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Wexler v. Allegion (UK) Limited

United States District Court, S.D. New York

March 9, 2017

ELIAS WEXLER, ZERO INTERNATIONAL REALTY CO., INC., ZERO OHIO, LLC, ZERO AMERICA LATINA, LTD., ZERO ASIA PACIFIC LTD., and ZERO EAST, LTD., Plaintiffs,
v.
ALLEGION (UK) LIMITED and SCHLAGE LOCK COMPANY, LLC, Defendants.

          OPINION AND ORDER

          Edgardo Ramos, U.S.D.J.

         Elias Wexler (“Wexler”), Zero International Realty Co., Inc. (“Zero Realty”), Zero Ohio, LLC (“Zero Ohio”), Zero America Latina, Ltd. (“Zero Latina”), Zero Asia Pacific Ltd. (“Zero Asia”), and Zero East, Ltd. (“Zero East, ” and collectively, “Plaintiffs”) brought this action against Allegion (UK) Limited (“Allegion UK”) and Schlage Lock Company, LLC (“Schlage, ” and collectively, “Defendants”), alleging a host of state law claims. Now pending before the Court is Defendants' motion to dismiss Counts I, II, III, VII, and VIII of the Complaint. For the reasons discussed below, Defendants' motion is GRANTED in part and DENIED in part. Plaintiffs will be given an opportunity to replead.

         I. BACKGROUND[1]

         Wexler is an entrepreneur and engineer who, for thirty-five years, served as the President and CEO of Zero International, Inc. (“Zero International”), a Bronx company known for creative, effective, and affordable approaches to construction material needs in the acoustical, fireproofing, and door-hardware fields. Compl. (Doc. 2, Ex. A) ¶ 28. Under Wexler's leadership, Zero International expanded its operations from one small factory in the Bronx to an international company, with four factories in the United States, branches all over the country, and sales in thirty-five countries around the world. Id. ¶ 31. Wexler is also the sole shareholder and President of Zero Realty, the majority member and President of Zero Ohio, and the 51% shareholder and President of each of Zero Latina, Zero Asia, and Zero East. Id. ¶¶ 9-13.

         Wexler has been published in many trade magazines and has served as a visiting lecturer at the Pratt Institute of Design, President of the New York Society of Manufacturing Engineers, and President of the New York Critical Manufacturing Sector Coordinating Council. Id. ¶¶ 35- 38. He was a member of the Builders Hardware Manufacturers Association, which advises and writes standards for the American National Standards Institute. Id. ¶ 39.

         In 2014, Defendants expressed an interest in acquiring Zero International. Id. ¶ 42. At all relevant times, Wexler's primary contact for Defendants was Anshu Mehrotra (“Mehrotra”), Allegion's Vice President and General Manager of Commercial Mechanical Business. Id. ¶ 43. In connection with Defendants' acquisition of Zero International, Wexler and Mehrotra discussed Wexler's desire and expectation to continue working in the industry. Id. ¶ 45. The two agreed that Wexler would continue to use his extensive expertise to further Defendants' business interests. Id. Specifically, Mehrotra told Wexler that Defendants would continue to employ him after the acquisition for a minimum of eighteen months and that Wexler would be permitted to retain the title of “‘President Emeritus' of Zero International for life.” Id. ¶ 48.

         Wexler and Mehrotra also discussed Wexler's desire that, following the acquisition, Defendants continue to use Zero Latina, Zero Asia, and Zero East as Zero International's exclusive distributors. Id. ¶ 46. Mehrotra, on behalf of Defendants, agreed that with regard to these three companies, “nothing would change, ” and that they would continue to be the exclusive distributors in their respective geographic regions for products manufactured and sold by Zero International. Id. ¶ 47.

         On or about February 13, 2015, Mehrotra sent Wexler a formal offer of employment upon the closing of Defendants' acquisition of Zero International. Id. ¶ 49. Wexler was offered to join Defendants as “President Emeritus - Zero Group International” with a base annual salary of $190, 000 plus benefits and other financial incentives. Id. ¶ 50. Wexler's job responsibilities were to include: sharing his knowledge of the industry and of Zero International's products and applications with Defendants' team at business meetings and presentations, helping Steelcraft (a company owned by Allegion) comply with acoustical standards, continuing his efforts to include Intumescent (a product produced by Zero International) in the Builders Hardware Manufacturers Association's standards and the National Fire Protection Association's certifications, providing support at Zero International's Bronx facilities on an as-needed and as-requested basis, and engaging and building relationships with international customers. Id. ¶ 52. The offer contained the following provision:

If Allegion involuntarily terminates your employments [sic] without cause prior to August 31, 2016, Allegion will pay you a lump sum equal to the total amount of base salary that would have been paid to you through August 31, 2016 if you had remained employed by Allegion through that date reduced by any amounts of base salary paid to you prior to such date. This lump sum payment shall be made as soon as administratively practicable after your termination of employment date and in no event later than the end of the month following the month in which your employment terminates.

Id. ¶ 51. On February 19, 2015, Defendants acquired Zero International pursuant to an Asset Purchase Agreement (“APA”) executed by Defendants, Wexler, and certain other parties. Id. ¶ 44.

         Wexler worked for Defendants from approximately April 1, 2015 through September 17, 2015. Id. ¶ 53. As part of his duties and at Defendants' request, Wexler attended meetings in New York, throughout the country, and around the world. Id. ¶ 54. Wexler also met regularly with Defendants' employees to discuss Zero International's business and products. Id. ¶ 57. During the term of his employment, neither Mehrotra nor anyone else on behalf of Defendants ever complained to Wexler about his work performance, and Defendants never reprimanded or disciplined Wexler in any way connected with his work. Id. ¶¶ 59-68.

         On or about September 17, 2015, Mehrotra traveled to Wexler's office in the Bronx, accompanied by the head of human resources and two security guards. Id. ¶ 69. Mehrotra abruptly told Wexler that “we're separating” and that he had thirty minutes to pack up his personal belongings and leave the building. Id. ¶ 70. Wexler was humiliated, and he silently collected his belongings. Id. ¶ 72. After meeting briefly with a representative of Defendants' human resources department, Wexler was expelled from the building by two security guards, in plain sight of his coworkers and colleagues, who stared at him. Id. ¶¶ 72-74. Wexler alleges that the spectacle gave those who viewed it the false impression that Wexler had engaged in misconduct and was being terminated for cause. Id. ¶ 75. Later, Wexler discovered that Defendants had also terminated his wife and son-whom Defendants had also employed after acquiring Zero International-in a similarly “public and humiliating” fashion. Id. ¶ 79. Wexler was 65 years old at the time he was fired. Id. ¶ 80.

         On or about September 17, 2015, Defendants sent Wexler a letter concerning his termination. Id. ¶ 81. The letter advised Wexler that he had been terminated as part of a “reduction in force.” Id. However, Wexler alleges that he was actually terminated because of his age and his “old-school” business practices. Id. ¶ 2. In the letter, Defendants agreed to pay Wexler the approximately $175, 000 to which he was entitled, pursuant to his offer letter, because he had been terminated without cause, but only if Wexler first agreed to sign a ten-page contract that included a general release and other conditions affecting his rights. Id. ¶ 81. Wexler refused to sign the contract, and Defendants, in turn, did not pay Wexler the $175, 000. Id. ¶ 82.

         Wexler alleges that Defendants falsely informed prominent members of the acoustical, fireproofing, and door-hardware industries that Wexler's work for Defendants had been unsatisfactory and that Wexler was unworthy of continued employment. Id. ¶ 83. Wexler also alleges that Defendants informed these industry leaders about the manner of his termination, and that these individuals interpreted Defendants' conduct as conveying the fact that Wexler had engaged in misconduct, was being terminated for cause, and was incompetent, dishonest, and unworthy of employment. Id. ¶¶ 83-85. Wexler asserts that Defendants' conduct damaged his reputation, destroyed his future career prospects, and rendered meaningless the title of “President Emeritus.” Id. ¶¶ 86-87. Since being terminated, Wexler has been stripped of his membership on the board of the New York Critical Manufacturing Sector Coordinating Counsel, and can no longer attend meetings and events for the Builders Hardware Manufacturers Association. Id. ¶¶ 90-91. Defendants also refused to use Zero Latina, Zero Asia, and Zero East as their exclusive suppliers and distributors for Zero International products. Id. ¶ 95.

         On February 29, 2016, Plaintiffs brought this action against Defendants in New York State Supreme Court, Bronx County, alleging age discrimination in violation of the New York State Human Rights Law (“NYSHRL”) and the New York City Human Rights Law (“NYCHRL”); defamation; breach of various contracts, including Wexler's employment contract and the oral distributor contracts with Zero Latina, Zero Asia, and Zero East; unjust enrichment; and conversion. Id. ¶¶ 125-183. Plaintiffs seek damages in excess of $10 million, as well as certain declaratory and injunctive relief. Id. at 26-27. On March 28, 2016, Defendants removed the case to this Court on the basis of diversity jurisdiction. Doc. 2. On November 9, 2016, the Court denied Plaintiffs' motion to remand the case back to state court. Doc. 36.

         Now pending before the Court is Defendants' motion to dismiss Plaintiffs' claims for age discrimination (Counts I and II); defamation (Count III); breach of the distributor contracts with Zero Latina, Zero Asia, and Zero East (Count VII), and conversion (Count VIII).[2] After Defendants filed their motion, Plaintiffs voluntarily ...


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