United States District Court, D. New Jersey
THOMAS H. MANN, et al., individually and on behalf of PARAMUS MALL CHEVROLET-GEO, INC. AND PARAMUS HUMMER, LLC, Plaintiff,
THE ESTATE OF EUGENE C. MEYERS, ET AL., Defendants
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For THOMAS H. MANN, individually, on behalf of PARAMUS MALL CHEVROLET-GEO, INC. and PARAMUS HUMMER, LLC, VIRGINIA T. SHEA, LEAD ATTORNEY, CARLET, GARRISON, KLEIN & ZARETSKY, LLP, CLIFTON, NJ; NORMAN I. KLEIN, CARLET, GARRSION, KLEIN & ZARETSKY, LLP, CLIFTON, NJ.
For THE ESTATE OF EUGENE C. MEYERS, THE EUGENE C. MEYERS REVOCABLE TRUST, 194 REALTY, LLC, HUMMER OF MAHWAH REALTY, LLC, Defendants, Cross Defendants, Cross Claimants: BRUCE HELLER NAGEL, RANDEE M. MATLOFF, NAGEL RICE, LLP, ROSELAND, NJ.
For MELODY PATON, EXECUTRIX OF THE ESTATE OF EUGENE C. MEYERS, PARAMUS HUMMER, LLC, HUMMER OF MAHWAH, LLC, 194 REALTY, LLC, Defendants, Cross Defendants, Cross Claimants: BRUCE HELLER NAGEL, LEAD ATTORNEY, RANDEE M. MATLOFF, NAGEL RICE, LLP, ROSELAND, NJ.
For PARAMUS AUTO MALL CHEVROLET-GEO, INC., Defendant, Cross Defendant, Cross Claimant: ROBERT C. CHAPIN, LEAD ATTORNEY, MONTGOMERY CHAPIN & FETTEN, P.C., BRIDGEWATER, NJ; BRUCE HELLER NAGEL, NAGEL RICE, LLP, ROSELAND, NJ.
For HUMMER OF MAHWAH REALTY, LLC, Defendant, Cross Claimant, Cross Defendants: JASON STEWART NUNNERMACKER, LEAD ATTORNEY, ARTURI D'ARGENIO GUAGLARDI & MELITI LLP, ROCHELLE PARK, NJ; BRUCE HELLER NAGEL, RANDEE M. MATLOFF, NAGEL RICE, LLP, ROSELAND, NJ.
For GMC-Pontiac of Mahwah, LLC d/b/a Buick-GMC of Mahwah, Defendant, Cross Claimant, Cross Defendant: JASON STEWART NUNNERMACKER, ARTURI D'ARGENIO GUAGLARDI & MELITI LLP, ROCHELLE PARK, NJ.
For Cadillac of Mahwah, LLC, GMC-Pontiac of Mahwah, LLC, Antonio Fernandez, Interested Parties, Cross Claimants, Cross Defendant: JASON STEWART NUNNERMACKER, LEAD ATTORNEY, ARTURI D'ARGENIO GUAGLARDI & MELITI LLP, ROCHELLE PARK, NJ.
HON. KEVIN MCNULTY, United States District Judge.
Thomas Mann worked at Paramus Auto Mall (" PAM" ), a car dealership, from December 1995 through April 2010. The majority shareholder and dealer-operator of the PAM dealership was Eugene Meyers, who is now deceased. Mann claims that Meyers and his successors took several actions that damaged Mann either as an employee or as a shareholder of PAM. As an employee, Mann alleges that Meyers wrongfully terminated him because of his
age. As a shareholder of PAM, Mann alleges that Meyers and his successors transferred PAM's Hummer franchise to another corporation, usurping an opportunity that rightfully belonged to PAM; that Meyers purchased the real estate on which PAM was located, usurping another corporate opportunity; that Meyers diverted to another corporation certain bonuses that PAM received from General Motors; and that Meyers's heirs wrongfully withheld a profit distribution owed to Mann in 2010.
Many of the same allegations were made in a prior lawsuit filed in 2008 by another minority shareholder who worked for PAM, Ronald Barna. Barna was largely successful in his lawsuit. The arbitrator found that Meyers and his successors were liable to Barna and to PAM. See Sections I.C, III.A.2, infra. Mann, however, was not a party to the Barna lawsuit. He instead filed this action in March of 2011.
Before this Court are four motions for summary judgment. The motions concern two topics: Mann's claims of age discrimination, and the potential collateral estoppel effect of the prior judgment in Barna's lawsuit.
In the age discrimination motions, Meyers's estate argues that Meyers, an individual, is not a proper defendant under federal discrimination laws. Meyers's estate and PAM also argue that Mann does not qualify as an " employee," and therefore possesses no viable claim for age discrimination. In addition, Meyers's estate and PAM argue in separate motions that they should be granted summary judgment on the merits with respect to the age discrimination claims.
In the collateral estoppel motions, Mann seeks to use findings from the Barna litigation against the defendants in this case. The Fernandez defendants, too, argue that certain findings from the Barna litigation should collaterally estop Mann here.
II. Factual Background
A. Employment and shareholder status
Meyers recruited Mann to work at Paramus Auto Mall in December 1995. See
Mann 2013 Deposition, 7. Initially hired as a finance and insurance manager, Mann eventually became general manager and general sales manager. See Mann 2013 Deposition, 7, 14.
Over the course of his employment, Mann also came to own nearly 10% of the shares of PAM. See Mann 2009 Deposition, 15-16, 30-33. Mann did not pay cash for any of his shares; they were " awarded" to him by Meyers. See Mann 2009 Deposition, 15-16 and 31-32; Mann Stmt Undisputed Facts, ¶ 12. Until his death in 2010, Meyers was the majority shareholder of PAM, always owning at least 67% of the outstanding shares. See Mann Stmt of Undisputed Facts, ¶ 7-14.
B. Background of Mann's Claims as a Shareholder
1. Hummer franchise
PAM was a General Motors dealership which, until about 2002, sold Chevrolets. In 2001 or 2002, GM granted PAM a second franchise that entitled it to sell GM's Hummer vehicles. See Interim Award, 4; Mann 2013 Declaration, ¶ ¶ 14-15. For that purpose, Meyers formed a corporation called Paramus Hummer, LLC, of which he owned 50%, and Mann and Ronald Barna each owned 25%. See Mann 2013 Declaration, ¶ 15. Mann and Barna operated the new Hummer franchise, managing it much as they had managed the Chevrolet business. See Mann 2013 Declaration, ¶ ¶ 14-17. Hummer became the " highest grossing vehicle on PAM's lot" and " one of the most successful Hummer dealerships in the United States." See Interim Award, 4.
In January of 2007, Meyers transferred the Hummer franchise to a new corporate entity called Hummer of Mahwah, LLC. Meyers dissolved Paramus Hummer LLC. PAM received no compensation in connection with the transaction. Meyers thereafter stopped selling Hummers at PAM, and instead sold them from a new location in Mahwah, New Jersey. See Interim Award, 5-6.
GM had an incentive program wherein it provided cash awards to dealerships that had exemplary Hummer sales and customer satisfaction. See Interim Award, 6-7. From 2004 through the end of 2006, GM issued $1,355,000 in such " Standards for Excellence" or " SFE" bonuses based on Hummer sales at the PAM dealership. See Interim Award, 6-7, 17. GM held the bonus money in escrow pending the completion of the new Mahwah Hummer dealership. See interim Award, 7. After Meyers moved the Hummer operations to Mahwah in 2007, GM released the SFE bonus money to Mahwah Hummer. See Interim Award, 7. None of the bonus money was paid to PAM. Interim Award, 7.
2. 194 Realty
PAM is located at 194 Route 17 in Paramus, New Jersey. See Interim Award, 7. Although the dealership itself is owned by PAM, the property on which the dealership is located was formerly owned by a subsidiary of General Motors. Id. In 2007, GM " expressed an interest in selling the property." Id. at 18. Meyers purchased the property through an entity called 194 Realty, LLC. Id. at 7. Meyers did not offer or share the opportunity to purchase the property with PAM or with its shareholders. Id. at 7-8. The purchase price of the property in 2007 was $6.9 million; by August 2009, the property was appraised at $13.3 million.
3. 2010 bonuses
PAM paid a bonus to Mann every year from 2002 through 2009, and to Barna from 1995 through 2009. See Interim Award, 26-27, 10. In 2010, after Meyers's death, PAM was being run by Melody Paton, the executrix of Meyers's estate and co-trustee of his trust. Id. at 9. In December 2010, Paton announced that there would be no bonuses that year. GM, she explained, was requiring improvements to the PAM facility, and she would need to devote a substantial amount of cash to that. Id. at 10. That same year, however, Paton arranged a $2 million loan from PAM to the Meyers estate, with which the estate paid " its estate and income tax liabilities." Id. at 11.
C. Background of Collateral Estoppel Claims: Barna Lawsuit
Like Mann, Ronald Barna worked at PAM and held a minority interest in the corporation. In 2008, Barna brought suit against Meyers and others alleging various causes of action arising from the transactions described above. See Barna Complaint. Barna also alleged that his termination in April 2010 was wrongful, although, unlike Mann, he did not allege age discrimination. Id. That suit was referred to, and ultimately decided by, an arbitrator. See Interim Award. The arbitrator issued an " interim" award and three " Post Arbitration Motion Opinion[s]." See 73-2, Exhs. C, D, E. The Chancery Division of the Superior Court of New Jersey held a hearing on the issue of whether to confirm the arbitration award. See 82-8, Exh. U. The Superior Court confirmed the arbitration award on April 15, 2013. See 73-2, Exhs. F, G. Part of the arbitrator's decision ordered the Estate defendants to pay Barna approximately 19% of the value of the Hummer franchise as of the date it was transferred out of PAM. See Interim Award, 16-17. The decision provided that the value of the franchise as of that date, January 1, 2007, would be estimated by a valuation expert, and evaluated by the arbitrator. Id. at 17. That valuation was subsequently performed. The arbitrator issued a final award incorporating the the valuation, and that award was confirmed by the New Jersey Superior Court. See 104-1, Exhs. A, B.
Further details of the arbitration award are discussed below at Section III.A.2.
D. Background of Age Discrimination Claims
Mann alleges that, beginning in July 2008, Meyers began making derogatory written and oral statements about Mann's age. See Mann 2013 Deposition, 19. On an " almost daily basis," Meyers would comment that Mann was too old to run the dealership, was " all washed up," and should retire. See Mann 2014 Declaration, ¶ ¶ 4-5 ; 79-2, ¶ 3. Meyers also allegedly wrote disparaging comments on objects in Mann's office almost daily for approximately 600 days. See Mann 2013 Deposition, 38. Meyers terminated Mann's employment on April 24, 2010. See Mann 2013 Declaration, ¶ 36.
A. Collateral Estoppel (Motions 70 and 73)
Before this action was filed, Ronald Barna sued the Estate defendants and the Fernandez defendants. Barna's lawsuit, which asserted many of the same claims that Mann makes here, was largely successful. In a motion for summary judgment, No. 73, Mann seeks a ruling estopping the Meyers defendants from contesting in this action five issues decided by the arbitrator in the Barna action:
1) Transferring the Hummer franchise to a different corporation without compensating PAM shareholders constituted misappropriation of a corporate asset. Id. at 30.
2) The failure to deliver the SFE bonus money to PAM was wrongful. id. at 20, 31;
3) Meyers' purchase (through 194 Realty) of the property on which PAM operates constituted a misappropriation of a corporate opportunity. Id. at 31-32.
4) Failing to distribute a bonus in 2010 was an act of bad faith. Id. at 29.
5) Barna was terminated without just cause. See Mann Estoppel Brief, 28-29.
The Fernandez defendants make a separate motion, No. 70, to invoke collateral estoppel against Mann. That motion is discussed in section III.A.4, below.
1. Standard for applying collateral estoppel
Whether a state court judgment should have a preclusive effect in a subsequent federal action depends on the law of the state that adjudicated the original action. See Greenleaf v. Garlock, Inc., 174 F.3d 352, 357 (3d Cir. 1999) (" To determine the preclusive effect of [the plaintiff's] prior state action we must look to the law of the adjudicating state." ); Bouriez v. Carnegie Mellon University, 430 F.App'x 182, 186 (3d Cir. 2011) (applying Pennsylvania law to decide whether to give preclusive effect to a Pennsylvania state court decision). That requirement arises from the Full Faith and Credit statute, which commands that federal courts recognize and honor state court judgments. 28 U.S.C. § 1738 (the " judicial proceedings of any Court of any such State... shall have the same full faith and credit in every court within the United States... as they have by law or usage in the courts of such State...from which they are taken." ). See also Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (" Congress has specifically required all federal courts to give preclusive effect to
state-court judgments whenever the courts of the State from which the judgments emerged would do so." ); Gregory v. Chehi, 843 F.2d 111, 116 (3d Cir. 1988).
The judgment as to which Mann invokes collateral estoppel is an arbitral award, decided in New Jersey and confirmed by a New Jersey state court. To decide his motion, I must determine whether and to what extent New Jersey law would give that ruling preclusive effect.
New Jersey courts will give preclusive effect to an arbitration award, particularly one confirmed by a court. See Barker v. Brinegar, 346 N.J.Super. 558, 788 A.2d 834, 838 (App.Div. 2002) (" In appropriate circumstances, arbitration awards may be given collateral estoppel effect in subsequent judicial proceedings." ); Carino v, Allstate Fin. Servs., LLC, No. A-5717-09T4, 2011 WL 1364150, at *3 (N.J. S.Ct. App.Div. Apr. 12, 2011) (" An arbitration award has the same effect under the doctrine of res judicata as a judgment of the court." ). An arbitral award will be given preclusive effect if it was " rendered in proceedings which merit such deference." Konieczny v. Micciche, 305 N.J.Super. 375, 702 A.2d 831, 836 (App.Div. 1997).
In deciding whether an award merits deference, the " essential question" is
whether an issue is formulated as it would be in a court and decided according to procedures similar to those of a court. An issue of fact is so formulated when there is assertion and controversion of the occurrence of a legally significant event. If an issue has thus been formulated, and if the procedure for resolving it is substantially similar to that used injudicial adjudication, the ...