Sullivan Files Another Dismissal Motion in Charney Litigation

Sullivan & Cromwell has filed a new Motion to Dismiss in the case of Charney v. Sullivan & Cromwell, in which gay former S&C associate Aaron Brett Charney alleges that he was subjected to sexual orientation discrimination and retaliation by the law firm. The new motion, filed on June 13, does not seek dismissal of those basic charges that were reiterated from the original complaint. Instead, it is aimed at two additional claims that Charney sought to add to the case when his attorneys filed an amended complaint on May 21. The amended complaint followed on New York Supreme Court Justice Bernard Fried’s April 30 ruling granting S&C’s motion to dismiss, but without prejudice and with leave to file an amended complaint.

In the amended complaint, Charney added a tort claim for intentional infliction of emotional distress, and a conspiracy claim, based on the allegation that attorneys for S&C and attorney Edward Gallion, then representing S&C associate Gera Grinberg (whose close working relationship with Charney had allegedly led some S&C partners to suspect incorrectly a romantic relationship between the two men), had conspired to create false evidence to counter Charney’s account of what happened at an unsuccessful settlement conference held on January 31 and to destroy the handwritten notes allegedly taken by Grinberg that Charney claims would substantiate his version of what transpired. (Sorry - re-read that sentence slowly and it should all make sense. I hate convoluted sentences as much as anybody....)

In a memorandum in support of its new motion, S&C contended that both of these new claims should be "dismissed as a matter of law," arguing that New York law does not recognize an independent tort of "conspiracy" in civil litigation, and that the emotional distress claim merely duplicated the existing damages claimed under the Human Rights Law. S&C also asked the court to strike from the amended complaint all the allegations related to the conspiracy claim, which it characterized as "irrelevant, scandalous and prejudicial."

Before making its argument, however, S&C took a swipe at Charney’s principal claims, stating that they are "without any basis in fact and law," and insisting that his lawsuit "is nothing more than an attempt to extort millions of dollars by making inflammatory and false accusations about a law firm that has long championed increased diversity in the legal profession."

In a somewhat gratuitous lead-in to the main arguments in its memorandum, S&C asserted that Charney’s main claims rested on a "flimsy foundation" of a handful of incidents, and characterized as "half-hearted" Charney’s claim that he was terminated "as the result of discrimination." Rather, asserted S&C, Charney was terminated the day after the January 31 settlement meeting because he admitted "leaking confidential S&C client information to the press," an admission S&C claims that he subsequently made under oath during a deposition.

Much of the argument and by-play at this stage of the litigation seems to stem from that January 31 meeting, at which Charney claims he was threatened by S&C partner Vince DiBlasi and ordered to destroy the hard-drive on his computer as an alternative to surrendering it to S&C. S&C purportedly demanded the computer in order to prevent Charney from leaking further documents to the press.

The day after that meeting, S&C discharged and sued Charney, and obtained an immediate court hearing for its demand that the court restrain Charney from disclosing any confidential S&C documents. Exactly what Charney was ordered to do and agreed to do at that hearing is a matter of some contention between the parties. After the hearing, Charney, who had been representing himself in the lawsuit up to that point, hired attorneys to represent him, and, within the next few days, and according to all concerned without consulting those attorneys, he destroyed the hard drive on his computer.

Since then, S&C has seized on the destruction of the computer hard drive as a reason for the court to dismiss Charney’s lawsuit, arguing that it was destruction of evidence relevant both to Charney’s claims against S&C and to S&C’s claims against Charney in its countersuit. Destruction of relevant evidence by an attorney is serious business, and Charney has sought to argue that he thought he was doing what S&C wanted him to do when he destroyed the computer drive, referring back to the January 31 meeting.

A puzzling footnote in the S&C memo referred to this as the "second computer hard drive" that Charney had destroyed, claiming, "Charney also has admitted that he failed to preserve the evidence contained on an earlier computer he discarded in late 2006, while he was planning this case against S&C, another fact undermining his version of the events leading to the deliberate destruction of his second hard drive in early 2007." This apparently refers to something Charney testified about in a deposition that has not been made public, but the footnote contains no transcript reference and the comment’s relevance is obscure.

S&C indicated in the memo that it would file a motion to dismiss the discrimination and retaliation claims at an "appropriate time," but the current motion was aimed at getting rid of the intentional infliction of emotional distress and conspiracy claims.

In support of its arguments, S&C cited a long list of New York cases to the effect that allegations of a conspiracy to violate a civil statute, such as the Human Rights Law, cannot constitute a separate and distinct claim under New York law. One could show a conspiracy in support of one’s charge that the defendant violated the Human Rights Law, S&C argued, but the conspiracy itself would not constitute a separate claim.

In addition, S&C ridiculed Charney’s conspiracy theory, pointing out that it was not based on any first-hand knowledge of Charney. "Even assuming arguendo that these ‘information and belief’ allegations could be given any weight, creating a false affidavit or destroying evidence, while perhaps constituting the crimes of suborning perjury or obstructing justice, are not civil causes of action in New York."

In asking the court to strike from Charney’s complaint the factual allegations underlying the conspiracy claim, S&C questioned their relevance to his lawsuit. "Charney’s dots fail to connect," argued S&C. "He was terminated on February 1. Thus, the purported acts between S&C and Gallion could not have been to further S&C’s alleged ‘discrimination and retaliation’ against Charney while an employee of the Firm. In other words, according to Charney, the purpose of the so-called S&C-Gallion conspiracy was to cover up S&C’s alleged statements at the January 31 meeting that supposedly would excuse his subsequent destruction of the hard drive. Although the true facts relating to this meeting might have some relevance to a future motion by S&C to determine whether Charney destroyed evidence improperly, they have nothing to do with his claim of discrimination and retaliation. Moreover, Charney does not allege, as he simply cannot, how a supposed affidavit never submitted to the Court or used for any purpose could have possibly injured him. Charney cannot transform his purported defense to an eventual spoliation motion into an actionable claim."

S&C also claimed that Charney’s allegations were inconsistent. On the one hand, he claimed that Gallion told him that Gallion himself had been the victim of anti-gay discrimination while previously employed at S&C, and on the other hand he claimed that Gallion conspired with S&C against Charney, who was suing the firm for anti-gay discrimination. S&C suggested the court should discount such inconsistent allegations, and that these "scandalous and prejudicial" allegations should be dismissed. Furthermore, S&C argued in a footnote, the only support Charney cited for some of these allegations was testimony by Grinberg at his deposition, which S&C argued that the court had sought to keep confidential to the parties. S&C also argued that the questions Grinberg had been asked to elicit this information "obviously exceeded the scope" of the court’s discovery order.

As to the emotional distress claim, S&C observed that the Human Rights Law already authorizes damages for emotional distress caused by conduct that violates the law, and that Charney’s discrimination and retaliation claims already sought damages for such emotional distress, rendering the addition count superfluous. S&C again cited several New York court decisions dismissing separate emotional distress claims when damages for emotional distress were recoverable under the main theories of the case.

If the court grants the motion to dismiss the emotional distress claim, as seems likely to this observer, Charney will really have lost very little. While New York courts theoretically recognize a possible tort action for "intentional infliction of emotional distress," they rarely if ever find that the facts of a particular case are so outrageous as to warrant awarding damages on such a theory. The requirements are to show that the defendant deliberately engaged in a course of outrageous action, knowing and intending that it cause severe emotional distress to the plaintiff, and that the defendant’s conduct have been so outrageous as to be beyond the bounds of civilized society.  If anything other than a bare desire to inflict emotional injury could be motivating the defendant, a court would be unlikely to find that tort proven, and here S&C's alleged actions might be explicable as hardball, albeit possibly unethical, litigation defense strategies. 

Loss of the conspiracy count would be more serious, perhaps, as S&C has sought to make the destruction of the hard drive a centerpiece of its defense against Charney, and the conspiracy charge underlies Charney’s claim to vindication on this point. In addition, the conspiracy allegations, if true, could help persuade a factfinder – perhaps a jury – that S&C is not quite the virtuous white knight it seeks to paint itself. However, as S&C’s memo indicates, loss of the conspiracy claim would not necessarily exclude the underlying evidence from the case – or, more to the point, from Charney’s defense of S&C’s lawsuit against him, which is directed at his own conduct since filing his original complaint on January 16 and releasing certain documents to the Wall Street Journal.

As the two cases have been combined before Justice Fried, a trial of both before the same fact-finder could result in a blurring of any distinction between facts relevant to one case and facts relevant to the other. Perhaps we will see a motion by S&C for a bifurcated proceeding sometime down the line.