SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ----------------------------------------------------------------------x SARA TIRSCHWELL, : : Index No.: 150777/2018 Plaintiff : : ANSWER ON BEHALF OF -against- : DEFENDANTS TCW GROUP : INC., TCW LLC, AND DAVID : LIPPMAN : TCW GROUP INC., TCW LLC, : DAVID LIPPMAN AND JESS RAVICH, : : Defendants. : ----------------------------------------------------------------------X Defendants TCW Group, Inc., TCW LLC and David Lippman (collectively, "TCW or TCW Defendants" "Company" or the "Company") by their undersigned attorneys hereby answer the Complaint as follows: 1. Deny each and every material allegation of retaliation, gender based discrimination or harassment, aiding and abetting, breach of contract, and breach of implied covenant of good faith and fair dealing set forth in the Complaint and aver: a. Plaintiff was properly discharged for cause on December 14, 2017 after she committed a repeat violation of Company compliance policies and procedures. That violation came to light to Company management on December 13, 2017 and followed a troubling history of compliance violations predating any complaint of harassment. Indeed, before Plaintiff ever alleged a gender based harassment complaint, Plaintiff had been warned - after a number of separate violations of Company compliance policies and procedures - that further occurrence could result in her immediate termination. Plaintiff had also repeatedly received training on her compliance violations including focused retraining less than a month before her 1 1 of 16
termination on the exact violation that was the last of the series for which Plaintiff was discharged. Impelled by Plaintiff's repeat violation, TCW's decision to terminate Plaintiff was for legitimate nondiscriminatory and non-retaliatory reasons and was reached in the same way it would have been if any other employee had committed comparable compliance violations. b. Defendant Ravich was not consulted and did not participate in the discharge decision. c. In or about November 17, prior to any suggestion of a gender based harassment complaint from Plaintiff - TCW had already determined that it would not re-employ Plaintiff beyond February 28, 2018, when her employment agreement expired. Defendant Ravich was not the decision maker. Plaintiff's employment agreement specified that Plaintiff's employment would terminate automatically, on February 28, 2018 if there was no success in meeting the agreed goal of raising $100 million in assets under management for the fund for (" which she was portfolio manager ("Distressed Fund" Fund"). Prior to commencing her business relationship with TCW, Plaintiff stated she would achieve that goal from investors she already knew, asserting that she could bring in $100 million from investors she had met with Livia Capital, and TCW relied on that assurance in engaging her. As of the time the decision not to reemploy Plaintiff was made, despite the fact that Plaintiff's employment contract had already been extended once to give her time to meet her contractual hurdle, the Distressed Fund was substantially short of that threshold and the substantial majority of the assets then in the Distressed Funds was not raised by Plaintiff but instead was seed money raised or directly invested by TCW employees. Accordingly, by November 2017, Plaintiff's ability to make good on her promises to raise $100 million, or for the Distressed Fund otherwise to raise assets to meet the $100 million threshold, appeared speculative at best. Thus, the November decision not to re- 2 2 of 16
employ Plaintiff took into account not only Plaintiff's failure to make good on the assurances she had made at the outset of her relationship with the Company that she would bring in $100 million in assets to be managed but also Plaintiff's then-known history of compliance violations, as well as complaints from both female and male employees about Plaintiff. d. Later, also in November 2017, on information and belief, defendant Ravich informed Plaintiff in substance that it was unlikely she would be re-employed after her employment agreement was expected to terminate automatically on February 28, 2018; on information and belief, Plaintiff and defendant Ravich then informally discussed possible severance, with on information and belief defendant Ravich ultimately telling Plaintiff she would not receive anywhere close to the amount she sought and that the decision was not his. All this predated any complaint of harassment by Plaintiff. e. On December 5, 2017, on information and belief, defendant Ravich informed Plaintiff that defendant Lippman was travelling to New York City and would meet with Plaintiff the next day, December 6, at which time Plaintiff would be notified officially that she would not be re-employed after February 28, 2018. f. Only then, and for the first time ever, at 6:13 p.m. on December 5, 2017, did Plaintiff make a complaint of gender based harassment. g. TCW maintains a zero tolerance policy for harassment or discrimination of any kind and has effective internal complaint procedures available to any employee who believes he or she has experienced harassment or discrimination. If she believed she had such a complaint, Plaintiff unreasonably failed to avail herself of those procedures. 3 3 of 16
h. The morning after Plaintiff made her complaint by email to Cheryl Marzano, Company Head of Human Resources, Plaintiff was interviewed by Cheryl Marzano and Meredith Jackson, Company General Counsel, about her complaint. She was told the Company would be engaging an independent investigator to investigate her complaint. Since that time, Plaintiff has failed and refused to meet with the independent investigator subsequently engaged or to provide any evidence in support of her complaint. 2. Answering the allegations contained in Paragraph 1 of the Complaint, admit that Plaintiff was listed in the Hedge Fund Journal and deny knowledge or information sufficient to form a belief as to the other allegations contained, except deny Plaintiff was successful at TCW. 3. Deny the allegations set forth in Paragraph 2 of the Complaint except admit that (i) Plaintiff served as a Managing Director and Portfolio Manager as alleged, (ii) Ravich is a Group Managing Director and Head of Alternative Products of TCW LLC ("TCW") and (iii) Ravich was appointed to TCW's Board of Directors on or about December 27, 2017. 4. Deny the allegations contained in Paragraph 3 of the Complaint. 5. Deny the allegations contained in Paragraph 4 of the Complaint that TCW was not investigating Plaintiff's Complaint as of December 27, 2017, and otherwise admit the allegations contained in Paragraph 4 of the Complaint. 6. On information and belief, deny the allegations contained in Paragraphs 5, 6, and 7 except admit that defendant Lippman complained about Plaintiff's yelling and being sharp elbowed. 4 4 of 16
7. Deny the allegations contained in Paragraph 8, 9, 10, and 11 of the Complaint, and answering those Paragraphs repeat and reallege Paragraph 1 of this Answer, as if set forth in full herein, admit that TCW offered a severance package of $500,000 which it indicated was not subject to negotiation and aver that the final compliance violation in a long series of violations for which Plaintiff was terminated for cause was not known as of December 5, 2017 when Plaintiff made her first ever complaint concerning gender harassment, and admit Defendant Lippman did ask Plaintiff to look at him. 8. Admit the allegations contained in Paragraph 12 of the Complaint. 9. Answering Paragraph 13 of the Complaint, repeat and reallege Paragraph 5 of this Answer as if set forth in full herein, as Paragraph 13 of the Complaint appears to duplicate Paragraph 4 of the Complaint, and otherwise deny the allegations contained in Paragraph 13. 10. As Paragraph 14 of the Complaint makes no factual allegations, no answer is required, but responding to Paragraph 14 of the Complaint, deny any violation of any law, or breach of any contract with respect to Plaintiff and further deny any act in any way in violation of Plaintiff's rights or any duty or obligation claimed to be due her. 11. Deny the allegations contained in Paragraph 15 of the Complaint. 12. Deny the allegations contained in Paragraph 16 of the Complaint and refer to the notice alleged in Paragraph 95 of the Complaint for its terms and conditions. 13. Admit the allegations contained in Paragraphs 17, 18, 19, 20, and 21, except deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 17 as to Plaintiff's marital, parental, or recognized leadership status. 5 5 of 16
14. Answering the allegations contained in Paragraph 22 of the Complaint, admit that Plaintiff purports properly to invoke this Court's jurisdiction with proper venue, deny the allegations contained in Paragraph 22b, admit the allegations contained in Paragraphs 22c, 22d, 22e, and 22f of the Complaint, and refer to the employment agreement alleged for its terms and conditions in answer to 22a, denying any allegation inconsistent with them.. 15. Answering the allegations contained in Paragraphs 23, 24, and 25 of the Complaint, deny the allegations contained in the second sentence of Paragraph 23, deny knowledge or information sufficient to form a belief as to the truth of the allegation in Paragraph 23 that Plaintiff is "esteemed" or what her goals were at Livia as alleged in Paragraph 24 or what her titles at prior firms were, as alleged in Paragraph 25 and otherwise admit the allegations contained and aver that Livia Capital failed to launch, according to Reuters when Plaintiff and her Livia co-founder realized "they could not work together"; that this occurred in or about late 2015; aver that on information and belief Plaintiff reached out to defendant Ravich for advice on her career in the midst of the impending failure of Livia; and further aver that in the course of discussions which ensued with TCW, Plaintiff repeatedly stated that she could bring at least $100 million in assets under management to a distressed fund TCW would launch. 16. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 26 of the Complaint, except aver that prior to the commencement of Plaintiff's engagement at TCW, defendant Ravich informed TCW of a prior romantic relationship with Plaintiff. 6 6 of 16
17. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 27 of the Complaint, except admit the allegations contained in the second sentence of Paragraph 27. 18. Answering Paragraph 28 of the Complaint, aver that a fundamental basis on which TCW engaged Plaintiff was her statement that she could raise at least $100 million in assets under management from her own prior contacts with investors; refer to the Term Sheet between Plaintiff and the Company alleged in Paragraph 30 of the Complaint for its terms and conditions and deny the allegations contained in Paragraph 28 of the Complaint which are contrary to that. 19. On information and belief, deny the allegations contained in Paragraph 29 of the Complaint, except admit that defendant Ravich disclosed a prior romantic relationship with Plaintiff prior to Plaintiff's engagement by TCW and aver that TCW authorized the engagement of Plaintiff on the understanding there was no continuing romantic relationship between defendant Ravich and Plaintiff. 20. Answering Paragraph 30 of the Complaint, refer to the Term Sheet alleged for its terms and conditions, and deny the allegations contained in Paragraph 30 which are inconsistent with the Term Sheet. 21. Deny the allegations contained in Paragraph 31 except admit that Plaintiff participated in pre-launch activities of the distressed strategy. 7 7 of 16
22. On information and belief deny the allegations contained in Paragraphs 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, and 42 of the Complaint, and refer to the Term Sheet and employment agreement alleged in Paragraph 43 of the Complaint for their terms and conditions. 23. Answering the allegations contained in Paragraphs 43, 44, 45, 46, and 47 of the Complaint, refer to the employment agreement alleged for its terms and conditions and deny any allegations which are inconsistent with them. 24. Answering the allegations contained in Paragraph 48 of the Complaint, refer to the Investor Agreement alleged for its terms and conditions, deny the allegations which are inconsistent with them, and otherwise deny the allegations contained. 25. Answering Paragraph 49 of the Complaint, aver that TCW, with Plaintiff's participation, worked to raise a friends and family round of funding, and otherwise on information and belief deny the allegations contained in the third sentence of Paragraph 49. 26. On information and belief, deny the allegations contained in Paragraphs 50, 51, 52, 53, 54, 55, 56, and 57 of the Complaint and aver that throughout its relationship with Plaintiff, TCW continuously provided support to the Distressed Fund with the goal of it being successful. 27. Deny the allegations contained in Paragraph 58 of the Complaint except admit the first sentence of Paragraph 58 and aver that it was plain at the time alleged that the Distressed Fund would not meet its fund raising threshold. 28. Answering Paragraph 59 of the Complaint, refer to the extension of the agreement alleged for its terms and conditions, admit on information and belief that defendant Ravich, prior 8 8 of 16
to the extension alleged discussed with Plaintiff the possibility of an extension of the employment agreement, and otherwise on information and belief deny the allegations contained therein. 29. On information and belief, deny the allegations contained in Paragraph 60 of the Complaint. 30. Admit the allegations contained in Paragraph 61 and 62 of the Complaint, except deny the allegations contained in the last sentence of Paragraph 62. 31. Deny the allegations contained in Paragraph 63 of the Complaint except aver that TCW obtained ISDA agreements. 32. Deny the allegations contained in Paragraph 64 of the Complaint except admit that TCW obtained ISDA agreements. 33. Deny the allegations contained in Paragraph 65 of the Complaint. 34. On information and belief deny the allegations contained in Paragraph 66 of the Complaint. 35. On information and belief, deny the allegations contained in Paragraph 67 of the Complaint except admit that TCW and a Japanese company were in negotiations in which defendant Ravich was involved and deny knowledge or information sufficient to form a belief as to the truth of allegations concerning Plaintiff's understandings. 36. Deny the allegations contained in Paragraph 68 of the Complaint except aver that, to ensure that the Distressed Fund was investing and being managed consistently with its 9 9 of 16
disclosures to investors and for marketing purposes, among other legitimate non-discriminatory and non-retaliatory reasons, an understanding was reached whereby the Company would provide additional support from its senior investment personnel and enhanced trading and investment protocols and processes important to the Fund's success would be implemented, and refer to the Distressed Fund's governing documents for their terms and conditions. 37. On information and belief, deny the allegations contained in Paragraph 69 of the Complaint. 38. Deny the allegations contained in Paragraph 70 of the Complaint and aver the gross returns were approximately 4.8% for the second half of 2017 and that net returns, the measure generally required by the SEC for disclosure to investors, were only approximately 2.8%, while net returns for the first half of 2017 were approximately 0.8%. 39. Answering the allegations contained in Paragraphs 71, 72 and 73 of the Complaint, repeat and reallege Paragraph 1 of this Answer as if set forth in full herein, on information and belief deny the allegations contained in Paragraphs 71, 72, and 73 which are contrary, admit on information and belief the allegations concerning remarks that Plaintiff yelled at people and had sharp elbows and admit that Plaintiff mentioned the possibility of an unnamed potential investor but aver on information and belief that Plaintiff was taking no formal steps to secure an investment from this unnamed source. 40. Answering the allegations contained in Paragraphs 74, 75, 76, 77, and 78 of the Complaint refer to Plaintiff's internal complaint for its terms and conditions, repeat and reallege Paragraph 1 of this Answer as if set forth in full herein and deny the allegations which are contrary to that, aver that on December 6, 2017, Plaintiff met with Ms. Marzano and Ms. Jackson 10 10 of 16
and deny that the allegations contained in Paragraphs 74, 75, 76, 77, and 78 of the Complaint are accurate, and/or full and complete representations of what occurred on December 6, except admit that Plaintiff was told TCW takes her complaint seriously, and aver that Plaintiff was told that TCW would promptly engage an independent investigator with respect to her complaint. 41. Deny the allegations contained in Paragraphs 79, 80, and 81 of the Complaint except admit that a meeting took place which Plaintiff interrupted and deny knowledge or information sufficient to form a belief as to the truth of the allegations concerning where Plaintiff went and Plaintiff's state of mind. 42. Deny the allegations contained in Paragraph 82 of the Complaint. 43. Admit the allegations contained in Paragraph 83 of the Complaint, aver Plaintiff was told she was being discharged for gross negligence and deny that Plaintiff was told she was being discharged for a single ethical wall violation. 44. Deny the allegations contained in Paragraphs 84 and 85 of the Complaint, except admitdefendant Ravich was privy to certain non-public information. 45. Deny the allegations contained in Paragraph 86 of the Complaint to the extent they are intended as iteration of the allegations contained in the preceding paragraphs and on information and belief deny the allegations in the last sentence of Paragraph 86. 46. Deny the allegations contained in Paragraphs 87, 88, and 89 of the Complaint, except admit that Mr. Purdy holds a role with the Company's Fixed Income Group, and reports to Jamie Farnham and not defendant Ravich, that the Distressed Strategy Group utilized open 11 11 of 16
trading space and was situated on the same floor as, and proximate to, the Direct Lending Group, and that offices are not sound-proofed. 47. Deny the allegations contained in Paragraph 90 of the Complaint. 48. Deny the allegations contained in Paragraph 91 of the Complaint, except admit that defendant Lippman did ask Plaintiff to look at him, and did state the Company's severance offer was non-negotiable. 49. Admit the allegations contained in the first sentence of Paragraph 92 of the Complaint, and the allegations that defendant Lippman responded that the Company took Plaintiff's allegations seriously, and deny the other allegations contained in Paragraph 92 of the Complaint. 50. Deny the allegations contained in Paragraph 93 of the Complaint, and aver that the statement attributed to defendant Lippman is not an accurate, full or complete statement and was in response to Plaintiff's assertion that she had built a great business with the Distressed Fund. 51. Deny the allegations contained in Paragraph 94 of the Complaint. 52. Answering the allegations contained in Paragraph 95 of the Complaint, refer to the notice alleged for its terms and conditions and deny any allegation which is inconsistent with them. 12 12 of 16
53. Admit the allegations contained in the first sentence of Paragraph 96 of the Complaint and deny the allegations contained in the second sentence of Paragraph 96 of the Complaint. 54. Deny the allegations contained in Paragraph 97 of the Complaint. 55. Answering Paragraph 98 of the Complaint, repeat and reallege Paragraphs 1 through 54 of this Answer as if set forth in full herein. 56. Deny the allegations contained in Paragraphs 99, 100, 101, 102, 103, 104, 105, 106, and 107 of the Complaint. 57. Answering Paragraph 108 of the Complaint, repeat and reallege Paragraphs 1 through 56 of this Answer as if set forth in full herein. 58. Admit the allegations contained in Paragraph 109 of the complaint except deny that defendant Ravich acted as Plaintiff's supervisor after December 5, 2017. 59. Deny the allegations contained in Paragraphs 110, 111, 112, 113, 114, and 115 of the Complaint. 60. Answering Paragraph 116 of the Complaint, repeat and reallege Paragraphs 1 through 59 of this Answer as if set forth in full herein. 61. Deny the allegations contained in Paragraph 117 of the Complaint. 62. Admit the allegations contained in Paragraphs 118 and 119 of the Complaint, and aver that defendant Lippman first became aware of Plaintiff's complaint on the evening of December 5, 2017. 13 13 of 16
63. Deny the allegations contained in Paragraph 120, 121, 122, 123, 124, and 125 of the Complaint. 64. Answering Paragraph 126 of the Complaint, repeat and reallege Paragraphs 1 through 63 of this Answer as if set forth in full herein. 65. Admit the allegations contained in Paragraph 127 of the Complaint. 66. Deny the allegations contained in Paragraphs 128, 129, 130, 131, and 132 of the Complaint. 67. Answering Paragraph 133 of the Complaint, repeat and reallege Paragraphs 1 through 66 of this Answer as if set forth in full herein. 68. Deny the allegations contained in Paragraphs 134, 135, and 136 of the Complaint. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE 69. Plaintiff's Complaint fails, in whole or in part, to state a cause of action upon which relief can be granted. SECOND AFFIRMATIVE DEFENSE 70. To the extent Plaintiff's claims are barred, either in whole or in part, by any applicable statute of limitations, Plaintiff is precluded from recovering on those claims. THIRD AFFIRMATIVE DEFENSE 71. To the extent Plaintiff's claims are barred, either in whole or in part, by failure to exhaust administrative remedies and/or fulfill a condition precedent, Plaintiff is precluded from recovering on those claims. 14 14 of 16
FOURTH AFFIRMATIVE DEFENSE 72. Plaintiff's employment agreement contains an exclusive forum choice provision with which she has not complied. FIFTH AFFIRMATIVE DEFENSE 73. Any adverse employment action taken with respect to Plaintiff was taken for legitimate, non-discriminatory and non-retaliatory reasons and was predicated upon a ground other than Plaintiff's gender or exercise of statutorily protected right, and would have been taken absent Plaintiff's gender or exercise of a statutorily protected right. SIXTH AFFIRMATIVE DEFENSE 74. Plaintiff failed to make use of effective internal complaint procedures available to her. SEVENTH AFFIRMATIVE DEFENSE 75. Plaintiff's damages claims are barred, in whole or in part, because Plaintiff failed to mitigate her damages. EIGHTH AFFIRMATIVE DEFENSE 76. TCW would have discharged Plaintiff at a subsequent time as a result of other conduct of the Plaintiff not discovered prior to her lawful discharge (after-acquired evidence). NINTH AFFIRMATIVE DEFENSE 77. TCW exercised reasonable care to prevent and correct promptly any discrimination or harassment, and Plaintiff unreasonably failed to take advantage of any preventative or corrective opportunities provided by TCW, or to avoid harm otherwise. 15 15 of 16
TENTH AFFIRMATIVE DEFENSE 78. Any act or omission by TCW was taken in good faith, and TCW had reasonable grounds for believing that such act or omission was not a violation of the applicable laws or any rights of Plaintiff. ELEVENTH AFFIRMATIVE DEFENSE 79. TCW is not liable for punitive damages because TCW did not commit any act with malice or reckless indifference to Plaintiff's protected rights, or approve, authorize or condone or have actual or constructive knowledge of any such acts. WHEREFORE, TCW Defendants respectfully request that judgment be entered in favor of the TCW Defendants and against the Plaintiff, and they be awarded their reasonable attorneys' fees and costs and such further relief as the Court deems just and appropriate. Respectfully submitted, Dated: February 20, 2018 Jonatha. Sulds Green rg Traurig, LLP MetLife Building 200 Park Avenue New York, NY 10166 Telephone: 212.801.9200 Facsimile: 212.801.6400 E-mail: suldsj@gtlaw.com Attorneys for Defendants TCW Group Inc., TCW LLC and David Lippman 16 16 of 16