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FILED: NEW YORK COUNTY CLERK 10/25/2017 01:18 PM INDEX NO. 652811/2017
NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 10/25/2017
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
BRADLEY J. LEVIN, Index No. 652811/2017
Plaintiff,
-against-
VICE HOLDING, INC., VICE MEDIA LLC, and
VICE MEDIA INC.,
Defendants.
REPLY MEMORANDUM OF LAW
IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS
Michael Delikat
James H. McQuade
Mark Thompson
ORRICK, HERRINGTON & SUTCLIFFE LLP
51 West 52nd Street
New York, NY 10019-6142
Telephone: (212) 506-5000
Facsimile: (212) 506-5151
Counsel for Defendants Vice Holding, Inc., Vice
Media LLC and Vice Media Inc.
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TABLE OF CONTENTS
PRELIMINARY STATEMENT ................................................................................................... 1
ARGUMENT ................................................................................................................................. 2
I. Levin’s Claims for Breach of Contract Based on Backend Profit Should
Be Dismissed ......................................................................................................... 2
II. Levin’s Claims for Conversion and Continuing Conversion Should Be
Dismissed ............................................................................................................... 6
III. Levin’s Claims for Retaliation and Continuing Retaliation Should Be
Dismissed ............................................................................................................... 8
IV. Levin’s Claim for Accounting Should Be Dismissed ............................................ 8
V. Levin’s Claim for Punitive Damages Should Be Dismissed ............................... 10
CONCLUSION ............................................................................................................................ 10
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Defendants Vice Holding, Inc., Vice Media LLC (previously known as Vice Media Inc.)
and Vice Media Inc. (collectively “Vice”) respectfully submit this reply memorandum of law in
further support of their motion to dismiss portions of the Complaint filed by Plaintiff Bradley J.
Levin (“Levin” or “Plaintiff”) pursuant to C.P.L.R. § 3211(a)(7).
PRELIMINARY STATEMENT
Nothing in Levin’s Opposition to Vice’s Motion to Dismiss (“Opposition”) saves his
claims for breach of contract, conversion, retaliation, accounting or punitive damages.
First, the language in the offer letter signed by Levin and dated August 9, 2013 (“the Offer
Letter”) providing that Levin will “be eligible for an Incentive Bonus of 3% of any backend profit
received by Vice on any Vice project that [he] help[s] to develop and sell” (the “Backend Profit”)
makes clear that the bonus is discretionary. No other “magic words” are required as Levin
contends.
Second, Levin’s claims for conversion must be dismissed because he has failed to allege a
wrong “separate and distinct” from his breach of contract claim. Levin’s conversion allegations
are entirely duplicative of his claims for breach of contract.
Third, Levin’s claims for retaliation should be dismissed because Levin has failed to
articulate any legal basis for these claims.
Fourth, Levin’s claim for an accounting should be dismissed because he has failed to allege
a confidential or fiduciary relationship between the parties.
Fifth, Levin’s claim for punitive damages should be dismissed because at best, Plaintiff
has alleged a cause of action for simple breach of contract, which is insufficient as a matter of law
to support a claim for punitive damages.
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ARGUMENT
I. Levin’s Claims for Breach of Contract Based on Backend Profit Should Be
Dismissed
In support of his argument that his breach of contract claims based on Backend Profit
should not be dismissed, Levin cites Ryan v. Kellogg Partners Institutional Servs., 19 N.Y.3d 1
(2012). The case is inapposite.
In Ryan, plaintiff, a former employee of defendant, sought to be paid a guaranteed bonus
allegedly orally promised him by defendant at the outset of his employment and then again the
following year after he agreed to forgo the bonus for one year. Defendant argued that plaintiff was
barred from recovery because statements in his employment application and the employee
handbook negated his alleged expectation of or entitlement to a guaranteed or non-discretionary
bonus. The court held that the statements in the employment application that confirms his
understanding that he was going to work at defendant as an at-will employee (i.e., that he was not
guaranteed employment for any period of time, and that his employment, compensation and
benefits were subject to termination by either party at any time and for any reason or for no reason
at all) did not bar his bonus claim because he did “not assert or rely on any alleged right to
continued employment, compensation or benefits” but instead was seeking compensation that he
says he was promised by his employer at the outset of his employment and again one year later.
Id. at 13. Similarly, the court held that plaintiff’s acknowledgment that nothing in the employee
handbook “creat[ed] a promise of future benefits or a binding contract . . . for benefits or for any
other purpose” did not bar his claims because “[t]he handbook does not say that oral compensation
agreements are unenforceable, or mention bonuses at all.” Id.
Here, unlike in Ryan, Levin is not seeking the enforcement of an oral promise guaranteeing
a bonus, and Vice is not seeking to bar enforcement of that oral promise with subsequent writings
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regarding the general terms and conditions of his employment. Here, Levin is seeking
enforcement of a written bonus agreement and Vice is seeking dismissal of his claims based on
language of the written bonus agreement, itself. In Ryan, there was a dispute as to whether the
oral agreement was guaranteed or discretionary in nature. The plaintiff testified that he was orally
promised a guaranteed and non-discretionary bonus. The defendant testified that the plaintiff made
it all up. Here, there is no need for testimony regarding what was orally promised to Levin because
we have a controlling writing—the Offer Letter. See Doolittle v. Nixon Peabody LLP, 126 A.D.3d
1519, 1520, 6 N.Y.S.3d 864, 866 (N.Y. App. Div. 2015) (“An employee's entitlement to a bonus
is governed by the terms of the employer's bonus plan and a plaintiff cannot recover under New
York law for breach of contract due to his employer's failure to pay him compensation pursuant to
a plan, where the plan vests the employer with absolute discretion as to the entitlement and amount
of any payments thereunder.”). In Ryan, the writings (i.e. the employment application and the
employee handbook) did not control because they did not speak directly to the issue of plaintiff’s
bonus. Here, in contrast, the Offer Letter does speak directly to the issue of the Backend Profit.
It makes clear that the Backend Profit bonus is discretionary in nature. Thus, Levin’s claims must
be dismissed.
The other cases cited by Plaintiff are inapposite for similar reasons. Doolittle, 126 A.D.3d
at 1521–22 (holding that law firm associate’s claim for bonus based on oral promise should not
have been dismissed because of conflicting testimony regarding whether partner told associates
the bonus was discretionary); Canet v. Gooch Ware Travelstead, 917 F. Supp. 969, 985 (E.D.N.Y.
1996) (enforcing oral promise to pay bonus where language of oral promise indicated amount was
discretionary but payment of the bonus was not); Lam v. Am. Exp. Co., 265 F. Supp. 2d 225, 237
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(S.D.N.Y. 2003) (generalized disclaimer language and reservation of rights in benefit plan did not
extinguish individual employees’ rights to benefits).
Levin further argues that because the Offer Letter does not contain certain “magic words”,
such as “bonuses are discretionary” or “sole and absolute discretionary authority and power,” the
Court should not grant Vice’s motion to dismiss. Opposition at p. 10. Contrary to Levin’s
suggestion, such “magic words” are not required to show that the Backend Profit bonus is
discretionary. When courts interpret contracts, “the only ‘magic words’ are ‘intent,’ ‘spirit,’ and
‘substance.’” See VNO 100 W. 33RD St. LLC v. Square One of Manhattan, Inc., 22 Misc. 3d 560,
562, 874 N.Y.S.2d 683, 685, 2008 N.Y. Slip Op. 28449, *2 (Civ. Ct. 2008). “Justice Cardozo
eloquently and inimitably expressed this in Wood v Lucy, Lady Duff-Gordon, 222 NY 88, 91
(1917): ‘The law has outgrown its primitive stage of formalism when the precise word was the
sovereign talisman, and every slip was fatal. It takes a broader view to-day.’” Id.; see also Bazak
Int'l Corp. v. Mast Indus., Inc., 73 N.Y.2d 113, 125, 535 N.E.2d 633 (1989) (rejecting significance
in commercial case of failure of merchant to use “magic words”).
Even if, however, certain “magic words” are required (which they are not), the Offer Letter
contains them. As detailed in Vice’s opening brief, the “magic words” here are “you will be
eligible for an Incentive Bonus.” See Compl., Ex. 1 (emphasis added). Case law makes clear that
the use of the word “eligible” by the parties requires a finding that payment of incentive
compensation in the form of the Backend Profit is discretionary, rather than mandatory. See Apple
Mortgage Corp. v. Barenblatt, 162 F. Supp. 3d 270, 291 (S.D.N.Y. 2016) (finding bonus
agreements where employees were “eligible for an additional 3% of the loan amount to be paid
quarterly” to be discretionary); Valentine v. Carlisle Leasing Int’l Co., 1998 WL 690877, at *4
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(N.D.N.Y. Sept. 30, 1998) (“Although the offer letter advised Valentine that he would be eligible
to receive a bonus, it did not promise that he would, in fact, receive one.”).
Levin’s attempt to distinguish the cases cited by Vice are unavailing. While, as Levin
contends, the court in Apple Mortgage did reject the employees’ argument that past practice was
insufficient to show that the employer had a duty to pay bonuses, it also found that the bonus
agreements which stated that employees were “eligible” rather than “entitled” to bonuses was
discretionary in nature. In fact, in rejecting the employees’ claims, the court explicitly noted that:
“The [employees] testified that they understood the difference between being ‘eligible’ for a bonus
and being ‘entitled’ to a bonus.” Id. at 291. If the court believed that there was any questions as
to whether the language in the agreements was mandatory, the court would not have dismissed the
employees’ claims for unpaid bonuses. Notably, the bonus agreements did not contain the “magic
words” such as “bonuses are discretionary” or “sole and absolute discretionary authority and
power” that Levin claims are required.
In Valentine, the offer letter at issue stated:
Your starting annual salary will be $120,000. Additionally, you will be eligible for
an annual target bonus of 40% of your salary. The bonus will be based upon both
your individual performance as well as that of the business. With outstanding
performance by yourself and the business, it is possible to achieve 67.6%. As the
structure of the Carlisle Container business unfolds, we will review the
compensation program to assure that it meets the needs of the parties. It is difficult
at this point to lock into a predetermined position.
1998 WL 690877, at *3 (emphasis added). The court determined that this language made clear
that the employer “would retain absolute discretion to determine both whether Valentine would
receive a bonus and, if so, how much he would receive.” Id. at *4. Contrary to Levin’s
suggestions, the offer letter in Valentine contained none of the certain “magic words” that Levin
claims are required.
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Because payment of the Backend Profit is discretionary, Levin’s claims for Breach of
Contract (Count One), Breach of Contract by Repudiation (Count Two), and the portion of Levin’s
claim for Continuing Breach of Contract (Count Four) based on payment of the Backend Profit
should be dismissed.
II. Levin’s Claims for Conversion and Continuing Conversion Should Be Dismissed
In his cause of action for Conversion (Count Five), Levin alleges “Vice has converted to
itself the value of the Backend Profit to which Mr. Levin is eligible and converted to itself the
value of Mr. Levin’s right to capitalize on increased share values, causing damage to Mr. Levin.”
Compl. at ¶ 57. In his cause of action for Continuing Conversion (Count Six), Levin alleges that
“Vice has converted and continues to convert to itself the value of the Backend Profit to which
Mr. Levin is eligible, and converted and continues to convert to itself the value of Mr. Levin’s
right to have exercised exercisable stock options, causing continued damage to Mr. Levin.” Id. at
¶ 58.
Levin makes no argument in his Opposition that his claims for conversion based on
Backend Profit are not duplicative of his claims for breach of contract. Thus, that portion of his
conversions claims should be dismissed.
With respect to the portion of his conversion claims concerning “increased share value”,
Levin argues that his claims are not duplicative of his claims for breach of contract because he
“was not terminated for cause” and “the forfeiture of his exercisable options was outside of the
terms of the governing documents, unauthorized by Plaintiff” and this “caused him meaningful
economic harm.” Opposition at p. 18. Contrary to Levin’s contentions, his conversion claims are
directly within the scope of the terms of the governing document---the applicable stock plan. The
applicable stock plan language states that options are exercisable when an employee is terminated
not for cause. Compl. at ¶ 22, Ex. 3. (“If the Participant’s Service terminates for any reason, except
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Disability, death or Cause, the Option, to the extent unexercised and exercisable for Vested Shares
by the Participant on the date on which the Participant’s Service terminated, may be exercised by
the Participant at any time prior to the ninety (90 days) after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date.”). If Levin can
prove that he was terminated without cause and Vice prevented him from exercising his options,
assuming he has complied with all other provisions of the plan1, Levin can state a claim for breach
of contract, subject, of course, to Vice’s defenses. There is no other “duty, independent of the
mere contract obligation” that can be said to have been breached in such a circumstance. Apple
Records, Inc. v. Capitol Records, Inc., 137 A.D.2d 50, 55, 529 N.Y.S.2d 279 (1988).
In support of his argument that his claims for conversion are not duplicative of his claims
for breach of contract, Levin cites Wildenstein v. 5H & Co, Inc., 97 A.D.3d 488, 489, 950 N.Y.S.2d
3, 5 (2012). In Wildenstein, plaintiff contracted with the defendant, 5H & Co. (“5H”), to perform
renovations to her apartment. Plaintiff sued 5H and its individual owner for breach of contract
alleging, among other things, that the defendants’ work was defective or incomplete and that they
left her with “uninhabitable living space.” Plaintiff also sued for conversion alleging that
defendants “retained certain items that belong to her in an attempt to extort more money from her.”
Id. at 490. The court held that it would not dismiss plaintiff’s conversion claim because “taking
plaintiff's personal property ‘in order to extort from Plaintiff the money [they] claim[] she owes
them’…is an independent tort.” Id. at 492. The court reasoned “[t]his is because these allegations
set forth a wrong separate and distinct from the breach of contract claim.” Id.
1
Levin has not complied with all other provisions of the plan. The plan language makes clear that
Levin was required to properly exercise his options within 90 days of his termination. This he
failed to do. Levin failed to submit proper payment and documentation in connection with his
attempted exercise of his stock options within 90 days of his termination.
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Here, there is no wrong “separate and distinct” from the breach of contract claim. Levin’s
conversion allegations are entirely duplicative of his breach of contract allegations. The alleged
wrong here is covered by the express terms of the contact and Levin has not and cannot allege any
wrong outside those terms. Thus, his claims for conversion should be dismissed.
III. Levin’s Claims for Retaliation and Continuing Retaliation Should Be Dismissed
In his Opposition, Levin has failed to identify any statute supporting his claims for
retaliation. Levin has also failed to identify any basis in the common law to support his claims.
In short, Levin has failed to articulate any legal basis for his claims for retaliation. Thus, they
should be dismissed.
IV. Levin’s Claim for Accounting Should Be Dismissed
“The right to an accounting is premised upon the existence of a confidential or fiduciary
relationship and a breach of the duty imposed by that relationship respecting property in which the
party seeking the accounting has an interest.” AHA Sales, Inc. v. Creative Bath Prod., Inc., 58
A.D.3d 6, 23, 867 N.Y.S.2d 169 (2008). “Under New York law, a failure to allege a fiduciary
relationship is thus fatal to a demand for accounting.” Kossoff v. Felberbaum, 2014 WL 1814030,
at *4 (S.D.N.Y. May 7, 2014).
In his Opposition, Levin does not argue that a confidential or fiduciary relationship exists
between himself and Vice. Instead, he argues that “[w]ithout an accounting, Plaintiff is entirely
powerless to determine and verify the values of his profit share” and that “he will be required to
take at face value the representations made by the party that breached the underlying contract and
tried to bully him into signing a release.” Opposition at p. 12. This argument is absurd. Plaintiff
can use the discovery process, including requests for production, interrogatories and depositions
to obtain information regarding his alleged damages, including the value of his alleged profit share.
Levin does not get to root around in Vice’s books and records simply because he does not trust
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Vice. If that were the law, the plaintiff would have the right to an accounting in virtually every
case.
In support of his argument, cites Kaminsky v. Kahn, 23 A.D.2d 231, 233, 259 N.Y.S.2d
716, 719 (1965), and the statement contained therein that “[i]t is generally held that equity has
jurisdiction to compel an accounting whenever one party has profits in which another is entitled to
share regardless of the relationship between the parties at the time the profits were earned.”
Opposition at p. 12. However, as recognized by the case cited by Levin, himself, Chambers v.
Weinstein, 2014 WL 42769102014, 44 Misc. 3d 1224(A), 997 N.Y.S.2d 668 (N.Y. Sup. 2014),
this quote from Kaminsky was merely dicta. In Kaminsky, a confidential or fiduciary relationship
did exist between the parties. As the court in Chambers noted “The Kaminsky defendant was the
majority shareholder as well as chairman of the board of directors, and had a duty to exercise good
faith toward minority shareholders, including the plaintiff.” Id. at *10.
Here, no such confidential or fiduciary relationship exists. The employer-employee
relationship alleged by Levin, which does not provide for a sharing of profits and losses, is
insufficient as a matter of law to support a claim for an accounting. Vitale v. Steinberg, 307 A.D.2d
107, 108, 764 N.Y.S.2d 236 (2003) (“An employer-employee relationship providing for the
division of profits will not give rise to a fiduciary obligation on the part of the employer absent an
agreement to also share losses.”)
Furthermore, as recognized by Chambers, to the extent that Kaminsky holds that a
confidential or fiduciary relationship is not required to state a claim for an accounting, it is no
longer good law: “In any event, Kaminsky was decided in 1965 and the current law requires a
fiduciary relationship as an element of an accounting claim.” 2014 WL 42769102014 at *10
(citing AMP Servs. Ltd. v. Walanpatrias Found., 34 A.D.3d 231, 233, 824 N.Y.S.2d 37, 39 (2006);
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Zyskind v. Facecake Mktg. Techs., Inc., 110 A.D.3d 444, 446, 973 N.Y.S.2d 34, 37 (2013)
(accounting claim dismissed because it did not allege a fiduciary relationship)).
Recognizing the deficiency of his accounting claim, Levin requests that “any determination
of the accounting claim and right to replead be reserved until the conclusion of discovery when
there will be a fuller record on which to evaluate the accounting claim.” Opposition at p. 12.
Levin, however, has failed to articulate what facts would be revealed in discovery that would
establish the requisite confidential or fiduciary relationship between the parties. This is no doubt
because he cannot. Thus, his claim for an accounting should be dismissed with prejudice.
V. Levin’s Claim for Punitive Damages Should Be Dismissed
In his Opposition, Levin cites Ross v. Louise Wise Servs., Inc., 8 N.Y.3d 478, 489 (2007),
for the proposition that “[p]unitive damages are permitted when the defendant's wrongdoing is not
simply intentional but ‘evinces a high degree of moral turpitude and demonstrates such wanton
dishonesty as to imply a criminal indifference to civil obligations[.]” Opposition at pp. 15-16. As
detailed above, Plaintiff cannot successful allege tortious conduct, let alone conduct that “evinces
a high degree of moral turpitude and demonstrates such wanton dishonesty as to imply a criminal
indifference to civil obligations.” At best, Plaintiff has alleged a cause of action for breach of
contract, which is insufficient as a matter of law to support a claim for punitive damages.
Rocanova v. Equitable Life Assur. Soc. of U.S., 83 N.Y.2d 603, 613, 634 N.E.2d 940 (1994)
(holding that under New York law, the general rule is that “[p]unitive damages are not recoverable
for an ordinary breach of contract, as their purpose is not to remedy private wrongs but to vindicate
public rights.”). Thus, Levin’s claim for punitive damages should be dismissed.
CONCLUSION
For the reasons detailed above, the Court should grant Vice’s motion to dismiss in its
entirety.
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Dated: October 25, 2017
New York, New York
ORRICK, HERRINGTON & SUTCLIFFE LLP
By: _/s/ Mike Delikat____________________
Mike Delikat
James H. McQuade
Mark R. Thompson
51 West 52nd Street
New York, NY 10019
Tel.: (212) 506-5000
Fax: (212) 506-5151
Counsel for Defendants Vice Holding, Inc., Vice
Media LLC and Vice Media Inc.
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