United States District Court, S.D. New York
Attorneys for Plaintiff LAWRENCE R. GELBER Lawrence R.
Attorneys for defendants BOND SCHOENECK & KING, PLLC
Dennis A. Lalli, Esq.
G2 FMV, LLC ("FMV"), G2 Capital Markets, LLC
("G2CM"), and J. Todd Morley ("Morley"
and, together with FMV and G2CM, the "New
Defendants") have moved to dismiss the Second and Fifth
Claims of the First Amended Complaint ("FAC") of
Plaintiff Robert Knutson ("Knutson" or the
"Plaintiff") pursuant to Federal Rule of Civil
Procedure 12(b)(6). Defendants G2 Investment Group, LLC
("G2IG"), FPCG LLC d/b/a Forbes Private Capital
Group ("FPCG"), StoneCastle Securities LLC
("StoneCastle"), Robert Holmen
("Holmen"), and John Ou ("Ou" and,
together with GI2G, FPCG, StoneCastle, and Holmen, the
"Original Defendants, " and, together with the New
Defendants, the "Defendants") have moved for a
judgment on the pleadings on the Second and Fifth Claims of
the FAC pursuant to Federal Rule of Civil Procedure 12(c).
Lastly, Defendants have moved to dismiss the First and Third
Claims of the FAC as against Morley, Holmen, and Ou pursuant
to Federal Rule of Civil Procedure 12(b) (6).
on the conclusions set forth below, Defendants' motions
March 3, 2014, Plaintiff filed his Complaint. Dkt. No. 2. The
Complaint alleged six claims for relief: (1) a violation of
the Americans with Disabilities Act of 1990, 42 U.S.C.
§§ 12101 et seq. (the "ADA");
(2) discrimination under the Age Discrimination in Employment
Act of 1967, 29 U.S.C. §§ 623 et seq. (the
"ADEA"); (3) discrimination under the New York
State Human Rights Law, N.Y. Exec. Law § 296 (the
"NYSHRL"); (4) breach of contract; (5) breach of
the implied covenant of good faith and fair dealing; and (6)
intentional and/or negligent misrepresentation. See
generally Dkt. No. 2. Several attorney substitutions and
fitful discovery proceedings ensued. See Dkt. Nos.
7, 39, 43-53, 63, 65, 78.
8, 2017, Plaintiff moved to amend his Complaint, which was
granted on September 6, 2017. Dkt. Nos. 92, 108.
Plaintiff's FAC added several additional Defendants and
alleged five claims for relief: (1) violation of the ADA; (2)
fraudulent inducement; (3) age discrimination under the ADEA;
(4) age discrimination under the NYHRL; and (5) breach of
contract and the implied covenant of good faith and fair
October 19, 2017, Defendants filed the instant motions, which
were heard and marked fully submitted on November 15, 2017.
Complaint sets forth the following allegations, which are
assumed true for the purpose of this motion to dismiss.
See Koch v. Christie's Int'l PLC, 699 F.3d
141, 145 (2d Cir. 2012).
useful background, it is worth first outlining the interplay
between the different corporate defendants. FMV was the
parent company of G2IG, and G2CM was GI2G's wholly-owned
subsidiary. FAC ¶¶ 12, 20. FPCG was G2IG's
wholly-owned distribution business. FAC ¶ 25. FMV and
FPCG were founded by Morley. FAC ¶¶ 17, 25, 39.
StoneCastle is a Financial Industry Regulatory Authority
("FINRA") registered broker-dealer through which
G2IG and G2CM passed securities transactions, as G2IG and
G2CM were not FINRA registered. FAC ¶¶ 18, 22, 28.
Holmen was StoneCastle's Chief Compliance Officer
("CCO") and Chief Financial Officer
("CFO"). FAC ¶ 30. Ou possessed supervisory
capacity at ¶ 2IG and was a registered representative of
StoneCastle. FAC ¶¶ 35, 37.
started in the financial services industry as a broker at
Merrill Lynch in 1977. FAC ¶ 43. Over decades in the
industry, Knutson developed a successful book of business and
was regularly engaged by large, financially sophisticated
institutional clients. FAC ¶ 46. Knutson also suffers
from several physical ailments, including rheumatoid
arthritis and diverticulitis, and has a pronounced shuffle
which at times requires use of a cane. FAC ¶¶ 7-8.
August 2011, Knutson was a senior vice president at the Royal
Bank of Canada ("RBC") and earned over $300, 000 a
year. FAC ¶¶ 44, 46. Around this time, Knutson was
approached by Holmen, who solicited Knutson to leave RBC to
work for G2CM. FAC ¶ 46. As part of the sales pitch,
Holmen made the following representations about G2CM: that it
was the "next Goldman Sachs" and growing fast, FAC
¶¶ 48, 95(a), 95(o); that it was
"extremely" well-capitalized and had access to
substantial additional capital, FAC ¶¶ 50,
95(b)-(c); that is was well-organized and well-run and with a
large aviation-based portfolio, FAC ¶¶ 95(d),
95(n); that it had a substantial list of Forbes clients that
Knutson could access and that information was regularly
provided, FAC ¶¶ 95(e), 95(i); that G2CM was hiring
respected and knowledgeable traders, FAC ¶¶ 95(g),
95(1);. that Knutson could keep his sales assistant, FAC
¶¶ 66, 95(h); that Knutson could work for FPCM,
have autonomy in cross trades, and continue to speak to the
press, FAC ¶¶ 53, 95(f), 95(m); that trades would
be backed by a subsidiary of Merrill Lynch, FAC ¶ 95(j);
and that Morley would be available to meet with major clients
to assist in closing transactions and developing
relationships, .FAC ¶ 74. Based on these
representations, Knutson left RBC and started working at
¶ 2CM in September 2011. FAC ¶¶ 59-60, 99.
solicitation of Knutson was with Morley's knowledge. FAC
¶¶ 58, 98. At the time of Holmen's
representations to Knutson, Holmen knew that the statements
were false. FAC ¶¶ 47, 98. As opposed to $52
million, as stated, in fact the company only had net capital
amounting to $1.2 million. FAC ¶ 52. Moreover, Holmen
did not intend to grant Knutson any autonomy while employed.
FAC ¶ 54.
October 2011, Holmen informed Knutson that Knutson would not
be permitted to cross corporate bond trade without prior
approval of the company's Corporate Bond Private
Placement Department, which went against a "trading
authorization list" issued by the company that should
have allowed Knutson to make such trades. FAC ¶¶
61-62. Knutson was also asked to report to Ou. FAC ¶ 64.
Knutson viewed both as delaying his trades and negatively
affecting his business. FAC ¶ 63. In December 2011,
Holmen terminated Knutson's assistant. FAC ¶ 66.
found the environment at ¶ 2CM challenging to conduct
business. Ou refused to share information with Knutson and
harassed Knutson, such as using foul language and calling
Knutson "old man." FAC ¶¶ 67, 72, 77.
Morley cancelled meetings with clients that Knutson would set
up, which embarrassed Knutson and affected his business. FAC
¶¶ 75-76. While working at ¶ 2CM, Knutson
learned that the company had no mortgage or corporate bond
inventory. FAC ¶ 68. In contrast to pre-hire
representations, G2CM also delayed Knutson's expense
reimbursements and changed Knutson's health insurance
policy is a less favorable option. FAC ¶ 71.
February 2012, Knutson was diagnosed with diverticulitis,
which required Knutson to go to the hospital for several
days. FAC ¶ 72. While at the hospital, Ou harassed
Knutson and demanded to know when Knutson would return. FAC
¶¶ 79-80. Knutson returned from the hospital, but
continued stress caused by Ou required Knutson to return to
the hospital for three days. FAC ¶ 80. During that three
day readmission, Holmen worked with Ou to reassign
Knutson's accounts to other employees. FAC ¶ 81.
Around this time, Knutson filed a complaint with the Human
Resources Department, which had no results. FAC ¶ 82.
March 2012, Knutson was diagnosed with Lyme disease. FAC
¶¶ 72, 83. While at work, Ou took a photograph of
Knutson napping in his chair, a physical ...