Nathan v. Morgan Stanley Renewable Dev. Fund, LLC

• Decision Date: 22 May 2012
• Docket Number: Case No. 11 C 2231
• Parties: JOSHUA J. NATHAN, Plaintiff, v. MORGAN STANLEY RENEWABLE DEVELOPMENT FUND, LLC; THIRD PLANET WINDPOWER, LLC; JAMES KUTEY; WALTER KAMP; LORAINE WINDPARK PROJECT, LLC; and TPW PETERSBURG, LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

JOSHUA J. NATHAN, Plaintiff,

v. MORGAN STANLEY RENEWABLE DEVELOPMENT FUND, LLC;THIRD PLANET WINDPOWER, LLC; JAMES KUTEY; WALTER KAMP;LORAINE WINDPARK PROJECT, LLC; and TPW PETERSBURG, LLC, Defendants.

Case No. 11 C 2231

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

Dated: May 22, 2012

Judge Joan H. Lefkow

OPINION AND ORDER

Joshua Nathan filed a seven count second amended complaint¹ against Morgan Stanley Renewable Development Fund, LLC ("Morgan Stanley"), Third Planet Windpower, LLC ("TPW"), Loraine Windpark Project, LLC ("Loraine"), TPW Petersburg, LLC ("Petersburg"), and TPW employees James Kutey and Walter Kamp (collectively "defendants") alleging violations of state and federal law stemming from his termination as general counsel of TPW. Nathan's second amended complaint alleges seven counts: breach of contract (Count I), declaratory judgment (Count II), unjust enrichment (Count III), promissory estoppel (Count IV), promissory fraud (Count V), violation of the Illinois Wage Payment and Collection Act("WPCA"), 820 Ill. Comp. Stat. 115/1 et seq. (Count VI), and retaliatory discharge under Title VII of the Civil Rights Act of 1964 ("Title VII"), as amended 42 U.S.C. §§ 2000e et seq. (Count VII).² Before the court is defendants' motion to dismiss the second amended complaint under Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6). (Dkt. #43.) As an alternative to dismissal under Rule 12(b)(3), defendants move to transfer venue to the Southern District of Florida pursuant to 28 U.S.C. § 1404(a). (Id.) As set forth below, defendants' motions are granted in part and denied in part.

BACKGROUND³

Joshua Nathan is an attorney who has spent much of his career serving as in-house counsel for wind energy companies. (Compl. ¶ 20.)⁴ Nathan is a citizen of Illinois who resides in Cook County. (Id. ¶ 5.) TPW is a limited liability wind energy development and operating company organized under the laws of Delaware with its principal place of business in Florida. (Id. ¶¶ 7, 19, Dkt. #32 ¶ 2.)⁵ Loraine and Petersburg are limited liability companies organized under the laws of Delaware with their principal places of business in Texas and Nebraska,respectively. (Compl. ¶¶ 10, 11; Dkt. #32 ¶¶ 3, 4.) TPW holds 100 percent of the membership interest in Loraine and Petersburg. (Dkt. #32 ¶¶ 3, 4.) Morgan Stanley is the parent company of TPW and owns "virtually all" of TPW. (Dkt. #32 ¶ 2.) Morgan Stanley is a limited liability company organized under the laws of Delaware with its principal place of business in New York; it is 100 percent directly owned by Morgan Stanley Renewables, Inc., a Delaware corporation that is not publicly held. (Compl. ¶ 6; Dkt. #32 ¶ 1.) Morgan Stanley operates and exists separately from TPW, and TPW has a separate management team that makes its day-to-day operational decisions. (Torres Aff. ¶ 8.)

In early 2008, Nathan began discussions with TPW's then-Chief Executive Officer Peter Mastic about joining the company. (Compl. ¶ 20.) After a series of meetings, Mastic invited Nathan to join TPW as its General Counsel and Vice President. (Id.) Nathan accepted the position, and the terms of his employment were memorialized in an April 11, 2008 e-mail from Mastic in Nevada to Nathan in Illinois ("employment contract"). (Kutey & Kamp Affs. ¶¶ 14-15.)⁶ The contract states in relevant part,

[Y]ou will be eligible for annual bonuses and [to] participate in project completion bonuses of at least $20,000 per MW or $1 million per project, whichever is less. Project completion bonuses will be awarded to the project team responsible for the successful completion and operation of each qualifying project. As Vice President, General Counsel, I expect that you will be involved in most or all of our projects and most or all of our project completion bonuses. . . .

As a member of TPW management and an important contributor to our success, and within thirty (30) days after your relocation to Portland, you would receive one-half (½) of one point (out of 100) of the manager's share, subject to the vesting provisions contained inthe TPW Operating Agreement and Members Agreement, including time vesting over the four (4) year period ending November 9, 2010. Depending on our success in creating value for the TPW platform, this equity position could be worth $250,000 to $750,000 or more.

(Compl. Ex. A.) TPW offered Nathan the equity position to induce him to accept a compromised severance package,⁷ and during the negotiations that immediately proceeded the contract Mastic told Nathan that "the fact that you would be getting an equity position that is already 40% vested and that is expected to be fully vested [by] November 9, 2010 or sooner, should moderate the need for severance." (Compl. ¶ 23.) Although the contract required Nathan to relocate to TPW's Portland office, the company later opened a Chicago office as a personal accommodation to Nathan based on his desire to remain in Illinois. (Kutey & Kamp Affs. ¶ 17.) TPW leased office space in Chicago from which Nathan worked. (Id.)

During his tenure, Nathan devoted a substantial amount of time to three wind farm projects, the Loraine I and II projects in Texas and the Petersburg project in Nebraska. (Compl. ¶ 25.) The Loraine I project achieved commercial operation in December 2009; the Loraine II and Petersburg projects are still incomplete. (Id. ¶¶ 27, 68.)

In early 2010, Mastic departed TPW and two Florida residents were promoted to leadership positions; James Kutey became Chief Development Officer and Walter Kamp became Chief Executive Officer. (Id. ¶ 28.) Jerry Johnson, who is based in TPW's California office, was in charge of all personnel matters. (Kutey & Kamp Aff. ¶ 11.) Almost immediately after Kutey and Kamp were promoted, the sole female member of the TPW management team began complaining of abusive conduct perpetrated by Kutey and Kamp, which she believed wasdirected at her. (Compl. ¶ 29.) She relayed her concerns to Nathan, informing him that Kutey and Kamp had verbally berated her, treated her unprofessionally, and cut off communications with her on numerous occasions to the point that her ability to execute her job functions was significantly impeded. (Id. ¶ 30.) Nathan investigated her claims and consulted outside employment counsel, who confirmed that the allegations required immediate attention. (Id. ¶¶ 33, 34.)

Nathan decided to confront Kutey and Kamp and requested to meet with them when they were scheduled to be in Chicago on other business. (Id. ¶ 35.) After "practically begging" Kutey and Kamp to meet with him, the three men met in Chicago on August 17, 2010. (Id. ¶ 36.) Nathan relayed the female manager's complaints and explained the liability risk that Kutey and Kamp's behavior posed to TPW. (Id.) A series of conference calls and meetings took place the following week, including legal consultation with outside counsel and Morgan Stanley. (Id.) Thereafter, Kutey and Kamp's behavior towards Nathan became openly hostile. (Id. ¶ 38.) For the first time, the two men began raising performance issues about Nathan's work, despite having rated his work as excellent as recently as May 2010. (Id. ¶¶ 37, 38.) This retaliatory conduct culminated in February 2011 when Nathan was terminated from TPW. (Id. ¶ 39.) Two months later, Nathan filed the instant lawsuit.

Nathan claims that defendants unlawfully refused to (1) release his equity shares; (2) pay him a project completion bonus for the Loraine I project, which was complete; (3) consider his eligibility for an annual bonus; and (4) award him a project completion bonus for the Loraine II and Petersburg projects if and when those projects reach completion. (Id. ¶¶ 46-49.) According to Nathan, TPW, Kutey and Kamp did not act alone; rather, Morgan Stanley, TPW's parentcompany, was a direct participant in the misconduct and was aware of and sanctioned each wrongful act directed at Nathan. (Id. ¶ 54.) With respect to the Loraine I project completion bonus, Kutey and Kamp told Nathan that Morgan Stanley "made the decision" that only those who worked at the Loraine I project site would receive a project completion bonus. (Id. ¶ 55.) Martin Torres, a Morgan Stanley employee and member of TPW's board, also told Nathan that he "discussed [Nathan's] situation with [Kutey and Kamp] and supports their position." (Id. ¶ 56.) Finally, as to Loraine and Petersburg, Nathan claims that Loraine and Petersburg (1) were solely influenced, governed and controlled by TPW; (2) were intentionally undercapitalized; and (3) commingled their funds with those of TPW. (Compl. ¶¶ 51-52.) As such, Nathan seeks to hold each defendant liable for multiple claims.

ANALYSIS

I. Subject Matter Jurisdiction⁸

The court has federal question jurisdiction over Nathan's Title VII claim (Count VII against TPW and Morgan Stanley)⁹ under 28 U.S.C. § 2000e-5(f)(3). Under 28 U.S.C. § 1367(a), the court may exercise supplemental jurisdiction over Nathan's state law claims against TPW and Morgan Stanley provided that "the state and federal claims derive from a common nucleus of operative facts." Ammerman v. Sween, 54 F.3d 423, 424 (7th Cir. 1995). "A loose factual connection between the claims is generally sufficient." Id.

Nathan alleges that he was terminated in retaliation for raising concerns about Kutey and Kamp's treatment of a female employee, and denied an equity position and bonuses in violation of his employment contract upon his termination. Because the facts surrounding Nathan's termination are relevant to his Title VII claim and to his state law claims, supplemental jurisdiction over Nathan's state law claims against TPW and Morgan Stanley is proper. See Nieman v. Nationwide Mut. Ins. Co., No. 09-3304, 2009 WL 4928014, at *2 (C.D. Ill. Dec. 11, 2009) (exercising supplemental jurisdiction over plaintiff's state law claims because "[a]ll of his claims, state and federal, are based on the circumstances...