Mandelblatt v. Perelman

683 F. Supp. 379, 3 I.E.R. Cas. (BNA) 857, 1988 U.S. Dist. LEXIS 4858, 1988 WL 32175
CourtDistrict Court, S.D. New York
DecidedApril 5, 1988
Docket86 Civ. 7829 (RLC)
StatusPublished
Cited by7 cases

This text of 683 F. Supp. 379 (Mandelblatt v. Perelman) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mandelblatt v. Perelman, 683 F. Supp. 379, 3 I.E.R. Cas. (BNA) 857, 1988 U.S. Dist. LEXIS 4858, 1988 WL 32175 (S.D.N.Y. 1988).

Opinion

ROBERT L. CARTER, District Judge:

OPINION

This is one of a growing number of suits seeking to redress adverse employment action on a theory of defamation. 1 Plaintiff Michael Mandelblatt brought suit in diversity against four directors of the Revlon Group, Inc. (Revlon) and its General Counsel, alleging that they defamed him in connection with the termination of his consulting arrangement with Revlon. Defendants move for summary judgment on the ground that plaintiff consented to the publication of their allegedly defamatory statements.

BACKGROUND

Revlon (formerly known as Pantry Pride, Inc.) came under the control of the MacAn-drews & Forbes Group, Inc., on June 11, 1985. Shortly thereafter, plaintiff entered into a consulting agreement (“the Agreement”) with Pantry Pride. Under the terms of the Agreement, plaintiff resigned his positions as officer and director of Pantry Pride, and of its subsidiary, Devon Stores, Inc., and, effective August 1, 1985, took on consulting responsibilities “in connection with the management, operation and possible disposition of the business of ... Devon.” Williams Aff’t, Ex. A, at 3.

The Agreement provided for the termination of plaintiff’s services on June 11, 1986, unless sooner terminated by, among other events, plaintiff's discharge for *381 cause. Cause for plaintiff’s discharge was declared to arise upon

(A) the willful and continued failure by [plaintiff] to substantially provide the services to be provided by him hereunder ..., after demand for substantial performance is delivered by the Board of Directors of Pantry Pride that specifically identifies the manner in which such Board of Directors believes [plaintiff] has not substantially performed his consulting services, (B) the willful engaging by [plaintiff], in his capacity as a consultant, in gross misconduct materially injurious to Pantry Pride monetarily or otherwise or (C) the conviction of [plaintiff] for a felony under federal or state law.... [N]o act, or failure to act, on [plaintiff's] part shall be considered “willful” unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of Pantry Pride....

Agreement, ¶ 7(d). As a matter of procedure, the Agreement stipulated that a discharge for cause should not be effective unless plaintiff first received (1) reasonable notice, (2) an opportunity to be heard, together with counsel, before the Board of Directors, and (3) a Notice of Termination, stating that “in the good faith opinion of [the] Board of Directors [plaintiff] was guilty of conduct set forth in clause (A), (B) or (C),” quoted above. Id. The Notice of Termination was required to “indicate the specific termination provision ... relied upon and ... set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination ... under the provision so indicated.” Id., ¶ 7(f).

At a March 5, 1986, meeting of Pantry Pride’s Board of Directors, defendant Perelman, Chairman of the Board, “requested [defendant] McNabb to report to the Board with respect to certain developments relating to [plaintiff’s] performance....” Williams Aff’t, Ex. B (Minutes of March 5 Meeting). The Board then unanimously resolved to authorize the appropriate corporate officers “to advise [plaintiff] that there is a reasonable basis for the Board to consider terminating him for cause as that term is defined in the [Agreement] ...[,] and to offer him the opportunity to be heard before the Board_” Id. By letter dated March 6, 1986, defendant Gittis notified plaintiff of the Board’s intention to consider terminating him, and gave him a week in which to advise Pantry Pride of his desire to be heard by the Board. Defendant Gittis wrote:

[m]anagement has submitted and will submit to the Board of Directors substantiation of its view that your conduct with respect to discouragement of prospective purchasers of Devon and otherwise establishes that you have willfully engaged in gross misconduct materially injurious to Pantry Pride constituting cause for your discharge pursuant to the provisions of Section 7(d)(B) of the Agreement.

Williams Aff’t, Ex. C.

Plaintiff’s attorney requested an opportunity to be heard, and defendant McNabb confirmed, by letter dated May 15, 1986, that the Board would hear plaintiff at its May 20 meeting. Defendant McNabb indicated in that letter that

the Company’s evidence will show that in conversations with [defendant] Slovin, President of MacAndrews & Forbes, its legal counsel, and with at least three prospective purchasers of Devon Stores, [plaintiff] demonstrated a clear design to interfere, and in fact interfered, with Pantry Pride’s efforts to sell Devon Stores.

Williams Aff’t, Ex. E. At the May 20 meeting, plaintiff was presented with “the Company’s evidence,” which included five affidavits. Williams Aff’t, Ex. F. In one of those affidavits, defendant Slovin swore that

[plaintiff] approached [defendant] Perelman, Chairman of the Board for Pantry Pride Inc. and sought a lucrative, long-term employment contract for himself. I was told by Mr. Perelman that he told [plaintiff] to work it out with me. [Plaintiff] told me in or around January, 1986 that he was looking for a three year agreement for himself escalating from $300,000 to $400,000 per year with large *382 additional incentives if Devon was sold_ I was opposed to [a] long-term [extension of the Agreement] because over the course of the several months immediately preceding these discussions, [plaintiff] told me on numerous occasions that he didn’t like his job and that he thought Devon was an inferior company.... [When I declined to offer him a long-term extension, [plaintiff] told me that unless I gave into [sic] his demands he would have no enthusiasm in managing the business and would not actively assist in its sale throughout the remainder of our Agreement’s term. I considered this to be a breach of our Agreement and told [plaintiff] that I thought his threats were inappropriate for a person in his position....

Slovin Aff’t, ¶ 8. Defendant Slovin went on to report two occasions on which plaintiff had allegedly discouraged potential purchasers of Devon, id., ¶¶ 9-11, and concluded by stating that “I am convinced that [plaintiff] acted in bad faith and with the avowed purpose of sabotaging the sale of Devon.” Id., ¶ 13.

At the conclusion of the May 20 Board meeting, it was resolved as follows:

[T]hat in the good faith opinion of the Board of Directors ..., [plaintiff] has violated clause B of Subsection 7(d) of the Consulting Agreement ... by reason of his threats to fail to perform his duties under the Agreement unless he were awarded a new and more lucrative contract coupled with his demonstrated lack of cooperation with and discouragement of prospective purchasers of Devon Stores, Inc. following the Corporation’s refusal to accede to his improper demands.

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Bluebook (online)
683 F. Supp. 379, 3 I.E.R. Cas. (BNA) 857, 1988 U.S. Dist. LEXIS 4858, 1988 WL 32175, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mandelblatt-v-perelman-nysd-1988.