IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA COMPLAINT

Transcription

1 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 1 of of 14 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA THE BON-TON STORES, INC., Plaintiff v. GARY PRALLE, Civil Action No. JURY TRIAL DEMANDED Defendant COMPLAINT Plaintiff, The Bon-Ton Stores, Inc., by and through its undersigned counsel, hereby files the following Complaint against Defendant, Gary Pralle, and in support thereof states as follows: INTRODUCTION 1. The Bon-Ton Stores, Inc. (hereinafter Plaintiff or The Bon-Ton ) has initiated this action against its former employee, Gary Pralle (hereinafter Defendant or Mr. Pralle ). The Bon-Ton seeks relief from this Honorable Court pursuant to common law claims of breach of fiduciary duty, unjust enrichment and fraud. In addition, Plaintiff seeks a declaration from this Court as

2 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 2 of of 14 to whether Mr. Pralle was terminated for cause as defined in the Executive Severance Pay Plan entered into between the parties. PARTIES, JURISDICTION & VENUE 2. The Bon-Ton is a Pennsylvania corporation with a principal place of business of 2801 East Market Street, York, PA Mr. Pralle is a citizen of the State of Florida and domiciled at Dory Lane, Fort Myers, Florida The amount in controversy in this matter exceeds the sum or value of $75, The Court has diversity jurisdiction over this matter because the matter in controversy exceeds the sum or value of $75,000 and is between citizens of different states. 28 U.S.C. 1332(a)(1). 6. Venue in this District is proper pursuant to 28 U.S.C. 1391(b), as a substantial part of the events or omissions giving rise to the claim occurred in this District.

3 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 3 of of 14 FACTS 7. The Bon-Ton is a national retailer which offers a wide selection of unique and limited-distribution merchandise and competitively-priced national and private brands. 8. Defendant is a former employee of Plaintiff who held the position of Senior Vice-President, Director of Stores. 9. Defendant was employed by The Bon-Ton Department Stores, Inc., the wholly-owned operating subsidiary of Plaintiff. 10. Defendant s principal place of work was in Plaintiff s corporate offices in York, Pennsylvania. 11. Beginning January 2012, Defendant was the Director of Stores for the Mid-Atlantic Region, including, but not limited to, Pennsylvania, Ohio, Michigan, Massachusetts and Connecticut (the Territory ). As an important part of his job duties, Defendant was required to travel to various store locations throughout the Territory. 12. Defendant was required to regularly visit the stores in the Territory. 13. Defendant failed to regularly visit the stores in the Territory, and, in fact, did not travel to the Ohio market for approximately one year.

4 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 4 of of Defendant s actions in failing to supervise all of the stores in his Territory, most notably the 23 stores located in Ohio, constituted neglect of his responsibilities as a Director of Stores. 15. From November 2012 through November 2013, Defendant spent only approximately 57% of his time in the Territory. 16. Defendant regularly commuted to his York, Pennsylvania office from his home in Fort Myers, Florida. 17. Defendant made the decision to move to Florida. 18. Plaintiff s agreement with Defendant was that he could occasionally work from his home in Florida one day per week. 19. Upon review of Defendant s calendar and travel schedule, Plaintiff discovered that during the time period of November 2012 through December 2013: (a) Defendant traveled to and from his home in Florida on most Fridays, some Thursdays, the majority of Mondays and on occasions, Tuesdays;

5 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 5 of of 14 (b) On the days prior to travel to or from Florida, Defendant frequently traveled late-morning or mid-day, thus missing additional work hours and days for Florida travel purposes; (c) Defendant was absent from the Territory for approximately 48.5 workdays; (d) Defendant was in Florida for the week ending January 5, 2013 on an unapproved vacation. Defendant did have approved vacation from January 14, 2013 through January 19, Accordingly, for the period of December 29, 2012 through January 14, 2013, i.e., ten working days, Defendant was in the Territory for only 2.5 days; and (e) Defendant was absent from the Territory during Plaintiff s second busiest sales volume weekend of the year due to the fact that he was traveling to Florida. 20. Defendant attempted to mislead Plaintiff as to his whereabouts through vague entries on his travel schedule. 21. Defendant s failure to perform the duties for which he was hired constitutes a breach of his fiduciary duty to Plaintiff.

6 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 6 of of Upon review of Defendant s expense reimbursement submissions, Plaintiff discovered that during the time period of November 2012 through December 2013, Defendant submitted for reimbursement: (a) (b) Numerous personal travel expenses to Florida; Hotel, rental car and meal bills for his time spent in York, Pennsylvania; and (c) Numerous extravagant expenses for lodging, meals and alcohol in excess of Plaintiff s travel policy. By way of example, (i) Contrary to Plaintiff s policy requiring executives to stay at mid-priced hotels, Defendant submitted for reimbursement hotel expenses for his stay at the Four Seasons Hotel in Philadelphia; and (ii) In violation of Plaintiff s policy, Defendant apparently engaged in the consumption of alcohol during the workday, inasmuch as he submitted expenses for reimbursement for the purchase of alcohol. 23. Plaintiff did not agree to reimburse Defendant for his trips from York, Pennsylvania to his home in Florida.

7 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 7 of of Defendant s travel from York, PA to Florida constituted a commuting expense and not a business expense. 25. Defendant misrepresented commuting expenses as business expenses and wrongfully submitted and received reimbursement for these expenses. 26. No other similarly-situated executives employed by Plaintiff have their commuting expenses paid for by the company. 27. Plaintiff submitted expenses for hotels, meals and rental car while working in his office in York, Pennsylvania. 28. Plaintiff did not agree to reimburse Defendant for his hotels, meals and rental car while he worked in his York office. 29. Similarly-situated executives pay for their hotel and meal expenses when in their principal office location. 30. Defendant s submission of personal and extravagant expenses for payment by Plaintiff caused Plaintiff to incur significant and substantial costs. 31. Defendant s submission of personal and extravagant expenses for payment by Plaintiff were in violation of Plaintiff s policy. 32. Plaintiff maintains an Executive Severance Pay Plan (the Plan ). See Exhibit 1.

8 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 8 of of Defendant was eligible for the Plan. 34. The Plan provides that Defendant would have been eligible for severance in the amount of one times his base salary, unless terminated for certain reasons enumerated in the Plan. 35. The Plan provides that a participant terminated for cause is not entitled to severance under the Plan. 36. For cause termination is defined in the Plan as, any reason for dismissing an Executive from employment with the Employer, acting in its role as the employer and not as a fiduciary, determines, in its sole discretion, would constitute (i) Executive s material and serious breach or neglect of Executive s responsibilities; (ii) willful violation or disregard of standards of conduct established by law; (iii) willful violation or disregard of the standards of conduct set forth in the Employer s Code of Ethical Standards and Business Practices and all Employer employment policies of general applicability; (iv) fraud, willful misconduct, misappropriation of funds or other dishonesty 37. Defendant s employment with Plaintiff was terminated for cause effective January 23, Upon termination of Defendant s employment, Plaintiff conducted a search of Defendant s s.

9 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 9 of of 14 materials. 39. Upon review of Defendant s s, Plaintiff discovered pornographic 40. Upon review of Defendant s s, Plaintiff discovered documents containing racial slurs. 41. Had Plaintiff discovered these pornographic and racist materials prior to Defendant s termination for the reasons outlined above, Defendant would have been terminated for violation of Plaintiff s conduct policies. above. COUNT I BREACH OF FIDUCIARY DUTY 42. Plaintiff incorporates by reference Paragraph Nos. 1 through 41, 43. As a Senior Vice-President, Defendant was an officer of Plaintiff. 44. As an officer of Plaintiff, Defendant held a fiduciary position with respect to his relationship with Plaintiff and its shareholders. 45. As an officer of Plaintiff, Defendant was required to perform his duties in good faith, in the best interests of the corporation and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances.

10 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 10 of of As an officer of Plaintiff, Defendant was not permitted to use influence and advantage of his office for his own personal gain. 47. Defendant breached his fiduciary duty to Plaintiff by engaging in ongoing misconduct which was not in the best interests of Plaintiff. 48. Defendant used his position as an officer of Plaintiff for his own personal gain. 49. Defendant s breach of his fiduciary duties to Plaintiff include, but are not limited to: (a) Incurring extravagant and unauthorized expenses which were billed to Plaintiff; (b) (c) Knowingly submitting falsified statements of expenses; Misusing and/or misdirecting Plaintiff resources for his own personal use and benefit; (d) (e) Willful neglect of his duties; Willful violation or disregard of the standards of conduct set forth by Plaintiff; and (f) Dishonesty.

11 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 11 of of Defendant failed to act in good faith and solely for the benefit of Plaintiff in all matters for which he was employed. 51. Plaintiff suffered injuries as a result of Defendant s conduct. 52. Defendant s conduct was the direct and proximate cause of the injuries suffered by Plaintiff. 53. As a result of Defendant s misconduct, Plaintiff has suffered injuries which include, but are not limited to, monetary damages and loss of goodwill with respect to its vendors, employees and others. WHEREFORE, Plaintiff, The Bon-Ton Stores, Inc., demands judgment in its favor and against Defendant, Gary Pralle, under Count I hereof, in an amount to be proven at trial, plus attorneys fees, expenses and costs of suit, and interest as allowed by law. above. COUNT II UNJUST ENRICHMENT 54. Plaintiff incorporates by reference Paragraph Nos. 1 through 53, 55. Defendant misrepresented commuting expenses as business expenses and wrongfully submitted and received reimbursement for these expenses.

12 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 12 of of 14 Defendant. 56. Defendant has been enriched inequitably at Plaintiff s expense. 57. Defendant has a legal duty of restitution. 58. Plaintiff is permitted to recover the benefit unjustly retained by WHEREFORE, Plaintiff, The Bon-Ton Stores, Inc., demands judgment in its favor and against Defendant, Gary Pralle, under Count II hereof, in an amount to be proven at trial, plus attorneys fees, expenses and costs of suit, and interest as allowed by law. above. COUNT III FRAUD 59. Plaintiff incorporates by reference Paragraph Nos. 1 through 58, 60. Defendant represented to Plaintiff that the expenses submitted by him for reimbursement were business expenses and not personal or commuting expenses. 61. Defendant s representations were false when they were made and were known by him to be false.

13 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 13 of of Plaintiff justifiably relied on Defendant s representations in reimbursing him for the expenses submitted by him. 63. As a result of Plaintiff s reliance on Defendant s misrepresentations, it has suffered damages in an amount to be proven at trial. WHEREFORE, Plaintiff, The Bon-Ton Stores, Inc., demands judgment in its favor and against Defendant, Gary Pralle, under Count III hereof, in an amount to be proven at trial, plus attorneys fees, expenses and costs of suit, and interest as allowed by law. above. COUNT IV DECLARATORY JUDGMENT (28 U.S.C. 2201) 64. Plaintiff incorporates by reference Paragraph Nos. 1 through 63, 65. An actual controversy exists as to whether Plaintiff s termination of Defendant s employment was for cause as defined in the Plan. 66. All parties who have an interest that would be affected by the declaration requested herein have been joined in the instant action. 67. Absent a declaration from this Court, the rights, status, and other legal relations of the parties as they relate to the Plan are uncertain.

14 Case 1:14-cv YK 3:02-at Document 5001 Filed 05/09/14 Page 14 of of Only the entry of a declaratory judgment will terminate the uncertainty and controversy regarding the nature of Defendant s termination. 69. Plaintiff seeks a judicial determination that Defendant s termination by Plaintiff was for cause as defined by the Plan. WHEREFORE, Plaintiff, The Bon-Ton Stores, Inc., demands a declaration in its favor that Defendant was terminated for cause as defined by the Plan. JURY TRIAL DEMAND Plaintiff demands a jury trial as to all claims so triable. Respectfully submitted, BARLEY SNYDER LLP By: /s/ Richard L. Hackman Richard L. Hackman (PA 81755) Joshua L. Schwartz (PA ) 100 East Market Street York, PA Fax: rhackman@barley.com jschwartz@barley.com Attorneys for Plaintiff