Dabney v. Hughes Hubbard & Reed LLP
| Docket Number | 1:23-mc-78 (MKV) |
| Decision Date | 06 July 2023 |
| Parties | JAMES W. DABNEY, Petitioner, v. HUGHES HUBBARD & REED LLP, Respondent. ORDER DENYING PRELIMINARY INJUNCTION MARY KAY VYSKOCIL, United States District Judge |
| Court | U.S. District Court — Southern District of New York |
Petitioner James Dabney seeks a preliminary injunction against Respondent Hughes Hubbard & Reed, LLP (“Hughes Hubbard” or the “Firm”), the law firm from which Dabney recently retired as a Partner. Dabney and Hughes Hubbard have agreed to arbitrate various claims that Dabney asserted following his retirement, including the claim that Hughes Hubbard's threat to disable or cut off Dabney's existing email address, telephone number, and Citrix access (the “Firm Systems”) amounts to a breach of the implied covenant of good faith and fair dealing contained in the Hughes Hubbard Partnership Agreement, and violates various federal laws prohibiting retaliation against employees. Dabney now seeks to enjoin the Firm from disabling his access to the Firm Systems pending arbitration of his claims. For the reasons discussed below, the motion is denied.
Dabney commenced this action on March 21, 2023, seeking by order to show cause a preliminary injunction in aid of arbitration. [ECF No. 9-3].[1] On March 24, 2023, a Consent Order was entered pursuant to which Hughes Hubbard “agreed until the hearing date of petitioner's motion for preliminary injunction,” that it would “(i) maintain petitioner's existing [Hughes Hubbard] e-mail address; (ii) maintain petitioner's existing [Hughes Hubbard] telephone numbers; and (iii) maintain petitioner's existing Citrix access.” Dabney Decl II, Ex. 2. The Consent Order also provided a schedule pursuant to which briefing would conclude on or before April 18, 2023.[2]Dabney Decl. II, Ex. 2.
On May 15, 2023, after briefing concluded, the parties appeared for an evidentiary hearing on the pending motion. At the hearing the Court received into evidence each of the declarations submitted by the parties and the exhibits attached thereto. See infra at n.3. The Court also heard testimony from Dabney and from Theodore V.H. Mayer, the Chair of Hughes Hubbard. At the conclusion of the hearing, the Court reserved decision and directed the parties to maintain the status quo pending the Court's ruling, i.e., Dabney's access to Firm Systems was not to be disabled or otherwise disrupted between the date of the hearing and the issuance of a decision. This opinion constitutes the Court's findings of fact and conclusions of law pursuant to Rules 52(a) and 65 of the Federal Rules of Civil Procedure.
FACTUAL BACKGROUND[3]
James Dabney was an equity Partner with the law firm Hughes Hubbard from 2014 until he retired on January 1, 2022. Dabney Decl. I ¶¶ 6, 41; Tr. 61:1-2. Dabney's relationship with the Firm during this period was governed by a Partnership Agreement, which explained (via an incorporated policy memorandum) that a partner, upon retirement, is entitled to become either “Senior Counsel” to the Firm or a “Retired Partner” of the Firm. Dabney Decl. I ¶¶ 2-3, Ex. 3 ¶ 8; Tr. 45:18-23. Those who elect the position of Senior Counsel receive certain benefits, including office space and secretarial assistance, but they must also satisfy certain requirements, such as remaining registered and in good standing as a member of the Bar and remaining in compliance with the Firm's restrictions on securities trading and confidentiality.[4] Mayer Decl. I at 11.
For the first year after his retirement, Dabney provided legal services to the Firm under the title “Of Counsel” (the functional equivalent of “Senior Counsel”) pursuant to the terms of a Retainer Agreement. Dabney Decl. I ¶¶ 5, 21, 25 & Ex. 5. Dabney explained that he requested this title, unique at Hughes Hubbard, because when he was an Associate with the law firm Sullivan & Cromwell in the 1980s, partners upon retirement were given the honorific “Of Counsel.” Dabney Decl. II ¶ 17. Dabney considered the title Of Counsel to be more prestigious than the designation of Senior Counsel. Tr. 87:15-18. During this period, Dabney was financially compensated for his work pursuant to the Retainer Agreement.
At some point, a disagreement surfaced between Dabney and the Firm concerning his retirement benefits, which led Dabney to file a charge of age discrimination against Hughes Hubbard with the Equal Employment Opportunity Commission (“EEOC”). Dabney Decl. I ¶¶ 1213 & Exs. 12-13. (The details of these allegations, though discussed at length by the parties, are not particularly relevant for the purposes of this motion.)
On January 3, 2023, several days before filing his age discrimination charge with the EEOC, Dabney's counsel emailed Hughes Hubbard to request that Dabney's status as Senior Counsel “be terminated not later than January 31, 2023, and that he be treated thereafter as a ‘Retired Partner.'” Dabney Decl. I, Ex. 11; Tr. 56:7-12. On February 1, 2023, Hughes Hubbard (seemingly in response to the email from Dabney's counsel) terminated the Retainer Agreement. Dabney Decl. I ¶ 25; Tr: 14:1-2. That same day, Hughes Hubbard informed Dabney that it planned to disable or cut off his existing email address, telephone number, and Citrix access on February 3, 2023. Dabney Decl. I ¶ 26, Ex. 15. That timeline for disabling access was repeatedly pushed back, however, as Dabney's counsel objected to the disablement as a violation of the covenant of good faith and fair dealing contained in the Partnership Agreement, and also as a form of illegal retaliation. Dabney Decl. I ¶¶ 27-36.
On March 17, 2023, Hughes Hubbard sent a letter advising Dabney that “[e]ffective April 1, 2023, the Firm will consider Mr. Dabney to be a Retired Partner.” Dabney Decl., Ex. 25 at 2. The letter went on to state that Dabney's “email and phone access will end” on April 1, 2023, “consistent with the Firm's past practices (with the exception of a few very senior Retired Partners who have not been active for years).”[5] Dabney Decl., Ex. 25 at 2. Hughes Hubbard explained, however, that in the event that Dabney should wish to continue providing services for the Firm beyond March 30, 2023, he may continue as Senior Counsel, in which case he could receive pension benefits as if he were a Retired Partner, a lump sum payment of $75,000, insurance coverage, and continued phone and email access. Dabney Decl., Ex. 25 at 3. However, the Hughes Hubbard letter stated that as a condition for this latter option, Dabney would have to (i) withdraw his pending EEOC charge, (ii) grant Hughes Hubbard a “general release,” and (iii) perform services exclusively for Hughes Hubbard. Dabney Decl. I ¶¶ 37-38 & Ex. 25.
On March 21, 2023, Dabney initiated arbitration proceedings pursuant to the Partnership Agreement. Dabney Decl. I ¶ 39, Ex. 26. No arbitrator has yet been appointed to hear his claims. Tr. 9:20-25. In the meantime, Dabney has continued to use the Firm's name and resources to work on various matters which were pending prior to his retirement. Tr. 13:16-15:15; 72:5-12. For at least one of these matters, Dabney directly billed the client for his own personal gain, without notice to or the consent of Hughes Hubbard. Tr. 72:5-73:18; 77:2-15. Dabney commenced this case seeking injunctive relief in aid of arbitration the same day he demanded arbitration.
A threshold issue is the proper role of this Court in this proceeding. Dabney previously filed a demand for arbitration and Hughes Hubbard does not dispute that arbitration is proper. As such, the preliminary injunction sought is one in aid of arbitration-rather than one coupled (as is often the case) with a motion to compel arbitration. However, an arbitrator has yet to be appointed and, at the preliminary injunction hearing, counsel could not estimate with any degree of certainty when one would be named. Tr. 9:21-10:3.
With the arbitrator not yet in place and no emergency relief mechanism available through the arbitration tribunal,[6] there is compelling justification for the Court to address and resolve this issue now, lest damage be done to either party in the interim. Moreover, under settled doctrine in this Circuit, the fact that a case is committed for merits resolution in arbitration does not prevent the Court from granting emergency relief. See Blumenthal v. Merrill Lynch, Pierce, Fenner & Smith, 910 F.2d 1049, 1053 (2d Cir. 1990). The Court retains the power to issue injunctive relief in order to maintain the viability of the arbitration and protect against irreparable harm. See Rex Med. L.P. v. Angiotech Pharms. (US), Inc., 754 F.Supp.2d 616, 621 (S.D.N.Y. 2010).
The overarching dispute between Dabney and Hughes Hubbard revolves around pension benefits and whether (and in what amount) Dabney was entitled to such benefits while he continued to practice law at the Firm. The Parties' briefing in this case refers repeatedly to this broad pension-based dispute, seemingly jockeying for advantage on that issue-or simply unable to set it aside. However, the pending motion for injunctive relief is about something much more narrow: whether Hughes Hubbard may disable or cut off Dabney's existing email address, telephone number, and Citrix access (the “Firm Systems”) before arbitration has concluded, when Dabney asserted in his demand for arbitration that the threat to disable the Firm Systems amounted to a breach of the implied covenant of good faith and fair dealing contained in the Hughes Hubbard Partnership Agreement, and was a violation of various federal laws prohibiting retaliation against employees.
To prevail on his motion for a preliminary injunction, Dabney...
To continue reading
Request your trial