Rocco v. Goldberg (In re Goldberg)

• Decision Date: 29 January 2013
• Docket Number: Bankruptcy No. 811–78915–reg.,Adversary No. 812–08099–reg.
• Citation: 487 B.R. 112
• Parties: In re Jeffrey L. GOLDBERG, Debtor. Mary Rocco, Plaintiff, v. Jeffrey L. Goldberg, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of New York

487 B.R. 112

In re Jeffrey L. GOLDBERG, Debtor.Mary Rocco, Plaintiff,

v.Jeffrey L. Goldberg, Defendant.

Bankruptcy No. 811–78915–reg.

Adversary No. 812–08099–reg.

United States Bankruptcy Court, E.D. New York.

Jan. 29, 2013.

Tracey S. Bernstein, Himmel & Bernstein, LLP, New York, NY, for Plaintiff.

Eric J. Snyder, Wilk Auslander LLP, New York, NY, for Defendant.

MEMORANDUM DECISION

ROBERT E. GROSSMAN, Bankruptcy Judge.

Before the Court are cross motions for summary judgment by the Plaintiff, Mary Rocco (“Plaintiff”), and the Debtor–Defendant (“Debtor”), Jeffrey L. Goldberg, in this adversary proceeding seeking a determination of dischargeability pursuant to section 523(a)(6) of the Bankruptcy Code. The Plaintiff and the Debtor each recognize that the critical issue before the Court is whether the Debtor's pre-petition conduct which gave rise to the debt in this case rises to the level of “willful and malicious” as required by section 523(a)(6). Relying on the doctrine of collateral estoppel, the Plaintiff argues that debt in the form of a prepetition state court judgment for pregnancy discrimination and retaliation under the New York State Human Rights Law (“NYSHRL”), Executive Law § 290 et seq., is, by the very nature of the underlying cause of action, non-dischargeable. In the alternative, the Plaintiff argues that the factual findings supporting the underlying judgment are sufficient to establish willful and malicious injury. The Plaintiff is asking this Court to find that when presented with a state court judgmentfor pregnancy discrimination and retaliation, the Debtor should be precluded by collateral estoppel from being permitted to introduce any evidence on the question of whether the underlying behavior was committed “willfully and maliciously” as is necessary to satisfy the requirements of section 523(a)(6). The Debtor argues that the state court judgment should not be given collateral estoppel effect, and that the state court's undisputed factual findings fail to establish that the judgment-debt is non-dischargeable within the meaning of section 523(a)(6) of the Bankruptcy Code.

Although the New York State legislature has proscribed pregnancy discrimination as sufficiently abhorrent to impose financial consequences for such conduct, Congress has not determined to add liability for pregnancy discrimination to the list of non-dischargeable debts under section 523(a). As such, a thorough collateral estoppel analysis must be conducted. This Court has been very clear in prior decisions that when conducting a collateral estoppel analysis it reviews state court decisions strictly as they are written and will not interpret the prior decision so as to satisfy necessary elements of section 523(a) unless the prior findings are clear and unequivocal.

In the instant case, a legal finding of a “willful and malicious injury,” per se, was not necessary to satisfy the statutory requirement for the state court to enter a judgment for discrimination or retaliation. Therefore, the judgment itself cannot stand alone as a basis for a finding of non-dischargeability. However, the extensive findings of fact as set forth in support of the judgment are sufficiently clear and unequivocal to warrant the application of the doctrine of collateral estoppel. In this Court's view, those findings are sufficient to support a finding of willful and malicious injury in this non-dischargeability action.

Accordingly, the Plaintiff's motion for summary judgment is granted and judgment of non-dischargeability will enter in her favor. The Debtor's motion for summary judgment is denied.

FACTS

Mary J. Rocco, the Plaintiff, was employed as an attorney for the Debtor's law firm, Jeffrey L. Goldberg, P.C., from 2000 until 2005. During that time she gave birth to three children, taking maternity leave of approximately three months in each instance. She was terminated from employment upon her return to work from maternity leave on June 6, 2005, following her third pregnancy. On June 1, 2006, the Plaintiff filed a complaint with the New York State Division of Human Rights (“NYSDHR”) against the Debtor, the law firm, and the firm's managing attorney. She alleged, inter alia, that (1) she was subjected to discriminatory treatment during her third pregnancy; (2) she complained of the treatment to the defendants; and (3) her employment ultimately was terminated in retaliation for her complaints. The Plaintiff prevailed after an evidentiary hearing before an administrative law judge (“ALJ”) and a final order was entered by the NYSDHR. The ALJ's decision was affirmed by the New York State Supreme Court Appellate Division, Second Department on June 28, 2011, and judgment was entered in the amount of $244,665.05.

Detailed factual findings were made by the ALJ. Those factual findings are as follows: The Plaintiff was a thirty three year old mother of three children. At the time of her termination, the Plaintiff was an associate attorney at the Debtor's law firm and she was qualified for that position. From 1997 to 2000, prior to her employment with the firm as an attorney, the Plaintiff worked for the firm as a legal intern while she went to law school. The Debtor's law firm practice areas included employment discrimination law. The Debtor was supportive when the Plaintiff's first child was born in August 2002 and he afforded her a flexible work schedule when she returned to work from maternity leave. In 2004, during Plaintiff's second pregnancy and at a time when Plaintiff was hospitalized due to pregnancy-related complications, the Debtor hired a male associate because, according to the Debtor, “he couldn't have babies.” It was around this time that the Debtor began to make the Plaintiff feel uncomfortable about her pregnancy and impending maternity leave. While Plaintiff was out on her second maternity leave in the spring of 2004, the Debtor began discussions with Eric Sanders regarding his employment with the firm. The Debtor hired Mr. Sanders on July 19, 2004, and promoted him to managing attorney on December 18, 2004.

The Plaintiff returned from her second maternity leave the same day Mr. Sanders started with the firm. From July 19, 2004 until March 9, 2005, the Plaintiff was “routinely given undesirable assignments and clerical tasks, and her direct contacts with clients and [the Debtor] were reduced.” (ALJ Decision ¶ 10). When the Plaintiff became pregnant with her third child the Debtor and Mr. Sanders thought she was “hiding it with big clothing”, and commented that the Plaintiff was having “Irish twins.” (ALJ Decision ¶ 11). When the Plaintiff announced to the Debtor that she was pregnant a third time, he responded, “[N]ot again. I need to speak to Mr. Sanders”. (ALJ Decision ¶ 12). On February 17, 2005, the firm revoked the Plaintiff's company car, her cell phone and credit card, while other employees of the firm retained those benefit for an additional six months. Although the Plaintiff was afforded a flexible schedule she maintained full time hours during her employment.

In March 2005, the Plaintiff complained to the Debtor that she was being penalized and retaliated against for her pregnancy. He apologized for revoking her car, cell phone and credit card, assured her that there were no problems with her work product, and said he would discuss her situation with Mr. Sanders. A few days later, just prior to her third maternity leave, the Debtor told the Plaintiff that she should “go have babies.” (ALJ Decision ¶ 19). While on maternity leave, in May 2005, the Plaintiff called the Debtor and asked him to address her complaint of discrimination. The Debtor was evasive and did not address her concerns. On June 6, 2005, when the Plaintiff returned from maternity leave she was fired. There was a new attorney in her office, all of her personal belongings had been packed up and she could not log into her computer. The Debtor claimed that he was not aware the Plaintiff was returning to work on June 6, 2005, but the ALJ found that claim not to be credible. An associate at the firm corroborated the Plaintiff's testimony that she was in fact fired.

The Plaintiff testified before the ALJ that she “felt humiliated, embarrassed and distraught over the loss of her job.” (ALJ Decision ¶ 35). In support of her claim for mental anguish, the Plaintiff “provided evidence [in the underling action] of ... vomiting, preterm labor, and bleeding, and testified to being placed on anti-depressants and having problems with her marriage and in caring for her third child.” (Decision of the Appellate Division, Plaintiff's Motion, Ex. B).

With respect to the Plaintiff's discrimination claim, the ALJ found that Plaintiff satisfied her burden of establishing that she was a member of a protected class, she was qualified for the position she held, she suffered an adverse employment action, and that the Debtor's actions occurred under circumstances giving rise to an inference of discrimination. (ALJ Decision at 8). The ALJ also found that the Debtor and Mr. Sanders “harbored discriminatory animus towards [the Plaintiff] because of her pregnancy.” Significantly, the ALJ also found that the Debtor's “proffered explanations for the [Plaintiff's] discharge” were not credible and therefore the Debtor failed to satisfy his burden to prove that his termination of the Plaintiff was motivated by “legitimate, nondiscriminatory reasons.”

The ALJ also found that the Plaintiff satisfied her burden of proving her retaliation claim by showing that she engaged in a protected activity, the Debtor was aware that she participated in this activity, she suffered an adverse employment action, and there was a causal relationship between the protected activity and the adverse action. The ALJ found a causal link between her complaints of discrimination and her termination, and also found that the Debtor did not satisfy his burden of proving that his actions were motivated by...