Plaintiff Sufficiently Alleged Retaliation Based on Defendants’ Opposing Unemployment Benefits and “Frivolous” Counterclaims in Sexual Harassment Case

The Southern District of New York recently reiterated, in Wermann v. Excel Dentistry PC, that “a plaintiff may bring a retaliation claim stemming from an employer’s opposition to her unemployment benefits application” and that “filing retaliatory counterclaims may violate” the New York State Human Rights Law (NYSHRL) and New York City Human Rights Law (NYCHRL).

The court denied defendants’ motion to dismiss plaintiff’s amended complaint under Federal Rule of Civil Procedure (FRCP) 12(b)(6) and to strike portions of it under FRCP 12(f).

Here are the relevant facts, taken from plaintiff’s amended complaint:

[Defendant George] Medeiros owns Excel Dentistry, a dental practice. Excel allegedly employed Dr. Medeiros, Ms. Wermann, Loryvette Sotilaire, Ivan Vitiello, Maria Gonzalez, as well as additional replacement staff members at various times.” Plaintiff served as Excel’s office manager from February 2010 to August 18, 2013, and she managed accounts payable and insurance payments.

Plaintiff claims that Medeiros repeatedly made sexually explicit, graphic, derogatory, and profane comments. Medeiros also allegedly groped Plaintiff’s breasts and buttocks. Medeiros once punched Plaintiff’s arm and once threatened her not to “ever try to take me down” or he would kill her.

On August 12, 2013, Plaintiff requested one week off work; Medeiros agreed. Plaintiff’s husband subsequently notified Medeiros that she had been hospitalized due to a medical condition, was receiving treatment from a psychiatrist, and taking medication to treat her condition. Medeiros believed her prescribed medication was for “crazy” people. During her one week leave, Defendants terminated her via a text message sent on August 18, 2013, allegedly for her poor job performance.

On September 4, 2013, Plaintiff’s counsel sent Defendants a letter summarizing her sexual harassment and discrimination claims. Defendants then challenged her unemployment benefits, allegedly in retaliation for her anticipated lawsuit.

Plaintiff sued, alleging that defendants (1) discriminated against her on the basis of gender and disability in violation of the NYSHRL and NYCHRL, (2) retaliated against her in violation of the NYSHRL, NYCHRL, and New York Labor Law § 215, and (3) unlawfully deducted her wages in violation of New York Labor Law § 193.

Defendants filed an answer and counterclaims, alleging that plaintiff “secured her employment through fraud, submitted fraudulent insurance claims and converted those payments, misappropriated Excel’s funds, and intentionally inflicted emotional distress on Medeiros.”

First, the court held that plaintiff sufficiently pleaded that defendant Excel was an “employer” subject to the NYSHRL and NYCHRL. Defendants argued that Excel did not meet the four-employee threshold to qualify as an “employer”, pointing to the fact that “Medeiros, as Excel’s sole principal and owner, is not an employee and therefore cannot be used to satisfy the four-employee requirement.” The court disagreed, noting that even if Medeiros was not an “employee”, plaintiff identified four employees, in addition to him, in her complaint.

Second, the court held that plaintiff sufficiently alleged retaliation under both statutes. It rejected defendants’ argument that plaintiff’s claims “must be dismissed because opposing unemployment benefits cannot constitute a retaliatory act and because their Counterclaims were not retaliatory in nature.”

As to her unemployment benefits, the court cited several cases for the proposition that “challenging unemployment benefits in retaliation for filing discrimination claims may violate the NYSHRL and NYCHRL.” While it was unclear whether the attorney’s letter was a “protected activity”, that issue, as well as whether defendants’ opposition to her unemployment benefits amounted to retaliation, was “fact specific” and therefore could not be resolved on a motion to dismiss. Thus, “under both the NYSHRL and NYCHRL, Plaintiff sufficiently pleaded that Defendants opposed her unemployment benefits application in retaliation to her threat to file a gender and disability discrimination lawsuit.”

As to the allegedly retaliatory counterclaims, the court held:

Plaintiff also sufficiently pleaded that Defendants filed their counterclaims in retaliation for the instant suit. Although Defendants are correct that [r]easonable defensive measures do not violate the anti-retaliation provision of Title VII, filing retaliatory counterclaims may violate the NYSHRL and NYCHRL. …

Defendants assert that their counterclaims are meritorious and were promptly filed and thereby could not have been retaliatory; these are factual issues that are inappropriate for a court to resolve on a motion to dismiss. Taking the allegations in Plaintiff’s Amended Complaint as true, she has plausibly alleged that Defendants filed frivolous counterclaims-namely that she submitted false insurance claims, misappropriated money, attained her job through fraud, and intentionally inflicted Medeiros to emotional distress-that could harm her reputation and affect her prospective employment in retaliation for filing the instant suit.

Third, the court held that plaintiff sufficiently pleaded that she suffered from a “disability” under the NYSHRL and NYCHRL.

The NYSHRL defines “disability” as, inter alia, “a physical, mental or medical impairment resulting from anatomical, physiological, genetic or neurological conditions which … or is demonstrable by medically accepted clinical or laboratory diagnostic techniques or … a condition regarded by others as such an impairment”, and the NYCHRL defines “disability” as, inter alia, “[a] mental or psychological impairment.”

In rejecting defendants’ challenge, the court reasoned:

Defendants only seek to dismiss Plaintiff’s disability discrimination claims on grounds that she failed to specifically allege she had a disability. Their argument is premised on her conclusory pleading that she had a “medical condition [that] constituted an impairment of a system of the body resulting from anatomical, physiological, genetic, or neurological condition which prevents the exercise of a normal bodily function.” However, Plaintiff also offers specific factual allegations to support her disability claim. Although a close call, accepting as true Plaintiff’s factual allegations that Medeiros knew that she requested one week medical leave because she was hospitalized, seeing a psychiatrist, and receiving medication that “crazy” people took, it is reasonable to infer that she was disabled as defined by the NYSHRL and NYCHRL.

Fourth, the court dismissed defendants’ motion to strike under Federal Rule of Civil Procedure 12(f).

That rule authorizes a court to “strike from a pleading … any redundant, immaterial, impertinent, or scandalous matter.” Courts hold that “[a] scandalous allegation is one that reflects unnecessarily on the defendant’s moral character, or uses repulsive language that detracts from the dignity of the court” and that “[o]n a motion to strike … [i]t is not enough that the matter offends the sensibilities of the objecting party if the challenged allegations describe acts or events that are relevant to the action.”

Defendants moved to strike portions of plaintiff’s complaint, claiming Medeiros’s alleged remarks are offensive, vulgar, irrelevant, and “solely designed to publicly and gratuitously humiliate Defendants.”

The court denied defendants’ motion, reasoning that “[a]lthough the remarks are profane and sexually explicit, they are relevant to Plaintiff’s gender discrimination claims because Medeiros allegedly directed those comments to Plaintiff; his remarks are thereby not inherently prejudicial or scandalous and do not meet the high threshold for a Rule 12(f) motion.” Therefore, since the targeted portions of plaintiff’s complaint “may be admissible, may have a bearing on the issues of this case, and do not unfairly prejudice Defendants, they shall not be stricken.”

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