Opinion
No 01 CIV. 2932 (DLC)
June 11, 2002
Robert David Goodstein, Goodstein West, New Rochelle, New York, Attorney for Plaintiff.
Kevin B. Leblang, Steven M. Knecht, Kramer Levin Naftalis Frankel LLP, New York, NY, Attorneys for Defendants.
OPINION AND ORDER
This case arises from the plaintiff's decision to reject employment at his company's offices in Hanover, Pennsylvania after the company closed its New Rochelle, New York operation for financial reasons. The offer for continued employment with the company at Hanover was contingent on the plaintiff accepting a significant reduction in pay. Plaintiff contends that his salary should not have been reduced by any amount and seeks payment of one year of his salary, principally on the ground that the company breached its written employment contract with him by not giving timely notice of its intent not to renew the contract. The plaintiff has also brought employment discrimination and New York labor law claims arising out of the same events. Defendants have moved for summary judgment on all claims and plaintiff has cross-moved for summary judgment on his contract claim. For the reasons that follow, defendants' motion for summary judgment is granted.
BACKGROUND
The following facts are either undisputed or as shown by the plaintiff. Defendant Gerard Daniel Co., Inc. ("Gerard Daniel") manufactures, distributes and imports industrial wire cloth, welded mesh, wire, synthetic fabric and pleating machines. Gerard Daniel is a wholly-owned subsidiary of defendant GDC International, Inc. ("GDC"). The President and CEO of Gerard Daniel and GDC is N. Gary Shultis ("Shultis")
1. Leiser's Employment with Gerard Daniel
Frank Leiser ("Leiser"), born March 13, 1946, was fifty-four when Gerard Daniel decided to close its New Rochelle division and transfer all of the functions formerly filled by that division to its operation in Hanover in order to reduce costs. The wire cloth industry had been experiencing a serious downturn, in part because the automotive industry, once a major market for wire mesh, was phasing wire mesh out of airbag construction. Domestic prices for mesh were being driven down by increased competition from products manufactured in China. Sales had steadily decreased for Gerard Daniel and, in particular, for the New Rochelle division. Sales in the New Rochelle division had fallen by twenty-five percent in the three years ending 1999. As Leiser himself explains, "[m]ore players came into the game, more suppliers, more applications. . . . Because of more suppliers, the pricing structures changed, customers became more aware of maybe different manufacturers. . . . Prices went down in the last maybe five years, I would say."
Gerard Daniel employed Leiser as an "inside" salesperson in the New Rochelle office. Leiser, who received his bachelor of science degree in marketing from the University of Chile in 1970, had worked for Gerard Daniel since April 26, 1976. Leiser spent most of his time working on inside sales, but also had some warehouse responsibilities, including purchasing, supervising, and resolving problems with lost goods and missed pick-ups. Leiser contends that all of his compensation was based on his sales responsibilities.
2. Leiser's Employment Agreement
Since October 1, 1980, Leiser' s employment with Gerard Daniel has been governed by a written employment agreement. Paragraph two of the agreement, included under the heading "Term of Employment," provides that Leiser's term of employment was to commence on the date of the agreement and to expire
on September 30, 1990; provided, however, that if neither party shall give the other party written notice of termination on or before the ninetieth day before September 30, 1990 (or the expiration date of any subsequent term), this Agreement and all of its provisions shall' continue from year to year thereafter until terminated in accordance with such notice.
Paragraph four of the agreement, entitled "Termination," provided for the immediate termination of the agreement on Leiser's death (paragraph 4.1), disability (paragraph 4.2), or termination for cause (paragraph 4.4). Paragraph 3.4.8 of the agreement, included under the heading "Compensation," stated that
Paragraph 3.4.8 was renumbered as paragraph 3.4.4 in 1980, but was not otherwise substantively changed. Despite the amendment, the discussion of Leiser's contract in this Opinion will refer to this provision as paragraph 3.4.8.
[i]f at any time the Employee is discharged by the Company for reasons other than those set out in paragraph 4.2 [discharge for disability] or paragraph 4.4 [discharge for cause] hereof, the Company shall pay to the Employee an amount equal to:
(a) the Profit Participation which had accrued as at the end of the fiscal year immediately preceding the date of termination of employment pursuant to such discharge, plus
(b) Base Salary for three months, plus
(c) In lieu of the Bonus, one thirty-second of one percent (.03125%) of Net Sales for the twenty-four full calendar months immediately preceding the Employee's termination of employment.
Any payment made pursuant to this paragraph shall be made in four equal semi-annual installments commencing six months after the date of such termination of employment.
Under the agreement as it existed in October 2000, Leiser was entitled to a base salary of $41,600 plus commissions. In 2000, Leiser would have earned an annual salary of $62,706.28 and commissions of $29,186, for annual compensation of $91,892.28.
In his Rule 56.1 Statement, the plaintiff states, apparently in error, that he had earned $21,185 in commissions by September 2000 — approximately eight thousand less than acknowledged by the defendants as earned as of August 2000.
3. Gerard Daniel's Employees in Hanover and New Rochelle
In the fall of 2000, Gerard Daniel also employed three other individuals in New Rochelle as inside salespeople: Tasha Gorham (DOB 9/24/75) ("Gorham"), Mary Ingram (DOB 1/1/40) ("Ingram"), and Keith Shocker (DOB 6/10/71) ("Shocker"). Gorham was paid an annual salary of $40,000; Ingram, a salary of $44,424.38 and commissions of $3,198 for annual compensation of $47,622.38; and Shocker, an annual salary of $45,000.
Lincoln Nixon (DOB 3/28/64), an inside salesperson employed at an annual salary of $63,653, resigned from the company in September 2000.
In August 2000, Linda Huggens (DOB 3/4/47) ("Huggens") and Nancy Bankert (DOB 11/15/59) ("Bankert") were inside salespeople in Hanover, and Mike Vaccaro (DOB 3/14/54) was the Hanover sales manager ("Vaccaro"). Huggens earned an annual salary of $21,190; and Bankert, $19,760. Each also earned a small commission. Vaccaro received an annual salary of $59,280. After the relocation of the New Rochelle office, Huggens and Bankert's salaries were increased to $25,000 and their commissions eliminated.
No information has been provided with regard to Mike Barba, "Jarrod," and "Kim," or any other salesperson. Steven Pfeffer (DOB 3/18/49) ("Pfeffer"), Vice President of Marketing, and Charlie Milmoe (DOB 11/1/37), Director of Gerard Daniel, were apparently also responsible for sales accounts.
4. Announcement of the Consolidation of Operations in Hanover
On August 9, 2000, Shultis sent Leiser a letter informing him that the New Rochelle operation would be moved to Hanover and offering him a position in Hanover. Because the cost-of-living and "going pay rate" in Hanover was lower than in metropolitan New York, the letter explained that Leiser's "total annual compensation," should he relocate to Hanover, would be $50,000. The letter also described the relocation assistance Gerard Daniel would provide to the plaintiff. Should Leiser decide not to move, he could receive nine months of severance if he agreed "to help us train new inside sales people we need to hire to replace any sales person electing not to move." Although not mentioned in the parties' correspondence, neither side disputes that Leiser's duties in Hanover would be entirely inside sales; he would no longer have warehouse responsibilities.
The letter also provided that if Leiser did not choose to refinance the loan on his company stock, the company would cancel the loan and provide him with a lump-sum bonus. Leiser appears to argue that the defendants should have revised the options it had offered to him once Shultis discovered that employees were not required to repay loans on stock options on separation from the company, but has articulated no legal theory in support of recovery on this claim.
In an almost identical letter, Ingram was offered an annual salary of $37,500 in Hanover plus relocation assistance, or nine months of compensation in exchange for training new salespeople. The letter provided that she would receive sixteen weeks base pay if she did not take either of the two other options. Ingram accepted the offer to train new salespeople in exchange for the nine month severance package.
Stickney was offered employment in Hanover at an annual salary of $65,000. R. Milmoe was also offered a position in Hanover; for assuming additional responsibilities, he was offered the same compensation he received in New Rochelle.
Shocker and Gorham received similar letters announcing the move, offering each annual compensation of $37,500 in Hanover, describing relocation benefits, and stating that they would receive twelve weeks base pay if they decided not to move. In exploring relocation options, Gorham apparently also asked whether the company would be willing to pay for her to return to school. In an email dated September 15, 2000, Shultis explained that Gerard Daniel did not have a "unilateral" policy with regard to school reimbursement. Gerard Daniel "reimburse[s] in very selective cases, as part of a development program for people who we believe have the potential and interest to become key managers for us in the future." Shultis explained that in the past, such people had demonstrated that they were "top performers," had shown "a strong interest in staying and growing with the company long-term," and had selected an appropriate course of study. Shultis stated that "Tasha may well be someone we want to develop for the long term, but I don't think she has been with us long enough yet to be able to make that determination. So our answer at this stage is a definite maybe."
According to Shultis, the pay offered New Rochelle employees for moving to Hanover was based on a number of factors, including a survey showing a cost-of-living differential of thirty percent, the difficulty of the job in New Rochelle compared to Hanover, pay received by Gerard Daniel employees in Hanover, and employee experience and ability. The pay offered to all New Rochelle inside salespeople was as follows:
The sales role in the New Rochelle division required more negotiation skills than the role in Hanover.
Shultis denies that the possibility of developing employees for the long-term was a factor in determining the salary offered to New Rochelle employees to move to Hanover.
Name DOB Pre -Move Post-Move Change
Ingram 1/1/40 $47,622.38 $37,500 -21.26%
Leiser 3/13/46 $91,892.28 $50,000 -45.59%
Shocker 6/10/71 $45,000 $37,500 -16.67%
Gorham 9/24/75 $40,000 $37,500 -6.25%
On August 11, 2000, a memorandum was sent to all employees announcing the upcoming move to Hanover and explaining that
[a]ny Gerard Daniel employee who has an interest in moving will have a job in Hanover. However, you need to be aware that the cost of living in Hanover is somewhat-to-considerably below the cost of living in the Metropolitan New York area. And as a result, the pay rates in the Hanover market are correspondingly lower as well.
The memorandum described relocation and severance options and noted that some people who choose not to move "will be asked to come to Hanover for an additional few weeks to help get things set up and operating and to help train the new people there." Employees received a second memorandum dated August 24, 2000, describing relocation and severance options and noting that some employees would be asked to work briefly in Hanover. An August 29, 2000 memorandum to all employees clarified payment of the "stay bonus."
5. Leiser's Negotiations with Gerard Daniel
On September 8, 2000, Shultis sent Leiser a memorandum in which Shultis described the "three options" Gerard Daniel had given Leiser on August 9. The memorandum described the options as follows:
1. Move to Hanover with us as an inside sales person at an annual salary of $50,000 per year plus benefits;
2. Stay with us until your job moves and help us train the new sales people who will be working with us in Hanover;
3. Stay with us until your job moves but do not actively assist us in training the new people.
The memorandum noted that "[t]o date, you have not communicated which option you would like to choose," and that if Leiser wanted to accept the Hanover offer, "you will need to tell me by no later than Wednesday, September 13." If Leiser intended to accept the training/severance option, "you have until Friday, September 29 to sign and return a copy of the attached letter to me." Should Leiser "elect option 3," he would be "paid severance in accordance with your Employment Agreement dated December 2, 1986, as amended January 11, 1990." Shultis describes this option as "honor[ing] [Leiser's] employment agreement."
Attached to the memorandum was a letter that described the terms of the training/severance option:
Your employment with GDC shall terminate effective October 13, 2000. . . . Between now and that termination date, you agree to continue your regular duties, as well as provide assistance both in New Rochelle and in Hanover as may be reasonably requested in training new sales employees hired in association with the relocation.
The offer was contingent on Leiser' s agreement to release all claims against Gerard Daniel. Ingram received a similar letter and signed that letter on September 26, 2000. A handwritten note on a copy of Ingram's September 8 letter indicates that Ingram worked in Hanover for two weeks and that her severance pay began on November 3, 2000.
On September 13, 2000, Leiser requested further information about the severance benefits to which he would be entitled under the agreement. On September 13, 2000, Shultis explained that under the contract, should Leiser be "discharged by the company for reasons other than . . . physical or mental disability or `Cause'," he would be entitled to three month's base salary and a portion of his commissions, for a total severance package of approximately $32,000. (Emphasis supplied.) Shultis stated that this "represents `. . . the benefits to which you are otherwise entitled . . .' mentioned in paragraph 3 of my letter dated September 8, 2000." (Emphasis in original.)
On September 22, 2000, Pfeffer sent Leiser and Ingram a memorandum stating that the company was "extending your employment through Friday, October 27th. For the weeks of October 16th and October 23rd you will be expected to be in Hanover to help ensure a smooth transition to the new sales team."
In a letter to Shultis dated September 28, 2000, Leiser described the option of relocating to Hanover "with my compensation being decreased by about 50%" as "totally unacceptable." Leiser wrote that
[a]fter twenty-five years of employment, I feel a strong sense of loyalty to GDC and am anxious to help in any way I can. Therefore without waiving any of my rights I am willing to stay with GDC and help train the new sales people. In fact I have been doing that for the past 10 days.
Leiser explained that he was "presently consulting with counsel" and would "advise you" as soon as he was "fully informed of my rights and can make a knowledgeable decision."
In an October 2, 2000 letter from Shultis to Leiser, Shultis thanked Leiser for "informing us of your rejection of our offer to relocate you to Hanover." Shultis explained that
[j]ust so there are no future misunderstandings as you consider your remaining two options, if you would like to select the nine month severance option you must:
1. Actively help us with the training of the new sales team. This training will include your working with these people in our Hanover facility during the weeks starting October 16 and October 23. We will, of course, reimburse you for your reasonable and customary travel and living expenses relating to those two weeks.
2. Sign without exception or modification (except for your separation date which will become October 27, 2000) the Separation Agreement Letter I sent to you on September 8.
If either of these conditions are not acceptable to you, your separation date will remain October 13, 2000 and your severance payments will be made in accordance with your current Employment Agreement with Gerard Daniel Co., Inc.
In a letter dated October 12, 2000, Leiser wrote to Shultis again, stating that he was not clear about the terms of the severance/training option. He quoted the language in Shultis's August 9 letter, and stated that he had "assisted in training the new people under option No. 2." Leiser wrote that he had received a letter from Shultis on October 2, which stated that the "training will include your working with these people in our Hanover facility during the weeks starting October 16 and October 23." Leiser stated that there had been "no mention of my being required to go to Hanover for two weeks to help train new people" in earlier letters. He needed to search for other employment and could not "spend the next two weeks in Hanover." He said he "remain[ed] willing to train anyone you would like me to train in New Rochelle for as long as you would like me to do it."
In short, I am willing to cooperate in every way that I can but I cannot accept at my age and after twenty-five years of service a 50% pay cut coupled with a requirement that I move to Hanover, Pennsylvania either temporarily or permanently.
Shultis responded on October 13, 2000. In this memorandum, Shultis "acknowledge [d] your letter of October 12, advising us that you are unwilling to provide the on-site training assistance we need from you during the next two weeks to get our new sales people fully qualified." Shultis stated that this assistance was a "condition to your receiving the expanded financial assistance option," and that "you understand that in taking this position you are declining our nine-month severance proposal." Shultis informed Leiser that "[a]ccordingly, . . . today will be your last day with the company." The memorandum continued: "Beyond this, we will of course honor all of the other separation benefits provided for in your employment contract."
On October 16, Leiser sent Shultis a copy of Shultis's October 13 memorandum on which Leiser had typed: "As per my letter of October 12th, I am in the New Rochelle Office. Awaiting your response." The notation on the endorsed memorandum reads: "Sent by Leiser on 10/16. The `response' he said he was waiting for was whether we accepted his proposal to train sales people in New Rochelle. By 10/16, [unintelligible] new people were already working in Hanover." Leiser showed up for work on October 16 in New Rochelle because he had offered to train employees in New Rochelle and "did not get a response to my offer."
According to the plaintiff, he would not have considered moving to Hanover unless he were offered the same compensation he received in New Rochelle. The sole basis for Leiser's age discrimination claim is Gerard Daniel's failure to make him what he characterizes as "a bona fide offer." He is not aware of any statements made by Shultis or any other employee regarding his age.
Leiser filed a complaint with the Equal Employment Opportunity Commission ("EEOC") on December 6, 2000. On February 13, 2001, the EEOC issued Leiser a right to sue letter. Leiser filed his complaint on April 6, 2001, asserting breach of contract, age discrimination and New York Labor Law claims. The defendants have asserted breach of fiduciary duty, misappropriation of trade secrets and breach of contract counterclaims.
Defendants have represented that they will move to voluntarily dismiss their counterclaims in the event their motion for summary judgment is granted.
DISCUSSION
Summary judgment may not be granted unless the submissions of the parties, taken together, "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The substantive law governing the case will identify those issues that are material, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "A dispute regarding a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Mount Vernon Fire Ins. Co. v. Belize NY, Inc., 277 F.3d 232, 236 (2d Cir. 2002) (citation omitted). The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination, the Court must view all evidence in the light most favorable to the nonmoving party. Abdu-Brisson v. Delta Air Lines, Inc., 239 F.3d 456, 465-66 (2d Cir.), cert. denied, 122 S.Ct. 460 (2001). When the moving party has asserted facts showing that the nonmovant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on the "mere allegations or denials" of his pleadings. Fed.R.Civ.P. 56(e); see also Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). In deciding whether to grant summary judgment, this Court must, therefore, determine (1) whether a genuine factual dispute exists based on the evidence in the record, and (2) whether the facts in dispute are material based on the substantive law at issue.1. Age Discrimination
Under the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. § 621 et seq., it is "unlawful for an employer . . . to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1) (1999). Courts analyzing discrimination claims under the ADEA apply the three step burden-shifting framework established by McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-05 (1973). Holtz v. Rockefeller Co., Inc., 258 F.3d 62, 76 (2d Cir. 2001).
Under McDonnell Douglas, a plaintiff must first establish a prima facie case of discrimination, by showing that: (1) he was a member of the protected class; (2) he was qualified for the position; (3) he suffered an adverse employment action; and (4) the adverse employment action occurred under circumstances giving rise to an inference of discrimination. Byrnie v. Town of Cromwell, Bd. of Educ., 243 F.3d 93, 101 (2d Cir. 2001). "The burden of making out the prima facie case is minimal." Windham v. Time Warner, Inc., 275 F.3d 179, 187 (2d Cir. 2001) (citation omitted); see also Greenway v. Buffalo Hilton Hotel, 143 F.3d 47, 52 (2d Cir. 1998).
Upon establishing a prima facie case of discrimination, the burden shifts to the employer to articulate a legitimate, non-discriminatory reason for the employment action. Byrnie, 243 F.3d at 102. "The defendant's burden is also light. The employer need not persuade the court that it was motivated by the reason it provides; rather, it must simply articulate an explanation that, if true, would connote lawful behavior." Greenway, 143 F.3d at 52 (emphasis in original).
If the employer has met its burden, the plaintiff bears the ultimate burden of showing that defendant intentionally discriminated against the plaintiff. Reeves v. Sanderson Plumbing Prod., Inc., 530 U.S. 133, 143 (2000); Howley v. Town of Stratford, 217 F.3d 141, 150 (2d Cir. 2000). The "plaintiff's prima facie case, combined with sufficient evidence to find that the employer's asserted justification is false, may permit the trier of fact to conclude that the employer unlawfully discriminated." Windham, 275 F.3d at 187 (citation omitted). In the context of a summary judgment motion, a court "should examine the record as a whole, just as a jury would, to determine whether a jury could reasonably find an invidious discriminatory purpose on the part of an employer." Byrnie, 243 F.3d at 102; Zimmermann v. Assoc. First Cap. Corp., 251 F.3d 376, 382 (2d Cir. 2001). An employer that has put forth nondiscriminatory reasons for its employment action is entitled to summary judgment "unless the plaintiff can point to evidence that reasonably supports a finding of prohibited discrimination." James v. N.Y. Racing Ass'n, 233 F.3d 149, 154 (2d Cir. 2000).
The plaintiff has established a prima facie case of discrimination under the ADEA. Leiser was fifty-four in August 2000, and was therefore a member of the protected class at all times relevant to the action. Roge v. NYP Holdings, Inc., 257 F.3d 164, 168 (2d Cir. 2001). Neither party disputes his qualification for the job he performed in New Rochelle or the job he was offered in Hanover. Leiser sustained an adverse employment action when offered the Hanover job at a reduced salary. Galabya v. New York City Bd. of Ed., 202 F.3d 636, 640 (2d Cir. 2000). Reassignment to another office, with nothing more, would not have been an adverse employment action. See id. at 641.
Leiser has also shown that he suffered from the adverse employment action under circumstances giving rise to an inference of discrimination. While no inference can be drawn from the fact that the offer of continued employment was contingent on acceptance of decreased compensation, since all comparable New Rochelle employees were offered Hanover positions at reduced compensation, the plaintiff has established a prima facie case of discrimination from the fact that his compensation was to be reduced by a greater percentage than the salary of any other New Rochelle salesperson. The burden of showing discrimination is minimal, and this comparison is sufficient to meet that burden.
The defendant justifies the reduction in compensation offered Leiser principally on the ground that Hanover was a significantly less expensive community in which to work. Even with the substantial reduction in salary, Leiser would have earned $50,000, or at least $12,500 more than any other Hanover salesperson, including employees both older and younger than he was. The severance package offered to Leiser was also more favorable than that offered to any other New Rochelle employee.
Leiser was offered two alternatives to the option to move to Hanover: (1) train employees and release Gerard Daniel in exchange for a severance package of nine months of compensation; or (2) a severance package worth approximately $32,000. Ingram was offered the same alternatives, although her second compensation package was only worth approximately $14,700 (sixteen weeks of her annual compensation). All other employees were offered only severance packages of twelve to sixteen weeks of salary. Sixteen weeks of Leiser's base salary would equal approximately $19,290.
Leiser is unable to show that the defendants' reduction of his compensation as a condition of employment was intentional discrimination based on age. He does not dispute that the company was justified in closing the New Rochelle office and consolidating operations in Hanover in response to deteriorating financial conditions and prospects. He does not dispute that Hanover is a less expensive community in which to live compared to New Rochelle and that the salaries of all New Rochelle salespeople who moved to Hanover were reduced. He contends, however, that it was discrimination to reduce his compensation by any amount and that that discrimination must be ascribed to age. There is no evidence to support this theory and no rational juror could find discriminatory treatment in these circumstances.
Nor can the plaintiff try to salvage his discrimination claim by arguing that the degree of his salary reduction is evidence of discrimination. It is undisputed that the plaintiff would not have accepted the Hanover position accompanied by any reduction in compensation. Compare Corneveaux v. CUNA Mut. Ins. Group, 76 F.3d 1498, 1503-04 (10th Cir. 1996) (defense that plaintiff would not have accepted reduction in salary defeated by plaintiff's demonstrated willingness to negotiate and evidence that other employees' salaries were not reduced). Because it is undisputed that he would not have accepted a position in Hanover contingent on any reduction in compensation, Leiser has also failed to show that he was constructively discharged.
Plaintiff's briefing on this motion and deposition testimony appear to go even further. It appears that the plaintiff would not have taken the job in Hanover even without a change in compensation. For this reason, his principal claim in this lawsuit has always been his breach of contract claim.
The difficulty with Leiser's claim is further illustrated by the following. Leiser would not be entitled to a back-pay award from a jury based on the difference between his historic compensation and the $50,000 salary he was offered if he agreed to move to Hanover since the undisputed facts are that Gerard Daniel was entitled to reduce Leiser's salary if he chose to transfer to Hanover. It would be unfair and impractical to base a damage claim on any alternative salary reduction, since Leiser never indicated to Gerard Daniel that he was willing to transfer to Hanover if it paid him any salary less than the amount he was currently receiving in compensation. Indeed, Leiser persists today with his declaration that he would not have accepted any change in income. Leiser cannot proceed on the legal theory that he was injured because he would have continued employment with a less drastic salary reduction when he has unequivocally declared the contrary in his deposition.
2. Breach of the Employment Agreement
Plaintiff's main claim in this lawsuit is based on his contention that his employment contract remained in force through September 30, 2001, because Gerard Daniel did not give him timely notice of its termination. Leiser argues that he is entitled not only to severance benefits under the contract but also to his salary through September 30, 2001. The defendants concede that Leiser is entitled to the severance benefits provided under the contract — which it is undisputed that they have paid — but contend that those payments entitle them to terminate the contract at any time and relieve them of the obligation to pay the plaintiff compensation for the remaining months in his employment contract.
A court may properly grant summary judgment when it finds that the terms of a contract are "unambiguous, or where no extrinsic evidence exists." Alexander Alexander Serv., Inc. v. These Certain Underwritings at Lloyd's, 136 F.3d 82, 86 (2d Cir. 1998) (applying New York law). Whether a contract "is ambiguous is a question of law for a court, while the meaning of an ambiguous contract is a question of fact for a factfinder." Scholastic, Inc. v. Harris, 259 F.3d 73, 82 (2d Cir. 2001) (applying New York law) (citation omitted). Contractual terms are ambiguous when they "suggest more than one meaning when viewed objectively by a reasonably knowledgeable person who has examined the context of the entire integrated agreement." Id. (citation omitted). Thus, when the contract's "terms have a definite and precise meaning and are not reasonably susceptible to differing interpretations, they are not ambiguous." Id. If the terms are ambiguous, and extrinsic evidence is required "to ascertain the correct and intended meaning of a term," summary judgment must be denied. Alexander, 136 F.3d at 86. The disputed provisions of Leiser's employment agreement are unambiguous. In any event, since the parties have not submitted extrinsic evidence of their meaning, summary judgment would be appropriate even if the contract's terms were ambiguous.
The interpretation of the employment contract is governed by New York law. On December 2, 1986, the parties added a paragraph providing that the agreement would be "governed by and construed and enforced in accordance with" New York law. See Cargill. Inc. v. Charles Kowsky Res., Inc., 949 F.2d 51, 55 (2d Cir. 1991).
Under New York law an employment contract for an indefinite term is presumed to be at-will and may be terminated by either party for any reason. Horn v. N.Y. Times, 739 N.Y.S.2d 679, 681 (1st Dep't 2002). Unless the parties provide otherwise, however, a "contract of employment for a definite term may not lawfully be terminated by the employer, prior to the expiration date in the absence of just cause." Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1020-01 (2d Cir. 1985) (citation omitted); see also Jones v. Dunkirk Radiator Corp., 21 F.3d 18, 22 (2d Cir. 1994), modified on other grounds, Baron v. Port Authority, 271 F.3d 81, 88 (2d Cir. 2001); Williamson v. Moltech Corp., 690 N.Y.S.2d 628, 629 (2d Dep't 1999). In such a case, "the discharge of an employee without cause before the expiration of the term of his contract constitutes a breach of the contract by the employer." Borne Chem. Co., Inc. v. Dictrow, 445 N.Y.S.2d 406, 412 (2d Dep't 1981).
The parties can, however, contract expressly to provide the employer with the ability to terminate the contract without cause prior to the expiration of the term, as long as the employee's relinquishment of this legal protection is supported by consideration such as a severance package. See Rothenberg, 755 F.2d at 1021; see also Olsen v. Arabian Am. Oil Co., 194 F.2d 477, 479 (2d Cir. 1952); Johnston v. Unexcelled, Inc., 345 N.Y.S.2d 1, 3 (1st Dep't 1973); Reiss v. Arabian Am. Oil Co., 109 N.Y.S.2d 625, 626 (2d Dep't 1952); L. Berzin v. W.P. Carey Co., Inc., 740 N.Y.S.2d 63, 64 (1st Dep't 2002). Consequently, when "the contract provided unequivocally that the employer could terminate the contract without cause but was thereupon obligated to pay a penalty to the employee, termination without cause was held not to constitute a breach if the penalty was paid." Rothenberg, 755 F.2d at 1021.
Under paragraph two of Leiser' s employment agreement, if notice not to renew the agreement is not given at least ninety days before September 30, Leiser's term of employment continues "from year to year thereafter until terminated in accordance with such notice." Leiser's employment is for a term and if the contract did not provide otherwise, Gerard Daniel could not discharge him without cause unless it gave timely notice, which it is undisputed it did not give.
Leiser and Gerard Daniel did, however, expressly contract to allow Gerard Daniel to discharge him without cause before Leiser's term had expired. Paragraph 3.4.8, the final paragraph in the lengthy section of the agreement entitled "Compensation," explicitly provides that certain severance benefits will be payable "[i]f at any time the Employee is discharged by the Company for reasons other than" disability or cause. (Emphasis supplied.) Since Gerard Daniel has paid the severance payments described in paragraph 3.4.8, it has not breached the contract.
Essentially, paragraph 3.4.8 performs two different functions. First, it ensures mutuality of consideration. Lemmon v. United Waste Sys., Inc., 958 S.W.2d 493, 500 (Tex.App. 1997) (applying New York law). Absent paragraph 3.4.8, Leiser could have been discharged only for cause or after notice given no later than three months before September 30. Gerard Daniel received the right to terminate Leiser without cause and without timely notice in exchange for payment of a severance package consisting of three months of salary, accrued profit participation benefits, and a bonus based on the net sales of the company in the preceding calendar year.
Second, paragraph 3.4.8 is a liquidated damages provision. In the absence of paragraph 3.4.8, Gerard Daniel's failure to give sufficient notice of nonrenewal would entitle Leiser to damages for breach, which courts have held to require payment of his salary for the full notice period. Holt v. Seversky Electronatom Corp., 452 F.2d 31, 35 (2d Cir. 1971); see also Delvecchio v. Bayside Chrysler Plymouth Jeep Eagle, Inc., 706 N.Y.S.2d 724, 726 (2d Dep't 2000). By including paragraph 3.4.8 in the contract, the parties specified the damages to be paid to Leiser if Gerard Daniel terminated the contractual relationship without cause and without three months of notice. Plaintiff may not recover for additional breach of contract damages because he "is fully protected" by his severance benefits. Polycast Tech. Corp. v. Uniroyal, Inc., No. 87 Civ. 3297 (CSH), 1992 WL 123185, at *7 (S.D.N.Y. May 28, 1992)
This interpretation is supported by the language and structure of Leiser's employment contract. The explicit language of paragraph 3.4.8 clearly contemplates and allows for Leiser' s discharge without cause "at any time." Other courts have read such general language in employment contracts, when paired with a provision specifically describing grounds for termination for cause, as rendering the agreement terminable without cause. In See, e.g., Int'l Klafter Co. v. Cont. Cas. Co., 869 F.2d 96, 97 (2d Cir. 1989); Olsen, 194 F.2d at 479.
3. Labor Law Claim
Leiser has also asserted a claim for unpaid commissions under Section 191 of New York's Labor Law and has moved for an award of fees and costs and for liquidated damages of twenty-five percent of the amount owning on the ground that the violation was willful. N.Y. Lab. Law §§ 191(1)(c), 198(1-a) (West 2002) Under Section 190, a "commissioned salesman" is defined as "any employee whose principal activity is the selling of any goods and whose earnings are based in whole or in part on commissions." Id. § 190. Under Section 191, employers are required to pay commissioned salesmen "the wages, salary, drawing account, commissions and all other monies earned or payable in accordance with the agreed terms of employment." Id. § 191(1)(c). The plaintiff has submitted no evidence that he was not paid commissions payable in accordance with the terms of his employment, and his Rule 56.1 Statement does not identify any such evidence. Because plaintiff has not submitted any evidence to show that he was not paid commissions as due under his employment contract, his claim under Section 191 of New York's Labor Law must be dismissed.
The plaintiff first identified the alleged violation of New York's labor law in his opposition brief submitted on this motion.
CONCLUSION
For the reasons stated above, the defendants' motions for summary judgment and for voluntary dismissal of their counterclaims are granted. The Clerk of Court shall close the case.