Morgan Stanley Sued by Former Executive for Age Discrimination

Morgan Stanley is being sued by a former employee for age discrimination, hostile work environment, intentional and negligent infliction of emotional distress, and breach of contract and covenant of good faith and fair dealing. He also seeks a declaratory judgment that a mandatory arbitration provision being invoked by Morgan Stanley is unenforceable.

Peter Zajaczkowski was hired by Morgan Stanley in September 2014 as executive director of operational excellence (OPEX) at a starting base salary of $225,000 with a $75,000 signing bonus, according to the complaint. His supervisor was Sean Murdoch.

Zajaczkowski, who is 41 years old, claims that he initially worked alone without staff and received positive feedback from Murdoch and other managers. He performed training sessions that were well received. By 2015 he expanded his operations to include two additional team members, a younger man, Arjun Bali, a consultant, and Sarah Nalwalla, a full time employee based in Mumbai, India, who is also younger.

Also in 2015 Zajaczkowski received a $90,000 bonus on top of his base salary and claims he “continued to deliver strong results.” By 2016 his team had expanded again, adding another member, and Zajaczkowski’s bonus rose to $100,000.

By 2017, however, Zajaczkowski began to observe some tensions between his OPEX team and members of the product development team, a larger team of 30 members focusing on technology products. In the complaint, he claims the teams often duplicated each others efforts and were not given clear delineation of their roles and responsibilities, making it harder to work together.

In mid-2017 Zajaczkowski traveled to Poland because his grandmother had passed away. When he contacted Murdoch to check in and get updates he claims Murdoch’s “manner was unusually formal and distant,” the complaint states. Upon his return Murdoch questioned him about his ability to get along with the product development team’s leaders, focusing on interpersonal conflict unrelated to his professional performance.

Zajaczkowski denied accusations that, during a conversation with co-workers about a serious client problem, he said “heads are gonna roll.” He claims that, as a Polish immigrant, he speaks with a fairly heavy accent and the phrase “lies unquestionably outside [his] vernacular.”

Zajaczkowski claims that, following that incident, Murdoch stopped managing him and instead focused only on complaints made about him. Eventually Murdoch told him that things were not going to work out with him because “his work relationships were somehow damaged beyond repair,” the complaint states.

While continuing to focus on his current job, Zajaczkowski began to explore other employment opportunities within Morgan Stanley and claims he received a positive response. Nevertheless, because he suffered from anxiety and other disorders, he began seeking medical attention and receiving medication.

In late 2017 Murdoch started bypassing Zajaczkowski and going directly to Bali, his younger colleague, for discussions about the OPEX team, according to the complaint. 

Shortly thereafter Murdoch told Zajaczkowski that he was being put on a “shot clock,” which meant he would be given 60 days to stay active and continue his job search, after which if he hadn’t found another position, he would receive two weeks severance for each year of service. But before the “shot clock” period had ended he was told to no longer come into the office and his access to email and phone were cut off, the complaint states.

Zajaczkowski claims he was told his “separation was not performance-related, but just a business restructuring.”  But he says no purported restructuring took place with regard to other employees. He claims to have noticed, however, a pattern of age discrimination against several of his older coworkers resulting in a number of terminations and separations of workers in their forties.

Zajaczkowski further claims that Morgan Stanley was “permeated with age-based discriminatory intimidation sufficiently severe and pervasive to alter the conditions of his employment,” thus causing a hostile work environment.

The claims for infliction of emotional distress are based on the arguments that  Morgan Stanley “intended to cause, or had a reckless disregard of the substantial probability of causing severe emotional distress to” Zajaczkowski and that such distress was foreseeable.

The breach of contract claim is based on Morgan Stanley not providing the entire 60 day “shot clock” period but cutting it short; the breach of covenant of good faith and fair dealing claim is based on Morgan Stanley creating a pretextual reason for terminating Zajaczkowski when it really did so because of his age.

Finally, Zajaczkowski seeks a declaratory judgment that the agreement compelling him to submit to arbitration is unenforceable. A reason given is that Morgan Stanley “delivered notice of such to employees via email only, providing no indication that the matter was of any specific importance,” and did not require employees to provide any type of acknowledgement that they had received the notice, therefore it was not legally effective in creating a binding contract, according to the lawsuit.

Zajaczkowski is represented by Mark Carey of Southport, Connecticut who filed the case in the Southern District of New York.

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