Charney v Sullivan & Cromwell, Take 2

Yesterday an amended verified complaint was filed in Charney v. Sullivan & Cromwell, No. 100625/07, in New York Supreme Court, responsive to the order by Justice Bernard Fried to file a complaint that omitted unnecessary matter from the earlier complaint.  But this is a real round two, for Charney goes beyond the first complaint to allege new matter and make new legal claims, in part based on what happened after the first complaint was filed.  In addition to allegations that surfaced during the motion practice that led to dismissal of the first complaint with leave to replead, there is some new matter in this complaint that is rather explosive.

That relates to the role of Edward Gallion, a former S&C associate who was retained to represent Gera Grinberg on S&C's tab.  Grinberg is the associate who had worked closely with Aaron Charney in S&C's mergers and acquisition department, the closeness of their working relationship having been, apparently, the stimulus for rumors about Charney that seem to have brought on the unpleasantness leading to this lawsuit.  It was apparent from the first complaint that Grinberg would be dragged into the lawsuit as a major witness, and so he needed counsel.  But the result of retaining Gallion was an odd situation, at least from the perspective created by this new complaint. 

Gallion's involvement is described in paragraphs 142-204 of the new complaint.  Some of these allegations are based on Charney's first-hand observations, but some is alleged "on information and belief" and it will be interesting to see how much of it stands up during discovery and, possibly trial.  In any event, according to Charney's allegations, he and Grinberg visited with Gallion at Gallion's apartment prior to the now-infamous January 31, 2007, meeting at the Penn Club; they were later joined by Gallion's law partner, Steven Spielvogel. Both Gallion and Spielvogel are former S&C associates.  According to paragraph 148, "During the meeting at the Gallion Apartment, prior to Spielvogel's arrival, Gallion told Charney and Grinberg that he was homosexual and that he had not made partner at S&C because of discrimination at S&C"  Paragraph 149: "Gallion told Charney and Grinberg that John L. Warden, an S&C partner and member of the Executive Committee, had nicknamed Gallion "the faggot" while Gallion was an associate at S&C."  Paragraph 150: "Prior to Spielvogel's arrival, Gallion also told Charney and Grinberg that S&C was about to commence a 'scorched earth' campaign against Charney for having filed the verified complaint."

The complaint goes on to describe, in very terse language, the Penn Club meeting, at which S&C partner Vince DiBlasi is alleged to have "threatened and berated Charney" (Para. 155), demanded the surrender of his computer and then agreed instead to the destruction of the hard drive, as suggested by S&C partner David Braff.  Then, paragraph 162, "During the Penn Club Meeting, DiBlasi stated that S&C represented the Nazis, that a book was written about S&C representing the Nazis, and that neither of these facts had adversely affected S&C."   Paragraph 163: "DiBlasi told Charney that nobody would care about Charney or his gay discrimination claims."  Paragraph 164: "DiBlasi also told Charney that S&C was 'invincible' and would 'crush' Charney."  The complaint then goes on to relate that Grinberg took the only notes during the meeting, turned them over to his attorney Gallion "for 'safe keeping,'" and that Gallion put them in his pocket, this happening shortly after DiBlasi and Braff had left the meeting.  According to the complaint, shortly after the meeting, DiBlasi telephone Gallion with a settlement offer for "both Charney and Grinberg."  (Since Grinberg was not suing S&C, one wonders what this was about; but then the complaint more than once alleges that S&C threatened Grinberg, a Canadian in this country on a work visa, with deportation as a result of the events of this case.)  According to Charney's allegations in paragraph 175, after speaking with DiBlasi on the phone, "Gallion told Charney that 'things are going to get very bad now' and that S&C would likely seek civil and criminal charges against Charney."

In subsequent paragraphs, Charney's complaint sets out the basis for allegations that came out during the motion practice about a "conspiracy "between Gallion and the S&C lawyers to construct a revisionist account of the Penn Club meeting, including constructing a false affidavit for Gallion and the destruction of Grinberg's notes.

The bottom line in terms of the complaint is an expansion from the original two causes of action, discrimination and retaliation in violation of the city Human Rights Ordinance (sexual orientation), to add two new causes of action: intentional infliction of emotional distress and conspiracy to violate the Human Rights Law.  Paragraph 216: "S&C, through its partners and employees, engaged in a persistent pattern of intentional, shocking, and outrageous conduct that was designed to humiliate and marginalize Charney for his sexual orientation and perceived relationship with Grinberg.  S&C also sought to undermine, excoriate and castigate Charney for filing an internal complaint about the discriminatory conduct that he had experienced, and to bully and intimidate him after he filed the Verified Complaint."  The conspiracy count alleges that "S&C entered into a conspiracy with Gallion for the purpose of unethically - and possibly illegally - undermining Charney's legal and common law claims and intimidating a crucial fact witness [Grinberg] with threats of deportation."  This count goes on to summarize the allegation about the conspiracy to create a "perjurious affidavit" concerning the Penn Club meeting.   In light of this count, one wonders why Gallion was not added to the complaint as a co-defendant, and why DiBlasi is not also added as an individual defendant, both on this and the third count, but the complaint named only S&C as a defendant.

Of course, now that Charney is represented (by counsel from three different firms), there is added a demand for attorneys fees, which can be awarded to a prevailing plaintiff in a Human Rights action under the City Administrative Code.

Shortly after the complaint was posted to the court's efile website, I received an email from Sard Verbinnen & Co., presumably a PR firm, announcing S&C's "response" -

"This is just a rehash of his original, now dismissed, complaint with the addition of some unsubstantiated allegations.  We will continue to defend the Firm vigorously against these same baseless claims.  Sullivan & Cromwell remains committed to fostering an inclusive workplace environment for all of its lawyers and staff and is proud of our track record of promoting diversity."

So, battle is once again joined in Charney v. S&C, this time with the stakes heightened by new allegations and legal claims.   As one's attention is very much drawn to the new claims, it is worth noting that the new complaint does an effective job of restating the first two counts, stripping out the matter that Justice Fried suggested was unnecessary from the first complaint and making much clearer the alleged chronology of events that led to Charney's internal complaint and the subsequent unfolding of the alleged retaliation.   

The discrimination claim seems a bit stronger in this retelling, although its biggest weakness is the heavy reliance on what Charney was purportedly told by another S&C associate, Daniel L. Serota, about what various partners were saying about him and Grinberg.  Clearly, the discrimination claim will turn very heavily on what Serota might say in a deposition, and if his testimony doesn't back up Charney's allegations, that part of the case may well collapse, since it seems likely that the various S&C partners will deny much of this under questioning.  But it's hard to say, ultimately, because we are really in new territory on the discrimination claim, in the sense that the relatively recently amended city Human Rights Law attempts to render largely irrelevant federal and state law hostile environment precedents in construing the city ordinance, as well as retaliation law.  So in some sense Justice Fried will be writing on a clean slate when called upon to rule on a post-discovery motion for summary judgment, in the absence of controlling appellate precedent on how the amendments may have changed the now-familiar legal tests under Title VII in particular.   I have been speculating on this blog (and elsewhere) that Charney's factual allegations on the discrimination would present a weak case under federal sexual harassment law, but who knows how they will fare under the relaxed standard intended by the City Council?

Much will turn on the testimony of Serota, at this point somebody who has not surfaced in the motion-practice wrangling of February through April, and of course on the testimony of Grinberg.  Also crucial to Charney's case would be the testimony of S&C partner Stephen M. Kotran, who is a major "source" for Charney's allegations concerning the retaliation claim.  Will Kotran confirm under oath the statements that Charney attributes to him?  If he doesn't, the retaliation claim doesn't fare very well, although there is the documentary evidence of the disparate performance reviews that play so crucial a role in this part of the case.

This case has been endlessly fascinating.  Justice Fried's late April ruling on the dismissal motion could well provide fodder for law school professional responsibility classes, and students of litigation could have a field day figuring out whether S&C's defense tactics have been brilliant or -- as charged in this amended complaint -- verging on the unethical and illegal.  Only time will tell! 

Comments

[Mark Wojcik]

Thank you for your updates on this case.

[Art Leonard]

You're welcome! And I should add that Charney also filed his answer in S&C v. Charney on Monday. No surprises there, denials and demurrals and reminders that the court found no merit to part of the action in partially granting the motion to dismiss.