Violetta v. Steven Brothers Sports Management, LLC et al

Filing 153

MEMORANDUM AND ORDER granting in part and denying in part 127 Motion for Summary Judgment; granting in part and denying in part 129 Motion for Summary Judgment; denying 147 Motion to Strike. Signed by District Judge J. Thomas Marten on 5/31/2018. (sz)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

STEVEN M VIOLETTA,
Plaintiff,
vs.

No. 16-1193-JTM

STEVEN BROS. SPORTS MGMT, LLC.,
et al.,
Defendants.

MEMORANDUM AND ORDER

Plaintiff Steven Violetta was hired in 2015 to turn around the performance of three
minor league hockey teams. Some six months later, he was terminated for poor
performance, and brought suit against his employer, its owners, and other related
companies, raising claims of breach of contract, violation of COBRA and ERISA
obligations, violation of the Kansas Wage Protection Act (KWPA), and age
discrimination. The matter is now before the court on the parties’ cross-motions for
summary judgment.
Summary judgment is proper where the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, show there is no
genuine issue as to any material fact, and that the moving party is entitled to judgment
as a matter of law. Fed. R. Civ. P. 56(c). In considering a motion for summary judgment,
the court must examine all evidence in a light most favorable to the opposing party.

McKenzie v. Mercy Hospital, 854 F.2d 365, 367 (10th Cir. 1988). The party moving for
summary judgment must demonstrate its entitlement to summary judgment beyond a
reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir. 1985). The
moving party need not disprove plaintiff’s claim; it need only establish that the factual
allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812
F.2d 1319, 1323 (10th Cir. 1987).
In resisting a motion for summary judgment, the opposing party may not rely
upon mere allegations or denials contained in its pleadings or briefs.

Rather, the

nonmoving party must come forward with specific facts showing the presence of a
genuine issue of material fact for trial and significant probative evidence supporting the
allegation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). Once the moving party
has carried its burden under Rule 56(c), the party opposing summary judgment must do
more than simply show there is some metaphysical doubt as to the material facts. “In the
language of the Rule, the nonmoving party must come forward with ‘specific facts
showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)) (emphasis in
Matsushita). One of the principal purposes of the summary judgment rule is to isolate
and dispose of factually unsupported claims or defenses, and the rule should be
interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett, 477
U.S. 317 (1986).

2

Here, in addition to the competing motions for summary judgment, defendants
have moved to strike the declaration (Exhibit K) of the plaintiff which is attached to his
reply (Dkt. 145). A centerpiece of the defendants’ arguments in their earlier pleadings
was that the initial versions of the Violetta affidavits (Exhibits A and B) were unsworn.
They argue that attaching the sworn statement is “in effect” making new arguments in
his reply. (Dkt. 147, at 3). Further, they argue that the sworn statement is still insufficient
and “worthless,” and “the Court must utilize its discretion [to] strike Plaintiff’s
[declaration].”
The motion to strike is denied. As defendants acknowledge, whether to strike a
declaration rests within the discretion of the court. The circumstances of the case do not
warrant striking the new declaration. First, the court notes that defendants fail to make
any demonstration that Exhibit K differs in any meaningful way as to the underlying facts
asserted. Accordingly, Exhibit K does not raise new arguments, it simply provides
evidentiary support for plaintiff’s contentions.
The court also rejects defendants’ arguments plaintiff failed to support his factual
contentions. In Exhibit K, Violetta “declare[s] under penalty of perjury” that the
statements in Exhibits A and B “are incorporated [into Exhibit K], are based on my own
personal knowledge, and are true and correct.” The court finds that the declaration is
sufficient to support plaintiff’s factual contentions.
Of course, the court does not encourage such belated documentation, and counsel
for plaintiff is admonished to comply with proper procedure in the future. Nonetheless,
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while defendants have indeed attacked the original affidavits as unsworn, they have not
articulated any particular prejudice from that failure, nor otherwise sought leave to
supplement their evidentiary responses to plaintiff’s factual claims. Under all the
circumstances of the case, the court finds no reason to strike plaintiff’s declaration, or to
defer a determination as to the uncontroverted facts in the action.
Violetta has worked in professional sports management and marketing since 1993.
During his 25-year career he has held a number of positions with National Hockey
League teams, including the Pittsburg Penguins (Vice President of Marketing and Sales),
the Ottawa Senators (Executive V.P. and Chief Marketing Officer), the Nashville
Predators (Executive V.P of Business Affairs), and the Detroit Red Wings (Senior V.P. of
Business Affairs). He has also worked for baseball’s San Diego Padres (Executive V.P. for
Business Affairs) and the minor league Staten Island Yankees (CEO).
Nine months after his termination by SBSM, Violetta was hired as Vice President
of Corporate Partnerships, Sales, and Service for the Edmonton Oilers of the NHL. He
remains in that position today.
Steven Brothers Sports Management, LLC (“SBSM”) is a Kansas limited liability
corporation with its principal place of business in Kansas. Steven Brothers Sports
Management of Allen, LLC (“SBSM-A”) was a Texas limited liability corporation with its
principal places of business in Kansas and Texas.
Brandon Steven, Rodney Steven, and Johnny Steven, individuals residing in
Kansas, own SBSM and SBSM-A. Brandon owns 45%, Rodney owns 45%, and Johnny
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owns 10%. Rodney Steven is the president and secretary of SBSM, and Brandon Steven is
the vice-president. Rodney Steven makes the decisions as to the hiring, firing, and other
personnel decisions regarding the CEO.
Genesis Health Clubs Management, Inc. is a Kansas corporation with its principal
places of business in Kansas. Genesis Health Clubs Management, LLC is a Kansas limited
liability corporation, with its principal place of business in Kansas.
In August 2015, SBSM hired Violetta to serve as CEO of its minor league East Coast
Hockey League franchises, the Wichita Thunder, the Tulsa Oilers, and the Allen
Americans. Specifically, Rodney Steven made the decision to hire Violetta.
On August 19, 2015, SBSM and Violetta entered into a written two-year
Employment Agreement. SBSM and Violetta entered into the Employment Agreement in
Kansas, and Violetta performed at least some of his duties in the state. Rodney Steven
negotiated and signed the Agreement on behalf of SBSM, and signed on behalf of the
company.
The Employment Agreement does not identify SBSM-A, Brandon Steven, or
Johnny Steven as parties to the contract.
During his many years in business, Rodney Steven has negotiated and entered into
hundreds of business contracts, as well as three to five employment contracts.
The Contract provides for the payment of compensation to Violetta, including a
base salary, potential bonuses, group medical and dental benefits, a car with insurance,

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vacations, a cell phone and cell phone service, and reimbursement of relocation expenses
of up to $20,000 and housing until he could locate and purchase a house.
The two-year term of the Agreement was subject to termination by either party
upon 180 days written notice. Further, the Agreement provided that SBSM could
terminate Violetta immediately for cause, which was defined as
i)

any act of personal dishonesty by Violetta in connection with his
responsibilities as an employee;

ii) Violetta’s refusal or repeated failure in any material respect to perform
his duties as CEO, after written notice to Violetta and a reasonable
opportunity to cure;
iii) Any willful act by Violetta which constitutes gross misconduct and
which in injurious to the Company.
Violetta was to receive a base salary of $150,000 in the first year of the Agreement,
and $160,000 in the second, and was further authorized to draw $25,000 against his
bonuses in the first year, and $20,000 in the second.
The Employment Agreement offered a series of bonuses for Violetta based on
franchise performance. He would receive a $5,625 bonus if the combined corporate
sponsorship revenues exceeded $2.25 million in a season, which ran from June to May.
In addition, Violetta would also receive a $3,250 bonus if season ticket revenues exceeded
$1.3 million, an additional bonus if group ticket sales exceeded specific monthly targets,
and if the individual franchises met specified minimum net profits.
Rodney Steven drafted the bonus schedule attached to the Agreement, and also
drafted and inserted the “for cause” termination provision.
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The defendants do not have employee handbooks, personnel manuals, or any
other personnel policies. They also do not have any policies or procedures, formal or
informal, related to employee health benefits or COBRA. They did not keep a personnel
file for Violetta, and do not have any documents reflecting communications to plaintiff
regarding his eligibility or potential eligibility for any fringe benefit or to participate in
any employee fringe benefit. The defendants did not keep copies of expense
reimbursement records relating to Violetta, and do not have any documents related to
their obligation to provide COBRA notice.
The defendant corporate entities (SBSM, SBSM-A, Genesis Health Clubs
Management, Inc., and Genesis Health Clubs Management, LLC) do not keep minutes of
their corporate meetings.
Citing an email by Rodney Steven, defendants contend that SBSM has an
established policy of not paying for unused vacation days. However, the plaintiff
counters that other evidence shows that SBSM had no established personnel policies.
More importantly, plaintiff points out that the email was sent after this termination, and
that no one ever told him of any such policy.
Rodney Steven has testified that Violetta’s duties included implementing
procedures for issuing ERISA and COBRA notices. Plaintiff disputes the contention,
noting that the Employment Agreement makes no mention of such duties. Rather, his
only duty was to notify Genesis whenever an employee left, so that Genesis could take
care of any required notices.
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During his employment by SBSM, plaintiff took $11,667.00 in payment as a draw
against his bonuses.
Before Violetta was hired, all of the SBSM teams consistently lost money (except
for the Thunder, which had made a small profit in 2012-2013). By August 2015, an officer
for the Allen Americans wrote of the team’s “desperate” situation. The team had
numerous outstanding bills due, and Blue Cross had cancelled its health insurance for
non-payment. To help the teams, Rodney Steven had transferred $1 million from Genesis.
Violetta reported to the SBSM corporate office in Wichita, Kansas, and was a
satellite employee stationed in Allen, Texas, although he performed his duties under the
contract in part in Kansas.
Violetta worked 80 hours a week, spending time in Allen, Tulsa, and Wichita. He
devised strategies and worked to increase revenue, keeping Rodney Steven informed of
what he was doing and getting his approval.
On December 23, 2015, Violetta emailed Rodney Steven an overview of his
recommendations for making changes on staffing, compensation, and culture for the
three teams, which he wanted to provide in more detail during an in-person meeting.
These changes including replacing Matt Canavan in Allen and posting two new job
descriptions he had prepared. Steven did not respond, so Violetta re-sent it on December
28.
Team finances improved under Violetta. Season ticket and corporate sponsorship
revenue for the 2015-2016 were up about $739,000, or 44%, compared to the prior season.
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By December 2015, all three franchises had significant increases in all major revenue
streams, including corporate sponsorships, season tickets, and group sales. At the same
time, the teams still had substantial prior debts. Rodney Steven wrote: “We have made
some positive turns: Improved lease by $400k; Corporate sponsorship sales up $250k;
Season ticket sales up; Group sales up.”
During the 2015-2016 season, combined revenue for the three franchises was
projected to be up almost $1.5 million, nearly a 50% increase, compared to the prior year.
On January 11, 2016, Rodney Steven stated, “[O]ur first year in Allen [2014-15] was
ugly. This year looks tons better. … We are on a cash basis, so a lot of the bills we are
paying this year are from last season. … [W]e are confident that next season we will show
a profit.”
Rodney Steven had originally wanted to hire Shawn Kuzmin as the CEO, and in
March 2015, he had signed an Employment Agreement and sent it to Kuzmin with the
statement, “I have signed my man.” But Kuzmin was unable to accept the offer for family
reasons.
In late May and early June 2015, while Steven was contemplating hiring
Violetta, he continued to communicate with Kuzmin. Kuzmin said he was “aching” to
take the job “but timing blows.”
Steven responded, “Just move the family to Dallas and lets get it on.”
Kuzmin replied, “June 2015 can’t. June 2016 different story. Wish it were different.
You know.”
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In late June 2015, Steven sent an email to Kuzmin saying, “Brandon and I still want
you to come run our sports organization!”
Kuzmin responded, “Not saying no, but timing is my issue right now.”
On December 6, 2015, Kuzmin emailed Brandon and Rodney
Steven, asking, “Should we start negotiating the 2016 contract yet?” Rodney responded
the same day, “Yes, we are still interested.”
On January 10, 2016, Rodney Steven told Kuzmin that he and Brandon “are ready
to go forward” with hiring Kuzmin. He sent Kuzmin the employment contract he had
given him in 2015, and Kuzmin responded on February 2 that he was “definitely in” and
would be ready to start in about a month or a month and a half.
After the Agreement, Violetta moved from New Jersey to Texas to work for SBSM.
He listed his New Jersey house for sale, found a buyer in November of 2015, and entered
into a contract to sell with a closing date on February 10, 2016. Violetta incurred over
$77,000 in relocation expenses, such as packing and moving, personal travel, and house
closing.
Violetta avers that he gave receipts for these expenses to SBSM, but it never
reimbursed him. It is uncontroverted that SBSM did not did not reimburse him for any
of these relocation expenses. No one explained why Violetta was not reimbursed.1

Defendants attempt to controvert the issue by relying on Rodney’s testimony that “I do not recall him
giving me expenses,” but otherwise cites no evidence which would directly contradict Violetta’s affirmative
representation that he gave the materials to SBSM in February 2016 (except for the house closing costs). “A
party opposing a properly supported motion for summary judgment cannot create a genuine factual

1

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In September 2015, Violetta engaged a realtor to help him find a house in Texas.
But he could not purchase a house in Texas until he sold his house in New Jersey,
because he needed the equity. SBSM placed Violetta in a Sheraton hotel until he could
purchase a house. Violetta has testified that he turned in his receipts for this temporary
housing option every month, and SBSM reimbursed him for these temporary monthly
housing expenses through November 30, 2015, in the amount of $4,950.00. However,
SBSM did not pay for or provide reimbursement of Violetta’s temporary housing
expenses, or provide an alternative temporary housing option for him, after that date. In
all, Violetta incurred $16,181 in additional temporary housing costs through September
30, 2016.
The parties dispute whether plaintiff was entitled to bonuses under the
Agreement. Defendants have produced spreadsheets indicating that these targets were
not met for the 2015-16 season. Further, defendants contend, the franchises lost money.
The plaintiff points out that the spreadsheets lack any foundation, and cites other
evidence indicating that both targets were met. Plaintiff also contends he was entitled to
a bonus for meeting a group ticket sales target. He states that he sent the figures

dispute simply by claiming that he does not recall a particular fact upon which the moving party has
presented affirmative evidence.” Hatfield v. Occidental Chem. Corp. 1988 WL 25249, *4 (4th Cir. 1988) (citing
Carter v. Newsday, Inc., 528 F.Supp. 1187, 1191 (E.D.N.Y.1981)); Tinder v. Pinkerton Sec., 305 F.3d 728, 735-36
(7th Cir. 2002) (plaintiff’s testimony that she did not “recall seeing or reviewing” an arbitration brochure
was insufficient to controvert affidavits indicating that “the brochure was definitely sent and presumably
received” with plaintiff’s paycheck).

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supporting his bonus calculations to Rodney Steven in February of 2016, and Rodney did
not dispute the figures.
Plaintiff also notes that Rodney Steven himself agreed when he was asked in his
deposition whether the teams made “somewhere between 2.25 and 2.5 million.” He later
indicated that as to the corporate sponsorship, season tickets, and group tickets bonuses,
the two former “I think … that I agree … but I’m not 100 percent.”
Violetta received draws against his bonus in the amount $11,666, leaving a
remaining balance of earned bonuses in the amount $17,209.
On February 17, 2016, Violetta sent an email to Rodney Steven concerning bonuses
earned as of the date of the email.
Rodney Steven testified that on January 8, 9, or 10, 2016, he met with Violetta in
person in Wichita with the intent of firing him on the spot. Steven told Violetta, “I just
got to let you know what’s going on here, this is not working out, Steve, and here’s the
following reasons why it’s not working out.” According to Steven’s deposition, he told
Violetta the teams were “losing money more and more,” the “staff has no respect for
him,” he had been “sleeping in [the] office,” and “has not hired staff to turn teams
around.” Steven testified that Violetta was passionate that he could fix things, so Steven
reconsidered and orally told Violetta he would give him 30 days to see if he could “turn
things around.”
Plaintiff cites Steven’s deposition testimony in support of his motion for summary
judgment, while specifically disputing the truth of the allegations made in the meeting.
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It is uncontroverted that in January, Rodney Steven did not provide Violetta with any
sort of written notice relating to the potential termination of his employment.
There is an issue of fact as to when Violetta learned of a potential termination.
Violetta contends that the first notice Rodney Steven gave of a possible termination was
on March 3, 2016, when Rodney offered him the job as General Manager in Allen, and
said that if that was unacceptable then March 11 should be his last day in the office.
According to Rodney, he discussed termination with Violetta as early as January 9, 2016,
and defendants note that on the next business day, Violetta began to look for new jobs,
and research Texas law on wrongful discharge and termination, as well as “things that
successful people do before leaving their job.”
The issue is not material because it is otherwise uncontroverted that, even under
defendants’ version of the facts, Violetta was given additional time to improve his
performance, but was then fired on February 11, “right now,” with only 30 days notice.
Plaintiff’s employment terminated March 11, 2016.
Again, according to Steven, on February 11, he called Violetta and said, “Steve, I
hate to do this on the phone right now and tell you, but this 30 days is not going to work,
I’m terminating you effectively [sic] today. … [I]t’s not working, Steve. You’ve lost all
support from everybody who works for you.”
Violetta said, “[Y]ou know, you owe me six months notice.”
Steven responded, “[W]ell, your notice is starting right now. And – but I can’t have
you in the office anymore.”
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Violetta asked if he could help with the transition for the next 30 days since “you’re
going to be paying me anyway” because “you owe me six months notice.”
Rodney Steven says he terminated Violetta for the reasons allegedly given in the
January meeting.
SBSM terminated Violetta on March 11, 2016, and offered him the opportunity to
serve as a General Manager or Ticket Manager for the Allen Franchise.
On March 3, Steven told Violetta that he was bringing in a new CEO, but offered
him a job as General Manager of the Allen team, with a different compensation plan
(lower salary and more incentives), because he knew he was “committed” and “can win
in a lot of aspects.”
March 11 was Violetta’s last day of work, and the last day for which he was paid.
On March 13, 2016, Rodney Steven sent an email to persons outside the company
stating that Violetta had been terminated for the reason that “goals were not being
achieved” and that Kuzmin would be taking his place.
Violetta participated in group health plans for medical benefits and for dental
benefits provided pursuant to his employment with SBSM.
Defendants contend that Violetta maintained health and dental coverage through
the plan through June 30, 2016, citing a subsequent COBRA notice issued by SBSM. The
plaintiff disputes this fact, citing evidence indicating that his healthcare benefits actually
terminated along with his employment, and that Blue Cross Blue Shield cancelled his
health insurance in May, once SBSM stopped paying premiums. Blue Cross would
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subsequently deny health claims by plaintiff on the grounds that the policy had been
terminated. Further, the Employment Health Plan precludes such a result, since it
provides benefits only to full-time employees. In addition, Rodney Steven, testifying as a
Rule 30(b)(6) witness, agreed that plaintiff’s health benefits ended the last day of his
employment (March 11, 2016).
On April 28, 2016, Violetta asked for plan documents from SBSM. On or about July
15, 2016, plaintiff suffered a foot injury for which he paid approximately $500 in medical
bills.
SBSM did not send COBRA information to plaintiff until July 8, when it sent a
document titled “Your Health Care Benefits Program,” along with a COBRA
Continuation Coverage Election Notice, as well as medical and dental benefits booklets.
That document failed to identify, among other things, the plan name, plan number, or
the plan’s agent for service of process
It is uncontroverted that defendants failed to timely provide him with the
requested plan documents. Defendants in their response (Dkt. 13 at 10) blame the failure
on plaintiff himself, citing Rodney Steven’s testimony asserting that Violetta was
supposed to develop COBRA notice procedures. As noted earlier, Violetta disputes the
asserted fact.
However, defendants’ evidence is limited to the assertion that Violetta was
supposedly tasked with developing COBRA procedures while he was employed.
Defendants have supplied absolutely no evidence in support of the claim that any
15

supposed deficiency by plaintiff prevented or in their words “greatly contributed” to the
delay.
On July 27, Violetta, through his lawyer, informed defendants that they had not
provided Violetta with the information that met the requirements of a summary plan
description under ERISA.
On August 30, 2016, SBSM provided plaintiff with a document titled “Additional
Information Provided to Steven Brothers Sports Management of Allen LLC Medical
Plan,” which contains legally required information about the plan. According to the
metadata in its “properties,” this document was created on August 19, 2016. The
Additional Information provided information that was inconsistent with the July 8 notice
about things such as the plan name, the insurance provider, and who to pay and where
to send payment for continuation coverage.
After Violetta filed his Complaint, Rodney Steven directed Genesis employees,
including LaNisha Rose, the Genesis Health Clubs Human Resources Manager, using a
“genesishealthclubs” email domain, to handle Violetta’s COBRA and plan document
inquiries. Defendants’ privilege log further demonstrates that Genesis was heavily
involved in responding to Violetta’s requests for information and ERISA plan benefits
and COBRA continuation coverage.
The same day that defendants gave Violetta a COBRA Continuation Coverage
Election Notice (July 8, 2016) SBSM served Violetta with a summons notifying him that it

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had sued him, seeking a declaratory judgment that it did not owe him for pay for the 180day notice period.
The COBRA Election Notice further stated: “You’re getting this notice because
your coverage under the Plan will end on 6/30/2016 due to … End of employment.” As
noted earlier, SBSM had actually ended Violetta’s employment on March 11, and
Blue Cross Blue Shield had informed Violetta his coverage had ended.
The COBRA Notice states that coverage would be under the Top Shelf LLC plan.
Top Shelf LLC was the company from whom the Steven Brothers had bought the Allen
Americans a couple of years earlier. The Notice stated that payments for continuation
coverage should be made to Blue Cross and Blue Shield of Kansas and sent to a PO Box
in Dallas. But the benefits book provided to him the same day referred to Blue Cross and
Blue Shield of Texas.
On July 27, Violetta, through his lawyer, highlighted for defendants the problems
and inconsistencies with the COBRA notice.
On August 30, Violetta completed and sent the COBRA Continuation Coverage
Election Form to the designated contact, Joel Lomurno, who is employed by SBSM, at the
designated address in Wichita.
On September 3, Violetta sent an email to Lomurno, who was listed as the contact
to answer questions, asking when, where, and how to make the payments for COBRA
benefits. Violetta also reported that he had incurred medical services in July that should
have been, but were not, covered by insurance.
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On September 4, Lomurno responded, “As for your questions I have no idea on
any of this so will probably have to check with lanisha in HR.” LaNisha Rose is employed
by Genesis as its HR director.
On September 26, Rose instructed that payment for COBRA coverage should be
made to “Allen Americans” and mailed to an address in Allen, Texas. This contradicted
the instruction in the COBRA Notice that payment should be made to “Blue Cross Blue
Shield of Kansas” and mailed to a Dallas address.
On September 29, Violetta’s counsel wrote a letter to defendants’ counsel to try to
help facilitate Violetta’s COBRA coverage in light of the inconsistent information that had
been provided over several months. On October 8, Violetta timely tendered payment for
COBRA coverage in the manner LaNisha Rose had instructed him.
Violetta and his counsel aver that they did not file or litigate his ADEA claim in
bad faith, vexatiously, wantonly, for oppressive reasons, or for any other improper
reasons.
The Steven Brothers own multiple companies, and plaintiff claims they freely
intermingle assets. He notes one document indicating that the hockey teams “sucked
cash,” so that Genesis had to put $1 million into them through operations in 2015. In
another instance, SBSM devised what it described as a “shady” scheme, to get around a
League requirement to use an approved vendor to purchase dashers, logos, and signage
for the hockey teams, to “have a local trade deal and Genesis pays our bill. . . . Obviously
though we would have to make sure there was no trail of a money transfer in case we get
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audited.” Rodney Steven approved the plan, stating, “Just make sure you don’t get in
trouble.”
In addition, Rodney Steven gave cars from a car dealership he operates with
Brandon Steven to the coach of the hockey team with “no terms,” travel expenses for
Genesis employees were paid for using hockey team credit cards, Genesis human
resources took care of SBSM health care benefit issues.
Defendants do not controvert these specifics, only arguing that plaintiff had not
properly pled piercing, and that there is no showing of fraud or injustice.

Conclusions of Law
The court finds that plaintiff has demonstrated a breach of the Agreement, and
that he is entitled to compensation for his relocation expenses, housing costs, earned
bonuses, and salary lost by the early termination of the Agreement.
With respect to these claims, defendants argue that the documents submitted by
Violetta fail to support any recovery because he only submitted invoices rather than
evidence of what he actually paid out. According to defendants, Violetta’s
documentation only indicated that he was out-of-pocket $580.88. Finally, defendants
offer a construction of the moving expenses clause under which plaintiff would only be
entitled to “travel events” — that is, apparently, the cost of travelling to a closing, but not
the closing cost itself. (Dkt. 133, at 16).

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The court finds that plaintiff is entitled to $20,000 in moving expenses. There is no
question that Violetta incurred expenses substantially in excess of the $20,000 allotment
for moving expenses, and the agreement (drafted by defendant Steven) is not reasonably
construed to preclude recovery. There is no evidence that the charges presented by
Violetta were otherwise exorbitant or unreasonable.
The moving expenses clause provides:
MOVING EXPENSES - Violetta will be provided a $20,000 (net) relocation
fund, to be used for reimbursement of relocation expenses, [i]ncluding but
not limited to: packing and moving of household goods, personal travel
to/from Texas for trips such as packing day, house closing, etc. Violetta will
provide receipts on a timely basis and will be reimbursed up to $20,000 for
his moving expenses. The parties will cooperate to maximize tax-free
reimbursement of moving expenses.
In addition [sic] Company offers a monthly housing option for Violetta
until a house to purchase is located. This option will be via trade through
the Allen Americans.
There is no evidence that Violetta was not legally obliged to repay the charges
presented in the relevant invoices. Although the agreement includes travel expenses, it is
explicitly not limited to them, and the key clause is the provision of a “relocation fund”
which is designed to reimburse Violetta for his “relocation expenses.”

Relocation

expenses is a term broader than mere travel costs, and the inclusion of a “housing option”
confirms the view that the clause is dealing with something more than travel alone.
Violetta also seeks recovery for $16,181 in housing expenses for costs incurred
through September 30, 2016. Defendants dispute the claim, stressing that plaintiff’s

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declaration submitted in conjunction with this motion for summary judgment was
unsworn, and plaintiff failed to submit any supporting receipts.
The court finds that plaintiff is entitled to this housing expenses claim. The
evidence supports the finding that plaintiff incurred these expenses for rooming at the
Sheraton, and there is no evidence by defendants showing the expenses were false or
unreasonable. To the contrary, the evidence shows that SBSM paid for the Sheraton
expenses, without complaint, until it discharged plaintiff.
The court also finds that plaintiff is entitled to $17,209 in unpaid bonus
compensation. The uncontroverted facts set forth earlier indicate that plaintiff earned this
amount in addition to the $11,667 draw he received on anticipated bonuses. The
conclusion is supported both by plaintiff’s testimony, and that of Rodney Steven, who
agreed that the corporate sponsorship amount was “somewhere between 2.25 and 2.5
million.” In the court’s view, this warranted a bonus under the Agreement, which
expressly provided for bonuses “based on the combined revenues in that particular
stream among The Franchises.”
Plaintiff also seeks $82,608.06 in additional salary, based on his termination, which
he contends violated the Agreement’s provision for termination by 180 days written
notice. Defendants argue that they are not liable for any additional pay because SBSM
properly terminated Violetta for cause pursuant to §3(D)(ii).
The cited provision allowed for immediate termination in the event of “Violetta’s
refusal or repeated failure in any material respect to perform his duties as CEO,”
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provided that SBSM gave plaintiff “written notice … and a reasonable opportunity to
cure.” Defendants argue that Violetta materially failed in his CEO duties, which they
allege included an obligation to improve the teams’ profitability. Defendants further
argue that the company’s emails to Violetta should be deemed to constitute the written
notice required by § 3(d)(ii), or in the alternative that the oral warnings to Violetta should
be deemed to constitute substantial performance under Texas law.
Plaintiff argues that the belated invocation of § 3(D)(ii) is a post-hoc rationalization
for SBSM’s breach of the contract, and stresses (Dkt. 145, at 18) that SBSM did not invoke
the “for cause” provision in 2016. Rather, after Rodney Steven orally complained to
plaintiff, and plaintiff reminded him of the 180-day notice provision, Steven simply
responded, “well, your notice is starting right now.” Steven did not indicate that he was
invoking the right to immediate termination under § 3(D)(ii).
Further, plaintiff argues that the concerns cited by Steven, such as losing money,
are insufficient to trigger application of § 3(D)(ii), which is reserved for a complete failure
or refusal to do the work of CEO.
The court finds that plaintiff is entitled to summary judgment on unpaid salary.
Defendants’ interpretation of the “duties” contemplated § 3(D)(ii) — that they included,
for example, the fielding of profitable teams, might be reasonable if viewed purely in
isolation from the rest of the Agreement and the circumstances of the parties. The SBSM
franchises had been historically losing money. Section 3(D)(ii) calls for a “reasonable
opportunity to cure,” which implies that the underlying default must be something
22

which can be corrected more readily that a hockey team’s profitability (for which SBSM
gave Violetta only a month to “cure”).
More importantly, interpreting the specific “just cause” provision so broadly that
it incorporates everything from increased profitability to nebulous concepts like
increasing “respect” from subordinates has the effect of nullifying the Agreement’s
general provision of termination only upon 180-days notice. It has the effect of making
the exception swallow the general rule. This construction is further appropriate given the
fact that the Agreement was drafted by Rodney Steven on behalf of SBSM.2
The court finds that only SBSM is liable to plaintiff on the breach of contract claims.
Defendants presented evidence that SBSM was the only defendant which was a party to
the Agreement, and accordingly only it can be liable of the breach. See City of Andover v.
Southwestern Bell Telephone, L.P., 37 Kan.App.2d 358, 362 (2007).
Plaintiff argues that the remaining defendants are also subject to liability under
the doctrine of piercing the corporate veil. See Kilpatrick Bros., Inc. v. Poynter, 205 Kan.
787, 796-97, 473 P.2d 33 (1970); University of Kan. v. Sinks, 565 F. Supp. 2d 1216, 1239 (D.
Kan. 2008).

2 Because the court finds that plaintiff was entitled to 180-days notice under the uncontroverted facts, it
need not resolve the additional claims advanced by defendants as part of their Section 3(D)(ii) argument
— that their emails should be deemed the required written notice or that the oral communications reflected
substantial performance. Plaintiff notes substantial Texas authority indicating that in similar circumstances,
where a contract calls for written notice, oral notice is insufficient. See, e.g., Emerald Forest Util. Dist. v.
Simonsen Constr., 679 S.W.21d 51, 54 (Tex. App. 1984).

23

The court declines to impose such liability for two reasons. First, the present
attempt to claim liability under a corporate veil is barred by the history of the action. Such
a claim is an equitable remedy which must be adequately pled, yet the Pretrial Order
entered in the action makes no mention of the issue. To the contrary, with respect to the
contract claim, the Pretrial Order makes no allegation of the factors supporting such an
equitable remedy.
Second, even if the claim were properly before the court, application of the
doctrine is not justified under the facts of the case. At most plaintiff has shown some
informality among the defendants’ family-held businesses, but there is not indication of
fraud or other unfairness to plaintiff in respecting the corporate structure of defendants.
Piercing the corporate veil requires both a disrespect of the separate identity of a
corporation, and a resulting fraud or injustice relating to plaintiff. See NLRB v. Greater
Kan. City Roofing, 2 F.3d 1047, 1052 (10th Cir. 1993).
Here, plaintiff has failed to show that SBSM cannot compensate him for the
recovery to which he is entitled, and has failed to show that in any way he was misled as
to the defendants’ corporate structure. Based on the evidence in the record, the court
grants summary judgment to defendants, other than SBSM, as to plaintiff’s contract
claims.
With respect to plaintiff’s ERISA and COBRA failure-to-notify claims, defendants
argue in their motion that the court should determine that (1) only SBSM-A, as the plan
administrator, is liable for any statutory penalties for a failure to provide required notices
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and information, (2) that no penalties may be awarded because plaintiff himself
contributed to any delays, (3) that no penalties should be awarded given an absence of
bad faith or actionable damages by Violetta, and (4) any attorney fees should be limited
to the reasonable expenses of obtaining the required notices. Plaintiff argues in his motion
that the court should award penalties under COBRA and ERISA for the failure to provide
timely notices. Plaintiff argues that such penalties should be awarded against all
defendants as part of the “control group” which included his employer SBSM, citing Law
v. Ernst & Young, 956 F.2d 364 (1st Cir. 1992) and Carner v. MGS-576 5th Ave., Inc., 992 F.
Supp. 340, 358 (S.D.N.Y. 1998).
The court finds that, were it to award penalties, they would be assessed against
SBSM-A only, as that company has been designated the plan administrator. Ernst &
Young, cited by plaintiff, is distinguishable. In that case, the court held that Ernst &
Young, the successor of the defunct Arthur Young accounting firm, could be held liable
as plan administrator, even though an internal Arthur Young committee had been the
formally-designated administrator. The court cited “the plethora of evidence indicating
that Arthur Young had assumed and controlled the plan administrator’s function.” 956
F.2d at 372. Moreover, the court expressed concern that a contrary rule, under the
circumstances of the case, could unfairly preclude any recovery Id. at 373 “If a company
ignored in practice any distinction between the administrator and itself, and assumed
responsibility for responding to plan inquiries (as Arthur Young appears to have done
here), both it and the purported plan administrator would be immune from liability.”
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Carner v. MGS-576 5th Ave., Inc., 992 F. Supp. 340, 358 (S.D.N.Y. 1998) is similarly
distinguishable. In that case, counsel for the defendant corporations both “conceded that
the Plan failed to designate a Plan administrator” and indeed “that defendants (and not
Blue Cross) were the Plan’s administrator.” The court recognized that where no
administrator is designated under a plan, the plan sponsor (the employer) is responsible
for complying with COBRA. See 29 U.S.C. § 1002(16)(A).
There is no similar concession here. There is no evidence that Violetta was
employed by any defendant entity, no evidence that any other entity assumed control of
the COBRA and ERISA obligations, and no evidence that the administrator is insolvent
or otherwise unable to pay any penalty.
The court denies summary judgment as to defendants’ claim that no penalties
should be awarded because plaintiff contributed to the delays involved. First, there is a
factual dispute as to whether Violetta was actually responsible for developing COBRA
and ERISA procedures. Second, the statutory provision cited by defendants, 29 U.S.C. §
1132(c)(1) simply provides that penalties may be limited where a lack of notice was due
to “matters reasonably beyond the control of the administrator.” Even assuming for the
sake of argument that Violetta had been tasked with developing notice procedures and
thus “contributed to” the delay in sending notice (Dkt. 128, at 12), this does not mean that
it was reasonably beyond SBSM-A’s control to realize, promptly, that no proper
procedures were in place and provide the required notice.

26

Nonetheless, the court finds that no penalties should be awarded given all the
circumstances of the case, including the relatively brief nature of the delay, the absence
of evidence of bad faith on the part of defendants, and extremely limited evidence of
actual prejudice cited by plaintiff. Plaintiff notes that an absence of bad faith or lack of
prejudice does not “exonerate[]” a defendant. See Daughtrey v. Honeywell, Inc., 3 F.3d 1488,
1494 (11th Cir. 1993). At the same time, both remain highly relevant factors for the court
to employ in exercising its discretion whether to award statutory penalties.
Finally, the court agrees that plaintiff’s recovery for attorney fees under 29 U.S.C.
§ 1132(g)(1) is limited to the efforts reasonably expended in obtaining the required notices
in 2016.
Plaintiff argues that the defendants’ motion is “premature” and “misplaced at the
summary judgment stage.” (Dkt. 141, at 17). He also argues that the request “ignores
other considerations, including culpability and the deterrence value of attorneys’ fees.”
(Id.). Plaintiff supplies no authority for the argument that the court cannot award partial
summary judgment on the issue, and no evidence to support any claims of particular
culpability or required deterrence.
In particular, the court notes that plaintiff provides no response to the concerns
expressed in cases noted by defendants, such as Bos v. Bd. of Trustees, 818 F.3d 486, 493
(9th Cir. 2016), which have specifically cautioned against an expansive reading of §
1132(g)(1), or even articulating how an award of fees is appropriate in light of the factors
set forth in Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 13836 (10th Cir. 1997).
27

The court finds plaintiff has failed to demonstrate evidence of bad faith or
enhanced culpability or any substantial value for deterrence. There is no evidence that
the benefit from an award of fees will inure to any party other than Violetta and his
counsel. As noted earlier, delay did occur but it was relatively limited, and plaintiff has
failed to show that his out-of-pocket medical expenses exceeded the cost of additional
premiums for continued coverage.
Defendants are entitled to summary judgment as to plaintiff’s claims of breach of
fiduciary duty under 29 U.S.C. § 1132(a)(2) and (3). The former provides actions against
plan fiduciaries where the claim is brought to provide recovery “to such plan.”
Notwithstanding plaintiff’s testimony presented as a correction to his deposition that he
is also bringing his claim “on behalf of the plan,” the fact remains that in the Pretrial
Order (Dkt. 121), which controls the course of the litigation, advances claims only for his
own monetary benefit.3 Accordingly, defendants are entitled to summary judgment on
the issue.
The same result holds true for plaintiff’s claim under § 1132(a)(3), which only
provides for equitable relief. Plaintiff notes that in certain circumstances, monetary
awards may be made under this section, citing CIGNA Corp. v. Amara, 563 U.S. 421 (2011).
The court awarded damages in that case, however, under circumstances markedly
different from the present case. There, the plan’s decision to change its structure resulted

3

The Amended Complaint also advances no claim on behalf of the plan. (Dkt. 86, ¶ 52).

28

in halving the vested annuity which some plaintiffs expected to receive. Under these
circumstances, the court construed monetary payments as “‘compensation’ for loss
resulting from a trustee’s breach of duty.” 563 U.S. at 441-2. The required payments had
the equitable effect of restoring plaintiffs to their prior position.
The present case presents no such denial of vested ERISA annuities, and any
award of monetary damages under § 1132(a)(3) would in direct conflict with the language
of the statute.
Defendants argue that the court should dismiss plaintiff’s claims arising under the
KWPA because: (1) plaintiff’s claim for unpaid salary after his termination is not a claim
for “wages” within the meaning of the KWPA, (2) unused vacation pay is recoverable
only if the employer had a policy of paying out such benefits, (3) any recovery for unpaid
bonuses or other compensation is barred because defendants’ actions were not willful,
and (4) only SBSM is subject to liability under the statute. (Dkt. 128 at 21-26). Plaintiff
indicates that he is not seeking vacation pay as part of his KWPA claim, but otherwise
argues that all of the cited wages and benefits are compensable under the KWPA, and,
citing Benjamin v. Manpower, Inc. of Wichita, 3 Kan.App.2d 657, 600 P.2d 148 (1979), argues
that defendants’ violation of the statute was willful. (Dkt. 141 at 11-13).
The court grants summary judgment as to plaintiff’s claim that defendants failed
to provide 180 days notice, under which he seeks recovery for the remainder of his
unpaid salary. Under the KWPA, “wages” means “compensation for labor or services
rendered by an employee.” Here, plaintiff never rendered services for the unpaid salary,
29

his claim is prospective only, and premised on services that were yet to be performed.
Violetta cites no authority for treating unpaid future salary as earned “wages” within the
meaning of the statute, and defendants are entitled to summary judgment on the issue.
The court finds that a material issue of fact precludes any award of summary
judgment as to the remaining unpaid benefits. Defendants correctly note that under
Kansas law, willfulness means acting with “a design, purpose, or intent on the part of a
person to do wrong or to cause an injury to another,” A.O. Smith Corp. v. Kansas Dep’t of
Human Resources, 36 Kan.App.2d 530, 543 (2005), and that the KWPA penalty will not be
imposed where the employer does not act willfully, but as the result of an “’honest
dispute’ …. over the amount of wages due.” Coma Corp. v. Kansas Dep’t of Labor, 283 Kan.
625, 646 (2007). Defendants argue that Violetta was terminated only after repeated
warnings and encouragements for better performance.
The court finds that Benjamin, relied upon by e defendants, does not compel the
determination that the nonpayment of compensation was willful. That case in fact
stressed “[t]he general rule … that the determination of a knowing and willful failure to
pay wages is a matter that is properly left to the finder of fact.” 3 Kan. App. 2d at 658; 600
P.2d at 150. The court’s determination that defendant had willfully failed to pay earned
vacation benefits was closely tied to the evidence in that case, which showed that “the
contract term had passed without the employer complaining to the worker about the
quantity or quality of his work.” Id. at 661; 600 P.2d at 151. The “honest dispute” defense
should not be allowed, the court concluded, because “an employer [should not] be
30

permitted to reexamine whether or not an employee’s work was ‘satisfactory’ after wages
(vacation pay) have been earned and the employee has been terminated.” Id. at 661; 600
P.2d at 152.
Here, there is evidence that defendants vigorously complained of Violetta’s
performance prior to his termination. As discussed earlier, the court concludes that based
on the evidence in the record, plaintiff is entitled to recover his unpaid bonuses and other
compensation under the Agreement. But the matter may not have been so clear to
defendants in 2016, and given all of the evidence in the case and the preference for
resolution of the issue by the trier of fact, the court will not resolve the issue by summary
judgment.
The court will not award summary judgment in favor of the individual
defendants. Under K.S.A. 44-323(b), an owner of a company may be subject to the
statute’s penalties if the owner “has charge of the affairs of the employer” and
“knowingly permits the employer” to violate the KWPA.
With respect to individual defendants Brandon and Johnny Steven, both parties
stress (Dkt. 141 at 14; Dkt. 144 at 11) that the other side has failed to introduce evidence
as to their participation in the management of SBSM and Violetta’s termination. Both
parties are correct — there is simply no evidence before the court as to these defendants.
But the underlying motion is defendants’ summary judgment motion, where the
statement of facts mentions Brandon and Johnny Steven only to indicate that they live in
Kansas and own SBSM, but were not parties to the Agreement with plaintiff. The
31

memorandum fails to provide any evidence that Brandon and Johnny Steven were not
involved in SBSM’s management, or what they may have known of the company’s
relationship with Violetta. Because defendants have not proven these individuals have
no responsibility for any KWPA violation, the motion for summary judgment is denied.
Defendants acknowledge that the issue of liability as to Rodney Steven is “a closer
question,” (Dkt. 144, at 11) but argues that summary judgment is appropriate because
Rodney did not knowingly violate plaintiff’s KWPA rights. As with the other individual
defendants, the court will deny summary judgment. There is substantial evidence that
Rodney was keen to hire another manager for the Franchises, and Violetta disputes the
validity of the complaints raised against him.
Finally, defendants have moved for an award of attorney fees for their expenses
in responding to Violetta’s age discrimination complaint. “When a defendant is the
prevailing party on a civil rights claim … district courts may award attorney's fees if the
plaintiff's ‘claim was frivolous, unreasonable, or groundless,’ or if ‘the plaintiff continued
to litigate after it clearly became so.’” CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642,
1646, 194 L. Ed. 2d 707 (2016) (quoting Christiansburg Garment Co. v. EEOC, 434 U.S. 412,
422, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978)).
“Without foundation” is nebulous and begets the very post hoc fallacy the
Court warned against. See [Christianburg,] at 421-22 (“[I]t is important that
a district court resist the understandable temptation to engage in post hoc
reasoning by concluding that, because a plaintiff did not ultimately prevail,
his action must have been unreasonable or without foundation.”). But
“frivolous” and “unreasonable” are both terms of art in the law.
“Frivolous” means “[l]acking a legal basis or legal merit; not serious; not
32

reasonably purposeful.” BLACK’S LAW DICTIONARY 692 (8th ed. 1999).
“Unreasonable” means “[n]ot guided by reason; irrational or capricious.”
Id. at 1574. “Courts should therefore ask whether the action was irrational,
capricious, not guided by reason, not serious, or not reasonably
purposeful.” Watson v. Cty. of Yavapai, 240 F. Supp. 3d 996, 1000 (D. Ariz.
2017).
Martinez v. Maricopa County Com. Col., 2018 WL 2119338, *2 (D. Ariz. May 8, 2018).
Defendants stress, first, that the claim was withdrawn only at the last minute, just
before the Pretrial Order, after defendants had expended substantial effort in preparing
to defend the claim. Second, the plaintiff did not undertake any substantial effort to
obtain discovery as to the issue. Third, defendants argue that the circumstances of the
case — Violetta was hired when he was 56 years old fired six months later — mean that
the claim “defied all common sense.” (Dkt. 128, at 27). In support of the last point,
defendants note the Seventh Circuit’s observation in Kadas v. MCI Systemhouse Corp., 255
F.3d 359, 361-62 (7th Cir. 2001):
[I]t is eminently reasonable to doubt that, as in this case, a worker hired at
an age well beyond that at which the protections of the age discrimination
law click in and terminated within months, that is, before he is appreciably
older, was a victim of age discrimination. A company that didn't want 54year-olds on its payroll would be unlikely to hire one rather than to hire
one and promptly fire him, thus inviting a lawsuit because terminated
workers are much more likely to sue than ones who have merely not been
hired, because of the greater difficulty of proving damages in the latter case.
Plaintiff opposes the motion for summary judgment, citing both his and his
counsel’s affidavits that state, in purely conclusory fashion, that ADEA claim was not
made in bad faith. Plaintiff neither mentions Kadas nor responds to defendants’ point
about the lack of discovery on the issue. He does contend that a claim of age
33

discrimination would have been supported by the ultimate hiring of Kuzmin, and claim
that evidence at trial would have shown that many of the concerns raised by Rodney
Steven were false and pretextual. Finally, they argue that the issue is precluded by the
February 5, 2018 agreed order dismissing claims, under which each party would bear
their own costs.
The court finds the issue is properly before the court and not waived, as the Pretrial
Order specifically notes that defendants were reserving the issue. (Dkt. 121, at 9). The
conclusory affidavits offered by Violetta and counsel do little to resolve the issue, since
defendants’ right to fees turns on an objective assessment of the age discrimination claim.
Fees may be awarded for advancing a frivolous claim, “even though not brought in
subjective bad faith.” Christianburg, 434 U.S. at 421.
The issue is close, and the court is particularly troubled where plaintiff placed so
little effort into documenting an inherently suspect claim. Nonetheless, the burden for
awarding fees is high, and the court in its discretion finds that defendants have not
demonstrated they are entitled to fees under the circumstances of the case.
In summary the court grants summary judgment in favor of plaintiff as to his
claims of breach of contract for unpaid travel expenses, housing costs, bonuses, and the
unpaid salary he would have earned if properly terminated with 180 days notice against
SBSM. The court grants summary judgment in favor of the remaining defendants on these
claims. The court finds that a material issue of fact exists whether unused vacation
benefits are recoverable as a part of plaintiff’s claim for breach of contract. Neither party
34

has submitted evidence showing that such benefits were customarily paid, or were
customarily not paid. In the absence of such evidence, let alone evidence resolving the
matter beyond a reasonable doubt, the court declines to resolve the matter by summary
judgment.
The court denies plaintiff’s claims for breach of fiduciary duty under ERISA, and
his claims for civil penalties based on improper notice under ERISA and COBRA. The
court grants judgment in plaintiff’s favor as to his actual damages for lack of notice
against SBSM-A; such claims against the remaining defendants are dismissed. The court
will authorize an award of reasonable attorneys’ fees for work expended on obtaining the
required notices; such claim for fees is otherwise denied.
The court denies plaintiff’s KWPA claims to the extent it is premised on unpaid
salary. With respect to the remaining claims, the court finds that a material issue of fact
exists with respect to the willfulness of the alleged violation, and the participation in the
action by the individual defendants.
The court denies defendants’ motion for attorneys’ fees in defending the ADEA
claim.
IT IS ACCODINGLY ORDERED this 31st day of May, 2018 that the defendants’
Motion to Strike (Dkt. 147) is denied; the plaintiff’s and defendants’ Motions for

35

Summary Judgment (Dkts. 127, 129) are granted in part and denied in part as provided
herein.
J. Thomas Marten
J. THOMAS MARTEN, JUDGE

36