The opinion of the court was delivered by: Feinberg, Circuit Judge
Submitted: September 18, 2008
Before: FEINBERG, WALKER, and LIVINGSTON, Circuit Judges.
Plaintiff Joseph J. Giordano worked as the Chief Financial Officer (CFO) of Thomson Industries, Inc. (hereafter "TII" or "the company") from September 2000 to October 2002. During that period, while TII was in the process of selling itself to defendant Danaher Corporation ("Danaher"), Giordano made some inquiries as to whether he would receive some sort of payment for his role in the sale. Some at TII perceived his behavior as counterproductive, and his employment was terminated. A little over a year later, Giordano brought this suit in the United States District Court for the Eastern District of New York. After a bench trial before Judge Joanna Seybert, the judge ruled in favor of TII and the two other defendants. We affirm.
TII manufactured a number of products, including ball bearings. The company was founded by the father of defendant John Thomson, Jr.; at the time of the sale to Danaher, Thomson was TII's sole shareholder.
Giordano started working on TII matters while he was a partner at Coopers & Lybrand. In 1993, Giordano left that firm and began working for TII as a part-time consultant.
By 1999, it had become clear that TII was struggling financially. In early 2000, the company began discussions with investment bankers to consider options for turning the company around, since there were worries that the company would break some of the covenants in its lending agreements. The options included a sale of the company, a recapitalization and a restructuring of its debt. TII eventually selected JPMorgan Chase ("JPMorgan") to represent it in these matters.
In 1999, as part of its turnaround efforts, the company hired Dr. Alex Beavers as its new CEO. Beavers, in turn, terminated Bartlett Polster, who was then the company's CFO. Polster had worked full time and was paid roughly $170,000 per year. In May 2000, Giordano was given the duties and title of the "acting CFO." In August 2000, Beavers asked Giordano to become the CFO, in part because (as Senior Corporate Vice President of Human Resources Patrick Mazzeo testified) it would look better to the people involved in the effort to sell or recapitalize the company to have an employee as CFO (as acting CFO, Giordano was technically still a consultant). Giordano told Beavers he would accept, but only if the role was part time and temporary. On this basis, Giordano became the company's CFO on September 1. He was paid a yearly salary of $250,000.
As indicated above, defendant Thomson eventually decided to sell the company to Danaher. Giordano assisted in the transaction by helping TII negotiate with its lenders. The company had defaulted on a loan payment and on a loan covenant. When the company defaulted, the lenders had the right to obtain a variety of extra payments. Giordano, working with Bruce Treen from JPMorgan, persuaded the lenders to waive their rights to those additional payments. This work was done mainly through conference calls; Giordano testified that these took place roughly once a week (sometimes more, sometimes less). Giordano also initially fielded requests for due diligence information, but eventually he delegated this duty to a subordinate. Although Giordano claims that his work with the lenders went beyond what a CFO would normally be expected to do, Treen and Anthony Garvin (another JPMorgan banker) disagreed, opining that such work would be within the normal scope of a CFO's duties.
At trial, the deal participants disagreed regarding whether Giordano was, in general, a competent CFO. Treen testified that Giordano generally "fulfilled the role of CFO." By contrast, one Danaher employee testified that Giordano was essentially not doing his job and "not proficient in the financial matters of the business other than at the very basic level." Similarly, Richard Cummins, an advisor to defendant John Thomson, testified that Giordano "didn't function as a CFO" and failed to "straighten out the accounting department." Garvin stated that Giordano did all the work normally expected from a CFO but that he was "somewhat less involved than we would have liked to have seen for a company in its circumstances."
Defendants also note that, according to their calculations, Giordano worked roughly 6.2 days per month between December 2000 and October 2002. In addition, about one month before the transaction closed, Giordano was away on vacation.
At some point, Giordano became aware that Danaher was not planning on keeping him as an employee after the purchase. Thereafter, he made several inquiries regarding whether he would receive an additional payment, beyond his salary, for his role in the sale of the company. Some transaction participants thought he was threatening to block the sale if he was not paid the additional money; at trial Giordano denied making such threats. This process culminated in a dinner between Cummins and Giordano that took place on October 14, 2002, shortly before the transaction documents were signed. As Cummins remembered it, Giordano asked for $1 million or more, and Cummins said that Thomson would never approve a payment in that range. Cummins also testified that Giordano threatened to "torpedo the closing" by refusing to sign necessary documents if he was not paid. Cummins also testified that he then called the law firm working on TII's behalf to tell it that TII was going to have to fire Giordano. Giordano testified that he did not threaten to block the deal, and that Cummins agreed to recommend a payment of $600,000.
On October 16, 2002, Giordano went to a "pre-closing," at which various participants were signing papers for the sale to Danaher. While there, Giordano signed all of the documents put in front of him except a document under which he would have released all of his claims against Thomson, TII and Danaher.
Under the release, Giordano would receive a $15,230 severance payment. By the next day, he still ...