Drummond v. Akselrad

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KENNETH J. DRUMMOND, Plaintiff, v. IRA AKSELRAD and THE JOHNSON COMPANY, INC. Defendants.

No. 23-cv-179 (LJL)

United States District Court, S.D. New York

May 1, 2023

OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:

Plaintiff Kenneth J. Drummond (“Drummond” or “Plaintiff”) brings this action against Defendants The Johnson Company, Inc. (“The Johnson Company”) and Ira Akselrad (“Akselrad,” and collectively with The Johnson Company “Defendants”), alleging claims under the New York Labor Law, as well as breach of contract and promissory estoppel. See Dkt. No. 1 (“Complaint” or “Compl.”). Defendants move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the third and fourth causes of action of the Complaint with prejudice. Dkt No. 12. For the following reasons, the motion to dismiss is granted without prejudice to Plaintiff's filing of an amended complaint.

BACKGROUND

The Court accepts the well-pleaded allegations of the Complaint as true for purposes of this motion.

The Johnson Company is the private wealth management company established by the descendants of Robert Wood Johnson, the founder of Johnson & Johnson, for the purpose of providing, among other things, investment management accounting support, estate planning services, and management of philanthropic activities for members of the Johnson family and related trusts. Compl. ¶ 7. Defendant Ira Akselrad is the President of The Johnson Company. Id. ¶ 1. Plaintiff became the Chief Financial Officer of The Johnson Company in 2006 and worked in that role until his employment was terminated in March 2021. Id. ¶¶ 1, 8. His job was to execute The Johnson Company's financial strategy to build and manage the Johnson family's wealth. His duties included, but were not limited to, working closely with Akselrad to develop financial plans; managing accounting policies, procedures, and practices; assisting with financial management of The Johnson Company's businesses, ventures and investments, including the New York Jets; supervising the handling of accounts payable; assisting with the Johnson family's philanthropic endeavors; and serving as a director of various Johnson family entities. Id. ¶ 9.

Plaintiff's lawsuit grows out of a change by The Johnson Company in or about 2017 to its policy concerning the accrual of unused personal time off (“PTO”), a dispute between Plaintiff and Akselrad regarding the application of the new policy to Plaintiff, and Defendants' subsequent termination of Plaintiff's employment. At the time Drummond began his employment with The Johnson Company in 2006, the company's vacation policy allowed employees to accrue unused PTO, which carried over, on an unlimited basis, from year to year. Id. ¶ 10. Employees were then allowed to collect accrued and unused PTO in cash upon their separation from employment. Id. Initially, Drummond received four weeks of PTO per year, which was increased to five weeks of PTO per year after he had been employed for five years. Id. ¶ 11. In or about 2017, The Johnson Company changed its PTO policy and adopted a new policy set forth in The Johnson Company Employee Manual (the “Employee Manual”), effective January 1, 2017. Id. ¶ 12. The new policy (the “2017 Policy”) provided that employees could carry over up to five unused PTO days from the previous year and required employees to use the carried-over days before May 31 of the following year or to forfeit the carried-over PTO days. Id. ¶ 13. Plaintiff claims that he and other executive employees were grandfathered into the previous PTO policy and continued to accrue all of their unused PTO. Id. ¶ 14. He alleges that this was evidenced by pay stubs that he and the other executive employees received, which continued to indicate the accrual of PTO in excess of five unused, carried-over PTO days despite the adoption of the new PTO policy. Id. ¶ 15.

On February 12, 2021, Plaintiff had a conversation with Akselrad about a salary increase. Id. ¶ 18. Akselrad regularly encouraged company employees to solicit offers for positions with other employers to “demonstrate their worth,” and in connection with their conversation regarding a salary increase, Plaintiff informed Akselrad that Plaintiff had received a potential job offer with a salary higher than what he was currently earning with The Johnson Company. Id. ¶¶ 17, 19. Akselrad initially offered to raise Plaintiff's salary by $50,000 a year for each of 2021 and 2022 and guaranteed him a bonus of between $50,000 and $100,000. Id. ¶ 20. In the course of discussing the compensation increase, Plaintiff requested that he be paid his accrued and unused PTO in a lump sum to his deferred compensation account. Id. ¶ 21. Akselrad responded that as a result of the change in policy, The Johnson Company did not owe Plaintiff for his accrued and unused PTO. Id. Nevertheless, he offered to make a one-time payment of some proportion to Plaintiff's accrued PTO. Id. Plaintiff replied that he was owed his accrued and unused vacation time because, as evidenced by the pay stubs, he was grandfathered into the previous PTO policy. Id. ¶ 22. In response, Akselrad became demonstrably upset and took an adversarial position towards Plaintiff, telling him “Hear my words, I will never agree to that. Hear my words, I will never agree to that at all. Never, never, never.” Id. ¶ 23. Akselrad continued to try to convince Plaintiff to accept a portion of his accrued PTO as a one-time payment and threatened to retaliate against him if he did not agree to the proposal. Id. ¶ 24. Plaintiff made a compromise proposal under which he would receive a one-time payment for 202 days of unused PTO, which was significantly less than what was indicated on the pay stubs, on February 12, 2021. Id. ¶ 25. But Akselrad immediately responded: “Yeah, you know I got a different proposal. I think you should take the other job.” Id. ¶ 26.

Wishing to remain at The Johnson Company, Plaintiff sent Akselrad an email that same day, stating: “Following up in connection with our conversations of this afternoon and to avoid any misunderstandings, I have not given notice of any voluntary resignation of employment. We should continue our discussions next week. In the interim, I will continue to perform my duties.” Id. ¶ 27. In a telephone call three days later, on February 15, 2021, Plaintiff reiterated that he had not resigned and intended to continue with The Johnson Company. Id. ¶ 28. Akselrad responded that he had decided that Plaintiff “should take that other offer.” Id. ¶ 29. Akselrad further stated, “it does not matter,” “it's done, it's done,” “we are moving on and you should take the other job,” and that he had already spoken to Christopher Johnson and Woody Johnson^[1]about Plaintiff's dismissal and proposed severance package and “that's it.” Id. ¶ 30.

On March 17, 2021, The Johnson Company “punitively” reduced its severance offer to Plaintiff to a figure that “was significantly less than was paid to even a departing administrative assistant, let alone an executive employee with fifteen years' service to the company.” Id. ¶ 34. The Johnson Company had customarily paid departing employees one to two weeks of salary per year of service as a severance package, which would have amounted to over $400,000 in the case of Plaintiff. Id. ¶ 35. After Plaintiff's departure on March 19, 2021, The Johnson Company reduced his accrued and unused PTO to 96.26 days, substantially less than the amount indicated on his pay stubs. Id. ¶¶ 36-37

Defendants also took a number of actions that Plaintiff characterizes as retaliation. On February 19, 2021, Akselrad sent Plaintiff a text message with the name of a potential employer which Plaintiff interpreted as a thinly-veiled threat to interfere with Plaintiff's attempts to secure alternative employment unless Plaintiff waived his claim to unpaid PTO and signed the release prepared by The Johnson Company's counsel. Id. ¶ 31. During a March 4, 2021 telephone call, Akselrad told Plaintiff that he had learned that Plaintiff had not secured alternative employment, to which Plaintiff responded that he had not “quit” as Chief Financial Officer. Id. ¶ 32. Akselrad gave another employee, who had been The Johnson Company's Director of Tax, the title of Chief Financial Officer before Plaintiff's departure, making it appear that Plaintiff had been removed from his position and thus making it more difficult for Plaintiff to secure alternative employment. Id. ¶ 33. Defendants also refused to allow him to port his work cellphone number to a personal account, even though they regularly allowed other departing employees to do so, and even though Plaintiff's cellphone had been his only cellphone for the previous fifteen years. Id. ¶ 38. Finally, while The Johnson Company allowed departing employees to use their work email address for a period of time post-departure, it did not afford Plaintiff the same opportunity. Id. ¶ 39.

PROCEDURAL HISTORY

Plaintiff filed his Complaint on January 9, 2023. Dkt. No. 1. It alleges claims for (1) retaliation in violation of New York Labor Law § 215, id. ¶¶ 40-42; (2) the unlawful deduction of wages in violation of New York Labor Law § 193, id. ¶¶ 43-46; (3) breach of contract for failure to pay Plaintiff all of his accrued and unused PTO, id. ¶¶ 47-52; and (4) promissory estoppel for violation of the alleged promise to compensate Plaintiff for all of his accrued and unused PTO, id. ¶¶ 53-57.

On February 27, 2023, Defendants filed this motion to dismiss along with an accompanying memorandum of law and declaration. Dkt. Nos. 12-14. Plaintiff filed a memorandum of law in opposition to the motion to dismiss on March 20, 2023. Dkt No. 19. Defendants filed a reply memorandum of law on March 27, 2023. ...