February 1, 2012 6:27 PM

Is Resolution at Hand in EEOC Bias Suit Against Kelley Drye?

Posted by Sara Randazzo

For Kelley Drye & Warren, a two-year-old legal battle over over an allegedly discriminatory retirement policy may be nearing an end.

A Monday filing in the Equal Employment Opportunity Commission's federal age-bias suit against the firm suggests the parties may be close to settling the case, which the EEOC initiated in January 2010 on behalf of then 79-year-old labor and employment partner Eugene D'Ablemont. At issue: whether Kelley Drye's policy of forcing partners to give up their equity in the firm at age 70 was discriminatory.

In the filing (PDF), EEOC lawyer Jeffrey Burstein tells U.S. magistrate judge Michael Dolinger in Manhattan that he would like "to update the Court on settlement negotiations," and requests until February 10 to alert the court if another in-person mediation session is required. (According to the court docket, the two sides had an initial mediation session on October 24.)

Kelley Drye has dropped the disputed retirement provision since the EEOC filed the suit. When the firm made the change in April 2010, then-chairman John Callagy told sibling publication the New York Law Journal that senior partners, like all other partners, would from that point on be judged solely on their performance.

"It doesn't serve our business interest anymore," Callagy said at the time. "And the EEOC wanted us to do it. We told them we would do it, we told them before the lawsuit we would do it." (Earlier this year, the firm announced that Callagy would be stepping down after two decades at the helm to make way for new chairman Paul McCurdy, a broker-dealer partner in New York.)

Despite the change, the EEOC suit has continued. In a second amended complaint (PDF) filed in August,the agency seeks back pay and punitive damages for D'Ablemont, as well as back pay for any other partners whose compensation was reduced because of their age.

The amended complaint details how D'Ablemont and others were told to eschew their equity interest in Kelley Drye and to "relinquish their authority to manage or significantly influence the firm" upon turning 70. The filing also alleges that after D'Ablemont complained to the EEOC about the policy in 2008, the firm retaliated by cutting his annual bonus from $75,000 to $25,000, despite his productivity and collections staying the same.

In its September response to the amended complaint—and in an echo of its April 2010 response to the EEOC's original complaint—Kelley Drye claims D'Ablemont, who is still a partner in the firm's New York office, is not an "employee," as the EEOC suit refers to him. Rather, the firm argues, his status as a partner makes him an "employer" who has a say in management elections and access to financial and confidential firm information. 

In one of its 15 affirmative defenses against the EEOC claims, the firm argued in its September filing—as it did in April 2010—that D'Ablemont only billed between 195 and 324 hours a year during the five previous years. In the filing, Kelley Drye also accuses D'Ablemont of violating his partnership agreement by receiving payments from an unnamed third party while seeking and accepting a bonus from the firm. (Subsequent court filings show that the third party D'Ablemont worked for is TeleRep, which represents television stations).

The firm also says it has given D'Ablemont and his family "tens of thousands of dollars" worth of free legal services.

Kelley Drye is being represented by Proskauer Rose partner Bettina Plevan, who frequently represents law firms in high-profile labor and employment disputes. Plevan did not immediately return a request for comment Wednesday. Reached Wednesday, Burstein of the EEOC said he could not comment on the matter. 

The court has set a deadline of February 29 for all fact discovery in the case and scheduled a final pretrial conference for May 4.

Kelley Drye isn't the only firm enmeshed in a legal dispute over its retirement policy. Stroock & Stroock & Lavan was sued in August by a former partner who claims he is still owed retirement benefits even though he took his practice to Locke Lord. As The Am Law Daily reported on January 24, that suit is now headed to arbitration.

Across the pond, meanwhile, a British court ruled this week on the issue of whether partners can be considered law firm employees, one of the key questions in the Kelley Drye case. In the U.K. case—which involves an unfair dismissal claim—a three-judge panel found that members of a limited liability partnership do not qualify as employees, The Lawyer reports.

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