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SLUKA v. LANDAU UNIFORMS

August 15, 2005.

CARL SLUKA, Plaintiff,
v.
LANDAU UNIFORMS, INC., and John Does 1-50, inclusive, fictitiously named defendants, jointly, severally and in the alternative, Defendants.



The opinion of the court was delivered by: JOSEPH IRENAS, District Judge

OPINION

This action, removed from state court, stems from Defendant Landau Uniforms, Inc.'s ("Landau") termination of Plaintiff Carl Sluka's employment. Landau is a Tennessee corporation with its principle place of business in Olive Branch, Mississippi, and Plaintiff is a citizen of the State of New Jersey. This Court has subject matter jurisdiction over all counts under 28 U.S.C. § 1332. Although the Fifth Count asserts a federal cause of action, the removal petition was based solely of diversity of citizenship. Venue is proper under 18 U.S.C. 1391(a) and (c).*fn1

Plaintiff's Complaint contains five counts: (I) material breach of the Employment Agreement; (II) material breach of the implied covenant of "good faith and fair dealing;" (III) violation of the New Jersey Wage Payment Law, N.J.S.A. 34:11-4.1 et seq. ("NJ WPL"); (IV) age discrimination in violation of New Jersey's Law Against Discrimination, N.J.S.A 10:5-1 et seq. ("NJ LAD"); and (V) failure to provide Plaintiff with notice pursuant to Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. § 1161 ("COBRA"). Both parties filed motions for summary judgment; each motion will be considered in turn.

  Plaintiff seeks summary judgment on Count I, his breach of contract claim, and on Count V, his COBRA notice claim. Plaintiff claims that the express terms of his Employment Agreement entitle him to two year-end payments that Landau has failed to issue. In addition, as to Count V, Plaintiff argues that he is entitled to statutory penalties, attorney's fees and costs based on Landau's untimely delivered COBRA notice.

  Landau seeks summary judgment on all five counts. Landau contends that Plaintiff was not entitled to the two "bonuses," under the Employment Agreement after he was fired, that he was paid his regular salary and that he was terminated for performance issues. Finally, Landau argues that it should not be held liable for the late COBRA notice because there is no proof of damages.

  The relevant portions of the Employment Agreement unambiguously classify the two year-end payments in question as compensation. Plaintiff is entitled to all forms of compensation duly earned prior to termination. Therefore, summary judgment will be granted for Plaintiff and denied for Defendant on Count I. Count II will be dismissed as moot because it mirrors Count I. Because the two payments are clearly incentive based, Landau did not violate the NJ WPL, and accordingly, summary judgment in favor of Defendant will be granted on Count III.

  Summary judgment will be denied on Count IV, the NJ LAD claim, because Plaintiff has raised issues of triable fact as to the reasons why he was fired. As to Count V, the COBRA claim, summary judgment will be granted in favor of Plaintiff and against Defendant. A statutory penalty of twenty dollars per day will be imposed.

  I.

  Landau is in the uniform business — marketing and selling uniforms to retail accounts. Plaintiff's training and experience is in sales and marketing. (Pl.'s Stmnt. of Facts at ¶ 2.) On August 31, 2001, Landau offered Plaintiff the position of Territory Manager for Pennsylvania, New Jersey, Maryland and Delaware. (Landau Letter, attached as "Exhibit D" in Supp. of Pl.'s Mot. for Summ. J.) A.

  On September 7, 2001, Plaintiff and Landau entered into an employment agreement for the Territory Manager position. (Employmnt. Agrmnt., attached as "Exhibit D" in Supp. of Pl.'s Mot. for Summ. J.) Counts I, II, and III stem from disputes over the interpretation of the Employment Agreement and the nature of certain payments. An attachment to the Employment Agreement, provides the specific break down of Plaintiff's compensation:
Employee shall be compensated as follows: Initial Base Salary of $60,000 per year plus commission of 1% on all net sales to accounts assigned to Employee plus 2% commission on net sales from new customers generated by Employee, plus 2% commission on year over year increase in net sales to accounts assigned to Employee.
(Emplymnt Agrmnt. at Exhibit "A")
  The text portion of the Employment Agreement explains the timing of the various components of Plaintiff's compensation:
Employee's compensation is detailed in Attachment A (attached hereto). The salary portion of Employee's compensation will be paid weekly or bi-weekly. The commission-based portion will be paid monthly, on the 10th of each month for sales accruing the preceding month. The bonus portion would be paid at year end.
(Id.) Although not explicitly stated in the Employment Agreement, the ordering of the components implies that the salary portion refers to the Initial Base Salary, the commission-based portion refers to the 1% on all net sales, and the bonus portion refers to the two 2% commission payments (2% net sales from new costumers and 2% year over year increase).*fn2

  The Employment Agreement specifically provides that Plaintiff was an at-will employee. (Id.) In addition, the Employment Agreement states that it "supersedes all previous agreements and may be modified only in writing, signed by both parties. The Landau handbook is not intended as a contract and in no way supersedes this Employment Agreement." (Id.) Both parties signed the Employment Agreement. It is undisputed that they both intended the provisions of the Employment Agreement to be binding and enforced to "the fullest extent permissible." (Pl.'s Stmnt. of Facts at ¶ 6.)

  B.

  Plaintiff began working for Landau on September 17, 2001. (Id. at ¶ 3.) There is some dispute as to Plaintiff's performance levels and work history. In January, 2002, Plaintiff received his first "2% net increase" payment, after he had been working for only a few months. (Sluka Dep. at 97-100.) However, according to Landau, Plaintiff was counseled for performance issues on February 8, 2002. (Def.'s Answer to Interogg. at 4.) Towards the end of 2002, and early 2003, Plaintiff took on a larger sales territory and received another year-end payment. (Pl.'s Am. Compl. at ¶ 5.) During December, 2002, and January, 2003, while Landau was seeking to find a permanent New England Territory Manager, Plaintiff was asked to fill-in as needed for the New England Territory. (Id.) In addition, New York's five boroughs and Long Island were added to Plaintiff's territory in January, 2003. (Id.)

  Landau states that Plaintiff was counseled for performance issues on March 27, 2003, and June 9, 2003. (Def.'s Answer to Interogg. at 5.) In June, 2003, Darryl Williams, Landau's Vice-President of Sales and Marketing, as well as Plaintiff's supervisor, received a complaint from one of Plaintiff's customers that the customer no longer wanted calls from Plaintiff. (Williams Dep. at 35.)

  Plaintiff contends that the importance of obtaining new accounts outside the normal channel of distribution was emphasized at a number of sales meetings; Plaintiff and one other salesmen (out of sixteen total) successfully accomplished this goal. (Pl.'s Am. Compl. at ¶ 6.) Plaintiff's accomplishment was highlighted at the August, 2003, group Landau headquarters sales meeting. (Id.) Furthermore, Plaintiff states that his dollar sales for the year were up approximately 10% over the preceding year and his monthly sales were up 10% over the previous month as of September, 2003. (Id. at ¶ 7.)

  C.

  Plaintiff was again counseled for performance issues on October 6, 2003. (Def.'s Answer to Interogg. at 5.) On October 21, 2003, Darryl Williams met with Plaintiff at the Hampton Inn in Philadelphia, PA. (Pl.'s Am. Compl. at ¶ 8.) Mr. Williams provided Plaintiff with a copy of a proposed Separation Agreement, including a severance pay offer. (Id.) The Separation Agreement does not mention cause or misconduct, but does reference age discrimination. (Id.) Through his attorney, Plaintiff rejected the proposed agreement on October 23, 2003. (Id. at ¶ 9.)

  Plaintiff was terminated from employment on October 21, 2003. (Def.'s Stmnt. of Facts at ¶ 10.) Landau states that Plaintiff was terminated for poor performance; the specific reasons included: communication problems with fellow employees and customers, not following expected procedures, and because "other than one new account added by Plaintiff, Plaintiff's sales were either flat or declining." (Def.'s Answer to Interogg. at 1.) These reasons are hotly contested by Plaintiff, who points out that according to Landau, "[t]hrough September, 2002, [Plaintiff] had gross volume sales in the amount of $1.7 million. Through September, 2003, [Plaintiff] had gross volumes sales of $2.1 million. Of the 2003 number, $243,000 represents sales to a `new' account (Supershoes)." (Letter from Def.'s Counsel to Pl.'s Counsel, attached as "Exhibit F" in Supp. of Pl.'s Mot. for Summ. J.)

  D.

  After Plaintiff's termination, Landau paid him his remaining initial base salary on October 24, 2003. (Austin Aff. at ¶ 7.) On November 12, 2003, Plaintiff was paid for his October, 2003, 1% net commissions. (Id. at ¶ 6.) It is not disputed that Plaintiff did not receive any payment for his year-over-year increase in sales Plaintiff achieved in 2003 versus 2002 or for the 2% net sales for his new customers in 2003. (Pl.'s Stmnt. of Facts at ¶ 8.) In early 2004, four months after Plaintiff ...


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