id. at 248. See Sec. Ins. Co. of Hartford v. Old Dominion Freight Line Inc., 391 F.3d 77, 82-83 (2d Cir. 2004) ("If . . . there is any evidence in the record from which a reasonable inference could be drawn in favor of the opposing party, summary judgment is improper.") (citation and internal quotation marks omitted). In addition, "conclusory statements or mere allegations [are] not sufficient to defeat a summary judgment motion." Davis v. State of New York, 316 F.3d 93, 100 (2d Cir. 2002); see also id. ("The nonmoving party must go beyond the pleadings and by [his or] her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.") (alterations in original) (citation and internal quotation marks omitted).

II. Breach of Contract

Plaintiff asserts a claim for breach of contract under New York law, arguing that he was fired in breach of promises made in CLS's Compliance Manual that he claims form a part of his employment contracts. Defendants make several distinct attacks on this claim. First, defendants claim that plaintiff cannot invoke the protection of the Compliance Manual's whistleblower provision because that provision was not written into the Manual until after plaintiff was discharged. Second, defendants argue that, even if the whistleblower provision did exist during the term of plaintiff's employment, he cannot avail himself of its protection because he did not make any good faith complaints during the term of his employment. Finally, defendants argue that, even if plaintiff did make such complaints during the term of his employment, he was discharged for legitimate, non-retaliatory reasons. Although plaintiff has submitted scant evidence supporting his contract claim, relying mostly on his own affidavit and deposition testimony to create a genuine issue of material fact, defendants have nonetheless failed to establish that a reasonable trier of fact could not accept plaintiff's testimony and find for plaintiff on his breach of contract claim. Therefore, summary judgment on this claim must be denied.*fn8

A. Whistleblower Provision

The governing legal principles are not in dispute. It is "settled law in New York that, absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will, terminable at any time by either party." Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 333 (1987). See also Dalton v. Union Bank of Switz., 520 N.Y.S.2d 764, 765 (1st Dep't 1987) ("Plaintiff's employment was not for a specified period of time and, therefore, the hiring is presumed to be an employment at will."). Without a formal contract, a plaintiff can not bring a claim of wrongful discharge based on common-law tort theory. Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293, 300 (1983); see Mulder v. Donaldson, Lufkin & Jenrette, 623 N.Y.S. 2d 560, 563 (1st Dep't 1995) ("[A]n employee . . . may be terminated . . . at any time, for any reason or even for no reason.") (emphasis in original). However, "New York law carves out . . . a few very narrow exceptions to the at-will employment doctrine." Brady, 406 F. Supp. 2d at 314. Specifically, an employer in New York may not terminate an employee where such termination violates "an express limitation in the applicable contract of employment." Mulder, 623 N.Y.S.2d at 563.

Here, Brady does not claim that he had a written contract specifying a time period for his employment, and thus is presumed to be an at-will employee. Brady, 406 F. Supp. 2d at 314. However, Brady asserts that the whistleblower provision in the Compliance Manual constitutes an "express limitation" on CLS's ability to discharge its employees. The whistleblower provision at issue provides that "[e]mployees are entitled to protection from retaliation for having, in good faith, made a complaint" regarding CLS's compliance with securities laws and regulations, including NYSE and NASD rules. (Pl. Ex. 5.) The whistleblower provision further provides that CLS "shall not discharge, demote, suspend, threaten, harass, or in any manner discriminate against an employee in the terms of conditions of employment based upon any lawful actions of such employee with respect to good faith reporting of complaints." (Id.) Thus, plaintiff argues that the whistleblower provision creates an implied contractual relationship between CLS and its employees, and therefore that a violation of that provision amounts to a breach of contract.

Defendants do not dispute plaintiff's interpretation of the whistleblower provision as creating an implied contract between CLS and its employees. Indeed, any such dispute would be futile, as several New York state and federal courts have found that a whistleblower provision such as that found in the Compliance Manual is an "express limitation" on an employer's ability to discharge its employees. See Mulder, 623 N.Y.S. 2d at 564; see, e.g., Albert v. Losken, No. 96 Civ. 219, 1996 WL 571112, at *3 (E.D.N.Y. Sept. 11, 1996); Gorman v. Nat'l Med. Care, Inc., No. 103604-95, 1998 WL 1050970, at *3 (Sup. Ct., N.Y. County, Aug. 13, 1998). However, defendants argue that the whistleblower provision on which plaintiff relies was not instituted until after plaintiff was discharged. Specifically, defendants claim that the whistleblower provision was put in force in November 2004, "as part of a post-acquisition policy directive from Credit Agricole in Paris." (Billet Aff. ...

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