United States District Court, Northern District of New York
June 4, 2002
MARK EDWARDS, PLAINTIFF,
SCHRADER-BRIDGEPORT INTERNATIONAL, INC., DEFENDANT.
The opinion of the court was delivered by: Frederick J. Scullin, Jr., Chief United States District Judge.
MEMORANDUM-DECISION AND ORDER
Certain issues in this case were tried to a jury on February 4-6,
2002, while others
were reserved for the Court's determination.
Presently before the Court are several post-trial motions. First, with
respect to the issues that were tried to the jury, Plaintiff moves (1)
for judgment as a matter of law pursuant to Rule 50 of the Federal Rules
of Civil Procedure (a) with respect to the $35,000 Success Bonus and (b)
with respect to the unvested stock options worth $30,393.33 on the ground
that there is no legally sufficient evidentiary basis for a reasonable
jury to find for Defendant on these issues; and (2) alternatively, for a
new trial pursuant to Rule 59 of the Federal Rules of Civil Procedure
with respect to the $35,000 Success Bonus on the grounds that (a) the
Court's instructions to the jury did not provide sufficient guidance as
to what constituted a resignation and (b) Plaintiff was precluded from
introducing evidence of his strong performance as plant manager.
In addition, Defendant moves for a judgment dismissing the claims that
the Court must decide in the first instance. With respect to these same
claims, Plaintiff moves (1) for judgment as a matter of law with respect
to the benefit due under the Executive Severance Policy on the ground
that he did not resign and (2) for judgment as a matter of law with
respect to his claim for prejudgment interest due as a result of
Defendant's delay in paying him the following amounts to which he was
entitled: (a) $10,080.68 representing the liquidated value of his vested
options in 1,667 shares of common stock, (b) $3,015.01 representing
reimbursement of business expenses he incurred on behalf of Defendant
prior to his separation from service, and (c) $2,182.90 representing
payment for eleven days of unused vacation time.
The Court will address each of these motions in turn.
A. Judgment as a matter of law
When a court is faced with a Rule 50 motion after the jury has returned
its verdict, "the district court may set aside the verdict only where
there is `such a complete absence of evidence supporting the verdict that
the jury's findings could only have been the result of sheer surmise and
conjecture, or . . . such an overwhelming amount of evidence in favor of
the movant that reasonable and fair minded men could not arrive at a
verdict against him.'" Harris v. Niagara Mohawk Power Corp., 252 F.3d 592,
597 (2d Cir. 2001) (quoting Song, 957 F.2d at 1046 (quoting Mattivi v.
South African Marine Corp., 618 F.2d 163, 168 (2d Cir. 1980) (internal
quotation marks omitted))) (other citations omitted). In other words, a
court should deny a Rule 50(b) motion "unless `the evidence is such
that, without weighing the credibility of the witnesses or otherwise
considering the weight of the evidence, there can be but one conclusion
as to the verdict that reasonable men could have reached.'" Id. (quoting
Samuels, 992 F.2d at 14 (quoting Simblest v. Maynard, 427 F.2d 1, 4 (2d
Cir. 1970) (internal quotation marks omitted))) (other citation
1. Plaintiff's resignation
Plaintiff contends that there is no legally sufficient basis for a
reasonable jury to find that he resigned. According to Plaintiff, all of
the evidence indicates that he expressed only a conditional intention to
resign in the future. To support this argument, Plaintiff relies on the
fact that when he stated: "I'm quitting. I'm leaving this organization"
during his March 20, 1998 telephone conference with Wiggins and Giudice,
Giudice told him that "he should formalize his resignation and anything
that [Giudice] chose to discuss or take exception to, that [Giudice]
get back to him on it." See Transcript of Deposition of Marty
Giudice ("Giudice Tr."), dated April 28, 1999, at 108. Plaintiff also
relies upon Giudice's contemporaneous notes of the telephone conference,
in which he wrote; "I advised [Plaintiff] to formalize his resignation as
he saw fit and I would respond accordingly to any terms he included."
See Trial Exhibit P-34. Based upon Giudice's statements that he would
respond to any conditions Plaintiff attached to his resignation,
Plaintiff contends that there was "no meeting of the minds" with respect
to his resignation and, therefore, under fundamental notions of contract
law, his actions did not constitute a voluntary resignation.
Alternatively, Plaintiff argues that even if he stated that he was going
to leave the company, he took no actions which would have been consistent
with a resignation and, therefore, a jury could not have found that he
intended to resign on March 20, 1998.
Plaintiff has failed to meet his burden under Rule 50 to demonstrate
that the jury's conclusion that he resigned on March 20, 1998, was "the
result of sheer surmise and conjecture[.]" See Harris, 252 F.3d at 597.
Plaintiff is asking the Court to do what a court cannot do on a
Rule 50 motion — weigh the evidence and make credibility determinations.
Both Giudice and Wiggins testified that Plaintiff resigned during their
telephone conference on March 20, 1998. See Transcript of Deposition of
James D. Wiggins ("Wiggins Tr."), dated April 9, 1999, at 196 (stating
that Plaintiff stated: "I'm quitting. I'm leaving the organization.");
Giudice Tr. at 108 (stating that Plaintiff "told us he didn't feel he
could continue to fulfill his responsibilities as plant manager and
therefore resigned."). Wiggins also testified that "We accepted his
resignation and we asked him to put it in writing." See Wiggins Tr. at
196. In addition, Prouty and LaPointe, two of Plaintiff's subordinates,
testified that Plaintiff told them that he had resigned. Although
Plaintiff testified that he only told them that he was resigning to
protect his reputation, he does not deny making the statement.
Alternatively, Plaintiff argues that his resignation was conditional on
March 20, 1998, because the parties had not agreed to all the terms.
However, the jury was free to reject this argument in light of all of the
evidence and to find that although the parties may not have agreed on the
date of Plaintiff's departure, this did not affect the validity of
Given the proof adduced at trial, the Court concludes that it cannot be
said that there is a complete absence of evidence to support the jury's
conclusion that Plaintiff resigned on March 20, 1998. Accordingly, the
Court denies Plaintiff's motion for judgment as matter of law with
respect to the issue of his resignation.
2. The $35,000 Success Bonus
The Court need not address the issue of whether Plaintiff was entitled
to payment of a $35,000 Success Bonus because, as Plaintiff concedes, he
would only be entitled to this bonus if Defendant terminated him to avoid
paying him this benefit. Since the jury concluded that Plaintiff resigned
and the Court has held that there was sufficient evidence to support this
determination, Plaintiff's motion with respect to this issue is moot.
Accordingly, the Court denies Plaintiff's motion for judgment as a matter
of law with respect to his entitlement to a success bonus.
3. Unvested stock options
Plaintiff asserts that the Court should not have been submitted the
issue of his entitlement to the liquidated value of his unvested stock
options to the jury because the Stock Option Agreements are
unambiguous. Therefore, according to Plaintiff, the Court should have
determined, as a matter of law, whether these agreements entitled him to
receive the liquidated value of his unvested stock options.
Plaintiff is, in effect, asking the Court to reconsider its previous
ruling that the Stock Option Agreements were ambiguous and that,
therefore, their interpretation was an issue for the jury. The Court has
reviewed these agreements for a second time and adheres to its previous
conclusion that they are ambiguous. Paragraph 2(c)(ii) of the Agreement
(c) Normal Vesting; Performance Targets; Acceleration of Vesting.
(ii) Acceleration of Vesting. Notwithstanding
anything contained in this Agreement to the contrary,
all unvested Options shall automatically vest upon a
Sale of the Company subject to your continued
employment with the Company or any Subsidiary through
the date 90 days prior to such Sale of the Company.
On the other hand, paragraph (d) of the Agreement states
(d) Termination of Option. In no event shall any part
of your Option be exercisable after the Expiration
Date set forth in Section 2(a). Except as provided in
Section 2(c)(ii), if your employment by the Company or
any Subsidiary terminates for any reason other than
for Cause, that portion of your Option that is not
vested and exercisable on the date of termination of
your employment shall expire and be forfeited, and the
portion of your Option that is vested and exercisable
on the date of such termination shall expire, to the
extent not theretofore exercised, on the first
anniversary of such date of termination. If your
employment with the Company or any Subsidiary
terminates for Cause, all of your Options not
previously exercised shall expire and be forfeited
whether or not vested and exercisable.
See Trial Exhibits P-7 and P-18.
The Court finds that the intent of these two paragraphs is ambiguous.
One states that an employee's options automatically vest if the employee
is employed with the Company through the date ninety days prior to the
Sale of the Company. The other paragraph, however, provides that if an
employee's employment is terminated for any reason other than cause, the
unvested portion of the employee's options is forfeited. These
paragraphs are subject to two reasonable interpretations. First, as
Plaintiff asserts, they could mean that as long as an employee was
employed ninety days prior to the sale of the company, he is entitled to
receive the liquidated value of his unvested stock options upon the sale
of the company even if he is no longer employed by the company on that
date. Another reasonable interpretation is the one that Defendant
offers, which is that in order for an employee to receive the liquidated
value of his unvested stock options upon the sale of the company, he must
be employed with the company ninety dates prior to the sale and on the
date that the company is sold.
The jury reviewed the Stock Option Agreements as well as the January
16, 1998 letter from Wiggins, which further explained the circumstances
under which an employee's unvested stock options would vest. That letter
states, in pertinent part,
The Board of Directors, on December 12, 1997, created
several programs for the benefit of management in the
event of a change of control of the Company. If a
change of control occurs on or before December 31,
1998, and you are employed through the date of the
change of control, the following will
occur: (1) all
outstanding, unvested options to purchase common stock
of the Company by you shall automatically vest in full
as of the date of the event . . .
See Trial Exhibit, P-23 (emphasis added).
Since the Stock Option Agreements are ambiguous, it was appropriate for
the jury to rely upon the January 16, 1998 letter to assist it in
resolving the ambiguity in those agreements. Moreover, the evidence was
sufficient for the jury to conclude that when read together these
documents indicate that an employee had to be employed both ninety days
before the date of the sale of the company and through the date of the
change of control. Once the jury reached this conclusion and also found
that Plaintiff resigned on March 20, 1998, prior to the date of the
change of control, then it was reasonable for the jury to conclude that
Plaintiff was not entitled to the liquidated value of his unvested stock
options. Accordingly, the Court denies Plaintiff's motion for judgment as
a matter of law with respect to this claim.
B. Motion for a new trial
Unlike a motion for judgment as a matter of law, on a motion for a new
trial under Rule 59 of the Federal Rules of Civil Procedure, "the trial
court may independently `weigh the evidence' without favor to the
non-movant[.]" Finn-Verburg v. N.Y. State Dep't of Labor,
165 F. Supp.2d 223, 228 (N.D.N.Y. 2001) (citation omitted). However, a
court "`should be least inclined to disturb a jury's verdict, based
entirely or primarily upon witness credibility, where the conflicting
accounts of the witnesses are equally plausible (or implausible), and
there is no independent evidence in the trial record' requiring the court
to credit one version of events over another." Id. (quoting Ricciuti v.
New York City Transit Authority, 70 F. Supp.2d 300, 308 (S.D.N.Y.
1999)). Thus, "[w]here the jury resolved conflicting versions of events
in favor of one party, a new trial is appropriate only where one
`conflicting account is so inherently implausible as to tax credulity, or
there is independent evidence in the trial record' such that finding for
one party, instead of another, would `lead to a miscarriage of justice.'"
Id. (quoting [Ricciuti, 70 F. Supp.2d] at 308).
Nonetheless, in addressing a Rule 59 motion, the court may
"independently weigh the evidence presented at trial to determine whether
the jury's verdict is `seriously erroneous' or resulted in a `miscarriage
of justice.'" Id. (quoting Sorlucco v. New York City Police Department,
971 F.2d 864, 875 (2d Cir. 1992)). In doing so, the court "is afforded
considerable discretion. On a Rule 59 motion, `the trial judge is free to
weigh the evidence himself and need not view it in the light most
favorable to the verdict winner.'" Id. (quoting Bevevino v. Saydjari,
574 F.2d 676, 684 (2d Cir. 1978)). However, "the mere fact that the
trial judge disagrees with the jury's verdict is not a sufficient basis
to grant a new trial." Id. (citing Mallis v. Bankers Trust Co.,
717 F.2d 683, 691 (2d Cir. 1983)). A court should grant a new trial
"only where the court `is convinced that the jury has reached a seriously
erroneous result or that the verdict is a miscarriage of justice.'" Id.
(quoting Sorlucco, 971 F.2d at 875 (quoting Smith v. Lightning Bolt
Produc., Inc., 861 F.2d 363, 370 (2d Cir. 1988))).
In the present case, Plaintiff contends that he is entitled to a new
trial with respect to the issue of his entitlement to the $35,000 Success
Bonus because (1) the Court's instructions to the jury did not provide
sufficient guidance as to what constitutes a resignation and (2)
Plaintiff was precluded from introducing evidence of his strong
performance as plant manager.
The Court will discuss each of Plaintiff's arguments in turn.
1. Jury instructions
Plaintiff claims that the Court's jury instructions were defective
because they were devoid of any guidance regarding the meaning of the
term "resignation," including that the resignation had to be voluntary.
The Court's instruction with regard to this issue was:
As noted, Defendant contends that Plaintiff resigned
on March 20, 1998, prior to the date of the change of
control, that is April 30, 1998. To the contrary,
Plaintiff contends that Defendant terminated his
employment on March 20, 1998 and that a substantial
motivating factor in Defendant's decision to terminate
him was Defendant's desire to avoid paying him the
Success Bonus promised to him in the January 16, 1998
If you find that Plaintiff has demonstrated, by a
preponderance of the evidence, that he did not resign
and that he would have been employed by Defendant on
the date of the change of control if Defendant had not
acted in bad faith in terminating him to avoid paying
him the Success Bonus, then you must find for
Plaintiff on this claim. On the other hand, if you
find that (1) Plaintiff resigned on March 20, 1998 or
that (2) Defendant terminated Plaintiff's employment
on March 20, 1998 for reasons other than to avoid
paying him the Success Bonus, then you must find for
Defendant on this claim.
Plaintiff has cited no authority in either New York or the Second
Circuit to support his claim that a jury instruction is deficient because
it does not define the term "resignation." The term "resignation" is a
commonly-used term within the comprehension of the ordinary person.
Moreover, the Court set forth the parties' alternative arguments as to
what occurred on March 20, 1998, specifically distinguishing between
resignation and termination and thereby putting the term "resignation" in
context. Under these circumstances, the Court concludes that its
instructions adequately provided the jury with the law it needed to
determine whether Plaintiff had resigned or was terminated from his
employment on March 20, 1998. Accordingly, the Court denies Plaintiff's
motion for a new trial on this ground.
2. Evidence about Plaintiff's performance
Plaintiff asserts that it was error for the Court not to allow him to
testify about his performance.*fn1 Defendant stipulated, prior to
trial, that there was nothing about Plaintiff's performance that would
provide grounds for termination for cause. In fact, Defendant's sole
defense to Plaintiff's claims was that Plaintiff resigned his position.
Therefore, any evidence regarding Plaintiff's performance was irrelevant
and possibly would have confused the jury. Accordingly, the Court denies
Plaintiff's motion for a new trial on this ground.
C. Issues for the Court's determination
1. Plaintiff's claim for payment under Defendant's Executive
In his third cause of action, Plaintiff alleges that his employment
with Defendant was terminated "with the specific intention to interfere
with Plaintiff's attainment of his rights to benefits" under, among other
things, the severance policy.
Defendant's Executive Severance Policy is
an employee benefit plan covered by ERISA. Section II of the Severance
Policy provides that
[d]uring the period that this Severance Policy is in
effect, if an Employee's employment is terminated by
either of the Companies other than for Cause or in the
event the Employee resigns by reason of a Constructive
Termination other than due to death or permanent
disability, the Companies shall pay to such Employee a
severance benefit equal to one (1) months' salary (at
the Employee's then effective base salary rate) for
each year of complete service with the Companies
(including those years of service with the Companies
completed prior to adoption of the Severance Policy
and including years of service with Schrader Inc. and
Bridge Products, Inc.). The minimum severance payable
hereunder shall be three (3) months' salary and the
maximum severance payable hereunder shall be twelve
(12) months' salary. Such benefit shall be paid on a
monthly basis following such Termination or
See Executive Severance Policy, attached to Stipulation as Exhibit 1, at 2.
Plaintiff claims that the Court need only find that he did not resign
to find him eligible for benefits under this policy since, by its terms,
it obligates Defendant to pay him unless he was terminated for "cause" or
resigned due to a "constructive termination."
Plaintiff's premise is correct; if the Court were to conclude that
Plaintiff did not resign, he would be entitled to receive benefits under
Defendant's Severance Policy. However, having reviewed the record in its
entirety, the Court finds that, although Plaintiff testified that he did
not resign, the testimony of Giudice, Wiggins, Prouty and LaPointe to the
contrary is more persuasive. Therefore, the Court holds that Plaintiff
has failed to establish, by a preponderance of the evidence, that he is
entitled to any benefits under Defendant's Executive Severance Policy.
Accordingly, the Court dismisses Plaintiff's third cause of action.
2. Plaintiff's claim for prejudgment interest with regard to
Defendant's allegedly delayed payment to Plaintiff of the
liquidated value of his vested options in 1,667 shares of
Plaintiff contends that he is entitled to prejudgment interest on the
liquidated value of his vested options in 1,667 shares of common stock
because Defendant inexcusably delayed paying him this amount. Defendant
disagrees, arguing that any delay in its payment to Plaintiff for his
vested stock options was due to Plaintiff's failure to execute the
required documentation, which would have entitled him to receive the
The crux of the parties' disagreement centers on the meaning of the
Letter of Transmittal attached to the May 8, 1998 letter that Defendant's
Vice President and CFO, Gary M. Cademartori, sent to Plaintiff. In his
letter, Cademartori advised Plaintiff that in order for him to receive
the $6.0472 per share cash payment he had to "(A) deliver the enclosed
Letter of Transmittal, appropriately completed to the Company and (b)
surrender such Shares by delivering the stock certificate(s) (which,
prior to the Merger, had evidenced such Shares) to the Company."
See Letter of Gary M. Cademartori to Mark R. Edwards, dated May 8, 1998,
attached to Stipulation as Exhibit 3, at 1. The relevant part of the
Letter of Transmittal states that
[t]he undersigned hereby represents, warrants and
agrees with the parties to the Merger Agreement that
(i) the undersigned acknowledges that it has received
and read a copy of the Merger Agreement, together with
all schedules and exhibits thereto, (ii) the
undersigned has full power, right and authority to
vote, submit, sell, assign and transfer the Shares
represented by the enclosed certificate without
restriction, (iii) the transfer of the Shares does not
violate, conflict with or result in a breach of any
provision of any law, statute, rule, regulation,
order, permit, judgment, ruling, decree or other
decision of any court or governmental entity or agency
binding on the undersigned, (iv) the undersigned owns
the Shares represented by the enclosed certificates
free and clear of any liens or encumbrances, (v) the
undersigned has not sold, transferred or otherwise
disposed of or in any way encumbered any of such
undersigned's Shares prior to the date hereof, (vi)
this Transmittal has been duly executed and delivered
by the undersigned and constitutes the valid and
binding obligation of it and is enforceable against it
in accordance with the terms hereof, (vii) as of the
date hereof, there are no claims, charges,
complaints, actions, causes of action, suits,
proceedings, demands, costs, losses, damages,
liabilities or expenses which the undersigned has
asserted or could, to the best knowledge of the
undersigned, assert against the Company or any Company
Subsidiary and their respective officers,
directors, employees, legal advisors or agents
connected with or arising out of any act or omission
of the Company or any Company Subsidiary or their
respective officers, directors, employees, legal
advisors or agents except for claims for unpaid
salary, accrued vacation pay, accrued benefits and
similar matters and (viii) the undersigned releases,
remises and acquits and forever discharges each of the
Company, any Company Subsidiary, the Merger Sub, the
Parent, the corporation surviving the Merger, and each
of their respective officers, directors and employees
from any and all actions, liabilities, charges,
complaints, causes of action, suits, proceedings,
demands, costs, losses, damages, expenses and all
other claims whatsoever (whether in contract, tort,
pursuant to statute, known or unknown) of whatever
nature and kind arising against such party by the
undersigned (including pursuant to any appraisal
rights proceedings) (collectively, "Claims"), based in
whole or in part on any matter occurring on or prior
to the date hereof, it being understood that this is
intended to be a general release and the undersigned
intends to be legally bound by the same.
See Letter of Transmittal, attached to Stipulation as Exhibit 3 (emphasis
Whether Plaintiff is entitled to prejudgment interest on this claim is
a very close call. Certainly, Defendant's requirement that Plaintiff
surrender the stock certificates prior to receiving the liquidated value
of the shares which those certificates represented and that he warrant
that he owned the shares is reasonable and prudent business practice.*fn3
is problematic, however, is the two seemingly contradictory releases
contained in the Letter of Transmittal attached to Cademartori's letter.
Paragraph (vii) appears to exempt claims for "unpaid salary, accrued
vacation pay, accrued benefits and similar matters" from the release
sought in that paragraph. However, paragraph (viii) requires a release of
all claims "based in whole or in part on any matter occurring on or prior
to the date hereof[.]" Given the explicit language of paragraph (viii)
that it was "intended to be a general release," the Court finds that it
was reasonable for Plaintiff to conclude that if he signed the Letter of
Transmittal he would be releasing Defendant from any and all claims that
he might have. Since Plaintiff had already filed the present action, he
could not sign the general release unless he decided not to proceed with
this action or, at the very least, not to proceed with his claims
predicated on his entitlement to the Success Bonus and to the benefit
included in the Executive Severance Policy. Moreover, Defendant has not
demonstrated what relationship, if any, there is between Plaintiff's
entitlement to receive the liquidated value of his vested stock options
and any other claims he might have against Defendant, which would warrant
requiring Plaintiff to sign a general release. Accordingly, the Court
finds that Plaintiff is entitled to prejudgment interest on the
liquidated value of his vested stock options from May 8, 1998, the date
of Cademartori's letter, until August 11, 2000, the date that Defendant
sent Plaintiff's counsel a check for the liquidated value of these vested
stock options. Such interest is to be calculated at the rate of nine
percent per annum as set forth in New York Civil Practice Law and Rules
§ 5004. See N.Y. C.P.L.R. § 5004 (McKinney 1992).
3. Plaintiff's claim for prejudgment interest and attorneys' fees
in connection with Defendant's alleged delay in paying Plaintiff
for his unreimbursed business expenses
Defendant contends that any delay in reimbursing Plaintiff for his
business expenses was due to Plaintiff's delay in supplying the
documentation necessary to support his claim for these expenses.
Moreover, Defendant claims that business expenses are not wages under
Article VI of New York Labor Law and, therefore, there is no basis
for Plaintiff's claim for attorneys' fees.
To support its position that it was Plaintiff's inaction that caused
the delay in his receiving reimbursement for his business expenses,
Defendant notes, first of all, that Plaintiff never requested
reimbursement for these expenses while he was employed. In addition,
Defendant points to the fact that on July 30, 1998, it requested
information and documents with respect to Plaintiff's claim for
approximately $5,000 in expenses and disbursements. On September 21,
1998, Plaintiff responded, stating that "as the specific items or dollar
amounts cannot be ascertained, plaintiff will supplement this response as
information is made available." Moreover, at Plaintiff's deposition on
May 11, 1999, Plaintiff's counsel stated that "[w]ith respect to the
claim of $5,000 in disbursements that we have not already — we will
give you a description of the folder containing documentation that
[Plaintiff] needs to detail his claim for disbursements. In addition, we
to the extent we currently can without those records. That will be done
Following his deposition, Plaintiff was provided with access to his old
Plaintiff apparently located some documents that were
related to this case. Defendant sent originals of these documents to
Plaintiff's counsel on June 3, 1999. On November 4, 1999, a copy of
these receipts, the originals of which had already been produced, were
offered to Plaintiff's counsel.
On June 5, 2000, Defendant's counsel wrote to Plaintiff's counsel
advising him that some of the claimed expenses had been previously
reimbursed to Plaintiff and asking for additional detail on some of the
other claims. As to the claims not in dispute, Defendant's counsel
offered to issue a check in the amount of $2,904.39. On June 26, 2000,
Plaintiff's counsel responded, acknowledging that some of the claims were
duplicates and requesting additional reimbursements. On August 11,
2000, Defendant sent a check covering the expenses to Plaintiff's
counsel. Plaintiff never cashed this check. On December 5, 2001, at the
request of Plaintiff's counsel, Defendant reissued the check to
Plaintiff asserts that unreimbursed business expenses constitute wages
under New York Labor Law and that Defendant had a duty to expedite
processing and payment of these expenses. Plaintiff asserts that initially
Defendant's counsel agreed to process Plaintiff's claim for unreimbursed
expenses informally, but that, after this proved unworkable, Plaintiff
was required to process this claim through litigation. Although
Plaintiff concedes that Defendant offered to reimburse his business
expenses in a letter dated August 11, 2000, he asserts that this letter
contained a general release of such claims, which he was unwilling to
provide. According to Plaintiff, Defendant did not unconditionally tender
reimbursement of his business expenses until December 5, 2001.
Therefore, Plaintiff seeks prejudgment interest from the date of his
separation until that date.
Under § 190 of New York Labor Law, the term "wages" is defined as
"the earnings of an employee for labor or services rendered, regardless
of whether the amount of earnings is determined on a time, piece,
commission or other basis. The term `wages' also includes benefits or
wage supplements as defined in section one hundred ninety-eight-c of this
article, . . ." N.Y. Labor Law § 190(1) (McKinney 1986 & Supp.
2002). Section 198-c of New York Labor Law defines "benefits or wage
supplements" to include "reimbursement for expenses; health, welfare and
retirement benefits; and vacation, separation or holiday pay." N.Y.
Labor Law § 198-c(2) (McKinney 1986 & Supp. 2002). However, §
198-c, which makes it a misdemeanor for an employer to "neglect or
refuse to pay the amount or amounts necessary to provide such benefits
or furnish such supplements within thirty days after such payments are
required to be made," also provides that "[t]his section shall not apply
to any person in a bona fide executive, administrative, or professional
capacity whose earnings are in excess of six hundred dollars a week."
N.Y. Labor Law § 198-c(1), (3) (McKinney 1986 & Supp. 2002).
Although Labor Law § 190 and § 198-c together define "wages" to
include reimbursement of expenses as a general matter, this general rule
does not apply to the present case. Rather, because Plaintiff is an
executive, the exception in § 198-c(3) applies and, therefore, as it
Plaintiff, reimbursement of expenses is not included in the
definition of wages under § 190. See Cohen v. ACM Med. Lab., Inc.,
178 Misc.2d 130, 135 (Sup.Ct. Monroe County 1998) (holding that with
respect to separation pay, "[i]f the prohibition in Section 198-c applies
due to the person being in this exempt administrative class, then
separation pay is not included in the definition of wages under Section
190"), aff'd without opin., 265 A.D.2d 839 (4th Dep't 1999); Gerzog v.
London Fog Corp., 907 F. Supp. 590, 603 (E.D.N.Y. 1995) (dismissing the
plaintiff's claim for accrued vacation pay under § 198-c on the ground
that the statute explicitly provides that it does not apply to persons in
executive positions whose earnings were more than $600 a week).
Accordingly, the Court holds that Plaintiff's claim for unreimbursed
business expenses does not arise under Article VI of New York Labor Law
and, therefore, the Court dismisses Plaintiff's claim for attorneys' fees
with respect to his claim for reimbursement of these expenses.
With regard to Plaintiff's claim for prejudgment interest on the
reimbursement amount, the Court finds that any delay that occurred in
Plaintiff receiving payment was the result of his failure to provide
Defendant with the appropriate information needed to reimburse him for
these expenses in a timely manner. Accordingly, the Court dismisses
Plaintiff's claim for prejudgment interest with respect to the
reimbursement for his business expenses.
4. Plaintiff's claim for prejudgment interest and attorneys' fees
in connection with his claim for payment for unused vacation time
Defendant contends that any delay in its payment to Plaintiff for his
unused vacation time was due solely to Plaintiff's refusal to release any
future claims for vacation pay in exchange for payment. Mr. Stewart, who
did not have any records that indicated how much unused vacation time
Plaintiff had accrued, testified at trial that when he talked to
Plaintiff in March 1998, he asked him how many vacation days he had not
used. At his deposition, Plaintiff testified about this conversation: "I
believe he started asking about vacation, and I said, `listen,' you
know, `you can pay me vacation if you want, do whatever you want, because
I need help.'" According to Defendant, the first indication of the
number of days for which Plaintiff was seeking payment occurred in
Plaintiff's supplemental interrogatory responses filed on March 22,
2000. On June 5, 2000, Defendant's counsel wrote to Plaintiff's counsel
asking for more information about the claim for eleven days of unused
vacation time. On June 26, 2000, Plaintiff's counsel advised Defendant's
counsel that although Plaintiff could "find no written documentation"
with regard to the amount of vacation to which he was entitled, his
recollection was that it was eleven days. On August 11, 2000, Defendant
sent a check, which included the $2,182.90 for unused vacation time, to
Plaintiff's counsel and requested a release. Plaintiff never cashed the
check. On December 5, 2001, at the request of Plaintiff's counsel,
Defendant reissued the check.
Plaintiff, on the other hand, testified at trial that on March 20,
1998, Mr. Stewart called and told him that he would be paid for fifteen
days of unused vacation time as part of his final pay check. See Trial
Tr. at 8. Plaintiff claims that Defendant did not unconditionally tender
reimbursement for his unused vacation time until December 5, 2001. In
addition to prejudgment interest from the date of his separation to
December 5, 2001, Plaintiff seeks costs and liquidated damages under New
York Labor Law § 198 for Defendant's failure to
timely pay him for the unused vacation time.
Although generally vacation pay would be included within the definition
of "wages" for purposes of New York Labor Law, in this particular case
because Plaintiff is an executive it is not. See Gerzog, 907 F. Supp. at
603. Therefore, the Court concludes that Plaintiff's claim for vacation
pay does not arise under Article VI of New York Labor Law and, thus, there
is no basis for his claim for attorneys' fees. Moreover, because
Plaintiff did not have an employment contract, but rather was an at-will
employee, he possesses no entitlement to vacation pay. In Grisetti v.
Super Value, Inc., 189 Misc.2d 800 (Supreme Court, Appellate Term, 2d
Dep't 2001), the court stated that "[t]here is a distinction between
vacation pay and vacation or personal time. While vacation pay is
considered additional compensation for labor, the right to receive
vacation or personal time is waivable." Id. at 801 (citations omitted).
The court explained further that "[a]ny rights incidental to vacation
time, such as the option to receive payment in lieu thereof or the
carrying over of same to the following year, is dependent on the
employment contract." Id. Since the plaintiff had not established that
his employment contract required his employer to pay him for unused
vacation time, the court found that he was not entitled to receive
payment for such time.
Plaintiff attempts to distinguish Grisetti by arguing that Defendant
has never asserted that he was not entitled to payment for unused
vacation time. While this may be true, it is Plaintiff's burden to
establish that Defendant was required to pay him for such time in order
to state a claim against Defendant for failure to do so in a timely
manner. Plaintiff has not even attempted to make such a showing.
Therefore, despite the fact that Defendant paid Plaintiff for eleven days
of unused vacation time, Defendant was under no contractual obligation to
do so, and, thus, the Court finds that Plaintiff is not entitled to
prejudgment interest on this amount. Accordingly, the Court dismisses
After carefully considering the record in this matter, including the
evidence adduced at trial and the parties' post-trial briefs, and the
applicable law, and for the reasons stated herein, the Court hereby
ORDERS that Plaintiff's motion for judgment as a matter of law with
respect to those issues that were tried to the jury is DENIED in its
entirety; and the Court further
ORDERS that Plaintiff's motion for a new trial is DENIED in its
entirety; and the Court further
ORDERS that Plaintiff's claim for payment under Defendant's Executive
Severance Policy is DISMISSED; and the Court further
ORDERS that Plaintiff's claim for attorneys' fees in connection with
the payment of the liquidated value of his vested options in 1,667 shares
of common stock is DISMISSED; and the Court further
ORDERS that Defendant is to pay Plaintiff prejudgment interest on the
liquidated value of his vested options in 1,667 shares of common stock at
a rate of nine per cent per annum for the period from May 8, 1998 until
August 11, 2000; and the Court further
ORDERS that Plaintiff's claim for prejudgment interest and attorneys'
fees in connection with his claim for unreimbursed business expenses is
DISMISSED; and the Court further
ORDERS that Plaintiff's claim for prejudgment interest and attorneys'
connection with his claim for payment for eleven days of unused
vacation time is DISMISSED; and the Court further
ORDERS that the Clerk of the Court is to amend the judgment in
accordance with this Memorandum-Decision and Order and close this case.
IT IS SO ORDERED.