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Patricia Kapner v. Riverside Wine & Liquor

October 28, 2011


The opinion of the court was delivered by: Siragusa, J.



This case, with allegations under New York and Federal law concerning Plaintiff's employment, is before the Court on Defendants' motions (Doc. Nos. 2 & 8) to dismiss and Plaintiff's cross-motion (Doc. No. 15) for an extension of time to comply with W.D.N.Y. Loc. R. Fed. P. 5.1(h). For the reasons stated below, Defendants' motions are granted and Plaintiff's cross-motion is denied.


The Court considers the facts alleged in the complaint as true for its analysis of the pending motions. Plaintiff contends that her causes of action arise from her constructive termination as an employee with Defendants.

Pre-resignation events

Riverside Wine & Liquor, Inc. ("Riverside"), is a wholesale business in the marketing and sales of alcoholic beverages under a license issued by the New York State Liquor Authority. In approximately 1994, Plaintiff's parents, Marcia Isner and Maurice Isner, along with Fredric Schade ("Schade"), took ownership of Riverside as shareholders. Maurice Isner was president and director; Marcia Isner was the secretary, treasurer and a director; and Schade was vice president and director. (Compl. ¶¶ 8-10.) Plaintiff served as an employee of Riverside for 15 years and held the title of controller. (Compl. ¶ 13.)

Plaintiff alleges that from about the year 2000 on, Schade was engaged in covert activities while employed at Riverside. From the allegations in the complaint, he had been importing liquor into the United States illegally under the cover of Riverside's license and sold that liquor independently of Riverside for his own profit. (Compl. ¶¶ 17-27.) Riverside's liquor license does not permit shipment to individuals and does not permit Riverside to sell alcoholic beverages outside of New York State. (Compl. ¶¶ 35 and 40.) However, Schade imported liquor from France and sold it to customers across the United States, in Russia, and the United Kingdom. (Compl. ¶ 41, 46.) Two paragraphs in the complaint describe how Schade conducted his rogue activities:

49. Schade imported the illicit cognac into Riverside's warehouse, where Schade would meet the container of Riverside's usual legal order of cognac, but in addition, concealed therein and mislabeled, was the illicitly imported cognac.

50. Schade would then secretively remove the illicitly imported cognac, and distribute that throughout the United States, transferring funds back to Benedicte Hardy in France through the U.S. Postal Service, Federal Express and other means. (Compl. ¶¶ 49 and 50.) On July 22, 2008, Plaintiff, having discovered what Schade was up to, confronted him. On the same day, Schade resigned from Riverside signing a letter that states:

July 22, 2008

I, Fred Schade do hereby resign from Riverside Wine & liquor as of today, July 22. I am relinquishing my stock to the company. Also, I promise to pay all monies I have stolen from the company.

Fred Schade:MI Vice-Pres. (Curtis Aff. Ex. G; Compl. ¶ 57.)

At approximately the same time that Schade resigned in July 2008, Plaintiff caused the Corporation to hire an attorney to assist in its investigation of Schade and to protect Riverside and its shareholders. The attorney, William Smith, Esq. ("Smith"), interviewed Glenn Whitney and Curtis Grant ("Grant"), both longtime employees of Riverside. Grant revealed that he was a witness to Schade taking company inventory into his own car and not telling anyone and that it had been going on for ten years. Grant also admitted to preparing Federal Express labels and packaging vintage cognac that illegally came into the United States. Additionally, he admitted to packaging illegal cognac for Riverside drivers to deliver to a private trucking company in Buffalo without the drivers knowing what was in the packages. Further, Grant admitted to assisting in sending contraband liquor to collectors all over the United States. (Compl. ¶¶ 59-64.) The complaint does not allege that Grant acted with the knowledge of anyone at Riverside except Schade.

Smith advised Marcia Isner to let Grant go, but she decided not to terminate Grant, because he had evidence against Schade. (Compl. ¶ 66.) On August 7, 2008, Plaintiff filed a formal complaint with the New York State Liquor Authority. In September 2008, Riverside commenced a lawsuit against Schade in New York State Supreme Court, which resulted in discovery of 4,000 documents evidencing that Schade had shipped contraband liquor into the country and distributed it in violation of the licensing regulations and laws. (Compl. ¶¶ 72-74.)

In November 2008, Plaintiff alleges that she discovered that a "retailer had been importing the wine using Riverside's import license and bond illegally." (Compl. ¶ 77.) After informing Marcia Isner of this, Plaintiff states that Marcia Isner instructed her to "'do whatever it takes' to bring the wine into the country." (Compl. ¶ 79.) Plaintiff refused. Plaintiff further alleges that once Schade left, her workload increased and that she was assigned as the primary contact with Riverside's legal counsel. Plaintiff alleges that she attempted to have her name put on the company's liquor license through conversations with the New York State Liquor Authority, but Marcia Isner refused consent. (Compl. ¶¶ 85-88.) Plaintiff states that as a result of the increased workload and Marcia Isner's lack of concern about the impact of such increased workload on Plaintiff's health, Plaintiff lost weight and had difficulty sleeping and in January 2009 sought therapy, "to help her deal with the stress and chaos at Riverside." (Compl. ¶ 91.)

Finally, "[i]n January 2009, during a dinner with Marcia Isner, Plaintiff's husband informed Isner that Plaintiff would resign if Isner continued to ignore Plaintiff's request for additional help at Riverside." (Compl. ¶ 92.) Although Riverside did then hire Robyn Bellinger to assist her, Plaintiff alleges that, "despite their exemplary performances, Marcia Isner began to treat Bellinger and Plaintiff in a rude and hostile manner." (Compl. ¶ 94.) In early February 2009, Marcia Isner met with Riverside's legal counsel in the Schade litigation and directed the lawsuit to be withdrawn. When counsel informed the Plaintiff that the lawsuit would be discontinued, "Plaintiff was devastated by this news." (Compl. ¶¶ 95-97.) The complaint then states:

99. Because of the continued cloud of illegal activity that now seemed to taint all Riverside directors that could also taint Plaintiff, and the heightened animosity Marcia Isner directed toward Plaintiff, and threats made by Grant against Plaintiff, Plaintiff felt she had no other option but to resign and did so on February 6, 2009. (Compl. ¶ 99.)

Post-resignation events

Following her formal resignation, Plaintiff, advised Marcia Isner and Riverside in writing that she would complete all work that needed to be done either at Plaintiff's home office using her own computer modern [sic] or after hours when Grant was not on the premises. 101. Shortly thereafter, Marcia Isner brought her son, Defendant Ben Isner, into Riverside's operations, who never exhibited any interest in Riverside's work during the 15 years of its operation. 102. Instead of being facilitative and collaborative so that Riverside's work could be done, Defendant Ben Isner threatened and harassed Plaintiff, changed passwords from all accounts and locked Plaintiff out of the company all in an attempt to dissuade her from making further complaints and lor from cooperating with the NYSLA.*fn1 103. Henceforth, Plaintiff was unable to complete necessary work for Riverside. (Compl. ¶¶ 100--03.)

Plaintiff further alleges that Riverside canceled her health insurance, wiretapped her personal phones, computers and fax machines, installed hidden files and malicious spyware, jeopardized her personal credit, and refused to negotiate with her. (Compl. ¶¶ 104--11.) The Complaint

Plaintiff's complaint alleges five causes of action: (1) a claim under the Federal Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1962(c);

(2) conspiracy under RICO, 18 U.S.C. § 1962(d); (3) retaliation under New York State Labor Law section 740; (4) tortious interference with business relations; and (5) tortious interference with prospective economic advantage. Jurisdiction is predicated on the Federal causes of action and Plaintiff has not claimed diversity jurisdiction.*fn2 (Compl. ¶ 6.) The complaint is dated November 5, 2009 and signed by Christina A. Agola, Esquire.

In her responding papers, Plaintiff voluntarily withdrew the fourth and fifth causes of action, conceding that they were waived as a result of her claim under New York Labor Law section ...

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