UNITED STATES DEPARTMENT OF LABOR OFFICE OF ADMINISTRATIVE LAW JUDGES Case No.: 2011 SOX 13 VANESSA GIFALDI, Complainant, v. OCTAGON, INC., & INTERPUBLIC GROUP OF COMPANIES, INC., Respondents. __________________________ VANESSA GIFALDI'S CLOSING ARGUMENT Introduction Vanessa Gifaldi was terminated on October 26, 2009 by Octagon's President, Phil de Picciotto, and its director of human resources, Julie Kennedy, for reasons never explained to her and that have since changed during the litigation. She was terminated within moments of Jenny Klitch's termination. Gifaldi - Octagon's former General Counsel and later Chief Legal Officer - was Klitch's right hand woman and, as Julie Kennedy (the human resources director) admitted, Gifaldi would have to be terminated if Klitch was terminated. The Respondents terminated both Gifaldi and Klitch without providing them with their contractual four week notice, even though Mr. de Picciotto acknowledged that he was aware that he had to provide them without four week notice. Mr. de Picciotto's conduct was retaliation for raising complaints about SOX compliance issues both internally, and more importantly, externally to Octagon's publicly traded parent company, IPG. The Respondents officers admit that they were upset that the complaint was made to IPG rather than be handled internally. They both had to be fired immediately. Page 1 of22 SARELSON LAW FIRM, P.1\., 1200 Brickell Avenue, Suite 1440, r...firuni, Florida 33l31, 305-379·0305, 800·421·9954 (fax) www.FloridaEmpJoymcntLawyerBlog.com www.sarelsOIl.com
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Vanessa Gifaldi v. Octagon, Inc. & Interpublic Group Companies
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UNITED STATES DEPARTMENT OF LABOR OFFICE OF ADMINISTRATIVE LAW JUDGES
Case No.: 2011 SOX 13
VANESSA GIFALDI,
Complainant, v.
OCTAGON, INC., & INTERPUBLIC GROUP OF COMPANIES, INC.,
Respondents. __________________________ ~I
VANESSA GIFALDI'S CLOSING ARGUMENT
Introduction
Vanessa Gifaldi was terminated on October 26, 2009 by Octagon's President, Phil de
Picciotto, and its director of human resources, Julie Kennedy, for reasons never explained to her
and that have since changed during the litigation. She was terminated within moments of Jenny
Klitch's termination. Gifaldi - Octagon's former General Counsel and later Chief Legal Officer
- was Klitch's right hand woman and, as Julie Kennedy (the human resources director) admitted,
Gifaldi would have to be terminated if Klitch was terminated. The Respondents terminated both
Gifaldi and Klitch without providing them with their contractual four week notice, even though
Mr. de Picciotto acknowledged that he was aware that he had to provide them without four week
notice. Mr. de Picciotto's conduct was retaliation for raising complaints about SOX compliance
issues both internally, and more importantly, externally to Octagon's publicly traded parent
company, IPG. The Respondents officers admit that they were upset that the complaint was
made to IPG rather than be handled internally. They both had to be fired immediately.
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Second, Ms. Gifaldi participated in an investigation conducted by Octagon's publicly
traded parent company, lPG, and an outside consultant, Deloitte, into allegations that Octagon
was not complying with SOX and that it had other legal and accounting compliance issues. l The
formal complaint was initiated in an August 25, 2009 email by Jenny Klitch, Octagon's Chief
Legal Officer to Octagon's parent-company, lPG. The email expressly identified legal,
accounting and SOX compliance issues as the basis for the complaint, and the email expressly
identified Vanessa Gifaldi.
Third, Ms. Klitch's August 25,2009 email to lPG constituted protected activity. Octagon
retaliated against Ms. Klitch by firing her, and, because of the close relationship between Ms.
Klitch and Ms. Gifaldi, terminated Ms. Gifaldi as well. Ms. Klitch also indicated in her email
that she was concerned that she would be terminated for sending the email. Even though the
email complaint did not come from Ms. Gifaldi, she was clearly within the zone of interest that
SOX seeks to protect. See Thompson v. North Am. Stainless, L.P., 131 S. Ct. 863, 867-68
(2011)2 There is overwhelming evidence that Ms. Gifaldi had to be fired with Ms. Klitch, and
that the two were treated as a package deal.
(ii) Adverse Employment Action
Ms. Gifaldi was terminated, thus satisfying the second element.
1 Ms. Gifaldi was an employee of Octagon, Inc., a wholly owned subsidiary of holdingcompany Advantage International Holdings, which itself is a wholly owned subsidiary of publicly traded Interpublic Group of Companies, Inc. (pp. 274-274). The Respondents conceded that both Octagon and lPG are covered by the anti-retaliation provision of SOx. 2 In Thompson v. North American Stainless, L.P., 131 S. Ct. 863, 867-68 (2011), the Court concluded that an employee who engaged in no protected activity, i.e., he did nothing, could nevertheless sue for retaliation because the employer fired the employee to retaliate against a different employee. The two employees in Thompson were engaged, but the plaintiffs fiancee, not the plaintiff himself, engaged in protected activity. Jd. at 868. His inaction did not preclude him from seeking relief under Title VII's anti-retaliation provision because he fell within the "zone of interests" Title VII seeks to protect. Jd. at 870.
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There is ovelWhelming evidence that the protected activity identified above was at least a
contributing factor to Ms. Gifaldi's termination on October 26, 2009. "A contributing factor is
any factor, which alone or in combination with other factors, tends to affect in any way the
outcome of the decision." Ameristar Airways, Inc. v. ARB, 650 F.3d 562, 567 (5th Cir. 2011)
(affirming ARB decision for complainant). As detailed below, there is no evidence that the
termination decision was made prior to the August 25, 2009 complaint or that the termination
decision was wholly unrelated to the protected activity. Ms. Gifaldi had excellent performance
reviews and was never told of any performance issues. Ms. Gifaldi was never given any advance
notice prior to October 26, 2009 that her job was in jeopardy. The testimony of Octagon's
witnesses, particularly its president, Phil de Picciotto, was highly incredible, inconsistent and
unsuppOlted by written documentation despite the Respondents concession that there should
have been written documentation to support its defense. An employer's shifting explanation for
the termination is itself evidence of pretext. Id at 569. The issue is: Is it more likely than not
that Ms. Gifaldi's complaints, her participation in the investigation, or Ms. Klitch's complaint,
contributed in any way to Ms. Gifaldi's termination on the date in question? The greater weight
of the evidence says yes.
II. Respondents Cannot Meet Their Burden of Producing Clear and Convincing Evidence that They Would Have Terminated Ms. Gifaldi Absent Protected Activity
Because Ms. Gifaldi has ovelWhelming evidence supporting her prima facie case under
SOX, the burden of proof shifts to the Respondents to prove by clear and convincing evidence
that it would have fired Ms. Gifaldi on October 26, 2009 even in the complete absence of any
protected activity. See 42 U.S.C. § 42121(b)(2)(B)(iv). Although "clear and convincing
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Ms. Gifaldi was told by Ms. Klitch that Ms. Klitch had made a complaint to Octagon's
parent,IPG. (p. 105). Ms. Gifaldi had no knowledge of being terminated (not even hints) until
the day she was terminated on October 26,2009. (pp. 100-101).
2) Jenny Klitch, Esq., General Counsel and Chief Legal Officer4
Ms. Klitch was hired in 2007 by Phil de Picciotto to serve as Octagon's General Counsel.
(p. 13). Mr. de Picciotto was extremely enthusiastic about hiring Ms. Klitch in large part
because of her background in SOX compliance. (p. 319). She was a very demanding boss5 Her
only performance review at Octagon was glowing. (p. 86).
Ms. Klitch was promoted to Chief Legal Officer and Senior Vice President of Operations
on or about May of 20096 Her new role was, inter alia, to create "'a legal and regulatory
appropriate framework" for the client invoicing. (p. 33). Other Octagon employees "objected []
strenuously" to some of the changes she implemented. (p. 63). Ms. Klitch hired Ms. Gifaldi to
assist her with establishing the proper legal and regulatory framework for the invoicing
processes. (pp. 87-88). Ms. Klitch was Ms. Gifaldi's supervisor at Octagon and she had no
performance issues with her. (p. 88).
On August 25, 2009, Ms. Klitch, Octagon's chief legal officer, "formally complain[ ed)"
via email to Julie Kennedy, Octagon's head of human resources, and Thomas Dowling, chief risk
officer for Octagon's parent, IPG. (p.44). The August 25 email was admitted into evidence as
4 Ms.Klitch's deposition was submitted as Exhibit C-l. Page references are to her deposition. S All of the witnesses have testified that Ms. Klitch was a demanding boss, including Octagon's head of human resources, Julie Kennedy. (p. 425). She worked a lot of hours, was very tough on her staff, and had her subordinates work a lot of hours as well. (pp. 425-426). 6 As General Counsel, Ms. Klitch oversaw the entire legal department and reported to Mr. de Picciotto. (p. 428). Upon her promotion to Chief Legal Officer, Ho Shin oversaw the legal department as General Counsel, but Mr. Shin still reported to Ms. Klitch, who then reported to Mr. de Picciotto. Id At all material times, she was the senior most attorney for Octagon.
3) Julie Kennedy, Octagon's Head of Human Resources?
Ms. Kennedy, the head of human resources, testified unequivocally that Ms. Klitch was
promoted to Chief Legal Officer in May 2009. (pp. 426-427). It was doclimented as a
promotion on Octagon's "employee change form." (p.427).
Ms. Kennedy testified that when she received the August 25 email fromMs.Klitch. she
telephoned Mr. de Picciotto and informed him of the complaint, but she never actually told him
what was in the complaint. (p. 430). According to Ms. Kennedy, Mr. de Picciotto never asked
what was in the complaint and never asked to see the actual complaint. (pp. 430-431, 488). Mr.
de Picciotto was not happy when he learned of the complaint. (p. 433). Within a few days of
receiving the complaint, one ofIPG's in-house attorneys, Marge Hoey, requested a copy of Ms.
Klitch's employment agreement from Ms. Kennedy. (pp.431-432).
Ms. Kennedy acknowledged that there was nothing in writing prior to the August 25
email indicating that Mr. de Picciotto was going to terminate Ms. Klitch. (p. 435). She claims
that in light of the August 25 email, Octagon was going to hold off on terminating only Ms.
Klitch. (p.436). ImpOitantiy, there was no discussion of holding off on terminating Ms. Gifaldi.
Id. She further acknowledges that as of August 25, there was no decision on terminating Ms.
Gifaldi. Id. 8 Ms. Kennedy learned of Mr. de Picciotto's purported decision to terminate Ms.
Gifaldi for the first time on September 22, 2009.
? As a preliminary matter, Ms. Kennedy testified extensively about what other Octagon employees told her about Ms. Klitch and Ms. Gifaldi. The Respondents' defense relies heavily on these complaints from other employees, i.e., the purported complaints from other employees are being offered for the tmth of the matter. Complaint respectfully renews her hearsay objection to Ms. Kennedy's testimony about what other Octagon employees told her about Ms. Klitch and Ms. Gifaldi. 8 This admission by Octagon's head of human resources is fatal to the Respondents' argument that it made the decision to terminate Ms. Gifaldi prior to the August 25 email from Ms. Klitch.
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On September 22, 2009, Ms. Kennedy was informed that Mr. de Picciotto decided to
terminate both Ms. Klitch and Ms. Gifaldi for "economic and performances reasons and work
location reasons." (p. 427). It would appear that the actual decision to terminate was made, at
the earliest, on September 22, 2009. Even giving Mr. de Picciotto the benefit of the doubt, he
had some minor discussions about Ms. Klitch and Ms. Gifaldi's employment prior to the August
25, 2009 email, but they were merely discussions, not decisions. According to the head of
human resources, the decision was made on September 22, 2009.9
The three reasons given to Ms. Kennedy by Mr. de Picciotto - economic, performance
and location - are not just unsupported by the evidence but are actually contraindicated. There
was no evidence presented that Octagon had financial difficulties at the relevant time (and in fact
Octagon hired people during this time period), (p. 418 & p. 309), Ms. Gifaldi had no
performance issues according to her supervisor Ms. Klitch,1O and, according to Ms. Kennedy,
Mr. de Picciotto actually "encouraged' Ms. Klitch to work remotely from her home in West
Palm Beach. (p. 428 and p. 401).
Ms. Kennedy acknowledged that it would be "best practice" to have written
documentation showing disciplinary concerns and to let employees know their job was in
jeopardy. (pp. 443-444). Despite this, at no point prior to their actual termination on October
26, 2009 did Octagon provide any notice to either Ms. Klitch or Ms. Gifaldi that their respective
9 More precisely, Ms. Kennedy testified that Octagon was "planning to terminate Jenny [Klitch] and we had talked about terminating Vanessa [Gifaldi]." (p. 438) (emphasis added). Mr. de Picciotto also acknowledged that in August 2009 he was merely "considering terminating" Ms. Gifaldi. (p. 291). 10 Ms. Kennedy acknowledged that neither Ms. Klitch nor Ms. Gifaldi had any negative performance reviews (pp. 453-454).
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job was in jeopardy or that they were going to be terminated. (p. 445)Y Ms. Kennedy fmther
acknowledged that there are personnel action forms that have to be completed when terminating
an employee. (p.446). Despite this, as of August 25,2009, the date of the email complaint.Ms.
Kennedy was not given any written directive from Mr. de Picciotto to start the termination
process of either Ms. Klitch or Ms. Gifaldi. (p. 446). Mr. de Picciotto also conceded that there
were no steps taken to terminate either Ms. Klitch or Ms. Gifaldi before October 26, 2009. (p.
359).
Ms. Kennedy believed that if Ms. Klitch was terminated, Ms. Gifaldi would have to be
terminated as well because they "basically worked hand-in-hand together." (p. 447). She further
testified that Ms. Gifaldi's termination was based in large part (if not exclusively) on her
"loyalty" to Ms. Klitch. (pp. 489 & 494). Finally, Ms. Kennedy acknowledged that neither Ms.
Klitch nor Ms. Gifaldi were "part of the family" and did not fit in at Octagon. (pp.497-498).12
Ms. Kennedy acknowledged that, in light of the complaint to lPG, she had to "dot her Is
and cross her Ts" with respect to the termination of Ms. Klitch and Ms. Gifaldi. (pp. 451-452).
No other Octagon employee had ever complained to IPG (p. 452) and no one else in the legal
department had raised any kind of internal complaint such as the one raised by Ms. Klitch. Id
In seventeen years working in human resources, Ms. Kennedy has never known a general
11 According to Ms. Kennedy, both Ms. Klitch and Ms. Gifaldi were "surprised" when they were terminated. (p. 448). Ms. Gifaldi was not given any performance improvement plan (p. 489) and Ms. Kennedy acknowledged that no one ever spoke to Ms. Gifaldi about her supposed performance issues. (p. 490). When the Comt asked her "how's an employee such as Ms. Gifaldi going to understand that she's got performance issues if nobody talks to her about it," Ms. Kennedy responded "I think that's a valid point." (p. 492). 12 The August 25 email complaint went emailed to her and it specifically identified Ms. Gifaldi. Perhaps not coincidentally, Ms. Kennedy was the one pushing for the termination of Ms. Gifaldi in addition to Ms. Klitch.
She is biased in favor of Octagon and to her boss, Mr. de Picciotto because she has
continuously worked for it and him since 1983 (p. 210) and because she owns stock and stock
options in lPG. (p.230)14 She is very loyal to Mr. de Picciotto. (p.231).
Octagon uses the U.S. mail and wire service to transfer money into and out of its
operating and escrow accounts. (p.212). She acknowledged significant "push back" to Klitch's
new policies and procedures from long-time employees. (p. 226). She acknowledged that the
preparation of invoices should have been centralized and that Klitch's job was to do exactly that.
(p. 229). She also acknowledged that Ms. Gifaldi was Ms. Klitch's "right hand person." (p.
229).
5) Michael Marra, Esq., lPG's Associate General Counsells
14 She acknowledged (over the Respondents' objection) that Octagon's profit and losses flow up to the IPG parent company (of which she is a pmtial owner) and that a loss at Octagon could negatively impact the share price oflPG stock. (pp. 257-259).
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According to Mr. Marra, Mr. de Picciotto informed lPG's deputy general counsel on the
telephone of his desire to terminate Ms. Klitch. (p. 12). (The deputy general counsel was not
called by the Respondents to confirm this). It was not memorialized in writing anywhere. (p.
13). Importantly, Mr. de Picciotto did not discuss his desire to terminate Ms. Gifaldi or anyone
else, just Ms. Klitch. (pp. 13-14). IPG supposedly told Octagon to hold off on the termination of
Ms. Klitch, but only of Ms. Klitch. (p. 32). IPG did not learn of Ms. Gifaldi's termination until
after it happened. (pp. 13-14). (More precisely, Ms. Gifaldi was not even "a blip on the radar"
at IPG. Id at 58.).
6) James Lombardo, Deloitte & Touche, LLp16
Contrary to Octagon's assertion, it was never cleared of wrongdoing. (pp. 11-12).
Deloitte was not tasked with conducting any audit, did not conduct an audit, was not tasked with
looking for wrongdoing, did not look for wrongdoing and did not reach any conclusions as pali
of its investigation. (pp. 9-12). The entire "investigation" consisted only of "getting an
understanding of how the escrow accounts were managed." (p. 9).
V. Phil de Picciotto's Testimony was Highly Incredible17
Mr. de Picciotto was a founder of Octagon and he was bought out by IPG for several
million dollars. (p. 306). He owns over $IM in IPG stock equity. (p. 307). He was, at all
material times, its president. He alone made the decision to terminate Ms. Gifaldi and Ms.
Klitch.
15 Mr. Marra was lPG's Rule 30(b)(6) designee and his depositions were entered as Exhibit C-127 and C-128. Page references are to his second deposition taken on July 6, 20 II. 16 Mr. Lombardo's deposition was entered as Exhibit C-129. Page references are to his deposition. 17 The Court indicated its own frustration with Mr. de Picciotto' s evasive answers. (p. 381).
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