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Violetta v. Steven Bros. Sports Mgmt, LLC.

United States District Court, D. Kansas

May 31, 2018

Steven M. Violetta, Plaintiff,
v.
Steven Bros. Sports Mgmt, LLC., et al., Defendants.

          MEMORANDUM AND ORDER

          J. THOMAS MARTEN, JUDGE.

         Plaintiff Steven Violetta was hired in 2015 to turn around the performance of three minor league hockey teams. Some six months later, he was terminated for poor performance, and brought suit against his employer, its owners, and other related companies, raising claims of breach of contract, violation of COBRA and ERISA obligations, violation of the Kansas Wage Protection Act (KWPA), and age discrimination. The matter is now before the court on the parties' cross-motions for summary judgment.

         Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the court must examine all evidence in a light most favorable to the opposing party. McKenzie v. Mercy Hospital, 854 F.2d 365, 367 (10th Cir. 1988). The party moving for summary judgment must demonstrate its entitlement to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir. 1985). The moving party need not disprove plaintiff's claim; it need only establish that the factual allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir. 1987).

         In resisting a motion for summary judgment, the opposing party may not rely upon mere allegations or denials contained in its pleadings or briefs. Rather, the nonmoving party must come forward with specific facts showing the presence of a genuine issue of material fact for trial and significant probative evidence supporting the allegation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). Once the moving party has carried its burden under Rule 56(c), the party opposing summary judgment must do more than simply show there is some metaphysical doubt as to the material facts. “In the language of the Rule, the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis in Matsushita). One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett, 477 U.S. 317 (1986).

         Here, in addition to the competing motions for summary judgment, defendants have moved to strike the declaration (Exhibit K) of the plaintiff which is attached to his reply (Dkt. 145). A centerpiece of the defendants' arguments in their earlier pleadings was that the initial versions of the Violetta affidavits (Exhibits A and B) were unsworn. They argue that attaching the sworn statement is “in effect” making new arguments in his reply. (Dkt. 147, at 3). Further, they argue that the sworn statement is still insufficient and “worthless, ” and “the Court must utilize its discretion [to] strike Plaintiff's [declaration].”

         The motion to strike is denied. As defendants acknowledge, whether to strike a declaration rests within the discretion of the court. The circumstances of the case do not warrant striking the new declaration. First, the court notes that defendants fail to make any demonstration that Exhibit K differs in any meaningful way as to the underlying facts asserted. Accordingly, Exhibit K does not raise new arguments, it simply provides evidentiary support for plaintiff's contentions.

         The court also rejects defendants' arguments plaintiff failed to support his factual contentions. In Exhibit K, Violetta “declare[s] under penalty of perjury” that the statements in Exhibits A and B “are incorporated [into Exhibit K], are based on my own personal knowledge, and are true and correct.” The court finds that the declaration is sufficient to support plaintiff's factual contentions.

         Of course, the court does not encourage such belated documentation, and counsel for plaintiff is admonished to comply with proper procedure in the future. Nonetheless, while defendants have indeed attacked the original affidavits as unsworn, they have not articulated any particular prejudice from that failure, nor otherwise sought leave to supplement their evidentiary responses to plaintiff's factual claims. Under all the circumstances of the case, the court finds no reason to strike plaintiff's declaration, or to defer a determination as to the uncontroverted facts in the action.

         Violetta has worked in professional sports management and marketing since 1993. During his 25-year career he has held a number of positions with National Hockey League teams, including the Pittsburg Penguins (Vice President of Marketing and Sales), the Ottawa Senators (Executive V.P. and Chief Marketing Officer), the Nashville Predators (Executive V.P of Business Affairs), and the Detroit Red Wings (Senior V.P. of Business Affairs). He has also worked for baseball's San Diego Padres (Executive V.P. for Business Affairs) and the minor league Staten Island Yankees (CEO).

         Nine months after his termination by SBSM, Violetta was hired as Vice President of Corporate Partnerships, Sales, and Service for the Edmonton Oilers of the NHL. He remains in that position today.

         Steven Brothers Sports Management, LLC (“SBSM”) is a Kansas limited liability corporation with its principal place of business in Kansas. Steven Brothers Sports Management of Allen, LLC (“SBSM-A”) was a Texas limited liability corporation with its principal places of business in Kansas and Texas.

         Brandon Steven, Rodney Steven, and Johnny Steven, individuals residing in Kansas, own SBSM and SBSM-A. Brandon owns 45%, Rodney owns 45%, and Johnny owns 10%. Rodney Steven is the president and secretary of SBSM, and Brandon Steven is the vice-president. Rodney Steven makes the decisions as to the hiring, firing, and other personnel decisions regarding the CEO.

         Genesis Health Clubs Management, Inc. is a Kansas corporation with its principal places of business in Kansas. Genesis Health Clubs Management, LLC is a Kansas limited liability corporation, with its principal place of business in Kansas.

         In August 2015, SBSM hired Violetta to serve as CEO of its minor league East Coast Hockey League franchises, the Wichita Thunder, the Tulsa Oilers, and the Allen Americans. Specifically, Rodney Steven made the decision to hire Violetta.

         On August 19, 2015, SBSM and Violetta entered into a written two-year Employment Agreement. SBSM and Violetta entered into the Employment Agreement in Kansas, and Violetta performed at least some of his duties in the state. Rodney Steven negotiated and signed the Agreement on behalf of SBSM, and signed on behalf of the company.

         The Employment Agreement does not identify SBSM-A, Brandon Steven, or Johnny Steven as parties to the contract.

         During his many years in business, Rodney Steven has negotiated and entered into hundreds of business contracts, as well as three to five employment contracts.

         The Contract provides for the payment of compensation to Violetta, including a base salary, potential bonuses, group medical and dental benefits, a car with insurance, vacations, a cell phone and cell phone service, and reimbursement of relocation expenses of up to $20, 000 and housing until he could locate and purchase a house.

         The two-year term of the Agreement was subject to termination by either party upon 180 days written notice. Further, the Agreement provided that SBSM could terminate Violetta immediately for cause, which was defined as

i) any act of personal dishonesty by Violetta in connection with his responsibilities as an employee;
ii) Violetta's refusal or repeated failure in any material respect to perform his duties as CEO, after written notice to Violetta and a reasonable opportunity to cure;
iii) Any willful act by Violetta which constitutes gross misconduct and which in injurious to the Company.

         Violetta was to receive a base salary of $150, 000 in the first year of the Agreement, and $160, 000 in the second, and was further authorized to draw $25, 000 against his bonuses in the first year, and $20, 000 in the second.

         The Employment Agreement offered a series of bonuses for Violetta based on franchise performance. He would receive a $5, 625 bonus if the combined corporate sponsorship revenues exceeded $2.25 million in a season, which ran from June to May. In addition, Violetta would also receive a $3, 250 bonus if season ticket revenues exceeded $1.3 million, an additional bonus if group ticket sales exceeded specific monthly targets, and if the individual franchises met specified minimum net profits.

         Rodney Steven drafted the bonus schedule attached to the Agreement, and also drafted and inserted the “for cause” termination provision.

         The defendants do not have employee handbooks, personnel manuals, or any other personnel policies. They also do not have any policies or procedures, formal or informal, related to employee health benefits or COBRA. They did not keep a personnel file for Violetta, and do not have any documents reflecting communications to plaintiff regarding his eligibility or potential eligibility for any fringe benefit or to participate in any employee fringe benefit. The defendants did not keep copies of expense reimbursement records relating to Violetta, and do not have any documents related to their obligation to provide COBRA notice.

         The defendant corporate entities (SBSM, SBSM-A, Genesis Health Clubs Management, Inc., and Genesis Health Clubs Management, LLC) do not keep minutes of their corporate meetings.

         Citing an email by Rodney Steven, defendants contend that SBSM has an established policy of not paying for unused vacation days. However, the plaintiff counters that other evidence shows that SBSM had no established personnel policies. More importantly, plaintiff points out that the email was sent after this termination, and that no one ever told him of any such policy.

         Rodney Steven has testified that Violetta's duties included implementing procedures for issuing ERISA and COBRA notices. Plaintiff disputes the contention, noting that the Employment Agreement makes no mention of such duties. Rather, his only duty was to notify Genesis whenever an employee left, so that Genesis could take care of any required notices.

         During his employment by SBSM, plaintiff took $11, 667.00 in payment as a draw against his bonuses.

         Before Violetta was hired, all of the SBSM teams consistently lost money (except for the Thunder, which had made a small profit in 2012-2013). By August 2015, an officer for the Allen Americans wrote of the team's “desperate” situation. The team had numerous outstanding bills due, and Blue Cross had cancelled its health insurance for non-payment. To help the teams, Rodney Steven had transferred $1 million from Genesis.

         Violetta reported to the SBSM corporate office in Wichita, Kansas, and was a satellite employee stationed in Allen, Texas, although he performed his duties under the contract in part in Kansas.

         Violetta worked 80 hours a week, spending time in Allen, Tulsa, and Wichita. He devised strategies and worked to increase revenue, keeping Rodney Steven informed of what he was doing and getting his approval.

         On December 23, 2015, Violetta emailed Rodney Steven an overview of his recommendations for making changes on staffing, compensation, and culture for the three teams, which he wanted to provide in more detail during an in-person meeting. These changes including replacing Matt Canavan in Allen and posting two new job descriptions he had prepared. Steven did not respond, so Violetta re-sent it on December 28.

         Team finances improved under Violetta. Season ticket and corporate sponsorship revenue for the 2015-2016 were up about $739, 000, or 44%, compared to the prior season. By December 2015, all three franchises had significant increases in all major revenue streams, including corporate sponsorships, season tickets, and group sales. At the same time, the teams still had substantial prior debts. Rodney Steven wrote: “We have made some positive turns: Improved lease by $400k; Corporate sponsorship sales up $250k; Season ticket sales up; Group sales up.”

         During the 2015-2016 season, combined revenue for the three franchises was projected to be up almost $1.5 million, nearly a 50% increase, compared to the prior year.

         On January 11, 2016, Rodney Steven stated, “[O]ur first year in Allen [2014-15] was ugly. This year looks tons better. … We are on a cash basis, so a lot of the bills we are paying this year are from last season. … [W]e are confident that next season we will show a profit.”

         Rodney Steven had originally wanted to hire Shawn Kuzmin as the CEO, and in March 2015, he had signed an Employment Agreement and sent it to Kuzmin with the statement, “I have signed my man.” But Kuzmin was unable to accept the offer for family reasons.

         In late May and early June 2015, while Steven was contemplating hiring Violetta, he continued to communicate with Kuzmin. Kuzmin said he was “aching” to take the job “but timing blows.”

         Steven responded, “Just move the family to Dallas and lets get it on.” Kuzmin replied, “June 2015 can't. June 2016 different story. Wish it were different. You know.”

         In late June 2015, Steven sent an email to Kuzmin saying, “Brandon and I still want you to come run our sports organization!”

         Kuzmin responded, “Not saying no, but timing is my issue right now.”

         On December 6, 2015, Kuzmin emailed Brandon and Rodney Steven, asking, “Should we start negotiating the 2016 contract yet?” Rodney responded the same day, “Yes, we are still interested.”

         On January 10, 2016, Rodney Steven told Kuzmin that he and Brandon “are ready to go forward” with hiring Kuzmin. He sent Kuzmin the employment contract he had given him in 2015, and Kuzmin responded on February 2 that he was “definitely ...


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