Slinger v. PendaForm Company, The

Filing 122

MEMORANDUM AND FINDINGS OF FACT AND CONCLUSIONS OF LAW PURSUANT TO FED. R. CIV. P. 52. Signed by District Judge Eli J. Richardson on 01/13/2021. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(ln)

IN THE UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
JACK L. SLINGER,
Plaintiff,
v.
THE PENDAFORM COMPANY,
Defendant.

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NO. 3:17-cv-00723
JUDGE RICHARDSON
MAGISTRATE JUDGE NEWBERN

MEMORANDUM AND FINDINGS OF FACT AND
CONCLUSIONS OF LAW PURSUANT TO FED. R. CIV. P. 52
I. Introduction1
Plaintiff initially filed this action in Davidson County Chancery Court. On April 19, 2017,
Defendant removed the action to this Court. The Court granted summary judgment to Defendant,
but the Sixth Circuit reversed on July 11, 2019. The Court held a one-day bench trial in this case
on November 25, 2019 before District Judge William L. Campbell, Jr.
On February 3, 2020, as directed by Judge Campbell, each party filed proposed findings of
fact and conclusions of law (Doc. Nos. 95, 96). On February 14, 2020, Judge Campbell recused
himself, and this case was reassigned to the undersigned district judge. (Doc. No. 101). Thereafter,
in a series of orders issued after receipt of input from the parties, the undersigned endeavored to
determine how to proceed, given that: (1) findings of fact and conclusions of law remained to be
issued by the Court; (2) the undersigned had not been present for the testimony that was presented
live (i.e., in-person at trial, as opposed to by read-back of depositions) at the bench trial before

For purposes of this Introduction, the Court assumes the reader’s general familiarity with the
names and items referred to in the Introduction and notes that such are clearly identified below.
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Judge Campbell;2 (3) live testimony potentially could assist the undersigned in making findings of
fact with respect to any facts truly in dispute, especially to the extent that such findings would turn
on credibility determinations as to the witnesses who had testified live (i.e., Plaintiff and Mr.
Kruger); (4) the issue of the enforceability of the Non-Solicitation Clause in the parties’
Employment Agreement had been raised but not yet decided.
Ultimately, the undersigned issued two rulings that dictated what should (and should not)
happen next in this case. First, the Court ruled that the Non-Solicitation Clause was unenforceable.
(Doc. No. 113). Second, the Court ruled that Defendant had waived (or forfeited) the right to assert
that: (a) Plaintiff’s termination was for any “cause” other than breach of the Non-Solicitation
Clause (Doc. No. 120); (b) failure to pay Plaintiff the severance alleged owed him was justified by
Plaintiff’s (alleged) non-compliance with the obligations imposed upon him by subparagraph 6(b)
and paragraph 7 of the Employment Agreement. Together, these rulings had the effect of
eliminating the need to address herein some of the issues the Court otherwise perhaps would need
to address herein. Likewise, the Court’s detailed explanation for these rulings eliminated the need
for the Court to explain (beyond merely referring to the Court’s prior orders) herein the reasons
for those rulings.
The content set forth below shall constitute the findings of fact and conclusions of law
required by Fed. Rule Civ. P. 52. The Court notes that the findings of fact cover some (though not
all) events and circumstances that—because of the Court’s above-referenced rulings—are not

The only witnesses to testify live at the bench trial were Plaintiff and Defendant’s president,
David Kruger.
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material to the Court’s conclusions of law (and resulting resolution of Plaintiff’s claim) but are
part of the overall context of Plaintiff’s claim and thus worth recounting.3
II. Findings of Fact4
At material times, Defendant was a company engaged in the business of extruding and
thermoforming black plastic components for use primarily in the automotive industry. (Plaintiff,
at 29).5 After its below-referenced acquisition by another company in December 2016, Defendant
was headquartered in New Concord, Ohio, having previously been headquartered in Portage,
Wisconsin. (Id. at 29-30). On July 11, 2011, Plaintiff Jack Slinger entered into an Employment
Agreement with the Defendant establishing his position as President and Chief Executive Officer
(“CEO”) with Defendant. (Employment Agreement, at 1 (Plaintiff’s Trial Exhibit 1); Plaintiff, at
59).6 Defendant understood that the contract remained binding and in effect even after the
December 2016 acquisition of Defendant. (Kruger, at 169-70).
The contract defined the “Employment Period” as expiring on July 11, 2014, but that period
was later extended to July 11, 2017. (Employment Agreement, at ¶ 5 (Plaintiff’s Trial Exhibit 1);

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They also are worth recounting because, as the Court fully realizes, Defendant contends that the
Court’s rulings are incorrect, and to the extent such contention is valid, some of these events and
circumstances would be relevant.
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As indicated below, the Court makes some of the below-referenced findings based on the
testimony of Plaintiff, or Mr. Kruger, or both. None of these findings, in the Court’s view, are
contested in any substantial way, and to the extent they may be contested to a degree, none are
material to the Court’s conclusions of law herein. For these reasons, the Court saw no need to take
live testimony from Plaintiff or Mr. Kruger in order to assist with credibility determinations.
5

Citations herein to trial testimony will be in the form of ([last name of witness or counsel
speaking], at [page number of the trial transcript (Doc. No. 94)]. As indicated above, live testimony
was presented of only two witnesses, i.e., Plaintiff and Mr. Kruger; the testimony presented of all
other witnesses was presented by reading portions of their deposition testimony.
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All (trial) exhibits cited herein are all joint exhibits and are marked as such on their first page.
But on the Court’s exhibit sticker, affixed to the back page of each exhibit, every such exhibit is
labeled as a Plaintiff’s exhibit and will be referred to as such in the citations herein.
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Amendment No. 1 (p. 16 of 20)). The Employment Period was subject to early termination upon
the occurrence of certain events, however, including “Termination For Cause” and “Termination
Without Cause.” (Id., ¶ 5).
If the company terminated Plaintiff early “without cause,” it was conditionally obligated
to continue to pay him his base salary and other benefits:

(Id., ¶ 6(b)).

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“Termination without cause” was defined as termination other than either a termination for
permanent disability (which is not implicated in this case) or a termination for cause. (Id., ¶ 8(f)).
“Termination For Cause” is defined by the contract to include a list of circumstances, including
“violation of paragraph 7.” (Id., ¶ 8(e)). Paragraph 7 prohibits certain competitive activity, and
includes the following provision (“Non-Solicitation Clause”):
Executive will not directly or indirectly at any time during the period of Executive’s
employment or for a period of two (2) years thereafter, attempt to disrupt, damage,
impair or interfere with the Company’s Business by raiding any of the Company’s
employees or soliciting any of them to resign from their employment by the
Company, or by disrupting the relationship between the Company and any of its
consultants, agents, representatives or vendors. Executive acknowledges that this
covenant is necessary to enable the Company to maintain a stable workforce and
remain in business.
(Id., ¶ 7(d) (emphasis added)). Before trial, Defendant conceded that the company is relying only
on the alleged breach of the Non-Solicitation Clause as a basis for termination for cause. Slinger
v. Pendaform Co., 779 Fed. Appx. 378, 380 n. 1 (6th Cir. 2019). For this and other reasons, as
noted above, the Court has concluded that Defendant is precluded from now asserting other bases
as termination for cause, and also from asserting any other alleged noncompliance with
subparagraph 6(b) or paragraph 7, as justification for the non-payment of severance which
otherwise would be owed to Plaintiff. (Doc. No. 120).
The Employment Agreement also contains a severability clause:

(Employment Agreement, ¶ 12 (Plaintiff’s Trial Exhibit 1)).

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The Employment Agreement provides that Wisconsin law governs disputes, and the parties
agree that Wisconsin law applies here. (Id., ¶ 17).
On December 22, 2016, Defendant was acquired (from its then-owners, Resilience Capital)
by TriEnda Holdings, LLC (“TriEnda”), a wholly owned subsidiary of Kruger Brown Holdings,
LLC (“KBH”). (Kruger, at 256; Plaintiff’s Exhibit 2).7 KBH is owned by Warren Kruger, his son,
David Kruger, and John Brown.8 (Kruger, at 159). Following the acquisition, Mr. John Brown and
David Kruger were installed as CEO and President, respectively, of the surviving corporation,
Pendaform. (Id., at 94). Mr. Kruger informed Plaintiff that he would no longer act as President and
CEO, but that the company would honor his contract. (Id., at 261-62). Mr. Kruger testified that it
was in the company’s financial interest to pay Plaintiff through the July 11, 2017 term of the
contract because it was less expensive than paying the severance amount. (Id., at 262-63). During
that time, Mr. Kruger told Plaintiff he would be expected to stay at home (in Nashville), forward
company emails to Mr. Kruger, and answer any questions directed to him from Mr. Brown and
Mr. Kruger. (Plaintiff’s Trial Exhibit 5; Kruger, at 262, Plaintiff, at 34). Mr. Kruger testified that
Plaintiff complied with these directives and that Plaintiff was “friendly, respectful, and cordial.”
(Kruger, at 169).
KBH planned to substantially downsize Defendant’s staff and activities after the
acquisition. For example, Defendant’s goal was to shut down its New Concord, Ohio, office
facility within 12 to 24 months after the acquisition. (Id., at 161). Moreover, shortly after the
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The details of the acquisition and subsequent corporation organization are immaterial for present
purposes, but the acquisition was considered a so-called “reverse merger” and was sometimes at
trial referred to as the “merger.”
Mr. Kruger testified that he and his father bought out Mr. Brown’s ownership interest a couple
of weeks before trial. (Kruger, at 159).
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acquisition, in early 2017, Defendant closed down part of the operations (the thermoforming
operations)9 of its plant in Bluffton, Indiana. (Plaintiff, at 60; Kruger, at 260).10 And by the time
of the below-referenced events of February 23, 2017, Defendant had laid off a number of
employees. (White, at 80).
On February 23, 2017 (a Thursday), with the permission of Mr. Kruger, Plaintiff traveled
to the company’s New Concord, Ohio, office to remove his personal belongings from his office
there. (Kruger, at 263). Plaintiff arrived late in the morning and began cleaning out his office.
(Plaintiff, at 40-41). According to Plaintiff, several employees came by to ask him how he was
doing and to ask his plans for the future. (Id., at 41-42). Plaintiff told them he thought the merger
was going well, that he was not sure of his future plans, and generally wished them well. (Id., at
41-42). Once he packed his boxes and put them in the case, he went to the two wings of the facility
to say goodbye to those working there. (Id., at 42). Plaintiff encountered two to three dozen people
at the office, but he could not recall what they spoke about. (Id., at 43). Plaintiff could not recall
saying: “Don’t be the last man standing,” but did not suggest anyone leave their employment with
the company. (Id., at 43-46). At that time, he had no other employment lined up and he did not
want to jeopardize his employment with Defendant. (Id., at 46-47). Plaintiff was at the New
Concord facility for a little over an hour, then drove to Akron to spend the night with his parents.
(Id., at 47-48). Plaintiff returned to Nashville the next day. (Id., at 48).
Over the weekend, Plaintiff tried to log in to his company email, but was unable to do so.
(Id., at 48). Late Monday afternoon, Mr. Kruger called, with Mr. Brown on the phone as well, and
told Plaintiff that he was terminated for “gross misconduct” because he told employees “don’t be

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The extruding operations at Bluffton were closed down somewhat later, in May 2017. (Kruger,
at 260).
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the last man standing.” (Id., at 50-51). At the time of his termination, as the parties stipulated,
Plaintiff’s annual base salary was $401,577. (Welborn, at 28).
Mr. Kruger received Mr. Oliver’s forwarded email at 4:07 p.m. on Friday, February 24,
2017. (Kruger at 177; Plaintiff’s Trial Exhibit 10). At 4:09 p.m., Mr. Kruger forwarded the email
to Mr. Brown, and stated: “I think we should term his contract for breach.” (Plaintiff’s Trial Exhibit
11). It was “clear” to him that this was a “fireable offense,” and he decided to terminate Plaintiff.
(Kruger, at 181). When he advised Mr. Brown by email of this decision, Mr. Brown’s response
was to “stop all payments” to Plaintiff. (Plaintiff’s Trial Exhibit 15).
On the following Monday (February 27), Mr. Kruger asked Sue Long, the human resources
manager, to conduct an investigation. (Kruger, at 268; Plaintiff’s Trial Exhibit 19). Ms. Long sent
Mr. Kruger an email on Monday, at 12:40 p.m. advising him that the employees told her Plaintiff
went through the New Concord facility “shaking hands, saying take care and don’t be the last one
standing.” (Plaintiff’s Trial Exhibit 18). Ms. Long’s conclusion was based on conversations with
five employees: Abby Shockling, Becky White, Derek Reichley, Gary Oliver, and Jeremy Mohler.
(Plaintiff’s Trial Exhibit 19).
On the afternoon of February 27, Mr. Kruger (with Mr. Brown on the line) telephoned
Plaintiff to advise him that he was being terminated for gross misconduct. (Kruger, at 270;
Plaintiff, at 50-51). Mr. Kruger did not mention the Non-Solicitation Clause when he terminated
Plaintiff, (Plaintiff, at 51), but instead relied on “gross misconduct.” (Id., at 51; Kruger, at 270).
Mr. Kruger was not aware of any business Plaintiff would be soliciting employees to join if they
left Pendaform. (Kruger, at 196).
The next day, Mr. Kruger sent Plaintiff an email attaching a termination letter, which gave
notice to Plaintiff that he was being terminated for cause, effective that day, “in connection with

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[Plaintiff’s] actions on February 23, 2017 and in connection with [Defendant’s] investigation into
those actions.” (Plaintiff’s Trial Exhibit 22). The letter did not state any basis for declaring the
termination as “termination for cause.” (Id.). Plaintiff’s termination letter made clear that Plaintiff
would not be receiving any severance payments. (Id.). Mr. Kruger had told Plaintiff that he would
not receive any severance payments, and in fact Plaintiff has received none. (Plaintiff, at 51).
Plaintiff offered the deposition testimony of three of the New Concord employees who
spoke with Plaintiff on February 23, 2017: Becky White, Amy Hoefler, and Abby Shockling.
Defendant offered the deposition testimony of two of those employees: Jeremy Mohler and Gary
Oliver. The Court credits as true all of the below-cited testimony of these respective deponents.
Ms. White testified that Plaintiff came by on that day to “tell me good-bye, and he just wanted to
say good-bye and good luck and don’t be the last man standing.” (White, at 79). When asked what
she understood that phrase to mean, Ms. White testified as follows:
Q. What did you understand him to be saying when he said “Don’t be the last man
standing”?
A. I understood him to be saying that the thoughts that we had about the company
going to close and going downhill, which we were all aware of was going to happen,
could possibly happen a lot faster than we thought it was going to. That was my
thought.
Q. When he told you “Don’t be – don’t be the last man standing,” did that make
you think that you needed to look for another job?
A. No, because we had all had that feeling before. It wasn’t any – it wasn’t a new
feeling. It was just, ah, like I said, it’s going to happen.
***
Q. So are you saying that the morale was not adversely impacted?
A. I don’t think it was adversely impacted, because we knew it was coming. But it
definitely reassured us that it was going to happen.
***
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A. . . . I can say that he did say –
Q. Sure.
A. – “Don’t be the last man standing.”
Q. Did you take that as an instruction of an executive of the company to you?
A. No. I think I took it as good luck and I hope things work out. I – I don’t really
know how to really answer that question. I don’t think he was saying get the heck
out of here now, because if you don’t –
Q. Okay.
(Id., at 79, 84, 88-89).
Amy Hoefler testified that she had a brief conversation with Plaintiff on the day he visited
the New Concord facility: “He came around and shook my hand and just basically said that he was
leaving, and he had enjoyed working with me and wished me the best of luck. And he said, ‘Don’t
be the last man standing.’” (Hoefler, at 111). Ms. Hoefler also testified about what she took that
phrase to mean:
Q. What was his demeanor when he said that to you?
A. I mean, he was – he was just friendly. It was friendly. And just – he was always
very – it was just friendly and outgoing. It wasn’t like a threat or anything. I – I
mean, I didn’t think anything of it, really. I think I laughed, actually, when he said
it.
Q. Did you take it to be any type of order or instruction to you on how to act?
A. No. I mean, no. At the time I really didn’t think anything about it.
***
Q. After Mr. Slinger left did you have any conversations with your co-workers
about his visit?
A. Yes. We did talk about it.
Q. And who would that have been with?
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A. We were all pretty close. There was only a few of us left. I probably talked to,
I think, Abby and Becky. I think – yeah, there was some people actually gone that
day, too, so possible – I can’t remember – possibly Jeremy, too. But I – I think we
were more surprised that he was leaving than actually what he said. It was just –
we had no idea he was leaving.
(Id., at 111-13) Ms. Hoefler did point out that another employee, Gary Oliver, who was close to
retirement, may have been upset about his interaction with Plaintiff, but in her opinion, “It wasn’t
a big deal until it became a bigger deal” when a human resources representative started calling
New Concord employees about Plaintiff’s visit. (Id., at 114). Ms. Hoefler “didn’t really give it a
second thought” and “took it as maybe friendly advice,” but she hoped her employment would
continue with the company. (Id., at 120).
Abby Shockling testified that she recalls Plaintiff walking around and “he basically just
said I think like good luck and don’t be the last man standing, or something like that.” (Shockling,
at 135). Ms. Shockling testified she took that to mean “I guess just probably that we at the New
Concord facility might not have our jobs too much longer,” and that she should go look for another
job. (Id., at 135-36). After the interaction with Plaintiff, Ms. Shockling said the employees were
worried and nervous about their jobs. (Id., at 136-37). Ms. Shockling testified that Plaintiff did not
encourage her to resign her employment with the company or to find a new job. (Id., at 141).
Jeremy Mohler testified that he heard Plaintiff talking with other employees before he
spoke with Mr. Mohler directly. (Mohler, at 214-25). Mr. Mohler recalled hearing Plaintiff
“[t]elling people, you know, good luck, best wishes, to take care of themselves, to not go down
with the ship and to not be the last man standing.” (Id. at 215). Plaintiff told Mr. Mohler, “[t]hat I
should take care of myself, you know, kind of look out for number one first, and you know, not to
go down with the ship.” (Id.). Mr. Mohler said he took those words to mean their jobs might be in
jeopardy, and it might be in his best interest to look for another job. (Id., at 215-16). Mr. Mohler
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explained that his concern was based on the uncertainty brought about by the acquisition. (Id., at
217).
Of the five employees whose testimony was introduced at the trial, Gary Oliver was the
most agitated by Plaintiff’s visit to the New Concord facility. He testified that Plaintiff told him
and other employees there “don’t be the last man standing” and “look out for yourself, or take care
of yourself.” (Oliver, at 239-40). Mr. Oliver interpreted those words as meaning: “that we were all
going to be let go so we better be looking for work.” (Id., at 240). Mr. Oliver testified that it
“alarmed” him that Plaintiff would speak to the employees that way because it was “inappropriate”
and evinced a lack of “professionalism.” (Id., at 240-41). On the other hand, Mr. Oliver explained,
he was not “alarmed” about the idea that he probably should be looking for a job because “we’ve
been hearing that for a year, year-and-a-half . . .” (Id., at 241). Mr. Oliver later sent an email to his
boss, Heidi Bulgrin, expressing his concerns about Plaintiff’s statements.11 (Id., at 243-44). After
Plaintiff left, Mr. Oliver testified, the employees expressed concern about their future with the

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The email, dated February 24, 2017, provides:
I thought you should know that Jack Slinger stopped by yesterday, did a run through
the office, and basically gave everyone here the same message – “don’t be the last
man standing” . . “Take care of yourself” . . I don’t know if while relaxing at home
he just watched a Bruce Willis movie, or what, but for a guy who rarely spoke to
any of us in 3 years, (except for Jim Cavezza) for him to make a special 5 minute
run through, and then be gone, didn’t sit right with me.
I have tried a little damage control and told people what you and I talked about, that
David and John would just like people to give them a chance, that they do not want
to lose us . . . One responded “then why don’t they tell us that?” To which I
responded, give them time – they have a lot on their plate. [ ]
Again, just thought you should know.

(Plaintiff’s Trial Exhibit 9).

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company, but Mr. Oliver told them “David and John [Kruger and Brown] asked us to give them a
chance, and I think that’s what we need to do.” (Id., at 242).
Some five months later, in July 2017, three of these five employees were terminated by the
company. (White, at 87-88; Hoefler, at 119-20; Shockling, at 141; Kruger, at 195). Indeed,
according to Mr. Kruger, all but one or two employees at New Concord were terminated at that
time. (Kruger, at 162, 278). Mr. Mohler left the company voluntarily on January 24, 2018. (Mohler,
at 221; Kruger, at 278). At the time of his deposition on March 8, 2018, Mr. Oliver was still
employed by the company, but was terminated sometime before trial. (Oliver, at 228; Kruger, at
162, 279).
III. Conclusions of Law
Plaintiff’s sole remaining claim is Count II’s claim for breach of contract,12 whereby he
seeks to recover unpaid severance under subsection 6(b) of the Employment Agreement. As noted
above, Wisconsin law governs the Employment Agreement. (Exhibit 1 at § 17). Under Wisconsin
law, a breach of contract claim consists of three elements: (1) an enforceable contract; (2) a breach
of that contract; and (3) damages. Brew City Redev. Grp., LLC v. Ferchill Grp., 714 N.W.2d 582,
588 (Wis. Ct. App. 2006).
Each of the three elements is satisfied here. First, undisputedly, the parties entered into a
contract, the Employment Agreement, which remained in effect at the time in question. And while
the Non-Solicitation Clause is unenforceable, as the Court has ruled, that does not mean that the
Employment Agreement otherwise was unenforceable. In fact, based on its severability clause, the
Employment Agreement’s enforceability was otherwise unaffected, and Defendant does not assert
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The Court and each of the parties respectively has expressed its understanding that Count II is
Plaintiff’s only remaining claim. (Doc. No. 105 at 1; Doc No. 106 at 2; Doc. No. 107 at 2). Count
II, captioned “Pretextual Termination With Cause,” alleges that Defendant terminated Plaintiff
purportedly with cause but actually without cause.
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that it was unenforceable with respect to its provisions regarding Defendant’s obligation to make
the severance payment here at issue.
Second, Defendant breached the Employment Agreement. As noted, the Employment
Agreement requires payment to Plaintiff of his full salary for one year after a termination “without
cause,” meaning a termination not for any of the causes listed in subparagraph 8(e)” (Employment
Agreement, at ¶¶ 6(b), 8(f) (Plaintiff’s Trial Exhibit 1)). This requirement is subject to certain
conditions, namely Plaintiff’s compliance with subparagraph 6(b) and paragraph 7 of the
Employment Agreement.
Defendant cannot rely on a violation of the Non-Solicitation Clause to establish that
Plaintiff’s termination was for cause, because the Non-Solicitation Clause is unenforceable under
this Court’s prior determination. And as the Court likewise previously has held, Defendant has
waived any assertion that Plaintiff’s termination was for any cause other than violation of the NonSolicitation Clause, or that non-payment of severance was contractual justified based on Plaintiff’s
non-compliance with something other than the Non-Solicitation Clause. So Plaintiff has
established that he was terminated without cause and that payment of severance therefore was
contractually required, irrespective of the conditions that conceivably could have obviated that
requirement. By failing to pay the severance as required, Defendant breached the Employment
Agreement.
Finally, Plaintiff has been damaged by the breach. Had Defendant not breached and instead
had paid the severance as required, Plaintiff would have been entitled to severance amounting to
his annual salary of $401,577, not to mention potential other benefits mentioned in subparagraph
9(b) of the Employment Agreement.

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For these reasons, the Court finds and concludes that Defendant breached the Employment
Agreement by terminating Plaintiff without payment of the amount to which he is entitled under
that contract. By January 27, 2021, Plaintiff shall file a supplemental brief stating the amounts due
under the contract, including any request for attorney’s fees. Defendant shall file any response
within 14 days of the date Plaintiff makes his filing.
IT IS SO ORDERED.

____________________________________
ELI RICHARDSON
UNITED STATES DISTRICT JUDGE

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