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Press Ganey Associates., Inc. v. Dye

United States District Court, N.D. Indiana, South Bend Division

March 19, 2014

PRESS GANEY ASSOCIATES., INC. and PG HOLDCO, LLC, Plaintiffs/Counterdefendants,
v.
REGINALD W. DYE, Defendant/Counterclaimant,
v.
VESTAR CAPITAL PARTNERS V, L.P., Counterdefendant.

OPINION AND ORDER

CHRISTOPHER A. NUECHTERLEIN, Magistrate Judge.

I. INTRODUCTION

The core of the dispute between these parties originates from an employment relationship gone bad. Press Ganey Associates, Inc. ("Press Ganey") hired Reginald Dye as Vice President of New Sales on October 5, 2009. Dye signed a contract in March 2010, with PG Holdco, LLC ("PG Holdco"), Press Ganey's parent company, in which he promised to refrain from certain restricted activities in exchange for "management units" of significant value from PG Holdco. In February 2012, Press Ganey hired a new Chief Executive Officer who made personnel changes including terminating Dye on May 3, 2012.

Dye then entered into a Separation Agreement with Press Ganey and PG Holdco in which Press Ganey agreed to pay Dye $111, 574.28 in severance pay and to repurchase Dye's management units for $76, 745.88 pursuant to the 2010 contract. In the Separation Agreement, Dye released any claims against Press Ganey, its subsidiaries, and affiliates and reiterated his commitment to refrain from engaging in the same restricted activities identified in the 2010 contract. Soon thereafter, Dye began working for a new employer. Press Ganey and PG Holdco contend that Dye's new employment constitutes restricted activity in violation of the 2010 contract as well as the Separation Agreement. As a result, Press Ganey and PG Holdco seek the return of the money they paid to Dye pursuant to the Separation Agreement.

Dye counters that his new employment does not violate his contracts with Press Ganey and PG Holdco, and further, that Press Ganey and PG Holdco discriminated against him on the basis of his race and his age. Dye also alleges that Press Ganey and PG Holdco intentionally caused him emotional distress before, during, and after his termination. Dye has also sued Vestar Capital Partners V, L.P. ("Vestar"), a private equity fund with interest in Press Ganey through its ownership of a majority of the equity interests of PG Holdco, alleging that Vestar and Press Ganey jointly employed him such that Vestar is also liable for all of Press Ganey's actions against him.

Press Ganey and PG Holdco, Dye, and Vestar have all filed motions for Summary Judgment. For the reasons that follow, the Court concludes that Dye's current employment breaches his contracts with Press Ganey and PG Holdco, and that as a result, Press Ganey and PG Holdco are entitled to a return of the money they paid Dye. Additionally, because Press Ganey and PG Holdco did not breach the contracts, Dye's release and waiver incorporated into the Separation Agreement remains valid. Therefore, Dye's claims for race discrimination and retaliation, age discrimination and retaliation, and intentional infliction of emotional distress against Press Ganey and PG Holdco fail. Moreover, Dye has failed to show any facts upon which a reasonable jury could conclude that Vestar was his joint employer, which precludes all liability against Vestar. As a result, the Court now GRANTS Press Ganey and PG Holdco's and Vestar's motions for Summary Judgment and DENIES Dye's Motion for Summary Judgment.

II. RELEVANT BACKGROUND

The following facts are primarily not in dispute. Where the facts are in dispute, this Court has determined that the disputes are either not material or has chosen to address such disputes in the Court's substantive analysis of the issues.

On October 5, 2009, Press Ganey hired Dye as Vice President of New Sales and on March 9, 2010, Dye signed a Management Unit Grant Agreement ("MUGA") with PG Holdco that governed equity distributions to Dye resulting from his employment at Press Ganey. The MUGA gave PG Holdco the option to repurchase management units distributed to Dye upon his termination. See Doc. No. 89-1 at 13-14. The MUGA also required Dye to repay any proceeds from a repurchase of the management units in the event that he engaged in "Competitive Activity." See id. at 17. Based on the MUGA, one situation where Dye would have been deemed to be engaging in Competitive Activity was if he were to become employed by a corporation or other entity "engaged, wholly or in part in the Restricted Area.... Id. The MUGA defined "Restricted Area" as

(i) the general area of measurement including, but not limited to, clinical, financial, operational and attitudinal data, (ii) data analytics and decision support tools, and (iii) products or services related to improvement solutions, educational programs, or taking any actions on, or publishing or reporting results in connection with, the general area of measurement, in all cases described in the foregoing clauses (i), (ii) and (iii) to or about health care or related institutional or employees thereof, or medical or other professionals operating in the health care industry, anywhere in the United States or any other geographic location where the Company [i.e., PG Holdco] or any of its Subsidiaries [e.g., Press Ganey] operates. "Restricted Area" also includes (x) any other in which the Company or any of its Subsidiaries provides services related to the general area of measurement or services relating to taking any actions on, or publishing or reporting results in connection with, the general area of measurement, decision support tools, data analytics and improvement solutions, or has substantially progressed towards providing such services, (y) marketing tools and services, or (z) any other business that the Company or any of its Subsidiaries is taking or has taken specific actions in furtherance of engaging in (so long as Executive [i.e., Dye] knew or reasonably should have known about such actions).

Id. at 10.

On February 24, 2012, Press Ganey's Board of Directors selected Patrick Ryan as its Chief Executive Officer. Before being selected as Chief Executive Officer, Ryan had developed concerns about the accuracy of Press Ganey's sales figures while he worked with a private equity investment firm conducting due diligence about the possible purchase of Press Ganey from PG Holdco in late 2011-a purchase that never materialized. After becoming Chief Executive Officer, Ryan discovered other issues of concern within the sales division. Ultimately, Ryan concluded that personnel changes were needed and on May 3, 2012, Ryan terminated Dye and two other officers in the sales division, Andy Lambert and Al Vega.

Soon after Dye's termination, his attorney and legal counsel for Press Ganey negotiated the terms of a Separation Agreement, which Dye signed along with Patrick Ryan representing Press Ganey, and Andrew Cavanna representing PG Holdco on June 1, 2012. The Separation Agreement provided that Press Ganey would pay Dye $111, 574.28 in severance and that PG Holdco was exercising its options under the MUGA to repurchase Dye's management units for $76, 745.88. In the Separation Agreement, Dye also released any claims he might have against Press Ganey and its "current and former officers, directors, employees, agents, investors, members, attorneys, shareholders, administrators, affiliates, divisions, parents, subsidiaries, representatives, predecessors and successor corporations and assigns." Doc. No. 1-4 at 4. As a result, Press Ganey, PG Holdco, and Vestar were all beneficiaries of the Settlement Agreement's Release and Waiver provision. By signing the Separation Agreement, Dye also restated his commitment to the restrictive covenants outlined in the MUGA, to which Vestar was also a beneficiary.

About a month after his termination and less than a week after signing the Separation Agreement, Dye accepted a position with Intellimed International Corporation ("Intellimed"). Before he began working, however, Dye contacted Cavanna, a PG Holdco Board member and Vestar employee, about his prospect of working for Intellimed. Cavanna shared the exchange with Press Ganey executives and on June 13, 2012, Press Ganey informed Dye that his employment with Intellimed violated both the MUGA and his Separation Agreement. Dye began his employment with Intellimed on June 18, 2012, and remains employed there to this day. On July 5, 2012, Press Ganey informed Dye that because his employment with Intellimed violated the MUGA and Separation Agreement, it was stopping all severance payments due under the Separation Agreement and demanded that Dye return all sums already paid in severance payments and in the repurchase of Dye's management units.

III. ANALYSIS

A. Standard of Review

Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Lawson v. CSX Transp., Inc., 245 F.3d 916, 922 (7th Cir. 2001). In determining whether a genuine issue of material fact exists, this Court must construe all facts in the light most favorable to the nonmoving party as well to draw all reasonable and justifiable inferences in favor ...


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