United States District Court, D. Connecticut
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.) ...