Sullivan v. Dumont Aircraft Charter, LLC, CIVIL ACTION NO. 16-10713-DPW

• Decision Date: 07 March 2019
• Docket Number: CIVIL ACTION NO. 16-10713-DPW
• Parties: Justin B. SULLIVAN, Plaintiff, v. DUMONT AIRCRAFT CHARTER, LLC, Dumont Aviation, LLC, and Kevin Wargo, Defendants.
• Court: U.S. District Court — District of Massachusetts

364 F.Supp.3d 63

Justin B. SULLIVAN, Plaintiff,

v.DUMONT AIRCRAFT CHARTER, LLC, Dumont Aviation, LLC, and Kevin Wargo, Defendants.

CIVIL ACTION NO. 16-10713-DPW

United States District Court, D. Massachusetts.

Filed March 7, 2019

Joseph L. Sulman, Andrea L. Haas, Law Office of Joseph L. Sulman, Esq., Waltham, MA, David I. Brody, Sherin and Lodgen LLP, Boston, MA, for Plaintiff.

James T. Hunt, Jr., Pro Hac Vice, Tenaglia & Hunt, P.A., Rochelle Park, NJ, Joseph A. Martin, Pro Hac Vice, Martin Law Firm, LLC, Cherry Hill, NJ, Christine R. Fitzgerald, Belcher Fitzgerald LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, UNITED STATES DISTRICT JUDGE

Plaintiff Justin B. Sullivan, a former employee of Dumont Aircraft Charter, LLC, brings this lawsuit against his former employer, its affiliate, Dumont Aviation, LLC, and the owner of the businesses, Kevin Wargo (together "Defendants" or "Dumont"). Mr. Sullivan claims that the Defendants failed to pay him compensation for the work he did. The Defendants have responded with counterclaims against Mr. Sullivan, in which they contend Mr. Sullivan has unlawfully retained money he did not earn. Both parties have moved for summary judgment on Mr. Sullivan's claims. For the reasons explained below, I will grant in part and deny in part each motion.

I. FACTUAL BACKGROUND¹

A. The Parties

Defendant Kevin Wargo is a director and co-owner of the Dumont Group, LLC, a non-party to this litigation. Defendants Dumont Aircraft Charter, LLC and Dumont Aviation, LLC , are both wholly-owned subsidiaries of the Dumont Group. The Defendants manage and operate charter flights on Federal Aviation Administration Part 135 certificates. These certificates permit an operator to sell charter flights on a particular plane to customers. Dumont generally receives a percentage of the revenue, typically around 10%, from charters sold on aircrafts they operate and manage, although it does not receive revenue from every such charter.

The Plaintiff Justin B. Sullivan made his living in the aircraft charter industry as a broker. For a time, before he was engaged as an employee, Mr. Sullivan worked as a broker selling charter to the Defendants.

B. Mr. Sullivan's Pre-Employment Interactions with the Defendants

1. The Cook Plane and Charter Commissions

In August 2015, three months before Mr. Sullivan became an employee of Dumont, he introduced a potential aircraft customer, Gregg Cook, to Kevin Wargo. Based on this introduction, Mr. Sullivan and Dumont agreed that Dumont would pay Mr. Sullivan $50,000 if Mr. Cook purchased an aircraft from Dumont, and that Mr. Sullivan would receive 5% of future charter sales on the aircraft. This agreement was wholly separate from any employment relationship and did not identify any further responsibilities, conditions, or duties that Mr. Sullivan needed to perform in order to be entitled to the 5% commission. The understanding of the parties with respect to the 5% commission was also not part of any written agreement and the agreement did not include a specific end date for residual commissions.

Mr. Cook signed an agreement to purchase the aircraft from Dumont Aircraft Sales, LLC, a subsidiary of the Dumont Group, in August 2015, and he paid a deposit at that time. On November 1, 2015, Falcon 50-054, LLC ("Falcon"), an entity controlled by Mr. Cook, purchased an aircraft with tail number N954DP from Dumont Aircraft Sales, LLC, a Dumont affiliate that is not a defendant in this case. Falcon also signed an agreement to pay Dumont Aircraft Charter, LLC, a 15% charter commission on flight charges. The Cook aircraft was placed in the Defendants' charter fleet, where it would be made available to the public for charter flights. The Cook plane ceased to be part of the aircraft charter program on August 22, 2017.

On November 6, 2015, the Defendants gave the Plaintiff a check for $50,000, in accordance with their agreement regarding purchase of the Cook plane.

On December 31, 2015, the Defendants paid Mr. Sullivan his first residual commission payment, in the amount of $3,772, for the November revenue generated by Mr. Cook's plane. On January 19, 2016, Kevin Wargo instructed Keith Wargo, the Chief Financial Officer ("CFO") for Dumont, to continue paying Mr. Sullivan the 5% commission for charter sales of Mr. Cook's plane. On January 31, 2016, the Defendants paid Mr. Sullivan his second residual commission payment, in the amount of $11,527.78, for December 2015 charter revenue generated by the Cook plane.

Both the November and December 2015 commission payments were paid as W-2 wages with applicable withholdings.² On February 18, 2016, Kevin Wargo instructed Keith Wargo, the CFO, not to pay any further commissions to Mr. Sullivan. Dumont, nevertheless, continued to collect charter revenue from the Cook plane from January 1, 2016 through August 22, 2017, when the Cook plane left the Defendants' charter program.

2. The Selldorff Aircraft Sale

Before Mr. Sullivan became an employee of the Defendants, he also introduced the Defendants to a second potential aircraft buyer, Frank Selldorff. Mr. Sullivan tried to encourage Mr. Selldorff to purchase a particular Dumont aircraft, with registration number N957DP. Mr. Selldorff decided not to purchase that plane. Though Mr. Sullivan did not broker the sale of a different aircraft to Mr. Selldorff, he remained in contact with Kevin Wargo about Mr. Selldroff's plans after the introduction had been made. For example, on September 2, 2015, Mr. Sullivan emailed Kevin Wargo to let him know that Mr. Selldorff seemed to be "narrowing in on a 601." Just over one month later, Mr. Selldorff came back to Dumont and purchased a Challenger 601 from Dumont Aircraft Sales, LLC. The sale closed on October 14, 2015.

C. Mr. Sullivan's Employment with Dumont

In September 2015, Mr. Sullivan and the Defendants began discussions about Mr. Sullivan formally joining Dumont as an employee. During the conversations regarding his employment, Mr. Sullivan and Mr. Wargo negotiated the terms of Mr. Sullivan's compensation structure via email and during an in-person meeting. In the electronic communications, Mr. Wargo never enumerated any deductions or withholdings from Mr. Sullivan's commission payments for costs or expenses of any kind. However, in an email exchange from September 14, 2015, Kevin Wargo asked Mr. Sullivan about "ongoing expenses" for Mr. Sullivan's business and, in an email dated September 25, 2015, the parties contemplated a number of "ongoing expenses," including compensation for Maria White, Mr. Sullivan's associate.

The terms of Mr. Sullivan's employment were set forth in a written agreement ("the Term Sheet") that Mr. Sullivan signed on October 19, 2015. His employment as the Sales Director for Dumont formally began on November 4, 2015.

1. The Term Sheet

The parties agree that the terms of Mr. Sullivan's employment were largely governed by the Term Sheet, which the Defendants authored. In its initial draft, the Term Sheet contained no provisions regarding expenses. The final version included one provision regarding expenses, noting that Mr. Sullivan's reasonable travel expenses were to be covered by the Defendants. After several discussions and email communications regarding a structure for compensation, Mr. Sullivan and Dumont ultimately agreed to and signed a written Term Sheet agreement, which set out the terms of Mr. Sullivan's employment with Dumont and his commission-only compensation structure. Mr. Sullivan specifically requested that he be compensated by sales commission only. He did not ask to be paid by the hour.

Mr. Sullivan received an offer letter from the Defendants, which he signed and returned by November 4, 2015. That offer letter incorporated the Term Sheet by reference, noting that Mr. Sullivan's "initial compensation package includes financial compensation based on the agreement signed October 19, 2015." It also made clear that Mr. Sullivan's start date for employment was November 4, 2015 and that his employment was at-will.

The Term Sheet further provided that Mr. Sullivan would be eligible for a commission on aircraft charter flight sales. Specifically, the Term Sheet made clear that "[t]hree percent of gross flight charges revenue sales will be allocated as sales department commissions. Justin may receive up to 75% of this number leaving 25% to be split amongst the remaining team. Under mutual agreement ... Justin can opt to reduce his share of the profit." Any commission not paid to Mr. Sullivan was retained by the Defendants.

The commission was calculated based on flight charges, which were determined when a customer accepted a flight quote and the Defendants added it to the flight schedule. Flight charges were reported to owners in monthly statements issued by the 20^th of the month following the flight activity. Flight charges typically did not change unless there was an issue with the flight or the routing changed. Mr. Sullivan's commission, then, was calculated by adding up flight charges and paying him the agreed percentage. He received paychecks from Dumont Crewing Services, LLC and Dumont Aircraft Charter, LLC.

According to the Term Sheet, Mr. Sullivan was also entitled to a commission on aircraft sales of "50% of aircraft sales profit, up to $100,000, for closing aircraft sales." The Term Sheet defined "closing aircraft sales" as follows: "Customer is brought by Justin, worked by Justin, brought thru the process by Justin, and Justin receives the signed contract, and the transaction closes."

The Term Sheet included no reference to costs, expenses, or other money to be deducted from Mr. Sullivan's commission.

2. Mr. Sullivan's Role as Sales Director

As the Sales Director, Mr. Sullivan's duties involved proactive outreach to prospective aircraft buyers to discuss aircraft sales opportunities. Mr. Sullivan also provided quotes to customers, engaged with brokers about potential charters, and monitored air charter boards. He...