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Silver Entertainment LLC v. Richard S. Rabin

March 21, 2011

SILVER ENTERTAINMENT LLC,
PETITIONER,
v.
RICHARD S. RABIN, RESPONDENT.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.:

ECF CASE

MEMORANDUM OPINION & ORDER

Petitioner Silver Entertainment LLC ("Silver") is a Delaware corporation with interests in the hospitality and gaming industry. Respondent Richard S. Rabin worked as a managing director at Silver from February 14, 2007, until his termination on January 9, 2009. Pursuant to an employment agreement which contained an arbitration clause, Rabin filed a Demand for Arbitration, requesting, inter alia, a ruling that he was entitled to an additional thirteen months of salary, bonus, and benefits.

On June 1, 2010, the arbitrator -- retired U.S. District Judge John Lifland -- awarded Rabin a total of $30,295.51 ($29,458.88 in damages and $836.63 in interest). On July 12, 2010, Silver filed a petition to confirm the arbitration award. Rabin, however, has filed a motion to modify the award, contending that the arbitrator erred in interpreting the employment agreement. Rabin asks this Court to, inter alia, increase the award to $349,624.38. For the reasons stated below, Rabin's motion to modify the arbitration award will be denied, and Silver's petition to confirm the arbitration award will be granted.

BACKGROUND

On February 14, 2007, Silver entered into an employment agreement with Rabin (the "Agreement") appointing him Managing Director of Hospitality and Gaming for the company. (Bloom Decl. ¶ 2; Ex. A (Employment Agreement) ¶ 2(a)(i)) The Agreement's term provision contains an automatic renewal clause, which reads as follows:

The term of Employee's employment hereunder (the "Term") shall commence as of the Effective Date. Unless earlier terminated under Section 5 of this Agreement, the Term shall continue until one (1) year from the Effective Date (the "Initial Period"). This Agreement shall automatically renew for successive one (1) year terms (each referred to as the "Extension Period") unless either party notifies the other party that this Agreement shall not renew at least ninety (90) days prior to the expiration of the Initial Period or any Extension Period. (Bloom Decl., Ex. A (Employment Agreement) ¶ 1)

Paragraph 5(d) of the Agreement provides:

Employee's employment may be terminated by the Company other than for Permanent Disability or Cause upon written notice to Employee at any time ("Without Cause"). . . . (Id. ¶ 5(d) (emphasis in original))

Paragraph 6(e) of the Agreement addresses the "Effect of Termination by the Company Without Cause":

Upon termination of Employee's employment hereunder by the Company Without Cause, Employee shall be entitled to: (i) a lump sum payment equal to the Employee's Base Salary for the remainder of the current Initial Period or Extension Period, as applicable; (ii) any unpaid portion of any bonuses for prior calendar years; (iii) a pro-rata portion of any bonuses (that Employee otherwise would have been entitled to) for the calendar year in which Employee's termination occurs; (iv) the benefit of any health plan in effect by the Company for the benefit of employees holding similar positions . . . and (vi) accrued and unpaid vacation pay, and unreimbursed expenses. . . . (Id. at ¶ 6(e) (emphasis in original))

On February 14, 2008, the Agreement automatically renewed for another year pursuant to the automatic renewal clause. On or about January 9, 2009, Silver terminated Rabin's employment. (Traflet Decl. ¶ 3) Silver gave no notice of non-renewal under the Agreement, however. (Bloom Decl., Ex. P (Arbitrator's Jun. 1, 2010 Opinion and Award) at 5)

On March 12, 2009, pursuant to an arbitration clause in the Agreement (Bloom Decl., Ex. A (Employment Agreement) ¶ 12(j)), Rabin filed a Demand for Arbitration with the Judicial Arbitration and Mediation Service ("JAMS"). (See Bloom Decl., Ex. I (Demand for Arbitration) at 2, 4) The "overall issue in the dispute [was] whether Richard S. Rabin . . . [was] entitled to any further compensation from [Silver]." (Bloom Decl., Ex. P (Arbitrator's Jun. 1, 2010 Opinion and Award) at 1) To answer that question, the arbitrator was required to resolve a number of ancillary issues, including: (1) what Rabin's salary was under the Agreement; (2) whether the Agreement automatically renewed on February 14, 2009, or whether Silver's January 9, 2009 termination of Rabin's employment precluded renewal; (3) whether the termination of Rabin's employment was "for cause"; and (4) the appropriate amount of damages and interest and other compensation owed to Rabin. (Id. at 1, 3, 4, 13, 14)

On June 1, 2010, the arbitrator issued his Opinion and Award, concluding, inter alia, that: (1) Rabin's annual salary was $250,000 (id. at 5); (2) Silver's January 9, 2009 termination of Rabin's employment precluded automatic renewal of the Agreement (id. 3-5); (3) Silver had not demonstrated that Rabin was terminated "for cause" (id. at 14); and (4) while Paragraph 12(j)(iii) of the Agreement provided that the losing party would reimburse the prevailing party for attorneys' fees and expenses, "no reimbursement [was] warranted," given that neither party could be regarded as having "los[t] the arbitration." (Id.) Because the Agreement had not been automatically renewed, Rabin was entitled to payment only for the days between his termination date (January 9, 2009) and the expiration of the Extension Period (February 13, 2009). This period amounts to 34 days. "34/365ths of $250,000 is $23,287.65."

(Id. at 13) The arbitrator further concluded that Rabin was entitled to a pro-rata portion of his bonus for 2009, "which would be 26.5% of $23,287.65, or $6171.23." Finally, the arbitrator awarded Rabin interest in the amount of $836.63, based on a 2% interest rate, calculated "in view of money market conditions" during the seventeen-month period between January 2009 and June 2010 -- the period that Rabin did not have use of the money awarded. (Id. at 13-15)

In concluding that the Agreement had not automatically renewed on February 14, 2009, the arbitrator found that "had there been no termination of the agreement during its term, the automatic renewal would have been effective, but the termination provisions trump the automatic renewal provisions, in the sense that the failure of Silver Entertainment to preclude automatic renewal did not preclude it from terminating the agreement." (Id. at 5)

On June 15, 2010, Rabin filed a Request for Corrections to Award, pursuant to Rule 24(j) of JAMS' Employment Arbitration Rules & Procedures.*fn1 (See Bloom Decl., Ex. Q (Request for Corrections) at 1, 11) In his Request for Corrections, Rabin raised three issues. Rabin first argued that his right to renewal vested on November 16, 2008 -- 90 days before the Agreement's anniversary date of February 14, 2009. Because Silver had not sent a non-renewal notice to Rabin by November 16, 2008, Rabin contended that he was "entitled to one additional year of salary, bonus and benefits under paragraph 6(e) of the Agreement." (See id. at 2-3 ("The critical point is whether the automatic renewal clause became effective as of 11/16/08 to lock-in a renewal on the contract's anniversary date, 2/14/09. If so, [Rabin] is entitled to one additional year of salary, bonus and benefits under paragraph 6(e) of the Agreement.")).

In his Request for Corrections, Rabin also argued that

(1) he was entitled to $700 in business expenses, $705 in moving expenses, and Cobra health insurance coverage at a cost of $1,979.65 per month;

(2) he had prevailed on the central relief sought, should thus be considered the "prevailing party," and was therefore entitled to attorneys' fees; and

(3) he was entitled to 9% interest, rather than the 2% awarded by the arbitrator.

(See id. at 10-11)

On July 5, 2010, the arbitrator denied Rabin's Request for Corrections. (See Bloom Decl., Ex. T (Arbitrator's Jul. 5, 2010 Ruling) at 1, 4) The arbitrator found that Rabin's arguments "do not suggest any 'computational, typographical or other similar error' by the Arbitrator" and thus were improper under JAMS Rule 24(j). (Id. at 1) (quoting JAMS Rule 24(j)) Rabin simply "disagree[d] with the Arbitrator's interpretation of the Employment Agreement's provisions relating to automatic renewal and termination without cause and the decision as to which one controls when they conflict." (Id. at 1) The arbitrator also discussed and distinguished five New York cases cited by Rabin in his Request for Corrections.*fn2 (Bloom Decl., Ex. T (Arbitrator's Jul. 5, 2010 Ruling) at 2-3)

As to the calculation of damages, the arbitrator concluded that the additional damages "were not proved" and there was thus "no basis for correcting the Award in this respect." (Id. at 3) With respect to Rabin's argument that he was the prevailing party, the arbitrator again noted that Rabin had not alleged a computational, typographical or other similar ...


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