United States District Court, E.D. New York
Alexander T. Coleman, Michael J. Borrelli, Peter J. Famighetti, Borrelli & Associates, Carle Place, NY, Matthew J. Blit, Levine & Blit, PLLC, New York, NY, for Plaintiff.
Daniel Charles Ritson, Leo James Hurley, Jr., Steven B. Harz, Archer & Greiner, P.C., Hackensack, NJ, for Defendants.
MEMORANDUM AND ORDER
A. KATHLEEN TOMLINSON, United States Magistrate Judge:
I. PRELIMINARY STATEMENT
Plaintiff Arleigh Spencer (" Spencer" or " Plaintiff" ) commenced this action on May 26, 2006 against International Shoppes, Inc. (" ISI" ) and Michael Halpern (" Halpern" ), personally and as President of ISI (collectively, " Defendants" ), alleging race and age based discrimination and retaliation. Defendants previously moved for summary judgment seeking dismissal of all of Plaintiff's claims. Judge Seybert granted their motion in part, dismissing the ADEA and Title VII discrimination claims, the Title VII retaliation claim and the race discrimination claim under § 1981. However, Judge Seybert denied the portion of the motion which sought dismissal of Plaintiff's claims for retaliatory commencement of litigation pursuant to Title VII of the Civil Rights Act of 1964 (" Title VII" ), New York Executive Law § 296 et seq. (" NYHRL" ), and 42 U.S.C. § 1981. DE 90 (" Sum. J. Op." ); Spencer v. International Shoppes, Inc., No. 06-CV2637, 2010 WL 1270173 (E.D.N.Y. March 29, 2010) (" Spencer I " ). As a result of that decision,
the claims based on Defendants' alleged retaliatory commencement of litigation are the only claims remaining in this case.
On January 11, 2011 the parties consented to this Court's jurisdiction for all purposes pursuant to 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73. DE 120. While the case was proceeding, the Hon. Ute Wolff Lally, Justice of the New York State Supreme Court, Nassau County rendered her decision after trial of ISI and Michael Helpern's suit against Arleigh Spencer in state court. A copy of that decision is attached as Exhibit B to the Certification of Daniel C. Ritson, Esq. in Support of Defendants' Motion for Summary Judgment [DE 162-1] (" Ritson Cert." ). In that decision, Justice Lally dismissed seven of the eight causes of action brought by ISI and Halpern, leaving only the Sixth Cause of Action for defamation per se by Spencer against Halpern. Defendants' counsel then wrote this Court requesting that the Court dismiss Plaintiff's remaining claim in federal court in light of Justice Lally's decision. At a September 21, 2011 Conference, I advised counsel that I would need briefing on this issue and would therefore treat Defendants' letter as a request for a pre-motion conference. See DE 159. After hearing from counsel regarding the effect of the state court action, I set a briefing schedule for Defendants' proposed motion to dismiss the instant case. Id.
Thereafter, Defendants filed their motion, denominated as a second motion for summary judgment. Having considered Defendants' Memorandum of Law in Support of Motion for Summary Judgment [DE 162-9] (" Defs.' Mem." ), Plaintiff's Memorandum of Law in Opposition to Summary Judgment [DE 163-3] (" Pl's. Mem." ), Defendants' Reply Memorandum of Law in Further Support of Motion for Summary Judgment [DE 164] (" Defs.' Reply Mem." ), as well as the supporting affidavits, certain deposition transcripts, and the parties' Local Civil Rule 56.1 Statements (" Defs.' Stmt." [DE 162-10] and " Pl's. Counterstmt." [DE 163-4] ), the Court DENIES Defendants' motion for summary judgment for the reasons that follow.
The following facts are taken from Judge Seybert's findings in Spencer I  and the relevant decisions issued and submissions made in the allegedly retaliatory litigation. For purposes of this motion, the facts are construed in the light most favorable to Spencer as the party opposing summary judgment, with any factual disputes resolved in Spencer's favor. See Capobianco v. City of New York, 422 F.3d 47, 50 (2d Cir.2005).
A. Plaintiff's Employment at ISI
Spencer, a fifty-three year old African-American male, began working at ISI as a payroll clerk on September 27, 1999. Sum. J. Op. at 2. During the course of his employment, Spencer was promoted to payroll coordinator, and received annual pay raises from 2000 to 2002, although he had been notified at his initial job interview that the company had no policy requiring such raises. Id. Prior to August of 2002, Spencer's employment was without incident. Id. at 3.
On August 8, 2002, Spencer notified Halpern, his boss, as well as the President of ISI, of a " phantom employee" scheme. Id. In this alleged scheme, the wife of an ISI employee was listed on the payroll although she did not work there, and hours attributed to the employee's wife were actually worked by the ISI employee. As a result, the ISI employee did not receive overtime pay that he had earned. When the scheme was disclosed, two ISI employees were disciplined for their involvement. Spencer received a written warning for failing to make a timely disclosure of the scheme to senior management despite his alleged knowledge of the scheme for a substantial period of time. Id.
Spencer was also disciplined for multiple payroll accounting irregularities (which Spencer disputes), including his failure to: " (1) make proper tax withholdings from employees' paychecks, including his own; (2) properly pay back a loan taken from ISI's 401(k) account; (3) account for several unauthorized salary advances; and (4) process some garnishments on his checks." Id. at 4. In December of 2003, Spencer received an additional written warning for conducting personal business during company time, a charge he also disputes. Id. He was then suspended without pay for three days for improperly changing the terms of his loan repayment schedule. Id. at 4-5. Eventually, Spencer was given a " last chance" warning that any further violations of company policy would result in his termination. Id. at 5.
Approximately one month after the " last chance" warning, Spencer delayed delivery of the payroll checks one day from Thursday to Friday. Id. The parties dispute whether Spencer's action was in violation of ISI policy. Id. Spencer was terminated on June 1, 2004 because, according to the Defendants, his action with respect to the late delivery of the payroll checks violated his " last chance" warning. Id. at 6.
In October of 2003, Spencer sent a memorandum to ISI management in which he claimed that he had been subject to a hostile work environment. Id. at 8. ISI conducted an investigation. Id. Spencer then filed a complaint against Defendants with the New York State Division of Human Rights (" DHR" ) on May 18, 2004 alleging discrimination on the basis of his age and race. Id. On July 22, 2004, Spencer filed a supplemental DHR complaint asserting that he was terminated in retaliation for filing the initial complaint. Id. at 8-9. The DHR dismissed the complaint on January 31, 2006, finding that there was no probable cause to believe that Defendants engaged in the asserted unlawful discriminatory practices alleged by the Plaintiff. Id. at 9.
B. Defendants' State Court Action Against Spencer and Related Events
On July 28, 2004, Halpern and ISI, along with two other companies (the " State Court Plaintiffs" ), filed an action against Spencer in the New York State Supreme Court, Nassau County, alleging defamation, defamation per se, prima facie tort, duress, and fraudulent concealment (the " State Court Lawsuit" ). See State Court Lawsuit Complaint, attached as Ex. 13 to the Certification of Peter J. Famighetti [DE 163-163-2] (" Famighetti Cert." ). The allegations centered around statements Spencer made regarding the phantom employee scheme and Spencer's harassment complaints. Id. The lawsuit sought $6.5 million in damages, as well as punitive damages. Sum. J. Op. at 11.
After the State Court Lawsuit was filed, Spencer made additional statements regarding the phantom employee scheme. On November 8, 2004, Spencer sent a letter to the Unemployment Insurance Appeal Board seeking a reversal of its decision
to affirm the order of a Department of Labor Administrative Law Judge disqualifying Spencer from receiving unemployment benefits due to misconduct. Id. at 9, 11. In that letter, Spencer stated that ISI and Halpern engaged in unlawful activity with respect to the phantom employee scheme. Id. On January 3, 2005, Spencer also set letters regarding the phantom employee scheme to United States Senators Hillary Clinton and Charles Schumer. Id. at 11.
On March 1, 2005, the Supreme Court, Nassau County granted Spencer's motion to dismiss the State Court Lawsuit on the grounds that Spencer could not be held liable for making statements which were true. See March 1, 2005 Order, Famighetti Cert., Ex. 15. The court also denied the State Court Plaintiffs' two motions for leave to amend seeking to add claims based on the statements made to the Unemployment Appeals Insurance Board and Senators Clinton and Schmumer. See id., Exs. 14, 15. On November 8, 2006 the Supreme Court of the State of New York, Appellate Division, Second Department reversed the trial court's orders granting the motion to dismiss and denying the motions to amend on the grounds that whether or not the alleged defamatory statements were substantially true could not be determined as a matter of law on the record presented. International Shoppes, Inc. v. Spencer, 34 A.D.3d 429, 430, 825 N.Y.S.2d 483 (2d Dep't 2006). Accordingly, the Second Department reinstated the dismissed claims, and granted Defendants leave to add four additional defamation claims which arose after the initiation of litigation. Id. at 429-30, 825 N.Y.S.2d 483.
The case ultimately proceeded to trial on the following causes of action:
• Second Cause of Action: defamation per se with respect to Halpern based on Spencer statements to Halpern, including " you are an asshole— I should have sued your ass before; "
• Third Cause of Action: defamation per se with respect to ISI predicated on Spencer's statement that the " company is committing fraud" and " is doing things that are illegal; "
• Fourth Cause of Action: fraudulent concealment of the " phantom employee" scheme;
• Fifth Cause of Action: defamation per se with respect to ISI based on Spencer's letter to the Unemployment Insurance Appeals Board;
• Sixth Cause of Action: defamation per se with respect to Halpern based on Spencer's letter to the Unemployment Insurance Appeals Board;
• Seventh Cause of Action: defamation per se with respect to ISI based on Spencer's letter to Senators Schumer and Clinton; and
• Eighth Cause of Action: defamation per se with respect to Halpern premised on Spencer's statement in the letter to the Senators that he was " ostracized, singled out and harassed by upper management mainly the president."
See Aug. 19, 2011 Order (" State Ct. Trial Order" ) at 4-8, attached as Ex. B to the Ritson Certification.
On August 19, 2011, after a bench trial, Justice Ute Wolff Lally issued a decision on the merits. Id. Justice Lally found that Spencer lacked credibility and therefore she resolved any conflicts in testimony in favor of the State Court Plaintiffs. Id. at 2. With regard to the First Cause of Action, the court found that this portion of the pleading appeared to be " nothing more than a recitation of jurisdictional and lead-in allegations." Id. at 4. The court dismissed the Second Cause of Action on the grounds that " a reasonable listener
would understand that the statement ‘ you are an asshole— I should have sued your ass before’ conveyed an opinion rather than a fact." Id. at 5. With respect to the Third, Fifth, and Seventh Causes of Action, Justice Lally found that the content was substantially true since a managerial employee at ISI did devise and carry out a phantom employee scheme that was illegal. Id. at 5-7. Therefore, the court dismissed the claims because truth constitutes an absolute defense to defamation per se. Id. The Fourth Cause of Action was dismissed because the State Court Plaintiffs failed to prove that Spencer knew about the phantom employee scheme prior to disclosing it. Id. at 5-6. The court noted that the State Court Plaintiffs did not produce any witnesses to support this claim and the Disciplinary Notice they introduced was self-serving and without probative value. Id. The Eighth Cause of Action was ...