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Lorri Zahler v. Empire Merchants

January 31, 2012


The opinion of the court was delivered by: John Gleeson, United States District Judge:



Plaintiff Lorri Zahler brings this action against her former employer, Empire Merchants, LLC ("Empire") and her former labor union, Liquor Salesmen's Union Local 2-D ("Local 2-D" or the "Union"). She alleges employment discrimination on the basis of age, sex and nationality in violation of Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq. (first cause of action), the New York State Executive Law § 296 et seq. ("New York State Human Rights Law" or "NYSHRL") (second cause of action), the Administrative Code of the City of New York § 8-107 et seq. ("New York City Human Rights Law" or "NYCHRL") (third cause of action), the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. (fourth cause of action), and the Equal Pay Act ("EPA"), 29 U.S.C. § 206(d) (fifth cause of action); common law tort claims of Tortious Interference with Contract (sixth cause of action), Tortious Interference with Business Relations (seventh cause of action) and Tortious Interference with Prospective Economic Opportunity (eighth cause of action); wrongful termination (ninth cause of action); interference (tenth cause of action) and retaliation (eleventh cause of action) under the Family and Medical Leave Act ("FMLA"), 29 U.S.C. §§ 2601, 2615(a); breach of a labor agreement, wrongful discharge in breach of a labor agreement and breach of the Union's duty of fair representation under § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a) (twelfth and thirteenth causes of action); and unlawful discharge with intent to deprive Zahler of pension benefits under § 510 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1140 (fourteenth cause of action).

Empire moves to partially dismiss Zahler's Amended Complaint ("Complaint"), pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, seeking dismissal of the sixth, seventh, eighth, ninth, tenth, eleventh and fourteenth causes of action for failure to state a claim.

For the reasons that follow, Empire's motion is granted in part and denied in part. Zahler's tortious interference claims (sixth, seventh and eighth causes of action) are hereby dismissed for failure to state a claim. Zahler's claim for wrongful termination (ninth cause of action) is also dismissed, because it is preempted by § 301 of the LMRA and thus redundant with her claim against Empire under § 301 (twelfth cause of action). However, Empire's motion is denied with respect to Zahler's claims for FMLA interference and retaliation (tenth and eleventh causes of action, respectively) and ERISA § 510 (fourteenth cause of action), because I conclude that she has alleged a plausible claim for relief on each.


A. Factual Allegations*fn1

Zahler, who is 55 years old, was employed by Empire (and its predecessor company, Charmer Industries) as a sales representative from 1994 until 2011. Compl. ¶¶ 20-22 (ECF No. 8). Empire distributes fine wines and spirits to bars, restaurants, and retail outlets in the metropolitan New York City area. As a salesperson, Zahler earned her income from commissions and incentive pay that she received based on the accounts that she developed. Id. ¶ 39.

In 2007, Charmer Industries merged with another company to form Empire. Id. ¶ 21. In the lead-up to this merger, older salespersons who were nearing vestiture of their pensions were aggressively encouraged to take early retirement. Id. ¶ 119. Zahler resisted, but found her workplace environment to become progressively more and more difficult and hostile. Id. ¶ 119. Zahler's managers treated her with hostility and undermined the relationships she cultivated with Empire's customers. At one point, the CEO of Empire, Loyd Sobel, said to Zahler, "Did you ever think of another career?" Id. ¶ 69.

After the 2007 merger, many of Zahler's accounts were redistributed among the other sales representatives at the company. Id. ¶ 46. Most of her high-earning accounts (called "top 3000 accounts") were given to younger male counterparts or to others of a preferred demographic. Id. Zahler was left with fewer and lower-earning accounts, effectively reducing her commissions. Id. ¶ 47. Zahler's division comprised mostly small, struggling, lower-end enterprises, which could not generate high-volume sales. Id. ¶ 72. Many of these accounts would only place orders "cash in hand" ("CIH") or "cash on delivery" ("COD"); were not yet open for business, did not have a liquor license, or were out of business; had too much stock; or would buy from local liquor stores because they could not afford to buy from a distributor like Empire. Id. ¶¶ 50, 71-72; Ex. J. The division was called the Combo Division by the company, but it earned the nickname the "Compost Division" by its sales representatives. Id. ¶ 50.

Zahler's employment with Empire was governed by a Collective Bargaining Agreement ("CBA"), which provided that employees could only be discharged for "just cause." Id. ¶ 36; Ex. E ¶ 3.2. "Just cause" was defined to include the "[f]ailure to earn commission of at least [$40,000] in a period of 12 months." Id. ¶ 36; Ex. E ¶ 3.3. The CBA also imposed a "Quota System," which required Empire employees to meet certain monthly sales quotas. Id. ¶¶ 32-35; Ex. D. Under the "Quota Procedure Rules for Assignment," quotas were to be assigned "in a fair and equitable manner," taking into consideration each salesperson's geographic territory, types of accounts and whether such accounts were CIH or COD accounts, among other things. Id. An employee was to receive a failing grade for any month in which she did not achieve at least 70% of the highest quota percentage achieved in her sales division. Id. Ex. D.

In spite of the strict quota and minimum commission provisions in the CBA, Empire did not strictly enforce failures to meet minimum commissions. Id. ¶ 68. In fact, Empire frequently assisted salespersons who fell short of their quotas by giving them additional "house" accounts (accounts that were already up and running and required little effort to service). Id. For example, when Anthony Baggio had difficulty making his quotas and draws in the wine division, they gave him a "leg-up" and switched him to the spirits division. Id. ¶ 70. However, Empire did not accord Zahler such forgiving treatment. On one occasion, Zahler missed her Management by Objectives ("MBOs") -- a set of goals set by Empire based on the Quota System -- by only 79 cents, but Empire still strictly enforced the Quota System against her. Id. ¶ 69. The management refused to adjust her quotas to reflect that many of her accounts were out of business or "cash in hand" establishments -- despite her repeated complaints and documentation of these accounts through email and photos. Id. ¶ 73; Exs. I, J. When Zahler complained that she could not meet her minimum commission requirements with her current account portfolio and pleaded for some stronger house accounts, the management summarily refused her requests, and told her that she first had to improve her existing, weak accounts. Id. ¶ 67.

An important part of Zahler's job was to market Empire's products by setting up promotion events with clients. She would set up the promotion, and then Empire was responsible for booking the promotion and providing general support. Id. ¶¶ 54-55. Distributing "wearables" -- such as branded t-shirts and caps from the supplier -- to be worn by waitstaff at restaurants was another important method employed by Empire's sales representative to promote Empire's products. Id. ¶¶ 78-79. Zahler's supervisors repeatedly undermined promotions she had arranged and unfairly denied her wearables to distribute, while helping her younger and/or male and/or Irish or Latino counterparts.

Anna Ortega, Zahler's supervisor beginning in early 2008, was a Latina woman who treated Latino salespeople better than Zahler, who is Jewish. Id. ¶ 57. For example, Ortega would "wine and dine" the accounts of other salespersons, particularly those of Latinos, but failed to do the same for Zahler. Id. On at least two occasions, Zahler requested promotions but they were not properly booked by Ortega, which led to the loss of those accounts. Id. ¶ 63. In February 2009, Zahler called Ortega to tell her she had been in an automobile accident and would be late to work. Id. ¶ 59. Ortega repeatedly sent Zahler emails, one in bold font, demanding that Zahler immediately produce accident-related documents, even though it would have been impossible for Zahler to have already received them. Id. At another event, which all salespersons were expected to attend, Zahler arrived early and went to the bathroom. Id. ¶ 61. When she exited the bathroom, Ortega yelled loudly, "You were late! You were late!" Id. Yet when Ortega received a call on her cell phone from a Latino salesperson a few moments later, she said soothingly that he shouldn't worry about coming since he was stuck in traffic. Id. In May 2009, Ortega admitted during a meeting with the general manager of the Combo Division that she did not feel comfortable working with Zahler because she was not one of her people. Id. ¶ 63.

John Cronin was Zahler's supervisor from 2008 to 2011. Id. ¶ 64. Cronin was hostile to Zahler and repeatedly undermined the orders and promotions she arranged, while privileging Zahler's younger male counterparts.

In March of 2010, Zahler went on FMLA leave to take care of her sick father, who was undergoing cardiac surgery. Id. ¶¶ 94, 96. On March 24, 2010, while Zahler was on leave, Cronin contacted Zahler and demanded that she produce a survey on one of her accounts. Id. ¶ 98. Even though Zahler explained that she had connectivity problems at the hospital that impeded her ability to submit the survey, Cronin repeatedly threatened Zahler with losing the account if she failed to submit it. Id. Later that evening, Zahler herself was hospitalized for being suicidal as a result of Cronin's conduct. Id. ¶ 99. Zahler returned to work in May 2010. Id. ¶ 100.

In late fall 2010, Cronin approved the Zahler's request to requisition drinking glasses from the warehouse for one of Zahler's accounts. Id. ¶ 82. Upon arrival at the warehouse, as per the proper procedure, Zahler called Cronin to confirm the approval with an employee at the warehouse. Id. Mr. Cronin asked the warehouse employee if the glasses were nice; when the employee confirmed that the glasses were "very nice," Cronin told the employee not to give them to Zahler. Id.

On December 3, 2010, after Zahler received approval from the supplier to take wearables from the warehouse, Cronin told Zahler, "You're not getting any!" Id. ¶ 81. However, Zahler observed numerous boxes at the warehouse, overwhelmingly designated for male employees. Id.

In the winter of 2010-2011, the owner of one of Zahler's best accounts informed Zahler that Cronin had gone in after business hours and tried to take over the account by bringing in wines to sell to the owner. Id. ¶ 83.

In December 2010, the owner of one of Zahler's accounts became verbally abusive to Zahler regarding a $10 service fee, placing Zahler in fear for her safety. Id. ΒΆ 88. To diffuse the situation, Zahler gave $10 to the owner. Id. When Empire learned of the situation, instead of protecting Zahler, it forced Zahler to ...

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