Mancuso v. L'Oreal USA, Inc.
| Decision Date | 02 April 2021 |
| Docket Number | 21-cv-00989 (LJL) |
| Parties | RACHAEL MANCUSO, Plaintiff, v. L'OREAL USA, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Defendants L'Oreal USA, Inc. ("L'Oreal") and IT Cosmetics, LLC ("IT Cosmetics," and together with L'Oreal, "Defendants") move, pursuant to Federal Rule Civil Procedure 12(b)(6) to dismiss the complaint against them for failure to state a claim for relief. For the following reasons, the motion is granted in part and denied in part.
The plaintiff in this action, Racheal Mancuso ("Plaintiff" or "Mancuso") was an employee of IT Cosmetics which, in 2016, became a subsidiary of L'Oreal. Dkt. No. 1 ("Complaint" or "Compl.") ¶¶ 8, 11. She was hired by IT Cosmetics in November 2013 on an at-will basis as its Senior Manager of Home Shopping. Id. ¶ 8. When Plaintiff began her employment with IT Cosmetics she signed a Non-Competition and Confidentiality Agreement, dated November 21, 2013 (the "NCA") that contained a restrictive covenant prohibiting her from engaging in a business that was competitive with the business of IT Cosmetics for two years in the event that she separated from it. Id. ¶ 10. After L'Oreal acquired IT Cosmetics, Mancuso signed an Employee Retention Agreement with L'Oreal, dated December 18, 2017 (the "Retention Agreement"), which was designed to incentivize her to continue her employment with L'Oreal through December 2019. Id. ¶ 12. Mancuso performed her obligations under the Retention Agreement in full until her resignation in 2020. She provided two weeks advance notice of her resignation on January 17, 2020, ¶ 20, and resigned from the L'Oreal on January 31, 2020, to pursue her own consulting business. Id. ¶¶ 18-91.
After Mancuso announced her resignation, L'Oreal offered her an opportunity to consult for L'Oreal. Id. ¶ 21. Mancuso alleges she "agreed to a non-exclusive arrangement and proposed that she would provide services to the [L'Oreal] for ten (10) days each month, in exchange for a consulting fee." Id. ¶ 21. Thereafter, Plaintiff alleges L'Oreal "offered [Plaintiff] a consulting fee that was half (1/2) the amount that was paid to a non-exclusive male-consultant performing at a substantially equivalent level." Id. ¶ 22. Plaintiff then "brought to the attention" of L'Oreal that it had "offered her materially less in the form of consulting fee than was currently paid to its male consultant." Id. ¶ 23.
Meanwhile, Mancuso also signed a contract and accompanying Statement of Work ("SOW") with another company, Glamsquad, allegedly in the same industry as L'Oreal. Id. ¶ 25. The contract and SOW set Mancuso up as an independent contractor to Glamsquad. It required Mancuso to provide services to Glamsquad as set forth in each SOW accepted by Mancuso for the fees set forth in each SOW. The SOW Mancuso signed with her contract gave her the opportunity to provide brand development strategy to Glamsquad for approximately 80-100 hours per month (with any work above 80 hours per month to be pre-approved by Glamsquad) at a rate of $175 per hour. Dkt. No. 21-3. L'Oreal initially objected to Mancuso's contract with Glamsquad, taking the position it was a competitor and that "we do need to enforce your non-compete." Compl. ¶ 27; Dkt. No. 21-4. On February 10, 2020, L'Oreal wrote in an email to Plaintiff:
[W]e have made the decision to enforce your non-compete for a period of twelve (12) months. This is a reduction from the two (2) year period set forth in your agreement. You will continue to receive your base pay during the period of enforcement, and if you are on L'Oreal healthcare benefits, you may continue your previous elections.
Dkt. No. 21-4 (the "Separation Agreement"). In the same communication, L'Oreal withdrew its offer to Mancuso for her to consult for L'Oreal. Id.
Plaintiff "accepted" the terms of the Separation Agreement and "rescinded" her agreement to consult with Glamsquad. Compl. ¶ 40. Subsequently, L'Oreal "failed to pay [Plaintiff's] first salary continuation when due on February 29, 2020, per the [terms of the Separation Agreement]." Id. Plaintiff then "escalated the matter and sought the issuance of her salary continuation payment by special payroll on March 6, 2020." Id. ¶ 42. The next business day, March 9, 2020, L'Oreal issued a one-page letter to Plaintiff stating that it had "made the decision not to no [sic] longer enforce" the NCA as to Glamsquad after "review of the specific details relating to your new role." Dkt. No. 21-5. At the same time, L'Oreal demanded that Plaintiff inform L'Oreal of any change she made in "employers or positions on or before March 1, 2021 . . . with advance written notice containing the name of your new employer and a description of your expected job duties, so that we may determine whether or not your [NCA] has been triggered." Id. It stated that if, and only if, L'Oreal made the determination to trigger the NCA would Mancuso be reinstated to payroll and even then, only "during any period in which we enforce your [NCA]." Id.
Thereafter Plaintiff received no payment or benefits from L'Oreal. Compl. ¶ 47. Plaintiff alleges that Defendants breached the Separation Agreement by failing to continue to pay her salary and benefits. She also alleges that by rescinding her agreement with Glamsquad, she lost "the valuable fees and opportunities to pursue her consulting business represented" by that agreement. Id. ¶ 37.
Mancuso filed this complaint in the United States District Court for the District of New Jersey on May 8, 2020. Dkt. No. 1. She asserts claims for breach of contract, promissory estoppel, breach of the duty of good faith and fair dealing, tortious interference with prospective economic relations, and violations of the New Jersey Wage Payment Law, N.J.S.A. § 34:11-2 et seq., and Contentious Employee Protection Act, N.J.S.A. §§ 34:19-1, et seq. On February 1, 2021, the District Court for the District of New Jersey granted Defendants' motion for a transfer of venue pursuant to 28 U.S.C. § 1404, concluding that Mancuso was bound by the forum selection clause contained in the NCA, that the Separation Agreement was not an independent agreement but an amendment of the NCA, and that Plaintiff's claims were covered by the forum selection clause. See Dkt. No. 13. On February 16, 2021, Defendants filed a motion to dismiss. Dkt. No. 19. Plaintiff responded on March 2, 2021, Dkt. No. 22, and Defendants replied on March 9, 2021, Dkt. No. 24.
To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, a complaint must include "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007)). A complaint must offer more than "labels and conclusions," "a formulaic recitation of the elements of a cause of action," or "naked assertion[s]" devoid of "further factual enhancement" in order to survive dismissal. Twombly, 550 U.S. at 555, 557. The ultimate question is whether "[a] claim has facial plausibility, [i.e.,] the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. "Determining whether a complaint states aplausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. Put another way, the plausibility requirement "calls for enough fact to raise a reasonable expectation that discovery will reveal evidence [supporting the claim]." Twombly, 550 U.S. at 556; see also Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 46 (2011).
Under New York law, which governs Plaintiff's common law claims, "there are four elements to a breach of contract claim: '(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages.'" Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162, 188-89 (S.D.N.Y. 2011) (quoting Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir.1996)).
Defendants do not dispute that the Separation Agreement is a valid enforceable agreement, supported by consideration and binding on them. They argue that they were not in breach of the Separation Agreement because they ultimately chose not to enforce the Settlement Agreement as to Mancuso's employment by Glamsquad. They focus on the statement in the Settlement Agreement that Mancuso would "continue to receive [her] base pay during the period of enforcement." Dkt. No. 21-4. Defendants argue that because L'Oreal relieved Mancuso of the confidentiality obligations and permitted her to take on the assignment with Glamsquad, they were relieved of the obligation to pay salary and benefits.
On a motion to dismiss a breach of contract claim under Rule 12(b)(6), the court must "resolve any contractual ambiguities in favor of the plaintiff." Luitpold Pharm., Inc. v. Ed. Geistlich Sohne A.G. Fur Chemische Industrie, 784 F.3d 78, 86 (2d Cir. 2015) (quotation marks and citation omitted). Thus, dismissal not appropriate when a contract is ambiguous and Plaintiffhas "an arguable claim under the contract." Axiom Inv. Advisors, LLC by & through Gildor Mgmt., LLC v. Deutsche Bank AG, 234 F. Supp. 3d 526, 533 (S.D.N.Y. 2017).
The language at issue in the Separation Agreement tends to favor Mancuso; the best that can be said for Defendants is that it may be ambiguous. The critical question is what is meant by the "period of enforcement" in the sentence where Defendants agree to continue Mancuso's base pay "during the period of enforcement." Dkt. No. 21-4. Plaintiff argues forcefully that the...
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