SCRANTON – The former President and CEO of a New York-based mattress company claims that he was unlawfully terminated from his role during an approved leave of absence for medical reasons.
William Spudis Jr. of Duryea filed suit in the Lackawanna County Court of Common Pleas on April 18 versus Metro Mattress Corporation of Syracuse, N.Y. and its Chairman and Owner David Adler, of Lantana, Fla.
“On or about Oct. 5, 2021, plaintiff Spudis and defendant Metro Mattress entered into the Employment Agreement. The Employment Agreement was signed by plaintiff Spudis and defendant Adler in his capacity as Chairman/Owner of defendant Metro Mattress. The Employment Agreement was signed on Oct. 5, 2021, but retroactive to Jan. 1, 2021. The Employment Agreement provided for a five-year term from Jan. 1, 2021 through Dec. 31, 2025. Pursuant to the Employment Agreement, plaintiff Spudis was employed as defendant Metro Mattress’s President and CEO and was also to perform executive services for affiliate company, Pennsylvania Bedding, Inc. The Employment Agreement provided that ‘all final hiring decisions for company, including as to members of the owner’s family, shall be made by [plaintiff Spudis],” the suit states.
“The Employment Agreement provided that plaintiff Spudis would receive compensation for his services via (1) A base annual salary which increased on an annual basis in connection with the Consumer Price Index, (2) additional compensation for services provided to Pennsylvania Bedding, Inc., (3) profitability bonus, (4) discretionary bonus, (5) payment and reimbursement of business related expenses, (6) life insurance, (7) student loan repayment and (8) employee benefits and benefit plans, including health insurance, retirement savings plan, disability plan and paid time off. During the course of his employment, defendant Metro Mattress provided plaintiff Spudis with additional benefits, including the payment of: (i) Plaintiff’s housing costs in New York and Connecticut; (ii) plaintiff’s Mercedes Benz automobile lease; (iii) plaintiff’s Glenmaura National Golf Club membership; and (iv) plaintiff’s Jeep automobile lease. Pursuant to the Employment Agreement: Company may at any time terminate Executive’s employment hereunder ‘for cause,’ as defined below, by delivering written notice to Executive of his termination, effective upon delivery.”
The suit adds the Employment Agreement defines ‘for cause’ as the occurrence of any of the following: (i) Executive’s failure to perform the duties of his position in a satisfactory manner, after company provides Executive with 30 days’ notice and opportunity to cure; (ii) Executive’s intentional acts of dishonesty, such as fraud, misappropriation or embezzlement; (iii) Executive’s conviction of a felony involving more turpitude; (iv) Executive’s illegal use of drugs or excessive use of alcohol in the workplace; (v) Executive’s intentional and willful misconduct that may subject the company to criminal or civil liability; (vi) Executive's breach of his duty of loyalty, including the diversion or usurpation of corporate opportunities properly belonging to the company; (vii) Executive’s willful disregarding company policies and procedures; (viii) Executive’s breach of any of the material terms of this agreement; and/or (ix) Executive’s insubordination or deliberate refusal to follow the reasonable instructions of the owner of company.
The Employment Agreement also provides that “if plaintiff Spudis were terminated without cause, he would be eligible to receive severance of two years of his base salary as well as continuation of health insurance, only in exchange for a separation agreement and release provided by defendant Metro Mattress.”
“On Feb. 27, 2024, defendant Adler contacted plaintiff Spudis to inform him that another individual was being hired by defendant Metro Mattress and that the new employee would be placed in a position above plaintiff Spudis. The news caused plaintiff significant mental distress, particularly due to the fact that the Employment Agreement provided that all final hiring decisions for defendant Metro Mattress ‘shall be made by [plaintiff Spudis]’. Consequently, defendant Adler did not have the authority to hire any employee. Due to the significant mental distress he was under as a result of defendant Metro Mattress's hiring of an individual in a position above plaintiff Spudis, on Feb. 28, 2024, plaintiff Spudis contacted defendant Metro Mattress’s Human Resources Department to request sick time from Feb. 29, 2024 through March 5, 2024. Plaintiff Spudis was at all times medically excused from work by his personal physician, who issued such a note on March 1, 2024. Plaintiff Spudis’s request for medical leave was granted on Feb. 28, 2024. However, the Human Resources Department did not advise plaintiff Spudis of his right to take FMLA leave at that time,” the suit says.
“On Feb. 29, 2024, while on approved medical leave, plaintiff Spudis received an email from defendant Adler stating that plaintiff Spudis was no longer employed as the President and CEO of defendant Metro Mattress. On March 4, 2024, plaintiff Spudis was locked out of his company email. He reached out to Human Resources regarding his employment status and was advised that he was given the opportunity to continue employment ‘in a different capacity’. He was told on March 5, 2024 to notify the company of his decision by the close of business the same day. Plaintiff Spudis did not respond. Following his return from a previously planned and scheduled family vacation, on March 25, 2024, plaintiff Spudis notified Human Resources that he continued to require sick time. On March 27, 2024, plaintiff Spudis was informed by Human Resources that defendant Metro Mattress was terminating certain of his benefits as President and CEO and cancelling his corporate credit cards. Plaintiff Spudis asked for the status of his employment and received no response. On March 28, 2024, plaintiff Spudis again asked for the status of his employment and received no response.”
The suit further provides that “on March 29, 2024, plaintiff Spudis was – post termination – advised of his rights pursuant to the FMLA. He was also advised on that date that as Chief Executive Officer, he was a key employee and could not be reinstated to his position as CEO due to the fact that it would result in a substantial and grievous economic injury to the company operations because it could not employ two CEO’s” – and at the same time, “plaintiff Spudis was threatened that if he did not abandon his FMLA leave, he would be terminated from his employment (despite the fact that he had already been terminated as President and CEO on Feb. 29, 2024).”
“Defendant Metro Mattress only advised plaintiff Spudis of his FMLA rights to cover up the fact that it had already terminated him following his advising the company that he needed medical leave – leave that ultimately qualified for FMLA leave. Likewise, Metro Mattress advised plaintiff Spudis that it was designating him as a key employee under the FMLA, and it was going to deny reinstatement because maintaining two CEO’s would result in a substantial and grievous economic injury to its operations. It advised plaintiff Spudis that if he decided to forego his FMLA leave and return to work, he would be immediately restored to work and then terminated. The foregoing was all inconsistent with Metro Mattress’s prior termination of plaintiff Spudis as President and CEO on Feb. 29, 2024. At the time of plaintiff Spudis’s termination as President and CEO on Feb. 29, 2024, 22 months remained on his employment term pursuant to the Employment Agreement,” the suit states.
“Plaintiff Spudis’s employment as defendant Metro Mattress’s President and CEO was terminated for reasons other than for cause as that term is defined in the Employment Agreement. Plaintiff Spudis’s termination occurred during the employment period set forth in the Employment Agreement. Defendant Metro Mattress failed to pay to plaintiff Spudis or on his behalf, fringe benefits to which he was entitled pursuant to his employment.”
For counts of breach of contract, interference/retaliation in violation of the Family and Medical Leave Act and violation of the Pennsylvania Wage Payment and Collection Law, the plaintiff is seeking compensatory damages in an amount equal to the fringe benefits unlawfully withheld by defendants, together with interest, liquidated damages, costs, reasonable attorney’s fees and such other and further relief the Court deems just and appropriate.
The plaintiff is represented by Joseph T. Wright Jr., Danielle M. Mulcahey and Alexander J. Tulaney of Wright Reihner & Mulcahey, in Scranton.
The defendants have not yet secured legal counsel.
Lackawanna County Court of Common Pleas case 2024-CV-02749
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com