Random Ventures, Inc. v. Advanced Armament Corp.

• Decision Date: 13 January 2014
• Docket Number: 12 Civ. 6792 (KBF)
• Court: U.S. District Court — Southern District of New York
• Parties: RANDOM VENTURES, INC., KEVIN BRITTINGHAM, & LYNSEY THOMPSON, Plaintiffs, v. ADVANCED ARMAMENT CORP., LLC & REMINGTON ARMS COMPANY, LLC, Defendants.

RANDOM VENTURES, INC.,KEVIN BRITTINGHAM, & LYNSEY THOMPSON, Plaintiffs, v. ADVANCED ARMAMENT CORP.,LLC & REMINGTON ARMS COMPANY, LLC, Defendants.

12 Civ. 6792 (KBF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Dated: January 13, 2014

OPINION & ORDER

KATHERINE B. FORREST, District Judge:

In some lawsuits, full development of the factual record reveals that neither side cloaked themselves in glory - that neither side did what it could or should have done to avert the mess that became the litigation. This is such a case. It is now this Court's task to take the factual record presented at trial and to grapple with the mess that characterized the parties' relationships; in short, to decide who wins and who loses. While the facts presented show less than stellar behavior on both sides, plaintiffs are entitled to the relief they seek.

In 1994, Kevin Brittingham started Advanced Armament Corp. (referred to herein as "Old-AAC"), a company that designed and manufactured silencers. A few years later, a friend of Brittingham's, Lynsey Thompson, joined the business; she soon took charge of the company's operations and finances, allowing Brittingham to focus on research and development ("R&D") and marketing. Old-AAC grew into a profitable business and a leader in the growing silencers industry.

In October 2009, a large firearms manufacturer, Remington Arms Company, LLC (formerly known as Remington Arms Company, Inc (referred to herein as "Remington"))¹ formed a new entity called Advanced Armament Corp., LLC ("AAC") and through AAC, acquired Old-AAC for approximately $10 million upfront and another $8 million to be paid upon certain conditions being met (in particular, that Brittingham was still employed by AAC in 2015). Brittingham and Thompson were retained as part of the agreement; each entered into an Employment Agreement ("EA"), which contained a Cause provision that outlined the circumstances under which each could be terminated by (the "new") AAC.

As could have (and should have, based on the factual record as developed herein) been predicted, things did not go smoothly for Brittingham, and to a lesser extent, Thompson, following the acquisition.

In December 2010, Brittingham and Thompson were suspended in conjunction with the investigation of an antique silencer that Brittingham had received at AAC's premises.

In January 2011, Brittingham and Thompson were reinstated and put on a one-year probationary period. On December 21, 2011, Brittingham was terminated by AAC; Thompson was terminated soon thereafter, in January of 2012.

On September 7, 2012, Old-AAC (sometimes referred to as Random Ventures), Brittingham, and Thompson filed this action against AAC and Remington (together, "defendants"), claiming, inter alia, that AAC and Remingtonbreached their contracts as well as the implied covenant of good faith and fair dealing. On October 3, 2012, defendants answered and asserted a counterclaim against Brittingham and Random Ventures for conversion and breach of contract. (See ECF No. 13.)

On June 17-21 and June 24-25, 2013, this Court held a bench trial in the action. This Opinion & Order constitutes this Court's findings of fact and conclusions of law.

FINDINGS OF FACT

I. Old-AAC

Kevin Brittingham discovered silencers as a teenager, and he knew he had found what he wanted to do with his life.² (Tr. 72-73.) At trial, he was sincere and credible regarding his passion for the business he developed and the company he started in 1994, Advanced Armament Corporation (again, "Old-AAC"). (Compl. ¶ 15.) Brittingham's skill in designing and marketing silencers is undisputed: he developed intellectual property (a series of patents) and a client base (a significant portion of which was the United States military) that resulted in Old-AAC becoming the industry leader for silencers. (Tr. 73-77.)

Prior to its acquisition by Remington, Old-AAC had a youthful, untraditional company culture. (Tr. 74.) Brittingham was determined to make Old-AAC a "cool" place to work - a place where people were not embarrassed to wear the company t-shirts. (Tr. 75.) As an example of the Old-AAC culture, Brittingham created a marketing campaign whereby people who tattooed Old-AAC's logo on their body would receive a free silencer; the campaign proved so successful it cost Old-AAC approximately $250,000. (Tr. 89-90.) Clearly, the Old-AAC was no typical corporation. Its employees were a small, dedicated, tight-knit group of people who worked well in an unconventional environment.

Brittingham was present for every moment of the trial and testified over the course of multiple days. The Court had ample opportunity to assess his demeanor. He was sincere in his love for Old-AAC and its business, protective of the culture that he had built and viewed as an important component of its success, and saddened, angry, and frustrated with the events that followed the acquisition.

After listening to Brittingham's testimony for just a few minutes, it was obvious that Brittingham would not fit in well in most corporate boardrooms, nor would he want to. It was also clear that Brittingham would be right at home at gun shows and gatherings of firearm enthusiasts. Having seen and assessed Brittingham, he is a non-conformist and not everyone's cup of tea; and that is fine with him. However, no sophisticated businessperson assessing Brittingham as a potential employee for a large corporate entity could reasonably believe that he would fit well in a corporate culture; nor could any sophisticated businessperson believe Brittingham could or would be willing (let alone deem it necessary) to change the way his highly successful company operated following the acquisition.

A key employee of Old-AAC, and one whom Brittingham credits with having been a critical part of its success, was Lynsey Thompson. Thompson started working for Old-AAC part-time while she was in college, and began working full-time upon her graduation. (Tr. 72-73.) Thompson handled the administrative and back-office side of the business; according to Brittingham, she "ran" the business while he focused on what he loved to do - designing, manufacturing, and marketing silencers. (Tr. 79.)

At trial, Thompson participated by live video-feed. (Tr. 9.) She was pregnant and under a doctor's order not to travel. Thompson testified and the Court found that she was largely credible - except as to topics not material to the outcome of this matter. Thompson and Brittingham had a close and complicated relationship during the period of events here at issue.

In connection with Old-AAC's R&D efforts, Old-AAC used a wide variety of firearms: machine guns of different types, rifles with short barrels and long barrels, semi-automatic and full automatic weapons, different types of revolvers; these firearms were critical tools of the trade - necessary to the design and development of silencers that complied with particular specifications. (Tr. 83-84, 95-97.)³ As a result, these critical tools were on the desks and work benches of the employees who used them each day in connection with Old-AAC's business. (Tr. 94-97, 884.) Thiswas the way that Old-AAC operated, and such fact would have been apparent to anyone who walked through its facilities or spoke with its employees.

Among Old-AAC's regular and significant customers were special operations of the U.S. military ("Special Ops"). (Tr. 76-77.) The requirements for these customers were specific and Old-AAC's marketing efforts were, quaintly put, tailored - and effective. Brittingham testified credibly that this customer group included individuals deployed away from home for periods of time, "the guys who killed bin Laden." (Tr. 494.) From time to time, he and they would ride dirt bikes, go aerial pig hunting, and socialize at strip clubs. (Tr. 494-96.)

There was no suggestion at trial that Brittingham or Old-AAC was the target of any enforcement efforts by the U.S. government or that it was ever investigated for any violations of firearm laws, rules, or regulations. While it is true that silencers are highly regulated firearms - referred to, like machine guns as "NFA" firearms (tr. 93) - there is no evidence that Old-AAC was ever found non-compliant with the applicable statutory regime.

Prior to the acquisition, Brittingham maintained two Federal Firearms Licenses ("FFLs") - the 40006 FFL⁴ (sometimes referred to as "the sole-proprietorship FFL") and the 02617 FFL⁵ (sometimes referred to as "the Old-AAC FFL"). Each had a corresponding "bound book," which is where certain recordspertaining to each FFL were kept. (The maintenance of FFLs and bound books are required pursuant to the statutory regime).⁶ (Tr. 107-08, 110; see infra.)

II. Remington's Initial Interest in Old-AAC

In 2009, Brittingham was not looking to sell Old-AAC. (Tr. 80-81.) If Remington had never approached him, he might have continued to grow his company and the years spent in this litigation would never have occurred. But that was not to be.

Old-AAC was doing well: it was edgy, profitable, innovative, and growing. (Tr. 73, 74, 88, 90.) Brittingham knew an individual who had been in the Special Forces of the U.S. Army, Greg Baradat; after Baradat retired from the military, he went to work for Remington as a military salesperson. (Tr. 78.) Baradat called Brittingham and asked him if he would be interested in speaking with Remington. (Tr. 78.)⁷ Baradat introduced him to Jason Schauble, a young, decorated former U.S. Marine who worked for Remington. (Tr. 78, 80.) Schauble expressed interest in acquiring Old-AAC, but Brittingham testified credibly that both he and Thompson initially expressed skepticism. (Tr. 81.) Brittingham was concerned about the very issue that ended up coming to pass - his company being swallowed by a large, corporate animal with a dyspeptic digestive tract. (Tr. 79.)

For example, Brittingham expressed concern to Schauble that a sale to Remington would cause the company to lose the innovative, "edg...