Appendix — Falbaum v. Leslie Fay Companies, Inc., 120 S. Ct. 788 (2000) (No. 99-548)
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No. 99-
8 pa 1999;
IN THE OFFICE OF THE CLERK
Supreme Court of the United States
>: & =
in Re: THE LESLIE FAY COMPANIES, INC..
Debtors.
JACOB V. FALBAUM, ANTHONY GILL, LEE L. KISHBAUGH, EMILE
LEWKOWIEZ, ELIZABETH MICHAUD and RAYMOND J. TERWILLIGER,
Petitioners,
—_vV.—
THE LESLIE FAY COMPANIES, INC.,
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT
APPENDIX TO PETITION FOR A WRIT OF CERTIORARI
ARTHUR M. WISEHART
Counsel of Record
WISEHART & KOCH
19 West 44th Street
Suite 412
New York, New York 10036
(212) 730-0044
Attorneys for Petitioners
TABLE OF CONTENTS FOR APPENDIX
United States Court of Appeals for the Second Circuit,
Mandate, August 24, 1999.....................005.
United States Court of Appeals for the Second Circuit,
Summary Order, June 29, 1999.....0..0.0..0......
Memorandum Order of United States District Court.
Southern District of New York, July 17, 1998
co aD oo ie ea
Decision on Remand, United States Bankruptcy Court,
Southern District of New York, December 11,
1998 (Tina L. Brozman, Chief U.S.B.J.) ..........
Order of United States Bankruptcy Court, Southern
District of New York, Granting Application for
Allowance of Compensation and Reimbursement
of Expenses, September 5, 1997 (Tina L. Brozman,
GUE PR NEB Ego ins seu erica ne sie tied ce kvaaiei.
Order of United States Bankruptcy Court, Southern
District of New York, Expunging Remaining
Claims of Emile Lewkowiez, Anthony Gill,
Jacob V. Falbaum, Raymond J. Terwilliger,
Elizabeth Michaud and Lee L. Kishbaugh,
September 5, 1997 (Tina L. Brozman,
UE ipods eh terete ae yeas cls hae eins xs
Memorandum and Opinion of United States District
Court, Southern District of New York,
September 5, 1997 (Miriam Goldman
eo Ee 8 8 Pe a re
PAGE
Sa
17a
18a
2la
il
PAGE
Decision After Trial of United States Bankruptcy
Court, Southern District of New York, on Employees’
Discrimination Claims, September 3, 1997
(Tina L. Brozmanm, CBIOl UB.) .) icc ccccccccess 3la
Decision of United States Bankruptcy Court, Southern
District of New York, on the Application of
Wisehart & Koch, Esqs. for Payment for
Substantial Contributions Pursuant to § 503(B)
of the Bankruptcy Code, August 22, 1997
(Tina L. Brogetane, COSOE Waa) ccc ckcwccesace. 120a
Order of United States Bankruptcy Court, Southern
District of New York, Expunging Portions of
Claims of Anthony Gill, Jacob V. Falbaum
and Raymond J. Terwilliger, February 2, 1999
(Tina L. Brozman, Chief U.S.B.J.) ................ 128a
United States Court of Appeals for the Second Circuit
Order, November 7, 1995, and Mandate,
November 9, Dea scccvakusaadscds sa sdaendvcdsdees 148a
Memorandum Decision and Order of United States
District Court, Southern District of New York in
Falbaum and Kishbaugh, 891 F. Supp. 986
(S.D.N.Y. 1995), July 24, 1995 (Miriam
Goldman Cedarbaum, U.5.D.5.) occsccccccccccseces 152a
Decision on United States Trustee’s Motion to
Disqualify Weil, Gotshal & Manges as
Debtors’ Counsel and to Impose an Economic
Sanction Against Weil, Gotshal & Manges, of
United States Bankruptcy Court, Southern
District of New York, December 15, 1994
(Tina L. Brozman, Chief U.S.B.J.)................ 167a
io a re mone
ill
PAGE
Memorandum of Endorsed Order and Oral Opinion
of United States District Court, Southern District
of New York, June 16, 1995 (Miriam Goldman
Cedarbaum., U.S.D.J.) ..........-- eee eee cece eee: 196a
Judgment of United States District Court, Southern
District of New York, June 22, Aa errr 210a
Notice of Motion to Alter or Amend dated August 4,
1995, With Supporting Affidavit .......-..-------- 212a
la
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
98-5051
Filed Jun 29, 1999
Issued as Mandate: Aug 24, 1999
SUMMARY ORDER
This summary order will not be published in the Federal
Reporter and may not be cited as precedential authority to this
or any other court, but may be called to the attention of this
or any other court in a subsequent Stage of this case, in a
related case, or in any case for purposes of collateral estoppel
Or res judicata.
Ata stated Term of the United States Court of Appeals for
the Second Circuit, held at the United States Courthouse,
Foley Square, in the City of New York, on the 29 day of June,
one thousand nine hundred and ninety-nine.
PRESENT:
HON. PIERRE N. LEVAL,
HON. SONIA SOTOMAYOR,
Circuit Judges,
HON. MILTON POLLACK,*
Senior District Judge.
. The Honorable Milton Pollack of the United States District
Court for the Southern District of New York, sitting by designation.
2a
JACOB V. FALBAUM, ANTHONY GILL, LEE L. KISHBAUGH,
EMILE LEWKOWIEZ, ELIZABETH MICHAUD AND RAy-
MOND J. TERWILLIGER,
Creditors-Appellants,
—V—
THE LESLIE FAY COMPANIES, INC..,
Debtors-Appellees.
Appearing for Creditors-Appellants: Arthur M. Wisehart,
Wisehart & Koch, New York, NY.
Appearing for Debtors-Appellees: Joel E. Cohen, McDer-
mott, Will & Emery, New York, NY, Alan B.
Miller, Weil, Gotshal & Manges LLP, New York,
NY.
UPON DUE CONSIDERATION of this appeal from a judgment
of the United States District Court for the Southern District of
New York (Jed S. Rakoff, Judge), it is hereby
ORDERED, ADJUDGED AND DECREED that the judgment of
the district court is AFFIRMED.
The creditors appeal from that portion of the district court's
judgment that affirmed a bankruptcy court decision expung-
ing their federal antidiscrimination claims and awarding fees
and expenses. We affirm for substantially the same reasons
stated by the district court.
The creditors’ principal argument on appeal is that the
bankruptcy court erred by exercising jurisdiction over the
creditors’ claims. It is, however, settled law “ that the deter-
minative factor as to [a] bankruptcy court's jurisdiction. . .
is that the [objecting party] filed a proof of claim resulting in
3a
an adversary proceeding that involved the ‘allowance or dis-
allowance of claims against the estate.’ " Jn re S.G. Phillips
Constructors, Inc., 45 F.3d 702, 705 (2d Cir. 1995) (quoting
28 U.S.C. § 157(b)(2)(B)). By filing a proof of claim, a cred-
itor also “forsakes its right to adjudicate before a jury
any issue that bears directiy on the allowance of that claim
_ . . ." Germain v. Connecticut Nat'l Bank, 988 F.2d 1323,
1329 (2d Cir. 1993). Because the creditors in this case filed
proofs of claims with the bankruptcy court seeking direct
allowances against the debtor's estate, the bankruptcy court
had the jurisdiction to adjudicate these claims without a jury.
Nor are we persuaded that mandatory withdrawal was
appropriate under 28 U.S.C. § 157(d), which ts reserved for
cases requiring “significant interpretation, as opposed to sim-
ple application of federal laws apart from the bankruptcy
statutes.” City of New York v. Exxon Corp., 932 F.2d 1020,
1026 (2d Cir. 1991); see also In re lonosphere Clubs, Inc.,
922 F.2d 984, 995 (2d Cir. 1990) (“Withdrawal under 28
U.S.C. § 157(d). . . is reserved for cases where substantial
and material consideration of non-Bankruptcy Code federal
statutes is necessary for the resolution of the proceedings.”).
Only one of the creditors’ claims even arguably required the
significant interpretation of non-Bankruptcy Code federal
statutes. In particular, the bankruptcy court was required to
decide a then-unsettled issue when adjudicating Kishbaugh’s
claims as to whether releases that were otherwise unen-
forceable could be ratified by a releasor’s failure to tender
back the consideration given for the release. The creditors
never explicitly pointed out the difficulty of this issue, how-
ever, in its motions to withdraw or as a ground for with-
drawal. Any error involved in adjudicating it was, moreover,
harmless because the issue was decided in Kishbaugh’s favor.
The creditors also challenge the Bankruptcy Court’s assess-
ment of the evidence presented. We see no error in the
bankruptcy judge’s evaluation of the evidence, and note that
when a “ district court premises its findings on credibility
determinations,” these findings are entitled to “particularly
4a
strong deference.” Castrol. Inc. v. Quaker State Corp., 977
F.2d 57, 64 (2d Cir.1992). Finally, all of the creditors’ alle-
gations of attorney conflict in the underlying bankruptcy pro-
ceedings in violation of 11 U.S.C. §327(c) are either
conclusory, unappealable or fail to allege an actual conflict.
See generally In re Arochem Corp., — F.3d —, 1999 WL
31142, at *9-14 (2d Cir. 1999).
We have considered all of the creditors’ other arguments on
this appeal and find them to be without merit. The judgment
of the district court is therefore AFFIRMED.
FOR THE COURT:
KAREN GREVE MILTON, Acting Clerk
By: LUCILLE CARR
Lucille Carr, Deputy Clerk
Sa
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
97 Civ. 8354 (JSR)
In re
THE LESLIE FAY COMPANIES, INC., ef al.,
Debtors,
JACOB V. FALBAUM, ANTHONY GILL, LEE L. KISHBAUGH,
EMILE LEWKOWIEZ, ELIZABETH MICHAUD and RAy-
MOND J. TERWILLIGER,
Appellants,
—
THE LESLIE FAY COMPANIES, INC., et al.,
Appellees.
MEMORANDUM ORDER
Jep S. RAKOFF, U.S.D.J.
On April 5, 1993, Leslie Fay and certain of its affiliates
filed voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code. Each of the debtors thereafter operated its
business or managed its properties as a debtor in possession
pursuant to §§ 1107 and 1108 of the Bankruptcy Code. By
6a
separate proofs of claim filed in 1993 and 1994, the appel-
lants—former Leslie Fay employees Jacob V. Falbaum,
Anthony Gill, Lee L. Kishbaugh, Emile Lewkowiez, Elizabeth
Michaud, and Raymond J. Terwilliger—sought $80 million in
damages from the debtors, alleging that the debtors unlaw-
fully terminated them on the basis of age, gender, and/or dis-
ability, unlawfully failed to rehire them for similar reasons,
and unlawfully retaliated against them for the exercise of their
rights.
After the Honorable Miriam Goldman Cedarbaum, United
States District Judge, denied appellants’ motions to withdraw
their claims from the Bankruptcy Court, the Honorable Tina
L. Brozman, United States Bankruptcy Judge, heard and
decided the claims adversely to the appellants. In blunderbuss
fashion, appellants now challenge almost every aspect of
those decisions. The Court finds, however, that except in one
minor respect relating to one aspect of the award of fees, their
appeals are without merit and must be denied.
The Bankruptcy Court's Jurisdiction
At the outset, appellants assert that the Bankruptcy Court
lacked jurisdiction to adjudicate their claims. To the extent
that these assertions constitute appeals from Judge Cedar-
baum’s orders, in the exercise of her original jurisdiction,
denying appellants’ various motions to withdraw the refer-
ence from the bankruptcy court, such appeals are beyond this
Court’s jurisdiction and must be addressed, if at all, to the
Court of Appeals. See 28 U.S.C. § 158(a); see also In re
Orion Pictures Corp., 4 F.3d 1095, 1100 (2d Cir. 1993); In re
Sonnax Indus., 907 F.2d 1280, 1282-83 (2d Cir. 1990); In re
Manville Forest Products Corp., 896 F.2d 1384, 1385 (2d Cir.
1990); In re Moens, 800 F.2d 173, 176 (7th Cir. 1986); cf. In
re Manoa Finance Co., Inc., 781 F.2d 1370, 1372 (9th Cir.
1986). But see In re Chateaugay Corp., 109 B.R. 613, 615
n.l, 619 (S.D.N.Y. 1990) (asserting—incorrectly in this
Court’s view—that the decision of a different district judge
Ta
that denied a motion for withdrawal of reference merged into
the final order of the bankruptcy court and was reviewable
under § 158(a)), appeal dismissed on other grounds, 924 F.2d
480 (2d Cir. 1991) (per curiam).
Appellants argue, however, that even if this Court cannot
review Judge Cedarbaum’s rulings, it can exercise appellate
jurisdiction to review Judge Brozman’s separate denial of cer-
tain of these same jurisdictional objections, which appellants
separately raised in the Bankruptcy Court. This is not per-
Suasive. Appellants, having chosen to raise all these juris-
dictional objections (and more) before the District Court in
the exercise of its original jurisdiction do not get a second
chance thereafter to relitigate the same issues before the
District Court under the guise of appellate review of Judge
Brozman. Moreover, even assuming arguendo that Judge
Brozman’s jurisdictional determinations were properly before
this Court, the Court concludes that Judge Brozman’s juris-
dictional determinations were correct and that the Bankruptcy
Court did not lack jurisdiction to try Leslie Fay’s objections
to the proofs of claim.
In particular, Judge Brozman was clearly correct in hold-
ing that appellants’ proofs of claim fall squarely within
the statutory definition of “core proceedings.” 28 U.S.C.
§ 157(b)(2)(B): see In re S.G. Phillips Constructors. Inc..
45 F.3d 702, 705 (2d Cir. 1995): In re Best Prods. Co., Inc.,
68 F.3d 26, 32 (2d Cir. 1995). As for appellants’ argument
that their claims are exempted from the Bankruptcy Court’s
jurisdiction by §§ 157(b)(2)(B) and (b)(5) because they
involve non-core “personal injury tort. . . claims,” this was
never raised before Judge Brozman (but only before Judge
Cedarbaum) and therefore there is nothing for this Court to
review. See August 18, 1997 Decision After Trial on Employ-
ees’ Discrimination Claims at 47-48. Finally, as to appellants’
jurisdictionally related assertion that they were deprived of a
jury trial, it is well settled that a creditor who voluntarily par-
ticipates in the equitable reordering of a debtor’s estate by fil-
ing a proof of claim has no jury trial rights with respect to
8a
proceedings that involve the allowance or disallowance of
those claims. See, e.g., Granfinanciera, S.A. v. Nordberg, 492
U.S. 33, 58 (1989); Langenkamp v. Culp, 498 U.S. 42, 44
(1990) (per curiam).'
The Denial of the Claims
Properly applying the relevant principles of the law of dis-
crimination and retaliation, the Bankruptcy Court denied
appellants’ claims, chiefly on the basis of credibility findings
adverse to appellants. Nothing in appellants’ papers remotely
supports a conclusion that any of these or the Bankruptcy
Court’s other factual findings were clearly erroneous. Appel-
lants contend, however, that the Bankruptcy Court erred in
bifurcating the trial so that it first heard (and decided
adversely to appellants) those claims that debtors claimed
were barred by validly obtained releases, before deciding
appellants’ other claims. On the contrary, such bifurcation,
which rested within the sound discretion of the Bankruptcy
Court, appropriately narrowed the issues and promoted judi-
cial economy, and thus was altogether proper. Cf. Simpson v.
Pittsburgh Corning Corp., 901 F. 2d 277, 283 (2d Cir. 1990);
Bormann v. AT&T Comms., Inc., 875 F.2d 399, 401 (2d Cir.
1989).*
l
In fact, the case on which appellants primarily rely in this area,
Germain v. Connecticut National Bank, 988 F.2d 1323 (2d Cir. 1993),
specifically held that “the Katchen, Granfinanciera, and Langenkamp
line of Supreme Court cases stands for the proposition that by filing a
proof of claim a creditor forsakes its right to adjudicate before a jury any
issue that bears directly on the allowance of that claim—and does so not
so much on a theory of waiver as on the theory that the legal issue has
been converted to an issue of equity. It is reasonable that a creditor or
debtor who submits to the equity jurisdiction of the bankruptcy court
thereby waives any right to a jury trial for the resolution of disputes vital
to the bankruptcy process, such as those involving the determination of
who is a valid creditor.” Jd. at 1329-30.
‘ Although appellants also assert that the Bankruptcy Court erred
in excluding various pieces of evidence, they do not explain why the
9a
The Award of Fees and Expenses
Finally, appellants argue that the Bankruptcy Court abused
its discretion in approving the award of $9,592,396 in fees
and $1,239,845.47 in expenses to debtors’ counsel Weil.
Gotshal & Manges (“Weil Gotshal”), $311,236.25 in fees
and $19,789.63 in expenses to debtors’ special labor
counsel McDermott, Will & Emery (“McDermott”), and
$2,426,226.10 in fees and $204,454.62 in expenses to
debtors’ special corporate counsel Parker Chapin Platteau &
Klimpl (“Parker Chapin”), because all three firms concur-
rently represented individual Leslie Fay officers and directors
and had impermissible conflicts of interest. See 11 U.S.C.
§ 328(c) (giving the Bankruptcy Court the ability to deny
compensation to a professional who “at any time during such
professional person’s employment. . . is not a disinterested
Person, or represents or holds an interest adverse to the inter-
est of the estate with respect to the matter on which such pro-
fessional person is employed”) id., § 101 (14) (defining
“disinterested person” as, inter alia, a person who “does not
have an interest materially adverse to the interest of the estate
or of any class of creditors or equity security holders. . . for
any. . . reason”). Additionally, according to appellants, the
firms did not disclose these conflicts to the Bankruptcy Court
as required under Bankruptcy Rule 2014(a).3
exclusion of this evidence was erroneous but rather merely assert that the
excluded evidence would have been probative. The Court concludes that
appellants have made no showing that the Bankruptcy Court abused its
discretion in this regard.
? Although appellants also appeal the Bankruptcy Court’s order
denying them compensation for professional services and expenses, they
make nary an argument on the topic in their opening brief, and have
therefore waived the issue entirely. See Knipe v. Skinner, 999 F.2d 708.
710-11 (2d Cir. 1993); Amoco Overseas Oil Co. v. Compagnie Nationale
Algerienne de Navigation, 605 F.2d 648, 653 n.3 (2d Cir. 1979): see also
Bankruptcy Rule 8010(a)(1)(E). Moreover, the Bankruptcy Court’s denial
of these fees pursuant to 11 U.S.C. § 503(b)—on the grounds that appel-
lants did not make “a substantial contribution” and that the fees and
10a
Appellants bear the burden of proof in establishing a con-
flict of interest, see In re Kliegl Bros. Universal Stage Light-
ing Co., Inc., 189 B.R. 874, 880 (Bankr. E.D.N.Y. 1995), and
they have not met this burden with respect to any of the three
law firms.* Regarding Weil Gotshal, appellants attack as
improper that firm’s submission of letters on behalf of the
Leslie Fay Board of Directors Audit Committee to the District
Court in a securities litigation related to the action at hand.
But that representation was permitted by the Bankruptcy
Court's decision on a disqualification motion involving Weil
Gotshal that has not been appealed and of which this Court
sees no reason to disapprove. See In re The Leslie Fay Com-
panies, Inc., 175 B.R. 525 (Bankr. §.D.N.Y. 1994). Nor did
Weil Gotshal act improperly in participating in the response
to appellants’ proofs of claim. Although certain of the
debtors’ objections were filed after December 15, 1994, the
date on which the Bankruptcy Court disqualified Weil Gotshal
from undertaking further new matters in this litigation, see
id., the objections were obviously begun prior to that date and
the Bankruptcy Court was aware of and approved of Weil
Gotshal’s prior role. With respect to appeilants’ allegations
that Weil Gotshal improperly brought about or influenced a
large severance payment made to Laura Pomerantz, former
member of the Leslie Fay management, there is no showing
that Weil Gotshal represented Ms. Pomerantz in any matter
relating to her employment agreement or the relevant release.
Finally, although appellants argue that Weil Gotshal failed to
pursue claims for pre-petition stock transactions conducted by
expenses were not “actual or necessary” because the firm had never
billed or been paid by its clients—was not clearly erroneous. See gen-
erally In re Hooker Investments, Inc., 188 B.R. 117, 120 (S.D.N.Y. 1995),
aff'd, 104 F.3d 349 (2d Cir. 1996).
4
Appellees further argue that appellants are collaterally estopped
from relitigating those aspects of the fee-related issues covered by var-
ious orders that have not been appealed or that have already been
affirmed on appeal. However, the Court need not reach this issue because
it finds appellants’ relevant underlying contentions to be without merit.
lla
certain members of Leslie Fay’s management, there was no
proof that management engaged in any wrongdoing and thus
no need to pursue any claims. See Leslie Fay, 207 B.R. at 776
n.19.
Regarding McDermott, which represented various officers
and directors of Leslie Fay in discrimination suits brought by
appellants in the District Court, appellants provide no basis
for believing that this representation involved McDermott in
representing an interest adverse to the estate or impacted on
the firm's disinterestedness as special labor counsel for Leslie
Fay. The Bankruptcy Court was aware of McDermott’s rep-
resentation of the individuals when it approved McDermott’s
retention as special labor counsel. In that connection, McDer-
mott submitted an affidavit Stating that the firm had apprised
both Leslie Fay and the individuals of the possible pitfalls
involved in representing all of them, that they had all con-
sented, and that no conflicts of interest had arisen or were
likely to arise since all of those Parties took an identical posi-
tion with respect to appellants’ discrimination claims and did
not have defenses that were inconsistent with each others’
interests. The Bankruptcy Court approved McDermott’s reten-
tion after finding that the representation created no “actual
conflict of interest” and that appellants had “not really iden-
tified any facts which Suggest. . . anything stronger than the
theoretical.” Tr. of 10/3/95 Hearing at 25-28. Appellants now
advance only speculation, innuendo, and conclusory asser-
tions in support of their argument that McDermott’s actions
were conflicted and, instead, tainted the Bankruptcy Court's
extensive proceedings. See, e.g., Appellants’ Reply Brief at
42. This is patently insufficient.
However, one minor aspect of the fee award to McDermott
must be remanded to the Bankruptcy Court for further con-
sideration. See Fed. R. Bankr. 8013. Although McDermott has
admitted that approximately $11,000 of the fees that it was
awarded in connection with its representation of the debtors
actually related to its representation of the individuals in the
discrimination suit, the Bankruptcy court never ruled on this
l2a
matter because it concluded that it had already been divested
of jurisdiction by appellants’ appeal to this Court. Accord-
ingly, this Court will remand this proceeding to the
Bankruptcy Court for the limited purpose of having it exam-
ine McDermott’s billing records, determine which portions
relate to matters other than McDermott’s representation of the
debtors, and set McDermott’s final fee award accordingly.
Regarding Parker Chapin, even if the Court overlooks the
fact that several of appellants’ objections relating to Parker
Chapin’s fees were not raised before the Bankruptcy Court,
the Court concludes that appellants have not in any event
demonstrated any impermissible conflicts of interest with
respect to that firm. For instance, although appellants char-
acterize as improper Parker Chapin’s representation of indi-
vidual officers and directors in connection with negotiation of
certain releases, the releases were negotiated on the debtors’
behalf by Wachtell, Lipton Rosen & Katz, counsel for the
creditors’ committee, not by Parker Chapin. Further, although
Parker Chapin was involved in a related state court derivative
action, any potential impropriety has been avoided by having
the creditors’ and equity committees take control over any
potential claims by debtors against their former officers and
directors and by the creation of the Derivative Action Board,
which has independent responsibility for evaluating and pros-
ecuting (if prudent to do so) the derivative action. Appellants’
other specific complaints relating to Parker Chapin are in the
same vein and are similarly meritless.
Conclusion
The Court has carefully considered each of appellants’
numerous arguments, inciuding those not discussed above,
and found them all to be without merit, except for the one
minor aspect relating to McDermott’s fees. Accordingly, that
limited issue is hereby remanded to the Bankruptcy Court,
and all of the other orders appealed from are hereby affirmed
in all respects.
ee
l3a
SO ORDERED.
/s/ JED S. RAKOFF
JED S. RAKOFF. U.S.D.J.
Dated: New York, New York
July 17, 1998
l4a
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
Case No. 93 B 41724, et. seq. (TLB)
In re
THE LESLIE FAY COMPANIES, INC., et al.
DECISION ON REMAND
APPEARANCES:
WEIL GOTSHAL & MANGES, LLP
Attorneys for Debtors
767 Fifth Avenue
New York, New York 10153
By: Brian S. Rosen, Esq.
WISEHART & KOCH
Attorneys for Claimants
19 West 44th Street, Suite 412
New York, New York 10036
By: Arthur M. Wisehart & Heather R. Boshak, Esqs.
MCDERMOTT, WILL & EMERY
Debtors’ Special Labor Counsel
1211 Avenue of the Americas
New York, New York 10036
By: Joel E. Cohen & Barbara R. Funt, Esqs.
15a
TINA L. BROZMAN, Chief United States Bankruptcy Judge:
In an Order dated September 5, 1997, I awarded the law
firm of McDermott, Will & (“MW&E”), special labor coun-
sel to the Leslie Fay Companies, Inc. (the “Debtors”),
$311,236.25 in final compensation. Subsequently, Jacob
V. Falbaum, Anthony Gill, Lee L. Kishbaugh, Emile
Lewkowiez, Elizabeth Michaud, and Raymond Terwilliger
(the “Claimants”) all of whom are former employees of the
Debtors who had asserted employment discrimination claims
against the Debtors, moved to alter or amend that Order, seek-
ing to vacate the award of fees to MW&E because the firm
had inappropriately billed the Debtors’ estate for services ren-
dered on behalf of MW&E’s clients, the officers and directors
of the Debtors (the “D&Os”), in litigation in the Southern
District of New York before Judge Cedarbaum (the “District
Court Action”). MW&E opposed the motion yet acknowl-
edged that it had committed approximately $11,000 in billing
errors and stated that it would immediately reimburse the
appropriate sums to the estate.
The Claimants raised other fee-related and billing issues
which I never reached because I had been divested of juris-
diction by virtue of the Claimants’ filing of a notice of appeal
in the district court. Judge Rakoff, in a Memorandum Order
dated May 17, 1998, affirmed in full my decision denying the
Claimants’ claims and authorizing the fee awards, but
remanded “for the limited purpose of having [the bankruptcy
court] examine McDermott’s billing records, determine which
portions relate to matters other than McDermott’s represen-
tation of the debtors, and set McDermott’s final fee award
accordingly.” It should be noted that I was affirmed in my
denial of ail of the Claimants’ claims, as a result of which
they hold no allowed claims against the Debtors’ estates. The
district court’s affirmance is, however, an appeal to the Sec-
ond Circuit.
MW&E submitted a proposed amended order to which the
Claimants objected because they believe the proposed
$10,461.70 reduction is insufficient. That amount represents
16a
the legal fees incurred by MW&E in defending the D&Os in
the District Court Action. Everyone agrees now that those
fees were not the obligation of the Debtors but of Aetna Casu-
alty & Surety Company, which had an Interim Funding Agree-
ment with the Debtors for that purpose.' The Claimants would
have me disallow any fees relating to the negotiation of that
agreement between the Debtors and Aetna.? However, as |
noted once before during the hearing on the Claimants’
motion to amend, Aetna’s payment of the D&O’s attorneys’
fees in connection with the District Court Action was a plain
benefit to the Debtors because, to the extent Aetna paid, the
Debtors were relieved of the obligation to advance funds in
accordance with the indemnification provisions of their by-
laws. The Interim Funding Agreement therefore benefitted the
Debtors, so that any fees occurred in its negotiation were
property billed to the estate.
I have undertaken a thorough review of MW&E’s billing
records and find that the $10,461.70 reduction proposed by
MW&E correctly reflects the amount that was improperly
; The Claimants criticize this agreement (which they have never
seen) as a secret agreement that somehow harms them. Inasmuch as I
expunged after trial all of the Claimants’ claims, I cannot conceive of
why they ought be entitled now to see this agreement.
>
7 The Claimants also urge me to disallow any fees generated by
the Adversary Proceeding commenced on behalf of the Debtors against
the Claimants which was assigned to Judge Gallet. They argue that it was
retaliatory and harassing, evidence of which, they claim, is its discon-
tinuance by MW&E on the eve of trial. This suit was brought by and for
the benefit of the Debtors. Nonetheless, MW&E had good reason to aban-
don the proceedings because, as a result of Judge Gallet’s denial of their
request to prohibit delving into matters already tried, the Debtors were
going to be forced to relitigate essentially the same matters I had decided,
in order reach the claims asserted in their complaint. The cost of going
forward under those circumstances was burdensome; the Debtors made
a calculated decision to quit while they were ahead. There is nothing
retaliatory about that. Moreover, MW&E instituted the adversary pro-
ceeding only after I had decided the Claimants’ employment discrimi-
nation claims favorably to the Debtors, not in order to coerce the
Claimants to drop their claims before trial.
in NS BAS ens aI
RS ttre
baa AT re ihe
17a
billed to the Debtors’ estate on account of matters that do not
relate to MW&E’s representation of the Debtors. Accordingly,
I am signing their Proposed order without change.
Date: New York, New York
December 11, 1998
/s/ TINA L. BROZMAN
CHIEF UNITED STATES BANKRUPTCY JUDGE
18a
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
Chapter 11 Case No. 93 B 41724 (TLB)
(Jointly Administered)
In re
THE LESLIE FAY COMPANIES, INC., et al.,
Debtors.
ORDER GRANTING APPLICATIONS FOR
ALLOWANCE OF COMPENSATION AND
REIMBURSEMENT OF EXPENSES
Upon consideration of the applications for allowance of
compensation and reimbursement of expenses (collectively,
the “Applications”) for professional services rendered and
expenses incurred during the respective subject periods; and
a hearing having been held before this Court to consider
the Applications on July 31, 1997; and notice having been
given pursuant to Federal Rules of Bankruptcy Procedure
2002(a)(7) and (c)(2) and this Court’s Order Establishing
Administrative Procedures, dated September 20, 1993; and
due consideration having been given to any objections and
responses interposed with respect thereto; and good and suf-
ficient cause having been shown therefor, it is hereby;
ORDERED that the Applications are granted to the extent set
forth in Schedule “A” annexed hereto.
Dated: New York, New York
September 5, 1997
/s/ TINA L. BROZMAN
UNITED STATES BANKRUPTCY JUDGE
ee Se ee en
es
CASE NU *R:
CASE NAN, c:
83 B 41724 (TLB)
in re The Leste Fay Companies, inc. gt al..
December 1, 1996 through June 4, 1997
19a
)
)
. TOTAL FEES AND EXPENSES
INTERIM INTERIM AWARDED AND TO BE PAID
DATEDOCKET NO. INTERIM FEES INTERIM FEES EXPENSES EXPENSES {INCLUDING FEES ;
: APPLICANT OF APPLICATION REQUESTED AWARDED REQUESTED AWARDED PREVIOUSLY HELD BACK)
/
: Weil, Gotshal & Manges LLP 06/30/97- 4188 | $ 1,227,061.40 $ 1,227,061.40 $110,223.60 | $ 110,223.60 $ 3,095,570.27
Parker. Chapin, Flattau & 06/30/97- 4178 ¢ 56,846.31 $ 56,846.31 $11,623.93 | $ 11,623.93 $ 434,188.34
; Klimpli
Arthur Andersen & Co. {invest.) | 06/30/97- 4181 $0.00 $ 0.00 $ 0.00 $ 0.00 $ 210,177.u0
: Aithur Andersen & Co. (Accts} | 06/30/97- 4180 $ 248,743.90 $ 248,743.90 $ 37,234.73 } $37,234.73 § 1,569.950.75
7 Akin, Gump, Strauss, Hauer & | 06/30/97- 4179 $ 291,830.00 ¢ 291,830.00 $ 29,743.28 | &@ 28,743.28 § 519,470.23
i Feld, L.L P.
j
: McDermott, Will & Emery 07/09/97- 4195 ¢ 94,711.25 @ 94,711.25 ¢ 2,704.97 $ 2,704.97 $ 151,547.48
} Jay Alix and Assoc. 06/30/97- 4176 $ 6,142.25 $ 6,142.25 $31.14 $31.14 $ 239,893.58
| Wachtell, Lipton, Rosen & Katz | 06/30/97- 4177 $ 481,238.50 $ 481,238.50 $56,424.13 |} $ 56,424.13 $ 832,324.50
CIBC/Wood Gundy 07/01/97- 4183 $ 5,640:00 ¢ 6,640.00 $ 216.99 $ 216.99 $ 166,677.08
Mudge Rose Guthrie 06/30/97- 4187 $ 36,587.66 $ 10,000.00 $ 0.00 $ 0.00 $ 77,968.18
. The Blackstone Group 07/18/97- 4203 $ 500,000.00 ¢ 500,000.00 ¢ 8,922.98 $ 8,922.98 $ 808,922.98
; 2
Lord, Bissel & Brook 06/27/97- 4170 $ 134,689.60? $ 0.00? $ 0.00 $ 0.00 $ 0.00
Latham & Watkins 06/27/97- 4173 ¢ 0.00 ¢ 0.00 # 0.00 $ 0.00 6 18,44
Rothschild, Inc. 06/26/97- 41693 $ 0.00 ¢ 0.00 $ 0.00 $ 0.00 § 55,516.66
Winston & Strawn 06/27/97- 4172 ¢ 0.00 ¢ 0.00 $ 0.00 $ 0.00 $ 8,302.75
Price Waterhouse LLP 07/02/97- 4190 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 170,619.66
Keen Realty Consultants, inc. 06/25/97- 4168 $ 14,250.00 ¢ 14,250.00 $ 525.37 $ 525.37 $ ahha
Bankruptcy Services LLC 06/27/97- 4171 $ 5,912.50 $ 5,912.50 $ 1,280.68 $ 1,280.68 $ 7,193.18
SCHEDULE A DATE: INITIALS: USBJ
PAGE 1 OF 2
* Net of all prior payments.
2 The tees requested by Lord, Bissel & Brook shall be the subject of a separate order of the Court.
ar
eee “ mn =
Kgs DRE WSS Set CS AS A RBS
Re Ate er ees
Secor
cc Ani Said cc eR ose
CASE NUM
CASE NAME:
$3 8 41724 (TLB)
in re The Leslie Fay Companies, inc. ef al.,
20a
ALL FEE PERIODS (INCLUDING THIS PERIOD)
APPLICANT
TOTAL FEES TOTAL FEES TOTAL FEES TOTAL FEES TOTAL TOTAL
REQUESTED AWARDED PAID/TO BE PAID HELD BACK EXPENSES EXPENSES
: REQUESTED AWARDED
Weil, Gotshal & Manges LLP $9,946.473.00 | $9,692,396.00 $9,692,396.00 $ 0.00 $1,240,845.54 $1,239,845.47
Paiber, Chapin, Flattau & Klimt $2,465,385.00 | ¢2,426,226.10 $2,426,226.10 $ 0.00 $ 211,147.00 $ 204,454.62
Winston & Strawn $ 36,898.50 $ 33,211.00 $ 33,211.00 $ 0.00 $ 679.69 $ 482.12
Anhur Andersen & Co. (Accts.) $7,760,033.20 | $7,767,407.10 $7,757,407.10 $ 0.00 $ 573,426.03 $ 573,426.03
Arttus Andersen & Co. Invest.) $1,434,263.00 | ¢1,434,263.00 $1,434,263.00 $ 0.00 $ 68,975.83 $ 68,975.83
Akin, Gump, Strauss, Hauer & Feld, L.t.P. | $1,042,791.75 | $1,027,396.75 $1.027,396.75 $ 0.00 $ 81,460.17 $ 81,460.17
McDermortt, Will & Emery $ 311,381.25 $ 311,236.25 $ 311,236.25 $ 0.00 $ 19,789.63 $ 19,789.63
The Blackstone Group $2,300,000.00 | $2,300,000.00 $2,300,000.00 > 0.00 $ 39,890.77 $ 34,910.77
Jay Alix and Assoc. $ 918,647.48 ¢ 888,481.75 $ 888,481.75 $ 0.00 $ 98,914.68 $ 98,035.16
Wachtell Lipton, Rasen & Katz $1,668,690.75 | $1,668,690.75 $1,668,690.75 $ 0.00 $ 185,250.34 $ 185,250.34
Price Waterhouse LLP $1,288,735.60 | §$1,279,662.10 $1,279,652.10 $ 0.00 $ 59,469.30 $ 59,469.30
CIBC/Wood Gundy $ 809,860.34 ¢ 809,860.34 $ 809,860.34 . 0.00 $ 18,569.84 $ 16,955.28
Lord, Bissel & Brook $ 6465,728.60' | $ 402,732.50' ¢ 326,030.88'}| ¢ 76,701.62" $ 76,819.45' $ 76,188.78'
Latham & Watkins $ 82,465.75 $ 82,465.75 ¢ 82,465.76 5 0.00 $ 17,137.14 $ 17,137.14
Rothschild, Inc. $ 316,166.66 $ 316,166.65 $ 316,166.66 * 0.00 $ 12,094.36 $@ 11,177.10
Equty Committee Members N/A N/A N/A N/A $ 3,320.77 $ 3,320.77
Mudge Rose Guthsie $ 466,621.26 $ 429,033.60 $ 429,033.60 ¢ 0.00 $ 18,399.47 $ 18,399.47
Sullinan, Fiedman & Shaw. P.C. $ 517,996.60 $ 617,996.60 $ 617,996.50 $ 0.00 $ 41,447.78 $ 41,447.78
KPMG Peat Marwick $ 252,246.30 | 6 262,246.30 ¢ 262,246.30 $ 0.00 $ 137.10 $ 137.10
Stroock & Stroock & Lavan $ 791,864.00 $ 791,864.00 $ 791,864.00 » 0.00 $ 68,217.53 $ 67,817.53
“SCHEDULE A DATE: INITIALS: uSBJ
PAGE 2 OF 2
' The fees sequested by Lord, Bisse! & Brook shall be the subject of a separate order of the Court.
2la
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
Chapter 11 Case No. 93 B 41724 et seq. (TLB)
(Jointly Administered)
In re
THE LESLIE Fay COMPANIES, INC., etal.,
Debtors.
ORDER EXPUNGING REMAINING CLAIMS OF
EMILE LEWKOWIEZ, ANTHONY GILL, JACOB V.
FALBAUM, RAYMOND J. TERWILLIGER, ELIZABETH
MICHAUD AND LEE L. KISHBAUGH (CLAIM NOS.
00076, 00077, 00078. 00079, 00080 AND 01566)
Upon the objections, dated February 14, 1995, January 17,
1997 and February 28, 1997 (the “Objections”), of The Leslie
Fay Companies, Inc. (“Leslie Fay”) for an order pursuant to
11 U.S.C. § 101, er seq. (the “Bankruptcy Code”) disallowing
the claims of Emile Lewkowiez (“Lewkowiez”), Anthony Gill
(“Gill”), Jacob V. Falbaum (“Falbaum”), Raymond J.
Terwilliger (“Terwilliger”), Lee L. Kishbaugh (“Kishbaugh”’)
and Elizabeth Michaud (“Michaud”) (collectively the
“Claimants”) arising out of the termination of Claimants’
employment with Leslie Fay (“Termination Claims”), as well
aS various post-termination claims (“Post-Termination
Claims”); and due and proper notice of the Objections and the
relief requested therein having been given, and Leslie Fay and
the Claimants having undertaken Significant discovery; and a
22a
trial having been held on October 11, 1995, continued on
November 27 and December 11, 1995 and concluded on Jan-
uary 16, 1996, to consider the validity of releases signed by
Gill, Falbaum and Terwilliger with respect to those claimants’
Termination Claims (the “Releases Trial”), and upon the rul-
ing of the Court dated January 24, 1996, and an Order dated
February 2, 1997, upholding the validity of certain releases
signed by Falbaum, Gill and Terwilliger (the “Releases”) and
expunging those claimants’ Termination Claims; and a hear-
ing having been held on February 18 and 19, 1997 to estimate
the value of the Post-Termination Claims of Gill, Falbaum
and Terwilliger and all of the claims of Lewkowiez and Kish-
baugh for purposes of confirmation of Leslie Fay’s plan of
reorganization (the “Estimation Hearing”); and a trial having
been held on May 28 and 29, and June 9, 16, and 23, 1997,
with respect to the merits of Gill, Falbaum, and Terwilliger’s
Post-Termination Claims and the entire claims of Lewkowiez,
Kishbaugh and Michaud (the “Merits Trial”); and the parties
having submitted Post-Trial Memoranda of Law and Reply
Memoranda of Law on July 7 and July 15, 1997; and upon
consideration of the Objections and all of the pleadings filed
in respect thereof; and upon the record of the Merits Trial,
and all other proceedings had before the Court; and for the
reasons set forth in the Decision After Trial on Employees’
Discrimination Claims rendered on August 18, 1997 (the
“Opinion”) with respect to the Objections as amended by
written Order dated Sept. 5, 1997; and after due deliberation
and sufficient cause existing therefor, it is hereby
ORDERED that the Objections be, and they hereby are
granted in their entirety; and it is further
ORDERED that, pursuant to section 502 of the Bankruptcy
Code, the remaining Post-Termination Claims of claimants
Falbaum, Gill and Terwilliger be, and they hereby are, dis-
allowed in their entirety; and it is further
ORDERED that, pursuant to section 502 of the Bankruptcy
Code, the entire Claims of claimants Lewkowiez, Kishbaugh
23a
and Michaud be, and they hereby are, disallowed in their
entirety.
Dated: New York, New York
September 5, 1997
/s/ TINA L. BROZMAN
UNITED STATES BANKRUPTCY JUDGE
24a
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
97 Civ. 2244 (MGC)
Chapter 11 Case No. 93 B 41724 et seq., (TLB)
In re:
THE LESLIE FAY COMPANIES, INC. et al..
Debtors.
Adversary Proceeding No. 96/8311A
THE LESLIE FAY COMPANIES, INC., et al.,
Plaintiffs,
—against—
JACOB V. FALBAUM, ANTHONY GILL
and RAYMOND TERWILLIGER,
Defendants.
25a
MEMORANDUM OPINION AND ORDER
APPEARANCES:
WEIL GOTSHAL & MANGES LLP
Attorneys for The Leslie Fay Companies, Inc.
767 Fifth Avenue
New York, New York 10153
By: Brian S. Rosen, Esq.
McCDERMOTT, WILL & EMERY
Special Labor Counsel for
The Leslie Fay Companies, Inc.
50 Rockefeller Plaza
New York, New York 10020
By: Joel E. Cohen, Esq.
WISEHART & KOCH
Attorneys for Jacob V. Falbaum, Anthony Gill
and Raymond Terwilliger
19 West 44th Street Suite 412
New York, New York 10036
By: Arthur M. Wisehart, Esq.
Cedarbaun, J.
Jacob V. Falbaum, Anthony E. Gill, and Raymond J.
Terwilliger, former employees of the debtor who have filed
proofs of claim. in the Bankruptcy Court alleging employment
discrimination, move in this Court for an order withdrawing
the reference of Adversary Proceeding No. 96/8311A
pursuant to 28 U.S.C. § 157(d). Because Falbaum, Gill and
Terwilliger (collectively, the “Creditors”) have not demon-
26a
strated that either mandatory or permissive withdrawal is
appropriate in this case, the motion is denied.
Background
The Leslie Fay Companies, Inc. (“Leslie Fay”) filed a vol-
untary petition for relief under Chapter 11 of the Bankruptcy
Code on April 5, 1993. Prior to that date, Leslie Fay had ter-
minated the employment of each of the Creditors. In con-
nection with the terminations, the Creditors signed severance
agreements in which they released and discharged Leslie Fay
from any charges, claims or actions arising out of their
employment or the termination of their employment. In addi-
tion to the releases, the severance agreements included
covenants not to sue which provided that the Creditors would
not bring any charges, claims or actions against Leslie Fay
except those arising after the signing of the severance agree-
ments.
Following their terminations, the Creditors filed age dis-
crimination charges against Leslie Fay with the Equal
Employment Opportunity Commission (the “EEOC”). The
EEOC dismissed the charges on the ground that the releases
precluded recovery.
On May 28, 1993, the Creditors filed proofs of claim
against Leslie Fay in the Bankruptcy Court seeking damages
for age discrimination. In January 1996, following a hearing,
the Bankruptcy Court held that the releases were knowing and
voluntary. It therefore upheld the validity of the releases and
ruled that those of the Creditors’ claims against Leslie Fay
that arose prior to the signing of the releases were barred. The
claims against Leslie Fay that arose after the releases were
signed were not barred and are currently being tried in the
Bankruptcy Court.
On March 22, 1996, Leslie Fay commenced an adversary
proceeding against the Creditors asserting a claim for breach
of contract. In the adversary proceeding, Leslie Fay seeks
damages to compensate it for the attorneys’ fees, costs and
27a
expenses associated with defending itself against the pre-
release discrimination claims that allegedly were filed in
breach of the severance agreements.' The Creditors now seek
an order from this Court pursuant to 28 U.S.C. § 157(d) with-
drawing the reference of the adversary proceeding.
Discussion
The Creditors argue that both mandatory and permissive
withdrawal of the reference apply in this case. With respect to
mandatory withdrawal, the Creditors do not make any argu-
ments that have not already been ruled upon in the many pre-
vious motions to withdraw the reference of the proofs of
claim. Withdrawal is mandated only “if the court determines
that resolution of the proceeding requires consideration of
both title 11 and other laws of the United States regulating
organizations or activities affecting interstate commerce.” 28
U.S.C. § 157(d). The Second Circuit has interpreted this
Statute to require mandatory withdrawal omiy where “sub-
stantial and material consideration of non-Bankruptcy Code
federal statutes is necessary for the resolution of the pro-
ceeding.” /n re lonosphere Clubs, Inc., 922 F.2d 984. 995 (2d
Cir. 1990), cert. denied, 502 U.S. 808 (1991). The adversary
proceeding in this case alleges a simple breach of contract
that clearly will not require “substantial and material con-
sideration of non-Bankruptcy Code federal statutes.” The
Creditors argue, however, that because the issues raised in the
adversary proceeding are “inextricably intertwined” with the
issues raised by the proofs of claim, interpretation of the Age
Discrimination in Employment Act (“ADEA”) will be
required. But I have already ruled that the issues raised by
the proofs of claim will not involve anything more than a
The Creditors have commenced an action in this Court asserting
claims of discrimination against individual officers of Leslie Fay. Those
individual defendants filed counterclaims dated June 14, 1996, which
contain allegations similar to those made by Leslie Fay in the adversary
proceeding.
28a
straightforward application of the ADEA to the facts of this
case. (Tr. of Hearing in 95 Civ. 2928 (MGC) dated 6/16/95 at
17.) The proceedings in the Bankruptcy Court to date have
not altered that determination.
The Creditors also argue that permissive withdrawal of the
adversary proceeding is warranted. Section 157(d) provides
that a district court “may withdraw, in whole or in part, any
case or proceeding referred under this section, on its own
motion or on timely motion of any party, for cause shown.”
The Second Circuit has held that in deciding whether there is
sufficient “cause” for permissive withdrawal, a district court
should weigh the following factors, of which the first is the
most important: “(1) whether the claim is core or non-core,
(2) what is the most efficient use of judicial resources, (3)
what is the delay and what are the costs to the parties, (4)
what will promote uniformity of bankruptcy administration,
(5S) what will prevent forum shopping, and (6) other related
factors.” In re Burger Boys, Inc., 94 F.3d. 755, 762 (2d Cir.
1996) (citing Jn re Orion Pictures Corp., 4 F.3d 1095, 1101
(2d Cir. 1993), cert dismissed, 511 U.S. 1026 (1994)).
The only “cause” for permissive withdrawal suggested by
the Creditors is their argument that they are entitled to a trial
by jury under the ADEA. However, I have twice ruled that by
filing their proofs of claim with the Bankruptcy Court, the
Creditors waived their right under the ADEA to a jury trial.
(Tr. of Hearing in 95 Civ. 2928 (MGC) dated 6/16/95 at 17;
Order in 95 Civ. 2928 (MGC) dated 9/12/95.) The adversary
proceeding instituted by Leslie Fay is essentially an objection
to the allowance of the claims which also seeks certain affir-
mative relief. As such, it is part of the claims allowance pro-
cess that commenced when the Creditors filed their proofs of
claim and thus the Creditors do not have a right to a jury trial
of the adversary proceeding. Germain v. Connecticut National
Bank, 988 F.2d 1323, 1330 & n.9 (2d Cir. 1993); see also
Langenkamp v. Culp, 498 U.S. 42 (1990) (per curiam) (by fil-
ing proof of claim, creditor submits to equitable jurisdiction
of bankruptcy court and is not entitled to jury trial on
on ee
eae ee er ‘
29a
trustee's subsequent preference action). Thus, the argument of
the Creditors does not support permissive withdrawal.
Moreover, the claim asserted in the adversary proceeding is
a core matter. Section 157(b)(2)(C) provides that core pro-
ceedings include “counterclaims by the estate against persons
filing claims against the estate.” The adversary proceeding is
nothing more than a counterclaim by Leslie Fay to the proofs
of claim filed by the Creditors. In addition, it arises out of the
Same transaction as the proofs of claim and concerns the same
severance agreements that were the subject of the hearing in
the Bankruptcy Court to determine whether the pre-release
ADEA claims could proceed. Adjudication of the adversary
proceeding will require consideration of the issues raised by
the proofs of claim. The Creditors themselves argue that the
adversary proceeding is both “inextricably intertwined” with
the proofs of claim and an “outgrowth” of the proofs of claim.
(Creditors’ Mot. 9] 28, 30.) Accordingly, the adversary pro-
ceeding is a core matter. See In re Manville Forest Products
Corp., 896 F.2d 1384 (2d Cir. 1990) (adversary proceed-
ing asserting debtor’s objection to creditor’s proof of claim
is core); In re Seatrain Lines, Inc., 198 B.R. 45, 50 n.7
(S.D.N.Y. 1996) debtor’s adversary proceeding against cred-
itor is core matter only when it arises out of same transaction
as proof of claim and thus functions as counterclaim); /n re
Lombard-Wall, Inc., 48 B.R. 986 (S.D.N.Y. 1985) (where
claim in adversary proceeding arose out of same transaction
as proof of claim and would require interpretation of same
contracts as proof of claim, adversary proceeding was coun-
terclaim under 28 U.S.C. § 157(b)(2)(C)). The fact that the
adversary proceeding in this case is a core matter weighs
against permissive withdrawal.
In addition, the other factors in this case do not support
withdrawal. Judicial economy would not be served by with-
drawal of the reference at this time. The Bankruptcy Court
has already held an extensive hearing on the releases in con-
nection with the proofs of claim. The adversary proceeding
will require consideration of the same releases as well as the
30a
issues raised by the age discrimination claims. Moreover, the
adversary proceeding is currently scheduled to be tried in
the Bankruptcy Court on September 8, 1997. To withdraw the
reference at this time would delay resolution of the matter.
Finally, the Creditors’ contention that withdrawal of the ref-
erence would eliminate “a duplicative, unnecessary pro-
ceeding in the Bankruptcy Court and a drain upon [the
Creditors’] very slender resources,” (Letter from Wisehart
dated 7/21/97), is not persuasive. It is the Creditors’ repeated
attempts to withdraw the reference based on arguments
that have already been ruled upon that are duplicative and
unnecessary.
Conclusion
For the foregoing reasons, the motion to withdraw the ref-
erence of Adversary Proceeding No. 96/8311A is denied.
SO ORDERED.
Dated: New York, New York
September 5, 1997
/s/ MIRIAM GOLDMAN CEDARBAUM
MIRIAM GOLDMAN CEDARBAUM
United States District Judge
3la
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
Case No. 93 B 41724, et. seq. (TLB)
In re
THE LESLIE Fay COMPANIES, INC., et al.
DECISION AFTER TRIAL ON EMPLOYEES’
DISCRIMINATION CLAIMS
APPEARANCES:
FOR THE CLAIMANTS
Wisehart & Koch
By: Arthur M. Wisehart & Heather R. Boshak, Esqs.
19 West 44th Street, Suite 412
New York, New York 10036-5993
FOR THE DEBTORS
McDermott, Will & Emery
By: Joel E. Cohen & Barbra Funt, Esqs.
50 Rockefeller Plaza
New York, New York 10020
TINA L. BROZMAN, Chief United States Bankruptcy Judge
The Leslie Fay Companies, Inc. (“Leslie Fay”), a domestic
clothing manufacturing company which has confirmed a plan
of reorganization, objects to the claims of six former employ-
Le a a ee
32a
ees all of whom contend that they were the victims of one
form or another of prohibited discrimination in regard to
either or both the termination of their employment and Leslie
Fay’s failure to rehire them. Collectively, the claimants seek
over $80 million in asserted administrative priority claims.
These claimants are not alone in the ranks of the terminated,
for over the course of four years, Leslie Fay let go some
3,700 employees, constituting two-thirds of its work force.
Claimant Elizabeth Michaud, who suffers from diabetes and
hypertension, alleges that she was not promoted and suffered
a series of discriminatory and humiliating acts deliberately
inflicted upon her by her supervisor which made it impossi-
ble for her to perform her duties effectively or to remain in
her position. She contends that she was thereby constructively
discharged and suffered retaliation due to her gender and dis-
ability in violation of Title VII of the Civil Rights Act of
1964, as amended, 42 U.S.C. § 2000e et seg., the Americans
with Disabilities Act of 1990 (“ADA”), 42 U.S.C. § 12101 et
seq., the New York State Human Rights Law (“NYSHRL”),
N.Y. Exec. Law § 290 et seq. (McKinney 1993), and the Penn-
sylvania Human Relations Act (“PHRA”), 43 Pa. Stat. Ann.
§ 951 et seq. (1996).
Jacob Falbaum, Anthony Gill, Lee Kishbaugh, Emile
Lewkowiez and Raymond Terwilliger allege that their
employment with Leslie Fay was terminated and they were
not rehired because of their ages, in violation of the Age Dis-
crimination in Employment Act (“ADEA”), 29 U.S.C. § 621
et seq. (1985), the New York State Human Rights Law
(“NYSHRL”), article 15, and the Pennsylvania Human Rela-
tions Act (“PHRA’”’), 43 Pa. Stat. Ann. § 955. In addition,
Terwilliger claims that, in violation of the ADEA, he was ter-
minated in retaliation for voicing objections to Leslie Fay’s
discriminatory employment practices.
33a
I.
A. Background and Prior Proceedings
Leslie Fay, a Delaware corporation with its principal place
of business in New York, was a publicly held company
engaged in the design, manufacture and sale of diversified
lines of women’s dresses, suits, blouses and sportswear. It
operated in two major divisions, its core businesses, called
“Leslie Fay”, and its “Sassco” division.' On April 5, 1993.
precipitated by the discovery of certain “accounting irregu-
larities,” Leslie Fay and certain of its affiliates filed voluntary
petitions for relief under chapter 11 of title 11 of the United
States Code. Although the magnitude of the overstatement of
its financial statements was not fully identified at the time of
the filing, eventually the company restated its earnings for the
years 1990, 1991, and 1992 to reflect income that was some
$81 million less than had been originally reported. See gen-
erally In re Leslie Fay Cos., Inc., 207 B.R. 764 (Bankr.
S.D.N.Y. 1997): In re Leslie Fay Cos., Inc., 175 B.R. 525
(Bankr. §.D.N-Y. 1994).
Leslie Fay continued to operate its business and manage its
property as a debtor in possession. In due course, a final date
for the filing of proofs of claim was fixed and the six
claimants filed proofs of claim against the estate.
All of the claimants save Terwilliger worked in Leslie Fay’s
domestic manufacturing or distribution facilities in Penn-
~ sylvania. Terwilliger, who served as Leslie Fay’s Vice Pres-
ident of Human Resources, was also based in Pennsylvania.
Falbaum and Lewkowiez were terminated in August 1992.
pursuant to a reduction in force (“RIF”): Terwilliger’s
employment was terminated the same month, but not pursuant
]
As a result of the confirmation and consummation of its plan of
reorganization, Leslie Fay’s two divisions were spun off into separate
corporations owned by its creditors. Both entities would be liable for the
payment of the claimants’ asserted administrative claims, if they are sus-
tained. General unsecured claims are payable through a combination of
a small amount of cash and stock of both surviving entities.
|
|
1
34a
to the RIF; Gill’s employment was terminated in May 1992,
not pursuant to an RIF; Kishbaugh was terminated post-
bankruptcy in connection with the November 1993 closing of
his factory; and Michaud retired on December 31, 1992. (Pre-
Trial Order, Undisputed Facts at 99 4, 6, 8, 10, 13, and 16).
Under Leslie Fay company policy, an involuntarily termi-
nated employee was not eligible for severance benefits unless
he or she executed a release agreement waiving any and all
claims against the company in connection with his or her
employment or the termination thereof.*? Pearson, Tr. 67
(October 11, 1995); Tully, Tr. 95-96 (Feb. 18, 1997); Silvi, Tr.
38-39 (Feb. 18, 1997). Leslie Fay offered Falbaum, Gill, Ter-
williger, Kishbaugh and Lewkowiez the opportunity to obtain
severance benefits in consideration for the execution of
releases. Because Michaud retired, she was not offered sev-
erance and did not sign a release.
Falbaum, Gill, Terwilliger and Kishbaugh executed releases
by which they agreed to “release and discharge [Leslie Fay]
from any and all charges, claims and actions arising out of
[their] employment with [Leslie Fay]. . .” Each of them
received severance benefits. Kishbaugh’s release was con-
cededly invalid, although he has not returned the severance
benefit in return for which he executed the release.
Lewkowiez declined to sign a release and thus received no
severance. Lewkowiez, Tr. 183-84 (Feb. 18, 1997) and Tr. 72
(May 28, 1997).
Despite their execution of releases, Falbaum, Gill and Ter-
williger filed charges with the Equal Employment Opportu-
nity Commission (“EEOC”), the New York State Division of
2
Citations to testimony from the trial are designated as “[witness
last name), Tr. [page number] ([date of testimony]). Where there was
more than one witness with the same last name, the witness’ first initial
is also indicated. Exhibits admitted during the trial that were introduced
by the Claimants are referenced as “CL’s Ex. [number]” and those intro-
duced by the Debtors are referenced as D’s Ex. [number]. Where helpful,
a brief description of the exhibit will follow the exhibit number. Exhibits
admitted during the release hearing will be referenced as Release Hear-
ing, Ex. [number].
oe eee
35a
Human Rights and the Pennsylvania Human Relations Com-
mission against Leslie Fay and certain of its former officers
and directors. Lewkowiez and Michaud did the same. While
these charges were pending, those of the claimants who had
by then been terminated filed their proofs of claim. Fourteen
months later Kishbaugh, newly terminated, did SO, too.
On February 14, 1995, Leslie Fay filed objections to the
proofs of claims interposed by Falbaum, Gill and Terwilliger
on the ground that the claims arising before or out of their ter-
minations were barred by the assertedly valid releases which
they had executed. I ordered the proceedings bifurcated so
that the merits of the discrimination claims would not be tried
until the issue of the binding effect of the releases was first
determined. I conducted a trial on that limited issue on Octo-
ber 11, November 27, and December 11, 1995 and January 16,
1996. On January 24, 1996, I read into the record my decision
upholding the validity of the releases. By order dated Febru-
ary 7, 1996, I expunged the pre-termination and termination-
related claims of the three claimants. Needless to Say,
perhaps, the release portion of the claims objection hearing
constitutes part of the record here. In any event, the parties
stipulated that the testimony taken and exhibits admitted into
evidence were deemed a part of this record.
The releases aside, Falbaum, Gill and Terwilliger all con-
tend that Leslie Fay did not rehire them because of their ages.
Inasmuch as those claims allege discriminatory acts separate
and distinct from their employment and termination claims
and were not encompassed within the releases, they are not
barred. See 29 U.S.C. § 626(f)(1)(C).
Although Kishbaugh’s release does not comport with the
mandatory requirements of the Older Workers Benefit & Pro-
tection Act (“OWBPA”), 29 U.S.C. § 626(f), the 1990 amend-
ment to the ADEA, Leslie Fay nevertheless contends that
Kishbaugh may he said to have ratified the release, or, stated
differently, to have waived the protections of the OWBPA,
because he failed to tender back the severance benefits he
received under the release agreement.
36a
On the eve of the hearing to consider approval of the joint
plan of reorganization filed by the debtors and the Official
Committee of Unsecured Creditors, Leslie Fay filed objec- .
tions to the claims of Kishbaugh, Michaud and Lewkowiez.
Because there was insufficient time before the scheduled con-
firmation hearing to ready the balance of the matters for trial,
I held an estimation hearing on February 18 and 19, 1997,
with regard to all of the claims except Michaud’s. Its purpose
was to enable me to determine whether the plan had been
accepted and whether it was feasible.’ I indicated that my fac-
tual findings would have no preclusive effect at trial although |
any legal principles decided would be binding. See /n re
Ralph Lauren Womenswear, Inc., 197 B.R. 771, 775 (Bankr.
S.D.N.Y. 1996) (in estimating claims, bankruptcy court may
use whatever method is best suited to the circumstances of the
case). Among the legal determinations which I made was that
the claims asserted by Gill, Terwilliger, Lewkowiez, and Fal-
baum were all general, unsecured claims. (I did not deal with
the priority of Kishbaugh’s claim because I had estimated its
value at zero.) Subsequently, the parties commendably stip-
ulated to admit into evidence all of the testimony taken and
exhibits admitted during the estimation hearing. The remain-
ing testimony was adduced and evidence received during the
trial held on May 28 and 29, and June 9, 16, and 23, 1997.
B. Leslie Fay Reduces Its Work Force
In the early 1990s, Leslie Fay’s so-called Dress Group
(which is part of the core “Leslie Fay” businesses) maintained
’ The claimants sought $80 million in administrative priority
claims. If valid in amount and priority, the claims would have rendered :
the plan unconfirmable because administrative claims must be paid in full
on the effective date of the plan or as otherwise agreed by the individual
administrative claimants. On the other hand, if the claims were not pri-
ority claims but general unsecured claims valued at $80 million, the neg-
ative vote of the claimants could have defeated the plan. This state of
affairs mandated that I fix a value and, for those with value, priority for
the claims prior to considering confirmation of the plan.
37a
substantial domestic manufacturing operations in Pennsy|-
vania, including factories, a distribution center and inde-
pendent contractor shops which produced some of its goods.
The Dress Group’s design staff, technical services personnel,
and sales and materials management were headquartered in
New York. All of the plaintiffs except Terwilliger were
employed in the Dress Group. Terwilliger was a senior exec-
utive with duties regarding all of Leslie Fay’s operations.
In the spring of 1991, Sanford Mazur, Leslie Fay’s most
senior executive in charge of manufacturing, had fallen ill and
announced his intention to retire. While he was recuperating,
Leslie Fay hired Max Weinstein (age 43) as Senior Vice Pres-
ident of Operations for the Dress Group. Mazur remained with
the company for a time thereafter. John T. Cawley (age 57),
who had been with Leslie Fay some 40-odd years and was
Mazur’s right-hand man, was the Vice President of Domestic
Manufacturing, running the manufacturing plants. When
Weinstein arrived, Cawley began reporting to him. Late that
year, Weinstein, part of whose mandate was to revamp the
Dress Division, determined to lay off approximately 18 peo-
ple. That trickle later grew into a flood.‘
In the spring of 1992, when Leslie Fay employed approxi-
mately 5,648 people in its domestic divisions, the Chairman
of the Dress Group informed Weinstein that, as a result of a
decline in sales volume, overhead would have to be further
cut. Weinstein, Tr. 9 (Oct. 11, 1995). Weinstein undertook in
earnest consolidating domestic manufacturing operations with
an eye toward achieving greater efficiency and cost savings.
Id., Tr. 277-78 (May 29, 1997). This meant more layoffs
would occur.
4
By 1993, the Dress Group terminated 500 employees. D’s Ex. B.
By 1994, the Dress Group terminated an additional 976 employees. /d.
By 1995, the Dress Group terminated another 644 employees. /d. By
1996, the Dress Group cut a very substantial portion of its work force.
2,361, leaving only 752 persons in its employ. /d. The bulk of the layoffs
occurred after Leslie Fay filed for chapter 11 relief.
38a
Terwilliger was the chief witness for the claimants attest-
ing to the age-biased animus driving the layoffs in Pennsyl-
vania. He testified that before Weinstein was hired Leslie
Fay’s policy during layoffs was to terminate according to
length of service and qualifications (“skills and seniority”).
See also Ex. 65. Leslie Fay historically reassigned people to
different functions based upon their broad experience in the
industry. Terwilliger, Tr. 949 (June 23, 1977); L. Kishbaugh.
Tr. 664 (June 16, 1997). Terwilliger commented that this
changed under Weinstein. At Cawley’s direction, the depart-
ment heads of the different facilities compiled a list of peo-
ple to be targeted for the necessary August 1992 RIF. After
the list had been prepared, Robert Silvi, the Dress Group’s
Human Resources Manager, was directed by Weinstein to add
more younger names to the RIF list; Cawley supplied the
additional names. Silvi, Tr. 108-115 (May 28, 1997); Wein-
stein, Tr. 1] (Oct. 11, 1995). The consolidations and the RIFs
which implemented them affected employees of all ages and
all levels within the organization, union and nonunion. See
Ex. B; Release Hearing Ex. D4; Weinstein, Tr. 10, 12-13, 39
(Oct. 11, 1995). As part and parcel of this new strategy, Leslie
Fay also increased emphasis on imports. Weinstein, Tr. 284
(May 29, 1997).
Although Terwilliger suggested otherwise, at least three of
Leslie Fay’s former employees who were responsible for
administering the RIFs testified that they were not instructed
to discharge older workers nor were they told that older work-
ers should be targeted for termination. Cawley, Tr. 18-19
(Feb. 18, 1997); Silvi, Tr. 43-44 (Feb. 18, 1997), Gordon, Tr.
66-67 (Feb. 18, 1997). This testimony was confirmed by
Roger Vallecorse, who worked in the Human Resources
department beginning in the year prior to Terwilliger’s depar-
ture and eventually replaced Terwilliger. Cl.’s Ex. 76, Depo-
sition of Vallecorse, at 68 (July 5, 1995). Weinstein testified
that he allowed the persons with the knowledge of the
employees to select those to be terminated. Weinstein, Tr. 10,
39-40 (Oct. 11, 1995); Tr. 312 (May 29, 1997).
%
3
Lee ee
fe ae: Pe
Peg pe eee eee oer an, * Pe A ,*
39a
Silvi explained that, although he had never been directed to
add names before, it was his general understanding as a
human resource manager that it was an acceptable procedure
to review layoff lists to ensure they were in compliance with
the law. Tr. 119-121, 130 (May 28, 1997). Vallecorse testified
that when RIFs were being implemented ages of employees
were always discussed. Cl.’s Ex. 76 (July 5, 1995).
Terwilliger, who had not objected to the original August
1992 RIF list, objected to the instruction to add more younger
people, warning Cawley that to do so could cause later prob-
lems. Terwilliger, Tr. 266-69, 290 (Nov. 27, 1995); Cawley,
Tr. 136-39 (May 28, 1997). He also voiced his concern to
Alan Golub, Leslie Fay’s then President, who assured Ter-
williger that if outside counsel, Michael Thrope, okayed the
course of action that Terwilliger shouldn’t worry about it. Ter-
williger, Tr. 223 (Nov. 27, 1995). Terwilliger acknowledged
that the August 1992 RIF list, pursuant to which both
Lewkowiez and Falbaum were terminated, was amended sev-
eral times.
Neither the drafts nor the final August 1992 RIF list are
available, leading the claimants to conclude that the missing
documents must contain information damaging to Leslie Fay.
Silvi testified, however, that draft layoff lists are not main-
tained by the company; only the implemented, final lists are.
Although Leslie Fay’s witnesses testified as to their efforts to
locate the final August 1992 list, they simply could not find
it. Pearson, Tr. 85-89 (Oct. 11, 1995); Tr. 168-17] (May 28,
1997); Silvi, Tr. 49-50 (Feb. 18, 1997), Tr. 105-121 (May 28,
1997).
A word about credibility is a necessary departure from the
chronology. I found the testimony of Silvi, Cawley and Gor-
don to be straightforward and credible. Vallecorse testified
through admission of his deposition, so I did not have the
opportunity to observe him, however, his testimony appears
to have been quite candid regarding Leslie Fay’s shortcom-
ings. Weinstein, too, was a credible witness. Terwilliger, how-
ever, was less so. As I observed during the release portion of
40a
this trial, Terwilliger told conflicting accounts of events,
answered questions evasively and had significant lapses in
memory. As will become apparent as I recount the facts, Ter-
williger continued his practice of contradicting himself. For
the most part, I have discounted his testimony except when it
was independently confirmed.
The manufacturing facilities were phased out over time
with some being consolidated into other plants and afterwards
closed outright. The consolidation of Leslie Fay’s domestic
manufacturing facilities and the implementation of RIFs con-
tinued during the bankruptcy period until August 1, 1995,
when the last of the domestic factories was closed and sub-
stantially all of the remaining manufacturing employees were
terminated, with the exception of certain quality control per-
sonnel. Cawley, Tr. 6-8 (Feb. 18, 1997); Tully, Tr. 100-01
(Feb. 18, 1997). Leslie Fay continues to operate its distribu-
tion center in Laflin, Pennsylvania, from which it distributes
the merchandise which it imports. Id. 27-28. Leslie Fay thus
uses its remaining work force primarily for quality control
and distribution of imported goods.
C. Investigation of Alternatives to Importing Goods
Before Leslie Fay decided to shut down all domestic man-
ufacturing, its engineering department began investigating the
viability of a “unit production system” as a way to make
domestic manufacturing more profitable. The claimants assert
that Leslie Fay could have manufactured profitably in the
United States utilizing a unit production system but the com-
pany chose instead to close the factories to mask its scheme
to rid Leslie Fay of older workers. In support of this theory
the claimants turn to the testimony of Nina Kishbaugh, plain-
tiff Kishbaugh’s wife, who is a former Time Study Production
Engineer for Leslie Fay. Ms. Kishbaugh testified that a study
she and others in the engineering department conducted
showed that Leslie Fay could have manufactured domestically
at @ profit had they implemented a unit production system. N.
Kishbaugh, Tr. at 740-41 (June 23, 1997). She admitted, how-
4la
ever, that her study was historical in viewpoint, not contain-
ing projections as to what future Operations might produce.
She also admitted that Leslie Fay did not simply reject the
concept of a unit production system, rather the company con-
ducted another internal study on the profitability of domestic
manufacturing before concluding that such operations had to
be abandoned. That study showed that the Savings attributable
to the use of the unit production System were not sufficient to
enable Leslie Fay to continue its existing operations under the
labor contracts it had then in force. N. Kishbaugh, Tr. 793-94
(June 23, 1997). Ms. Kishbaugh recalled that when Cawley
had learned of the results of her study he commented that it
was “too bad that Leslie Fay had not started the unit pro-
duction system earlier.” In light of this testimony, I do not
believe that Leslie Fay engaged in an elaborate ruse to close
the factories so as to get the older employees off its payroll.
The claimants also suggest that Leslie Fay’s destruction of
the engineering department’s reports in the last two weeks of
July 1995 prove that Leslie Fay was covering up the fact that
domestic manufacturing could have been profitable but for
Leslie Fay’s decision to terminate all of its experienced work-
ers in order to facilitate the elimination of older employees.
However, Ms. Kishbaugh admitted that all of the documents
that the engineering department had accumulated over the
prior eighteen to twenty years had to be destroyed because the
information contained within them was not for the general
public and the manufacturing facilities as to which they per-
tained were closing. N. Kishbaugh, Tr. 730-31 (June 23.
1997). Moreover, the documents were not destroyed until
Route 315, the last facility to close, was shut down. There is
absolutely no suggestion from that evidence that Leslie Fay
was destroying files in order to hide any RIF list or the results
of Ms. Kishbaugh’s study.
42a
D. The Consolidation of Functions and Closing
of the Manufacturing Plants
Around the time that the 1992 downsizing began, Leslie
Fay’s Dress Group operated out of eight manufacturing or dis-
tribution facilities in Pennsylvania—“Downing Garment,”
“Ricky Fashions,” “Andy Fashions,” “Pittston,” “Kingston,”
“Laflin,” and “Throop.” The main facility was located at
“Route 315.” Each manufacturing facility was run by a fac-
tory manager. The six managers and their ages in 1992 were:
(1) Joseph Bachkosky (age 40; hired 1974) managed Ricky
Fashions; (ii) Kishbaugh (age 52, hired 1976) managed
Downing; (iii) James McGavin (age 33, hired 1980) managed
Pittston; (iv) Phil Marino (age 33; hired 1981) managed
Throop; (v) Ron Pitcavage (age 49, hired 1984) managed
Kingston, and (vi) Tommy Gill (age 50+ and plaintiff Gill’s
brother) managed Andy Fashions, The following other man-
agers were also in place in 1992: Gill (age 57; hired 1978)
was a production manager; Falbaum (age 53; hired 1977) was
the number two person at the distribution center at Laflin; and
Lewkowiez (age 56; hired June 1984) headed up quality con-
trol, a job which required oversight of manufacturing at all of
the factories.
As Leslie Fay consolidated functions and operations to
reduce overhead it also put greater emphasis on importing
lower-cost garments. Weinstein, Tr. 278 (May 29, 1997);
Granahan. Tr. 194 (May 28, 1997). This, in turn, caused two
significant operational changes. When garments were
imported, it was necessary to exercise efficient “quality con-
trol” to ensure that they met specified criteria before Leslie
Fay shipped them out to customers. Weinstein implemented a
new audit system employing “statistical sampling” of finished
garments to expedite the flow of merchandise to customers.
Leslie Fay’s “examiners”* would now test certain predeter-
5S
“Examiners” look at completed garments before they are
shipped, weeding out those which have defects. This is in contradis-
tinction to the “quality control” function which aims to define acceptable
parameters for garments before they are manufactured and to enforce
‘ ~*
=" ven eee
43a
mined percentages of every cut of finished garments. Previ-
ously Leslie Fay had tested 100% of the first (and sometimes
second) cut of each style and subsequent cuts were then
passed through. However, with large shipments of imported
garments arriving all at once, the old method could not be
performed efficiently. Weinstein, Tr. 278, 283-94: Granahan.
Tr. 200, 283-285 (May 28, 1997).
The second change which Weinstein instituted to accom-
modate the increase in imports was to move quality control
for domestic manufacturing out of the distribution center and
into the manufacturing plants. Rather than focusing on qual-
ity control for domestic manufacturing in the now over-bur-
dened Laflin facility where the product was to be bagged,
tagged, and prepared for shipping, Weinstein emphasized
catching the quality control problems right at the manufac-
turing plants before the garments ever reached Laflin. Wein-
Stein instructed the plant supervisors and quality control
people who were already employed at the plants that they
would now have responsibility for their own quality control.
Weinstein, Tr. 285 (May 29, 1997). This change did not bode
well for Lewkowiez.
When he was making decisions regarding the consolidation
of functions, Weinstein concluded that Lewkowiez’s position
and input into the creation of manufacturing specifications
was a luxury that Leslie Fay could no longer afford. Wein-
stein, Tr. 277-78 (May 29, 1997). Thus Leslie Fay terminated
Lewkowiez in August 1992 as part of the RIF. Weinstein
explained that almost seventy percent of Lewkowiez’s job
was spent at the Route 315 facility working with the manu-
facturing people in order to edit the production techniques,
Suggest alternative methods of manufacturing, and create the
documentation that would be the guideline to the factories for
putting garments together and determining what tolerances to
provide. Weinstein, Tr. 278-89 (May 29, 1997). As he con-
templated methods of shaving cost, Weinstein realized that
fidelity to those specifications before the garments are delivered for
shipping.
44a
Lewkowiez’s functions could all be and, to a large extent
already were being, performed by Cawley, Fred Wesstrum
(the Chief Engineer), and the production pattern makers,
specification technicians, engineers and costing personnel
who were all involved in the process.
Cawley testified that the six or eight people who had
reported Lewkowiez began to report to the production head
for each division, who in turn reported to Cawley. When
Lewkowiez was terminated, Leslie Fay promoted Joseph
Guarilia (age 57) to manage the examining function at Laflin.
Plaintiff Michaud, the examining supeivisor, was passed over
in the process, to her great consternation. Guarilia then
reported to a production person named Lee Granahan (age
36), who had been with Leslie Fay since 1974. Within a year
or two Granahan was laid off. Leslie Fay rehired him for a
low-level distribution position in 1977, where he worked his
way up to more senior positions until 1990, when he left vol-
untarily to work for Liz Claiborne. Plaintiff Falbaum, to
whom Granahan reported at the time he left, re-recruited
Granahan later that year and gave him the Production Man-
ager position which he held at the time Lewkowiez was ter-
minated, Falbaum asked Granahan to return because of
Granahan’s qualifications and not because of his age.
In November 1992, as part of its consolidation strategy,
Leslie Fay moved Ricky Fashions up to Route 315. Joe
Bachkosky (who was then 40), its manager with 14 years’
experience (and who had been at Leslie Fay for 18 years), was
not terminated, but transferred to Route 315 with his staff. Ex.
G, Tr. 660 (June 16, 1997).
In early 1993, Gordon, Leslie Fay’s in-house counsel,
advised Leslie Fay that he would be retiring at the end of the
year. Vallecorse was also leaving. With continued cost-cutting
in mind, Leslie Fay decided to consolidate its human
resource, shareholder relations, and legal functions and
employed an executive search firm to locate an appropriate
candidate to fill all three jobs. The firm turned up Katherine
Connors, who was employed at Liz Claiborne, and Leslie Fay
45a
successfully recruited her to Leslie Fay on August 1, 1993.
Connors, Tr. 376 (May 29, 1997). She was the first of numer-
ous Liz Claiborne alumni hired by Leslie Fay.®
With its new dependence on importing, Leslie Fay hired
Don Ochs (age 52) in October 1993 to head up production as
Senior Vice President of Worldwide Sourcing. Prior to join-
ing Leslie Fay, Ochs had been employed at a similar position
at Liz Claiborne; he thus brought experience which was lack-
ing at Leslie Fay. Throughout 1993 and 1994, Ochs recruited
Mary Siercho (age 41), Katherine Bini (age 48), Don Ciley
(age 48), Dick Hastings (age 57), Dan Liedy (age 49), Amr
Fahmy (age 31), and Keith Farrell (age 37), people with
whom he had worked at Liz Claiborne. Terwilliger testified
that Leslie Fay often became enamored with recruiting peo-
ple from other successful businesses and that such affiliations
often became paramount in hiring decisions. Lewkowiez
acknowledged that this type of recruiting was not unusual for
the industry; Falbaum admitted that he had entered Leslie
Fay’s employ in a similar manner.
By August 1993, Leslie Fay decided to close most of the
domestic manufacturing factories and bring operations into
the main Route 315 plant one by one. L. Kishbaugh, Tr. 213
(Feb. 18, 1997). Leslie Fay told Kishbaugh of its plan and
further that Downing Garment, Kishbaugh’s factory, would be
the first to close. Leslie Fay also informed him that no factory
managers would be transferred.
Kishbaugh’s factory closed on November 12, 1993; the 53
year-old Kishbaugh, with 16 years’ experience as a Leslie Fay
factory manager, was terminated. Downing Garment’s non-
management work force was combined with Ricky Fashions’,
and Leslie Fay kept Bachkosky, the 41 year-old manager
who had been employed at Leslie Fay two years longer than
Kishbaugh. Cawley explained that this was done because
Bachkosky was the plant manager of Ricky Fashions, the
6 Granahan was rehired first, but his stint with Liz Claiborne was
very brief; the great majority of his working years were spent at Leslie
Fay.
46a
largest of the plants. Cawley, Tr. 14-15 (Feb. 18. 1997).
Bachkosky had the most experience in operating a large fac-
tory, which was important given that the combined facility
was even bigger than Ricky Fashions.
One month later, Leslie Fay closed Andy Fashions and
moved operations up to Route 315. Leslie Fay terminated
Andy Fashions’ manager (age 50+). With Andy Fashions now
included in his responsibilities, Bachkosky was “spread very,
very thin” and could not handle all the functions. N. Kish-
baugh, Tr. 760-61 (June 23, 1997)..
Having learned that Bachkosky could not oversee all the
transferred operations, when Weinstein closed the next plant
(Pittston) in early February 1994 he did not terminate the fac-
tory manager, James McGavin (age 40), but instead trans-
ferred him to Route 315. Tr. 642 (June 16, 1997); 761 (June
23, 1997). Pittston was the same size as Andy, which had
been closed two months before. Kishbaugh, Tr. 237 (Feb. 18,
1997). McGavin then headed up the now-combined Pittston/
Andy Fashions division (which removed Bachkosky from
responsibility for Andy Fashions). To further assist Bach-
kosky by supervising the Downing employees, in March 1994
Leslie Fay also hired Annmarie Murphy, a woman in her early
forties who had been a supervisor from an outside contract
shop. Tr. 774 (June 23, 1997). Although McGavin had fewer
years’ experience and a little less seniority than Kishbaugh,
he was familiar with the Pittston management and staff who
were transferred to th: combined facility.
When Kishbaugh heard that McGavin had been transferred,
contrary to the information given to him that factory man-
agers would not be retained as their factories were closed, he
reapplied to Leslie Fay in March 1994 for the Factory Man-
ager position of Pittston/Andy Fashions. Cl’s Ex.5. He never
received a response.
In the Spring of 1994, during the bankruptcy, Leslie Fay’s
union employees went on strike, staying off the job for 40
some-odd days. Marino and the other management employees
from his factory (Throop) filled in for striking workers at
47a
Laflin. He and his non-union supervisory employees did
whatever needed doing; in that manner, Marino obtained
hands-on examining experience. N. Kishbaugh, Tr. 695 (June
16, 1997). Leslie Fay did not reopen Throop after the strike
ended. This had Salutary consequences for Marino (age 35)
who, instead of being terminated, was transferred to Laflin
along with at least three of the other management employees
from Throop. The function which he performed at Laflin was
entirely different from his job at Throop, however. He became
the head of quality control based on his newly-acquired skills
combined with his many years of experience as a plant man-
ager. Cawley, Tr. 141, 163 (May 28, 1997).
Several months later, in December 1994, Leslie Fay closed
Kingston, and Ron Pitcavage (age 51), the factory manager
who had had some 20+ years’ experience as a factory man-
ager, was terminated. By August 1995, Route 315 closed and
Bachowky, McGavin, Cawley, and Ms. Kishbaugh were all
terminated. Cawley, Tr. 27-28 (Feb. 18, 1997): Tully, Tr. 100-
01 (Feb. 18, 1997). Weinstein had also been let go in fall of
1994; Ochs on February 10, 1995: Leidy on March 20, 1995:
Farrell on June 20, 1995; Sierchio and Fahmy on July 21,
1995; and Ciley on July 28, 1995. In fact, all of the factory
managers except Marino and all of the staff that Ochs had
hired was eventually terminated, except Bini (age 50), who
continues as the Vice President of Piece Goods Purchasing.
Marino remains as the Quality Control Manager.
Because the circumstances of the six claimants require indi-
vidual examination, I turn to the facts more specific to each
of them.
E. Facts Specific to Each of the Claimants
1. Lewkowiez
Emile Lewkowiez was 56 when Leslie Fay terminated him
from his position as the Director of Quality Control for
the Dress Division on August 5, 1992. Originally hired by
Terwilliger in July 1979 for another position (at age 43),
48a
Lewkowiez left Leslie Fay to move elsewhere with his fam-
ily in June 1980. Some years later, he returned to Leslie Fay
(at age 48) when Terwilliger hired him for the quality control
directing position pursuant to a written offer of employment
dated May 30, 1994. D’s Ex. 1. At that time, Mazur allegedly
assured Lewkowiez that he would have tenure and would only
be fired for cause. However, the offer letter, which was signed
by Terwilliger and provides Lewkowiez with various
perquisites, contains no representations by Leslie Fay that
Lewkowiez was being offered “career employment” or that he
could only be fired for cause.
Claiming that Leslie Fay terminated and failed to rehire
him because of his age, Lewkowiez points out that younger,
less qualified persons were retained or hired in the area of
“quality control,” and that those persons who had formerly
reported to him now reported to Granahan, who was in his
30s. Tr. 12, 30, 854; Exs. 15, 57. Lewkowiez was mistaken
regarding Granahan. Whereas the people at the Laflin facil-
ity (like Michaud) who had reported to Lewkowiez now
reported to Granahan, the other employees who had reported
to Lewkowiez began reporting to the production heads at each
of their own facilities. See Cawley, Tr. 27 (Feb. 18, 1997).
Cawley testified that although Lewkowiez was “very tal-
ented,” his position was eliminated as a result of the down-
sizing, and no one was hired to replace him. Cawley, Tr.
278-79 (May 29, 1997); see also Silvi, Tr. 43 (Feb. 18, 1997).
Lewkowiez’s function did not embrace the “examining”
aspects of quality control, although the examining supervisor,
at least for a time, reported to him. Rather, Lewkowiez
assured quality control] in the manufacture of goods from their
inception. Consistent with this focus and recognizing that the
future in manufacturing was overseas, Lewkowiez had
informed Cawley in February 1992 that he was interested in
an available position as Quality Control Manager for Leslie
Fay in Indonesia. Cawley responded that Lewkowiez was
much too valuable in Wilkes-Barre and that Wilkes-Barre was
the best place to stay. Lewkowiez, Tr. 179 (Feb. 18, 1997). As
49a
it turned out, Cawley’s son, John (age 32), got the Quality
Control job in Indonesia in June 1992, just two months before
Lewkowiez was terminated. Lewkowiez provided a lengthy
analysis, well supported by other testimony, that he was
indeed the better choice for the Indonesian position. However,
Lewkowiez admitted that age was not the motivating factor—
he believes John Cawley got the job not because of his youth
but because his father was Jack Cawley. Terwilliger and Kish-
baugh both confirmed this. See Lewkowiez, Tr. 197-98 (Feb.
18, 1997), 83-85 (Feb. 19, 1997); Kishbaugh, Tr. 213, 24]
(Feb. 18, 1997); Terwilliger, Tr. 85 (Feb. 19, 1997). A rela-
tively brief time later, Leslie Fay closed the Indonesian plant
and terminated John Cawley.
A few months after Lewkowiez’s termination, in October
1992, Weinstein informed Lewkowiez that Leslie Fay was try-
ing to find another position for him and would continue to
do so. Cl’s Ex. 31. It is not clear what Weinstein intended
or what Lewkowiez perceived this Statement to mean.
Lewkowiez could not have put too much stock in it because.
a month later, Lewkowiez requested and Leslie Fay provided
a letter of recommendation to him. Lewkowiez was unem-
ployed for approximately eight months. In February 1993,
Lewkowiez was hired as the quality control director for a
company in Florida, where he remains today. However,
Shortly after securing that position, Lewkowiez received an
offer from Liz Claiborne in New Jersey which would have
paid him a higher annual Salary than what he was receiving at
Leslie Fay. Lewkowiez, Tr. 101 (May 28, 1997). After assess-
ing the financial pros and cons, including the tax ramifica-
tions, of moving back to the northeast, Lewkowiez declined
the Liz Claiborne offer.
Lewkowiez maintains that he should have been offered
reemployment for the positions made available to Farrell,
Marino, and Ochs. Lewkowiez nonetheless contends that
he was qualified for Ochs’ position in light of Lewkowiez
performance of production functions at other companies and
for his current employer, a position which requires visits to
50a
factories around the world. Lewkowiez, Tr. 74-75 (May 28,
1997). Lewkowiez recognized, however, that Ochs had more
qualifications, having been employed in one of the major
apparel companies in the United States as a chief of produc-
tion in charge of worldwide sourcing.
Keith Farrell (born May 16, 1957, age 37) was one of the
employees hired by Ochs in April 1994. Ochs named Farrell
Director of Quality Control, the same title which Lewkowiez
had held. Connors testified that Farrell was recruited for two
reasons: (1) because of Ochs’ prior relationship with Farrell at
Liz Claiborne and (11) because of Ochs’ belief that Farrell,
who had worked at J.C. Penney, could assist Leslie Fay in
obtaining that company as a client. Connors, Tr. 367-69 (May
29, 1997). Notwithstanding the like title, Farrell’s position
was actually quite different from Lewkowiez’s. Farrell's posi-
tion was more along the lines of an examining supervisor's,
like Michaud’s, rather than like Lewkowiez’s, who was more
focused on quality control in the manufacturing stages. Caw-
ley, Tr. 24-25, 30 (Feb. 18, 1997). Ms. Kishbaugh confirmed
this. Notwithstanding that Lewkowiez was probably qualified
for the position that Farrell held, he never indicated a desire
to perform lesser functions when he was laid off or at any
time thereafter. Phil Marino, to whose job Lewkowiez says he
was entitled, later replaced Farrell when Marino's factory did
not reopen after the 1994 union strike.
2. Falbaum
Plaintiff Falbaum was hired by Leslie Fay in March 1977
(at age 38) and was terminated on August 7, 1992 (at age 53)
as part of an RIF. At the time he was terminated, Falbaum was
the Director of Physical Distribution for the Dress Division
working out of the Laflin facility. Falbaum, Tr. 307 (Nov. 24,
1995). He was responsible for the movement of goods, which
entailed directing operations at the warehousing and distri-
bution center. Because Falbaum executed an enforceable
release, his only surviving claim is for discriminatory failure
to rehire.
Sla
When Leslie Fay terminated Falbaum, Weinstein volun-
teered that Falbaum would be considered for future positions
within Leslie Fay and further that Weinstein would try to get
Falbaum a job elsewhere. In response to a letter from Fal-
baum expressing dissatisfaction with the severance benefit
proposed by Leslie Fay, Weinstein wrote, “Incidentally, we
have been trying to find a Position for you and we will con-
tinue to do so.” Ex. 14.
There were two available factory manager Positions in 1993
for which Falbaum was qualified. In early 1993, Sassco had
an opening to run its warehouse facility in Secaucus. Lester
Schreiber, the Chief Executive Officer of Sassco, testified that
Falbaum never applied for the position, but, in any event,
Schreiber was not interested in hiring him. Several years ear-
lier, in 1990, Falbaum had applied for a position with Sassco.
Schreiber interviewed him. forming the impression that Fal-
baum wasn’t completely effective in dealing with subordi-
nates. Schreiber says that Falbaum seemed preoccupied with
his ability to hire and fire rather than with his major function.
distribution. Schreiber also Says his impressions were con-
firmed by Terwilliger, testimony which I also believe.
notwithstanding Terwilliger’s attempt to dance around this
issue.
Terwilliger’s assessment of Falbaum’s difficulties with his
subordinates was corroborated by an undated memorandum
from Sandy Mazur to Falbaum, a copy of which Mazur had
supplied for Falbaum’s personnel file. (Mazur retired at the
end of 1991, so the memorandum has to have been sent no
later than that time.) The memorandum is quite critical of Fal-
baum, recognizing that while he worked long hours, he was
not managing the department. Mazur stated that “Your people
not only have no respect for you, but every one of the super-
visors feel you are of little or no help to them. To speak to
you of a problem results in no action. You don’t really know
what is going on in the department. You don’t know how to
solve problems. . . .” Debtors’ Ex. J.
52a
The accuracy of Falbaum’s account of his application to
Sassco in early 1993 is questionable. His suggestion that he
did not get the job in 1993 because of his age is equally prob-
lematic. Falbaum testified on direct examination that he had
heard through the “grapevine” that Sassco needed a factory
manager so he mailed a resume and attempted to reach
Schreiber by telephone. He later identified his “grapevine” as
Ron Kalman, the director of corporate engineering. Falbaum |
described Kalman’s job as encompassing visits to all of Leslie |
Fay’s facilities, giving Kalman a pulse on what the company’s !
hiring needs were. However, when pressed on cross exami-
nation about whether he was perhaps mistaken about how he
heard of the 1993 Sassco position in light of the fact that
Kalman had actually left the company two years earlier, Fal-
baum steadfastly held to his story. He said that notwith-
standing Kalman’s departure, Kalman was still “in the know,”
an unlikely proposition at best. Falbaum also testified that
after he had sent Schreiber his resume in 1993 and had not
heard from Sassco, Kalman informed him that Sassco “would
not touch [him] with a ten foot pole” because “he was Leslie
Fay.” Falbaum explained that Sassco’s principals were
untrusting of Leslie Fay people. (Even if true, this has noth-
ing to do with age discrimination).
Falbaum’s reaction to the critical memorandum from Mazur
was also less than credible. He testified that he “probably”
never received it from Mazur and that Mazur always sent
“love notes” like that to people, so that it shouldn’t be given
too much weight. Terwilliger attempted to stand the memo-
randum on its head, suggesting that the import of it was that
Mazur was concerned that Falbaum was working too hard.
This, as much as anything Terwilliger said, illustrated his
willingness to shade his testimony to achieve an objective,
leading me yet again to question his truthfulness. Signifi-
cantly, Falbaum admitted that he left his post-Leslie Fay posi-
tion with Maidenform because they were unhappy with how
he dealt with labor problems, lending substance to Schreiber’s
53a
instinct about not hiring Falbaum for Sassco and to his tes-
timony about what Terwilliger had said regarding Falbaum.’
The second opening for a factory manager position became
available when Galen Erickson, who had been brought in over
Falbaum, resigned from his position in August 1993. The
debtors concede that Falbaum had the experience for this
position but, rather than rehiring Falbaum (age 54), Leslie
Fay transferred an existing employee, Robert Sink (age 49),
from its Hanover facility. Cawley, Tr. 162 (May 28, 1997).
Sink, who was five years younger than Falbaum, was not in
distribution before his transfer. Terwilliger testified that
Leslie Fay made it a point to move people internally to dif-
ferent jobs and operations based upon their broad under-
Standing of the apparel industry, and Sink’s transfer is
consistent with this policy. See Terwilliger, Tr. 137-38 (Feb.
19, 1997). Sink was terminated in October 1995, and Grana-
han then (age 40), promoted from within, is now running the
facility. Granahan had worked for Falbaum twice and was
trained in part by Falbaum.
3. Gill
Anthony Gill was hired by Leslie Fay in the summer of
1978 (at age 42) and terminated June 6, 1992 (at age 57). Gill,
Tr. 165 (Nov. 27, 1995). At the time of his termination, Gill
was a Production Manager at Albert Nipon, then a division of
Leslie Fay. He reported to Mazur, the Vice President of Man-
ufacturing. Gill’s position was eliminated when Leslie Fay
consolidated Albert Nipon with three other divisions and
retained the Production Manager of those divisions, who had
more seniority than Gill. Cawley, Tr. 152-56 (May 28, 1997):
Gill, Tr. 425 (May 29, 1997). (One year later, the combined
division was closed.)
Gill’s function was domestic “sourcing,” which meant that
he searched out independent contractor factories to produce
As it so happens, Schreiber hired an individual for the position
who was the same age as Falbaum. Schreiber, Tr. 92 (Feb. 18, 1997).
54a
a quality product and then priced the garment. Gill was
“exceptionally” qualified and a valued employee at Leslie
Fay. Cawley, Tr. 147 (May 28, 1997), Cl’s Ex. 41. In January
1992, he had been given a raise.
Gill's qualifications were not limited to production, for Gill
had spent some time in the specialty needle and fusing depart-
ment which he had successfully revamped. Gill, Tr. 232 (May
28, 1997); Cawley, Tr. 147 (May 28, 1997). In 1988 or 1989,
Gill was transferred from the specialty department because
his job there had been completed. No one was hired to replace
him because all the new methodology was in place. Gill, Tr.
433 (May 29, 1997). The supervisors whom he had overseen
remained in their positions when Gill was transferred to the
Nipon division; those supervisors were later terminated as
Leslie Fay downsized. Tr. 429, 431, 435 (May 29, 1997).
As mentioned above, Gill has waived any claim for wrong-
ful termination. Thus his employment discrimination claims
subsist only to the extent that he was discriminated against in
his attempt or right, if any, to be rehired.* Gill, who is quite
ill, has not secured any comparable position to those which he
held at Leslie Fay; rather, he has done part-time freelance
domestic sourcing.
Gill testified that when he was terminated from his pro-
duction manager position in June 1992, Cawley assured him
that if any position became available, Gill would be consid-
ered. Cawley denies promising Gill future employment.
About a week after he was terminated, Gill spoke with Mazur,
whom he says also assured him that if any subsequent posi-
8 In the Claimants’ reply post-trial memorandum, Gill attempts to
reargue the merits of his claim that the release he signed violated manda-
tory provisions of the ADEA in light of facts which he says were devel-
oped during the trial on the merits of his discriminatory failure to rehire
claim. However, his request is patently improper given that I entered an
order two years ago dismissing those very claims. An attempt al a new
trial would have to be made via the appropriate Federal Rule of
Bankruptcy Procedure. Even assuming Gill’s request were not proce-
durally improper, Silvi's testimony does not lead me to question the facts
as I have already found them.
55a
tion became available, Gill would be considered. Terwilliger,
,
were available. Cawley wrote a letter of recommendation for
Gill on November 5, 1992. Ex. 4].
twice—first by mailing an application in January 1993 and
then by faxing a copy of his resume in March 1993. Cl’s Ex.
35, 36, 37; Gill, Tr. 493, 511 (June 9, 1997).
Although he responded to the advertisement, Gill did not
communicate with Cawley, Silvi, or Mazur to let them know
him, testifying that they always received their copy of
Women’s Wear Daily the day after it was published, so that the
handwritten date at the top represents the date of the ad.
L. Gill, Tr. 539 (June 9, 1997). Gill’s (or his wife’s) notes
indicate that he mailed a resume on February 14, 1993. and
faxed one on March 11, 1993.
56a
The relevance of when Gill mailed his resume lies in the
fact that Horder filled the position on January 27, 1993, in all
likelihood before Gill even applied for it. Moreover, Horder
testified that he meticulously reviewed all responses, num-
bered and coded them, and put them in a single folder. He was
sure that he did not receive an application from Gill in
response to the Spitalnik advertisement. Horder, Tr. 154 (Feb.
18, 1997). The person Horder hired was David Gerstein (age
52), who is six years younger than Gill. Gerstein eventually
was terminated when the Spitalnik division shut down oper-
ations in April 1995. Horder and most of the other employees
were also terminated.
Gill testified that he should have been hired for Ochs’ posi-
tion but he admitted he had no experience in sourcing
imports. Tr. 528. In suggesting that he should have gotten
Guarilia’s position, Gill admits that Guarilia is the same age
as he, but testified that “ability should be valued.” He also
suggests that he should have been asked to fill the Director of
Distribution position which was given to Granahan, although
he admits that he never worked in distribution at Leslie Fay
and did not know if they knew if he had experience in that
area from previous employment. Gill, Tr. 439 (May 29, 1997).
Gill maintains that he should have been offered yet other
positions opening up at Leslie Fay after his termination. Cl’s
Exs. 15 , 57, 67, 44, 56, 45, 43, 47, 49, 48; Gill, Tr. 439-40,
445-46 (May 29, 1997). The positions included several avail-
able Vice President of Manufacturing positions filled by Dan
Liedy (age 49) on December 20, 1993; Don Cilley (age 48) on
January 10, 1994; Katherine Bini (age 49) on December 20,
1993; and Wilhelm Meyer (age 58) on March 1, 1994.
(Remember that these were some of the positions which Ochs
filled from among his former co-workers at Liz Claiborne.)
Gill also submits that he should have been hired for a Direc-
tor of Manufacturing position opening up on December 27,
1993, but filled by Amr Fahmy (age 31), a Production Super-
visor position opening up on June 27, 1994 and filled by
Richard Hastings (age 57), and a trim buying position filled
57a
on January 1, 1994 by Mary Louise Sierchio (age 42). Gill
admits, however, that he did not apply for any of these posi-
tions which were filled by Don Och’s people well after Gill
was let go.
4. Kishbaugh
Kishbaugh was hired in November 1976 (at age 36) and ter-
minated on November 12, 1993 (at age 53). Throughout his
tenure, Kishbaugh was a Leslie Fay Factory Manager and
spent time at more than one of Leslie Fay’s dress factories. At
the time of his termination, Kishbaugh was the Factory Man-
ager for Leslie Fay’s Downing Garment factory in Wilkes-
Barre, Pennsylvania. Kishbaugh alleges that, at the time of his
termination, younger factory managers were treated more
favorably. Since his termination, Kishbaugh has been either
unemployed or employed only part-time.
As mentioned earlier, in August 1993 Leslie Fay informed
Kishbaugh that the Pennsylvania factories would be closing
and that certain of their personnel would be transferred up to
Route 315; that no factory managers would be transferred;
and that his factory would be the first to close. Kishbaugh, Tr.
213 (Feb. 18, 1997). Kishbaugh, although unhappy with his
termination, accepted his plight.
When Kishbaugh learned that McGavin had been trans-
ferred notwithstanding the closing of his factory, Kishbaugh
sent an application to Silvi “for the position of Factory Man-
ager of Pittston/Andy Fashions.” Cl’s Ex. 5; Silvi, Tr. 39-4]
(Feb. 18, 1997). Silvi did not respond to Kishbaugh because
no factory manager jobs were available; McGavin was run-
ning the facility for which Kishbaugh had applied. Kishbaugh
maintains that he nonetheless Should have been offered the
Factory Manager position at Pittston/Andy Fashion because
he was more qualified and experienced than McGavin. Ms.
Kishbaugh testified that, as time study engineer, she would
review monthly reports regarding performance at the facto-
ries. She said that her husband’s “erosion values” were about
a third better than Marino’s and Bachkosky’s but, she admit-
58a
ted, only sometimes slightly better than McGavin’s. She tes-
tified that erosion values measured the efficiency of the fac-
tory, and that in 1993 and 1994, Bachkosky (who was 42 and
employed at Leslie Fay longer than any other factory man-
ager) consistently went over costs, his erosion values were
always unacceptable, and he was not complying with the
specifications issued by the engineering department.’ What-
ever the relative merits were of the six factory managers, indi-
vidual performance was not terribly relevant for, as Cawley
testified, all the factories were operating at a considerable
loss and no one was performing markedly better than another.
(It was for this very reason that Leslie Fay studied the unit
production system—to see if domestic operations could be
made profitable where they were uniformly unprofitable.)
Kishbaugh also maintains that he should have been given
the job in the examining department that Phil Marino obtained
in 1994. Kishbaugh had had experience in examining and thus
could have filled Marino’s position, although he admitted he
did not know if he had told that to anyone at Leslie Fay. The
cover letter to his resume indicated only that he was looking
for the factory manager position. Cl.’s Ex. 5.
Although Kishbaugh signed a release in the form that some
of the other plaintiffs signed and received severance benefits
(which he has not returned), his release did not have
appended to it a list informing him of the positions and ages
of other employees terminated in connection with the reduc-
° According to Ms. Kishbaugh, Bachkosky’s problems were not
limited to his job performance, for he would also use foul language and
make lewd sexual remarks to female employees. After Ricky Fashions,
Bachkosky’s factory, moved up to Route 315, someone must have com-
plained to Cawley because Cawley reprimanded Bachkosky. N. Kish-
baugh, Tr. 743 (June 23, 1997). Notwithstanding Cawley’s reprimand,
Bachkosky’s behavior continued. Nonetheless, however, the only female
plaintiff—Michaud—did not report to Bachkosky and did not work in his
factory. Nor did Michaud testify that she had ever had a run-in with
Bachkosky. In any event, the record reflects that Cawley reprimanded
Bachkosky and that no one else informed Cawley that Bachkosky’s
alleged behavior continued.
59a
tion in force, an unambiguous requirement for a knowing and
voluntary release of age discrimination claims under the
Older Workers Benefit Protection Act of 1990.
See D’s Ex. A.
5. Terwilliger
Raymond Terwilliger was hired by Leslie Fay in February
1978 (at age 30) and was terminated by Leslie Fay’s Presi-
dent, Alan Golub, on August 10, 1992 (at age 44). Until Jan-
uary 1981, he had been the Director of Personnel for Leslie
Fay’s Pennsylvania Operations. In 1981 he was promoted to
Vice President of Human Resources for all of Leslie Fay. Ter-
williger received a Substantial merit increase in 1992 and his
credentials are not questioned by Leslie Fay.
Terwilliger claims that his termination was in retaliation for
his speaking up about the discriminatory hiring and firing
practices at Leslie Fay. However, he also testified that he told
Golub at the time that Golub terminated him that he was
being terminated because of his ongoing feud with Paul Pol-
ishan, Leslie Fay’s Chief Financial Officer (whom Terwilliger
believed was not competent). Terwilliger said that Golub
announced that the termination decision was final. Vallecorse
confirmed that the strain with Polishan was behind the ter-
mination. Vallecorse, Dep. Tr. 15-16 (Ex. 76)(July 5S. 1995S).
In any event, as mentioned above, Terwilliger executed a
release in return for substantial benefits for all claims result-
ing from alleged employment discrimination arising out of his
employment and termination. Thus, only a subsequent appli-
Cation or right, if any, to reemployment may form the basis
for recovery.
A few weeks after Terwilliger was terminated, but before he
had executed a release, he called Gordon to talk about his
concern that he might not find future employment before his
severance ran out. Terwilliger, Tr. 226 (Nov. 27, 1995). He
also may have indicated a desire to remain with Leslie Fay.
See id. Gordon. like Golub, informed Terwilliger that he
believed the decision was final. Terwilliger, Tr. 228 (Nov. 27,
60a
1995). Terwilliger asked what would happen if he did not find
another position before he exhausted his severance pay, and
Gordon told him to take up the issue with Golub or John
Pomerantz, Leslie Fay’s Chief Executive Officer. Terwilliger
then approached Golub, who assured Terwilliger that he
would have “no problem” and that “Leslie Fay will stand
behind you.” Terwilliger says Golub mentioned that he would
take money out of his own pocket if necessary. Tr. 227-28.
Terwilliger testified that, as a result of these conversations,
the parties put a provision into the release (which he later
signed and I found valid) allowing Leslie Fay to consider pay-
ing Terwilliger additional severance “at Leslie Fay’s sole
option.” Tr. 228, 261. Notably, nothing was put into the
release agreement about future employment, consistent with
the version of this story told by Terwilliger that Gordon and
Golub told him that the decision to terminate was final.
Terwilliger planned to find a new job, but the revelation of
Leslie Fay’s accounting irregularities made it difficult for a
long-time Leslie Fay executive to find a new position. So, on
April 23, 1993, Terwilliger called Gordon to ask for addi-
tional severance benefits. Terwilliger testified that Gordon
apparently believed that Terwilliger wrote to the media
regarding Leslie Fay’s accounting irregularities. Terwilliger
says he denied authorship of any letter but announced that he
“felt vindicated [by revelation of accounting irregularities
during Polishan’s tenure as Chief Financial Officer] but could
not wait to be as far away from Leslie Fay for the rest of [his]
life as possible.” Terwilliger, Tr. 235 (Nov. 27, 1995). Gordon
suggested that Terwilliger “go to hell.” /d. Terwilliger then
informed Gordon that he felt he was being backed into a
corner, and Gordon repeated his instructions. Terwilliger,
Tr. 102-104 (Feb. 19, 1997). Terwilliger replied that he was
then forced “to do what he had to do” given his financial inse-
curity as a result of Leslie Fay’s not keeping its agreement to
consider paying him additional severance. Gordon took that
as a threat, with the conversation ending on a sour note.
wool Do art tee A
6la
Subsequently, and notably after I found Terwilliger’s ter-
mination claims barred by the release he signed, Terwilliger
attributed a new purpose to his call to Gordon, that of rein-
statement at Lesiie Fay. Given Terwilliger’s much earlier tes-
timony that during this conversation he told Gordon that he
could not wait to “be as far away from Leslie Fay as possible”
I find it more likely that Terwilliger did not seek reinstate-
ment as he now contends. Gordon corroborated Terwilliger’s
first version of the events and denied that Terwilliger
“applied” for a position at Leslie Fay at this time or was look-
ing for anything other than additional severance.
On cross-examination, Terwilliger said that he believes that
Leslie Fay failed to rehire him in retaliation for a conversa-
tion that Terwilliger had had with Thrope (Leslie Fay’s out-
side counsel) during which Terwilliger told Thrope that it was
management's policy to target old people for termination and
sprinkle in young people. Terwilliger also said that Thrope
threatened him, suggesting that if he persisted in accusing
Leshe Fay of employment discrimination, Leslie Fay would
make things very difficult for him. Thrope vehemently denied
ever threatening Terwilliger, a long time friend. Thrope quite
credibly testified that the purpose of his meeting with Ter-
williger was only to Suggest he get on with his life, put Leslie
Fay behind him, and stop asking for additional severance.
Thrope testified that discrimination was never implicitly or
explicitly a part of their conversation.
It was readily apparent from Terwilliger’s testimony that
the April 23 conversation with Gordon did not include any
implicit or explicit reference to age discrimination. Notably,
it Was not until after this conversation, in which it became
clear that Leslie Fay had no present intention of paying Ter-
williger additional severance, that Terwilliger filed his EEOC
complaint alleging the company practiced illegal age dis-
crimination.
Terwilliger’s contention that he reapplied for a position
with Leslie Fay in 1995 further illustrates his propensity to
bend facts to suit his purposes. Terwilliger’s purported
62a
“application” occurred when he ran into John Pomerantz
while waiting for an elevator during discovery proceedings.
By this time, Terwilliger had publicly accused Pomerantz of
personal involvement in fraud at Leslie Fay and had sug-
gested that Pomerantz ought be removed from management.
Nonetheless, Terwilliger explains that he had (and still has)
a great fondness for Pomerantz, and told him he would like to
come back to Leslie Fay. He testified that he said to Pomer-
antz something like, “if you had only listened to me, none of
this would have happened.” Terwilliger testified that he then
said that he would like to come back to Leslie Fay and help.
Pomerantz responded with an obscenity and called Terwilliger
a liar. | do not find credible Terwilliger’s testimony that this
encounter constituted an “application” for employment, nor
is there any indication that age discrimination was a moti-
vating factor behind Pomerantz’s hostility.
As to whether other positions were available for which Ter-
williger would be qualified, the answer to that question is
probably yes. When Leslie Fay terminated Terwilliger, Roger
Vallecorse, who is ten years older than Terwilliger and who
had actually been brought in above Terwilliger in late 1991,
took over his functions. When Vallecorse departed voluntar-
ily in early 1993, he was replaced briefly by Rochelle Geller
(age 41), who was promoted from her position as Director of
Human Resources. In the spring of 1993, Gordon informed
Michael Babcock, the then President of Leslie Fay, that he
would be retiring at the end of the year. As indicated earlier
in this decision, Leslie Fay decided to consolidate several
functions, merging in one person the role of general counsel
and director of human resources, among other things. Leslie
Fay recruited Connors, a lawyer, for the top job. She in turn
recruited Susanne Tully (age 46) from Liz Claiborne and gave
her the title of Director of Human Resources. The two had
worked together at Liz Claiborne for close to ten years. When
Connors left, Tully, a non-iawyer, replaced her as Vice Pres-
ident of Human Resources in September 1995. Other lesser
but related positions were also apparently available—in
63a
November 1992, Leslie Fay hired Howard Horder (age 32) as
Human Resource Administrator. In 1993, Leslie Fay also
asked Vallecorse (age 58) to return for a special assignment,
interviewing employees at the Hanover facility after the dis-
covery of the financial improprieties. Tr. 564 (June 9, 1997):
921 (June 23, 1997): Exs. 1, 76 pp. 82-84. Terwilliger was
qualified for at least some of these positions becoming avail-
able after his termination.
Since his termination from Leslie Fay, Terwilliger held var-
10US part-time jobs until he formed his own consulting busi-
ness, which has done fairly well.
6. Michaud
Elizabeth Michaud was employed by Leslie Fay at the
Laflin facility as an Examining Supervisor. Her employment
ceased as of December 31, 1992, when she retired. Michaud
Was first hired by Leslie Fay in 1947. During the next three
decades, she voluntarily departed from and returned to the
company a number of times in different positions. On Febru-
ary 17, 1979, she was rehired (at age 48) as Examining Super-
Visor, a position she held until She retired at age 61. During
the course of her employment, Michaud talked from time to
time about her desire to retire.
Michaud suffers from diabetes and hypertension but there
is no dispute that she was qualified for and able to perform
her position. She had also received commendations from her
supervisors. Michaud was herself a supervisor, responsible for
the examiners who inspected finished garments in the distri-
bution center in order to catch quality problems that were not
detected at the manufacturing stage by quality control
employees. Michaud, Tr. 823 (June 23, 1997): Weinstein, Tr.
306-08 (May 29, 1997). During her tenure she devised a lag-
ging system which expedited the quality control-repair func-
tion through the use of identifiable color-coded Stickers to
Show quickly and easily where repairs needed to be made. Ex.
71.
64a
Michaud’s disability required her to eat lunch every day on
time, have access to fresh air, not carry heavy materials, and
sit periodically. Leslie Fay accommodated her disability by
providing her with an air-conditioned office; she also had
access to a service porter to move garments around. Part of
the examining function was standing and moving garments
from rack to rack. Leslie Fay told her to sit and let the exam-
iners bring questions to her. Her supervisor told her to ask the
porter to carry the garments.
Throughout most of the period that Michaud was employed
as Examining Supervisor, she reported to plaintiff Lewkowiez.
Her relationship with Lewkowiez was a warm one. He test!-
fied that he never knew of her disability, that she often carried
garments, without complaint, and that she allowed his fre-
quent interruptions of her lunch hour, without objection.
As mentioned earlier, in August 1992, during the transition
to the new audit system, Leslie Fay eliminated Lewkowiez’s
position. Weinstein, Tr. 278 (May 29, 1997); Granahan, Tr.
194 (May 28, 1997). Michaud was very uncooperative in
implementing the new audit system. Granahan, Tr. 194 (May
28, 1997). Granahan testified that he had to speak with her
two or three times about her recalcitrance in following the
new procedure. He said that he recalled working with her in
the past, before he was her supervisor, and that there was no
compromise with Michaud. Things were done her way or no
way—‘you did whatever Betty wanted; that is the way things
got done.” Granahan testified that Michaud was combative in
many situations.
Joseph Guarilia (age 57), a pressing supervisor who had
been hired in April 1991, also had an aggressive personality,
leading the two of them to frequent clashes. Weinstein, Tr.
292 (May 29, 1997); Michaud Tr. 834 (June 23, 1997). Guar-
ilia moved quickly from being a presser to the supervisor of
pressing. Granahan, Tr. 189 (May 28, 1997); Lewkowiez, Tr.
65 (May 28, 1997). Michaud perceived that Guarilia, under-
mined her by shipping garments without having them repaired
as per Michaud’s instruction. She complained to Lewkowiez
a
6Sa
that Guarilia was removing the stickers off garments and then
shipping them even though she deemed them not shippable,
which was contrary to Lewkowiez’s orders and company pol-
icy. Lewkowiez, Tr. 65-66 (May 28, 1997). Lewkowiez rep-
rimanded Guarilia, who continued to ship what Michaud had
determined were inferior garments. Lewkowiez complained to
Galen Erickson, the Shipping director, but was told that the
goods had to go because they had been prebilled. Lewkowiez,
Tr. 66, 69-70 (May 28, 1997).
Lewkowiez never complained to Cawley, his supervisor,
about Guardia’s alleged shipment of inferior garments, but in
any event, Cawley said he was not surprised to learn of it. He
said that sometimes it was a business decision whether to ship
the customer or repair the goods, and it was always a man-
agement decision. Cawley, Tr. 145. When Weinstein was
asked whether Guarilia would have been promoted had Wein-
Stein known that Guarilia was shipping “inferior garments,”
Weinstein testified that he would have looked into the situa-
tion, but corroborated Cawley’s testimony characterizing
quality control as “art not science;” there were always dif-
ferences of opinion as to what is passing and what is not.
Weinstein, Tr. 311 (May 29, 1997). Weinstein, who was in the
Laflin distribution center every Friday, testified that
Lewkowiez had not complained to him of Guarilia’s alleged
shipping of inferior garments. /d. at 3] 1-12.
In late 1991 and 1992, Michaud testified, she started to feel
very sick and depressed. She reports that after Guarilia came
on board her bloc ° sugar level increased and her blood pres-
sure skyrocketed, although she offers no medical proof of her
assertions.'° As mentioned, during the onset of the new audit
10
Michaud called Dr. Stanley Portnow, a psychiatrist, to testify as
to her disability. Dr. Portnow first examined Michaud a few days before
the trial, and had never met her before. Portnow did not compare
Michaud’s medical reports before Guarilia became her supervisor with
reports on her medical condition after he became her supervisor, although
Michaud had seen doctors during both periods. Portnow confined his tes-
timony to what she had told him about her condition and what she had
66a
system, in August 1992, Lewkowiez’s position was elimi-
nated. At the time, Michaud asked Lewkowiez if she could be
transferred out of the department, but he told her it was out of
his hands.
After Lewkowiez’s departure, Leslie Fay promoted Guar-
ilia to the position of Manager of the Exam and Repair
Department, a position directly above Michaud. Gurailia now
reported to the production person, Granahan, who in turn
reported to Cawley. Guarilia had only been with Leslie Fay
just over a year. Michaud, although considered for the pro-
motion, was passed over. Michaud testified that she should
have been given the promotion because she had been with
Leslie Fay longer and had better qualifications. She says she
even had to teach Guarilia various portions of the examining
function because his prior management experience had been
in managing the manufacture of shoes, not dresses. Weinstein
testified that it was Erickson who had been Guarilia’s man-
ager and who decided to promote Guarilia; Weinstein had
confidence in Erickson’s decision. Michaud contends that she
did not get the manager position because she was a woman.
She offers the testimony of Nina Kishbaugh who heard
Mr. Lynne Williams, Leslie Fay’s Chief Engineer, say that “as
long as present management was in control of Leslie Fay,
there would never be another woman manager.” N. Kish-
baugh, Tr. 754-57 (June 23, 1997). Ms. Kishbaugh testified
that qualified women were given the title of “Sewing Section
Supervisor” while men in the same position were titled,
“Plant Manager Trainee,” although their functions were the
same. Ms. Kishbaugh recounted that Leslie Fay had a woman
told him about how she was feeling. He did not offer a medical opinion
on what Guarilia’s hostility, if true, could have done to a person with dia-
betes and hypertension. He also offered no link between her depression
and Guarilia’s treatment. For all those reasons I do not believe Dr. Port-
now’s testimony carries any great weight. Michaud herself testified as to
her condition, that is, that both her blood pressure and blood sugar level
increased and that Guarilia’s treatment depressed her. Because the evi-
dence is in the record through Michaud, there is no need for me to rely
on Dr. Portnow’s report of the same information.
67a
supervisor named Ann Krupa, a graduate of the Fashion Insti-
tute of Technology, who had had more training than any male
plant manager but was never given the opportunity to be man-
ager. /d.
In response, Leslie Fay offers the names of several women
in positions of authority, some of whom were hired after
Michaud filed her proof of claim against the estate. See D’s
Ex. D (Joan Ruby, Vice President/General Counsel): Cl.’s Ex
15 (Kathryn Connors, Human Resources, hired Aug. 1, 1993:
Susanne Tully, Human Resources, hired Feb. 16, 1994): Cl.’s
Ex. 50 (Tina Adams, Director of Manufacturing, hired Sept.
1991); Ex. SI (Michele Israel, Vice President, hired Mar.
1994): and Ex. 52 (Annette Mathieu, Vice President. hired
Apr. 1994).
Granahan and Weinstein both testified that Guarilia, rather
than Michaud, was promoted because he had had substantial
experience as a factory Operations manager, albeit in a shoe
factory. Granahan. Tr. 187, 189 (May 28, 1997): Weinstein,
Tr. 29] (May 29, 1997). Granahan admitted that while
Michaud had the technical skills needed for to her own posi-
tion, those skills were less important for the Operations
management position into which Guarilia was promoted.
Granahan explained that Guarilia’s qualifications for manager
“far exceeded” Michaud’s—he had the people skills, negoti-
ating experience, ability to take orders, and ability to delegate
responsibility that are necessary as a manager; and he had
been an operations manager for over thirty years. Granahan,
Tr. 189 (May 28, 1997): see also Weinstein, Tr. 29] (May 29,
1997). Guarilia knew how to negotiate and accomplish what
had to be done, said Granahan. and he told Michaud that
Guarilia was promoted because Guarilia possessed the proper
managerial skills. Michaud testified that after Guarilia
became her supervisor he wanted fewer correction stickers on
the garments: “Joe did not want us to spend a lot of time to
examine them, but the factories wanted more information on
the garments that were going back.” She felt slighted that the
system which she designed was not being employed as she
68a
intended. Indeed Michaud informed Cawley, the Vice Presi-
dent of Manufacturing who was responsible for the Laflin dis-
tribution center, that Guarilia “was cheating the paying
customers” by shipping inferior garments. After Cawley
reported this call to Granahan, in what Michaud remembered
as a three hour meeting both Guarilia and Granahan repri-
manded her for going outside her “line of authority” to Caw-
ley to complain that bad quality garments were being pushed
through without examination. She testified that both Grana-
han and Guarilia forbid her from “telling anybody about any-
thing,” instructing her that in the future, she was to bring her
problems to Guarilia and then if still unresolved to Granahan.
Tr. 853-54.
As the 1992 RIFS were underway, Michaud asked Guarilia
if she could be included in the layoffs. Guarilia transmitted
her request to his supervisors, Granahan and Erickson, who
rejected it because Michaud’s position was not being elimi-
nated. For a reason that was not apparent to me, Michaud was
upset with Guarilia for telling Granahan of her request.
In the fall of 1992, Michaud testified, Guarilia often
screamed at her. She described Guarilia standing with his
hands on his hips, gritting his teeth, watching her. If he saw
her limp or wince, she says he would say, “If you're too damn
sick, why don’t you get the hell out{[?]” Michaud testified that
Guarilia stated several times over a period of a few months
that she should leave if she was “so damn sick.” Michaud, Tr.
844-45.
Michaud also testified that after Guarilia became her super-
visor, she was not allowed to use her air-conditioned office
except during lunch or a break. She testified that Guarilia
forced her to write her reports standing up outside her office
and that although Guarilia told her to ask the porter to carry
garments for her, when the porter was not around, Guarilia
laughed when he saw her struggling with garments. Michaud
also said that Guarilia threatened to take the porter away, an
assertion which does not square with her testimony that Guar-
ilia told her to use the porter to transport dresses. Granahan
69a
testified that Michaud never complained to him about having
to stand or carry garments and that she never complained that
Guarilia was threatening her or not accommodating her dis-
ability. Lewkowiez also testified that Michaud never com-
plained about standing or carrying garments.
In support of her constructive discharge theory, Michaud
complains that from “time to time” Guarilia and Granahan
would interrupt her lunch hour for conferences. Michaud. Tr.
849 (June 23, 1997). In such instances, she testified, she
would tell them that she needed a full lunch hour but they
would talk to her about work anyway. Granahan admitted that
he would sometimes talk with Michaud during her lunch hour,
and that she would Say she needed to eat. He Says he
responded that she should continue to eat; he never prevented
her from eating, a point which Michaud never contradicted.
Lewkowiez testified that he had never had any problem work-
ing with Michaud. Although she objected to Granahan’s and
Guarilia’s interruptions of her lunch hour she equably toler-
ated Lewkowiez’'s frequent lunch hour interruptions and con-
ferences. Lewkowiez, Tr. 86, 87 (May 28, 1997). Obviously,
she was far more tolerant of those she liked than of those she
didn't.
In one instance, Michaud testified, the women in the exam-
ining room were complaining to her that there was not enough
space for them to work because there were too many dresses.
Michaud baited Guarilia: rather than discussing the matter
with him in private, in front of the women she asked Guarilia
to find a way of getting more air in the work area for the
examiners. Guarilia told her to “shut up,” and go to her office.
(Although he was her supervisor, in view of her disability,
Michaud had the only available office, which was air condi-
tioned; Guarilia Stayed out on the floor.) At that point Guar-
ilia slammed his hand on the desk, saying, “Do I have to beat
you to understand that its [sic] what I say and not what you
say?” Michaud. Tr. 844 (June 23. 1997).
Michaud testified that Guarilia would malign her in front of
the examiners. He was not happy with the way the examiners
70a
worked, the way Michaud would teach them, the amount of
product they were getting out. She resented that Guarilia “pit-
ted the girls” against her, which she felt was not right given
that she had worked with many of the women for many years.
At some point Michaud called Granahan down to her office
“to tell him about this whole thing, about how Joe slammed
the desk and he upset [her] so badly many times.” Granahan
said he would get back to her, but never did. Michaud testi-
fied that she thinks she called Cawley twice, one time, as ear-
lier mentioned, to tell him about Guarilia’s pulling the
stickers off the dresses, and another time to tell him that she
“really couldn't stand to work for Joe anymore, it was ruining
[her] health.” Michaud, Tr. 853 (June 23, 1997). But Cawley
testified that it never came to his attention from Michaud or
otherwise that Guarilia was abusing Michaud. Granahan also
testified that Michaud never told him that Guarilia was threat-
ening her, yelling at her, or refusing to accommodate her
medical needs. Michaud, Tr. 853; Granahan, Tr. 192-93 (May
28, 1997); Cawley, Tr. 139 (May 28, 1997). It is not clear
what Michaud complained to Granahan about other than
Guarilia slamming the desk. As for her complaints to Cawley,
there is no inconsistency between her testimony and Cawley’s
because there is no indication that she complained about any-
thing other than business disagreements, not mentioning
harassment or Guardia’s perceived refusal to accommodate
her disability.
In the fall of 1992, Michaud received no raise. Granahan
testified that she did not receive a raise because she was
uncooperative in implementing the new audit system. He said
he told her that she needed to improve her people skills, work
better with other managers in other departments, and had to
get the new audit system off the ground and rolling. Grana-
han, Tr. 205-06 (May 28, 1997). (Guarilia, despite his higher
position, was paid less per week than Michaud, and, in fact,
during Michaud’s tenure, never earned as much as she.)
Granahan, Tr. 192-93, 204-05 (May 28, 1997); D’s Ex. O.
Tla
Granahan testified that one of the reasons why Michaud did
not get the raise was her combativeness in too many situa-
tions, including the implementation of the new audit proce-
dures. Michaud’s own testimony demonstrates that many of
the disagreements she had had with her supervisors related to
performance issues and her perceived insubordination. For
example, Michaud testified that in 1989 or 1990 she had
had a harsh exchange with Paul Polishan, Leslie Fay’s former
Chief Financial Offer, because he directed her to include
items in inventory that she did not think worthy of sale.
Polishan ordered her to tell her staff to count the items and
prepare them for sale. Michaud protested, explaining that she
did not think anyone should have to work on such dirty items.
Michaud had proven herself sufficiently tough that Polishan
resorted to rather unbecoming behavior, insisting “You'll do
it or I'll make your life hell.” Michaud, Tr. 838 (June 23.
1997).
Michaud was both strong-willed and petty, at least as far as
Guarilia was concerned: this was illustrated and when the
parking spaces were changed. Although her new space was
closer to the door than her old one, she says she was upset
because she bad to walk over two car-lengths of gravel.
(There is nothing in the record to Suggest that she had any dif-
ficulty walking, particularly in physically undemanding con-
ditions.) She complained to both Guarilia and Granahan. Her
discomfiture was caused less by the gravel than by the fact
that Guarilia’s space was a “better” one than hers. Although
her supervisors explained to her that the spaces had been ran-
domly assigned, she was not mollified, apparently still per-
ceiving her allotted space as a slight. Michaud, Tr. 882 (June
23, 1997).
Michaud testified that after she was denied a raise, in Octo-
ber 1992, she asked Cawley for a transfer, but he said he
knew of nothing that was available. In December she also
asked Silvi, who agreed that there was nothing available.
Around that time, however, she discovered that she was eli-
gible for early survivor social security benefits so she
72a
informed Erickson that she was going to retire. At no time did
Michaud tell any Leslie Fay manager that she wanted to retire
because Guarilia was abusing her or refusing to accommodate
her health problems. Michaud, Tr. 202-03 (June 23, 1997).
Indeed, she participated in the planning of her retirement
party and selected the memento she was to receive. Id. 204.
Since her retirement, Michaud has worked at a number of
part-time jobs but has avoided positions that would increase
her income level such that her survivor benefits would be
reduced. Id. 862-64, 868-69. Michaud does not allege that she
applied for future positions or that she was promised she
would be considered for any future position.
II.
A. Jurisdiction
The claimants have repeatedly asserted that I lack juris-
diction to adjudicate their claims. Over the last two years they
have aiso made several motions to withdraw the reference, all
of which have been denied by the district court. I have pre-
viously ruled on the jurisdictional issue, finding I had core
jurisdiction to adjudicate the claims because the plaintiffs
filed proofs of claim against the estate. See In re Leslie Fay
Co., Inc., 181 B.R. 156, 160 (Bankr. §.D.N.Y. 1995) (citing
e.g., 28 U.S.C. § 157(b)(2)(B); Langenkamp v. Culp, 498 U.S.
42, 44 (1990); Granfinanciera, S.A. v. Nordberg, 492 U.S. 33,
53 n.14 (1989); Katchen v. Landy, 382 U.S. 323, 337 (1966):
S.G. Phillips Constructors, Inc. v. City of Burlington (In re
S.G. Phillips Constructors, Inc.), 45 F.3d 702 (2d Cir. 1995)
(determinative factor as to the bankruptcy court’s core juris-
diction to adjudicate city’s claim was that the city filed a
proof of claim).
The only ground upon which the claimants rely in con-
tending that I lack jurisdiction is that because they have a
right to a jury trial in the absence of bankruptcy, the pro-
ceeding must be conducted in the district court. They confine
their argument to the following:
73a
The Debtors’ Objections to Claimants’ Proofs of Claims
will require factual determinations by the Court with
respect to the merits of such claims. Such factual and
credibility determinations are the function of a jury. This
is especially so in discrimination cases in which signif-
icant reliance upon circumstantial evidence is necessary
as has been extensively noted by the Courts.
Joint Estimation Hearing Pre-Trial Order, Relief Prayed,
A at 2-3 (May 19, 1997): Joint Pre-Trial Order, Issues of
Law, {] A. at 36-37 (both briefs citing Gallo v. Prudential Res-
idential Servs., 22 F.3d 1219, 1224 (2d Cir. 1994)),
No one questions that an employee has an initial right to a
jury trial for an employment discrimination claim. However,
notwithstanding 28 U.S.C. § 626(c)(2), such a right is subject
to waiver by the employee. See Washington v. New York City
Bd. of Estimate, 709 F.2d 79? (2d Cir. 1983) (employee's fail-
ure to file request for jury trial within deadline waived
employee's right to jury trial), cert. denied, 104 S. Ct. 537, 78
L.Ed. 2d 717 (1984). In the bankruptcy arena it has been held
that an employee with a discrimination claim, just like many
of the other claimants with jury trial rights, may waive that
right by filing a proof of claim and thereby consenting to the
claim’s inclusion in the equitable reordering of a debtor's
assets in the bankruptcy court. See Wittes v. Interco Inc., 137
B.R. 328 (E.D. Mo. 1992) (Age Discrimination in Employ-
ment Act claims properly decided in bankruptcy court); /n re
Interco Inc., 152 B.R. 273 (Bankr. E.D. Mo. 1993) (same).
Although the claimants do not argue that their claims con-
Stitute personal injury torts within the meaning of section
157(b)(2)(B), the issue is subject to some debate in the
courts.'' I need not add my voice to the controversy, however, _
i See Priest v. Interce, Inc. (In re Interco}, 135 B.R. 359, 361-62
(Bankr. E.D. Mo. 1991) (holding that personal injury exception should
be construed narrowly so as not to include torts without physical injury);
accord Perino v. Cohen (In re Cohen), 107 B.R. 453 (S.D.N.Y. 1989)
(personal injury within the meaning of 28 U.S.C. § 157 requires impair-
ment beyond “mere shame and humiliation”); /n re Atron Inc.. 172 BR.
74a
because the claimants have waived the issue. See Adams v.
Cumberland Farms, Inc., 86 F.3d 1146, No. 95-1736, 1996
WL 228537 (1st Cir. May 7, 1996), cert. denied, 117 S. Ct.
387, 136 L. Ed.2d 303 (1996). Subject matter jurisdiction is
not lacking given that section 157(b)(2)(B) is not jurisdic-
tional; it defines only what is core and not core. “The clas-
sification of a proceeding as core or non-core does not
determine the jurisdiction of a bankruptcy court, but instead
relates to a determination of whether the court may enter a
final order or judgment or whether it may only issue findings
of fact and conclusions of law upon which the district court
enters a final order upon de novo review.” In re Wefco, 97
B.R. 749, 751 (E.D.N.Y. 1989). Bankruptcy courts retain
541, 544-45 (Bankr. W.D. Mi. 1994) (“While not minimizing the emo-
tional pain characteristic of job loss, the Claimant in the present case
simply does not allege that his emotional suffering reached the level of
a personal injury tort. . . . We are unwilling to adopt the broad excep-
tion to bankruptcy court jurisdiction urged by Claimant and thus open the
door to a mass exodus of the claims allowance process to the district
court. . . .”); see also Siewert v. Christy (In re Finley, Kumble, Wagner,
Heine, Underberg, Manley, Myerson & Casey), 194 B.R. 728, 734
(S.D.N.Y. 1995) (emotional damages, while not inconsequential, are not
sufficient to transfer a business tort into a personal injury tort). cf. Bert-
holet v. Harman, 126 B.R. 413, 416 (Bankr. D. N.H. 1991) (in debtor's
adversary proceeding against bankruptcy trustee for damage to debtor's
principal, court held that plaintiff's contemplated expert testimony
regarding plaintiffs fatigue and anxiety/stress was not the gravamen of
the complaint and therefore not subject to 28 U.S.C. § 157(a)(5)).
But cf. Thomas v. Adams (In re Gary Brew Enters. Ltd.), 198 B.R. 616
(Bankr. S.D. Cal. 1996) (Peterson, C.J.) (concluding that racial dis-
crimination claim was in the nature of a “personal injury tort” necessi-
tating trial in the district court); see also Williamson v. Patterson (In re
Patterson), 150 B.R. 367, 368 (E.D. Va. 1993); cf. Boyer v. Balanoff (In
re Boyer), 93 B.R. 313 (Bankr. N.D.N.Y. 1988) (Gerling, J.) (in debtor's
adversary proceeding against third parties, bankruptcy court had no juris-
diction because the debtor's discrimination claims were properly char-
acterized as “personal injury tort” claims within the meaning of 28
U.S.C. § 157(b)(5)); Smith v. New York State Higher Education Servs.
Corp. (In re Smith), 95 B.R. 286, 290, 291 (Bankr. N.D.N.Y. 1988)
(same); see also Hansen v. Borough of Seaside Park (In re Hansen), 164
B.R. 482, 483-84, 485-86 (D. N.J. 1994) (no “subject matter” jurisdic-
tion).
7Sa
jurisdiction over non-core matters, and further, parties may
waive their right to de novo review by failing to assert that an
action involving them is non-core. Men’s Sportswear, Inc. y.
Sasson Jeans, Inc. (In re Men’s Sportswear, Inc., 834 F.2d
1134, 1137-38 (2d Cir. 1987) (citing 28 U.S.C. 157(c)(1),
(C)(2)); Gravel & Shea y. Vermont Nat’| Bank, 162 B.R. 961,
966 (D. Vt. 1993). This holds true for a claimant’s contention
that his claims constitute personal injuries within the mean-
ing of section 157(b)(2)(B). See Adams, 86 F.3d 1146. Section
157(b)(5) does not change the result, for the Provision only
directs the procedure once it is determined that an action is a
personal injury tort. /n re Manning, 71 B.R. 981 (Bankr. N.D.
Ala. 1987); see also Coker v. Pan Am. Corp., 950 F.2d 839,
841-45 (2d Cir. 1991) (notwithstanding section 157(b)(5),
which directs that claim “shall be tried in the district court,”
district court has power of permissive abstention to allow the
claims to be tried in state court).
I find persuasive the First Circuit’s unpublished decision in
Adams finding a waiver of the issue whether the injury
alleged constituted a personal injury tort where the claimant
did not raise the matter before the bankruptcy court. Here. in
all the time the claimants insisted their claims be tried in the
district court, they never argued that I lacked core jurisdiction
Over their claims because they were “personal injury torts,”
nor did the claimants argue that 28 U.S.C. § 157(b)(2)(B) or
(b)(S) precluded my presiding over this trial. (There is also no
indication that the claimants made any of these assertions
before the district court.) Accordingly, I turn to the merits.
B. Release and Waiver Under the ADEA
The first substantive issue arises under the Age Discrimi-
nation in Employment Act (“ADEA”), 29 U.S.C. § 621 er
’eq., as amended by Title II of the Older Workers Benefit Pro-
tection Act of 1990 (“OWBPA”), 29 U.S.C. § 626(b), con-
cerning the effect of the release, drafted by Leslie Fay and
signed by Kishbaugh, by which Kishbaugh purports to waive
all claims, including those based on age discrimination, asso-
76a
ciated with his termination and employment at Leslie Fay.
Kishbaugh contends that he did not release his ADEA claims
because the release fails to meet specific and detailed require-
ments of OWBPA. Leslie Fay admits that the release did not
comport with the requirements for a knowing and voluntary
release mandated by the OWBPA, but argues that it nonethe-
less must be enforced because Kishbaugh did not “tender
back” the severance benefits received under it.
Under the OWBPA, “an individual may not waive any right
or claim under [the ADEA] unless the waiver is knowing and
voluntary.” 29 U.S.C. § 626(f)(1) (1999). “[A] waiver may not
be knowing and voluntary unless at a minimum” it meets cer-
tain specific requirements laid out by the statute, only one of
which is relevant here—if the employee is terminated as part
of an employment termination program, the employee must
receive in writing “the job titles and ages of all individuals
eligible or selected for the program, and the ages of all indi-
viduals in the same job classification or organizational unit
who are not eligible or selected for the program.” 29 U.S.C.
§ 626(f)(1)(H). Leslie Fay does not dispute that Kishbaugh’s
termination fell under “an employment termination program”
within the meaning of the statute and that the company failed
to comply with subsection (H).
Leslie Fay argues that notwithstanding the mandatory
requirements of the OWBPA, an employee may ratify an
invalid release by failing to promptly repudiate it upon
learning that it was unlawfully obtained. See Di Rose v. PK
Management Corp., 691 F.2d 628, 633 (2d Cir. 1982) (under
the common law a “contract or release, the execution of
which is induced by duress, is voidable, not void, and the per-
son claiming duress must act promptly to repudiate the con-
tract or release or he will be deemed to have waived his right
to do so.”), cert. denied, 461 U.S. 915 (1983)). The burden of
proving ratification of an invalid release rests upon Leslie
Fay. Leslie Fay also argues that Kishbaugh must be deemed to
have ratified the release because he did not tender back the
$10,200 he received as a result of signing it.
77a
Whether the OWBPA was intended to supplant the common
law doctrine of ratification is the subject of intense debate.
See Reid v. IBM Corp., No 95 Civ. 1755, 1997 WL 357969,
*14 (S.D.N.Y. June 26, 1997) (quoting 29 U.S.C. § 626(f)(1)):
compare Blistein v. St. John’s College, 74 F.3d 1459, 1466
(4th Cir. 1996) (holding ADEA release enforceable notwith-
standing employer’s failure to conform the release to the
OWBPA because “upon learning that the agreement is void-
able, the employee, like the party who acted under duress, can
either avoid performance of the contract or accept its benefits
and thereby ratify the contract”): Fleming v U.S. Postal Serv.,
27 F.3d 259, 261-62 (7th Cir. 1994); Wittorf v. Shell Oil Co..
37 F.3d 1151, 1154 Sth Cir. 1994) (same); Wamsley v. Cham-
plin Refining & Chemicals, Inc., 11 F.3d 534, 539-40 (Sth Cir.
1993) (same), cert. denied, 115 S. Ct. 1403 (1995); with Long
v. Sears Roebuck & Co., 105 F.3d 1529, 1534 (3d Cir. 1997)
(“In light of the law as it now Stands, we conclude that the
ratification doctrine does not apply to ADEA releases which
fail to comply with the OWBPA.”); Raczak v. Ameritech
Corp., 1994 WL 780899 (E.D. Mich. 1994), rev’d in part, 103
F.3d 1257, 1270 (6th Cir. 1997) (“Rather than a bar to suit, a
release should be considered as a factor that would reduce the
judgment amount received by a plaintiff upon bringing suit’):
Oberg v. Allied Van Lines, Inc., 11 F.3d 679 (7th Cir. 1993);
Forbus v. Sears, Roebuck & Co.. 1] F.3d 1036 (11th Cir.
1992); Eye v. Fluor Corp., 952 F. Supp. 635, 641 (E.D. Mo.
1997); Soliman v. Digital Equipment Corp., 869 F. Supp. 65
(D. Mass. 1994): Isaacs y. Caterpillar, Inc., 765 F. Supp.
1359 (C.D. Ill. 1991),
Assuming ratification is possible, whether the common law
requires “tendering back” the proceeds of a voidable release
before maintaining an action is also the subject of debate. See,
€.g., Reid v. IBM Corp., No 95 Civ. 1755, 1997 WL 357969,
*14 (S.D.N.Y. June 26, 1997); Hodge v. New York Collage of
Podiatric Medicine, 940 F. Supp. 579, 579 (S.D.N.Y. 1996):
cf. Kristoferson v. Otis Spunkmeyer, Inc., No. 96 Civ. 252]
(S.D.N.Y. June 4, 1997). Recently the United States Supreme
78a
Court granted certiori on a case implicating these issues. See
Oubre v. Energy Operations, Inc., 1996 U.S. Dist. LEXIS
sy aff'd, 112 F.23d 787 (Sth Cir. 1996), cert. granted, 117
Ct. 1466 (Apr. 21, 1997).
oe only precedent in this district ts Hodge v. New York
College of Podiatric Medicine, 940 F. Supp. 579, 584
(S.D.N.Y. 1996) in which Judge Jones held that “[a]n agree-
ment that fails to meet the requirements of the OWBPA is
merely voidable and not void, and thus can be ratified by
acceptance of the benefits conferred by the agreement.” The
facts in Hodge, however, are very different. After the plain-
tiff filed an EEOC charge, the employer offered the plaintiff
an employment contract in exchange for the plaintiff's with-
drawal of the EEOC complaint and waiver of those claims.
The waiver, however, did not comport with the mandatory
requirements of the OWBPA. When the employment agree-
ment expired, the plaintiff sued on his old claims. The
court deemed the originally invalid release ratified by the
employee's acceptance of the employment contract and the
employee's and the employer's completed performance there-
under. It was clear that in Hodge the only consideration the
plaintiff provided for the release was the release of his age
discrimination claims; no other claims were released. Further
there was no way to make the employer whole if the release
were held invalid because the employment contract that the
employer gave in exchange for the release was fully com-
pleted by the time the plaintiff initiated the action. Hodge,
however, did not hold that a plaintiff desiring to sue on
ADEA claims when the purported release failed to comport
with the mandatory requirements of the OWBPA must “tender
back” the monetary consideration received in exchange.
Kishbaugh executed his release on November 15, 1993. He
learned in February or March that Leslie Fay was indeed
transferring managers, contrary to what he was told when he
executed the release. He re-applied for a position on March
24, 1994, notifying the company that it had come to his atten-
tion that Leslie Fay was transferring managers. When the
79a
company did not respond within a reasonable time, Kishbaugh
filed an EEOC charge. On August 3, 1994, he filed a proof of
claim with this court. Under these circumstances, Leslie Fay
has not persuaded me that Kishbaugh did not act promptly in
repudiating the release of his ADEA claims. See Di Rose, 69}
F.2d at 633.
We turn to whether the common law doctrine of “tender
back” applies to bar Kishbaugh from now claiming he is not
bound by the release. Significantly, Kishbaugh did not release
only his ADEA claims. As noted by almost every court con-
sidering whether ratification is possible, the OWBPA and the
ADEA do not declare a non-conforming release “void.”
Therefore, a proper inquiry may be to look at the value of the
consideration received and whether other claims were also
released. See generally Long, 105 F.3d at 22 (3d Cir. 1997)
(dissent). For example, if the plaintiff released other claims
lawfully (i.e. breach of contract. slip and fall claims) it would
appear inequitable to require the plaintiff to return the total of
the benefits paid before being able to maintain an age dis-
crimination suit for those claims which were unlawfully
released. In some instances the adjudication of that value may
await trial. See generally Long, 105 F.3d at 1543 (majority
opinion) (“An employer found liable will be entitled to a set-
off of any severance benefits paid”).
Whereas it is generally inequitable to allow a plaintiff to
retain the proceeds of an invalid release and at the same time
maintain a lawsuit on the very claims that the release was
intended to obviate, that principle may not have the same
Vitality under the OWBPA even in the face of the common
law doctrines of voidability, ratification, and tender back. The
reason is that, under the common law, the release is either
going to be found valid or not depending on whether it was
procured by fraud or duress, whereas in an OWBPA suit, the
Whole release is not necessarily invalid. Notably, the statute
declares the release of age discrimination claims unknowing
and not voluntary only when certain Statutory minima are
not met. Additionally, the policy behind the ADEA and the
80a
OWBPA suggests that a per se rule requiring tender back
would be inappropriate. In enacting the ADEA, Congress
determined that “older workers find themselves disadvantaged
in their efforts to retain employment and especially to regain
employment when displaced from their jobs.” 29 U.S.C.
§ 621. Kristoferson noted that retired employees in age dis-
crimination lawsuits might never be able to earn the where-
withal to return the consideration, 1997 WL 297027 at *4,a
result that would appear clearly at odds with the purpose of
the ADEA and OWBPA; see Long, 105 F.3d at 1539-1542
(analogizing OWBPA to the Federal Employer’s Liability Act
(“FELA”), 45 U.S.C. § 51 (1939) under which the Supreme
Court held that the tender back doctrine was “wholly incon-
gruous with the [statute’s] general policy.” Hogue v. Southern
R. Co., 390 U.S. 516 (1968)).
Kishbaugh received $10,200 when he was terminated in
1992 at age 53 after having been with Leslie Fay since 1976.
Aside from his ADEA claims, Kishbaugh released “any and
all charges, claims and actions arising out of his employment”
that arose prior to his termination. The release of these claims
would not be valid unless the party who gave the release
received something of value to which that party was not oth-
erwise entitled. Chaput v. Unisys Corp., 964 F.2d 1299, 1301
(2d Cir.) (applying New York law). Because Kishbaugh gave
up something more than his ADEA claims, I do not believe
that his failure to tender back the severance paid is fatal to his
action, although, were he to recover, a setoff might be appro-
priate.
C. Age Discrimination
The ADEA was enacted in 1967 to combat age discrimi-
nation in employment settings. 29 U.S.C. § 621-634 (1988).
The ADEA provides that it is “unlawful for an employer. .
to discharge any individual or otherwise discriminate against
any individual with respect to. . . compensation, terms, con-
ditions, or privileges of employment, because of such indi-
vidual’s age.” 29 U.S.C. § 623(a)(1) (1988). The New York
8la
Human Rights Law affords protections similar to the ADEA,
see N.Y. Exec. Law § 296 (1)(a) (McKinney’s 1997), as does
the Pennsylvania Human Rights Law embodied in section
955(a) of the Pennsylvania Human Relations law. All of New
York’s and Pennsylvania’s employment discrimination laws
and the ADEA follow the analysis and shifting burdens of
proof outlined by courts interpreting civil rights violations
under title VII. See Armbruster vy. Erie Civic Center Auth..
937 F. Supp. 484. 495 (W.D. Pa. 1995) (interpreting 43 Pa.
Stat. Ann. § 951 er seq.), aff'd, 100 F.3d 946 (3d Cir. 1996);
Gallo v Prudential Residential Servs, L.P., 22 F.3d 1219, 1225
(2d Cir. 1994) (interpreting ADEA and N.Y. Exec. Law
296(1)(a)).
First, the plaintiff must present a prima facie case of dis-
crimination by showing that:
(1) he is a member of a protected class;
(2) he is qualified for the position;
(3) he was discharged:
(4) in circumstances giving rise to an inference of age
discrimination.
See McDonnell Douglas Corp. v. Green, 411 U-S. 792 (1973).
To rebut a plaintiff’s prima facie case, “the defendant must
Clearly set forth, through the introduction of admissible evi-
dence, the reasons for the plaintiff's rejection.” St. Mary's
Honor Center v. Hicks. 509 U.S. 502, 506-525 (1993): United
States Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 7] :,
714 (1983); Texas Dep't of Community Affairs v. Burdine, 450
U.S. 248, 254 (1981) (“the defendant need not persuade the
court that it was actually motivated by the proffered reasons
in order to nullify the presumption and obligate the plaintiff
to satisfy the burden of proof”); Board of Trustees v. Sweeney,
439 U.S. 24, 25 n.2 (1978) (employer need only “explain. . .
what he has done”); Lieberman v. Gant, 630 F.2d 60, 65 (2d
Cir. 1980) (defendants “do not have the burden of establish-
ing that their basis was sound”); Viola v. Philips Medical Sys.
82a
of N.A., 42 F.3d 712, 716, 718 (2d Cir. 1994); Maresco v.
Evans Chemetics, Div. of W.R. Grace & Co., 964 F.2d 106,
111 (2d Cir. 1992).
After the defendant meets its burden of production, the
plaintiff at all times retains the burden of proving that it is
more likely than not his age was a motivating factor in the
challenged employment action. Burger v. New York Inst. of
Tech., 94 F.3d 830, 832-33 (2d Cir. 1996) (plaintiff carries
burden of persuasion); Burdine, 450 U.S. at 253; Ostrowski v.
Atlantic Mutual Ins. Cos., 968 F.2d 171, 181-82 (2d Cir.
1992); see also Cronin v. Aetna Life Ins., Co., 46 F.3d 196,
203-04 (2d Cir. 1995) (RIF case); Montana v. First Fed. Savs,
& Loan Ass'n, 869 F.2d 100, 105 (2d Cir. 1995) (plaintiff
need only prove that “her age did make a difference.”); Sutera
v. Schering Corp., 73 F.3d 13, 16 (2d Cir. 1995) (If the defen-
dant carries its burden of production, the plaintiff must show
by the preponderance of the evidence that the defendant's
articulated reason is more likely than not a pretext for age
discrimination).
1. Gill
Gill, who signed a valid and binding release for his termi-
nation claims, alleges that Leslie Fay failed to rehire him
because of his age. A discriminatory “fa
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