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FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024
NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024
EXHIBIT B
FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024
NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024
ATTACHMENT 1 TO THE DEMAND FOR ARBITRATION UNDER EMPLOYMENT
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION
I. INTRODUCTION
1. Wilson Williams LLC ("Wilson Williams") represents Mr. Jason Leli ("Claimant"), who
makes this Demand for Arbitration ("Demand") in his dispute with RTW Retailwinds
Acquisition LLC ("RTW"), Saadia Group LLC ("Saadia"), Joseph Saadia ("JS") and Yakoub
Saadia ("YS") (collectively "Respondents") with the American Arbitration Association
("AAA") under its National Rules for the Resolution of Employment Disputes ("Rules").
2. Arbitration of disputes between Claimant and the Respondents is provided for in Claimant's
employment agreement with the Respondents, a true and correct copy of which is attached to
this Demand (see Annex 1).
3. Claimant is a natural who resides in New York and who was employed as Senior Vice-
person,
President, Brand Marketing, New York & Company (the "Bankrupt Company") from 2005
through 2020.
4. On or about September 2020, the Bankrupt Company was acquired through a bankruptcy sale
by Respondents.
5. Claimant commenced employment with Respondents on January 1, 2021, pursuant to a letter
agreement ("Employment Agreement").
6. Claimant remained employed with Respondents until he was terminated without cause on
January 13, 2023 ("Termination Date").
7. Saadia is a New York limited liability company, formed in 1996 by JS and YS.
8. RTW is a Delaware limited liability company, which is an affiliate of Saadia, formed in 2020.
RTW is also registered as a foreign limited liability company in New Jersey and New York.
9. JS and YS are natural persons residing in New York.
10. Unbeknownst to Claimant when he accepted and began his employment, the Respondents have
a long history of committing dishonest and illegal acts. For example, in 2007 YS pleaded guilty
to importing counterfeit fashion apparel into the United States and consequently served prison
time, and was ordered to disgorge over $4,000,000.00 (see Annex 2).
11. Since emerging from prison, YS (along with JS) recommenced operations by creating multiple
shell corporations in order to acquire legitimate distressed companies to, upon information and
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belief, launder inferior or counterfeit products, engage in phantom transactions and shield their
personal assets from liability for similar bad acts.
12. Respondents acquired legitimate entities that have filed for bankruptcy in a series of
bankruptcy sales. The Respondents the restructured and reconstituted the acquired companies
companies' recognition."
into new entities that would use the former bankrupt "brand Among
these are: American Exchange Time LLC ("American Exchange"), Aquatalia Ecomm LLC
("Aquatalia"), Aquatalia IP LLC ("Aquatalia IP"), Chic Home Design LLC ("Chic"),
Davidson 2005 L.L.C. ("Davidson"), Excel Bright Holding LLC ("Excel"), Fame Fashion
House LLC ("Fame"), The Fashion Exchange LLC ("Fashion Exchange"), Fashion to Figure
Ecomm LLC ("Figure"), Le Tote, Inc., ("Tote"), Lord & Taylor Ecomm LLC ("Lord"), New
York & Company ("NY&Co."), Olivia Miller, Inc. ("Olivia Miller"), RTW, Saadia LLC
("Saadia 2"), Saadia Acquisition LLC ("Acquisition"), Saadia Equities LLC ("Equities"),
Saadia Holding LLC ("Holdco 1"), Saadia Holdings LLC ("Holdco 2"), S3 Holding LLC
("S3"), Saadia Square LLC ("Square"), Saadia Residence LLC ("Residence"), Saadia Safdi 2
LLC ("Safdi"), Saadia Safdi Realty, LLC ("Realty"), SHM Shoes, LLC ("SHM") and X-Ray
Jeans ("X-Ray") (collectively, along with RTW and Saadia, referred to as the "Saadia
Entities").
13. Respondents disregard the corporate forms of the Saadia Entities by:
a. Using the same addresses in New York and New Jersey;
b. Employing the same directors and officers. For example, YS, JS, Eric Klein (Head of
Human Resources at Saadia) and Arvee Claravall-Nordling (Chief Financial Officer at
Saadia) are involved in the management of Acquisition, RTW, Saadia, Chic, Davidson,
Excel, Fame, Fashion Exchange, HoldCo 1, Olivia Miller, Realty, Residence, Safdi and
S3;
c. Upon information and belief, YS and JS also named family members, including David
Saadia, Marc Saadia and Deborah Hanono, as figurehead officers or members of Saadia
Entities even though control of those entities remains with both YS and JS;
d. Upon information and belief, engaging in pretextual financial transactions between and
among these entities, such as obtaining loans and secured transactions, specifically to
undercapitalize and avoid paying legitimate creditors. For example, to finance the
purchase of the Bankrupt Company, Saadia, YS, and JS, used the assets of Chic and
Davidson. In January 2023, Davidson filed a financing statement against RTW, despite
pot"
being treated by YS and JS as part of a single unified "money that intermingles
Entities'
Saadia funds;
Respondents'
e. Moreover, employment contracts require employees, such as Claimant,
to be available to work for all Saadia Entities. Claimant, for example, worked for
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multiple Saadia Entities such as NY&Co., Olivia Miller and X-
Figure, Lord, Chic,
Ray, in addition to RTW and Saadia.
Respondents'
14. In 2023, numerous acquisitions and bad acts began to catch up with them when
not less than 11 lawsuits totaling approximately $25 million were filed against Saadia Entities.
15. These lawsuits include failure to pay rent (Index No. LT-313471-23/NY, filed by Cushman &
Wakefield, Inc.), unlawfully promoting, distributing, and selling imitation bags (Case No.
1:23-cv-10239 (SDNY), filed by Gucci America, Inc.), failing to pay royalties to use the
trademark of Gabrielle Union (Case No. 1:23-ev-02354-JHR, filed by Flawless Style LLC),
and other failure to pay claims.
16. Issues involving the Respondents and questions of fact involving any of the Saadia Entities are
appropriate for decision by the Arbitrator because Article 16 of the Employment Agreement
states that "any dispute, claim or difference arising out of or in relation to [Claimant's]
employment will be settled exclusively by binding arbitration administered by the American
Arbitration Association under its National Rules for the Resolution of Employment Disputes
arbitrator."
before a single Claims subject to arbitration include, among others, asserted
violations of "any claim of breach of contract, tort, promissory estoppel or detrimental reliance,
defamation, intentional infliction of emotional distress; or the public policy of any state, or any
law."
other federal, state or local
Respondents'
17. Claimant now makes this second demand for arbitration following initial refusal
to arbitrate (see Annex 3).
II. APPLICABLE LAW
18. Article 20 of Claimant's Employment Agreement states: "[a]ll issues and questions concerning
the construction, validity, enforcement and interpretation of this [Employment] Agreement
shall be governed by, and construed in accordance with, the laws of the State of New Jersey,
without regard to the choice of law principles therefor that would result in the application of
jurisdiction."
the laws of any other
IIL SUMMARY OF CLAIMS
19. Claimant is filing this Demand for the following reasons:
(i) the Respondents have materially breached the Employment Agreement with
Claimant by failing to pay Claimant the severance pay owed to him at the end of
his employment with Respondents;
(ii) the Respondents breached the implied covenant of good faith and fair dealing by
deliberately frustrating the performance of the Employment Agreement and acting
in bad faith, which caused Claimant consequential damages; and
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(iii) the Respondents fraudulently induced Claimant to accept an offer of employment
with Respondents by making false representations concerning Claimant's
employment, which they had no intention to honor and on which Claimant relied
when he accepted the offer of employment with Respondents.
20. In addition to damages for the above claims, plus interest thereon, Claimant will seek
reimbursement of all the fees, costs, and expenses, associated with the arbitration process,
including all the fees, costs, and expenses, of the AAA, fees, costs, and expenses, of the
Arbitrator, and Claimant's legal fees, costs, and expenses.
IV. STATEMENT OF CLAIMS
(A) Breach of Employment Agreement (Failure to Pay Severance)
21. Claimant commenced work for the Respondents under the Employment Agreement on January
1, 2021.
22. The Employment Agreement provides in Article 7 that, "[u]pon a termination of [Claimant's]
employment by [the Respondents] (including its Affiliates) without Cause (as defined below),
but subject to [Claimant's] performance of all post-employment obligations set forth in this
[..]."
[Employment] Agreement, [Claimant] will be entitled to receive severance pay
23. Claimant has been terminated without Cause, as defined in the Employment Agreement.
24. Article 7 of the Employment Agreement further provides the amount of such severance pay,
which is expressed in the number of weeks and depends on the length of Claimant's
employment with the Respondents and his final Base Salary. Pursuant to the Employment
Agreement, Claimant is entitled to receive severance pay of eight (8) weeks if employment
termination occurs prior to the one (1) year anniversary of the start date of employment, sixteen
(16) weeks if it occurs prior to the two (2) year anniversary of the start date of employment,
and twenty-six (26) weeks if employment termination occurs thereafter. Claimant accumulated
more than two (2) years of service with the Respondents. Claimant is thus entitled to twenty-
six (26) weeks of pay at his final Base Salary. Claimant's final Base Salary was $228,000.00
per annum. Therefore, in accordance with the Employment Agreement, Claimant is entitled to
receive $1 14,000.00 in severance pay from the Respondents.
25. The Respondents provided Claimant with a draft separation agreement on January 19, 2023
("Separation Agreement"), which offered half of the severance pay Claimant is entitled to.
Despite multiple requests to Respondents by and on behalf of Claimant to correct the amount
of the severance pay as mandated by the Employment Agreement, Respondents have
unjustifiably refused to do so and have failed to provide any reasoned explanation for such
refusal.
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26. Accordingly, the Respondents have materially breached the Employment Agreement with
Claimant by failing to pay Claimant his severance pay.
27. Claimant seeks an initial award amounting to $114,000.00 in severance pay, plus interest
thereon, from the Respondents.
(B) Breach of the implied covenant of good faith and fair dealing
28. In the period between the purchase of the Bankrupt Company until today, Respondents
deliberately frustrated the performance of the contract by, among other things:
(a) not intending to honor the salaries and severance payments promised to Bankrupt
Company's employees, including Claimant, which they considered were too generous,
even before such promises were specifically made to Claimant and other employees;
(b) frustrating Claimant's job by refusing to honor the promises of dedicating new
resources for marketing and provide platform update;
(c) defunding RTW by using Claimant and other RTW employees to spend significant
amounts of time and resources on non-RTW matters;
(d) frustrating credibility with vendors by marketing inferior products;
(e) ignoring customer complaints and abolishing the customer service department
altogether;
(f) causing RTW's 60% reduction in sales;
(g) instructing employees, including Claimant, to not process payments to third-party
vendors;
(h) causing harm to Claimant's reputation and business relationships as a result of these
acts;
employees'
(i) unilaterally and arbitrarily reducing Claimant's and other salary without
cause and as a direct result of the defunding efforts; and
(j) failing to appear in the prior case initiated by Claimant before the AAA in March 2023
(Case Number 01-23-0000-9292).
29. In particular, Respondents acted in bad faith as they always intended to reduce Claimant's Base
Salary and phase him out of RTW within two years.
30. Respondents also acted in bad faith as they never intended to provide Claimant with severance
pay in the event of termination of employment.
31. In addition, Claimant initiated AAA proceedings to resolve this once prior, on March 6, 2023.
Respondents were asked several times by the AAA to pay their share of the arbitration fees,
Respondents'
which was set at $2,100.00. Even though YS and the then General Counsel, Marc
Schuback, received numerous requests from the AAA, Respondents deliberately ignored the
process and never paid their share of the arbitration fees, which resulted in the AAA closing
Claimant's case on April 28, 2023 (see Case Number 01-23-0000-9292). Claimant's attempts
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at negotiation with Respondents for six months following AAA's closure of the case have also
been fruitless.
Respondents'
32. breach of the implied covenant of good faith and fair dealing caused damages to
Claimant in the amount of unpaid severance pay, i.e., $114,000.00, and in form of
consequential damages, approximately in the amount of $600,000.00.
33. Claimant respectfully requests that the Arbitrator award Claimant damages in the
amount of $714,000.00, plus interest thereon.
34. In addition, the arbitration provision in the Employment Agreement, Article 16, also provides
that "the arbitrator will be empowered to require any one or more of the Parties to bear all or
any portion of fees and expenses of the Parties or the fees and expenses of the arbitrator in the
faith."
event that the arbitrator determines such Party has acted in bad Respondents have acted
attorneys'
in bad faith and should be held liable for Claimant's fees.
35. Accordingly, Claimant also respectfully requests that the Arbitrator find that the
Respondents acted in bad faith and are required to cover all of Claimant's fees, costs,
and expenses, of the AAA, fees, costs and expenses of the Arbitrator, and Claimant's legal
fees, costs, and expenses.
(C) Fraudulent inducement
36. After closing the purchase of the Bankrupt Company in September 2020, Respondents made
several false representations to Claimant, and other employees, in order to convince Claimant
to accept the offer of employment with Respondents.
37. YS represented at the time that there are grand plans in place for RTW's future business and
that RTW has the financials to achieve these grand plans. YS represented that the business is
stable and that it would be growing in the future.
38. Among the false representations Respondents made was that they intended to maintain the
prior entity's structure by retaining key employees, such as Claimant, and falsely represented
that they would provide them with the security of severance pay in the event of a non-
performance related termination.
39. Upon information and belief, those representations were always false because the Respondents
intended to pillage RTW's assets and terminate its key employees like Claimant at the earliest
possible opportunity and deliberately refused to honor the Employment Agreement.
40. Upon information and belief, Respondents also never intended to honor their promises of
further developing the business by dedicating additional resources to marketing and updating
the digital platform used to market the products. To the contrary, they frustrated their
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credibility with vendors by providing inferior products and abolishing the customer service
department.
41. Upon information and belief, Respondents also deliberately rendered RTW financially
unstable, which harmed business relations with existing vendors.
42. Claimant's promised salary was one of the main reasons he accepted employment with
Respondents. In accepting the offer, Claimant relied on Respondent YS's verbal
representations after the purchase of the Bankrupt Company that the business was starting fresh
Respondents'
and flush with cash, on the terms and conditions of the offer, and on the terms
and conditions of the Employment Agreement.
Respondents'
43. Had Claimant known that representations were false, he would have sought other
employment opportunities, which would allow him to make between $250,000.00 and
$300,000.00 per annum had he left the Bankrupt Company at the end of 2020 and started
working in a similar position at another company.
Respondents'
44. fraudulent inducement of Claimant to enter into the Employment Agreement
with Respondents caused him damages to be determined at the hearing but not less than
$324,000.00.
45. Claimant respectfully requests that the Arbitrator award Claimant damages in the
amount of not less than $324,000.00, plus interest thereon, from this fraudulent
inducement.
V. PAYMENT OF COSTS ASSOCIATED WITH THE ARBITRATION PROCESS UP
FRONT
46. The Respondents should be responsible for initial payment of arbitration costs.
47. New York and New Jersey public policy both recognize that an employer should be responsible
for paying all initial costs of arbitration subject to the later reallocation by the a
Preview
FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 EXHIBIT B FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 ATTACHMENT 1 TO THE DEMAND FOR ARBITRATION UNDER EMPLOYMENT ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION I. INTRODUCTION 1. Wilson Williams LLC ("Wilson Williams") represents Mr. Jason Leli ("Claimant"), who makes this Demand for Arbitration ("Demand") in his dispute with RTW Retailwinds Acquisition LLC ("RTW"), Saadia Group LLC ("Saadia"), Joseph Saadia ("JS") and Yakoub Saadia ("YS") (collectively "Respondents") with the American Arbitration Association ("AAA") under its National Rules for the Resolution of Employment Disputes ("Rules"). 2. Arbitration of disputes between Claimant and the Respondents is provided for in Claimant's employment agreement with the Respondents, a true and correct copy of which is attached to this Demand (see Annex 1). 3. Claimant is a natural who resides in New York and who was employed as Senior Vice- person, President, Brand Marketing, New York & Company (the "Bankrupt Company") from 2005 through 2020. 4. On or about September 2020, the Bankrupt Company was acquired through a bankruptcy sale by Respondents. 5. Claimant commenced employment with Respondents on January 1, 2021, pursuant to a letter agreement ("Employment Agreement"). 6. Claimant remained employed with Respondents until he was terminated without cause on January 13, 2023 ("Termination Date"). 7. Saadia is a New York limited liability company, formed in 1996 by JS and YS. 8. RTW is a Delaware limited liability company, which is an affiliate of Saadia, formed in 2020. RTW is also registered as a foreign limited liability company in New Jersey and New York. 9. JS and YS are natural persons residing in New York. 10. Unbeknownst to Claimant when he accepted and began his employment, the Respondents have a long history of committing dishonest and illegal acts. For example, in 2007 YS pleaded guilty to importing counterfeit fashion apparel into the United States and consequently served prison time, and was ordered to disgorge over $4,000,000.00 (see Annex 2). 11. Since emerging from prison, YS (along with JS) recommenced operations by creating multiple shell corporations in order to acquire legitimate distressed companies to, upon information and 1 FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 belief, launder inferior or counterfeit products, engage in phantom transactions and shield their personal assets from liability for similar bad acts. 12. Respondents acquired legitimate entities that have filed for bankruptcy in a series of bankruptcy sales. The Respondents the restructured and reconstituted the acquired companies companies' recognition." into new entities that would use the former bankrupt "brand Among these are: American Exchange Time LLC ("American Exchange"), Aquatalia Ecomm LLC ("Aquatalia"), Aquatalia IP LLC ("Aquatalia IP"), Chic Home Design LLC ("Chic"), Davidson 2005 L.L.C. ("Davidson"), Excel Bright Holding LLC ("Excel"), Fame Fashion House LLC ("Fame"), The Fashion Exchange LLC ("Fashion Exchange"), Fashion to Figure Ecomm LLC ("Figure"), Le Tote, Inc., ("Tote"), Lord & Taylor Ecomm LLC ("Lord"), New York & Company ("NY&Co."), Olivia Miller, Inc. ("Olivia Miller"), RTW, Saadia LLC ("Saadia 2"), Saadia Acquisition LLC ("Acquisition"), Saadia Equities LLC ("Equities"), Saadia Holding LLC ("Holdco 1"), Saadia Holdings LLC ("Holdco 2"), S3 Holding LLC ("S3"), Saadia Square LLC ("Square"), Saadia Residence LLC ("Residence"), Saadia Safdi 2 LLC ("Safdi"), Saadia Safdi Realty, LLC ("Realty"), SHM Shoes, LLC ("SHM") and X-Ray Jeans ("X-Ray") (collectively, along with RTW and Saadia, referred to as the "Saadia Entities"). 13. Respondents disregard the corporate forms of the Saadia Entities by: a. Using the same addresses in New York and New Jersey; b. Employing the same directors and officers. For example, YS, JS, Eric Klein (Head of Human Resources at Saadia) and Arvee Claravall-Nordling (Chief Financial Officer at Saadia) are involved in the management of Acquisition, RTW, Saadia, Chic, Davidson, Excel, Fame, Fashion Exchange, HoldCo 1, Olivia Miller, Realty, Residence, Safdi and S3; c. Upon information and belief, YS and JS also named family members, including David Saadia, Marc Saadia and Deborah Hanono, as figurehead officers or members of Saadia Entities even though control of those entities remains with both YS and JS; d. Upon information and belief, engaging in pretextual financial transactions between and among these entities, such as obtaining loans and secured transactions, specifically to undercapitalize and avoid paying legitimate creditors. For example, to finance the purchase of the Bankrupt Company, Saadia, YS, and JS, used the assets of Chic and Davidson. In January 2023, Davidson filed a financing statement against RTW, despite pot" being treated by YS and JS as part of a single unified "money that intermingles Entities' Saadia funds; Respondents' e. Moreover, employment contracts require employees, such as Claimant, to be available to work for all Saadia Entities. Claimant, for example, worked for 2 FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 multiple Saadia Entities such as NY&Co., Olivia Miller and X- Figure, Lord, Chic, Ray, in addition to RTW and Saadia. Respondents' 14. In 2023, numerous acquisitions and bad acts began to catch up with them when not less than 11 lawsuits totaling approximately $25 million were filed against Saadia Entities. 15. These lawsuits include failure to pay rent (Index No. LT-313471-23/NY, filed by Cushman & Wakefield, Inc.), unlawfully promoting, distributing, and selling imitation bags (Case No. 1:23-cv-10239 (SDNY), filed by Gucci America, Inc.), failing to pay royalties to use the trademark of Gabrielle Union (Case No. 1:23-ev-02354-JHR, filed by Flawless Style LLC), and other failure to pay claims. 16. Issues involving the Respondents and questions of fact involving any of the Saadia Entities are appropriate for decision by the Arbitrator because Article 16 of the Employment Agreement states that "any dispute, claim or difference arising out of or in relation to [Claimant's] employment will be settled exclusively by binding arbitration administered by the American Arbitration Association under its National Rules for the Resolution of Employment Disputes arbitrator." before a single Claims subject to arbitration include, among others, asserted violations of "any claim of breach of contract, tort, promissory estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or the public policy of any state, or any law." other federal, state or local Respondents' 17. Claimant now makes this second demand for arbitration following initial refusal to arbitrate (see Annex 3). II. APPLICABLE LAW 18. Article 20 of Claimant's Employment Agreement states: "[a]ll issues and questions concerning the construction, validity, enforcement and interpretation of this [Employment] Agreement shall be governed by, and construed in accordance with, the laws of the State of New Jersey, without regard to the choice of law principles therefor that would result in the application of jurisdiction." the laws of any other IIL SUMMARY OF CLAIMS 19. Claimant is filing this Demand for the following reasons: (i) the Respondents have materially breached the Employment Agreement with Claimant by failing to pay Claimant the severance pay owed to him at the end of his employment with Respondents; (ii) the Respondents breached the implied covenant of good faith and fair dealing by deliberately frustrating the performance of the Employment Agreement and acting in bad faith, which caused Claimant consequential damages; and 3 FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 (iii) the Respondents fraudulently induced Claimant to accept an offer of employment with Respondents by making false representations concerning Claimant's employment, which they had no intention to honor and on which Claimant relied when he accepted the offer of employment with Respondents. 20. In addition to damages for the above claims, plus interest thereon, Claimant will seek reimbursement of all the fees, costs, and expenses, associated with the arbitration process, including all the fees, costs, and expenses, of the AAA, fees, costs, and expenses, of the Arbitrator, and Claimant's legal fees, costs, and expenses. IV. STATEMENT OF CLAIMS (A) Breach of Employment Agreement (Failure to Pay Severance) 21. Claimant commenced work for the Respondents under the Employment Agreement on January 1, 2021. 22. The Employment Agreement provides in Article 7 that, "[u]pon a termination of [Claimant's] employment by [the Respondents] (including its Affiliates) without Cause (as defined below), but subject to [Claimant's] performance of all post-employment obligations set forth in this [..]." [Employment] Agreement, [Claimant] will be entitled to receive severance pay 23. Claimant has been terminated without Cause, as defined in the Employment Agreement. 24. Article 7 of the Employment Agreement further provides the amount of such severance pay, which is expressed in the number of weeks and depends on the length of Claimant's employment with the Respondents and his final Base Salary. Pursuant to the Employment Agreement, Claimant is entitled to receive severance pay of eight (8) weeks if employment termination occurs prior to the one (1) year anniversary of the start date of employment, sixteen (16) weeks if it occurs prior to the two (2) year anniversary of the start date of employment, and twenty-six (26) weeks if employment termination occurs thereafter. Claimant accumulated more than two (2) years of service with the Respondents. Claimant is thus entitled to twenty- six (26) weeks of pay at his final Base Salary. Claimant's final Base Salary was $228,000.00 per annum. Therefore, in accordance with the Employment Agreement, Claimant is entitled to receive $1 14,000.00 in severance pay from the Respondents. 25. The Respondents provided Claimant with a draft separation agreement on January 19, 2023 ("Separation Agreement"), which offered half of the severance pay Claimant is entitled to. Despite multiple requests to Respondents by and on behalf of Claimant to correct the amount of the severance pay as mandated by the Employment Agreement, Respondents have unjustifiably refused to do so and have failed to provide any reasoned explanation for such refusal. 4 FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 26. Accordingly, the Respondents have materially breached the Employment Agreement with Claimant by failing to pay Claimant his severance pay. 27. Claimant seeks an initial award amounting to $114,000.00 in severance pay, plus interest thereon, from the Respondents. (B) Breach of the implied covenant of good faith and fair dealing 28. In the period between the purchase of the Bankrupt Company until today, Respondents deliberately frustrated the performance of the contract by, among other things: (a) not intending to honor the salaries and severance payments promised to Bankrupt Company's employees, including Claimant, which they considered were too generous, even before such promises were specifically made to Claimant and other employees; (b) frustrating Claimant's job by refusing to honor the promises of dedicating new resources for marketing and provide platform update; (c) defunding RTW by using Claimant and other RTW employees to spend significant amounts of time and resources on non-RTW matters; (d) frustrating credibility with vendors by marketing inferior products; (e) ignoring customer complaints and abolishing the customer service department altogether; (f) causing RTW's 60% reduction in sales; (g) instructing employees, including Claimant, to not process payments to third-party vendors; (h) causing harm to Claimant's reputation and business relationships as a result of these acts; employees' (i) unilaterally and arbitrarily reducing Claimant's and other salary without cause and as a direct result of the defunding efforts; and (j) failing to appear in the prior case initiated by Claimant before the AAA in March 2023 (Case Number 01-23-0000-9292). 29. In particular, Respondents acted in bad faith as they always intended to reduce Claimant's Base Salary and phase him out of RTW within two years. 30. Respondents also acted in bad faith as they never intended to provide Claimant with severance pay in the event of termination of employment. 31. In addition, Claimant initiated AAA proceedings to resolve this once prior, on March 6, 2023. Respondents were asked several times by the AAA to pay their share of the arbitration fees, Respondents' which was set at $2,100.00. Even though YS and the then General Counsel, Marc Schuback, received numerous requests from the AAA, Respondents deliberately ignored the process and never paid their share of the arbitration fees, which resulted in the AAA closing Claimant's case on April 28, 2023 (see Case Number 01-23-0000-9292). Claimant's attempts 5 FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 at negotiation with Respondents for six months following AAA's closure of the case have also been fruitless. Respondents' 32. breach of the implied covenant of good faith and fair dealing caused damages to Claimant in the amount of unpaid severance pay, i.e., $114,000.00, and in form of consequential damages, approximately in the amount of $600,000.00. 33. Claimant respectfully requests that the Arbitrator award Claimant damages in the amount of $714,000.00, plus interest thereon. 34. In addition, the arbitration provision in the Employment Agreement, Article 16, also provides that "the arbitrator will be empowered to require any one or more of the Parties to bear all or any portion of fees and expenses of the Parties or the fees and expenses of the arbitrator in the faith." event that the arbitrator determines such Party has acted in bad Respondents have acted attorneys' in bad faith and should be held liable for Claimant's fees. 35. Accordingly, Claimant also respectfully requests that the Arbitrator find that the Respondents acted in bad faith and are required to cover all of Claimant's fees, costs, and expenses, of the AAA, fees, costs and expenses of the Arbitrator, and Claimant's legal fees, costs, and expenses. (C) Fraudulent inducement 36. After closing the purchase of the Bankrupt Company in September 2020, Respondents made several false representations to Claimant, and other employees, in order to convince Claimant to accept the offer of employment with Respondents. 37. YS represented at the time that there are grand plans in place for RTW's future business and that RTW has the financials to achieve these grand plans. YS represented that the business is stable and that it would be growing in the future. 38. Among the false representations Respondents made was that they intended to maintain the prior entity's structure by retaining key employees, such as Claimant, and falsely represented that they would provide them with the security of severance pay in the event of a non- performance related termination. 39. Upon information and belief, those representations were always false because the Respondents intended to pillage RTW's assets and terminate its key employees like Claimant at the earliest possible opportunity and deliberately refused to honor the Employment Agreement. 40. Upon information and belief, Respondents also never intended to honor their promises of further developing the business by dedicating additional resources to marketing and updating the digital platform used to market the products. To the contrary, they frustrated their 6 FILED: NEW YORK COUNTY CLERK 04/10/2024 10:55 AM INDEX NO. 651858/2024 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 04/10/2024 credibility with vendors by providing inferior products and abolishing the customer service department. 41. Upon information and belief, Respondents also deliberately rendered RTW financially unstable, which harmed business relations with existing vendors. 42. Claimant's promised salary was one of the main reasons he accepted employment with Respondents. In accepting the offer, Claimant relied on Respondent YS's verbal representations after the purchase of the Bankrupt Company that the business was starting fresh Respondents' and flush with cash, on the terms and conditions of the offer, and on the terms and conditions of the Employment Agreement. Respondents' 43. Had Claimant known that representations were false, he would have sought other employment opportunities, which would allow him to make between $250,000.00 and $300,000.00 per annum had he left the Bankrupt Company at the end of 2020 and started working in a similar position at another company. Respondents' 44. fraudulent inducement of Claimant to enter into the Employment Agreement with Respondents caused him damages to be determined at the hearing but not less than $324,000.00. 45. Claimant respectfully requests that the Arbitrator award Claimant damages in the amount of not less than $324,000.00, plus interest thereon, from this fraudulent inducement. V. PAYMENT OF COSTS ASSOCIATED WITH THE ARBITRATION PROCESS UP FRONT 46. The Respondents should be responsible for initial payment of arbitration costs. 47. New York and New Jersey public policy both recognize that an employer should be responsible for paying all initial costs of arbitration subject to the later reallocation by the a