United States District Court, D. Connecticut
MEMORANDUM AND RULING
A. BOLDEN, UNITED STATES DISTRICT JUDGE
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. 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.
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.
FINDINGS OF FACT
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
Relationships between the Parties
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.
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.
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.
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.
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.
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.
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.
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. 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.
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.
Representations of Ownership
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
Conversations with Individual Customers
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
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.
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.
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.
Life Insurance Policy
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.
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
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.
Employment Disputes and Mr. ...