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Kuczynski v. Viad Corp.

United States District Court, D. Connecticut

November 21, 2019

THOMAS M. KUCZYNSKI, Plaintiff,
v.
VIAD CORP, Defendant.

          MEMORANDUM OF DECISION RE: APPLICATION TO VACATE ARBITRATION AWARD (ECF NO. 1-1)

          KARI A. DOOLEY, UNITED STATES DISTRICT JUDGE.

         This matter follows the arbitration of an employment dispute between Plaintiff Thomas M. Kuczynski (“Kuczynski”) and his former employer, Defendant Viad Corp (“Viad”). Kuczynski filed the instant Application to Vacate Arbitration Award (“the Application”) in Connecticut Superior Court on January 22, 2019, seeking vacatur of an award entered against him and in favor of Viad on December 20, 2018. (App., ECF No. 1-1.) Viad removed the action to this Court on February 15, 2019 (ECF No. 1) and filed an opposition to the Application on February 22, 2019. (ECF No. 12.) Kuczynski filed a reply brief on March 6, 2019. (ECF No. 15.) The Court has considered the parties' submissions. For the reasons set forth below, the Application to Vacate is DENIED.

         Background

         The Parties and Factual Basis for Kuczynski's Claims

         Viad is a corporation engaged in the business of providing services for live events and travel and recreational activities. (Stipulation of Uncontested Facts ¶ 2, Notice of Removal Ex. C, hereafter, “Stip., ” ECF No. 1-3). It hired Kuczynski in 2008 to serve as its Chief Corporate Development and Strategy Officer. (Id. ¶ 4.) Pursuant to its Omnibus Incentive Plan, Viad granted Kuczynski long-term incentive awards that included Restricted Stock awards (“RSAs”) and Performance Units (“PUs”). (Id. ¶ 5.) These awards were governed by individual RSA and PU agreements, each of which contemplated a three-year vesting cycle-that is, there was a three-year restriction or performance period, after which the awards would fully vest. (See Award Agreements, Def.'s Opp. Ex. 4 ¶ 2, ECF No. 12-5 at 2, 8, 15, 21.) Kuczynski's compensation package also included a cash bonus referred to as a Management Incentive Plan (“MIP”). (App. at 8; Stip. ¶ 7.)

         Viad terminated Kuczynski's employment in March 2016 and in April 2016 the parties executed a Severance Agreement and General Release (the “Severance Agreement, ” or the “Agreement”). (Stip. ¶¶ 6, 8.) It is undisputed that Kuczynski was not terminated for cause. (See Final Award at 4, App. Ex 1, ECF No. 1-1 at 24.) The Severance Agreement set forth the compensation and benefits to which Kuczynski was entitled following his separation, which included “a pro-rated payment pursuant to Employer's 2016 [MIP], if earned, subject to the MIP terms and conditions . . . .” (Agreement, App. Ex. 2 ¶ 2A.i., ECF No. 1-1 at 29-30.) Viad compensated Kuczynski for his prorated 2016 MIP and Kuczynski does not dispute that such proration was appropriate under the Severance Agreement. (Stip. ¶ 11.)

         As of Kuczynski's termination, Viad had granted him long-term incentive awards comprised of 2, 800 RSAs (2014); 2, 200 RSAs (2015); 6, 500 PUs (2014); and 5, 200 PUs (2015). (Stip. ¶ 7.) Following his termination, Viad paid Kuczynski for 1, 857 RSAs (2014); 787 RSAs (2015); 4, 821 PUs (2014); and 2, 123 PUs (2015). (Id. ¶¶ 12-13.) Kuczynski does not disagree with the price per unit he was paid. Rather, he maintains that he was entitled to payment for all RSAs and PUs he had been awarded by the date of his termination-including a 2016 RSA of 2, 300 shares that was completely forfeited-and asserts that Viad was not authorized to pro rate or reduce the number of units in any manner. (See id ¶¶ 7, 13; see also App. at 9-10.)

         Pursuant to the Agreement's arbitration clause, (see Agreement ¶ 20), Kuczynski filed claims for Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, and Violation of Connecticut's Wage Statute with the American Arbitration Association in February 2018. (See Arbitration Compl., App. Ex 3, ECF No. 1-1 at 38.) A hearing was held on October 29, 2018, during which both Kuczynski and Viad's assistant general counsel testified. (See Final Award at 3.) Following the filing of post-hearing briefs and reply briefs and the closing of the record, the arbitrator denied Kuczynski's claims on December 20, 2018.

         The Arbitration and Decision

         As discussed, the parties disagreed as to whether, under the terms of the Severance Agreement, Viad was required to pay Kuczynski for the outstanding RSAs and PUs that had not fully vested as of his termination instead of prorating the awards based on the length of his employment.

         On this issue the Severance Agreement provided in pertinent part:

Employee's Restricted Stock Awards and Performance Units previously granted by Employer to Employee will continue to vest in accordance with the terms and conditions of the applicable agreement(s), including but not limited to Employee's requirement to execute this Agreement, which is being requested by Employer, and any diminution, forfeiture, or reduction in such awards due to Employee's termination of employment shall not apply, nor shall Employer utilize any discretion available under the Plan on its part which might result in a downward adjustment to the vesting or value of any award, except where the exercise of such discretion is with respect to the overall determination as to whether the financial Performance Measures have been achieved on a group basis and not in respect of an adjustment on an individual or selective basis for Employee.

(Agreement ¶ 2.C.) The Severance Agreement also contained a merger clause, which stated in relevant part that the “Agreement embodies the entire agreement of all the Parties hereto who have executed it and supersedes any and all other agreements, understandings, negotiations, or discussions, either oral or in writing, express or implied, between the Parties, ” with certain categories of exceptions, including one for separate agreements regarding Restricted Stock, Performance Units, and other benefits, “which will remain in full force and effect.” (Id. ¶ 13.)

         The individual PU award agreements provided that in circumstances where the employee is terminated twelve or more months past the commencement date for reasons other than for cause, ownership of the units would vest at the end of the performance period on a pro rata basis based on the percentage of time that the employee was employed. (See Award Agreements ¶ 4(a), ECF No. 12-5 at 4, 17.) The RSA agreements similarly provided that in such circumstances, “full ownership of the Shares will occur to the extent not previously earned, upon lapse of the Restriction Period . . . and dividends will be paid through such period, in each case on a pro-rata basis, calculated based on the percentage of time such Employee was employed . . .” (Id., ECF No. 12-5 at 10-11, 23-24.) ...


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