# Appendix — Falbaum v. Leslie Fay Companies, Inc., 120 S. Ct. 788 (2000) (No. 99-548) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_0125%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2000 ## Text Quprers: Comt, wg, FELL BD | 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 sur [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_0125%3A2. Public record. Not legal advice.