By Robert S. Whitman.
The decision of the Court of Appeals in Doe v. Bloomberg, L.P. is welcome news for individual executives who are frequently named as defendants in employment lawsuits under the New York City Human Rights Law despite having little or no connection to the facts of the plaintiff’s claims. It will put an end to the practice of including these individuals as a lever to generate adverse publicity, embarrassment, or heightened settlement value.
The court’s recounting of the case background leaves little doubt as to what was going on here. The plaintiff alleged that her direct supervisor at Bloomberg, L.P. “engaged in a continuous pattern of sexual harassment, including rape.” The supervisor was not named as a defendant; instead, the plaintiff pointed the finger at Michael Bloomberg, the company’s multi-billionaire founder and former New York City Mayor, on grounds that “he had fostered an environment that accepted and encouraged ‘sexist and sexually-charged behavior.’” Critically, the plaintiff “[did] not claim that Bloomberg had any ‘personal participation’ in the specific offending conduct.”
Needless to say, there was no doubt that Bloomberg the company had the resources to satisfy a judgment in the plaintiff’s favor, so there was no need to include its prominent namesake as a co-defendant to guard against a company bankruptcy or sudden dissolution. But the naming of Bloomberg the individual, with all of his fame, wealth, and prominence, likely garnered a level of press coverage and notoriety for the case that it otherwise would not have achieved.
Hence some of the headlines: “Bloomberg saleswoman sues over rape, rampant drug culture.” “Michael Bloomberg built a toxic, sexually charged nightmare.” “Mike Bloomberg Has Been Accused of Having a ‘Woman Problem.’”
This starkly illustrates the problem associated with including individual owners and employees in lawsuit captions, even though the statute permits it. Absent some specific connection to the unlawful acts being challenged, the individual’s presence serves no meaningful purpose.
More typically, the named executive in such cases is not the company’s namesake, or a billionaire, or a prominent former elected official. They are ordinary middle managers or senior executives who get named in the lawsuit not because they are alleged to have personally wronged the plaintiff in some way, but because their presence takes a personal toll on the individual, which can distort a case’s value and ratchet up settlement pressure. Sometimes they’re included only to avoid diversity jurisdiction and ensure that a case is litigated in state court, which many plaintiff’s lawyers prefer.
In the big picture, the practice might be seen as harmless—as long as the company indemnifies the individual through its policies or by-laws or by operation of law, he or she faces no true risk of financial ramifications from the case, and few people pay attention to news reports about garden-variety employment discrimination lawsuits anyway.
But most management-side employment lawyers will be familiar with the plight of individual defendants in such cases and have heard the complaints repeatedly: that a general Google search of their name displays the lawsuit and related media coverage on the first page of hits; or that they are applying for a mortgage and have to list the lawsuit in loan disclosure forms; or that their homeowner’s insurance policy requires notification to the carrier.
The court’s decision, not surprisingly, did not address these “real world” concerns, and instead took a textualist approach to deciding whether an owner is an “employer.” In a 6-1 ruling, the Court of Appeals sensibly held that “where a plaintiff’s employer is a business entity, the shareholders, agents, limited partners, and employees of that entity are not employers within the meaning of the City HRL. Rather, those individuals may incur liability only for their own discriminatory conduct, for aiding and abetting such conduct by others, or for retaliation against protected conduct.”
The dissenting judge was not so constrained. She invoked the familiar interpretive canons applicable to the City HRL: that it “shall be construed liberally for the accomplishment of the uniquely broad and remedial purposes thereof” and must be given a plaintiff-favoring interpretation whenever reasonably possible. None of that really answers the “employer” question, but provides a convenient backdrop for the dissenter’s true objective, which is explained here: “Maximizing the accountability of those at the top encourages preemptive action by captains of industry with the means to effectuate broad workplace change.”
Title VII and other federal anti-discrimination laws do not contemplate individual liability, whether for company owners as corporate alter egos or managerial employees as aiders and abettors. That has not robbed the statutes of their effectiveness in combatting discrimination. While the City law takes a more plaintiff-friendly approach, there is no reason to believe, as an empirical matter, that loosening restrictions on naming individual defendants would accomplish the laudable societal goal of eradicating discrimination more effectively than limiting case captions to the employers and individuals who genuinely are alleged to have acted unlawfully.
None of this is meant to express undue sympathy for Mr. Bloomberg. When one founds a company and gives it one’s own name, and then serves in high government office and aspires to higher office, such peccadilloes come with the territory. And, of course, he and his company were able to fund an extended challenge to his inclusion in the lawsuit, all the way to the State’s highest court. So perhaps he is not the ideal defendant to serve as the poster child for this particular strain of lawsuit-caption abuse. The same could be said for other eponymous companies whose wealthy founders have been brought low by allegations of egregious personal wrongdoing.
Sympathetic or not, Bloomberg was perfectly situated to spearhead a case that prompted a definitive ruling on this subject, since he has such a strong personal identification with the company he founded (and to which he returned after his Mayoralty). And the court decision he achieved through his efforts can be relied on in the future by company owners—including those in much lower tax brackets—who are named in employment lawsuits under the City law despite no personal connection to the events.
ABOUT THE AUTHOR: Robert S. Whitman is a partner in the New York office of Seyfarth Shaw LLP.
Posted on 2021-02-19.