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Burke v. Apogee Corp.

United States District Court, D. Connecticut

August 4, 2017




         Jeffrey Burke (“Plaintiff”) brought this action against Apogee Corporation (“Apogee”) and Superior Plastics Extrusion Company, Inc. (“Superior Plastics”) (together “Defendants”). The Court held a bench trial from February 13, 2017 through February 16, 2017. During the course of this trial, ten (10) witnesses testified and sixty-four (64) exhibits were admitted into evidence.[1] The parties filed proposed findings of facts and conclusions of law on May 5, 2017 and responses to their initial filings on May 19, 2017.

         The Court now sets forth its findings of fact and conclusions of law under Federal Rule of Civil Procedure 52(a)(1), and, as explained below, finds for Defendants on all counts of the Second Amended Complaint.


         Under the terms of an employment agreement between Plaintiff and Defendants, Jeffrey Burke had an opportunity to purchase a five percent (5%) “shadow share” interest in Apogee and Superior Plastics, when he worked there. Once this interest had been purchased, Defendants would be required to buy back that interest at the time of Mr. Burke's separation from the companies. While Defendants dispute the existence of any such agreement and ever representing that Mr. Burke could have an ownership interest in either company, the Court finds otherwise. Mr. Burke, however, has failed to prove by a preponderance of the evidence that he actually purchased the shadow shares. Thus, when Mr. Burke was involuntarily terminated from the companies, Defendants did not have a contractual obligation to pay him for the value of these shares.

         A. Relationships between the Parties

         In 1970, Steven Ryan started Impact Plastics, Inc., a plastic sheet extrusion company. Tr. III, 520:6-17. Mr. Ryan remained the sole owner of Impact Plastics, Inc. until 1992, when David Kingeter joined the company. Id. After joining the company, Mr. Kingeter purchased an approximately forty-nine percent (49%) ownership share and Mr. Ryan and Mr. Kingeter became joint owners of Impact Plastics, Inc. Id.

         In 1992, Impact Plastics, Inc. changed its name to Apogee Corporation (“Apogee”), while continuing to conduct business under the trade name “Impact Plastics.” Id. at 520:18-20. A few years later, in 1995, Mr. Ryan and Mr. Kingeter acquired Superior Plastics Extrusion Company, Inc. (“Superior Plastics”), a separate company that had recently undergone a reorganization through bankruptcy. Id. at 534:17-25 - 535:4. Mr. Ryan and Mr. Kingeter each owned a fifty percent (50%) share in Superior Plastics and continued owning and operating Apogee, even after taking ownership over Superior Plastics. Id.; Tr. III, 515:19-23.

         After acquiring Superior Plastics, Mr. Ryan and Mr. Kingeter conducted their plastic sheet extrusion business through both Apogee and Superior Plastics, with Apogee focusing on brokering resin and selling plastic sheet and Superior Plastics focusing on manufacturing. Id. at 529:20-24. Apogee formally ceased operations in 2007, though it continued to exist as a separate legal entity, and Superior Plastics officially began using the name “Impact Plastics” as its trade name at that time. Id.

         Customers of Apogee and Superior Plastics understood the two companies as belonging to the same overall entity, Impact Plastics. For example, Tom Barry, who formerly worked as an independent sales representative for Defendants, testified that he considered Apogee and Superior Plastics as being “always under one roof” and “like one and the same[.]” Tr. II, 473:17 - 474:1-15. Similarly, Andrew Fitzsimmons, who did business with Defendants for around twenty years, testified that he was doing business with one company, Impact Plastics, even though he noticed that the company's trucks sometimes read Superior Plastics. Tr. II, 446:12-25 (“I only knew Impact Plastics, other than what I saw on their trucks.”). Mr. Ryan himself treated the two companies as components of a single entity, and the companies shared resources, equipment and space. Tr. I, 33:13-17 (“I always just considered everything Impact Plastics, which is somewhat basic.”). While they were legally separate entities and were never officially part of the same company, they functioned in practice as one company.

         Jeffrey Burke had been close friends with David Kingeter for over a decade when Mr. Kingeter approached Mr. Burke about partnering with Apogee. Tr. I, 59:5 - 61:8. Mr. Kingeter first approached Mr. Burke about working for Apogee in 1994, and Mr. Burke declined. Id. Mr. Kingeter approached him again in 1995, around the time Mr. Kingeter and Mr. Ryan were acquiring Superior Plastics, and the parties entered into discussions about employment. Id. Mr. Burke had a successful career in the plastics industry at the time, and he was working at a company called BASF, when he and Mr. Kingeter began discussing this opportunity. Id. Mr. Burke joined the company in January of 1996, after Mr. Ryan and Mr. Kingeter had already acquired Superior Plastics. Tr. I, 54:10-16.

         B. Employment Contract

         Mr. Burke signed an employment contract with both Apogee and Superior Plastics in January of 1996. Tr. I, 10:18 - 91:18. Exhibit 109 is the operative employment contract for Mr. Burke.[2] Id.

         In this contract, the company name for Superior Plastics is misstated as “Superior Plastics Extrusion, Inc.” Ex. 109 at 1. Although Defendants deny that “Superior Plastics Extrusion, Inc.” was intended to refer to Superior Plastics, Mr. Kingeter testified that the phrase did not refer to any other recognized company, see Tr. I, 9:13-18, suggesting that the misstating of the company name in the text of was more likely than not a typographical error on the part of the drafters.

         The employment contract provided Mr. Burke with the “right and privilege of purchasing up to five (5) percent in shadow shares of the outstanding stock” of Apogee and Superior Plastics.[3] Id. at 3. The purchase price of this five percent shadow share interest was to be “fixed at the book value of the Corporation at the fiscal year end December 31, 1995.” Id. The contract, however, does not specify how Mr. Burke was to purchase this interest. Id.

         In the event of Mr. Burke's death or termination, Defendants' contractual obligation was to repurchase “all shadow shares of stock owned by” Mr. Burke. Id. Under the contract, in the event of involuntary termination, the cost of the shares at the time of repurchase were to be calculated based on the “fair market value of the shadow stock, ” id., whereas in the event of death or voluntary termination, the cost of the shares were to be calculated based on the “book value of the Corporation at the fiscal year-end in which death or voluntary termination occurs.” Id. This repurchase obligation is the only obligation on the part of Defendants noted in the contract with respect to the shadow shares; the contract does not make any reference to a right to equity payments as a component of any purchased ownership interest in shadow stock. Id.

         C. Representations of Ownership

         Particularly when interacting with customers and potential business partners, Defendants regularly held out Mr. Burke as having an ownership role within the companies, even though, as discussed in further detail below, he had never purchased an ownership interest. Defendants also represented that Mr. Burke was an owner when securing an additional life insurance policy on his behalf, and did not directly challenge Mr. Burke's assertions that he was an owner, until after his termination.

         1. Conversations with Individual Customers

         Mr. Burke has established that certain individuals who worked with Defendants perceived him as having an ownership interest in Apogee and/or Superior Plastics, and that, on at least three separate occasions, Defendants either directly or indirectly represented to those individuals that Mr. Burke was a partial owner of the companies. During trial, three individuals presented credible testimony regarding Defendants' representations surrounding Mr. Burke's ownership interest: Andrew Fitzsimmons, Bob Carrier, and Tom Barry.

         Mr. Kingeter made statements suggestive of an ownership interest on the part of Mr. Burke during a dinner meeting with L'Oreal representatives in 2008. Tr. I, 210:23 - 211:25. The testimony of Andrew Fitzsimmons, a long-time customer of Defendants, established that, during this meeting, Mr. Kingeter described Mr. Burke as having “skin in the game, ” which Mr. Fitzsimmons understandably took to mean that Mr. Burke had an ownership interest. Tr. II, 451:18 - 452:23. Mr. Kingeter also did not correct Mr. Burke when Mr. Burke referred to himself as an owner during that conversation, and neither Mr. Burke nor Defendants have presented evidence that Mr. Kingeter ever challenged or corrected that notion in a private conversation with Mr. Burke following the interaction with Mr. Fitzsimmons. Mr. Kingeter's categorical denial at trial that he never used the phrase “skin in the game” is not credible, as Mr. Fitzsimmons seemed to recollect the conversation clearly and had no identifiable motive to misrepresent Mr. Kingeter's statements for purposes of this trial. Tr. III, 639:16-24.

         Mr. Kingeter also made statements consistent with an ownership interest on the part of Mr. Burke during a dinner meeting in 2012 at the National Plastics Exposition in Orlando, Florida. Tr. I, 212:19 - 214:8. According to the testimony of Bob Carrier, the owner of another plastics company that did business with Defendants, Mr. Kingeter described Mr. Burke as a part owner of the companies during that dinner. Tr. II, 329:15 - 332:19. Defendants claim that Mr. Carrier's recollection is based solely on Mr. Burke's representations, not statements made by Mr. Kingeter. Defendants further suggest that Mr. Carrier's testimony is not fully accurate since he was under the influence of alcohol during that dinner. Tr. II, 332:3-13. Mr. Carrier's recollection, however, did not seem to be impaired in any way and, like Mr. Fitzsimmons, Mr. Carrier had no identifiable motive to misrepresent Mr. Kingeter's statements at trial. Thus, the Court finds that it is more likely than not that Mr. Carrier was telling the truth and that Mr. Kingeter did describe Mr. Burke as a part owner.

         By deposition testimony, Tom Barry, who had previously worked with Defendants as an independent representative, testified at trial that Mr. Kingeter referenced Mr. Burke's “equity position” during a dinner meeting in New York City sometime after 2000. Tr. II, 469:2 - 470:9. Defendants have not contested this statement. Defs. Response Br. at 7, ECF No. 115. Each of these three individuals confirmed that, based on Mr. Kingeter's statements and the nature of Mr. Burke's role, they perceived Mr. Burke to be an owner. Thus, the Court finds that, on each of these occasions, Mr. Kingeter affirmatively represented to third parties that Mr. Burke had an ownership interest in Apogee and/or Superior Plastics.

         2. Life Insurance Policy

         In 2006, Defendants secured an additional one-million-dollar life insurance policy for Mr. Burke. Ex. 125; Tr. II, 304:23 - 305:11. Brendan Conry, Defendants' insurance agent, unequivocally noted on the life insurance policy application that Mr. Burke was an owner with a five percent interest in the company. Id. at 310:22 - 311:6.

         Mr. Burke claims that this application accurately reflects his ownership interest, and that, consistent with this interest, Defendants purchased the additional life insurance policy for the purpose of repurchasing Mr. Burke's shadow shares in the event of his death. Pl. Prop. Findings of Fact at 15-16, ECF No. 112; Tr. II, 291:7 - 292:6. Defendants, on the other hand, claim that they applied for this policy simply because it had a lower premium than Mr. Burke's existing company-provided life insurance policy. Defs. Response Br. at 7, ECF No. 115; Defs. Mem. of Law at 19-20, ECF No. 114. According to Defendants, the application was not an accurate reflection of Mr. Burke's ownership status, but it was completed in such a way as to ensure eligibility for the new policy. Id.

         The Court finds that the representations of ownership on Defendants' 2006 life insurance application were inaccurate, as discussed later, and do not confirm the actual existence of any ownership interest on the part of Mr. Burke. The application does indicate, however, that Defendants were misleading in their treatment of Mr. Burke as an owner during his employment with the companies.

         3. Employment Disputes and Mr. ...

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