Goldberg v. Jacquet

Filing 34

OPINION & ORDER re: 24 MOTION for Summary Judgment Notice of Motion. filed by Ernest K. Jacquet. For the foregoing reasons, Jacquet's motion for summary judgment is granted. The Clerk of the Court is directed to enter judgment and terminate this matter. (As further set forth in this Order) (Signed by Judge Paul A. Crotty on 8/31/2015) (lmb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

------------------------------------------------------------)(
MARC GOLDBERG,

Plaintiff,
-against14 Civ. 1581 (PAC)
ERNEST K. JACQUET,

Defendant.

OPINION & ORDER

------------------------------------------------------------)(
HONORABLE PAUL A. CROTTY, United States District Judge:
Plaintiff Marc Goldberg ("Plaintiff' or "Goldberg") sued Defendant Ernest K. Jacquet
("Defendant" or "Jacquet"), alleging violations of the New York Labor Law ("NYLL"), unjust
enrichment, and promissory estoppel after Goldberg did not receive full compensation for his
employment at Passport Brands. Jacquet now moves for summary judgment on all of
Goldberg's claims. For the following reasons, the motion is granted.
BACKGROUND 1
Goldberg was employed by Passport Brands Inc. ("Passport"), a publicly traded textile
and apparel company formerly known as LC. Isaacs & Company, Inc. Def. 56.1 Statement iii! 12. In 2000, Goldberg began working as an independent sales representative for Passport, and in
2002 he became a national sales manager. Id.

iii! 6-7.

In 2002, he signed a sales representation

agreement, which was amended in 2006. Id. iii! 8-9. In July 2007, Goldberg became Vice

1 These

facts are derived from Jacquet's 56.1 Statement and Goldberg's Counter-Statement. The Court recounts
only those facts necessary to decide this motion.

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President of Sales for Men's and Women's at Passport. Id.

if 12. His 2007 Employment

Agreement was signed on behalf of Passport by Robert Stec, Passport's CEO until July 2012. Id.

ifil 4, 13 . That agreement provided for an annual base salary of $325,000.

Id.

if 14.

Jacquet became involved with Passport as an investor in the early 2000s, when he
purchased shares of Passport. Id.
Id.

if 29.

if 28 . He obtained a majority interest in approximately 2007.

From 2007 through 2014, Jacquet invested approximately $10-12 million in Passport,

and became its non-Executive Chairman in 2013. Id.

ifif 32-33. He never took a salary from

Passport nor was he reimbursed for his expenses on Passport's behalf. Id.

ifif 34-35. His role

was to find investors to invest in Passport and otherwise raise money for Passport. Id.

if 38.

In November 2011, Passport began withholding a portion of Goldberg's salary to cover
general business and operating expenses. Id.

iJ 56.

In April 2012, the parties discussed a revised

compensation package for Goldberg but never put any agreement into writing. Id.

ifif 57-58; PL

Counter-Statement ifil 57-58. In July 2012, Goldberg and Passport again sought to amend
Goldberg's compensation package, but no agreement was reached and the draft agreement was
never signed. Def. 56.1 Statement iii! 59-60; Pl. Counter-Statement iii! 59-60.
Goldberg agreed to delay the normal payroll, and then agreed to accept a reduced wage
and be repaid when Passport received additional cash. Def 56.1 Statement iii! 62-63. Goldberg
asserts that this agreement was coerced because he was repeatedly told that if he did not agree,
the company would fold and he would be terminated. Pl. Counter-Statement iii! 62, 65, 68, 70,
72, 96. In July 2012, the amount withheld from Goldberg's salary increased. Def. 56.1
Statement if 65. The management team, including Plaintiff, tentatively agreed to take a 20-25%
deferral in base pay to improve Passport's cash flow, after it was guaranteed that they would be
repaid, if Passport became profitable. Id.

if 66. Goldberg disputes that he ever agreed to this

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deferral. Counter-Statement if 66. In November 2013, the amount of wages withheld increased
again. Def. 56.l Statement if 69. On May 8, 2014, Robert Arnot, then CEO of Passport,
terminated all Passport employees, including Goldberg. Id.

ilil 76-77.

DISCUSSION
I.

Applicable Law
Summary judgment is appropriate where "the movant shows that there is no genuine

dispute as to any material fact," Fed. R. Civ. P. 56(a), and "the record taken as a whole could not
lead a rational trier of fact to find for the norunoving party," Chabad Lubavitch ofLitchfield Cty.,
Inc. v. Litchfield Historic Dist. Comm 'n, 768 F.3d 183, 192 (2d Cir. 2014) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). Where the moving party has
made an initial showing that no genuine issue remains, the nonmoving party must present
specific evidence in support of its contentions that a genuine dispute exists, Fed. R. Civ. P. 56(e),
and cannot rest on "[ c]onclusory allegations, conjecture, and speculation," Niagara Mohawk
Power Corp. v. Jones Chem., Inc., 315 F.3d 171, 175 (2d Cir. 2003) (citations and internal
quotation marks omitted). The Court resolves all ambiguities and draws all reasonable
inferences against the movant. Pandora Media, Inc. v. Am. Soc '.Y of Composers, Authors &
Publishers, 785 F.3d 73, 77 (2d Cir. 2015) (citation and internal quotation marks omitted).

II.

Analysis
Goldberg does not oppose Jacquet's motion for summary judgment on the claims for

unjust enrichment (Count 2) and promissory estoppel (Count 3). Pl. Mem. at 1 n. l. The motion
is granted with respect to those claims. Goldberg's complaint does not allege specific violations
of the NYLL, so Jacquet moves for summary judgment on the claims under §§ 191,2 193, and

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Goldberg does not dispute that there is no viable claim under§ 191. Pl. Mem. at 8.

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198-b3 of the NYLL. Def. Mem. at 7-12. Goldberg argues that Jacquet is not entitled to
summary judgment because the record demonstrates that Jacquet made unlawful deductions from
Goldberg's salary in violation ofNYLL § 193 and required unlawful kickbacks in violation of
NYLL § 198-b, and that Jacquet has failed to meet his burden of showing no material facts are in
dispute. Pl. Mem. at 4-8.

A. Unlawful Deductions in Violation of NYLL § 193
Under NYLL § 193, "[n]o employer shall make any deduction from the wages of an
employee, except deductions which ... are expressly authorized in writing by the employee and
are for the benefit of the employee." Jacquet argues that the payments withheld from Goldberg
do not constitute deductions and are instead a failure to pay wages not addressed by § 193. The
Court agrees.
"[T]he majority, and more persuasive, interpretation of§ 193 is that it 'has nothing to do
with failure to pay wages or severance benefits, governing instead the specific subject of making
deductions from wages."' Malinowski v. Wall Street Source, Inc., 2012 WL 279450, at *3 n.5
(S.D.N.Y. Jan. 31, 2012) (quoting Monagle v. Scholastic, Inc., 2007 WL 766282, at *2
(S.D.N.Y. Mar. 9, 2007)); accord Moras v. Marco Polo Network, Inc., 2012 WL 6700231 , at *11
(S.D.N.Y. Dec. 20, 2012) (no unlawful deduction claim where employee was paid less than
agreed-upon salary). "[A] 'deduction' is more targeted and direct than the wholesale
withholding at issue here," and "New York courts recognize that the purpose of section 193 is to
'place the risk of loss for such things as damaged or spoiled merchandise on the employer rather

3 Jacquet

originally did not address§ 198-b, but following Goldberg's assertion that the record demonstrates a
violation of§ 198-b, Jacquet seeks summary judgment on claims under that section as well.

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than the employee."' Gold v. Am. Med. Alert Corp., 2015 WL 4887525, at *5 (S.D.N.Y. Aug
17, 2015) (quoting Hudacs v. Frito-Lay, Inc., 90 N.Y.2d 342, 349 (1997)).
Goldberg argues that the Complaint adequately alleges, and the record sufficiently
reflects·, that there were specific deductions from his compensation. PL Mem. at 4-6. But the
Court rejects Goldberg's attempt to portray the withholding of his wages as a deduction, as this
would sanction a skewed interpretation of§ 193. See, e.g., Gold, 2015 WL 4887525, at *2
("Section 193 requires something more [than the total withholding of wages]: a specific instance
of docking the employee's pay" ) (emphasis added). The cases cited by Goldberg are not to the
contrary. See Monagle, 2007 WL 766282, at *2; Kletter v. Fleming, 820 N.Y.S.2d 348, 350
(N.Y. App. Div. 3d Dep't 2006). And Goldberg's effort to explain why his allegations of
deductions are different from a failure to pay wages is meritless. PL Mem. at 6 n.3. That a New
York Court has defined a deduction as " literally[] an act of taking away or subtraction" from the
amount of wages paid to an employee, see Angello v. Labor Ready, Inc., 7 N.Y.3d 579, 584
(N.Y. 2006), does not mean that the Court must interpret the failure to give full wages as a

deduction when it is, in truth, a withholding.
The record demonstrates that Goldberg did not receive wages to which he is entitled, but
it also reflects that he did not have wages deducted in the manner intended to be prohibited by §
193. Accordingly, Jacquet is entitled to summary judgment on Goldberg's claim under NYLL §
193.

B. Unlawful Kickbacks in Violation of NYLL § 198-b
NYLL § 198-b provides that it is "unlawful for any person .. . to request, demand, or
receive ... a return, donation, or contribution of any part or all of said employee's wages [or]
salary, ... upon the statement, representation, or understanding that failure to comply with such

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request or demand will prevent such employee from procuring or retaining employment."
Goldberg argues that there is a genuine dispute over whether Jacquet violated this statute,
because the statute "is violated whenever an employee is in essence deprived by an employer of
part of his agreed upon wages, irrespective of how such deprivation is effected or of whether
money deducted was ever in employee's possession." Pl. Mem. at 7 (citing Falzia v. Meyer, 3
N.Y.S.2d 870, 874 (N.Y. Mag. Ct. 1938)). Goldberg asserts that because he was under threat of
tennination if he refused to accept lower wages, Jacquet's conduct constitutes a violation of§
198-b and that Jacquet has failed to demonstrate that there is not a genuine dispute over this
claim. Id. at 6-8.
The cases cited by Goldberg do not suggest that the conduct here is a violation of the
anti-kickback statute. The Court acknowledges Goldberg's argument that he was under duress to
consent to the receipt of lower wages- he was told that ifhe did not, he would be terminated.
Even so, there is no other indication that any failure to pay Goldberg was a kickback. Courts
have found violations of the anti-kickback statute where employers required fees to be taken out
of employees' wages on threat of termination, or where employers required employees to
purchase certain items necessary for their employment with their own wages. See Fermin v. Las
Delicias Peruanas Restaurant, Inc., 2015 WL 1285960, at *18 n.8 (E.D.N.Y. Mar. 19, 2015)
(citing cases). No case has found the conduct at issue here, the withholding of wages based on a
general "threat" that the company would fold and the employee would be terminated if the wages
were not withheld, to constitute a kickback, and the Court declines to find so here.

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As stated above, it is clear from the record that Goldberg was not paid money to which he
was entitled. But it is also clear that Goldberg's case seeks to fit a square peg into a round hole
in order to find a violation of the NYLL. The Court declines to accept these skewed
interpretations of the relevant statutes, and finds that as a matter of law the conduct at issue here
does not violate either§§ 193or198-b of the NYLL.

CONCLUSION
For the foregoing reasons, Jacquet's motion for summary judgment is granted. The Clerk
of the Court is directed to enter judgment and terminate this matter.

Dated: New York, New York
August 31 , 2015

PAULA. CROTTY
United States District Judge

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