Chad Slater didn’t get everything he wanted, but he got a good bit of it—$1.4 million to be exact—in the resolution of his wrongful termination lawsuit against MeritDirect.
The arbitrator, James F. Stapleton, awarded Slater that sum in damages and interest in a decision dated Feb. 13. The decision just became part of the public record.
The payout should not cause financial hardship for MeritDirect. Roughly $1.3 million is already being held in escrow in the case as the result of a court-ordered lien. (Direct Newsline, June 17, 2003).
Stapleton wrote that there were no grounds for Slater’s termination as a MeritDirect employee in October 2002 according to the company’s operating agreement. However, his fellow members in the limited liability corporation had the right to terminate his membership—or partnership—Stapleton continued.
The arbitrator also stated that MeritDirect had defamed Slater in the way it described his departure to people in the industry.
Slater, who founded Integrated Direct Marketing after leaving MeritDirect, commented that the monetary award was “less important that clearing my reputation. I’m now vindicated of the unpleasant accusations that were made, and I look forward to putting this behind me and growing my new business.”
Ralph Drybrough, CEO of MeritDirect, said that the award was “about what we anticipated. Obviously, we’re glad it’s over and we want to continue to focus on providing our clients with the best brokerage, management and e-mail services within the industry.”
Both Drybrough and Slater declined comment on the specifics of the decision.
The financial award was based on several elements, including $1 million in unpaid compensation. The lion’s share of this was $757,232 owed for the balance of Slater’s fourth quarter 2002 bonus and tiered bonuses.
The arbitrator wrote that a new compensation plan put into place after Slater’s departure, which would have reduced these bonuses to $98,569, could not be applied to him retroactively.
The sum also includes $301,424 on the receipts MeritDirect received on Slater’s business in 2003. Expenses that were to have been deducted from this sum “cannot be created out of thin air,” Stapleton wrote.
Stapleton also awarded Slater $91,992 in interest for the unpaid compensation.
In addition, Slater was granted $105,642 for his equity interest in MeritDirect. That was based on the fact that the firm’s capital account had $1.05 million in it at the time of Slater’s departure.
Slater did lose a few points. Stapleton denied an additional bonus payment of $198,283 for the year 2002 because the claim was based on a bonus plan that did not to take effect until 2001 and was not retroactive.
Also denied was the claim for $19,733 that was owed for the balance of Slater’s third-quarter 2002 bonus.
Stapleton also denied statutory damages, and any award for future lost wages. He noted wryly that “Mr. Slater has gone into a new competing business, has successfully financed it and has achieved, in a very short time, a substantial measure of success.”
But Slater was awarded $150,000 on his defamation claim.
“It was unnecessary for MeritDirect to go into detail as to the reasons for the separation and it did so at its peril if those reasons were not true and accurate,” Stapleton wrote. “They were not and it necessarily caused some damage to Slater’s reputation in their industry.”
