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Sullivan Settles With Former Associate Who Sued Firm for Discrimination
New York Law Journal
October 26, 2007
Sullivan & Cromwell said Thursday it had reached a settlement with former associate Aaron Charney, who sued the New York law firm earlier this year for sexual orientation discrimination.
"Aaron Charney and Sullivan & Cromwell have resolved their differences in connection with all pending disputes between them," the firm said through a spokesman.
Charney's lawyer, Daniel Alterman of Alterman & Boop, did not return a call for comment.
The settlement, the terms of which are confidential, brings to a close a dispute that had fascinated the New York legal community over the past several months, both with its allegations concerning partners at one of the city's most prestigious firms and its bizarre twists and turns in the courtroom.
Charney, then a fourth-year mergers and acquisitions associate, filed his initial pro se complaint against Sullivan & Cromwell in January. He claimed that several partners discriminated against him because he is gay and that the firm retaliated against him after he filed an internal complaint.
The discrimination described by Charney, 28, included some acts of outright hostility, including one instance in which partner Eric Krautheimer allegedly threw documents at the associate's feet and ordered him to pick them up. But most of the alleged discrimination involved constant insinuations by partners that Charney was involved with another associate, Gera Grinberg, and that such a relationship was, in the alleged words of partner Alexandra Korry, "unnatural." Charney, who stated in his complaint that Grinberg is not gay and that the two were never in a relationship, said he complained about discrimination only to face retaliation in the form of what he claimed was a fabricated performance review that also criticized his closeness with Grinberg.
Sullivan & Cromwell categorically denied the allegations and responded by firing Charney and filing its own lawsuit claiming that the ex-associate had violated firm and client confidences in his widely disseminated complaint and that he had stolen from an adjacent partner's office documents concerning associate attrition that he passed to The Wall Street Journal.
After the firm filed its suit, Charney retained Alterman, a civil rights lawyer, and his legal team grew to include employment lawyers Herbert Eisenberg and Laura Schnell, as well as criminal defense lawyer Michael Kennedy. Sullivan & Cromwell was chiefly represented by Zachary Fasman of Paul, Hastings, Janofsky & Walker and Charles Stillman of Stillman, Friedman & Shechtman.
Much of the drama in the case in recent months has focused not on the allegations in the complaints but on the destruction of Charney's personal computer hard drive.
The firm had sought the hard drive as part of its efforts to determine whether Charney had stolen documents. In February, Alterman said in court before Manhattan Supreme Court Justice Bernard Fried that Charney had destroyed the hard drive in response to a settlement offer made by Sullivan & Cromwell at a secret Jan. 31 meeting.
Charney's lawyers later added a conspiracy charge in an amended complaint, claiming that Sullivan & Cromwell had engaged in an elaborate plot to discredit his case by having him destroy his hard drive and possibly face sanctions for spoliation of evidence. Charney alleged partner Gandolfo DiBlasi's threats at the Jan. 31 meeting to "crush" Charney if he did not turn over or destroy his hard drive intimidated him into taking the action he did.
DiBlasi's threats were allegedly recorded in notes taken by Grinberg, who also attended the meeting. But Charney's lawyers claimed these notes were destroyed by Grinberg's then-lawyer, Edward Gallion of Gallion & Spielvogel, as a "favor" to Sullivan & Cromwell, where Gallion had once been an associate.
Justice Fried dismissed Charney's conspiracy charge a few weeks ago, along with a claim for intentional infliction of emotional distress, finding the latter duplicative of the discrimination claim and the former unsupportable without the underlying emotional distress tort. Earlier in the year, the judge also threw out some of the firm's confidentiality claims on the grounds that much of the information Charney included in his complaint was already in the public record.
The lawsuit surprised many in New York because Sullivan & Cromwell, which has several homosexual partners, had enjoyed a reputation as a gay-friendly workplace.
Indeed, shortly after the suit was filed, John Scheich, president of the Lesbian, Gay, Bisexual & Transgender Law Association (LeGaL), was forced to step down after he told ABC News that the firm had been a strong supporter of gay lawyers and said: "I don't know Aaron Charney or the details of his case, but if I had to line up on one side or the other, I would have to line up with ... Sullivan Cromwell." He later apologized for pre-judging Charney and his case.
