Bentivegna v. People's United Bank et al

Filing 50

MEMORANDUM OF DECISION & ORDER granting 41 Motion to Dismiss; For the reasons set forth herein, the Court grants the Plaintiff's Rule 12(b)(1) motion in its entirety and dismisses the Defendants' counterclaims for lack of subject matter jurisdiction. So Ordered by Judge Arthur D. Spatt on 6/21/2016. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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JOANNE BENTIVEGNA,
Plaintiffs,
MEMORANDUM OF
DECISION & ORDER
14-cv-599 (ADS)(GRB)

-againstPEOPLE’S UNITED BANK, PEOPLE’S
UNITED INSURANCE AGENCY, INC.,
DAN CASEY, LOUISE SANDBERG, and
JOHN BARNES,
Defendants.
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APPEARANCES:

Leeds Brown Law P.C.
Attorneys for the Plaintiffs
One Old Country Road, Suite 347
Carle Place, NY 11514
By: Rick Ostrove, Esq.
Andrew George Costello, Esq., Of Counsel
Jackson Lewis, P.C.
Attorneys for the Defendants
58 South Service Road, Suite 250
Melville, NY 11747
By: Daniel Sergio Gomez-Sanchez, Esq.
Mark S. Mancher, Esq., Of Counsel
SPATT, District Judge.
This case arises from allegations by the Plaintiff Joanne Bentivegna (the “Plaintiff” or
“Bentivegna”) that her former employer, the Defendant People’s United Insurance Agency, Inc.
(“PUIA”), and the Defendants People’s United Bank, Dan Casey, Louise Sandberg, and John
Barnes (collectively, the “Defendants”), discriminated against her on the basis of her gender and
retaliated against her in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e
et seq. (“Title VII”); the New York State Human Rights Law, N.Y. Exec. Law § 290 et seq.
(“NYSHRL”); and the Equal Pay Act, 29 U.S.C. § 206(d) (the “Equal Pay Act”). In addition,
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she asserts a breach of contract claim; an unjust enrichment claim; and a claim under New York
Labor Law § 190 et seq. related to the Defendants’ alleged failure to pay her $90,000 in sales
commissions.
Presently before the Court is a motion by the Plaintiff pursuant to Federal Rule of Civil
Procedure (“Fed. R. Civ. P.” or “Rule”) 12(b)(1) to dismiss counterclaims filed by the
Defendants against the Plaintiff for breach of contract; conversion; unfair competition;
misappropriation of confidential and proprietary information; tortious interference with business
relations; and diversion of corporate opportunity and breach of a duty of loyalty.
For the reasons set forth below, the Plaintiff’s motion is granted and the counterclaims
are dismissed for lack of subject matter jurisdiction.
I. BACKGROUND
A. The Amended Complaint
The Plaintiff is a resident of Shoreham, New York. (Am. Compl. at ¶ 1.) From 1987 to
2004, she was employed by Seigerman-Mulvey Company, Inc. (“Seigerman-Mulvey”) first as a
customer service representative, then as a commissioned insurance salesperson, and finally as a
partner. (Id. at ¶¶ 11–12.)
In 2004, the Bank of Smithtown acquired Seigerman-Mulvin, at which point, the Plaintiff
began working as an operations manager for the Bank of Smithtown Insurance Agents & Brokers
(“BOSIAB”). (Id. at ¶ 14.) In 2007, the Plaintiff became the president of BOSIAB. (Id. at ¶
15.)
The Defendant People’s United Bank is a federally chartered stock savings bank with
headquarters in Bridgeport, Connecticut. (Id. at ¶ 7.)

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The Defendant PUIA is a wholly owned subsidiary of People’s United Bank. (Id. at ¶ 8.)
It is a Connecticut corporation that operates an insurance agency and has an office in Hauppauge,
New York. (Id.)
On November 30, 2010, People’s United Bank acquired BOSIAB, and BOSIAB merged
with PUIA. (Id. at ¶¶ 20–21.)
In December 2010, as part of the transition, the Plaintiff lost her title as President and her
fixed salary. (Id. at ¶ 31.) Instead, she assumed a role at PUIA as a commissioned sales
producer and agreed to an arrangement whereby she would receive a commission of 25% on all
new policies and policy renewals that she helped to procure. (Id. at ¶¶ 32–33.)
According to the amended complaint, in January 2011, the Plaintiff learned that PUIA
was paying male sales producers with the same book of business that she had at a commission
rate of 32%, seven percent higher than the 25% commission rate that PUIA agreed to pay her.
(Id. at ¶ 37.)
In March 2011, the Plaintiff began complaining to the Defendant Dan Casey (“Casey”),
the then-chief executive officer of PUIA, about this apparent pay disparity. (Id. at ¶ 38.) On
June 27, 2011, after the Plaintiff raised the issue several more times with Casey, he agreed to pay
her at a rate commensurate with her male colleagues beginning on August 1, 2011, but he
refused to make the pay increase retroactive. (Id. at ¶ 50.)
According to the amended complaint, Casey made a number of inappropriate comments
and suggestions to the Plaintiff and other female employees during sales meetings and company
events, including the following: (i) in a July 2011 meeting, he used the word “do” in a way that
suggested an illusion to sex, see id. at ¶ 51; (ii) in the summer of 2011, he threw ping pong balls
down the shirt of a female co-worker during a company picnic, see id. at ¶ 53; (iii) during a
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February 2012 lunch meeting, he told a hostess at a lunch meeting that he would “take two of
those,” in reference to her breasts, see id. at ¶ 56; (iv) during a June 2012 meeting, he told sales
producers to bring clients to bars to close deals but advised, “you can’t do that with women,” see
id. at ¶ 63; and (v) in a July 2012 meeting, he stated in front of thirty employees, “We are happy
that [the Plaintiff] is successful, despite that she’s a woman,” id. at ¶ 66.
In addition, in June 2012, the Plaintiff was at the Hartford office of PUIA and took down
a poster in the coffee room that depicted a woman in a low-cut tank top. (Id. at ¶ 60.) Based
“[u]pon information and belief,” the Plaintiff alleges that after she took the poster down,
unidentified employees replaced the poster with another poster of a woman “clad in thigh-high
fishnet stockings holding a pair of handcuffs.” (Id. at ¶ 61.)
The Plaintiff also alleges that she was offered less administrative support than other male
sales managers. (Id. at ¶¶ 42–44.) Further, on one occasion, Casey sent a list of sales leads to
male employees before sending it to female employees, and as a result, male employees obtained
more promising sales leads than their female counterparts. (Id. at ¶¶ 42–44, 72.)
On December 7, 2012, the Plaintiff filed a charge of discrimination with the New York
State Division of Human Rights (“NYSDHR”) and the U.S. Equal Employment Opportunity
Commission (“EEOC”) alleging sexual harassment and gender discrimination. (Id. at ¶ 79.)
Subsequently, the Defendants removed the Plaintiff from her position as a team leader for
a sales team in the Hartford office and assigned her to a smaller team in the Bridgeport office (Id.
at ¶ 81.) On June 6, 2013, the NYSDHR found probable cause to support the allegations in the
Plaintiff’s complaint. (Id. at ¶ 94.)
On July 31, 2013, after the parties had engaged in settlement negotiations, Brian Loveless
(“Loveless”), the chief financial officer of PUIA, and Deborah Gross (“Gross”), a human
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resources manager, held a meeting with the Plaintiff and informed her that they were placing her
on administrative leave immediately because she accessed company information on her private
email address. (Id. at ¶ 101.) As a result, the Plaintiff could no longer sell insurance or generate
new commissions. (Id.)
On August 19, 2013, Gross informed the Plaintiff that PUIA was terminating her
employment. (Id. at ¶¶ 103–04.)
According to the amended complaint, during the course of her employment, the
Defendants represented to the Plaintiff that even after she was terminated, she would continue to
receive commissions on accounts that she originated if those accounts were renewed. (Id. at ¶
120–21.) However, the Defendants have thus far refused to pay her $90,000 in commissions that
she claims that she is entitled to. (Id. at ¶ 125.)
B. The State Court Action
On September 4, 2013, prior to the Plaintiff commencing this action, the Defendant PUIA
filed a summons and complaint (the “State Court Complaint”) in New York State Supreme
Court, Suffolk County, seeking injunctive relief and monetary damages against the Plaintiff,
John K. Mulvey (“Mulvey”), and WLF Consulting, Inc. (“WLF”) (the “State Court Action”).
(See State Court Compl., Costello Aff., Ex. 1.) The State Court Complaint paints a picture of the
events leading up to the Plaintiff’s termination that is starkly different from the allegations
discussed above.
In particular, according to the State Court Complaint, prior to April 2004, Mulvey and the
Plaintiff were both principals at Seigerman-Mulvey. (Id. at ¶ 13.) In 2004, they entered into an
agreement to sell their shares in Seigerman-Mulvey to the Bank of Smithtown in exchange for

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cash pay-outs. (Id. at ¶ 14.) They also entered into separate employment agreements with Bank
of Smithtown. (Id. at ¶ 15.)
Under the terms of the purchase agreement and their employment agreements, Mulvey
and the Plaintiff allegedly agreed that during the period of their employment with the Bank of
Smithtown, they would not “engage as an agent, broker, independent contractor, employee or
consultant in a company that is not affiliated with [Bank of Smithtown].” (Id. at ¶ 16.) They
also agreed that for a period of three years from the dates of their terminations, they would not
“engage as an agent, broker, independent contractor, employee or consultant in a company . . .
which is in the business of selling insurance products and services and/or offering mutual fund
investment services in . . . Suffolk, Nassau, Queens, Kings, New York, or Staten Island
[Counties].” (Id. at ¶ 17.)
On January 1, 2011, People’s United Bank acquired the Bank of Smithtown and in doing
so, also allegedly acquired all the rights under any contracts or agreements with the Bank of
Smithtown or its predecessor entities, including the restrictive covenants described above. (Id. at
¶ 9.)
Following the acquisition, Mulvey and the Plaintiff became employees of the Defendant
PUIA. (See id. at ¶ 27.) As employees of PUIA, they became subject to a code of conduct under
which they agreed to, among other things, not disclose the confidential and proprietary
information of PUIA. (Id. at ¶ 23.)
Allegedly, on December 18, 2012, while still employed at PUIA, the Plaintiff formed
WLF without authorization from PUIA. (Id. at ¶ 48.) According to the State Court Complaint,
the Plaintiff and Mulvey then began to solicit clients, including existing and potential clients of
PUIA, and to provide consulting services on WLF’s behalf for those clients. (Id. at ¶¶ 46, 52–
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60.) It is also alleged that the Plaintiff also forwarded information regarding the insurance
policies of clients of PUIA to competitors of PUIA. (Id. at ¶¶ 66–78.)
Subsequently, after discovering that the Plaintiff and Mulvey had undertaken these
actions, PUIA terminated Mulvey and the Plaintiff for allegedly violating their restrictive
covenants and the employee code of conduct. (Id. at ¶ 93.)
After his termination, Mulvey allegedly removed his computer from his office at PUIA,
which contained the company’s confidential and proprietary information, and has not returned it.
(Id. at ¶¶ 94–99.)
Based on these allegations, PUIA asserted state law claims against the Plaintiff, Mulvey,
and WLF for (i) breach of contract; (ii) conversion; (iii) unfair competition; (iv)
misappropriation of confidential and proprietary information; (v) tortious interference with
business relations; and (vi) diversion of corporate opportunity and breach of a duty of loyalty.
(See id. at ¶¶ 118–153.) It also asserted a separate claim solely against Mulvey and WLF for
tortious interference with contract. (See id. at ¶¶ 154–63.)
In conjunction with filing the complaint, PUIA moved by order to show cause for a
temporary restraining order (“TRO”) and a preliminary injunction restraining the Plaintiff and
Mulvey from breaching the restrictive covenants in their employment and purchase agreements
by, among other things, soliciting business from PUIA’s existing clients and engaging in the
insurance business within the New York City area. (See Costello Aff., Ex. 2.)
Subsequently, Justice Thomas F. Whelan of the New York State Supreme Court, Suffolk
County, entered a TRO and set a briefing schedule on the motion for a preliminary injunction.
(See id.) No hearing was held. (See Cosello Aff., Ex. 3.)

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On September 20, 2013, Justice Whelan rendered a decision conditionally granting
PUIA’s motion for a preliminary injunction and enjoining the Plaintiff and Mulvey, as follows:
(i) from soliciting any clients of [PUIA] that were clients on August 19, 2013 in
any of the six downstate counties of Suffolk, Nassau, Queens, Kings, New York,
and Richmond; and (ii) from engaging in those six same downstate counties as
agent, broker, independent contractor, employee or consultant or from serving as
director, officer, member or partner to a company that sells insurance products of
the type sold by PUIA or that renders consulting services of the types engaged in
by [PUIA], namely claims management consulting, workers compensation
experience modification analysis consulting; insurance premium audit consulting;
and safety loss control consulting in connection with the reduction of workplace
injuries.
(Id. at p. 8.)
In addition, Justice Whelan required PUIA to post an undertaking pursuant to New York
Civil Practice Law and Rule (“CPLR”) § 6312 in the amount of $400,000. (Id.)
According to a declaration filed by Andrew Costello, Esq. (“Costello”), an attorney for
the Plaintiff, on May 13, 2014, the Plaintiff served interrogatories and a request for the
production of documents on PUIA, both of which had an original return date of June 12, 2014.
(See Costello Aff. at ¶ 11.) However, Costello states that despite being granted multiple
extensions of discovery deadlines by Justice Whelan, PUIA has thus far failed to produce any
documents or interrogatory responses. (Id. at ¶ 14–15.)
For its part, in a declaration filed by Mark Mancher, Esq., an attorney for PUIA, he states
that “[w]hile discovery disputes exist in the State case, it is PUIA’s position that it has fully
complied with [the] Plaintiff’s discovery requests.” (Mancher Decl. at ¶ 33.) PUIA also
represents that, “None of the parties have been deposed in either action and neither action is
substantially further in terms of completed discovery.” (Id. at ¶ 32.)

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On December 7, 2015, the Plaintiff filed a motion pursuant to CPLR § 3126 to strike the
PUIA’s complaint or in the alternative, to preclude PUIA from offering evidence as to the items
to which the Plaintiff allegedly sought in discovery. (See Costello Dec., Ex. 4.)
The parties do not state whether Justice Whelan has ruled on the Plaintiff’s motion.
C. As to the Instant Action
On January 28, 2014, the Plaintiff commenced this action in federal court against the
Defendants People’s United, PUIA, Case, and Sandberg, alleging claims against the Defendants
under Title VII, the NYSHRL, and the Equal Pay Act. As described earlier, the Plaintiff
principally alleges that the Defendants discriminated against her on the basis of her gender,
retaliated against her for filing a complaint with the EEOC and the NYSDHR for sexual
harassment and discrimination, and failed to pay her $90,000 in commissions that she was
allegedly entitled to.
On April 10, 2014, the Defendants filed an answer to the complaint generally denying the
substance of the Plaintiff’s allegations.
In response to a request by the parties, United State Magistrate Judge Gary R. Brown
stayed discovery so that the parties could participate in mediation.
On June 26, 2015, the parties filed a letter with the Court indicating that they had failed
to reach a settlement in mediation.
On July 6, 2015, the parties appeared before Judge Brown for a conference during which
Judge Brown approved an amended discovery schedule.
On October 1, 2015, the Plaintiff filed a motion for leave to amend the complaint to add
John Barnes (“Barnes”), the President and Chief Executive Officer of People’s United Bank, as a
named Defendant.
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On October 16, 2015, the Defendants filed a letter motion for leave to amend their
answer to assert counterclaims against the Plaintiff.
On October 20, 2015, the Court issued an order granting the Plaintiff’s motion to amend
the complaint as unopposed and directed the Plaintiff to file her amended complaint within
twenty days. The Court further denied the Defendants’ letter motion to amend the answer as
moot because it noted that the Defendants would have an opportunity to file an amended answer
in response to the amended complaint.
On November 3, 2015, the Plaintiff filed an amended complaint.
On December 1, 2015, the Defendants filed an amended answer and counterclaims. The
Defendants’ counterclaims against the Plaintiff are almost identical to the claims that PUIA
asserted against the Plaintiff in the State Court Complaint. Specifically, they assert the same six
common law claims against the Plaintiff for (i) breach of contract; (ii) conversion; (iii) unfair
competition; (iv) misappropriation of confidential and proprietary information; (v) tortious
interference with business relations; and (vi) diversion of corporate opportunity and breach of a
duty of loyalty. (See Am. Answer at ¶¶ 100–127.) These claims are also based on the same
allegations contained in the State Court Complaint — namely, that the Plaintiff misappropriated
PUIA’s confidential information; setup a competing entity known as WLF; and violated the
restrictive covenants in their stock purchase and employment agreements. (See id. at ¶¶ 2–3.)
In their answer, the Defendants state that they chose to assert the same claims against
Plaintiff as PUIA asserted against her in the State Court Action “in the interest of efficiency.”
(Id. at ¶ 7.)
Presently before the Court is a motion by the Plaintiff pursuant to Fed. R. Civ. P. 12(b)(1)
to dismiss the counterclaims for lack of subject matter jurisdiction. Specifically, the Plaintiff
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contends that (i) the Defendants are seeking an end-round 28 U.S.C. § 1441, the removal statute;
(ii) the Court should decline to exercise supplemental jurisdiction over the State law
counterclaims pursuant to 28 U.S.C. § 1367(c); and (iii) even if the Court finds that supplemental
jurisdiction is proper, it should abstain from exercising jurisdiction under the principles outlined
in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). (See the
Pl.’s Mem. of Law at 2–10.)
In opposition, the Defendants contend that (i) resort to the removal statute is not
necessary because they are not seeking to remove the entire State Court Action, only the claims
against the Plaintiff; (ii) the Court should exercise supplement jurisdiction over the Plaintiff’s
claim; and (iii) the Colorado River abstention doctrine is inapplicable in this case. (See the
Defs.’ Mem. of Law at 6–17.)
As set forth below, the Court finds compelling reasons to decline supplemental
jurisdiction over the Defendants’ counterclaims in light of the State Court Action. Therefore, it
need not address the Plaintiff’s remaining arguments.
II. DISCUSSION
A. The Legal Standard
“Dismissal of a case for lack of subject matter jurisdiction under Rule 12(b)(1) is proper
‘when the district court lacks the statutory or constitutional power to adjudicate it.”’ Ford v.
D.C. 37 Union Local 1549, 579 F.3d 187, 188 (2d Cir. 2009) (Per Curiam) (quoting Makarova v.
United States, 201 F.3d 110, 113 (2d Cir. 2000)). In ruling on a Rule 12(b)(1) motion, the Court
must accept all factual allegations in the pleading as true and draw all reasonable inferences in
favor of the pleader. See Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60, 65
(2d Cir. 2012) (“We review de novo a district court’s dismissal pursuant to Fed. R. Civ. P.
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12(b)(1) or Fed. R. Civ. P. 12(b)(6), ‘accepting all factual allegations in the complaint as true.’”)
(quoting Ford, 579 F.3d at 188)); Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635,
638 (2d Cir. 2005) (‘“[I]t is well established that, in passing on a motion to dismiss, whether on
the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action,
the allegations of the complaint should be construed favorably to the pleader.”’) (parenthetically
quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L.Ed.2d 90 (1974), abrogated
on other grounds by, Harlow v. Fitzgerald, 457 U.S. 800, 102 S. Ct. 2727, 73 L. Ed. 2d 396
(1982)).
However, the district court “may refer to evidence outside the pleadings,” and the party
“asserting subject matter jurisdiction has the burden of proving by a preponderance of the
evidence that it exists.” Makarova, 201 F.3d at 113 (citations omitted).
Applying these standards, the Defendants are for purposes of this motion, the pleader of
their counterclaims. Therefore, the Defendants have the burden of establishing subject matter
jurisdiction over their counterclaims, and the Court construes the allegations supporting their
counterclaims as true. However, in resolving question of subject matter jurisdiction, the Court
will also consider the evidence and declarations filed by the parties that are extrinsic to the
pleadings.
B. As to Supplemental Jurisdiction
The Defendants do not offer an independent basis of federal subject matter jurisdiction.
Rather, they assert this Court should exercise supplemental jurisdiction over their state law
counterclaims under 28 U.S.C.A. § 1367 (“Section 1367”), which states, in relevant part:
in any civil action of which the district courts have original jurisdiction, the
district courts shall have supplemental jurisdiction over all other claims that are so
related to claims in the action within such original jurisdiction that they form part
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of the same case or controversy under Article III of the United States
Constitution.
28 U.S.C. § 1367(a).
There is no dispute that this Court has original jurisdiction over this action under 28
U.S.C. § 1331 because the Plaintiff asserts claims against the Defendants for gender
discrimination under two federal statutes, Title VII and the Equal Pay Act. See
28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising
under the Constitution, laws, or treaties of the United States.”).
The Defendants assert that their state law counterclaims against the Plaintiff for
misappropriating confidential information; setting up a competing entity; and violating restrictive
covenants in the Plaintiff’s employment and purchase agreements “form part of the same case or
controversy” as the Plaintiff’s federal law claims against them for employment discrimination
and retaliation. That is because the Defendants intend to defend against the Plaintiff’s
discrimination claims by “offering evidence that those [discrimination claims] merely were
brought as a strategy to allow her to walk away from her restrictive covenant agreements and
misappropriate PUIA’s customers” and that they terminated her employment, not due to
discrimination or retaliation, but rather, for “her acts of disloyalty.” (See the Defs.’ Opp’n Mem.
of Law at 7.) According to the Defendants, this same evidence also forms the basis of state law
counterclaims against the Plaintiff because their state law claims are predicated on allegations
that the Plaintiff breached her duty of loyalty and her obligations under a stock purchase
agreement and her employment agreement by “engaging in a scheme to divert business from
PUIA and provide highly confidential information to a competitor.” (Id.)

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On their part, the Plaintiff does not dispute that the Defendants’ counterclaims “form part
of the same case or controversy” as her federal discrimination claims. Rather, she relies on
Section 1367(c), which provides:
The district courts may decline to exercise supplemental jurisdiction over a claim
under subsection (a) if—
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over
which the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original
jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons for
declining jurisdiction.
The Plaintiff asserts this case involves “exceptional circumstances,” and there are “compelling
reasons” to decline supplemental jurisdiction because of the existence of the parallel State Court
Action in which PUIA asserts identical claims against the Plaintiff. (See the Pl.’s Mem. of Law
at 2–8.)
In response, the Defendants assert that “exceptional circumstances” do not justify
declining to exercise supplemental jurisdiction over their counterclaims because if the Court
allows the Defendants to proceed with their counterclaims against the Plaintiff in this Court,
PUIA intends to dismiss its claims against the Plaintiff in the State Court Action. (See the Defs.’
Opp’n Mem. of Law at 8–9.) Thus, they assert that there would be no “duplication.” In fact, the
Defendants contend that exercising supplemental jurisdiction would further judicial economy
because it would consolidate the Defendants’ claims against the Plaintiff in one proceeding.
(See id.) They also assert that “a declination by the Court of supplemental jurisdiction over [the]
Defendants’ counterclaims could unfairly prejudice [the] Defendants by potentially limiting the

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relevant evidence [the] Defendants could introduce in support of their legitimate business reason
for terminating Plaintiff’s employment.” (Id. at 10.)
In reply, the Plaintiff contends that even if the Defendants were to dismiss their claims
against the Plaintiff in the State Court Action, there still exists “compelling reasons” to decline
exercising jurisdiction because (i) Justice Whelan has already issued a number of factual and
legal determinations in the State Action and permitting the Defendants to start those claims anew
in this Action may result in inconsistent judicial outcomes; (ii) consolidating the Defendants’
claims against the Plaintiff in this action would be unfair to the Plaintiff because it would remove
certain remedies exclusively available to the Plaintiff in the State Court Action; and (iii)
consolidation of the Defendants’ claims against the Plaintiff would permit the Defendants to
circumvent the Plaintiff’s motion for discovery sanctions currently pending in the State Court
Action. (See the Pl.’s Reply Mem. of Law at 2–7.) The Court agrees.
The Second Circuit has stated that where “at least one of the subsection 1367(c) factors is
applicable, a district court should not decline to exercise supplemental jurisdiction unless it also
determines that doing so would not promote the values . . . [of] economy, convenience, fairness,
and comity.” Jones v. Ford Motor Credit Co., 358 F.3d 205, 214 (2d Cir. 2004); accord Itar-Tass
Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 446 (2d Cir. 1998) (“Once a court
identifies one of the factual predicates which corresponds to one of the subsection 1367(c)
categories, the exercise of discretion ‘is informed by whether remanding the pendent state claims
comports with the underlying objective of ‘most sensibly accommodat[ing]’ the values of
‘economy, convenience, fairness, and comity.’”) (quoting Executive Software N. Am., Inc. v.
United States Dist. Court, 24 F.3d 1545, 1557 (9th Cir. 1994)).

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Applying this principle, the Court must determine (1) whether there are “exceptional
circumstances” and “compelling reasons” within the meaning of Section 1367(c)(4) to decline
jurisdiction over the Defendants’ counterclaims; and (2) whether declining jurisdiction will
accommodate the values of “economy, convenience, fairness, and comity.”
The Second Circuit has indicated that Section 1367(c)(4) should be applied narrowly
because in using the term, “exceptional circumstances,” “Congress has sounded a note of
caution that the bases for declining jurisdiction should be extended beyond the circumstances
identified in subsections (c)(1)-(3) only if the circumstances are quite unusual.” Itar-Tass
Russian News Agency, 140 F.3d at 448 (quoting Executive Software, 24 F.3d at 1558). As such,
“federal courts must ensure that the reasons identified as compelling are not deployed in
circumstances that threaten this principle.” Id. (internal quotation marks and citations omitted).
“[C]ourts have found that ‘exceptional circumstances’ exist for declining jurisdiction
under § 1367(c)(4) where the claims in federal court are duplicative of claims already asserted in
parallel state court proceedings.”’ Metro Found. Contractors, Inc. v. Arch Ins. Co., 498 F. App’x
98, 103 (2d Cir. 2012) (Summary Order); see also Kleiman v. O’Neill, No. 03-CV-3829 (ERK),
2008 WL 5582453, at *3 (E.D.N.Y. Dec. 30, 2008) (“The existence of a parallel proceeding
addressing the same allegations may give rise to an exceptional circumstance supporting the
Court’s refusal to exercise supplemental jurisdiction under subsection (c)(4).”).
However, “[a]s a general matter, ‘[t]here is no bar against parallel in personam actions
proceeding in two or more courts. ‘Each court is free to proceed in its own way and in its own
time, without reference to the proceedings in the other court. Whenever a judgment is rendered
in one of the courts and pleaded in the other, the effect of that judgment is to be determined by
application of the principles of res adjudicata.’” SST Glob. Tech., LLC v. Chapman, 270 F.
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Supp. 2d 444, 461 (S.D.N.Y. 2003) (quoting Woodford v. Community Action Agency of Greene
County, Inc., 239 F.3d 517, 525 (2d Cir. 2001)). Therefore, “in instances where courts have
dismissed claims under § 1367(c)(4) on grounds of duplication and judicial economy, the
duplication between the federal and state proceedings has been much more marked or the fact of
duplication has been accompanied by the presence of other factors rendering the circumstances
‘exceptional.’” Id.
For example, in Hays Cty. Guardian v. Supple, 969 F.2d 111, 124 (5th Cir. 1992), the
district court remanded the state law claims asserted by the plaintiffs, a group of students and a
newspaper, against state officials in their official and individual capacities on Eleventh
Amendment-sovereign immunity grounds. On appeal, the Fifth Court found no error in the
district court’s decision to remand the state law claims against the defendants in their official
capacities on sovereign immunity grounds. Id. at 125. However, the Fifth Circuit found that the
Eleventh Amendment “does not bar state-law actions against state official in their individual
capacity.” Id. Nevertheless, the Circuit Court affirmed the remand of the state law claims
against the defendants in their individual capacities under Section 1367(c)(4), reasoning that
“exceptional” and “compelling reasons” for remand existed because “[a]djudicating state-law
claims in federal court while identical claims are pending in state court would be a pointless
waste of judicial resources.” Id.
Similarly, in Philip Morris Inc. v. Heinrich, No. 95 CIV. 0328 (LMM), 1998 WL 122714,
at *1 (S.D.N.Y. Mar. 19, 1998), a defendant in a federal action moved under Rule 14(a) for leave
to file a third party complaint against a non-party for indemnification, breach of contract, breach
of the obligation of good faith and fair dealing, interference with prospective economic
advantage, wrongful termination under New Jersey state law, fraud, and violations of New
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Jersey’s state RICO statute. The court granted the defendant’s motion with regard to the
indemnification claims but not with regard to the breach of contract and fraud claims because the
court found “compelling reasons” existed for declining to exercise supplemental jurisdiction over
those claims. Id. Specifically, the court noted there “is currently another action in existence in a
New Jersey state court, addressing the same claims as those alleged in [the defendant’s]
proposed third-party complaint.” Id. As discovery was set to close in the New Jersey action in
less than three months, the court reasoned that the defendant would be “able to obtain the relief
he seeks in his third-party complaint in another forum and his claims are likely to be more
quickly resolved in the New Jersey forum than if added to the claims litigated in this forum.” Id.
at *2.
In Philip Morris Inc., the court also found that the addition of the non-indemnification
claims would prejudice the Plaintiff because “it would likely result in additional motion practice,
additional discovery, and the injection of unrelated employment contract issues into this already
complex action.” Id. Finally, the court noted that allowing the defendant to bring all of his
claims against the non-party in one action would not eliminate the duplication of evidence or
avoid inconsistent results because other than the indemnification claim, the proposed third party
claims were “separate from and independent of the issues to be litigated in the main action,
creating almost no overlap of legal or factual matters to be determined in the resolution of the
separate complaints..” Id.
By contrast, the Defendants cite to Metro Found. Contractors, Inc. v. Arch Ins. Co., No.
09 CV 6796 JGK, 2011 WL 2150466, at *1 (S.D.N.Y. May 31, 2011), aff’d in part, vacated in
part, remanded, 551 F. App’x 607 (2d Cir. 2014). There, a subcontractor filed a claim against
the general contractor in New York State Supreme Court to recover money they were allegedly
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owed for work they performed under a subcontract agreement. Id. at *2. Subsequently, the
subcontractor initiated an action in federal court against the general contractor’s surety who
issued a payment bond to the general contractor to cover costs of labor and materials for the
project. Id. at *1–2. In the federal action, the surety filed an answer and a third-party complaint
against the general contractor and other defendants seeking indemnification. Id. at *2. The
general contractor then filed a third-party answer and counterclaims against the subcontractor for
breach of contract and indemnification alleging that the subcontractor failed to perform its duties
under the subcontract in a timely and workmen like manner. Id.
In Metro Found. Contractors, Inc., the subcontractor moved in the federal action to
dismiss the general contractor’s state law counterclaims for lack of subject matter jurisdiction
because it argued that, among other things, there were “exceptional circumstances” that justified
the court declining supplemental jurisdiction over the general contractor’s counterclaims because
the general contractor’s “state law [counterclaims] are virtually identical to claims that [the
general contractor] had previously asserted in response to [the subcontractor’s state court
action].” Id.
The district court rejected that argument for two reasons. First, it found that it was not
clear that judicial resources would be preserved by declining to exercise supplemental
jurisdiction given that, according to the court, the same factual issues would have to be
considered in addressing the subcontractor’s claims against the surety and the surety’s claims
against the general contractor even if the court decided not to exercise supplemental jurisdiction.
Id. Second, the court found it would not be an appropriate case to find “exceptional
circumstances” because it was the subcontractor who multiplied the proceedings by deciding to
bring one action against the surety in federal court and a separate action against the general
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contractor in state court. Id. at *6. Thus, it would be unfair to decline supplemental jurisdiction
over the general contractor’s claims based on the the multiplication of proceedings because it
was the subcontractor who caused the multiplication of proceedings in the first instance. Id.
In the present case, the Defendants acknowledge that their counterclaims against the
Plaintiff are identical to the claims that PUIA asserts against the Plaintiff in the State Court
Action. (See the Defs.’ Opp’n Mem. of Law at 6.) As noted above, courts have often declined
to exercise supplemental jurisdiction under such circumstances because it is a waste of judicial
resources to allow a party to proceed with identical claims in both state and federal court.
However, the Defendants contend there would be no waste of judicial resources in this
case because if this Court decides to exercise supplemental jurisdiction over their counterclaims
against the Plaintiff, PUIA will voluntarily dismiss its claims against the Plaintiff in the State
Court Action. (See id. at 8–9.) The Court finds this argument problematic for several reasons.
First, the State Court Action has been pending for almost three years. Justice Whelan
issued a lengthy opinion granting a preliminary injunction on some but not all of PUIA’s claims.
Thus, even if PUIA dismisses its claims against the Plaintiff in the State Action, there would
likely be further motion practice in this Court regarding the preclusive effect, if any, of Justice
Whelan’s factual and legal findings, particularly given that the Defendants are moving for
similar injunctive relief in this action and may also seek a preliminary injunction.
Furthermore, the parties in the State Court Action appear to have been litigating
discovery disputes since 2014. The Plaintiff contends that PUIA has been entirely delinquent in
their discovery obligations. (See Costello Aff. at ¶¶ 11–15.) The Defendants assert that PUIA
has complied with its discovery obligations. (See Mancher Decl. at ¶ 33.) Were the Court to
exercise supplemental jurisdiction over the Defendants’ counterclaims in this Court, the Court
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would set an entirely new discovery schedule on the Defendants’ counterclaims, and the parties
would likely have to re-litigate many of the same issues that they have already raised before
Justice Whelan.
On the other hand, although the Defendants state that PUIA intends to voluntarily dismiss
its claims against the Plaintiff in the State Court Action, PUIA’s claims against Mulvey and
WLF would remain pending. Aside from one separate claim involving Mulvey’s alleged
misappropriation of PUIA’s computer, PUIA’s claims against Mulvey and WLF are almost
identical to its claims against the Plaintiff. Thus, even if PUIA dismissed its claims against the
Plaintiff in the State Court Action and instead pursues those claims as counterclaims in this
Action, there would still be a large degree of factual overlap between the two proceedings and
duplicative discovery.
Therefore, the Court finds that the existence of the State Court Action does present
“exceptional circumstances” warranting the denial of supplemental jurisdiction because
exercising supplemental jurisdiction over the Defendants’ counterclaims would likely result in
further litigation and not save judicial resources regardless of whether Justice Whelan grants
PUIA’s motion to voluntary dismiss its claims against the Plaintiff. See Philip Morris Inc., 1998
WL 122714 at *2 (rejecting a defendant’s argument that permitting him to bring all of his claims
in the federal proceeding, as opposed to a parallel state proceeding, would promote judicial
economy because “it would not eliminate duplication of evidence or avoid inconsistent results
from identical or similar evidence”).
Declining jurisdiction is also consistent with the other relevant factors of convenience,
fairness, and comity. As to convenience, construing the allegations in the State Court Claim as
true, the Plaintiff was a co-conspirator of Mulvey and led the efforts to form WLF and allegedly
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poach PUIA’s clients. Thus, the Plaintiff will likely have to participate as a key witness in the
State Court Action even if PUIA voluntarily dismisses its claims against her.
Similarly, as noted, PUIA intends to continue the State Court Action against Mulvey and
WLF even if it decides to voluntarily dismiss its claims against the Plaintiff. Thus, regardless of
whether their claims against the Plaintiff are consolidated into this action, the Defendants will
also have to litigate their claims arising from the Plaintiff and Mulvey’s alleged scheme to form a
separate and competing enterprise in both the State Court Action and this action.
Therefore, the Court finds that declining jurisdiction over the Defendants’ counterclaims,
and thereby forcing the Defendants to continue litigating their claims against the Plaintiff in the
State Court Action, would not materially inconvenience either the Plaintiff or the Defendants.
With regard to fairness, as the Plaintiff correctly points out, in issuing a preliminary
injunction against the Plaintiff, Justice Whelan required PUIA to submit an undertaking pursuant
to CPLR 6312(b) in the amount of $400,000. CPLR 6312(b) mandates that a plaintiff furnish a
bond for a fixed amount of money to reimburse the defendant for any damages caused by the
preliminary injunction if it is “finally determined” that the injunction was erroneously granted.
See J.A. Preston Corp. v. Fabrication Enterprises, Inc., 68 N.Y.2d 397, 405, 502 N.E.2d 197, 200
(N.Y. 1986) (stating that the purpose of an undertaking is ‘“to reimburse the defendant for
damages sustained if it is later finally determined that the preliminary injunction was erroneously
granted.”’) (quoting Margolies v. Encounter, Inc., 42 N.Y.2d 475, 477, 368 N.E.2d 1243, 1244
(N.Y. 1977)).
The injunction against the Plaintiff has been in place in State Court for nearly three years.
If the Defendants are permitted to discontinue their claims against the Plaintiff in the State Court
Action and renew those claims as counterclaims against the Plaintiff in this action, the Plaintiff
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may lose the ability to initiate a claim against the $400,000 undertaking to reimburse her for
damages if Justice Whelan makes a “final determination” that the injunction was not properly
issued in the first place. Taking away a remedy and a potential source of damages from the
Plaintiff is, of course, unfair and prejudicial to the Plaintiff.
Furthermore, on December 7, 2015, more than six months ago, in light of PUIA’s
apparent unwillingness to comply with the Plaintiff’s discovery requests, the Plaintiff filed a
motion in the State Court Action to dismiss PUIA’s complaint or in the alternative, to preclude
PUIA from offering evidence as to the items to which the Plaintiff allegedly sought in discovery.
That motion appears to still be pending and permitting the Defendants to remove their claims
from the State Court Action and re-assert them here would, as the Plaintiff correctly points out,
potentially permit PUIA to evade responsibility for its alleged discovery violations. While the
Defendants appear to dispute the substance of the Plaintiff’s motion in the State Court Action,
the Court finds that it would be unfair and prejudicial to the Plaintiff to permit the Defendants to
start with a clean slate in this Court before Justice Whelan has an opportunity to rule on the
Plaintiff’s motion.
On the other side of the farness balance, the Court finds no merit in the Defendants’
contention that declining jurisdiction over their counterclaims against the Plaintiff would
“potentially limit[] the relevant evidence Defendants could introduce in support of their
legitimate business reason for terminating the Plaintiff’s employment and in support of their
contention that [the] Plaintiff’s discrimination claims are a mere pretextual attempt to evade her
obligations to PUIA.” (The Defs.’ Opp’n Mem. of Law at 10.)
In analyzing claims of gender discrimination, such as those asserted by the Plaintiff,
under Title VII and the NYSHRL, the court applies the familiar burden-shift framework set forth
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in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).
Under that framework, ‘“[o]rdinarily, a plaintiff must first establish a prima facie case of
discrimination by showing that (1) he is a member of a protected class; (2) he is competent to
perform the job or is performing his duties satisfactorily; (3) he suffered an adverse employment
decision or action; and (4) the decision or action occurred under circumstances giving rise to an
inference of discrimination based on his membership in the protected class.”’ Dawson v.
Bumble & Bumble, 398 F.3d 211, 216 (2d Cir. 2005) (quoting Mario v. P & C Food Markets,
Inc., 313 F.3d 758, 767 (2d Cir .2002)). “Second, assuming the plaintiff demonstrates a prima
facie case, the burden of production shifts to the employer to articulate a legitimate, clear,
specific and non-discriminatory reason for [the adverse employment action].” Holt v. KMICont’l, Inc., 95 F.3d 123, 129 (2d Cir. 1996). Third, “once the employer has proffered its
nondiscriminatory reason, the employer will be entitled to summary judgment (or to the
overturning of a plaintiff’s verdict) unless the plaintiff can point to evidence that reasonably
supports a finding of prohibited discrimination.” James v. New York Racing Ass’n, 233 F.3d
149, 154 (2d Cir. 2000).
Evidence regarding the Plaintiff’s purported acts of disloyalty and breaches of company
protocol are highly relevant to the Defendants’ defense of the Plaintiff’s gender discrimination
claims because that evidence tends to suggest that the Defendants had a legitimate nondiscriminatory reason for discharging the Plaintiff. Thus, regardless of whether the Court
exercises supplemental jurisdiction over the Defendants’ counterclaims against the Plaintiff
regarding her supposed breaches of loyalty, the Defendants will be able to obtain discovery on
these issues and if necessary, introduce evidence regarding the Plaintiff’s alleged disloyal acts at

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the trial. Accordingly, the Court does not find any prejudice to the Defendants in declining to
exercise supplemental jurisdiction over their counterclaims.
Finally, considerations of comity also weigh in favor of declining jurisdiction over the
Defendants’ counterclaims. Comity refers to “a proper respect for state functions, a recognition
of the fact that the entire country is made up of a Union of separate state governments, and a
continuance of the belief that the National Government will fare best if the States and their
institutions are left free to perform their separate functions in separate ways.” Levin v.
Commerce Energy, Inc., 560 U.S. 413, 421, 130 S. Ct. 2323, 2330, 176 L. Ed. 2d 1131 (2010)
(quoting Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454 U.S. 100, 112, 102 S. Ct.
177, 184, 70 L. Ed. 2d 271 (1981)).
As noted, Justice Whelan has presided over the same claims the Defendants seek to assert
against the Plaintiff as counterclaims in this action. To permit PUIA to dismiss its claims against
the Plaintiff in the State Court Action after Justice Whelan issued a preliminary injunction,
discovery has been ongoing for more than two years, and the Plaintiff filed a potentially
dispositive motion to dismiss the State Court Complaint that has been pending for more than six
months, and then permit PUIA to reassert those same claims in this Court and to start discovery
anew would undermine Justice Whelan’s authority over the State Court Action and may result in
rulings in this case that are inconsistent with his prior rulings. That result would clearly impinge
upon the principles of comity. See Chenensky v. New York Life Ins. Co., 942 F. Supp. 2d 388,
395 (S.D.N.Y. 2013) (“State judges are the best arbiters of state law and comity weighs in favor
of state decisions being interpreted by state judges, especially when, as here, parallel proceedings
in state and federal court could lead to disparate results in each venue.”); Dedon GmbH v. Janus
et Cie, No. 10 CIV. 04541 CM, 2010 WL 4227309, at *9 (S.D.N.Y. Oct. 19, 2010), aff’d, 411 F.
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App’x 361 (2d Cir. 2011) (“Comity is an ‘important and omnipresent factor’ in parallel
litigation.”) (quoting Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 160 (3d Cir. 2001)).
Also, the Court does not find the countervailing factors at issue in Metro Found.
Contractors, Inc., supra, to be present in this case. Specifically, as described above, in Metro
Found. Contractors, Inc., the subcontractor was the plaintiff in both the state and federal court
action. 2011 WL 2150466, at *6. As the plaintiff was the one who brought about the existence
of multiple proceedings, the court in Metro Found. Contractors, Inc. found that that the plaintiff
could not then “assert the existence of multiple proceedings — which it brought about — as a
reason to limit the available claims of third-party defendants who were brought into this lawsuit
which it commenced.” Id.; see also Metro Found. Contractors, Inc., 498 F. App’x at 103
(affirming the district court’s finding that the existence of a parallel state court action did not
provide a compelling reason to decline supplemental jurisdiction because the subcontractor was
the plaintiff in both the federal and state court and was “therefore solely responsible for the
existence of the parallel proceedings.”).
Here, by contrast, Bentivegna is not the plaintiff in the State Court Action. She is a
defendant in that action. Therefore, unlike the plaintiff in Metro Found. Contractors, Inc.,
Bentivegna is not solely responsible for the fact that there are parallel proceedings. Rather, the
Defendant PUIA, which decided to initiate suit in state court before the Plaintiff initiated this
action in federal court, is equally at fault for the existence of state and federal court proceedings.
Therefore, the Court does not find the reasoning of Metro Found. Contractors, Inc. to be
applicable to this case.
In sum, the Court finds that the pendency of the State Court Action is an “exceptional
circumstance” that provides “compelling reasons” within the meaning of Section 1367(c)(4) to
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decline supplemental jurisdiction over the Defendants’ counterclaims. Further, in the Court’s
view declining supplemental jurisdiction is also consistent with the values of judicial economy,
convenience, fairness, and comity.
III. CONCLUSION
For these reasons, the Court grants the Plaintiff’s Rule 12(b)(1) motion in its entirety and
dismisses the Defendants’ counterclaims for lack of subject matter jurisdiction.

SO ORDERED.
Dated: Central Islip, New York
June 21, 2016

_/s/ Arthur D. Spatt
ARTHUR D. SPATT
United States District Judge

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