Gold v. American Medical Alert Corp.

Filing 70

OPINION & ORDER re: 52 MOTION for Summary Judgment . filed by American Medical Alert Corp. For these reasons, AMAC's motion for summary judgment is denied. The parties are directed to appear for a pretrial conference on March 9, 2017, at 11:00 A.M. (Pretrial Conference set for 3/9/2017 at 11:00 AM before Judge John F. Keenan.) (Signed by Judge John F. Keenan on 2/16/2017) (tro)

Case 1:09-md-02013-PAC Document 57

Filed 09/30/10 Page 1 of 45
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 02/16/2017

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICTDISTRICT COURT
UNITED STATES OF NEW YORK
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SOUTHERN DISTRICT OF NEW YORK
DANIEL MARTIN GOLD,
:
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::
In re FANNIE MAE 2008 SECURITIES
08 Civ. 7831 (PAC)
Plaintiff,
::
LITIGATION
09 MD 2013 (PAC)
:
No. 14 Civ. 5485 (JFK)
:
-against:
:
OPINION & ORDER
:
OPINION & ORDER
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AMERICAN MEDICAL ALERT CORP.,
:
:
Defendant.
:
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HONORABLE PAUL A. CROTTY, United States District Judge:
APPEARANCES

For Plaintiff Daniel Martin Gold:
KARLINSKY LLC
BACKGROUND1
Martin E. Karlinsky
Amy The early years of this decade saw a boom in home financing which was fueled, among
A. Lehman
For other things, byAmerican rates and laxAlertconditions. New lending instruments, such as
Defendant low interest Medical credit Corp.:
FOX ROTHSCHILD LLP
James mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans)
subprime Lemonedes
Barri A. Frankfurter
kept the boom going. Borrowers played a role too; they took on unmanageable risks on the
JOHN F. KEENAN, United States District Judge:
assumption that the market would continue to rise and that refinancing options would always be
Plaintiff Daniel Martin Gold brings this action for breach
available in the future. Lending discipline was lacking in the system. Mortgage originators did
of contract alleging that Defendant American Medical Alert
not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the
Corporation (“AMAC”) terminated his employment without cause, in
originators sold their loans into the secondary mortgage market, often as securitized packages
violation of his employment agreement with the company. AMAC

known as mortgage-backed securities (“MBSs”). MBS markets grew almost exponentially.
moves for summary judgment, arguing that the undisputed facts
But then the housing bubble burst. In 2006, the demand for housing dropped abruptly
establish that Gold was terminated for cause and that AMAC is
and home prices began to fall. In light of the changing housing market, banks modified their
therefore entitled to judgment as a matter of law. As explained
lending practices and became unwilling to refinance home mortgages without refinancing.
below, there are genuine issues of material fact regarding
whether Gold was terminated for cause under the employment
1

Unless otherwise indicated, all references cited as “(¶ _)” or to the “Complaint” are to the Amended Complaint,

agreement.22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.
Accordingly, the Court denies AMAC’s motion for
dated June
summary judgment.
1

1

Background
Unless otherwise noted, the following facts are not in
dispute.

AMAC is a healthcare communications company

incorporated in New York with its principal place of business in
Long Island City, New York. (Compl. ¶¶ 4-5.)

It sells products

such as personal emergency response systems, electronic
medication reminder devices, and disease management monitoring
appliances. (Id. ¶ 5.)

Gold, a citizen of Virginia, began doing

consulting work for AMAC in 2008 and entered into an employment
agreement with the company in January 2010. (Id. ¶ 3; Def.’s
Loc. R. 56.1 Statement ¶¶ 4, 6 [hereinafter Def.’s 56.1
Statement].)

In March 2012, the parties agreed to a second

employment agreement—the contract at issue here—which provided
that Gold would serve as the senior vice president for AMAC’s
Health and Safety Monitoring Systems Division. (Def.’s 56.1
Statement ¶ 6; Decl. of James M. Lemonedes Ex. D.)

The

agreement covered a three-year period from January 1, 2012,
through December 31, 2014, (see Lemonedes Decl. Ex. D at 1), and
by its terms is governed by New York law. (See id. at 5.)
If AMAC terminated Gold without cause, the employment
agreement provided that Gold would be entitled to certain
compensation and benefits, including his annual base salary of
$240,000.00 through the third year of the agreement, a bonus
payment for the year of his termination, and continued health
2

benefits. (Id. at 3.)

Section 9(a)(iii) of the agreement

defined “cause” to include “the commission of an act of bad
faith (i.e., an act involving actual or constructive fraud, or a
design to mislead or deceive another, or the conscious doing of
a wrong because of dishonest purpose or motivated by ill will).”
(Id.; Def.’s 56.1 Statement ¶ 7.)

Under section 9(a)(vi) of the

agreement, any violation by Gold of AMAC’s Code of Business
Conduct and Ethics (the “Code of Conduct”) also amounted to
“cause.” (Lemonedes Decl. Ex. D at 3; Def.’s 56.1 Statement
¶ 7.)
The Code of Conduct provided, among other things that each
director, officer, or employee of AMAC “has a responsibility to
all other directors, officers, employees and to [AMAC] itself”;
that each employee must “act responsibly, in good faith and with
competence and diligence . . . without misrepresenting material
facts or allowing your independent judgment to be subordinated”;
that all employees “must handle any actual or apparent conflict
of interest in an ethical manner”; that conflicts of interest
“exist when a person’s private interest interferes in any way
with the interest of [AMAC],” including by “taking actions or
having interests that interfere with your ability to effectively
and objectively perform your work”; and that employees “should
not take unfair advantage of anyone through manipulation,
concealment, abuse of privileged information, misrepresentation
3

of material facts, or any other unfair-dealing practice.”
(Lemonedes Decl. Ex. E at 1-3; see also Def.’s 56.1 Statement
¶¶ 8-11.)
AMAC terminated Gold on October 31, 2012. (Def.’s 56.1
Statement ¶ 41.)

In a written termination letter, AMAC informed

Gold that his termination was for cause under Sections 9(a)(iii)
and 9(a)(vi) of his employment agreement. (Id. ¶¶ 41, 43;
Lemonedes Decl. Ex. I.)

Specifically, the termination letter

described the basis for Gold’s termination as follows:
We have learned that you directed an
employee to complete a “special project” for
you -- a memo whose sole purpose was to
prevent the Company’s hire of a new sales
executive and protect your own position.
You advised the employee that the
project would require that he not think of
himself as an AMAC employee, and that he would
have to separate himself completely from his
employment with the Company in order to
complete the project.
You offered to pay him for this so-called
project out of your own pocket. You told him
to keep his involvement in the project
completely confidential from the Company.
You also instructed him to deny that he had
played any role in the so-called project if
the Company were to ask him about it.
(Lemonedes Decl. Ex. I at 1.)
In support of its position that Gold was terminated for
cause, AMAC produces an October 26, 2012 “Incident Report”
prepared by Robert Farrish, the other AMAC employee referenced
4

in Gold’s termination letter. (Def.’s 56.1 Statement ¶ 13;
Lemonedes Decl. Ex. F.)

Because the Incident Report supplies

the principal evidence that AMAC argues entitles it to summary
judgment, the Court quotes the body of the report in full.
reads:
Daniel came to LIC on 10/10 for some
meetings. In the morning he asked me go on a
walk with him around the block. Outside he
asked me if I had the objectivity and
professionalism to completely separate myself
from my employment in order to complete a
special project for him. He said that we
worked together well, referencing my proposal
writing skills and several memos and other
correspondence that I had written for him or
with him (examples attached). He said that
someone new was being put in charge of sales,
someone who was a “cell phone salesman” that
had no prior experience in healthcare.
He
said that this was not acceptable.
Daniel then said that he would pay me
several hundred dollars to work on a special
memo that would put pressure on AMAC not to
dismantle the current authority structure or
business model, and he used the phrase “put an
atomic bomb up AMAC’s ass with the skeletons
in its closet.” He said it was a difficult
task, because I would be called to write
something that would demand that I don’t think
of myself as an AMAC employee, and that it
would be a document that would shake things
up.
He said that because of the sensitive
nature of this document, he was going to
prepare a contract for me to sign that
included a confidentiality agreement. He said
the reason for that was if I was ever
5

It

questioned by AMAC afterwards about the
content of this document or its formulation,
I
would
be
able
to
reference
this
confidentiality clause and wouldn’t have to
say anything. I was very uncomfortable with
this idea. I told Daniel he didn’t need to
pay me any money, that I had written many
documents with him in the past and had never
discussed them with anyone.
The next day he came into my office and
mentioned the project again. I told him I’d
rather not sign any contracts or take money.
He said for me not to be spooked out by his
request, that it was standard practice to sign
such a contract. Although I did not outright
refuse to sign anything at that moment, I
never would have done so nor would I have taken
any money. Since he is my supervisor, I wasn’t
sure what to do.
He called me later that day, and I
recorded the call. During the call he again
stated that he was going to “put a bomb up
AMAC’s ass.” I asked him to clarify, and he
said “put pressure on them.”
I didn’t ask
exactly what that meant. At the end of the
call he said we would start on the project
tomorrow and that he hoped he didn’t “spook me
out” in reference to the contract and money.
On Friday he called me and told me that
the project would not be necessary after all.
I was relieved, but concerned about what the
ramifications would be for me and the company
if he went through with whatever he intended
to do.
(Lemonedes Decl. Ex. F.)
Farrish now lives in Germany, is no longer associated with
AMAC, and was not deposed in this case. (See Lemonedes Reply

6

Decl. ¶ 4; id. Ex. A at 1.)

According to the undisputed

deposition testimony of Seth Muraskin, AMAC’s vice president of
human resources at the time of Gold’s termination, the Incident
Report was maintained by AMAC in accordance with company
policies. (See Def.’s 56.1 Statement ¶¶ 37, 40.)
Gold disputes several aspects of the Incident Report and
offers his own account of his conversations with Farrish.

In his

deposition, Gold testified that before speaking with Farrish he had
developed concerns regarding operational and regulatory issues at
AMAC and had communicated some of these concerns to the company’s
leadership. (Gold Dep. Tr. 145:17-145:25, 148:19-148:25.)
According to Gold, he had already decided to terminate his
employment with the company when he spoke with Farrish, and the
document he wanted Farrish to review was his own resignation
letter. (Id. at 169:14-170:12.)

Gold testified that he wanted to

speak with Farrish because he felt badly for the sales team,
wanted to share his thoughts on why he was leaving the company,
and wanted to convey to Farrish that many of the values Gold had
developed would be retained after his departure. (Id. at 185:16185:20, 187:3-187:12.)
Gold testified that he did not tell Farrish what the letter
would be about because he was concerned that Farrish “might share
it with the rest of the sales team,” which would “cause tremendous
stress during a period of time when we were about to close on a lot

7

of deals.” (Id. at 188:5-188:9.)

Gold denied telling Farrish that

the letter would be designed to “push” AMAC or to affect
decisions regarding the management team. (Id. at 161:8-161:16.)
He also testified that he did not believe he said that the
letter was intended as a “bomb to shake things up.” (Id. at
164:2-164:7.)

Gold acknowledged that, based on a transcript of

an October 11, 2012 conversation between Farrish and him, it
appeared Gold said something like “bomb ass,” but he did not
know what he would have meant by that statement. (Id. at 164:8164:19.)

Gold also stated that he did not recall using the

words “put an atomic bomb up AMAC’s ass,” as alleged in the
Incident Report. (Id. at 190:2-191:5.)
Gold testified that he asked Farrish if he could be objective,
disinterested, and fair-minded if he reviewed the letter, but he
did not recall referring to the task as a “special project” or
saying that it would require Farrish to completely separate himself
from his employment. (Id. at 173:23-174:25.)

Nor did Gold

remember telling Farrish that he would be called on to not think
of himself as an AMAC employee or that Gold would draft a
confidentiality agreement for Farrish to sign. (Id. at 181:4183:7.)

Gold explained that “a confidentiality agreement in

this context would not make sense for an attorney to suggest,
because it doesn’t make any legal sense.” (Id. at 183:2-183-7.)
According to Gold, he suggested that he might have to pay
8

Farrish out of his own pocket for reviewing the letter. (Id. at
160:2-160:12, 208:7-208-12.)

Farrish then mentioned an amount

around $50.00 or $100.00 but later said that no payment would be
necessary. (Id. at 160:2-160:12, 208:7-208:12.)
In an affidavit submitted in support of his opposition to
AMAC’s motion for summary judgment, Gold specifically denies
several statements in the Incident Report.

In the affidavit,

Gold states, among other things, that he:

“never asked Farrish

if he ‘had the objectivity and professionalism to completely
separate [himself] from [his] employment in order to complete a
special project,’”; “never told Farrish that [Gold] wanted him
to ‘work on a special memo that would put pressure on AMAC not
to dismantle the current authority structure or business
model.’”; “never stated that the document would ‘shake things
up’”; “never told Farrish that [Gold] would draft a contract
with a ‘confidentiality agreement’ for him to sign”; “never
asked Farrish not to think of himself as an AMAC employee”; and
“never told Farrish to ‘deny that he had played a role’ in
drafting the letter.” (Aff. of Daniel Martin Gold ¶¶ 19-21, 2324.)
II. Legal Standard
Summary judgment must be granted “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” FED. R. CIV.
9

P. 56(a).

A dispute about a fact is material if it “might affect

the outcome of the suit under the governing law.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248.

A dispute about a

material fact is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Id.

In considering the evidence, “all ambiguities must be

resolved and all inferences drawn in favor of the party against
whom summary judgment is sought.” Gallo v. Prudential
Residential Servs., Ltd., 22 F.3d 1219, 1223 (2d Cir. 1994).
Nevertheless, the non-movant “may not rest upon the mere
allegations or denials of his pleading, but must set forth
specific facts showing that there is a genuine issue for trial.”
Liberty Lobby, Inc., 477 U.S. at 248 (quoting First Nat’l Bank
of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288 (1968)).
III. Discussion
The Court considers at the outset two arguments bearing on
the evidence it may consider on this motion.

First, Gold urges

the Court to disregard the Incident Report because AMAC has not
shown that it will be admissible at trial.

Under Federal Rule

of Civil Procedure 56(c)(2), “[a] party may object that the
material cited to support or dispute a fact cannot be presented
in a form that would be admissible in evidence.” FED R. CIV. P.
56(c)(2).

AMAC indicates that it is not clear whether Farrish

will testify at trial because he now lives in Germany and is no
10

longer associated with the company.

However, AMAC submits that

the Incident Report will be admissible as a business record
under Federal Rule of Evidence 803(6) through the testimony of
Seth Muraskin, AMAC’s former vice president of human resources.
Because the report appears to have been prepared at or near the
time of the events, by Farrish, a person with knowledge, the
Court finds it sufficiently likely that the report will be
admissible at trial to consider it on this motion. See FED. R.
EVID. 803(6).
Likewise, the Court rejects AMAC’s contention that it must
disregard Gold’s sworn affidavit because Gold now expressly
denies making certain statements alleged in the Incident Report
that he previously testified he did not recall.

Under the so-

called sham issue of fact doctrine, a party may not defeat
summary judgment by submitting an affidavit that contradicts the
party’s previous sworn testimony. See In re Fosamax Prod. Liab.
Litig., 707 F.3d 189, 193 (2d Cir. 2013).

The contradictions,

however, must be “inescapable and unequivocal in nature” to
create a sham issue of fact. Id. at 193 & n.4 (citing Rivera v.
Rochester Genesee Reg’l Transp. Auth., 702 F.3d 685, 696 (2d
Cir. 2012).

Such a contradiction may be found where a party

seeks to defeat summary judgment by submitting an affidavit with
factual allegations about an event the party previously
testified he or she could not recall. See, e.g., Raskin v. Wyatt
11

Co., 125 F.3d 55, 63 (2d Cir. 1995) (affirming summary judgment
in employment age discrimination case where plaintiff produced a
declaration stating that his supervisor expressed concern that
the plaintiff “would not remain with [the company] long enough
to learn the manager’s job,” but previously testified that he
did not remember the points covered during the conversation).
Here, however, Gold’s affidavit does not create an inescapable
contradiction.

If one is alleged to have said something but

does not recall saying it, this suggests that the statement was
never made, particularly when the statement would have been out
of the ordinary.

The Court therefore does not view Gold’s

statements as creating the type of clear contradiction that
would warrant disregarding his affidavit.

To the extent that

the statements may be viewed as inconsistent, the issue is one
of credibility reserved for the jury. See In re Fosamax, 707
F.3d at 193 n.4 (citing Fincher v. Depository Trust & Clearing
Corp., 604 F.3d 712, 725 (2d Cir. 2010).
Turning to the substance of the motion, the Court finds
that genuine issues of material fact exist, precluding summary
judgment.

AMAC argues that the undisputed facts establish that

Gold was terminated for cause under sections 9(a)(iii) and
9(a)(vi) of his employment agreement, entitling AMAC to judgment
as a matter of law.

The Court disagrees.

As an initial matter,

the question of whether Gold violated sections 9(a)(iii) and
12

9(a)(vi) does not lend itself to summary judgment.

Section

9(a)(iii) defines “cause” to include “the commission of an act
of bad faith (i.e., an act involving actual or constructive
fraud, or a design to mislead or deceive another, or the
conscious doing of a wrong because of dishonest purpose or
motivated by ill will).” (Lemonedes Decl. Ex. D at 3.)

Where,

as here, questions of intent and state of mind are implicated,
summary judgment is generally inappropriate. See Patrick v.
LeFevre, 745 F.2d 153, 159 (2d Cir. 1984).

Likewise, in arguing

that Gold was terminated for cause under section 9(a)(vi), AMAC
relies on Code of Conduct provisions prohibiting, among other
things, “conflicts of interest” and requiring employees to act
in “good faith” and to “deal fairly with . . . employees.” (See
56.1 Statement ¶¶ 9-11.)

As with the question of bad faith, the

determination of whether Gold’s conduct violated these standards
is a fact-specific determination not readily subject to summary
judgment.
Further, to the extent that these questions might otherwise
be resolved at this stage, genuine issues of material fact exist
regarding the events described in the Incident Report,
precluding summary judgment.

Gold denies, among other things,

telling Farrish that the letter would be designed to “push” AMAC
or to affect decisions regarding the management team; that the
document would “shake things up”; that Gold would draft a
13

contract

h a confidentiality agreement for Farrish to sign;

or that reviewing the letter would require that Farrish not
think of himself as an AMAC employee.
161:16, 164:2-164:7; Gold Aff.

~~

(Gold Dep. Tr. at 161:8-

20 21, 23.)

Gold also

testified that at the time he spoke with Farrish, he had already
decided to leave AMAC.

(Gold Dep. Tr. at 169:14-170:12.)

Gold

explained that he wanted to speak with Farrish because he felt
bad for the sales team, he wanted to share his thoughts on why
he was leaving the company, and he wanted to convey to Farrish
that many of the values he had developed would be retained after
his departure.

Id. at 185:16-185:20, 187:3-187:12.)

Whi

AMAC

argues that Gold asking Farrish to review his resignation letter
and suggesting that he might have to pay Farrish to do so would
itself amount to cause for termination, there is ample room for
a reasonable trier of fact to disagree with that conclusion.
Accordingly, genuine issues of material fact exist for trial.
Conol"Qs.ion

For these reasons, AMAC's motion for summary judgment is
denied.

The parties are directed to appear for a pretrial

conference on March 9, 2017, at 11:00 A.M.
SO ORDERED.

Dated:

New York, New York
February 16, 2017

rdwJ

;-

l

~

JOHN F.KEENJ\N

United States District Judge
14