Stevens v. Publicis, S.A.
Supreme Court of New York, Appellate Division, First Department
April 1, 2008, Decided; April 1, 2008, Entered
3215, 3215A, 602716/03
[*254] [**691] Judgment, Supreme Court, New York County (Richard B. Lowe, III, J.), entered February 26, 2007, dismissing the complaint in its entirety after a jury trial, unanimously affirmed, with costs. Order, same court and Justice, entered January 12, 2007, which granted defendants' motion for partial summary judgment on their claim for reasonable attorneys' fees and expenses, unanimously affirmed, with costs.
In October 1999, plaintiff sold his New York-based public relations firm, Lobsenz-Stevens (L-S), to defendant Publicis S.A., a French global communications company, and its codefendant American subsidiary. The sale involved two contracts: a stock purchase agreement, pursuant to which plaintiff sold all the stock of L-S to defendants, and an employment agreement, pursuant to which plaintiff was to continue as chairman and CEO of the new company, named Publicis-Dialog, Public Relations, New York (PDNY), for three years. Plaintiff's duties were to be the "customary duties of a Chief Executive [***2] Officer."
Under the stock purchase agreement (SPA), plaintiff received an initial payment of $ 3,044,000, and stood to earn "earn-out" payments of up to $ 4 million contingent upon PDNY achieving certain levels of earnings before interest and taxes during the three calendar years after closing.
Within six months of the acquisition, signs of financial problems appeared. Plaintiff admits that revenue and profit targets were not met. Further, PDNY lost L-S's largest preacquisition client, Pitney Bowes. On March 5, 2001, plaintiff had a meeting with Jon Johnson, former CEO of Publicis Dialog, a related entity, at which he was shown financial statements and told that the business had lost approximately $ 900,000 in the year 2000. Plaintiff was removed as CEO of the business, and was given several options, including leaving the firm, staying and working on new business, and a third option to come up with another alternative. Thereafter, Bob Bloom, former chairman and CEO of Publicis USA, became involved in the matter. Bloom and plaintiff exchanged a series of e-mails, culminating in a March 28 message from Bloom setting forth his understanding of the parties' terms regarding plaintiff's new [***3] role at PDNY: "Thus I suggested an allocation of your time that would permit the majority of your effort to go against new business development [****2] (70%). I also suggested that the remaining time be allocated [*255] to maintaining/growing the former Lobsenz Stevens clients (20%) and involvement in management/operations of the unit (10%). This option, it would seem, is in your best interest because it offers the best opportunity for you to achieve your stated goal of a full earn-out. When I suggested this option, you seemed to have considerable enthusiasm for it and expressed your satisfaction with it so I, of course, assumed that it was an option you preferred." (Emphasis added.) By e-mail the next day, plaintiff wrote:
"Bob, to begin with, I want to thank you again for helping me restore the dignity and respect that I'm entitled to as a senior professional. Things were really getting out of hand until you intervened. Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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50 A.D.3d 253 *; 854 N.Y.S.2d 690 **; 2008 N.Y. App. Div. LEXIS 2834 ***; 2008 NY Slip Op 2880 ****; 27 I.E.R. Cas. (BNA) 1064
[****1] Arthur H. Stevens, Appellant, v Publicis S.A., et al., Respondents.
Subsequent History: Appeal dismissed by Stevens v. Publicis S.A., 10 N.Y.3d 930, 892 N.E.2d 399, 2008 N.Y. LEXIS 1886, 862 N.Y.S.2d 333 (2008)
Related proceeding at Stevens v. Sokolow Carreras LLP, 2012 N.Y. Misc. LEXIS 6269 (N.Y. Sup. Ct., Jan. 18, 2012)
Prior History: Stevens v. Publicis S.A., 2007 N.Y. App. Div. LEXIS 4783 (N.Y. App. Div. 1st Dep't, Apr. 17, 2007)
e-mail, employment agreement
Contracts Law, Contract Interpretation, Good Faith & Fair Dealing