Drapkin v. MAFCO Consol. Grp., Inc.

• Decision Date: 17 November 2011
• Docket Number: 09 Civ. 4513(PGG).,Nos. 09 Civ. 1285(PGG),s. 09 Civ. 1285(PGG)
• Citation: 818 F.Supp.2d 678
• Parties: Donald G. DRAPKIN, Plaintiff, v. MAFCO CONSOLIDATED GROUP, INC., Defendant.MacAndrews & Forbes LLC, Plaintiff, v. Donald G. Drapkin, Defendant.
• Court: U.S. District Court — Southern District of New York

818 F.Supp.2d 678

Donald G. DRAPKIN, Plaintiff,

v.MAFCO CONSOLIDATED GROUP, INC., Defendant.MacAndrews & Forbes LLC, Plaintiff,

v.Donald G. Drapkin, Defendant.

Nos. 09 Civ. 1285(PGG)

09 Civ. 4513(PGG).

United States District Court, S.D. New York.

Sept. 23, 2011.Opinion Denying Reconsideration Nov. 17, 2011.

David Dunn, Hogan & Hartson L.L.P., Elkan Abramowitz, Sidhardha Kamaraju, Thomas Matthew Keane, Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, P.C., New York, NY, for Plaintiff.

Jonathan David Cogan, Steven Gary Kobre, Steven William Perlstein, Kobre & Kim LLP, New York, NY, for Defendant.

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, District Judge.

These are breach of contract actions. Donald Drapkin alleges that Mafco Consolidated Group, Inc. breached a separation agreement by failing to pay him $2.5 million, while MacAndrews & Forbes LLC—successor to MacAndrews & Forbes, Inc., and parent of Mafco Consolidated Group, Inc. (together, the “Company”)—claims that Drapkin violated the separation agreement, by breaching provisions concerning return of Company files and documents, reimbursement of medical expenses, non-disparagement, and attempts to induce or influence employees to leave the Company.

Drapkin has moved for summary judgment in both actions, which are mirror images of each other. In 09 Civ. 1285, his motion seeks an order granting him summary judgment on his breach of contract claim and dismissing a counterclaim asserted against him for breach of contract. (09 Civ. 1285, Dkt. No. 58 (Notice of Motion)). In 09 Civ. 4513, Drapkin seeks summary judgment on the Company's breach of contract claim against him and on the breach of contract counterclaim he filed in that action. (09 Civ. 4513, Dkt. No. 62 (Notice of Motion)). For the reasons stated below, Drapkin's motions for summary judgment will be granted in part and denied in part.

BACKGROUND

Drapkin joined the Company in 1987 as vice chairman and served in that capacity until 2007. (Drapkin R. 56.1 Stmt. ¶¶ 10, 31) ¹ He worked closely with Ronald O. Perelman, the Company's chief executive officer and Board chairman. ( Id. ¶¶ 6, 15) Drapkin's relationship with Perelman became strained over time, and in 2007 Drapkin left the Company to become vice chairman of Lazard International. ( Id. ¶¶ 17, 31) Drapkin asked his assistant of twenty years, Nancy Link, to join him at Lazard. ( Id. ¶¶ 16, 32)

A. Separation Agreement and Stock Purchase Agreement

Before Drapkin's departure, he and the Company agreed to a separation package that required the Company to pay Drapkin a total of approximately $27.5 million over five years. (Company R. 56.1 Stmt. ¶ 171; Keane Decl., Ex. 24 (Separation Agreement) Section 3(a); Keane Decl., Ex. 34 (Stock Purchase Agreement) ¶ 3) The terms of the separation package are set forth in a Separation Agreement and Stock Purchase Agreement, both dated April 25, 2007. (Drapkin R. 56.1 Stmt. ¶¶ 21–22, 24, 31) The Separation Agreement provides that MacAndrews & Forbes LLC will pay Drapkin approximately $15.5 million in seven installments:

The Company will pay to you an aggregate amount of $15,500,000 less such deductions or amounts to be withheld as required by applicable law and regulations, payable as follows: $2,250,000 on July 1, 2009; $2,250,000 on January 1, 2010, $2,250,000 on July 1, 2010; $2,250,000 on January 1, 2011; $2,250,000 on July 1, 2011; $2,250,000 on January 1, 2012; and $2,000.000 on July 1, 2012.

(Keane Decl., Ex. 24 (Separation Agreement) Section 3(a))

The Stock Purchase Agreement provides that Mafco Consolidated Group, Inc. will buy back 200,000 shares of M & F Worldwide Corp. from Drapkin, paying him $5 million upon delivery of these shares and an additional $7 million in three installments: $2.25 million on January 1, 2008; $2.25 million on July 1, 2008; and $2.5 million on January 1, 2009. (Keane Decl., Ex. 34 (Stock Purchase Agreement) Section 3(a)-(b))

Drapkin also has a right to reimbursement of medical expenses under the Separation Agreement:

Until you reach the age of 65, the Company will reimburse you for any medical expenses (defined as those expenses covered by the executive medical reimbursement program then in effect for the Company, from time to time) incurred by you and your immediate family which are not otherwise reimbursed through medical plans, if any, covering you or your immediate family.

(Keane Decl., Ex. 24 (Separation Agreement) Section 3(b))

Drapkin has a number of obligations under the Separation Agreement, including (1) to return, under certain circumstances, Company-related documents and files, whether in hard copy or electronically stored; (2) not to disparage the Company or its management; and (3) not to induce or attempt to induce any Company employee—other than Link—to leave the Company.

With respect to return of Company files, the Separation Agreement provides in pertinent part:

You ... agree to deliver promptly to the Company at any time the Company may so request all memoranda, notes, records, reports, manuals, drawings, blueprints and other documents (and all copies thereof), including data stored in computer memories or on other media used for electronic storage and retrieval, relating to the Company's business or the business of its affiliates and all property associated therewith, which you may possess or have under your control.

( Id. at Section 6(a))

[Y]ou may continue to possess the equipment identified in Section I of Annex C, which equipment shall become your property on December 31, 2007, provided that you promptly provide to the Company copies of all electronic files in your (or your personal assistant's) personal possession relating to the Company or its affiliates and not otherwise available to the Company, after which you delete (and do not attempt to recover) all copies of such files in your possession.

( Id. at Section 6(h)) ²

With respect to non-disparagement, the Separation Agreement states:

You agree not to take any action or to make any statement that does, or is reasonably likely to, enter the public domain and disparages the business or management of the Company or any of the Company's affiliates, or any of its Related Persons, with respect to any period during which you were either employed by the Company or receive benefits under this Agreement. The Company agrees that it shall not instruct or authorize any directors, officers, agents, or employees of the Company or any of the Company's affiliates or any of its Related Persons to take any action or make any statement, written or oral, that disparages or criticizes you. Nothing in this Section 5 shall prevent you or the Company, the Company's affiliates or any of its Related Persons from truthfully responding in connection with governmental inquiries or as required by subpoena, court order or legal process. Upon receipt by either party of written notice of any breach of this Section 5, the party receiving such notice shall have a period of 10 days to respond to and cure any such breach.

( Id. at Section 5)

With respect to inducing employees to leave the Company, the Separation Agreement states:

For a period of two years from the date hereof, you shall not, directly or indirectly, (i) induce or attempt to influence any employee of the Company or its affiliates (other than Nancy Link [Drapkin's assistant] ) to terminate his or her employment with the Company....

( Id. at Section 6(c))

The Separation Agreement further provides that “any material breach” of those terms would enable the Company to rescind the agreements, reclaim the benefits provided to Drapkin thereunder, and stop performing. ( Id. at Section 9) As to waiver, the Separation Agreement states:

The failure of either party at any time or times to require performance of any provision hereof will in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this agreement, whether by conduct or otherwise, in any one or more instances, will be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this agreement.

( Id. at Section 11)

B. Drapkin's Departure From The Company

In late April 2007, Steven Fasman, an in-house lawyer at the Company (August 2, 2010 Fasman Decl., ¶ 1), met with Drapkin, explained that he “was following up on the agreement and [ ] wanted to know if [Drapkin] had anything he wanted to turn over.” (Company Resp. to Drapkin R. 56.1 Stmt. ¶ 77) Drapkin told Fasman that he did not.³ (Drapkin R. 56.1 Stmt. ¶ 78) The parties agree that Fasman never made any other request to Drapkin for the return of documents, and that “Fasman never made any written request to Drapkin for any documents or recorded in writing any oral request.” (Drapkin R. 56.1 Stmt. ¶ 80)

On April 30, 2007, Drapkin told Link, his assistant, that they would be moving to Lazard and instructed her to “get rid of any documents we do not need.” (Company R. 56.1 Stmt. ¶¶ 226, 227) Drapkin testified that he did not have “anything crisp and clear in [his] mind when [he] said it,” but that he “certainly wanted [Link] to save [his] personal emails” and “get rid of things that related to MacAndrews & Forbes that [he] didn't need or want or care about.” (Company R. 56.1 Stmt. ¶ 229) Link testified that she went through documents on her laptop computer and deleted “[a]nything that wasn't personal” and also deleted “a few” word processing files, but “was doing it very quickly because [she] was leaving quickly.” (Company R. 56.1 Stmt. ¶¶ 230, 231) Although the parties disagree as to the number of Company-related documents that were not deleted from Link's laptop computer, they agree that—after this litigation was commenced—849 e-mails and 79 other Company-related documents were found on Link's laptop. (Drapkin R. 56.1 Counter–Stmt. ¶ 244)

Drapkin joined Lazard on May 1, 2007. (Drapkin R. 56.1...