Mayer v. Morgan Stanley & Co., Inc.
| Decision Date | 02 December 1988 |
| Docket Number | No. 88 Civ. 2816 (RWS).,88 Civ. 2816 (RWS). |
| Citation | 703 F. Supp. 249 |
| Parties | Richard L. MAYER, Plaintiff, v. MORGAN STANLEY & CO., INCORPORATED, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Matays Hughes & Brown, New York City (Rodney A. Brown, of counsel), for plaintiff.
Nicholas R. Weiskopf, New York City, for defendant.
Defendant Morgan Stanley & Co. Incorporated ("Morgan Stanley") has moved for judgment on the pleadings, Fed.R.Civ.P. 12(c), and summary judgment, Fed.R.Civ.P. 56, dismissing the First Amended Complaint in its entirety. Morgan Stanley also has moved for default judgment, Fed.R. Civ.P. 55, and summary judgment, Fed.R. Civ.P. 56, on its first counterclaim for mis-appropriation of trade secrets and proprietary materials. Plaintiff Richard L. Mayer ("Mayer") has moved to dismiss Morgan Stanley's second counterclaim for conversion and its third counterclaim for abuse of process for failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6). Mayer also has moved for an order compelling Morgan Stanley to produce certain documents identified in Mayer's first and second requests for production of documents, Fed.R.Civ.P. 37. As set forth below, the motions will be granted in part and denied in part.
Mayer has asserted three causes of action —breach of contract, fraud, and defamation —for which he seeks damages. Morgan Stanley has filed an answer, a general denial, and counterclaims for misappropriation of trade secrets and proprietary information, conversion, and abuse of process and prima facie tort, seeking an injunction and damages. This court has diversity jurisdiction over these claims under 28 U.S.C. § 1332.
This action has been strenuously litigated so far in the discovery process between Mayer, the highly paid former employee, and Morgan Stanley, the investment banking firm that employed him during 1987. Mayer joined Morgan Stanley in March of 1987 as a vice president with responsibility for structuring and executing complicated international monetary transactions—so-called "currency swaps"—in the firm's Tokyo office. In October 1987, Morgan Stanley concluded that Mayer's services were unsatisfactory because of difficulties of an interpersonal nature, and it terminated him before the end of that year. According to Mayer, Morgan Stanley terminated him because he declined to participate in transactions he considered illegal. When Mayer departed the Tokyo premises, he took with him some 2,800 pages of documentation that he asserts are his work product with respect to the transactions with which he was involved. This simple recital of the parties' positions explains the vigor with which they have litigated to date.
The motions were argued and submitted on August 3, 1988.
In the summary judgment context, the moving party bears the burden of proving that there exists no genuine issue of material fact, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986); Corselli v. Coughlin, 842 F.2d 23 (2d Cir.1988), all doubts are resolved against the moving party, and all favorable inferences are drawn in favor of the party against whom summary judgment is sought. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1609-10, 26 L.Ed.2d 142 (1970); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985), cert. denied, ___ U.S. ___, 108 S.Ct. 269, 98 L.Ed.2d 226 (1988); 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2727 (1983). Except as noted below, the facts are not in dispute.
Before joining Morgan Stanley, Mayer was a Vice President with Merrill Lynch, Pierce, Fenner & Smith ("Merrill Lynch"), where he specialized in international transactions involving currency swaps, private placements, and loan syndications. For 1986, Merrill Lynch paid him approximately $500,000 to $600,000 in salary and bonuses.
In early November of 1986, Patrick de Saint-Aignan ("de Saint-Aignan"), Managing Director in charge of the currency swap group at Morgan Stanley, invited Mayer to join Morgan Stanley's Tokyo swap group. Over the next couple of months, Mayer interviewed with other Morgan Stanley people from the firm's New York, Japan, and London offices. Following negotiations between Mayer and de Saint-Aignan, de Saint-Aignan sent Mayer a letter, dated January 29, 1987, offering him a position as Vice President with Morgan Stanley. The pertinent paragraph in that letter provided:
Your title will be that of Vice President in the Swap Group in our Tokyo office. Your base salary will be set at an annual rate of $90,000. In addition, you will receive three equal bonus advance payments of $11,250 each paid in April, July and October. We expect your total compensation for 1987 to be in the range of $500,000 to $600,000. The actual number may vary based on your performance, Swap Group and overall Firm results.
Mayer accepted this employment offer and joined Morgan Stanley on March 2, 1987. Two weeks later, Mayer relocated to Japan and began working at Morgan Stanley's Tokyo office. While in Japan, Mayer worked on numerous transactions, developing a reputation as a very able investment banker.
Despite Mayer's technical abilities, Morgan Stanley was dissatisfied with his interpersonal and client communication skills. As a consequence, the firm claims, de Saint-Aignan told Mayer in October of 1987 that Morgan Stanley was terminating him and that it would announce the discharge as a relocation to New York, which it was. According to Mayer, de Saint-Aignan at that meeting proposed to transfer him back to New York, perhaps into the Capital Market Services group—de Saint-Aignan did not tell him the firm was discharging him.
Mayer alleges that Morgan Stanley provided him an office in Tokyo in the Investment Banking Division while he was awaiting reassignment to New York. During this period, he claims, he continued working on product research and development, specifically regarding a negative duration bond. De Saint-Aignan maintains that the firm gave Mayer no responsibilities in either Tokyo or New York after the end of October and that he did not know Mayer's whereabouts after that date. However, de Saint-Aignan concedes that Mayer showed up on occasion in both the Tokyo and New York offices.
When Mayer left the Tokyo office, he had some 2800 pages of documents shipped back to New York. Mayer maintains that these documents represent his work product regarding the transactions he worked on while in Tokyo. Morgan Stanley alleges that most of these documents are proprietary materials containing confidential information regarding the identity of the firm's clients, the identity of parties to non-public transactions, the structure Morgan Stanley employs in complex transactions, important business decisions and strategies, and similar sensitive information. Morgan Stanley has demanded in writing that Mayer return these documents, but Mayer has refused, arguing that he requires the documents to help prosecute his claims in this action.
On January 4, 1987, Stephen W. Baird ("Baird") of Morgan Stanley's New York office sent Mayer a letter informing him that his official date of resignation was December 31, 1987, and that the firm would cease paying him his base salary and benefits as of that date. The letter also advised Mayer that the firm was prorating his bonus over the thirty-four weeks it believed he actually worked with Morgan Stanley—March 2, 1987, until October 31, 1987.
Mayer alleges that he joined Morgan Stanley according to a written contract guaranteeing him total compensation for 1987 of $500,000 to $600,000. Morgan Stanley breached this contract, Mayer contends, by failing to pay him the amount it promised. Morgan Stanley agrees that this contract governed Mayer's employment with the firm but argues that it has complied fully with the contract's terms because the amount it paid Mayer represents $500,000 in salary and bonus prorated for the thirty-four weeks Mayer worked with the firm between March 2 and October 31 of 1987. On this breach of contract claim, summary judgment is granted in favor of Mayer.
De Saint-Aignan's letter of January 29, 1987 set forth the terms of Mayer's employment contract. In that letter, Morgan Stanley promised to pay Mayer "total compensation for 1987 ... in the range of $500,000 to $600,000," with the actual amount varying according to "Mayer's performance, Swap Group and overall Firm results." Where contractual language is plain on its face, it should be so construed as a matter of law in the summary judgment context. See Sutton v. East River Savings Bank, 55 N.Y.2d 550, 554-55, 435 N.E.2d 1075, 450 N.Y.S.2d 460 (1982). The contract obliged Morgan Stanley to pay Mayer at least $500,000 for 1987, but left it to the firm's discretion to pay him more than that amount. See Lezinski v. Roubaix Mills, Inc., 210 A.D. 102, 103, 205 N.Y.S. 573 (1st Dept.1924).
The firm cannot reduce Mayer's bonus for the period in early 1987 before he joined the firm. De Saint-Aignan's letter offering Mayer a position with Morgan Stanley promised him "total compensation for 1987" of $500,000 to $600,000. Nothing in that letter indicated that Morgan Stanley planned to reduce this amount to reflect the fact that Mayer would start with the firm in early March. Indeed, the timing of the letter—January 29, 1987—indicated the opposite. If Morgan Stanley intended to pay Mayer at an annual rate of $500,000 to $600,000, it would not have sent him a letter one month into 1987 promising him total compensation for the year of $500,000 to $600,000.
Morgan Stanley contends that it has no obligation to pay Mayer a bonus beyond October 31, 1987, because de Saint-Aignan terminated Mayer during a meeting in Tokyo in the latter part of October. But this contention conflicts with Baird's...
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