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Lederman v. Prudential Life Insurance Company of America

May 9, 2006

LAWRENCE LEDERMAN, PLAINTIFF-APPELLANT, AND
PHILIP SHAPIRO, PLAINTIFF/INTERVENOR-APPELLANT,
v.
PRUDENTIAL LIFE INSURANCE COMPANY OF AMERICA, INC., N/K/A/ PRUDENTIAL FINANCIAL, INC., LENARD LEEDS, STEVEN A. MORELLI, JEFFREY K. BROWN, DEIRDRE J. KAMBER, JOHN WIRENIUS, LEEDS & MORELLI, L.L.P., LEEDS, MORELLI & BROWN, P.C., JAMES VAGNINI, BRYAN MAZZOLA, DAVID NEVINS, LISA CALVACCA, SUSAN FITZGERALD, STEVE FRIEDMAN, ROBERT JOHN VALLI, JR., FREDRIC DAVID OSTROVE, AND MARK E. FABER, DEFENDANTS-RESPONDENTS, AND DIANE BRADLEY AND BRIAN D. TUSA, DEFENDANTS.*FN1



On appeal from the Superior Court of New Jersey, Law Division, Essex County, ESX-L-010547-02.

The opinion of the court was delivered by: Winkelstein, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 5, 2006

APPROVED FOR PUBLICATION

Before Judges Weissbard, Winkelstein and Sapp-Peterson.

Plaintiff Lawrence Lederman appeals from the Law Division's summary judgment dismissing his claims against his former employer, Prudential Life Insurance Company of America (Prudential); Prudential's vice-president and general counsel, Mark E. Faber; his former attorneys, Leeds, Morelli & Brown, P.C. (LMB), a New York law firm,; and multiple LMB attorneys. The court dismissed outright plaintiff's claims against a number of the individual defendants, while at the same time it dismissed and referred plaintiff's claims against Prudential and LMB and its principals to arbitration.

On appeal, Lederman challenges the dismissal of all claims.*fn2

We reverse the dismissal and reinstate the complaint as to the following defendants: Prudential and Faber; LMB and its named principals; and two of the individually named LMB attorneys, John Wirenius and Deirdre Kamber. We affirm the dismissal as to all remaining defendants.

I. The Facts and Procedural History

Lederman was employed by Prudential from 1966 through 1997 as a sales agent and manager. He claims that in 1992, after he was transferred to Prudential's Bayonne office, Prudential pressured him not to sell insurance to minorities, and discriminated against him and other agents who did. He asserts that Prudential's actions caused him to suffer a mental breakdown, rendering him unable to continue his employment, which he left on disability in 1997.

Plaintiff was not the only Prudential employee who claimed to be aggrieved by Prudential's actions. Three hundred fifty eight current and former other Prudential employees also asserted that they had been subject to adverse employment actions by Prudential.

LMB is a law firm that represents clients who have claims against their employers. From March through May 1999, Lederman and the other employees with claims against Prudential attended a series of meetings at LMB's New York office. As a result of these meetings, Lederman and the others entered into retainer agreements with LMB, authorizing LMB to receive a one-third contingent fee to represent them in their employment claims against Prudential.

Lederman and the other aggrieved employees then entered into an agreement dated May 5, 1999, (the May 1999 Agreement or the Agreement) with both Prudential and LMB. The Agreement, governed by New York law, obligated Lederman and the other "Covered Claimants" to engage in a confidential alternative dispute resolution (ADR) process to resolve their employment claims against Prudential.

Under the Agreement's terms, a Covered Claimant was required to submit all claims that he or she may have against Prudential to the process enunciated in the Agreement, known as "Roads to Resolution" (R to R), including claims of discrimination, tortious interference with contractual relations, fraud, misrepresentation, and intentional and negligent infliction of emotional distress. If that process was unsuccessful, the Covered Claimant would submit to binding arbitration. The Agreement further provided that despite the one-third contingent fee agreement signed by each Covered Claimant with LMB, Prudential would pay each Claimant's attorneys' fees to LMB. The Agreement stated in part:

So as to relieve each of the Covered Claimants of the obligation he or she has undertaken by signing a retainer agreement with [LMB] to pay [LMB's] attorneys' fees in the amount of 33 1/3% of the Covered Claimant's recovery, if any, Prudential agrees to pay attorneys' fees to [LMB] on behalf of the Covered Claimants, in exchange for which [LMB] agrees to release and discharge each and every Covered Claimant from any obligation to pay attorneys' fees to [LMB] for its representation of the Covered Claimant in [the R to R process] any provision of any retainer agreement between [LMB] and a Covered Claimant to the contrary notwithstanding.

In addition, the May 1999 Agreement contained confidentiality provisions. It stated:

(a) Covered Claimants and [LMB] shall not disclose, cause or suffer to be disclosed, either directly or indirectly . . . (i) this Agreement, its execution, negotiation, existence, or terms; (ii) any Claim or the underlying facts thereof; (iii) their employment, or separation from employment, by Prudential; or (iv) the terms of any award or negotiated settlement hereunder.

(b) Covered Claimants and [LMB] shall not disclose to any person or entity, except as required by law, . . . any facts, testimony, or documents obtained from, submitted by, or revealed by any party hereunder, any information concerning the settlement terms or relief (if any) obtained hereunder, or any information about the amounts of fees and costs paid pursuant to this Agreement.

The parties agreed that any court action to enforce the Agreement would be filed under seal.

Of particular import to Prudential and LMB was the Agreement's arbitration provision. In paragraph 20, the parties agreed that (1) any dispute about the terms or the application of the Agreement would be resolved by the American Arbitration Association (AAA), and (2) no party or arbitrator could disclose the existence, content, or results of any arbitration without Prudential's prior written consent.

Despite the language in the Agreement that purported to make it "the entire agreement and final understanding concerning the subject matter," also on May 5, 1999, Prudential and LMB, but not the Covered Claimants, entered into a separate agreement (the Second May 1999 Agreement). That agreement obligated LMB to submit Lederman's claim, and the claims of the other 358 claimants, to Prudential's confidential R to R process; according to plaintiff's complaint, in return, Prudential was obligated to pay $15,000,000 as follows: the first $5,000,000 was to be paid to LMB as counsel fees in advance of the resolution of any claims; the remaining $10,000,000 was to be distributed to the claimants through the R to R process. The agreement contained a schedule of proposed payments from Prudential to LMB:

(i) Upon execution hereof, Prudential will advance the sum of Three Million Five Hundred Thousand Dollars ($3,500,000) to [LMB] against Earned Fees which both Prudential and [LMB] reasonably anticipate [LMB] will earn under the Agreement (the "Initial Advance");

(ii) Upon completion of the resolution of the first one hundred (100) Claims, but in no event later than August 31, 1999, Prudential will advance the sum of Five Hundred Thousand Dollars ($500,000) to [LMB] against Earned Fees which both Prudential and [LMB] reasonably anticipate [LMB] will earn under the Agreement ("the Second Advance") and Prudential will simultaneously advance the sum of One Million Dollars ($1,000,000) to [LMB] against Earned Fees ...


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