Case 1:21-cv-06296-JMF Document 79 Filed 01/14/22 Page 1 of 14
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`IN RE:
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`IBM ARBITRATION AGREEMENT
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`LITIGATION
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`21-CV-6296 (JMF)
`21-CV-6297 (JMF)
`21-CV-6308 (JMF)
`21-CV-6310 (JMF)
`21-CV-6312 (JMF)
`21-CV-6314 (JMF)
`21-CV-6320 (JMF)
`21-CV-6322 (JMF)
`21-CV-6323 (JMF)
`21-CV-6325 (JMF)
`21-CV-6326 (JMF)
`21-CV-6331 (JMF)
`21-CV-6332 (JMF)
`21-CV-6337 (JMF)
`21-CV-6340 (JMF)
`21-CV-6341 (JMF)
`21-CV-6344 (JMF)
`21-CV-6349 (JMF)
`21-CV-6351 (JMF)
`21-CV-6353 (JMF)
`21-CV-6355 (JMF)
`21-CV-6375 (JMF)
`21-CV-6377 (JMF)
`21-CV-6380 (JMF)
`21-CV-6384 (JMF)
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`PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIRST AMENDED COMPLAINT
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`I.
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`INTRODUCTION
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`Plaintiffs1 hereby move to submit the Proposed Amended Complaint (attached as
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`1
`All Plaintiffs seek to assert the additional fraudulent inducement claim included in
`the Proposed Amended Complaint (attached hereto as Exhibit A). Plaintiffs seek to
`designate William Abt as the lead Plaintiff and class representative for this purpose, and
`the Proposed Amended Complaint states facts specific to Plaintiff Abt. This matter
`consists of approximately twenty-six (26) individual matters that have been
`administratively related and collectively designated In Re: IBM Arbitration Agreement
`Litigation, C.A. No. 21-cv-06296-JMF. The Court has administratively closed all but the
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`1
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`Case 1:21-cv-06296-JMF Document 79 Filed 01/14/22 Page 2 of 14
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`Exhibit A) against Defendant International Business Machines Corp. (―IBM‖ or
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`―Defendant‖) to add a claim for fraudulent inducement. Plaintiff Abt brings this claim of
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`fraudulent inducement on behalf of a class of similarly situated employees under Fed.
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`R. Civ. P. 23. The fraudulent inducement claim is brought as a class action, or
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`alternatively, as individual actions by these Plaintiffs (in the above-captioned
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`consolidated matter). The Declaratory Judgment action is brought as individual actions
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`by all these Plaintiffs.
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`As explained below, Plaintiffs‘ request is made in good faith and will not cause
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`undue delay or prejudice to IBM, as no discovery has begun. Indeed, granting Plaintiffs‘
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`leave to amend is an especially simple decision given that identical fraudulent
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`inducement claims will be proceeding before this Court in the ―second wave‖ cases,
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`which have been amended as matter of right. See Gilmore v. IBM, 1:21-cv-09574
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`(JMF), Dkt. 16 (Gilmore is the lead case in the second wave, which the Court has now
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`re-captioned as In Re: Second Wave IBM Arbitration Agreement Litigation, 1:21-cv-
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`09574 (JMF)). Thus, permitting Plaintiff to amend here will require no more discovery
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`and no additional judicial resources. Indeed, Plaintiffs will be relying on common
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`evidence to prove their claims, which is precisely why Plaintiffs should be permitted to
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`pursue this claim on a classwide basis. However, in the event Plaintiffs‘ putative class
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`lead case (brought by William Chastka) in that coordinated set of actions. In this
`proposed Amended Complaint (that is intended to apply generally to the Plaintiffs in all
`these related cases), Plaintiff Abt would now be the lead plaintiff in the lead case for the
`claims in these related cases. But regardless of whether this claim is ultimately certified
`as a class action, both the fraudulent inducement claim and the Declaratory Judgment
`Act claim are intended to be brought individually by all Plaintiffs in the related actions
`consolidated in In Re: IBM Arbitration Agreement Litigation.
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`Case 1:21-cv-06296-JMF Document 79 Filed 01/14/22 Page 3 of 14
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`is not ultimately certified, it is important that Plaintiff Abt and the ―first wave‖ Plaintiffs
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`have the opportunity to assert their claim before this Court on individual bases.
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`Moreover, submission of this Amended Complaint is not intended to delay the
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`Court‘s consideration of Plaintiffs‘ Motion for Summary Judgment (Dkt. 27), which is
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`currently fully briefed before the Court. Plaintiffs believe that the Court should decide
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`their Motion for Summary Judgment, and then the parties can proceed with discovery
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`with respect to their fraudulent inducement claim. Therefore, the Court should permit the
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`filing of the Amended Complaint under the liberal Fed. R. Civ. P 15(a) standard.
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`II. LEGAL STANDARD
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`Federal Rule of Civil Procedure 15(a) provides that leave to amend ―shall be
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`freely granted when justice so requires.‖ Grounds for a denial of a motion to amend
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`include ―undue delay, bad faith or dilatory motive on the part of the movant, repeated
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`failure to cure deficiencies by amendments previously allowed, undue prejudice to the
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`opposing party by virtue of allowance of the amendment, [and] futility of amendment[.]‖
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`Foman v. Davis, 371 U.S. 178, 182 (1962). ―Rule 15(a)(2) of the Federal Rules of Civil
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`Procedure provides that a court ‗should freely give leave [to amend] when justice so
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`requires.‘ ‖ Gorman v. Covidien Sales, LLC, 2014 WL 7404071, at *2 (S.D.N.Y. Dec. 31,
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`2014) (quoting Fed. R. Civ. P. 15(a)(2)). Consistent with this liberal amendment policy,
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`―‗[t]he rule in this Circuit has been to allow a party to amend its pleadings in the absence
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`of a showing by the nonmovant of prejudice or bad faith.‘ ‖ Id. (alteration in Gorman)
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`(quoting Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993)); see also
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`Shipner v. E. Air Lines, Inc., 868 F.2d 401, 407 (11th Cir. 1989) (―Th[e] policy of rule
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`15(a) in liberally permitting amendments to facilitate determination of claims on the
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`3
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`Case 1:21-cv-06296-JMF Document 79 Filed 01/14/22 Page 4 of 14
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`merits circumscribes the exercise of the district court's discretion; thus, unless a
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`substantial reason exists to deny leave to amend, the discretion of the district court is
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`not broad enough to permit denial.‖).
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`III. RELEVANT BACKGROUND
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`As set forth within the Proposed Amended Complaint (Exhibit A), IBM
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`communicated to Plaintiffs and other similarly situated employees that the reason for
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`their terminations (or events that led to their constructive discharge) were based upon
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`legitimate, non-discriminatory reasons, rather than based on their age. (Proposed Am.
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`Compl. ¶¶ 5-6, Exhibit A.) However, as set forth below, in fact, IBM has been engaging
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`in a years-long effort to oust older employees from the workplace in order to make room
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`for younger employees and thereby build a younger workforce. (Proposed Am. Compl.
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`¶¶ 16-19, Exhibit A.) Had Plaintiffs and other similarly situated employees known that
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`the true reason for their discharge (or the events that led to their constructive discharge)
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`was actually rooted in age discrimination (in particular, the desire of IBM‘s CEO and
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`other top executives to shift the demographics of the company toward younger
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`employees), they would not have signed the agreement that has relegated their pursuit
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`of ADEA claims to individual confidential arbitration, where IBM has impeded their ability
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`to pursue their claims as fully as they would have been able to in court. (Proposed Am.
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`Compl. ¶¶ 6, 56, Exhibit A.)
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`In addition, IBM fraudulently induced Plaintiff Abt and other Plaintiffs to sign the
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`arbitration agreement based upon misstatements that the employees would only receive
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`COBRA benefits, upon their separation from IBM, if they signed the agreement.
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`(Proposed Am. Compl. ¶¶ 5-6, 55, Exhibit A.) Receipt of COBRA benefits (which allow
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`Case 1:21-cv-06296-JMF Document 79 Filed 01/14/22 Page 5 of 14
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`employees to maintain health insurance after they leave a job) is a right that employees
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`have that is not and cannot be contingent on signing a severance agreement.
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`(Proposed Am. Compl. ¶ 6, Exhibit A.) However, IBM knowingly misled employees into
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`believing they could only maintain their health care coverage, through COBRA, by
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`signing the agreement (which contained the arbitration clause). (Proposed Am. Compl.
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`¶¶ 5-6, 55, Exhibit A.) Had Plaintiff Abt and other Plaintiffs understood that they could
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`maintain their health insurance through COBRA without signing the agreement, they
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`would not have signed the agreement and thereby relegated their pursuit of ADEA
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`claims to individual confidential arbitration, where IBM has impeded their ability to
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`pursue their claims as fully as they would have been able to in court. (Proposed Am.
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`Compl. ¶ 6, Exhibit A.)
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`In 2012, Virginia (―Ginni‖) Rometty became the President and CEO of IBM.
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`(Proposed Am. Compl. ¶ 37, Exhibit A.) In approximately June 2013, Ms. Rometty
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`promoted a senior human resources executive, Diane Gherson, to the position of Senior
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`Vice President and Chief Human Resources Officer. (Proposed Am. Compl. ¶ 38,
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`Exhibit A.) Ms. Gherson communicated directly and frequently with Ms. Rometty and
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`was responsible for implementing and executing Ms. Rometty‘s policies and agenda
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`concerning the structuring of IBM‘s workforce. (Proposed Am. Compl. ¶ 38, Exhibit A.)
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`Ms. Rometty desired to aggressively alter the age demographics of IBM‘s
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`workforce by targeting older workers for adverse employment actions, such as layoff
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`programs (referred to as ―Resource Actions‖ at IBM), as well as other actions that were
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`intended to lead to their termination or constructive discharge (such as giving
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`employees the ―option‖ of continuing their employment by relocating across the country,
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`when IBM knew that very few employees would accept this ―option‖). (Proposed Am.
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`Compl. ¶ 39, Exhibit A.) Ms. Rometty, unbeknownst to much of the rank-and-file
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`workforce she led (as well as many of its managerial employees), harbored deep
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`animus toward IBM‘s older workers. (Proposed Am. Compl. ¶ 40, Exhibit A.) While Ms.
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`Rometty hid her discriminatory animus from much of IBM‘s rank-and-file workforce, she
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`directly communicated ―behind closed doors‖ with executives such as Ms. Gherson
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`regarding her discriminatory plans to exit older workers from the company because of
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`their age, and Ms. Gherson helped implement the scheme to shift the company‘s
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`demographics towards younger employees. (Proposed Am. Compl. ¶ 40, Exhibit A.)
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`IBM is a highly sophisticated and well-resourced company. Over a period of
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`years, extending back at least to 2013, IBM devised and implemented this scheme to
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`conceal its discriminatory programs to oust older workers from the company and shift its
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`age demographics to younger workers. (Proposed Am. Compl. ¶ 41, Exhibit A.)
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`Around approximately 2014, IBM decided that it would no longer provide its laid
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`off workers information required by the Older Workers‘ Benefits Protections Act
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`(―OWBPA‖), 29 U.S.C. § 626(f)(1)(H) because such information could enable IBM‘s laid
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`off workers to discover IBM‘s discriminatory scheme and expose the true purpose
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`behind the structuring of IBM‘s programs, including Resource Actions, to target and exit
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`older workers so as to make room for a younger workforce as desired by IBM‘s CEO.
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`(Proposed Am. Compl. ¶ 42, Exhibit A.)
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`In 2014, when IBM announced its unorthodox refusal to provide OWBPA
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`information with its separation agreements, IBM had its spokesperson provide
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`pretextual and untruthful rationales in order to mislead IBM‘s workforce into believing
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`that the change in policy was being made to protect their privacy interests.2 (Proposed
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`Am. Compl. ¶ 43, Exhibit A.) For example, IBM spokesperson Doug Shelton assisted
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`IBM in misleading its workforce by claiming that the change was made to address
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`―concerns raised by employees that the age/title information the company previously
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`provided infringed on employee privacy.‖ See
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`https://www.insurancejournal.com/news/national/2014/05/13/328904.htm. (Proposed
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`Am. Compl. ¶ 43, Exhibit A.) IBM executives instructed Mr. Shelton to provide
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`information that was misleading to IBM employees. (Proposed Am. Compl. ¶ 43, Exhibit
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`A.) In reality, this decision was made to conceal the aggressive discriminatory layoff
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`scheme IBM had been and would continue engaging in for a period of years. (Proposed
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`Am. Compl. ¶ 43, Exhibit A.)
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`IBM also made changes to its separation agreements in approximately 2014 or
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`2015 that would require employees to bring their claims under the ADEA in individual
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`arbitration, while releasing nearly all other claims. (Proposed Am. Compl. ¶ 44, Exhibit
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`A.)
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`IBM‘s decision to require individual arbitration was also made with the known
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`purpose to conceal IBM‘s discriminatory scheme and make it more burdensome (if not
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`all but impossible) for individuals to prove IBM‘s plainly discriminatory layoff scheme
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`and high-level policies and practices. (Proposed Am. Compl. ¶ 45, Exhibit A.) IBM‘s
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`executives understood that the decision to require individual confidential arbitration
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`would assist them in their efforts to conceal IBM‘s discriminatory patterns and practices
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`2
`Indeed, IBM had never disclosed the names of laid off employees prior to this
`change - merely their ages and position titles.
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`and mislead laid off workers because it would make it difficult for employees to amass
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`pattern and practice evidence of the broad-based discriminatory scheme in which IBM
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`engaged and would hinder their ability to prevail on claims under the ADEA. (Proposed
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`Am. Compl. ¶ 45, Exhibit A.)
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`In order to convince the victims of its discriminatory scheme to sign a separation
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`agreement in which they would waive their rights to pursue any claims in court (and
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`could instead only pursue claims of age discrimination in individual arbitration, where
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`IBM would aggressively block their sharing of evidence with other employees pursuing
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`similar claims), IBM fraudulently and in bad faith represented to its employees that they
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`were being laid off for legitimate business reasons (or that the circumstances leading to
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`their constructive discharges – for example, being offered a ―choice‖ to remain with the
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`company but relocate to another part of the country — were the result of legitimate
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`business reasons). (Proposed Am. Compl. ¶ 46, Exhibit A.)
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`For example, IBM provided employees with template letters indicating that the
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`company was required to lay them off due to their allegedly unneeded skills and/or the
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`company‘s decision to move in a different business direction. (Proposed Am. Compl. ¶
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`47, Exhibit A.) IBM provided these pretextual explanations to conceal the fact that the
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`Resource Actions were knowingly structured in a discriminatory manner to further the
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`CEO‘s discriminatory goals to shift the age demographics of the company toward a
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`younger workforce.3 (Proposed Am. Compl. ¶ 47, Exhibit A.)
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`3
`See Zampierollo-Rheinfeldt v. Ingersoll-Rand de Puerto Rico., Inc., 999 F.3d 37,
`58 (1st Cir. 2021) (even an employer who has a ―compelling reason wholly unrelated to
`the [age] of any of its employees to reduce the size of its work force may still be liable
`under the ADEA if it use[s] the occasion as a convenient opportunity to get rid of its
`[older] workers.‖) (citations and internal quotation marks omitted); Matthews v.
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`Indeed, although IBM claimed that these Resource Actions were so-called
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`―reductions in force‖, IBM was simultaneously recruiting and hiring younger workers to
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`replace employees in the targeted protected age group who were being purged through
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`the layoffs. (Proposed Am. Compl. ¶ 48, Exhibit A.)
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`IBM executives knowingly planned hiring and recruitment programs targeted at
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`younger workers, right around the time of IBM‘s simultaneous termination programs,
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`while informing the terminated employees within the protected age group (over age 40)
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`that their layoffs were necessary as part of a large corporate downsizing. (Proposed
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`Am. Compl. ¶ 49, Exhibit A.)
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`IBM executives, such as Ginni Rometty, Diane Gherson, and other senior human
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`resources executives reporting directly to Ms. Gherson knowingly and carefully guarded
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`demographic data and information that might lead others within IBM‘s organization to
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`discover their discriminatory policies and practices. (Proposed Am. Compl. ¶ 50, Exhibit
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`A.) IBM executives knowingly concealed details of their discriminatory scheme from
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`lower-level managers and representatives so that its lower-level managers and
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`representatives could carry out IBM‘s targeted Resource Actions without even knowing
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`that they were being forced to terminate targeted workers from a proverbial ―stacked
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`deck‖ of individuals within the protected age group. (Proposed Am. Compl. ¶ 50, Exhibit
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`A.)
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`Commonwealth Edison Co., 128 F.3d 1194, 1195 (7th Cir. 1997) (accord); see also
`Rowell v. BellSouth Corp., 433 F.3d 794, 798 (11th Cir. 2005) (an age discrimination
`plaintiff can ―present circumstantial statistical evidence regarding age; or evidence that
`the employer's plan was subterfuge for discrimination, such as evidence that an
`employee-rotation plan existed which shifted protected workers into jobs most likely to
`be cut in the reduction in force.‖).
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`IBM further coached low-level managers to parrot pretextual, pre-determined
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`rationales for the need for the Resource Actions resulting in the employees‘ termination.
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`(Proposed Am. Compl. ¶ 51, Exhibit A.) However, IBM did not provide these low-level
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`managers with information regarding the true purpose of their discriminatory layoff
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`scheme, and thus IBM relied on low-level managers to fraudulently convey misleading
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`information in order to induce Plaintiff and other similarly situated employees to sign
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`IBM‘s standard separation agreement. (Proposed Am. Compl. ¶ 51, Exhibit A.)
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`IBM‘s carefully crafted scheme was designed to fraudulently mislead its
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`workforce, with the exception of the relatively small number of senior executives who
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`were privy to the decisions made to target older workers (and privy to the hard statistical
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`data that executives monitored to ensure their policies and practices were achieving
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`their discriminatory ends). (Proposed Am. Compl. ¶ 52, Exhibit A.)
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`Plaintiff and other similarly situated employees would never have signed IBM‘s
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`separation agreement had they known that IBM terminated them in a Resource Action
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`that was part of a larger scheme of blatant and systematic age discrimination and that,
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`by signing such agreement, they would be giving up their ability to effectively pursue
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`claims that they were victims of systemic age discrimination. (Proposed Am. Compl. ¶
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`53, Exhibit A.)
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`Moreover, IBM‘s managers and human resource professionals presented
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`employees with inaccurate and/or misleading information regarding their legal rights in
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`connection with their separation from IBM. (Proposed Am. Compl. ¶ 54, Exhibit A.) For
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`example, IBM also fraudulently induced Plaintiff and other similarly situated employees
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`to sign IBM‘s separation agreement (containing the arbitration clause and class action
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`waiver) by misrepresenting to them that they could only maintain their health benefits
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`through COBRA by signing the agreement. (Proposed Am. Compl. ¶ 55, Exhibit A.)
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`In approximately August 2017, Plaintiff Abt was informed that if he did not sign
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`his separation agreement, he would not be eligible to receive COBRA health insurance
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`coverage. (Proposed Am. Compl. ¶ 56, Exhibit A.) On information and belief, managers
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`and human resource professionals at IBM conveyed incomplete and/or inaccurate
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`information that would reasonably lead numerous employees such as Plaintiff into
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`believing they had to sign the separation agreement or risk losing their ability to
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`maintain health insurance coverage. (Proposed Am. Compl. ¶ 56, Exhibit A.) Plaintiffs
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`would not have signed away their rights to participate in a class action if they had known
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`they had been victims of this discriminatory scheme that IBM attempted to keep hidden
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`from them. (Proposed Am. Compl. ¶ 6, Exhibit A.)
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`IV. ARGUMENT
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`Plaintiffs‘ motion to amend should clearly be permitted for four (4) reasons: (1)
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`the liberal Rule 15 amendment standard warrants the granting of this motion; (2)
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`Plaintiff has not unreasonably delayed filing this amendment nor is there any prejudice
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`to IBM (again, Plaintiffs do not intend for this amendment to delay in any way the
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`Court‘s consideration of their Motion for Summary Judgment (Dkt. 27), which is fully
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`briefed); (3) this Court will already be addressing the identical claims in the ―second
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`wave‖ Gilmore matter; and (4) the parties in the ―second wave‖ Gilmore have not
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`commenced any discovery, and thus there is no prejudice to IBM if this amendment is
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`granted.
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`Next, IBM cannot possibly argue that this claim is futile as this Court has
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`previously denied IBM‘s motion for judgment on the pleadings in a remarkably similar
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`case. See McCormack v. IBM, 145 F. Supp. 3d 258, 268 (S.D.N.Y. 2015). At a
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`minimum, Plaintiffs have raised serious questions regarding IBM‘s fraudulent
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`inducement of thousands of similarly situated victims of its discriminatory scheme to
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`waive their right to pursue ADEA claims in court and require them instead to pursue
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`such claims in individual confidential arbitration only. See generally Proposed Amended
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`Complaint (Exhibit A); Amended Complaint, Gilmore v. IBM, 1:21-cv-09574 (JMF), Dkt.
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`16. Indeed, Plaintiffs‘ fraudulent inducement claim is especially plausible when viewed
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`in connection with the exemplar record submitted with the pending confidentiality
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`challenge. This record serves as the basis for many of the allegations in the complaint
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`(although Plaintiffs intend to engage in discovery to further prove the fraudulent
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`inducement claims). Plaintiffs have raised serious questions going to the merits of their
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`class-wide claim that, in order to convince the victims of its discriminatory scheme to
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`sign a separation agreement in which they would waive their rights to pursue any claims
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`in court (and could instead only pursue claims of age discrimination in individual
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`arbitration, where IBM would aggressively block their sharing of evidence with other
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`employees pursuing similar claims), IBM fraudulently and in bad faith represented to its
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`employees that they were being laid off for legitimate business reasons, when, in fact,
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`IBM was engaging in a campaign to oust older workers and build up a younger
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`workforce. Id. ¶35. McCormack v. IBM, 145 F. Supp. 3d 258, 268 (S.D.N.Y. 2015)
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`(describing elements of fraudulent inducement: ―(1) a representation of material fact,
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`(2) which was untrue, (3) which was known to be untrue or made with reckless
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`disregard for the truth, (4) which was offered to deceive another or induce him to act,
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`and (5) which that other party relied on to its injury,‖ and rejecting IBM‘s Motion for
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`Judgement on the Pleadings of similar fraudulent inducement claim); Lohnn v.
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`International Business Machines Corp., C.A. 21-CV-6379 (S.D.N.Y.), Dkt. No. 42, at 11,
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`25 (describing exemplar documents submitted as part of the record that “on their face
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`appear to show an effort to remove older employees in favor of younger
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`employees” and detailing “directly relevant” evidence that IBM has been
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`withholding in arbitration under the guise of its confidential arbitration
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`provisions) (emphasis added).
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`V.
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`CONCLUSION
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`For the foregoing reasons, Plaintiffs‘ Motion for Leave to Amend Complaint
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`should be granted.
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`Respectfully submitted,
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`PLAINTIFFS WILLIAM CHASTKA et al,
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`By their attorneys,
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`/s/ Shannon Liss-Riordan________________
`Shannon Liss-Riordan (NY Bar No. 2971927)
`Zachary Rubin (NY Bar No. 5442025)
`LICHTEN & LISS-RIORDAN, P.C.
`729 Boylston Street, Suite 2000
`Boston, MA 02116
`(617) 994-5800
`Email: sliss@llrlaw.com, zrubin@llrlaw.com
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`Dated:
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`January 14, 2022
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`CERTIFICATE OF SERVICE
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`I hereby certify that on January 14, 2022, a true and accurate copy of the
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`foregoing document was filed via this Court‘s CM/ECF system.
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`/s/ Shannon Liss-Riordan
`Shannon Liss-Riordan
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`14
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