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Jason Deron v. Sg Printing

September 4, 2012

JASON DERON,
PLAINTIFF
v.
SG PRINTING, INC. AND SYE GROSS, DEFENDANTS



The opinion of the court was delivered by: (Judge Munley)

MEMORANDUM

Defendant Sye Gross and Defendant SG Printing, Inc. (collectively "defendants") move to dismiss Plaintiff Jason Deron's (hereinafter "plaintiff") amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for which relief can be granted. (Doc. 11). This matter is briefed and ripe for disposition. For the following reasons, the court will deny defendants' motion to dismiss.

Background

The instant litigation arises from the dissolution of plaintiff's business relationship with his former employer, Defendant SG Printing, Inc. (hereinafter "SG Printing"), and its Chief Executive Officer, Defendant Sye Gross (hereinafter "Gross"). Specifically, plaintiff asserts, under several legal theories, that defendants owe him approximately $400,000 in unpaid wages. The facts as described in the amended complaint are summarized below.

Plaintiff served as the Vice President of Sales for North East Graphics from 2000 to 2003. (Doc. 9, Am. Compl. (hereinafter "A.C.") ¶ 6). North East Graphics was a financial and commercial book printing company located at 249 Roosevelt Highway in Waymart, Pennsylvania. (Id.) North East Graphics ceased operations in 2003 after the company's owner died. (Id.) SG Printing purchased the real property and equipment owned by North East Graphics in 2005, and SG Printing commenced operations as a graphics arts communication company at North East Graphic's former location. (Id. ¶ 7). As a graphic communications company, SG Printing engaged in "a full range of printing services for the financial and commercial book market." (Id. ¶ 8).

The Oral Employment Agreement

During the summer of 2005, Gross approached plaintiff regarding a sales position with SG Printing. (Id. ¶ 9). Plaintiff and Gross orally discussed an employment agreement, the terms of which provided that plaintiff will use his best efforts to do the following: "(a) sell the printing services offered by SG Printing, which included attempting to solicit the prior customers of North East Graphics; (b) engage in marketing efforts to increase SG Printing's presence in the marketplace; and (c) promote the general brand and services of the company." (Id. ¶ 11). The oral employment agreement provided that plaintiff would receive wages in the form of commissions based upon the gross amount of sales that he made.*fn1 (Id. ¶ 12). All commissions were "earned" when SG Printing received payment for services rendered to plaintiff's customers. (Id. ¶ 14). The oral employment agreement provided that at the end of each calendar year, SG Printing would calculate the commissions plaintiff earned for that calendar year and make payments to plaintiff on such commissions during the following calendar year. (Id. ¶ 15). SG Printing agreed to pay plaintiff a salary, which essentially constituted of an advance on his future commissions, of $60,800 for his work from August 2005 to December 2005. (Id. ¶ 16). Consequentially, plaintiff's commissions payable in the year 2006 would be determined by his commissioned sales from August to December of 2005, less the $60,800 advance. (Id.)

The oral employment agreement also provided for reimbursement of reasonable business expenses. (Id. ¶¶ 17-18). Such business expenses included "(a) vehicle mileage; (b) tolls; (c) company cell phone usage; (d) internet access; (e) meals/client entertainment; (f) hotels; and (g) airfare." (Id. ¶ 17). Plaintiff was reimbursed at the end of the month for the previous months expenses. (Id. ¶ 18).

Plaintiff and Gross, on behalf of SG Printing, entered into the oral employment agreement described above during their meeting in the summer of 2005. (Id. ¶ 10). Plaintif commenced employment as SG Printing's Vice President of Sales in August 2005. (Id, ¶ 19).

Salary Paid and Commissions Earned from 2005 to 2011

From August 2005 to December 2005, plaintiff made approximately $1,189,984 in sales for SG Printing. (Id. ¶ 21). Under the terms of the oral employment agreement, plaintiff earned approximately $103,567 in commissions at an effective commission rate of 8.7%. (Id.) Due to his $60,800 salary advance, SG Printing owed plaintiff $42,767 in commissions payable in 2006. (Id. ¶ 22). Recognizing that his commissioned sales would increase over the course of an entire year, Gross agreed to pay plaintiff $196,000 for the 2006 calendar year; a salary that amounted to a $153,233 advance on plaintiff's commissions earned in 2006 and payable in 2007. (Id.

¶¶ 23-24). Plaintiff further alleges that, "[b]eginning in 2006 and continuing for each year thereafter, SG Printing and Gross determined the weekly compensation that Deron would receive" and that "the amount of weekly payments made to Deron was based largely on the cash flow of the company." (Id. ¶ 25). The following chart represents the salary plaintiff received, the commissioned sales plaintiff made, the commissions plaintiff earned, and plaintiff's effective commission rate for the years 2005-2010. (See id. ¶¶ 21-39).

Year Salary Paid Commissioned Commissions Effective

Sales Made Earned (Payable Commission in the Next Year) Rate 2005 $60,800 $1,189,984 $103,567 8.70% 2006 $196,000 $3,134,952 $270,783 8.63% 2007 $327,600 $5,024,488 $451,835 8.99% 2008 $390,000 $5,575,771 $465,232 8.34% 2009 $390,000 $4,368,510 $395,209 9.05% 2010 $390,000 $4,935,403 $441,610 8.95%

Total $1,754,400 $24,229,108 $2,128,236

As the chart above illustrates, SG Printing paid plaintiff a total of $1,754,400 from 2005-2010 and plaintiff earned $2,128,236 in commissions during that same period. Thus, going into the 2011 calendar year, SG Printing owed plaintiff $373,836 in unpaid commissions. (Id. ¶ 39). From January to June 2011, plaintiff made approximately $2,002,048 in sales and earned $200,412 in commissions under the oral employment agreement. (Id. ¶ 41). During the same period, SG Printing paid plaintiff $180,000, leaving plaintiff with approximately $394,248 in unpaid commissions by June 2011. (Id. ¶¶ 40, 49).

Dissolution of Plaintiff's Business Relationship with Defendants

On May 25, 2011, SG Printing issued plaintiff a paycheck for $5,323. (Doc. 9-1, Ex. A, 5/25/11 Paycheck). Approximately one week after presenting this check for payment, it was returned for insufficient funds. (A.C. ¶ 42). Plaintiff confronted Gross about the bounced May 25 check, and Gross represented that the next paycheck would have sufficient funds. (Id. ¶ 43). On June 1, 2011, SG Printing issued plaintiff another check for $5,323. (Doc. 9-2, Ex. B, 6/1/11 Paycheck). Like his previous week's paycheck, the June 1 check was returned for insufficient funds. (A.C. ¶ 44). Gross again represented that the next scheduled paycheck would be honored, and, as a result of this reassurance, plaintiff continued to work. (Id. ¶ 45).

SG Printing issued a $5,323 paycheck to plaintiff on June 8, 2011. (Doc. 9-3, Ex. C, 6/8/11 Paycheck). Like his previous two paychecks, the June 8 check was dishonored for insufficient funds. (A.C. ¶ 46). During the weeks prior to the June 8, 2011 payday, Gross repeatedly represented that plaintiff would be paid despite the company's financial woes. (Id. ¶ 47). Gross shut down the business operations of SG Printing on June 11, 2011. (Id. ¶ 48).

With respect to his business expenses, plaintiff alleges that in March 2011, Gross and SG Printing stopped reimbursing him for his business related expenses. (Id. ¶ 52). Plaintiff alleges that SG Printing stopped reimbursing him despite the fact that plaintiff complied with all relevant terms of his oral employment agreement. (Id. ¶¶ 50-52). Plaintiff contends that defendants owe him a total of $10,003 in business expenses that he incurred in connection with his employment. (Id. ¶ 53). Plaintiff alleges that, at the time Gross discontinued SG Printing, plaintiff was owed a total of $404,251 in unpaid wages (the total unpaid wages is equivalent to the sum of $394,248 in unpaid commissions and $10,003 in unpaid business expenses). (Id. ¶ 54).

Plaintiff alleges that Gross controlled SG Printing as his alter ego. (Id. ¶ 69). Gross denied the president of SG Printing the ability to write checks for SG Printing. (Id. ¶ 70). Gross was the only policy maker with full check-writing authority for SG Printing. (Id. ¶¶ 56, 68). Although Gross represented that plaintiff would receive his unpaid wages, Gross nonetheless disregarded plaintiff's requests for the ...


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