United States District Court, D. New Jersey
ACTEON, INC. D/B/A COMEG MEDICAL, Plaintiff,
ERIC HALVORSON, Defendant.
JOSEPH H. RODRIGUEZ, UNITED STATES DISTRICT JUDGE
matter comes before the Court on Motions of Defendant Eric
Halvorson [Dkt. No. 24] and Plaintiff, Acteon, Inc. d/b/a
Comeg Medical [Dkt. No. 25] seeking summary judgment,
pursuant to Fed.R.Civ.P. 56. The Court has considered the
written submissions of the parties, as well as the arguments
advanced at the hearing on April 17, 2019. For the reasons
stated on the record that day, as well as those that follow,
the Plaintiffâs motion is denied, and Defendantâs motion is
denied in part and granted in part.
Acteon, Inc. d/b/a Comeg Medical (“Plaintiff, ”
“Comeg, ” or “Acteon”)
“designs, manufactures, markets and/or distributes
proprietary dental equipment, including but not limited to
imaging systems, dental implant systems, hygiene systems, and
dental tips.” [Dkt. No. 1 (Compl.) at ¶8]. Acteon
is the wholly owned subsidiary of Acteon Group, a European
Company. Plaintiff Acteon is “the only company that
does any business in North America.” Harbuck Dep.
15:7-15. Acteon uses “Comeg” as a brand name for
commercial purposes. Pochon Dep. 72:8-1. Initially, Acteon
was doing business under the Comeg name in France. Now, Comeg
is used to primarily to sell “endoscopes and products
for endoscopic surgery” throughout the United States,
Canada, Puerto Rico, and Latin America. Id. at
18:12-16. The parties agree that Comeg was entering a U.S.
market with well-established competitors. Building the
business was going to be a challenging and difficult task.
Harbuck Dep. 24; Nelson Dep. 30:7-31:10.
efforts to expand Comeg, Plaintiff hired Eric Halvorson, the
Defendant (“Defendant” or “Mr.
Halvorson”), and the parties entered into a formal
Employment Agreement on November 23, 2015. (Eric
Halvorson’s Employment Agreement, Def. Ex. A); Def.
SOMF ¶ 1. Mr. Halvorson was “recruited to make a
business out of a nothing business” and build
Comeg’s sales in the U.S. as the General Manager of
Medical Americas Division. Pochon Dep. 145:1-5, 56:4-7. From
February 23, 2016 until his termination, the Defendant also
served under the title of President, Medical Americas
Division, which Plaintiff insists came without any additional
responsibilities. Id. at 15:15-25; 16:1-6.
Defendant’s Employment Agreement
to Section 2.1 of Defendant’s Employment Contract his
duties as General Manager and “President” were as
Executive shall diligently and competently perform such
reasonable duties in connection with the business and affairs
of Company as may be assigned to him by Company’s Chief
Executive Officer or Company’s Board of Directors (the
“Board of Directors”) from time to time,
including but not limited to market development in the United
States, Canada, Central America and Latin America,
determining budget requirements, development of direct and
distributor sales organizations, building and implementing
training and education programs for surgeon customers in the
sales force, building a scalable commercial operations
support team, implementing appropriate dashboards to measure
and manage performance and results and determining the
clinical and economic evidence required to support product
value propositions and key selling tools. Executive shall
report to Company’s Chief Executive Officer.
further describes Defendant’s duties as
“commercial marketing and sales;” he was to
generate sales forecasts and “develop the sales which
were absolutely nonexistent before him.” Pochon Dep.
49:16-20; 35:1-5. Defendant was regarded as a highly paid
executive; whose annual base salary was $360, 000. Def. Ex.
A, Section 4.1. The Employment Agreement between the parties
also provides how Plaintiff may terminate Defendant’s
employment with the company. Pursuant to Section 7.1.1,
Plaintiff had the option to terminate Defendant’s
employment “for cause.” Section 7.1.1 states as
Company may terminate Executive’s employment
immediately at any time for Cause. For purposes of this
Agreement, “Cause” is defined as: (A)
EXECUTIVE’S REPEATED FAILURE TO FOLLOW THE REASONABLE
AND LAWFUL DIRECTIVES OF THE COMPANY’S CHIEF EXECUTIVE
OFFICER OR BOARD OF DIRECTORS; (B) THE MATERIAL BREACH BY
EXECUTIVE OF ANY OF EXECUTIVE’S COMMITMENTS, DUTIES, OR
OBLIGATIONS UNDER THIS AGREEMENT; or (c) Executive’s
conviction or indictment for a felony, or if Executive enters
a guilty plea or plea of no contest with respect to a felony;
provided, however that in the case of (a) or (b) above, if in
Company’s reasonable discretion, the failure or breach
is curable, Executive shall be notified in writing of the
failure or breach and shall be given thirty (30) days from
receipt of such written notice to cure the failure or breach
to the Company’s satisfaction. In the event
Executive’s employment is terminated in accordance with
this Section 7.1.1, Executive shall be entitled to receive
only (a) the portion of Executive’s Base Salary earned
through the date of termination; (b) reimbursement of
Executive’s reasonable and necessary out-of-pocket
business expenses as provided in Section 6.1 through the date
of termination of employment in accordance with
Company’s policies; and (c) any accrued and vested
benefits under Company’s benefit plans, which shall be
paid or provided in accordance with, and remain subject to,
the provisions of the applicable plans or arrangements
(collectively, the “Accrued Amounts”). All other
Company obligations to Executive pursuant to this Agreement
will become automatically terminated and completely
Ex. A (emphasis added).
addition, the Employment Agreement provides that
Halvorson’s employment may be terminated “without
cause, ” in which case Plaintiff agreed to pay
“(a) the Accrued Amounts and (b) any Prior Year Bonus .
. . . In addition [Mr. Halvorson] will receive a case
severance payment in an amount equivalent to nine (9) months
of [Mr. Halvorson]’s Base Salary (the ‘Severance
his employment, Defendant was to report to Plaintiff’s
CEO, Ms. Marie Laure Pochon (“Ms. Pochon”). Def.
Dep. 72:22. In January 2016, Defendant provided Ms. Pochon
with an initial sales forecast for Comeg projecting
approximately $4 million in revenue for that year alone
(2016). Pochon Dep. 58:10-14; Def. Dep.
45:11-13. According to the Defendant, he
continued to send Ms. Pochon multiple regular business
updates, which included additional sales forecasts. Def. SMOF
¶ 19. Defendant claims that the forecasts were updated
as the targets changed during his tenure, however Plaintiff
asserts that Defendant’s overall projections were never
changed or updated. Andrea Nelson, Defendant’s
employee, testified that the sales forecasts were subject to
change. Nelson Dep. 100:1-4. She would give projections to
Mr. Halvorson that were not “concrete, ” rather
plans that could change drastically. Id. at 103.
Overall, Defendant testified that he provided reviews,
forecasts, and presentations to Ms. Pochon during his
employment, but admits that “revenue was lower than
what the forecast and projections were.” Def. Dep.
role at Comeg, Defendant “was in charge of hiring his
own sales team.” Pl. SOMF 6. He assembled a team that
consisted of a Marketing Director, Sales Representatives, an
Administrative Assistant, and a Sales Director. Id.
at 45. Ms. Pochon knew that Defendant was hiring people for
certain roles but was unaware that Andrea Nelson (“Ms.
Nelson”) was hired as Director of Sales, in which she
maintained a dual role. Specifically, Ms. Pochon stated that
Defendant made known that he wanted an “important
person next to him . . . who was Marketing Director”
but gave no intention of having a Sales Director. Pochon Dep.
26:7-25. She claims it was clear in their conversations
together that “nobody would be hired as a Sales
Director.” Id. at 28:4-9.
hired Ms. Nelson in April 2016. She testified that the
Defendant was not “transparent” about her role at
Comeg and that he had not communicated why she was hired to
other employees. Nelson Dep. 91. Ms. Nelson, however,
confronted Defendant about the situation, did not hide her
position, and represented herself as the director of sales,
which included having her position in her E-mail signature.
When asked about hiring staff, Defendant testified that as
President of Comeg’s U.S. division, he had “full
responsibility to make those decisions.” Def. Dep.
53:15-20. According to him, he was not required to inform the
board or Ms. Pochon of Ms. Nelson’s specific
responsibilities. Def. Dep. 53:21-25.
claims that Ms. Nelson’s, large salary was not
approved, and further contends that Defendant had Ms. Nelson
performing his own responsibilities without permission. [Dkt.
No. 25 (Pl. Brf.) at 4]. In Defendant’s deposition he
explained: “[Ms. Nelson] helped in many ways. She
helped in training the sales group, she helped in closing
sales, she had direct interaction with sales people every day
to get them up to speed. She was much stronger than the other
sales people, so I wanted to use her best practices.”
Def. Dep. 70:8-13. Defendant further acknowledges that he had
Nelson helping create business plans; he also states that he
would get input from “many people, ” including
others on the sales team. Def. Dep. 59:20-25.
Pochon met Ms. Nelson during a visit in May 2016, at which
Ms. Nelson was presented to her as a sales representative who
would be a promising sales director if sales developed well.
Pochon Dep. 27. In time, board member, Thomas (Rick) Harbuck
(“Mr. Harbuck”), was aware of Ms. Nelson’s
exact position at Comeg. Harbuck Dep. 47:19-25. He was
impressed that the Defendant had brought Ms. Nelson on board
and thought it was a “good move;” she contributed
good contacts with customers and clients. Id. at
to Ms. Pochon, in August 2016, she had a “long and
difficult” conversation with the Defendant regarding
sales development. Pochon Dep. 69-71. During this
conversation, she did “everything to wake him up, to
make him understand, ” but there was no mention of any
possible termination of his employment. Id. at
69:1-9. Ms. Pochon told the Defendant that she wanted him to
“spend more time with dealers, with current
customers.” Id. at 80:21-25. Defendant urges
that he did so. He names “Medtronic, ”
“Endodcopy Services, ” “Optum, ” and
“D-Scope” as clients he met with. Def. Dep.
85-86. “[Defendant] spent some time in the field with
people.” Nelson Dep. 108. He characterized his time at
Comeg as “20% to 40% of [his] time out of the
office” and the rest of the time in the office.
Id. at 77:4-6.
September 2016, Defendant recalls that Ms. Pochon expressed
her disappointment that the sales take off was “far
from plan.” Id. at 78:4-16. Then, in October,
Mr. Harbuck visited Comeg U.S. to observe the Defendant at
work. See Def. Ex. G. Mr. Harbuck’s main job
is to observe Comeg and aid the division’s leader.
Harbuck Dep. 16:21-25. During his visit, Mr. Harbuck went out
in the field with Ms. Nelson. When asked if she expressed any
concerns at that time, Mr. Harbuck stated that she did
“not really” indicate dissatisfaction with Mr.
Halvorson but he recalls that “[c]onfidence in his
leadership ability . . . was questioned.” Id.
Nelson had a lack of confidence in Defendant. She claims she
had several conversations with Defendant about her concerns,
she tried to let him know “what was lying ahead of
[them], ” that things were going to take time at Comeg,
and give him relevant advice; however, she kept having to
have those conversations multiple times. Nelson Dep. 109-110.
According to Ms. Nelson there were similar concerns with the
other sales representatives, namely that the Defendant was
“out of touch” with the current market that Comeg
was trying to sell in. Id. at 141:2-6. She was
frustrated in Mr. Halvorson’s lack of understanding and
felt there was a disconnect in communication “going
back and forth with France.” Id. at 147:22-25.
Ms. Nelson “could tell [Defendant] was under pressure.
Id. at 148:1-2.
Mr. Harbuck’s visit with Defendant and his sales team,
he sent an email to the Defendant with an attached memo from
his “October 10, 11, 2016 Visit” [Ex. G to Def.
Op. (“Harbuck’s Memo”)]. The email and Memo
present an overview of his observations, concerns and
recommendations that he had at the time. Together they state
that he was “impressed” and “confident with
where Comeg U.S. is at present.” Id.
Harbuck’s Memo also indicates that there was some
“confusion and lack of confidence.” Mr. Harbuck
expressed that his email and certain positive notes from his
visit were “an effort to boost Halvorson’s
confidence, and provide him with some type of optimism that
he could get the job done.” Harbuck Dep. 35:12-24. At
some point, Harbuck’s Memo was forwarded to Ms. Pochon.
Id. at 4:11-17. Defendant followed up with Mr.
Harbuck to address some of his concerns.” Id.
November 2016, Ms. Pochon requested a business update, which
showed U.S. sales to “dealers” decreased another
20%. Pochon Dep. 39:3-12, 13-17. Defendant has pointed to
certain difficulties with the nature of the business itself
and internal issues at Comeg. Some of these
“huddles” were expressed to Mr. Harbuck, such as
pricing, cost of goods sold, and instructions for products
not meeting U.S. standards. Harbuck Dep. 55:16-25. In
addition, there was “significant backorder” on
the product line. Def. Dep. 74:11-13.
to Ms. Pochon, Defendant was given multiple repeated notices,
both written and oral, of the deficiencies in his work
product and his failures to follow directives. See
Pochon Dep 22; Pl. SOUMF ¶ 11. Still, Defendant claims
that he “wrote emails along the way giving Marie Laure
updates on if interesting things were occurring. It was not
uncommon to send her notes.” Def. Dep. 63:10-12. He
testified: “I sent her updates on, basically, a monthly
basis for the projections, ” and “I don’t
think that they ever said that I wasn’t performing
well. We talked about the business not performing
well.” Id. 64:4-5; 77:23-25. The parties agree
that, ultimately, Comeg did not reach Defendant’s
projection in his initial sales forecast.
Pochon was unhappy with Defendant’s sales and made the
decision to let him go. Pochon Dep. 63:14-16. She reached out
to Mr. Harbuck to discuss how Comeg would operate moving
forward if Defendant’s position was no longer there.
During that conversation, she informed him that
Defendant’s role was, in fact, being eliminated. Ms.
Pochon also had a conversation with Ms. Nelson, during which
she informed Nelson that Defendant would be let go and wanted
to confirm that she could assume some of his duties moving
forward. Nelson Dep. 151:3-13.
provided Halvorson with a formal notice of termination by
letter, dated November 21, 2016. [Dkt. No. 27, Ex. B (Eric
Halvorson’s Termination Letter)]. The letter stated
that his termination was “for cause” pursuant to
Section 7.1.1 of his Employment Contract but did not include
notice of the alleged reasoning. Ms. Pochon testified to
firing Defendant, explaining that “Mr. Halvorson gave
me many, many times the feeling that, okay, I sent you a
forecast in January. We will not meet the forecast, but
it’s not really important. I will send you a new
forecast. Probably, in some big companies, it’s
acceptable, but in a company like Acteon, it’s
absolutely not acceptable to think that it is normal to
reforecast and to change by half each of your
commitments.” Pochon Dep. 44:19-51:25; 86:21-87:13
termination meeting, Pochon claims that she explained to
Defendant “that the results were not there and [she]
was not satisfied of the way he was driving the commercial
part of the - - of Comeg in the U.S.” The General
Manger in the company was expected to be in the field,
“not sitting in his office” a “major
lack” was that Defendant was not with customers.
Id. at 62:4-9. Specifically, the CEO stated,
“we dismissed Mr. Halvorson because he was absolutely
not doing his job properly in terms of behavior and in terms
of results. And . . . he was acting absolutely outside of all
of the rules of the company.” Id. at
declares he did not fail to follow directives from either Ms.
Pochon or the Plaintiff’s board of directors.
Declaration 2, Def. Ex. 2. Plaintiff further claims that
“Defendant’s administrative assistant was also
tasked with overseeing employee expense reports, a
responsibility that should have been handled solely by
Defendant. Said assistant, with Defendant’s approval,
approved expenses that included a tv, subwoofers, trips taken
outside of the scope of work, and rental cars outside of a
sales reps territory, all of which are violations of Acteon
Policy.” Pl. SOUMF ¶ 12. Plaintiff’s admit
they learned the specific issues with these expense reports
after this litigation was commenced. [Dkt. No. 35 (Oral Arg.
Tr.) at 8].
Plaintiff did not provide Mr. Halvorson with a cure period,
to cure any performance issues that the company found.
According to Acteon, it determined in its discretion
“that Defendant’s many bad faith breaches and
deceptions were in no way curable, voiding the 30 day cure
period as was reasonably determined by Plaintiff.”[Dkt.
No. 24-4 (Pl. SOMF in op.) ¶ 12.]
Defendant demanded payment of severance pursuant to his
employment agreement. Pl. Ex. G. Following
the demand, Plaintiff commenced this action and filed a
complaint with this Court on January 11, 2017. [Dkt. No. 1].
Plaintiff’s complaint alleges breach of contract (Count
I), breach of duty of good faith and fair dealing (Count II),
and requests injunctive relief and declaratory judgment
(Count III). Defendant filed an Answer and Counterclaim on
February 3, 2017, “seeking payment of the severance pay
under the Employment Agreement.” [Dkt. No. 4].
Defendant’s counterclaim similarly alleges breach of
contract (Count ...