851 F. Supp. 2d 631
S.D.N.Y.2012Background
- Plaintiff Berkeley S. Scott was hired May 2009 as Senior Vice-President, Global Accounts & Business Development, under an written at-will offer letter promising $220,000 salary and six months severance plus benefits; signed May 2, 2009.
- The at-will letter allowed termination by either party for any reason not prohibited by law and reserved right to modify terms prospectively.
- In late 2009 Harris Interactive began reducing Scott’s duties and changing his role to an individual contributor/seller, with a corresponding shift in responsibilities.
- A March 4, 2010 conference call informed Scott that his title would be changed and his salary reduced to $150,000, effective March 15, 2010; he continued working March 15–16, 2010.
- Scott alleges breach of contract and New York Labor Law wage claims for pay at the original rate for March 15–16, 2010, and seeks severance, health benefits, and other relief; Harris Interactive counterclaims for repayment of a $15,000 signing bonus.
- The court granted Harris Interactive summary judgment on all claims and awarded $15,000 plus prejudgment interest to Harris on its counterclaim; plaintiff’s cross-motion for summary judgment was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can an at-will contract be modified prospectively without breach? | Scott; at-will status cannot be used to retroactively alter agreed terms. | Harris Interactive; at-will contracts allow unilateral prospective changes with employee acceptance or continued employment. | Yes; changes prospectively are valid; no breach based on March 15–16 pay. |
| Is Scott entitled to the original salary for March 15–16 under NY Labor Law? | Plaintiff argues wage at original rate was owed under contract. | Because of at-will status and knowledge of changes, pay was properly reduced. | Labor Law claim dismissed; no contractual right to wages at original rate. |
| Was there a constructive discharge to trigger severance/benefits? | Changes created intolerable working conditions forcing resignation. | Changes do not meet the constructive discharge standard; employee voluntarily resigned. | No constructive discharge; severance/benefits claim dismissed. |
| Is Harris entitled to the $15,000 signing bonus repayment? | Bonus was intended to make Scott whole for forfeited benefits after a constructively discharged stay. | Bonus conditioned on not leaving before one year; Scott voluntarily terminated. | Yes; repayment required; contract unambiguous. |
Key Cases Cited
- Parker v. Columbia Pictures Indus., 204 F.3d 326, 204 F.3d 326 (2d Cir. 2000) (at-will contract can be modified; termination rights vs. modification)
- Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 69 N.Y.2d 329 (N.Y. 1987) (at-will employment may be modified by express agreement or conduct)
- Terry v. Ashcroft, 336 F.3d 128, 336 F.3d 128 (2d Cir. 2003) (constructive discharge framework in hostile-environment-like context)
- Faragher v. City of Boca Raton, 524 U.S. 775, 524 U.S. 775 (S. Ct. 1998) (analysis of hostile environment standard and employer liability)