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Kevin O'malley v. Wire Weld

February 9, 2012


The opinion of the court was delivered by: Sean J. McLaughlin United States District Judge



Pending before the Court is a motion for summary judgment filed by the Defendants pursuant to Federal Rule of Civil Procedure 56. ECF No. 34. For the reasons that follow, that motion will be denied. The Court has jurisdiction pursuant to 28 U.S.C. § 1332.


Plaintiff Kevin O'Malley ("Plaintiff") is an adult male residing in Gwinnet County, Georgia. ECF No. 16 at ¶ 1. Defendant Wire Weld, Inc. ("Wire Weld"), is a Delaware corporation maintaining its principal place of business in Erie County, Pennsylvania. Id. at ¶ 2. Defendants Ernest Humphreys ("Humphreys"), Richard King ("King") and David Heth ("Heth") serve as officers and directors for Wire Weld. Id. at ¶¶ 3-5.

Wire Weld was established in 1983. ECF Nos. 36 & 38 at ¶ 2. It is in the business of manufacturing wire shelving systems designed to store and display merchandise. Id. During the fall of 2008, Wire Weld contracted with Fulcrum Executive Search and Transitions ("Fulcrum") to find a suitable candidate to serve as its President and Chief Executive Officer ("CEO"). Id. at ¶ 3. Plaintiff submitted his resume to Fulcrum in response to an advertisement posted on the Internet. Id. at ¶ 7. He was an attractive candidate for the advertised position because he had previous retail marketing experience in the northeastern United States. Id. at ¶ 9. Following an application process involving several candidates, Plaintiff was chosen to serve as Wire Weld's President and CEO. Id. at ¶¶ 8, 10.

Plaintiff entered into an employment agreement with Wire Weld on January 13, 2009. Id. at ¶ 13; ECF No. 16-1. Pursuant to the terms of the agreement, Plaintiff was entitled to an annual salary of $200,000.00, "customary benefits" and "incentive compensation." Id. at 1. The portion of the agreement discussing Wire Weld's payment obligations in the event of a termination provided as follows:

Employment shall be on an at will basis and shall commence on January 5, 2009, provided, however, in the event of a termination without cause of the Employee, the Company shall continue to honor the payment obligations herein until the later to occur of: (a) December 31, 2009; or (b) ninety (90) days after the date of termination.

Id. Attached to the agreement was a document styled an "Equity Appreciation Agreement" which provided, in part:

"Termination for Cause" means the termination by the Board of Employee's employment with the Corporation or any subsidiary thereof upon the occurrence of anyone or more of the following: (i) Employee's conviction by, or entry of a plea of guilty or nolo contendere in, a court of competent jurisdiction for any crime that constitutes a felony in the jurisdiction involved; (ii) Employee's misappropriation of funds or commission of an act of fraud upon the Corporation; (iii) gross negligence by Employee in the performance of such Employee's services to the Corporation; (iv) a material breach by Employee of a provision of this Agreement, or any other agreement to which Employee and the Corporation are party; or (v) a material failure by Employee to substantially perform his duties to the Corporation.

ECF No. 16-2 at 3. This document also required Plaintiff to keep "material non-public information" obtained during the course of his employment "in strict confidence," and to refrain from disclosing such information "to any person outside the Company except as pursuant to regular job performance in the best interests of the Company, to company advisors and if compelled to do so by law or court." ECF No. 16-1 at 1-2. The terms of Plaintiff's employment also required that he "not engage in any activity or enterprise" that was "competitive with the activity or enterprise of the Company." Id. at 2.

As the CEO, Plaintiff reported to Wire Weld's Board of Directors ("Board"). ECF Nos. 36 & 38 at ¶ 12. After the commencement of his employment, Plaintiff had several discussions with Humphreys and King concerning his management style. Id. at ¶ 26. Some of these discussions concerned his interactions with other members of Wire Weld's staff. Id. at ¶ 27.

Harvey Wigder ("Wigder"), the owner of Fulcrum, visited Wire Weld's Pennsylvania facility on February 16, 2009, to meet with Plaintiff. Id. at ¶ 29. Wigder also met with King and Heth on that occasion. Id. at ¶ 31. Shortly after the meetings, Wigder prepared a written report detailing his discussions with Plaintiff, King and Heth. ECF No. 37-3 at 6-9. The report included summaries of what had been said and agreed upon during the meetings. Id. at 7. Under a heading entitled "Cultural Differences," Wigder reported as follows:

There are no rights and wrongs here but I felt that this discussion would eliminate misunderstandings; I felt that Kevin understood the values that were shared and will be more sensitive to those moving forward. There were also ideas shared about Kevin getting closer to hourly production staff.

Id. Under a heading entitled "Issues Concerning the role of the CEO," it was noted that everyone involved in the discussions had agreed that "the three principals" needed to meet on a regular basis to ensure that Plaintiff "had the knowledge of history and operations to be effective." Id. The recruitment of a Director of Finance and the solidification of "sales organization" were identified as Plaintiff's "highest immediate priorities." Id. Wigder also stated that Plaintiff had been encouraged to "become more familiar with other aspects of the operation and do more bonding with the rest of the staff." Id. Heidi Sheehan ("Sheehan") was hired to be Wire Weld's Director of Finance shortly thereafter. ECF No. 38-4 at 21.

In April 2009, Humphreys and Richard Paolino ("Paolino"), another member of the Board, met with Plaintiff to discuss his performance. ECF Nos. 36 & 38 at ¶ 41. Humphreys apparently gave King a "recap" of the meeting on the morning of April 27, 2009. ECF No. 37-6 at 34. In a message emailed to Paolino later that afternoon, Humphreys stated that Plaintiff was "either worried or pissed, or both." Id. (capitalization omitted).

Wigder met with Plaintiff again on May 13, 2009. ECF Nos. 36 & 38 at ¶ 46. In a memorandum to Plaintiff bearing that date, Wigder made the following observations:

Unfortunately the consensus of the feedback that I have received is that you have failed in providing vision and in convincing the key individuals whose support you need that you are providing the leadership Wire Weld requires to succeed. This isn't about metrics, although they are important. It is more about leadership. If you want to succeed in this job, your priority must be to build trust ...

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