| Hudson v Merrill Lynch & Co., Inc. |
| 2016 NY Slip Op 02901 [138 AD3d 511] |
| April 14, 2016 |
| Appellate Division, First Department |
[*1](April 14, 2016)
| Sara Hunter Hudson et al., Appellants, et al.,Plaintiff, v Merrill Lynch & Co., Inc., et al.,Respondents. |
Vladeck, Raskin & Clark, P.C., New York (Anne L. Clark of counsel), forappellants.
Bressler, Amery & Ross, P.C., Birmingham, AL (Rima F. Hartman of the bar ofthe State of Alabama and the State of Washington, admitted pro hac vice, of counsel), forrespondents.
Order, Supreme Court, New York County (Cynthia S. Kern, J.), entered April 23,2014, which granted defendants' motion for summary judgment dismissing the complaintasserting gender discrimination under the New York City Human Rights Law,unanimously affirmed, without costs.
In 2008 and early 2009, plaintiffs Sara Hunter Hudson and Julia Kuo were enrolledin a financial advisor training program at the Fifth Avenue branch of defendant MerrillLynch, Pierce, Fenner & Smith, Inc. The training program consisted of three phasesof development. The first was the Trainee Period, which lasted up to 17 weeks. Duringthis phase, the trainees were required to pass licensing exams and an initialdevelopmental assessment. Upon completion of the Trainee Period, the trainees receiveda production number, which allowed them to bring in business, and entered the nextphase, known as Stage I.
In Stage I, the trainees were required to complete a financial planning course andpass a second developmental assessment. After three months in Stage I, successfultrainees moved on to Stage II, the core production phase, where they had to completefurther course work and pass additional developmental assessments. In both Stages I andII, the trainees were expected to satisfy various objective performance hurdles measuredby the business the trainees brought in. After 36 months in Stage II, successful traineeswere deemed to have completed the training program.
In late 2008, the U.S. financial sector suffered a severe collapse. In mid-January2009, Merrill Lynch senior management notified its branch offices that there would be areduction in force in the trainee program, and directed the Fifth Avenue branch to lay offhalf of its approximately 29 trainees. Merrill Lynch management provided the FifthAvenue branch with two lists. The first was denominated the "termination list" with "noexceptions." It was a computer-generated list of Stage II trainees (and trainees in asimilar training program) having at least three performance months who were off-targetas of December 2008, and who were also off-target for more than 50% of that year. Thesecond list consisted of all trainees in the Trainee Period and Stage I, and recommendedthat those not meeting performance targets be "strongly considered for termination."Hudson and Kuo were not on either list.
The Fifth Avenue branch was notified of the reduction in force on Friday, January16, 2009, and was required to submit its proposed termination list by Tuesday, January20. Working over the Martin Luther King Day weekend, Joel Meshel and AnnaRoccanova, the principal Merrill Lynch decision makers, prepared the termination list.Meshel and Roccanova used the following methodology in making their decisions. Theystarted with the first list, which contained seven men and two women. After consultationwith Traci Kamil, Merrill Lynch's [*2]regional humanresources director, and Sabina McCarthy, the regional managing director, Meshel andRoccanova removed three men from that list due to extenuating circumstances.[FN1] The four remainingtrainees on the list were chosen for termination: two men and two women, plaintiffCatherine Wharton, and Jennifer Vuona.
Branch management was given discretion in selecting the other trainees who wouldbe laid off. In deciding whom next to include for termination, Meshel and Roccanovaturned to the other Stage II trainees. In order to compare trainees with similar experience,Meshel and Roccanova divided them into two groups based on their time in the program.The first group consisted of five trainees, four men and Kuo, who had six or moremonths length of service in Stage II. Kuo, who had the worst record in the group basedupon the objective performance standards, was chosen for termination. The second groupof Stage II trainees consisted of two men, Hudson, and another woman, each with one tothree months length of service in Stage II. From this group, Hudson, who objectively wasthe weakest performer, was laid off.
The remaining trainees who were laid off came from the second list provided tobranch management, which included the 12 trainees in the Trainee Period and Stage I. Ofthis group, seven were chosen for termination, four men and three women. Two of thesetrainees were specifically identified on the list as having not met performance targets.Because of limited performance data, the remaining five layoff decisions were based onwhich trainees, in Meshel's and Roccanova's estimation, would be most likely to succeed.At the end of the process, Meshel and Roccanova presented their layoffrecommendations to Linda Houston, the branch director. After reviewing themethodology, and the business reasons behind the recommendations, Houston approvedthe termination list, and those trainees were subsequently let go.
In September 2010, the three plaintiffs in this action (Hudson, Kuo, and Wharton),along with Vuona, filed a complaint against Merrill Lynch and related entities in the U.S.District Court for the Southern District of New York. In the federal complaint, theplaintiffs alleged, inter alia, that Merrill Lynch unlawfully terminated their employmenton the basis of gender, in violation of title VII of the Civil Rights Act of 1964 (42 USC§ 2000e et seq.), and New York State and New York City HumanRights Laws (Executive Law § 290 et seq.; Administrative Code ofCity of NY § 8-107 et seq.). Following extensive discovery, thedefendants in the federal action moved for summary judgment dismissing the complaint.In a decision dated January 24, 2013, the federal court granted the motion with respect tothe plaintiffs' federal and state law claims. The court declined to exercise supplementaljurisdiction over the plaintiffs' City Human Rights Law claims, and dismissed themwithout prejudice.
In July 2013, Hudson, Kuo, and Wharton commenced the instant action againstMerrill Lynch and the related entities asserting a single cause of action for genderdiscrimination in violation of the City Human Rights Law.[FN2] Defendants moved for summaryjudgment dismissing the complaint, and in a decision entered April 23, 2014, the motioncourt granted the motion. Plaintiffs Hudson and Kuo (hereinafter plaintiffs) appeal, andwe now affirm.[FN3]
Even though the federal court dismissed plaintiffs' federal and state genderdiscrimination claims, the viability of plaintiffs' City Human Rights Law claim must beindependently assessed under more liberal standards (Williams v New York City Hous. Auth., 61 AD3d 62, 66[1st Dept 2009], lv denied 13 NY3d 702 [2009] [the City Human Rights Law"explicitly requires an independent liberal construction analysis in all circumstances,even where state and federal civil rights laws have comparable language"]). A motion forsummary judgment dismissing a City Human Rights Law claim can be granted "only ifthe defendant demonstrates that it is entitled to [*3]summary judgment under both [the McDonnellDouglas burden-shifting framework (McDonnell Douglas Corp. v Green,411 US 792 [1973]) and the 'mixed-motive' framework]" (Melman v Montefiore Med.Ctr., 98 AD3d 107, 113 [1st Dept 2012]).
Under the McDonnell Douglas framework, a plaintiff asserting a claim ofemployment discrimination bears the initial burden of establishing a prima facie case, byshowing that she is a member of a protected class, she was qualified to hold the position,and that she suffered adverse employment action under circumstances giving rise to aninference of discrimination (id. at 113). If the plaintiff makes such a showing, theburden shifts to the employer to show a legitimate, nondiscriminatory reason for theemployment decision (id. at 113-114). If the employer succeeds in doing so, theburden then shifts back to the plaintiff to prove that the reason proffered by the employerwas merely a pretext for discrimination (id. at 114). Under the "mixed-motive"framework, "the question on summary judgment is whether there exist triable issues offact that discrimination was one of the motivating factors for the defendant's conduct"(Williams, 61 AD3d at 78 n 27). Thus, under this analysis, "the employer'sproduction of evidence of a legitimate reason for the challenged action shifts to theplaintiff the lesser burden of raising an issue as to whether the [adverse employment]action was motivated at least in part by . . . discrimination"(Melman, 98 AD3d at 127 [internal quotation marks omitted]).
Applying these principles, we find that the motion court properly dismissedplaintiffs' claims of gender discrimination under the City Human Rights Law. At theoutset, the federal court's decision collaterally estops plaintiffs from relitigating manydiscrete factual issues that were decided against them in the federal action. The doctrineof collateral estoppel precludes a party "from relitigating in a subsequent action an issueclearly raised and decided against that party in a prior action" (see Ji Sun Jennifer Kim vGoldberg, Weprin, Finkel, Goldstein, LLP, 120 AD3d 18, 23 [1st Dept 2014]).To successfully invoke this doctrine, "the issue in the second action must be identical toan issue which was raised, necessarily decided and material in the first action," and "theparty to be precluded must have had a full and fair opportunity to litigate the issue in theearlier action" (id.).
In Simmons-Grant v QuinnEmanuel Urquhart & Sullivan, LLP (116 AD3d 134 [1st Dept 2014]), thisCourt applied the doctrine of collateral estoppel in the context of a state court litigationof a City Human Rights Law claim following a federal court's dismissal of a similarclaim brought under federal law. In that case, we concluded that collateral estoppel canapply to "strictly factual question[s] not involving application of law to facts or theexpression of an ultimate legal conclusion" (id. at 140). As explained furtherherein, plaintiffs are precluded from relitigating many "strictly factual" issues underlyingtheir City Human Rights Law claims.
Viewing the evidence in the light most favorable to plaintiffs, no reasonable jurycould find defendants liable under either the McDonnell Douglas or"mixed-motive" frameworks. Defendants do not dispute, for purposes of this appeal, thatplaintiffs have made out a prima facie case of gender discrimination. Likewise, plaintiffsdo not challenge on appeal the motion court's finding that defendants articulatedlegitimate nondiscriminatory reasons for including them in the layoffs. There is noquestion that a reduction in force undertaken for economic reasons is anondiscriminatory basis for employment terminations (see Matter of Laverack &Haines v New York State Div. of Human Rights, 88 NY2d 734, 738-739 [1996];Sheikh v Habib Bank, 270 AD2d 107, 108 [1st Dept 2000]).
Further, defendants have proffered evidence showing that plaintiffs were included inthe layoffs due to their poor work performance (see Bennett v Health Mgt. Sys., Inc., 92 AD3d 29, 45-46[1st Dept 2011] [unsatisfactory work performance is a nondiscriminatory motivation]).Specifically, defendants point to evidence showing that, based on objective standards,Hudson's performance was the weakest compared to the other Stage II trainees with oneto three months length of service. Likewise, defendants put forth evidence showing that,based on similar objective standards, Kuo was the weakest performer in her group ofStage II trainees having six or more months length of service.
Even when analyzed under the more liberal City Human Rights Law, no reasonablejury could conclude that defendants' nondiscriminatory reasons for laying off plaintiffswere pretextual, or that gender discrimination played any role in those decisions.Plaintiffs argue that [*4]gender played a factor in thelayoff decisions because they performed better than similarly situated male trainees whowere not laid off. Collateral estoppel precludes this claim. The federal court specificallyfound that there was "no evidence of male comparators to Hudson being treateddifferently," that "[n]o other . . . trainees [within the same length of servicegroup] had nearly as poor performance data as Hudson," and that "[Hudson's]performance metrics were a far cry from those of any trainee who ultimately survived the[layoffs]." Likewise, with respect to Kuo, the federal court found that "[w]ithin her[length of service] group, Kuo had the weakest performance record, having met herhurdles" only 50% of the time.
Plaintiffs complain that the methodology used by Meshel and Roccanova to decidewho would be let go shows pretext because it did not precisely follow corporatemanagement's directives. Regardless of whether a different termination sequence mighthave made better business sense, there is no basis to conclude that gender played any rolein the methodology employed. Nor can gender bias be inferred by the decision not toterminate three male trainees who were on the "no exceptions" list. These trainees werespared, after consultation with Human Resources personnel, due to extenuatingcircumstances. One of the men, JBC, was on medical leave for serious emotionalproblems; another, Joshua Young, had recently landed a multimillion dollar 401(k)account which would take him above the performance hurdles once it was finalized; thethird man, Shahe Galstian, had a sponsorship agreement with a female financial advisorwhereby credit for business she brought in could be transferred to him to make up for hisshortfalls. Neither Hudson nor Kuo had circumstances even remotely comparable tothese, and no reasonable jury could conclude that these men were spared, and plaintiffswere terminated, on the basis of gender.
Plaintiffs contend that Meshel and Roccanova failed to credit Kuo with certainbusiness not reflected in her performance figures, but considered similar unreflectedbusiness for Joshua Young, who was not laid off. Any claim that Meshel and Roccanovahad actual knowledge of Kuo's alleged business is precluded by collateral estoppel. Thefederal court found that Kuo had not presented "any evidence that Meshel andRoccanova knew that the data reflected in the reports for Kuo, on which thedecision to terminate her was made, were inaccurate." In contrast, the federal court foundthat Roccanova had actual knowledge of Young's unreflected business, a finding thatalso is entitled to preclusive effect. The absence of actual knowledge renders baselessplaintiffs' claim that Meshel and Roccanova ignored Kuo's additional business.
There is insufficient support for plaintiffs' contention that the layoff decisions wereinfected by a purported office-wide culture of gender bias. Collateral estoppel precludesplaintiffs from arguing that male trainees were provided better mentoring and teamingopportunities than women. The federal court specifically found that plaintiffs hadadduced no evidence to support this claim. Even if some managers made inappropriategender-based comments, under the circumstances, they constitute at most stray remarkswhich, "even if made by a decision maker, do not, without more, constitute evidence ofdiscrimination" (Melman, 98 AD3d at 125; see Godbolt v Verizon N.Y. Inc., 115 AD3d 493, 494-495[1st Dept 2014], lv denied 24 NY3d 901 [2014]). Although the subject matter ofa book promoted at a firm event could be viewed as inappropriate, the event took placeeight months prior to the layoffs, negating any causal nexus between the two (seeid.).
Finally, plaintiffs' reliance on statistics as evidence of pretext or bias is unavailing,because the sample sizes are "too small to support an inference of discrimination" (Armstrong vSensormatic/ADT, 100 AD3d 492, 493 [1st Dept 2012]). In any event, in theabsence of other evidence of gender discrimination, the statistics alone are insufficient todefeat summary judgment. We also note that roughly half of those terminated weremen.
We have considered plaintiffs' remaining contentions and find them unavailing.Concur—Tom, J.P., Sweeny, Richter and Manzanet-Daniels, JJ. [Prior CaseHistory: 2014 NY Slip Op 31048(U).]
Footnote 1:Although two other maletrainees were also removed from the list, plaintiffs concede that the circumstancessurrounding these men are not probative.
Footnote 2:Vuona is not a party tothis action.
Footnote 3:Wharton is not a party tothis appeal.