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SWIDER v. HA-LO INDUSTRIES

March 9, 2001

PAUL SWIDER, PLAINTIFF,
v.
HA-LO INDUSTRIES, INC., DEFENDANT.



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

OPINION

Now before the Court is defendant's motion for summary judgment in this employment action. Plaintiff, Paul Swider, a former employee of defendant, HA-LO Industries, Inc. ("HA-LO"), brings this action for breach of contract, promissory estoppel, discriminatory discharge in violation of the New Jersey Law Against Discrimination ("LAD") and fraud. Defendant has moved for summary judgment on all counts of the Complaint.

The Court has considered the submissions of the parties and decided this motion on the papers pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons discussed below, the Court will grant defendant's motion. Plaintiff's Complaint will be dismissed in its entirety, with prejudice.

BACKGROUND

1. Mergers and Acquisitions

In 1997, defendant, a Chicago-based company, acquired NB Specialties, Inc. ("NB"), a Montville, New Jersey-based company that distributed promotional products, such as merchandise bearing a company's name or logo. Defendant was in the same industry as NB. After the acquisition, defendant maintained the Montville office, and employed Caryl and Neil Breithaupt, the former owners of NB. Caryl was hired as the office manager for New Jersey and Neil was hired as Sales Manager, also in New Jersey. Both Breithaupts were given written employment contracts specifying that they would hold those particular positions for five years and that they could only be dismissed for cause.

During this same period, plaintiff was working for Red Sail Merchandising ("Red Sail"), a San Francisco-based company. Plaintiff worked in their Hillside, New Jersey office as regional sales director. Sometime in 1997, plaintiff learned that Red Sail was to be sold to defendant. Herb Levy, Vice President — Northeast for defendant, contacted plaintiff to express defendant's interest in keeping him on after the acquisition. Plaintiff was told that defendant needed his experience to help in developing the New Jersey office. Plaintiff and Levy met several times to discuss plaintiff's employment with defendant. Plaintiff also met with Greg Kilrea, defendant's CFO, for the same purpose.

Defendant offered plaintiff a position as Sales Manager for New Jersey, but did not inform plaintiff of what his specific duties would be. Plaintiff was told that it was not defendant's practice to enter into written contracts with management-level employees.*fn1 At the time of his hiring, plaintiff did not know that Neil Breithaupt was also employed as Sales Manager for New Jersey or that Neil Breithaupt had a written employment contract.

Plaintiff was told that defendant's sales managers were typically expected to make sales, but that he would not be responsible for any sales himself. Swider Dep. 32:11-23.*fn2 Plaintiff was further told by defendant's Chief Operating Officer, Richard Magid, to disregard the comments of a fellow Red Sail employee, Ann Nepo, suggesting that plaintiff would not be Sales Manager after the acquisition. Magid told plaintiff not to worry about Nepo and assured him that defendant did want to hire him. Magid further told plaintiff that he knew the kind of individual Nepo was and that she had previously caused trouble at Red Sail. He suggested that if Nepo became a serious problem, her termination was a possibility. Swider Dep. 101:18-104:12.

Notwithstanding the offer from defendant, plaintiff did make a limited inquiry regarding other possible employment. Plaintiff's efforts in that regard were, however, relatively few and unfocused. He did not send out his resume or take any action beyond "networking and talking to people." He had no actual interviews. Swider Dep. 35:3-36:3. Tom McNulty, a friend of plaintiff and then-client of Red Sail, invited plaintiff to come work for him "anytime [he] wanted." Plaintiff and McNulty had a number of conversations about plaintiff's joining McNulty's company, one of which occurred before plaintiff had even spoken to Levy about working for defendant. These conversations occurred at McNulty's offices when plaintiff was there on Red Sail business or visiting socially. Swider Dep. 36:7-39:11.

McNulty wanted plaintiff to work as a commissioned salesperson for Distro-Sales, a company owned by Green, Lind & McNulty, McNulty's advertising firm. At the time, Distro-Sales had no employees other than Green, Lind & McNulty employees who ran it and Distro-Sales had never employed a salesperson before plaintiff was offered the job. McNulty did not give plaintiff an offer in writing and they did not discuss the job in specific terms because plaintiff indicated that he was not interested. Plaintiff did not want to work strictly on a commission basis and, therefore, was not interested in working for Distro-Sales. Plaintiff obviously preferred working for defendant, who promised him that, notwithstanding his title as Sales Manager, he would not have to make any sales of his own. In fact, McNulty's deposition testimony suggests that plaintiff would not have gone to work for Distro-Sales, even if he had not had an offer from defendant. See McNulty Dep. 40:1-6 ("[Plaintiff] wanted a position which was more of a management kind of a position and a position that had, as he indicated to me, a steadier income.").

Plaintiff never told anyone at defendant-company that he had turned down a job offer from McNulty, Lind & Green. Plaintiff accepted defendant's offer of employment and, on October 20, 1997, he began working for defendant in their Hillside office at a higher salary than he had been earning at Red Sail. As noted above, Neil Breithaupt had already been hired as Sales Manager as well, so plaintiff and Breithaupt were co-sales managers for New Jersey, with plaintiff operating out of the Hillside office and Breithaupt based in Montville. Apparently, it was understood by all parties that, notwithstanding their titles, plaintiff was in fact Neil's superior, and that plaintiff had, in plaintiff's own words, "direct responsibility, overall responsibility for all operations and sales and Neil was — Neil's responsibility was for his own sales." Swider Dep. 49:19-24.

Approximately three months after defendant acquired Red Sail, in or about January 1998, defendant merged its Montville and Hillside offices into a single, new office space in Florham Park, New Jersey. Plaintiff had primary responsibility for the design and layout of that space. He worked with the architects and Sabina Filipovic, from defendant's Chicago office. Plaintiff states that he involved Neil Breithaupt in "all the decisions," but that plaintiff maintained ultimate decision-making authority. Plaintiff remembers several occasions on which he overrode Neil's suggestions, but contends that on the whole, they sought to achieve consensus through compromise. Swider Dep. 53:20-54:18.

Following the merger of the two offices, plaintiff continued to have overall responsibility for operations and ultimate decision-making authority. Neil Breithaupt, though still Sales Manager in name, assisted plaintiff with operations and made sales of his own. Plaintiff's understanding, gleaned from conversations with Herb Levy and Greg Kilrea, was that Neil was "to grow his sales," which was essentially what salespersons at defendant-company did, rather than what managers did. Swider 57:5-58:7. After the merger of the offices, Caryl Breithaupt was Neil's assistant.

2. Problems in the New Jersey Office

Shortly after the merger of the Montville and Hillside offices, problems developed in defendant's New Jersey office. The problems seem to have derived both from tensions created by the corporate organization and from the clash of personalities of the individuals working together in the newly merged office.

Plaintiff acknowledges that the office was not running smoothly, but he faults the Breithaupts and Anne Nepo for this situation. According to plaintiff, the problems were caused by (1) Caryl Breithaupt's "controlling behavior" and constant "interference" in the operations of the office, and (2) both Breithaupts' extreme unhappiness resulting from the "bad deal" they made with defendant. Plaintiff contends that the Breithaupts felt betrayed by defendant in that they believed that Neil was to be Sales Manager and Caryl was to be Office Manager, but neither ultimately was. Moreover, both of their contracts contained non-compete clauses that prevented them from taking any customers with them should they decide to leave defendant, and both had received stock options, which were proving unprofitable. Plaintiff apparently received complaints from a number of employees about Caryl Breithaupt. Swider Dep. 65:9-67:8; 73:4-74:13.

Plaintiff also blames personnel problems and low morale on the "animosity" Anne Nepo felt towards him. Plaintiff knew what Nepo thought of him from the beginning. Even before he became Sales Manager, she had been spreading rumors about him. Then, when he was manager, Nepo complained to Mike Stoll, Manager of defendant's White Plains office, about plaintiff. Nepo indicated that she did not respect plaintiff, that he was not helping her or managing her at all. Stoll told plaintiff about this conversation with Anne and told him "that he had to give this a chance . . . working with her and trying to manage and assist her and show that he could be effective . . ." Stoll Dep. 15:22-25. Stoll informed others in higher management about the situation between plaintiff and Nepo.

3. The Bernal/Nepo Letter

On May 5, 1998, Tanja Bernal, a member of the support staff, sent a letter to Sabina Filipovic, the head of human resources at corporate headquarters in Illinois, complaining about plaintiff. See Kiernan Certif., Exh. Q. The letter discussed problems that Bernal perceived in the New Jersey office, particularly regarding plaintiff's management. Specifically, it noted that morale was low and attributed that to plaintiff, whom Bernal indicated was "a very ineffective manager." Kiernan Certif., Exh. Q, at 1. The letter suggested that plaintiff was not working hard at his job and was not responsive to the concerns or needs of his staff. Id. at 2. It further blamed plaintiff for problems that the staff was having with Barbara King, the Operations Manager whom plaintiff had hired. Id.

When Filipovic received this letter, she spoke immediately to Rich Magid and Gene Ehrenfeldt. She shared the letter's contents and asked how they wanted her to handle it. It was agreed that Magid and Ehrenfeldt would deal with it because they interacted more with plaintiff. Filipovic Dep. 26:10-27:6. Filipovic also spoke to Neil Breithaupt because she wanted to ascertain his perspective on the situation, given that he and plaintiff were co-managers at that time. Filipovic Dep. 28:18-29:5; 31:7-24. Therefore, the letter's existence and contents were widely known among upper management.

Filipovic also spoke to Anne Nepo, whom she knew was involved in the drafting of the letter in some way. She informed Nepo that her behavior — discussing her problems with a particular manager with another employee — was unprofessional and inappropriate and could lead to her termination. Filipovic Dep. 34:2-22.

Plaintiff learned of the letter from Sabina Filipovic, but did not learn who had written it or exactly what it said. She informed him only that they had received a letter complaining about him and, as a result, she was overseeing his decisions more carefully. Swider Dep. 89:2-90:2. Plaintiff approached Neil Breithaupt about the letter. Neil acknowledged his awareness of the letter's existence and provided plaintiff with a copy of the letter that he had received several weeks before. Swider Dep. 90:7-18. Plaintiff subsequently learned from another employee that many employees had known of the letter before it was signed by Bernal and delivered to management. According to plaintiff, this other employee indicated that pressure had been put on others in the office to sign a letter complaining about plaintiff. Swider Dep. 93:20-94:8.

Within only a few weeks of the letter's transmission to Filipovic, plaintiff received a phone call from Bernal, the letter's author. She called to apologize about the letter and to inform plaintiff that she had not in fact written it, but rather that Anne Nepo had. Anne Nepo had apparently pressured Bernal into signing and sending the letter. Bernal later sent a retraction letter to plaintiff. See Kiernan Certif., Exh. S. In the retraction, Bernal again apologized for the letter's contents and explained that she sent it to put an end to Nepo's harassing behavior towards her, which included phone calls to Bernal's home. Id.

4. Restructuring and Termination

In late May or early June 1998, it became apparent that the co-manager structure was failing and had to be eliminated. Magid solicited thoughts of others in upper management on restructuring and on the possibility of elevating plaintiff to the status of sole manager. Kilrea agreed with Magid that some corporate reorganization was necessary. Kilrea Dep. 40:17-41:16. Filipovic, for her part, believed that the co-manager arrangement was not working, but she was not sure that plaintiff was capable of managing the sales department on his own. She felt that "Paul wasn't going to be strong enough for that location in a sales manager role due to the fact that he didn't necessarily have sales experience." Filipovic Dep. 44:3-9. She shared these thoughts with Rich Magid and Gene Ehrenfeldt. Filipovic Dep. 44:10-15. Ultimately, the decision was made to dispense with the co-manager structure and to make plaintiff Sales Manager and change Neil Breithaupt to salesperson.

According to plaintiff, at approximately that time, he received a phone call from Lou Weisbach, defendant's CEO and President, telling him how pleased the company was with him and that he was getting "very good reports" about plaintiff. Swider Dep. 111:9-18.

Notwithstanding this alleged positive feedback, not long after the restructuring, Magid decided to fire plaintiff. Magid did not make this decision alone. About one month before plaintiff's termination, Mike Stoll had spoken to different members of upper management about the tension between plaintiff and Nepo. He indicated that the situation "had gotten to a point where [he] didn't feel it could be resolved . . ., unless [the company] made a significant change, and . . . that [the] best solution at this point [was] to let Paul go." Stoll Dep. 20:17-23. Stoll recommended this because he believed that they would "be able to move the office ahead faster and more effectively by replacing Paul." Stoll Dep. 23:7-11.

Gene Ehrenfeldt, Sabina Filipovic and Greg Kilrea also participated in Magid's decision to terminate plaintiff. Ehrenfeldt Dep. 43:3-10. They met to discuss the continuing problems in the New Jersey office and how to handle them. They discussed the feedback that had been coming from different individuals in the New Jersey office regarding its functioning and morale. They agreed that the office was not running efficiently and that sales were not meeting the expectations of management. Kilrea Dep. 48:10-24. The ultimate decision was to terminate plaintiff. Ehrenfeldt Dep. 43:3-10.

On or about July 19, 1998, Gene Ehrenfeldt, Vice President of Sales, met with plaintiff and informed him that the company no longer needed his services. When plaintiff asked Ehrenfeldt the reasons for his termination, Ehrenfeldt told him simply that the company "wanted to make changes." Swider 114:14-25. Ehrenfeldt also volunteered that the decision to fire him had nothing to do with the Bernal/Nepo letter.

At the time of plaintiff's discharge, the position that McNulty had offered to plaintiff may have remained open, but plaintiff contends that he was not made another offer to accept the position.

DISCUSSION

1. Summary Judgment ...


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