Belfiore v. Merch. Link, LLC

180 A.3d 230, 236 Md. App. 32
CourtCourt of Special Appeals of Maryland
DecidedMarch 1, 2018
Docket2043/16
StatusPublished
Cited by9 cases

This text of 180 A.3d 230 (Belfiore v. Merch. Link, LLC) is published on Counsel Stack Legal Research, covering Court of Special Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Belfiore v. Merch. Link, LLC, 180 A.3d 230, 236 Md. App. 32 (Md. Ct. App. 2018).

Opinion

Panel: Nazarian, Shaw Geter, Fader, JJ.

Nazarian, J.

Erik Belfiore served in various executive positions at Merchant Link, LLC ("Merchant Link") over a period of six years, and rose ultimately to the position of Chief Operating Officer. In 2011, he sought a pay increase, and the company was considering it. Before a final decision was made, though, he was terminated after he tried, the company contends, to sabotage an important company project. He challenged his termination in the Montgomery County Office of Human Rights ("OHR"), alleging that he had been fired and, before that, denied the pay increase, on the basis of race. After a six-day evidentiary hearing, a hearing examiner found that Merchant Link had established non-discriminatory reasons to justify his pay and termination. The Circuit Court for Montgomery County affirmed OHR's decision, and we affirm it as well.

I. BACKGROUND

Merchant Link is headquartered in Silver Spring and serves as an electronic intermediary between credit card issuers and merchants. The company uses proprietary systems to process and provide security for up to five billion credit card transactions per year. Merchant Link hired Mr. Belfiore in September 2005 as a financial analysis manager, and he served as Merchant Link's chief operating officer ("COO") from mid-2008 until November 2011.

In December 2008, after some corporate restructuring, Merchant Link became a joint venture owned by the company's two major clients, Chase Paymentech ("Chase") and First Data Corporation ("First Data") and managed by a board of managers (the "Board") that consisted of Chase and First Data executives. The Board was responsible for approving the appointment and replacement of Merchant Link officers and for setting officer compensation.

Shortly before the corporate restructuring, in May 2008, Mr. Belfiore had been appointed as Merchant Link's COO. Mr. Belfiore replaced Dan Lane, an original employee of the company who was appointed Chief Technology Officer ("CTO"). At its first meeting in 2008, the Board elected Messrs. Belfiore and Lane and Christopher Justice, who had been the company's president before the restructuring, as "officers" of the new joint venture. Mr. Belfiore remained COO, Mr. Lane remained CTO, and Mr. Justice was elected Chief Executive Officer ("CEO").

Mr. Justice resigned in March 2009 and was replaced as CEO on an "interim" basis by Board member Daniel Charron.

During this period, Mr. Charron remained at his office in Dallas and delegated day-to-day operational control to Mr. Belfiore, Mr. Lane, and Timothy Kinsella, the executive vice president for sales. Mr. Charron served as interim CEO for approximately two years. In April 2011, Mr. Lane took over as CEO.

At its first meeting in December 2008, the Board created a compensation committee, and appointed two of its members, Mr. Charron and Barry McCarthy, to serve on it. Mr. Belfiore asserts that Messrs. Charron, McCarthy, and Lane discriminated against him based on his race (he is African-American) in setting his compensation between 2009 and 2011, and that Mr. Lane retaliated against him by firing him when Mr. Belfiore threatened legal action over his pay.

Merchant Link had a somewhat complex compensation system. Each employee was assigned a grade, but each grade has a broad salary range, and a lower-grade employee might earn more than a higher-grade one. Salaries were supplemented by two bonus plans: the "annual incentive plan" ("AIP") bonus and "long term incentive plan" ("LTIP") grants. AIP bonuses were a percentage of total salary and increases based on grade. LTIP grants were awarded from a pool of money tied to the company's overall economic performance. The amount of the pool was proposed initially by the CEO to the Board; once approved, the CEO had broad flexibility to set individual awards.

Mr. Belfiore received raises throughout the period from 2008 to 2011. His salary went from approximately $105,000 in 2008 to $130,000 in 2011. His AIP bonuses and LTIP grants increased his overall compensation in 2009 and 2010 by more than $90,000 in each of those years, and he received a total of $195,000 between salary and bonuses in 2011 before he was fired in November of that year.

In August 2011, after Mr. Belfiore had requested a raise after negotiations, Mr. Lane agreed to raise Mr. Belfiore's salary from $130,000 to $172,000, and the raise went into effect for two pay periods. But on October 6, 2011, Mr. Lane heard from Merchant Link's chief financial officer that the increase needed Board approval, and that the higher payments needed to be recouped, at least temporarily. Mr. Lane gave Mr. Belfiore this news and assured him he would try to persuade the compensation committee ( i.e. , Messrs. Charron and McCarthy) to approve the raise.

On October 11, Mr. Lane asked human resources director Wendy Nussbaum to prepare a request to the compensation committee to increase Mr. Belfiore's salary. Ms. Nussbaum did so, and included information about the salaries of positions at Merchant Link that could be considered comparable to COO, as well as a survey of local and nationwide COO compensation.

On October 13, Mr. Lane wrote to Mr. McCarthy to recommend that the company pay Mr. Belfiore at the higher rate. Mr. Lane also informed Mr. McCarthy that Mr. Charron would support the request. After some back-and-forth with Mr. Lane, on the phone and via email, Mr. McCarthy wrote to Mr. Lane on October 20 and denied the increase, pending deliberations by the compensation committee. Mr. McCarthy asked Mr. Lane to schedule a committee meeting.

On October 21, Mr. Belfiore sent an email to Messrs. Charron, McCarthy, and Lane, complaining that his compensation was not adequate and attributing the shortfall to "your actions and inaction" stemming from racial discrimination. Mr. Belfiore wrote that he had no choice but "to initiate the process of identifying a suitable legal resolution." It was not until he received this email that Mr. McCarthy (a First Data executive) became aware that Mr. Belfiore is African-American.

On October 25, the compensation committee met, and, according to an email from Mr. Lane to Messrs. McCarthy and Charron, Ms. Nussbaum, and to Merchant Link's outside counsel Harry Jones, requested additional information about Mr. Belfiore's historical compensation, his role at the company, and other executive compensation. Mr. Lane stated in the email that he would schedule another committee meeting, but the committee never met before Mr. Belfiore's employment was terminated twelve days later.

On November 8, Mr. Belfiore called a lower-level employee, Renee Dantzler, into his office. According to Ms. Dantzler, Mr. Belfiore asked her for help in undermining the company's new customer relations management ("CRM") system, used profanity, and upset her. The following day, Ms. Dantzler reported the meeting to her supervisor Zack Minton, and on November 10, put the incident in writing to Ms. Nussbaum; Mr. Minton also wrote an email to Ms. Nussbaum and Mr. Lane about the incident. No one talked to Mr. Belfiore.

On November 11, Mr. Lane fired Mr. Belfiore. Messrs. McCarthy and Charron testified that the Board had approved the termination (although no evidence of a Board meeting concerning the termination exists, and Merchant Link did not call the two other Board members to testify at the administrative hearing we will describe shortly).

Mr.

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Cite This Page — Counsel Stack

Bluebook (online)
180 A.3d 230, 236 Md. App. 32, Counsel Stack Legal Research, https://law.counselstack.com/opinion/belfiore-v-merch-link-llc-mdctspecapp-2018.