Nicolaou v. Horizon Media, Inc.

• Decision Date: 28 March 2005
• Docket Number: Docket No. 03-9186.
• Citation: Nicolaou v. Horizon Media, Inc., 402 F.3d 325 (2nd Cir. 2005)
• Parties: Chrystina NICOLAOU, Plaintiff-Appellant, v. HORIZON MEDIA, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

Page 325

402 F.3d 325

Chrystina NICOLAOU, Plaintiff-Appellant, v. HORIZON MEDIA, INC., Defendant-Appellee.

Docket No. 03-9186.

United States Court of Appeals, Second Circuit.

Argued: July 13, 2004.

Decided: March 28, 2005.

Daniel J. Kaiser (Henry J. Saurborn, Jr., on the brief), Kaiser Saurborn & Mair, P.C., New York, NY, for Plaintiff-Appellant.

Laura H. Allen (Nicholas H. DeBaun, Nilufer Loy, Chad Edgar, on the brief), Sidley Austin Brown & Wood LLP, New York, NY, for Defendant-Appellee.

Gail Ann Perry, Trial Attorney, U.S. Dept. of Labor (Howard M. Radzely, Solicitor of Labor, Timothy D. Hauser, Associate Solicitor, and Elizabeth Hopkins, Counsel for Special Litigation, on the brief), Washington, D.C., for Amicus Curiae Secretary of Labor.

Before: POOLER, SACK, and RAGGI, Circuit Judges.

PER CURIAM.

BACKGROUND¹

The defendant in this action, Horizon Media, Inc. ("Horizon"), is a New York corporation with its principal place of business located in New York City. ¶ 2. The plaintiff, Chrystina Nicolaou, was hired by Horizon in July 1998 as its Director of Human Resources and Administration. ¶ 6. In this capacity, Nicolaou served as a fiduciary and trustee of Horizon's 401(k) employee benefits plan ("the Plan"), which is regulated by the Employee Retirement and Income Security Act, 29 U.S.C. §§ 1001-1461. ¶ 9. Nicolaou was also a participant in the Plan. ¶ 9.

Shortly after she began working at Horizon, Nicolaou "discovered a serious payroll discrepancy involving underpayment of overtime to all non-exempt employees of the [New York City] and Los Angeles offices." ¶ 10. This "discrepancy" had apparently existed for more than a decade, resulting in what the complaint terms "a historical under funding of Horizon's 401(k) plan." ¶¶ 13, 20. Nicolaou immediately brought this problem to the attention of Jerry Riley, Horizon's Chief Financial Officer, who advised her to let the matter drop. ¶¶ 8, 11. She then raised the issue on two occasions with Stewart Linder, Horizon's Controller, who declined to address it. ¶¶ 8, 12, 14-17.

By October 1999 Nicolaou became "convinced that Horizon was unwilling to rectify" the funding problem. ¶ 18. She therefore contacted Mark Silverman, who is identified in the complaint simply as "an attorney for Horizon," in the hope "that Horizon would finally address the overtime issue by conducting an investigation into the issue." ¶ 18. Silverman in fact "expressed enormous concern regarding how detrimental the information was" and Nicolaou "promised to remain available to assist or provide additional information in connection with the investigation." ¶¶ 22-23. Silverman apparently undertook his own inquiry into the funding problem, upon the conclusion of which he told Nicolaou that "he had confirmed her findings concerning the payroll issue." ¶ 25.

During November 1999 Nicolaou and Silverman met with William Koenigsberg, the President of Horizon. ¶¶ 8, 26. We note that the amended complaint does not specify by whom this meeting was arranged. It is clearly alleged, however, that in addition to informing him of the existence of the payroll discrepancy, Silverman urged Koenigsberg to see that the problem would be promptly rectified. ¶¶ 27-29. Koenigsberg, however, made no such commitment during the meeting, but instead "appeared disturbed ... and not at all pleased that this issue was being brought to his attention." ¶ 30.

The amended complaint alleges that a campaign of retaliation was then initiated against Nicolaou. "Within days" of the meeting just described, "Koenigsberg announced that he was bringing a `real' Human Resources professional into the organization that [sic] would report directly to him." ¶ 32. Soon afterward, "Nicolaou was formally advised that she was being replaced as the Director of Human Resources and Administration and that her job title would thereafter be Office Manager." ¶ 36. Horizon subsequently hired two individuals, who together assumed virtually all of Nicolaou's former responsibilities. ¶¶ 37-40. This process of what the amended complaint characterizes as "professional trashing" ended with Nicolaou being terminated by Horizon on November 7, 2000. ¶ 44.

Nicolaou filed her initial complaint in this action on January 31, 2001, and, as already noted, filed an amended complaint on April 24, 2001. The amended complaint states two causes of action for illegal retaliation arising from its allegations that Horizon demoted and eventually terminated Nicolaou after she had raised concerns about Horizon's funding of its 401(k) plan: (1) a violation of Sections 15 and 16 of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, and (2) a violation of Section 510 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. ¶¶ 48, 51.

Horizon moved to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The district court granted this motion in an unreported opinion, entered on September 25, 2003. The court held that Nicolaou had no cause of action under FLSA because Sections 15 and 16 do not make it illegal for a firm to retaliate against an employee for bringing complaints within the firm; those provisions only make it illegal for a firm to retaliate against an employee who has filed a formal complaint with a regulatory agency, or who has taken part in a regulatory agency's proceeding against the firm. The district court dismissed Nicolaou's ERISA claim because it construed the amended complaint as seeking only damages, and not equitable relief, as required by the statute. See 29 U.S.C. § 1132(a)(3).

Nicolaou moved for reconsideration of the district court's dismissal of her ERISA claim after informing the court by letter that the amended complaint in fact seeks injunctive relief in the form of reinstatement of her employment with Horizon. The district court issued an opinion in response, entered on October 15, 2003, which agreed that reconsideration was warranted, but went on to again dismiss the ERISA claim. The opinion concludes that, as with FLSA, "§ 510 of ERISA does not protect an employee who participates in an internal inquiry, [and because Nicolaou] has not alleged that she participated in a protected activity [she] therefore has failed to state a cause of action under ERISA." Nicolaou v. Horizon Media, Inc., No. 01 Civ. 0785, 2003 WL 22852680, at *3, 2003 U.S. Dist. LEXIS 18341, at *9 (S.D.N.Y. Oct.15, 2003).

DISCUSSION

Our review of a district court's dismissal of a complaint under Rule 12(b)(6) is de novo. See Ontario Pub. Serv. Employees Union Pension Trust Fund v. Nortel Networks Corp., 369 F.3d 27, 30 (2d Cir.2004). Nicolaou has elected to only appeal the dismissal of her claim under Section 510 of ERISA.

Section 510 of ERISA, codified at 29 U.S.C. § 1140, reads in relevant part as follows:

It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this chapter....

Other federal statutes contain provisions which prevent employers from retaliating against employees who have raised an issue concerning the employer's compliance with the regulatory program set forth in the statute. It is useful to compare the language of Section 510 with the analogous "whistleblower provisions" of FLSA and Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2000e-17. Section 15(a)(3) of FLSA, codified at 29 U.S.C. § 215(a)(3), makes it unlawful

to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding.

Section 704(a) of Title VII, codified at 42 U.S.C. § 2000e-3(a), provides as follows:

It shall be an unlawful employment practice for an employer to discriminate against any of his employees ... because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.

In dismissing Nicolaou's claim under Section 510 of ERISA, the district court relied on our decision in Lambert v. Genesee Hospital, 10 F.3d 46 (2d Cir.1993). In that case, this Court held that Section 15(a)(3) of FLSA does not apply to retaliation taken in response to internal complaints, as opposed to retaliation occurring after an employee has cooperated with an investigation brought by a regulatory agency. In doing so, the Court relied upon a comparison of FLSA Section 15(a)(3) with the whistleblower provision contained in Title VII:

The phrase "opposed any practice" [in Section 704(a) of Title VII] encompasses an individual's complaints to supervisors regardless of whether she also files an EEOC charge. Kotcher v. Rosa & Sullivan Appliance Ctr., Inc., 957 F.2d 59, 65 (2d Cir.1992).

In contrast, ... [t]he plain language of [FLSA Section 15(a)(3)] limits the cause of action to retaliation for filing formal complaints, instituting a proceeding, or testifying, but does not encompass complaints made to a supervisor.

Id. at 55.

The district court here declared that it could "find no distinction" between FLSA's whistleblower provision and Section 510 of ERISA. Nicolaou, 2003 WL 22852680, at *2, 2003 U.S. Dist. LEXIS 18341, at *7. Following Lambert, it therefore concluded that "the inquiry contemplated by § 510 can only be a formal, external inquiry. Participation in an internal inquiry is not a protected activity under § 510." Id.² We do not agree, however, with the district court that Lambert is decisive here. Our conclusion is based upon the plain language of ERISA Section 510, which is unambiguously broader in scope than Section 15(a)(3) of FLSA.

First, the whistleblower provision of...