Dreni v. Printeron Am. Corp.

486 F.Supp.3d 712

Denis DRENI, Plaintiff,

v.PRINTERON AMERICA CORPORATION, Defendant.

1:18-cv-12017-MKV

United States District Court, S.D. New York.

Signed September 14, 2020

James Duncan Bailey, Hozaifa Cassubhai, Eric Wertheim, Bailey Duquette P.C., New York, NY, for Plaintiff.

Tracey Salmon-Smith, Faegre Drinker Biddle & Reath LLP, Florham Park, NJ, Lucas Michelen, Faegre Drinker Biddle & Reath LLP, New York, NY, for Defendant.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART MOTIONS FOR SUMMARY JUDGMENT

MARY KAY VYSKOCIL, United States District Judge:

Plaintiff Denis Dreni brought this action against Defendant PrinterOn America Corporation ("PrinterOn"), his former employer, to recover unpaid commissions under his employment contract following his termination from the company. Pending before the Court is a motion for summary judgment by PrinterOn and a motion for partial summary judgment by Dreni. For the reasons discussed below, PrinterOn's motion for summary judgment is GRANTED IN PART AND DENIED IN PART and Dreni's motion for partial summary judgment is GRANTED IN PART AND DENIED IN PART.

I. BACKGROUND

A. Factual Background

1. The Employment Agreement and Commission Plans

At its essence, this is a contract dispute that arose after PrinterOn, a cloud-based printing company, fired one if its high-level salespersons, Dreni. In early May 2012, a mutual acquaintance introduced Dreni to Kenneth Noreikis, Vice President of Sales and Marketing for PrinterOn, who then broached a potential employment opportunity for Dreni to PrinterOn. (Pl.’s Resp. Def.’s 56.1 ¶¶ 5, 13 [ECF No. 57].)¹ After weeks of negotiations regarding terms of employment, PrinterOn hired Dreni as Director of Strategic Alliances & Enterprise Accounts. (Id. ¶¶ 15–16; Jt. 56.1 ¶ 5 [ECF No. 49].)² On June 22, 2012, Dreni and PrinterOn CEO and President Angus Cunningham executed Dreni's employment agreement ("Employment Agreement"), which the parties agreed would be governed by New York law, as well as a Proprietary Information and Invention Agreement. (Jt. 56.1 ¶¶ 6–8.)

Under the Employment Agreement, Dreni was entitled to a base salary and "commission based upon sales revenue procured in [his] assigned market space." (Jt. 56.1 Ex. 1 [ECF No. 49-1].) The Employment Agreement provided for commissions based on both personal sales and company sales. Dreni's commission payments were governed by separate commission plans that PrinterOn issued each year beginning with the Fiscal 2013 Commission Plan ("2013 Commission Plan"). (Jt. 56.1 ¶¶ 11–12.) Under the 2013 Commission Plan and subsequent plans, Dreni's commissions were contingent on his "Annual Personal Quota" (personal sales performance) and the "Annual Company Target" (company sales performance). (Jt. 56.1 Ex. 1.) The "Annual Personal Quota" section of the 2013 Commission Plan states, "$1,000,000 net new revenue in your Target Market.... All hardware, software, training and services revenue will count toward my annual quota." (Id. ) The "Annual Company Target" section states, "$5,200,000 Revenue for each fiscal year ended April 30." (Id. ) The "Variable Compensation on Annual Personal Quota" section provides that Dreni would earn "4.5% of net new subscription revenue on net new subscriptions in [his] Target Market up to the first $1,000,000 of [his] Annual Personal Quota" and 5.63% of revenue on subscriptions over $1,000,000. (Id. ) Finally, the "Variable Compensation on Annual Company Target" section provides that Dreni would earn a set amount of dollars for each revenue milestone PrinterOn achieved. (Id. ) The plans that followed the 2013 Commission Plan were structured similarly. (See generally Jt. 56.1 Exs. 2–5 [ECF Nos. 49-2–5].)

2. The Docomo Account

Among the accounts serviced by Dreni while he was employed at PrinterOn was Docomo interTouch Pte. Ltd. ("Docomo"), an internet service provider for hotels in the Asia-Pacific region. (Pl.’s Resp. Def.’s 56.1 ¶ 30.) The 2013 Commission Plan lists Docomo under Dreni's "Duties and Responsibilities" with the description, "Expand relationship to Nomadix and NTT Docomo (parent)." (Jt. 56.1 Ex. 1 [ECF No. 49-1].) PrinterOn aimed to extend its existing relationship with Docomo to Nomadix, a hardware manufacturing division of Docomo, and NTT Docomo, Docomo's parent company. (Id. ¶¶ 43–47.)

In February 2012, four months before Dreni was hired, PrinterOn and Docomo signed a letter of intent regarding a $1 million reseller and distributor agreement. (Pl.’s Resp. Def.’s 56.1 ¶¶ 30–31.) The letter states that "[u]pon execution of the Reseller and Distribution Agreement Docomo interTouch shall pay to PrinterOn a one-time sum of US $1,000,000 for the 7,500 annual PrinterOn subscriptions." (Salmon-Smith Decl. Supp. Ex. H [ECF No. 52-8].)³ Between March 2012 and June 22, 2012, the date Dreni was hired, PrinterOn and Docomo negotiated the terms of the agreed upon $1 million purchase of PrinterOn subscriptions. (Pl.’s Resp. Def.’s 56.1 ¶ 34.)

The parties agree that the $1 million Docomo deal, or pre-payment, did not count towards Dreni's personal sales quotas but disagree whether it should have counted towards his company target quota. The Docomo pre-payment was discussed during the negotiations of Dreni's Employment Agreement. Noreikis e-mailed Dreni a "model for his compensation plan," which lists Docomo under Dreni's initial personal accounts with the note "pre-payment does not apply to company target." (Salmon-Smith Decl. Supp. Exs. O–P [ECF Nos. 52-15–16].) When Dreni asked, "Why are we leaving out any prepayment from Docomo from the company number?," Noreikis responded that it was "not in the budget" but "the hardware that will ship to support the subscriptions will apply to your personal and company number." (Salmon-Smith Decl. Supp. Ex. E [ECF No. 52-5].) In deposition testimony, Noreikis recalled:

I had a material project that was going to close, was likely going to close with Docomo. I didn't know if the [Docomo] contract was going to sign days before [Dreni] started or two days after he started, and that for purposes of compensation plan, the million dollar project at Docomo would not accrue to a sales compensation for either the personal number or the company number.

(Salmon-Smith Supp. Decl. Ex. I 87:11–19 [ECF No. 52-9].)

On August 12, 2012, two months after Dreni was hired, PrinterOn issued a $1 million invoice to Docomo for 7,500 pre-paid software licenses. (Salmon-Smith Decl. Supp. Ex. R [ECF No. 52-18].) Shortly thereafter PrinterOn received from Docomo an executed agreement in which Docomo agreed to pre-pay $1 million for the rights to redistribute a set number of PrinterOn subscriptions. (Salmon-Smith Decl. Supp. Exs. S–T [ECF Nos. 52-19–20].)

Discussions between Dreni and PrinterOn about commissions from the Docomo pre-payment continued after the deal was finalized. In a January 2013 e-mail sent to Noreikis, Dreni stated, "it is not fair that the company number, now, suddenly becomes complicated. I agreed with you, that Docomo will not be part of my company number." (Salmon-Smith Decl. Supp. Ex. X [ECF No. 52-24].) In addition, in a May 2013 e-mail chain with Noreikis, Dreni stated, "I am not asking to be paid commission on the 1 million dollar Docomo order. This has nothing to do with my personal number. This has only to do with my company number," and "I am NOT asking for you to include the Docomo number as part of my FY13 commission benefit.... (it is not in my contract btw, I never thought it was. On the contrary Docomo was part of my targeted accounts.") (Salmon-Smith Decl. Supp. Ex. W [ECF No. 52-23].) Noreikis again told Dreni that he would not receive commissions on the $1 million Docomo pre-payment. (Salmon-Smith Decl. Supp. Ex. Y [ECF No. 52-25].)

3. Dreni's Termination

On January 4, 2018, PrinterOn terminated Dreni. (Jt. 56.1 ¶ 17.)⁴ Section 4.1(D) of the Employment Agreement provides that upon termination, Dreni would be paid "any applicable outstanding commissions up to the date of such termination." (Jt. 56.1 Ex. A.) Upon his termination, PrinterOn provided Dreni with a termination letter that detailed two payments Dreni received: (1) $49,842.33 representing salary due, commissions on orders not yet processed, and other items; and (2) $155,769.23 representing a lump sum severance payment for an additional thirty-six weeks of salary. (Jt. 56.1 Ex. 6 [ECF No. 49-6].)

The Employment Agreement also contains the following "Release of Claims" provision:

Upon payment of the amounts due upon termination of employment under the applicable Subsection 4.1 B – E, ... the Employee shall have no claim against the PrinterOn Group for damages, termination pay, severance pay, pay in lieu of notice of termination, statutory or otherwise, except in respect of payment of remuneration earned, due and owing to the effective date of termination and the right to dispute whether the termination was for Cause. The payment of any amounts by the Corporation in excess of any amounts owing to the Employee pursuant to applicable legislation and arising as a result of the termination of Employee's employment are conditional upon the execution by the Employee of a full and final release of all claims and possible claims, as well as an indemnity for the Employee's taxes, in favour of the PrinterOn Group and its shareholders, directors, officers and employers in a form acceptable to the Corporation.

(Jt. 56.1 Ex. 1.) Dreni did not execute the "Waiver and General Release" PrinterOn sent to him after his termination. (Jt. 56.1 ¶ 20.)

4. The PrinterOn Laptops

When Dreni was terminated, PrinterOn asked him to return all company property. (Jt. 56.1 ¶ 21.) At the time, Dreni had two PrinterOn laptops in his possession. (Id. ¶ 22.) Dreni gave the laptops to his attorneys for safekeeping in October 2018 while the parties negotiated protocols for Dreni to extract personal information from the laptops. (Id. ¶ 23.) In May 2019, Dreni sent the laptops to a third-party vendor selected by...