EMPLOYMENT DISCRIMINATION: SEVERANCE RELEASE FRAUDULENTLY INDUCED

Evans v. Bloomberg LP, NYLJ August 13, 2020, Date filed: 2020-07-31, Court: Supreme Court, New York, Judge: Justice Lucy Billings, Case Number: 160707/2019 (emphasis supplied)

"I. INTRODUCTION

 In this action for discrimination based on age, disability, and gender and for retaliation, defendants move to dismiss the amended complaint based on documentary evidence: a release that plaintiff signed November 28, 2016, barring her discrimination and retaliation claims. C.P.L.R. §3211(a)(1) and (5). Defendants also seek a declaratory judgment that the release is valid and enforceable. C.P.L.R. §3001. The court grants defendants’ motion to dismiss plaintiff’s claims that the release is void and declares that it is not void due to her incapacity, duress, the release’s ambiguity, its lack of consideration, and its violation of statutory requirements, without opposition. C.P.L.R. §§3001, 3211(a)(1) and (5); N.Y. Gen. Oblig. Law §15303; Allen v. Riese Org., Inc., 106 A.D.3d 514, 515 (1st Dep’t 2013); Serbin v. Rodman Principal Invs., LLC, 87 A.D.3d 870, 870 (1st Dep’t 2011). The court denies defendants’ motion to dismiss plaintiff’s claim that the release is void because it was fraudulently induced, however, as explained below. If it is void, then of course it does not bar her discrimination and retaliation claims. GoSmile, Inc. v. Levine, 81 A.D.3d 77, 82 (1st Dep’t 2010); Federal Ins. Co. v. Kozlowski, 18 A.D.3d 33, 39 (1st Dep’t 2005). Plaintiff timely filed the amended complaint before defendants served any answer to her original complaint. C.P.L.R. §3025(a). Although plaintiff’s amended complaint repeatedly refers to “other similarly situated members of her protected class,” Aff. of Elise M. Bloom Ex. 1 (Am. V. Compl.), plaintiff has clarified that her amended complaint does not allege a class action. Therefore defendants’ motion to dismiss plaintiff’s class action allegations is academic.

II. THE ALLEGED FRAUDULENT INDUCEMENT

To void the release due to its fraudulent inducement, plaintiff must show that defendants misrepresented or concealed a material fact, knowing the misstatement or omission was false, to induce plaintiff to rely on it, and that plaintiff justifiably relied on the misrepresentation or omission and incurred damages from that reliance. Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V., 17 N.Y.3d 269, 276 (2011); Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 178 (2011); Laduzinski v. Alvarez & Marsal Taxand LLC, 132 A.D.3d 164, 167 (1st Dep’t 2015); Perrotti v. Becker, Glynn, Melamed & Muffy LLP, 82 A.D.3d 495, 498 (1st Dep’t 2011). Plaintiff alleges that she signed the agreement releasing her claims against defendants, her former employer and former supervisor, based on their misrepresentation that her position was eliminated as part of a reduction in force. An attachment to the release identifies six other employees in her media department whose employment was terminated simultaneously with hers as part of a reduction in force. Bloom Aff. Ex. 1 (Am. V. Compl.)  Defendants insist that this document refutes plaintiff’s claim of fraudulent inducement, but the attachment only supports her claim that defendants gave her a reason for her termination, a reduction in force, that was false. Plaintiff claims that in 2019 she learned that she and those six other employees, all over age 40, were replaced by younger employees. Id.

Defendants’ further documentary evidence, plaintiff’s email November 21, 2016, to a colleague at Bloomberg L.P., acknowledging that plaintiff’s “division in the media group was dismantled,” also supports her reliance on defendants’ representation in her agreeing to the release. Aff. of Darron Smith Ex. A.

Defendants then inconsistently suggest that plaintiff’s reliance on their own representations of a reduction in force was unjustified. Pointing to the amended complaint’s allegations that plaintiff was a sophisticated, experienced employee in the media industry who produced significant revenue and managed business relationships critical to her employer’s success, defendants criticize her for not giving more studied consideration to the terms of her severance and verifying defendants’ representations. Again, viewing the evidence most favorably to plaintiff, this need for verification only supports her claim that defendants’ offered reason for her termination was questionable. JF Capital Advisors, LLC v. Lightstone Group, LLC, 25 N.Y.3d 759, 764 (2015); Miglino v. Bally Total Fitness of Greater N.Y., Inc., 20 N.Y.3d 342, 351 (2013); ABN AMRO Bank, N.V. v. MBIA Inc., 17 N.Y.3d 208, 227 (2011); Drug Policy Alliance v. New York City Tax Comm’n, 131 A.D.3d 815, 816 (1st Dep’t 2015).

Plaintiff’s allegations regarding defendants’ conduct, in hindsight, reveal cause to question defendants’ representations. On November 20, 2016, after plaintiff had been hospitalized for a nervous breakdown, Bloomberg L.P.’s Human Resources representative Alyson Zeitz telephoned plaintiff and inquired whether she would need leave for a mental disability. When plaintiff responded that she intended to return to work as soon as possible, Zeitz informed plaintiff that her division within her department was being eliminated. Bloom Aff. Ex. 1 (Am. V. Compl.)  If that fact were true, Zeitz had no reason to inquire whether plaintiff intended to take leave for a disability. In sum, plaintiff’s allegations that defendants falsely represented that her position was eliminated as part of a reduction in force, on which plaintiff relied in agreeing to the release, when in fact she was replaced by a younger employee, and her position and division were not eliminated, demonstrate fraudulent inducement that damaged her. American Media, Inc. v. Bainbridge & Knight Labs., LLC, 135 A.D.3d 477, 477-78 (1st Dep’t 2016); Laduzinski v. Alvarez & Marsal Taxand LLC, 132 A.D.3d at 168-69.
Plaintiff also alleges that defendants concealed their severance policies and that Zeitz misrepresented to plaintiff that payment of her accrued salary, bonus, and severance pay was contingent on her signing the release, when in fact the payment was due her regardless of her signing the release. Bloom Aff. Ex. 1 (Am. V. Compl.)

These allegations that defendants concealed their severance policies and falsely represented that she would receive the payments due her only if she signed the release, on which she also relied in agreeing to it, when in fact she was owed the payment under defendants’ policies without signing the release, likewise demonstrate fraudulent inducement that damaged her. Id.


While the release acknowledges that plaintiff has agreed to it knowingly and voluntarily, if fraudulent inducement voids the release, then this provision is void along with the release as a whole. Any knowing agreement by plaintiff is based on her knowledge upon entering the agreement. Johnson v. Lebanese Am. Univ., 84 A.D.3d 427, 430 (1st Dep’t 2011). Defendants offer no reason why plaintiff would have known that the information defendant gave her, on which her knowledge was based, was false. Of course that information regarding the reduction in force may have been entirely true, but the complaint alleges to the contrary, which at this stage the court must accept as true. JF Capital Advisors, LLC v. Lightstone Group, LLC, 25 N.Y.3d at 764; Miglino v. Bally Total Fitness of Greater N.Y., Inc., 20 N.Y.3d at 351; ABN AMRO Bank, N.V. v. MBIA Inc., 17 N.Y.3d at 227; Drug Policy Alliance v. New York City Tax Comm’n, 131 A.D.3d at 816."