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Cappiello v. ICD Publications

August 19, 2010

ROBERT N. CAPPIELLO, PLAINTIFF,
v.
ICD PUBLICATIONS, INC. AND DAVID PALCEK, DEFENDANTS.



The opinion of the court was delivered by: Spatt, District Judge.

MEMORANDUM OF DECISION AND ORDER

The plaintiff Robert N. Cappiello ("the plaintiff" or "Cappiello") has brought this action for: (1) breach of an Employment Agreement against the defendant ICD Publications, Inc. ("ICD") and, (2) tortious interference with a contract against the defendant David Palcek. The plaintiff seeks compensatory and punitive damages and attorneys' fees.

The plaintiff contends that this case is more serious than a breach of contract action and has elements of wrongful, wilful and malicious conduct on the part of the defendants. After hearing the testimony and the presentation of the evidence, the Court disagrees. This is a case involving solely an alleged breach of an employment agreement, as will be clear from the evidence adduced at the trial and set forth in this decision.

I. BACKGROUND

This civil action is in the Federal Court as it arises from a controversy between citizens of different states, and the amount in controversy exceeds $75,000, exclusive of costs and interest. See 28 U.S.C. § 1332(A). Here, the plaintiff is a citizen of New York residing in Wantagh, New York, and the defendant ICD was and is an Illinois corporation with a principal place of business in Setauket, New York. The defendant David Palcek ("Palcek") is a resident of the State of Illinois. Palcek was and still is the President and Chief Executive Officer of ICD.

The plaintiff, now 52 years of age, had a career in trade shows prior to entering into this agreement with ICD. On June 11, 2007, the plaintiff signed an Employment Agreement with ICD, which is the major subject matter of this lawsuit. In essence, the plaintiff contends that he was terminated on January 31, 2008 without cause and that the defendant ICD is responsible for damages for breach of contract. He also alleges that the defendant Palcek is liable for tortious interference with the contract.

In opposition, the defendant ICD denies that it breached the Employment Agreement and, contends that the plaintiff was discharged for cause, namely, acts of dishonesty and disloyalty. In addition, the defendant Palcek denies that he is liable for tortious interference with the Employment Agreement.

II. THE EMPLOYMENT AGREEMENT

On June 11, 2007, the plaintiff Robert Cappiello entered into a written employment agreement with ICD Publications, Inc. ("The Agreement"). The term of The Agreement was slightly less than three years, commencing on June 11, 2007 and terminating on June 1, 2010 (the "Expiration Date"). The plaintiff's position, by the terms of The Agreement, was "Vice President, Conferences and Special Event." As to his position and duties, the agreement provided:

During the Employment Period, Employee shall serve as Vice President, Conference and Special Events, and shall render such sales, marketing, and other services to the company as to the Company's President may from time to time direct. Employee shall devote Employee's best efforts and Employee's full business time and attention (except for permitted vacation periods, leaves of absences, and periods of illness or other incapacity) to the business and affairs of the company, and Employee shall report to the President.

The plaintiff's compensation, as set forth in The Agreement was a salary of $210,000 per year. As to commissions, the Agreement provided:

Employee shall be entitled to commissions (the "Commissions") based on performance, at a schedule to be determined upon the starting date (above). However, it is the intent of the Employer to design a commission program which will reach $60,000 annually, based on performance of the Employee in achieving additional net sales for the Company.

In addition, the Agreement provided for health insurance and disability insurance, as follows:

In addition to the salary and commissions payable to Employee, Employer shall be entitled to the following benefits.

Health insurance and disability insurance as outlined in the ICD Employee Handbook. Insurance is subject to employee contributions and to starting dates as per Company policy. Also outlined in the ICD Employee Handbook are benefits including, but not limited to, sick days, personal days, vacation days, etc.

The first 90 days of employment shall be considered probationary, with no health insurance provided in the initial 90 days.

Crucial to the decision in this case, is the termination for cause provisions. The Agreement provides that the employment period shall terminate prior to the date set forth in The Agreement, "upon written notice by the Company that it is terminating the Employment Period for Cause." In the Definition portion of The Agreement, "Cause" is defined, as follows:

Definitions.

"Cause" means the commission of a felony or a crime involving moral turpitude or the commission of any other act involving dishonesty, disloyalty or fraud with respect to the Company.

Whether there was "Cause" to terminate the plaintiff on January 31, 2008 because of his "dishonesty" and/or "disloyalty" is the material issue in this case.

III. THE TRIAL

A. The Plaintiff's Case

The plaintiff Robert Cappiello is 52 years of age. He is married and has three children and has two homes, in Wantagh, Long Island, and a bed and breakfast in North Conway, New Hampshire. He is a graduate of Hofstra University. He previously worked for publishing companies. His last employer, prior to ICD, was Reed Elsevier Co., the largest trade show producer in the world. Cappiello explained that the purpose of a trade show is "to get a group of like manufacturers together with their customers who can see new product and in many cases buy that product." (Tr. at 35)*fn1. Cappiello worked at Reed Elsevier for almost five years and resurrected their hardware show. While there, he increased their profit by 247 percent, won awards in the trade show industry, and had articles published about him.

In March 2007, Cappiello was approached by Ian Gittlitz, who was then the President and CEO of ICD, about coming to work for ICD and to start a trade show and conference division for their company. According to the plaintiff, he left Reed Elsevier to work for ICD to launch a trade show division.

In April 2007, Cappiello received a "Preliminary Proposal Sheet" (Pltf's Ex. 4), which stated, among other things, that his title would be "ICD Vice President, Conferences and Trade Shows;" his compensation shall be a $210,000 base salary, with customary benefits, and, in addition, a performance-based commission designed to reach $60,000 in the first full year of employment; his responsibilities shall be changed periodically and may change between ICD's Hospitality and Retail publishing groups; and he would be responsible for a new Trade Show and Conference Division.

As stated above, The Employment Agreement at issue was signed on June 11, 2007. The essential terms have been previously described. In particular, and material to the issues in this case, cause for termination is defined, in part as "the commission of any other act involving dishonesty, disloyalty, or fraud with respect to the company." ICD printed articles about the plaintiff's hiring. The plaintiff started working at ICD on June 11, 2007, the date The Agreement was signed. He worked on various projects. Shortly thereafter, in late June 2007, Ian Gittlitz was terminated, allegedly for stealing money from the company. David Palcek was to be the President of the Company and Cappiello was to be the Interim Group Publisher of the hotel magazines.

Following the termination of Gittlitz, as Interim Publisher, Cappiello coordinated some events of the roundtable think tank, which is a small event. When he was asked who he was loyal to, the plaintiff responded "to ICD." Jay Schultz, who was formerly the Publisher of the Hotel Business Magazine, returned to work for ICD, and became the person in charge of the group of magazine conferences. After Schultz returned to the company, Cappiello did "a little of this and a little of that," including making hotel reservations, ordering coffee and several months of ad hoc tasks. He and another man also designed a customer relationship management system. He also planned a party in Miami Beach for Cindy Evans, among many other tasks. Cindy Evans was the Vice President of ICD and a stockholder. Cindy Evans' proper name is apparently Cynthia Evans.

In August 2007, Schultz asked Cappiello to write the 2008 Editorial Calendar. Within a week or two, he submitted several versions of the Editorial Calendar to Schultz, who never gave him any feedback. As time went on, the plaintiff did other work on the Editorial Calendars, including creating a "sales sheet" (Pltf's Ex. 34). He also worked on a "mission statement" for magazines and the Green Book, which is an annual directory of services and providers for the hotel hospitality industry produced by ICD. Cappiello testified at length with regard to some of the other work he did at ICD. This included a C-Level (High Level) summit; sales calls to Starwood Properties, with the exchanges of e-mails and phone calls; a sales sheet for Electronic Marketing; a presentation to the Wyndham Hotel; negotiations with John Harnack of Hunter Douglas with regard to digital advertising, including a proposal for Harnack by the end of January 2008; and a Roundtable presentation.

In addition, in November 2007, Cappiello was in charge of a trade show in New York City in the Javits Convention Center involving the hotel/motel business, including being in charge of physically setting up the ICD booth. He made sure the booth was manned and spent a lot of time in the booth. This was to be a problem for him in later times. On December 14, 2007, the plaintiff had a meeting with Palcek and Cindy Evans who advised him that he was spending too much time in the booth and not engaged enough with the customers. In that meeting, the plaintiff raised the subject of the lack of his defined role with the company; his concern that he was not doing trade shows - the reason he came to the company; and his future with the company. He realized that he had to earn substantial money in order to justify his salary and that it might not be economically feasible for him to continue with the company after his employment term expired. Cappiello told Palcek and Evans that while he needed a clearer defined role, he intended to fulfill his contract with ICD.

On January 31, 2008 at about 4 pm at the conference room at ICD headquarters in East Setauket, Cappiello was fired. Present at this meeting was Palcek, Schultz and Peter Giannetti. Palcek told him that he felt he had not been honest with him about contacting one Beth Blake, a former co-worker with the plaintiff at Reed Elsevier Co. However, the plaintiff testified that he had called that woman several times and did speak to her. In addition, Palcek gave the plaintiff a memo that was written to him from Bill McLaughlin, an editor of magazines for ICD. Previously, the plaintiff had a conversation with McLaughlin at the Christmas party at which time the plaintiff indicated to him that he was unhappy working at ICD because he was hired to do "big things" like big trade shows and make significant revenues for ICD. In doing so, he himself would be rewarded with significant income. However, this was not happening. He also told McLaughlin:

I felt bad for the company that they had this big expense but were not giving me an opportunity to make the kind of revenue for the company. And I couldn't continue to do these small things for the publishing division because it would never come up with the revenue that ICD needs to just pay my contract, let alone to make profits on it. So I felt bad for the company in that regard.

I also felt bad because I couldn't make the kind of money that I was promised in enticing me away from a very good job, and I thought my career was being damaged in the process.

So I thought everyone was losing. ICD was losing and I was losing. (Tr. at 215, 216).

Cappiello also told McLaughlin that it would be okay if they wanted to "buy me out of the contract" or mediate their management so "we could both walk away happily." If not, he was going to fulfill his contract with ICD in any event.

On January 31, 2008 at the termination meeting, Palcek gave Cappiello a termination letter and a termination agreement. He was advised that if he signed the termination letter, he would receive two months salary, in exchange for waving his right to sue. Cappiello responded that he was not going to sign the separation agreement and was going to sue because there was no cause to fire him. At that point, Cappiello testified that Palcek threatened him.

Q: What was Mr. Palcek's response?

A: He threatened me.

Q: What kind of threat?

A: Two things. He said, one, you won't sue me because things will come out that you don't want out. He also said, you don't want to be a 50-year-old man, out of work, with a bad recommendation from your employer.

(Tr. at 219).

After his discharge from ICD, Cappiello made many attempts to obtain other employment. He prepared a new resumé, which he posted on job seeking websites; he contacted many publishing companies and other prospective employers; he retained a job hunter company; he looked in the newspapers; and, he went on two job interviews. In evidence is an eight page list of jobs that he applied for from a computer printout. (Pltf's Ex. 69). In addition, Cappiello went through new postings every one or two days, spending three or four hours a day responding to job postings. However, as of the time of the trial, he was unable to find a job. He did purchase a small bed and breakfast in North Corning, New Hampshire. Cappiello is still looking for employment.

The subject of off-site offices was raised during this trial. Cappiello testified that Gittlitz told him that he could work in an off-site office up to 5 days per month. He did work in an off-site office several times a month in August, September and October 2007. Cappiello pointed out that other executives at ICD worked at off-site offices, including Palcek and Evans, Andy Luchesi, Stacy Silver, Holly Kaye, and Alan Rolerri. Cappiello testified that he worked at his off-site office and communicated with his staff by phone and e-mail.

As to damages, Cappiello testified to the following monetary losses as a result of the January 31, 2008 termination of The Agreement.

(1) Base salary - $210,000 per year for two years and 121 days $489,616.14

(2) Commissions - a minimum of $60,000 per year for all 3 years $180,000.00

(3) Medical insurance premiums paid $39,425.33

(4) Dental insurance premiums paid $3,545.59 Total Compensatory Damages $712,587.06

On cross-examination, as to commissions, it was elicited from the plaintiff that the words in The Agreement regarding commissions, included, "based on performance of the Employee in achieving additional net sales for the company." Also, it was elicited from Cappiello that his off-site office was not in his home. It was the home of a woman named Michelle Roberts. Further, the terms with regard to his off-site or remote office which were negotiated with Gittlitz prior to signing The Agreement, were not included in the proposal letter or The Agreement.

In addition, as to the meeting with McLaughlin, Cappiello conceded that he called him an asshole.

Portions of the deposition of Cynthia Evans, an ICD co-owner, were read into evidence. She testified that it was the intention of the company that the plaintiff's commission program would reach $60,000 annually. She also conceded that the words "best efforts" do not appear in the Termination for Cause paragraph in The Agreement. In addition, Ms. Evans testified that the plaintiff "was really very engaging and did a good job."*fn2

Q: Do you remember ever hearing about good things Mr. Cappiello did?

A: I heard that when he went on a sales call, he was really very engaging and did a good job.

Q: Were there any other sales calls that Mr. Cappiello went on that you heard he had done a good job?

A: On the call?

Q: Correct.

A. I think Alan told me that he made - - he makes a very good impression, which was exciting to us.

(Tr. at 320, 321.)

When Ms. Evans was questioned about the reason for the plaintiff's termination, she stated: "I think dishonest. Dishonesty." (Tr. at 328). However, she conceded that she did not have any first hand knowledge with regard to his alleged dishonesty. It was Palcek who decided to terminate the plaintiff. "He was in control. He's the head of the company... He was responsible." (Tr. at 331, 332).

Portions of the deposition of James Schultz were also read into the record. Schultz stated that he didn't necessarily have a problem with Cappiello working from an off-site office, but that he probably would have been better off being in the home office. However, in that regard, Schultz conceded that other employees at ICD worked in off-site offices. On his part, he was having trouble motivating the plaintiff to follow through on assigned tasks. However, he testified that the plaintiff's termination was Palcek's call.

Portions of the deposition of David Palcek were also read into the record in the plaintiff's case. Palcek testified that it was the intent of ICD that the commissions for the plaintiff "will reach $60,000 annually." (Tr. at 343). Also, the plaintiff would be entitled to health insurance and disability benefits as outlined in the ICD Employee Handbook. Palcek also testified that the plaintiff was terminated for cause for "dishonesty, disloyalty and not providing best efforts to the company," but not for a felony or a crime involving moral turpitude. (Tr. at 345). He also stated that Cappiello did not engage in fraud, to his knowledge. Significantly, Palcek testified in his deposition that in The Agreement in the paragraphs entitled "term" and "cause" it does not state that the plaintiff can be terminated for not devoting his best efforts.

Q: It doesn't say anywhere in that paragraph that he can be terminated. I'm just asking based upon your review of the paragraph and I will get to the just cause definition in a minute, it doesn't state anywhere in that paragraph that he can be terminated for failing to put his best - -

A: No, it doesn't say that.

Q: I'm not quite finished with my question. I wanted to say it right this time.

A: Okay.

Q: For not devoting his best efforts, isn't that correct?

A: It is not stated in the paragraph, that is correct. * * * * *

Q: Now we are going back to the page we were previously on and I would like you to read the definition of "cause," also capitalized and in quotes, in the definition section to yourself and then I'm going to ask the next question.

A: Just the first paragraph or all of it?.

Q: Just the definition of "cause."

A: All right.

Q: In that definition of cause that you just read, does it say anywhere that Mr. Cappiello can be terminated for failing to devote his best efforts?

A: It is not in that paragraph. (Tr. at 350-352).

In this regard, the Court notes that a review of The Agreement reveals that nowhere does it say that the plaintiff could be terminated for not devoting his best efforts to the job.

Palcek testified in his deposition that Cappiello did commit an act of dishonesty with respect to the company, as follows:

Q: Had Mr. Cappiello committed any act of dishonesty with respect to the company?

A: Yes.

Q: What was that act?

A: As far as dishonesty is concerned, Mr. Cappiello was to contact Reed for a name. It is subject for debate as to whether he did it or not but he never reported back to us that he did and a name wasn't available.

Q: We will get to that.

Do you have any firsthand knowledge as to whether he contacted Beth Blake?

A: No. (Tr. at 352, 353).

Palcek also testified that Cappiello did commit an act of disloyalty; namely, in his conversation with Bill McLaughlin, as follows:

Q: With regard to [disloyalty], what specific acts do you claim substantiate your claim of disloyalty?

A: Rob's conversation with Bill McLaughlin. (Tr. at 353).

Further information concerning the "Beth Blake" or Reed Elsevier Co. incident raised by Palcek and referred to as dishonesty on the part of the plaintiff was furnished in the deposition of Peter Giannetti.

Q: Okay. Let's talk about the person he was going to or was asked to contact.

A: Okay.

Q: Who was that person?

A: Beth Blake.

Q: Where does Beth Blake work?

A: At Reed.

Q: Who asked him to contact Beth?

A: I don't know.

Q: Who knew that he knew someone at Reed named Beth Blake?

A: I did.

Q: How did you know that?

A: Because I have worked with Beth and I know Beth.

Q: Do you know what Beth's position at Reed is or was at that time.

A: Not specifically but she was involved - - like director of marketing and communications. I'm not exactly sure what her title was or is.

Q: What specifically was Mr. Cappiello asked to do?

A: To get a contact name at Home & Garden Television.

Q: Why was Mr. Cappiello asked to do this?

A: I don't know. Because he knew Beth.

Q: You also knew Beth?

A: Yes.

Q: You weren't asked to do this at this time, were you?

A: No.

Q: During this conversation with Beth Blake, tell me what she said to you and what you said to her.

A: I asked if Rob had tried to contact her at any time regarding Home & Garden Television.

Q: And what did she say to you?

A: As I recall, she didn't answer that question.

Q: What did she say next?

A: Nothing and I didn't push the question. * * * * *

Q: When you spoke to Beth, she never explicitly told you that Rob hadn't called her, isn't that correct?

A: There was no answer to my question.

Q: That's not what I'm asking. She never said the words, quote, Rob never called, end quote, isn't that correct.

A: I don't recall those words.

Q: Subsequent to your conversation with Beth, have you ever called her and said: Hey Beth, did Rob ever call you?

A: No; I don't recall that.

Q: So you have never explicitly asked her if Rob called?

A: No. Not that I'm aware of. I don't recall. * * * * *

Q: Did you ever tell Dave that you didn't think Rob called her?

A: I don't recall telling Dave that. (Tr. at 360-365).

The final part of the plaintiff's case was a reading of portions of the deposition testimony of William McLaughlin. In his testimony, McLaughlin related that Home World Business put out an article in about the spring of 2007 called the Players. He and Peter Giannetti were involved in writing this article. It was "a who to watch in the industry type of article." (Tr. at 373). Robert Cappiello was on this list.

With regard to the charges of disloyalty raised by Palchek involving McLaughlin's conversation with the plaintiff, McLaughlin refuted that charge as follows:

Q: Do you think that Mr. Cappiello speaking to you about being unhappy was disloyal?

A: I do not.

Q: What do you define disloyalty as?

A: Actions - - in what context?

Q: Just your general definition of disloyalty.

A: In personal or professional situations?

Q: Just your general definition. Being the historian that you are, what would you ...


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