“Faithless Servant” Counterclaim Dismissed; Alleged Wrongdoing Insufficient

In Doe v. Solera Capital LLC, 18-cv-1769, 2019 WL 1437520 (S.D.N.Y. March 31, 2019) – in which plaintiff alleges employment discrimination and a hostile work environment on the basis of race and plaintiff’s status of a survivor of domestic violence, retaliation, and failure to pay overtime – the court, inter alia, dismissed defendant’s counterclaim alleging a violation of the “faithless servant” doctrine.

After surveying the legal landscape – specifically, the “two alternative standards for determining whether an employee’s conduct warrants forfeiture under the faithless servant doctrine” – the court concluded:

Finally, the faithless servant doctrine doesn’t apply on the facts of this case because Defendants have not cited, and the Court has not found, a case where the doctrine was applied to the type of garden-variety, petty pilfering by an employee as alleged here.6 The most analogous case cited to the Court on this instant motion is Torres v. Gristede’s Operating Corp., 628 F. Supp. 2d 447, 466 (S.D.N.Y. 2008), because that case also involved employee/plaintiffs that alleged, among other claims, wage violations, and a defendant/employer that sought to bring counterclaims for violation of the faithless servant doctrine. There, the proposed counterclaims were based on the alleged sexual harassment by one plaintiff against coworkers, and the alleged misuse of a customer’s credit card by another plaintiff. Id. at 466. In finding that the counterclaims failed as a matter of law, the court described them as “small beer,” id., and noted “[n]or can it be … that every routine termination for sexual harassment or credit card fraud necessarily raises faithless servant claims,” id. at 470. So too here, the improper use of the firm’s credit card for a total of $224.20, and the alleged snooping of admittedly sensitive information, cannot be said to rise to the level of substantial disloyalty that was present where courts have found a violation of the doctrine. [2019 WL 1437520 at *10]

This was a good thing for the plaintiff, explained the court in a footnote, since “[t]he faithless servant doctrine calls for ‘drastic’ remedies” such that “[a]n individual who has been found to violate the doctrine can be made to forfeit all of her compensation from the moment the violation began.”  [2019 WL 1437520 n.6]