supreme court of the state of new york...
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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF SUFFOLK ----------------------------------------------------------- )( PERSONAL COMMUNICATIONS DEVICES, LLC,
Plaintiff,
-against-
PHILIP CHRISTOPHER and KOSTAS KASTAMONITIS,
Defendants.
PHILIP CHRISTOPHER,
Defendant/Counterclaimant,
-against-
PERSONAL COMMUNICATIONS DEVICES, LLC,
Plaintiff/Counterclaim Defendant,
and
JONATHAN STEARNS, PINEBRIDGE DIRECT INVESTMENTS, LLC (f/kla AIG DIRECT INVESTMENTS, LLC), PINEBRIDGE GLOBAL INVESTMENTS, LLC (f/kla AIG GLOBAL INVESTMENTS, LLC), and PINEBRIDGE INVESTMENTS, LLC (f/kla AIG INVESTMENTS, LLC),
Additional Counterclaim Defendants.
----------------------------------------------------------- )(
Index No.: 30060/12
Justice Assigned: J. Emily Pines
AMENDED ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS TO SECOND AMENDED COMPLAINT
Defendant-Counterclaimant Philip Christopher ("Christopher"), by his attorneys Meyer,
Suozzi, English & Klein, P.C. and Duane Morris, LLP, as and for his Amended Answer,
Affirmative Defenses and Counterclaims to the Second Amended Complaint, alleges as follows:
INTRODUCTION
Personal Communication Devices, LLC ("PCD"), PineBridge Direct Investments, LLC
(f/kla AIG Direct Investments, LLC), Pinebridge Global Investments, LLC (f/kla AIG Global
Investments, LLC), Pinebridge Investments, LLC (f/k/a AIG Investments, LLC) (collectively,
"PineBridge") and Jonathan Steams ("Steams") have engaged in an elaborate, calculated and
deceitful scheme designed to destroy all the business relationships Christopher has established
over thirty (30) years. Through meritless litigation and other wrongful conduct, their goal is to
fashion for themselves something they do not have by contract: a restrictive covenant preventing
Christopher from working in the cell-phone industry. Because their efforts have been successful
in destroying Christopher's business relationships, PCD, PineBridge, and Steams are liable to
Christopher for interference with Christopher's current and prospective contractual and business
relationships.
Before and during his four-year tenure as PCD's President and Chief Executive Officer
("CEO"), Christopher had established excellent working relationships with PCD's suppliers,
distributors, vendors, and clients. These relationships were critical for PCD. As an intermediary
between the manufacturers and the wireless carriers, PCD's business in the competitive cell
phone market was heavily dependent on the personal relationships that its senior management
developed with its suppliers, distributors and its ultimate clients, the wireless carriers. Such a
business environment calls for an entrepreneurial mindset focused on establishing, maintaining
and nurturing lasting connections to suppliers, distributors, and clients. Using the relationships
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he had developed and nurtured, Christopher had grown PCD's business by 60% during his time
there.
Completely disregarding the relationship-driven nature ofPCD's business, PCD and
PineBridge did not want to renew Christopher's employment contract, despite Christopher's
repeated attempts to remind PCD and PineBridge that he was a vital asset. PCD, PineBridge,
and Steams thought they could successfully operate PCD's business without its founder, and
drove Christopher out ofPCD.
Let there be no doubt, PCD and PineBridge forced Christopher out ofPCD. Christopher
wanted to stay with PCD. He had invested millions of dollars of his own money in the founding
ofPCD. By the time of his departure, he had accumulated additional shares in PCD aggregating
approximately $15.0 million and he wanted to continue building and maintaining the
relationships necessary for PCD to prosper so as to increase the company's equity value for all
shareholders, including PineBridge.
Realizing that PineBridge was damaging PCD's business, other employees eventually left
in a mass exodus. Belatedly recognizing their gross error in judgment, PCD, PineBridge, and
Steams attempted to lure Christopher back to PCD, conditioned upon Christopher convincing
certain other former employees of PCD to return to PCD with him. Christopher was interested in
returning to PCD. But PCD, PineBridge, and Steams had damaged relationships with their
former employees beyond repair, and Christopher could not convince other employees to return.
After leaving PCD, Christopher was not subject to any restrictive covenant and was free
to work in any capacity for any employer in the cell-phone industry or elsewhere. He joined
AirTyme Communications, LLC ("AirTyme"), a company developing a new business model in
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the reverse logistics cell-phone market, and used his business relationships to successfully begin
building the business.
Rather than take responsibility for their poor judgment, their destructive behavior, and the
decisions made by the Board that they control, all of which have caused PCD's business to
rapidly and significantly decline, PCD, PineBridge, and Steams seek to blame Christopher for
their conduct. As specifically described in paragraphs 248 through 295 below, they filed this
meritless lawsuit and engaged in other wrongful conduct designed to destroy Christopher's
current and prospective contractual and business relationships and render him toxic in the cell
phone industry. Notably, neither the lawsuit nor the other conduct was a benefit to PCD. While
PCD, PineBridge, and Steams unfortunately succeeded in their goal to destroy Christopher's
reputation and business relationships, a byproduct of their conduct has been the ruin of business
relationships upon which PCD was dependent and, as a consequence, the dramatic decline of
PCD.
Regardless of the effect on PCD's business, PCD, PineBridge, and Steams are liable to
Christopher for the damage resulting from their tortious interference with his business
relationships.
RESPONSE TO ALLEGATIONS IN SECOND AMENDED COMPLAINT
1. Admits the allegations set forth in paragraph 1 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to what plaintiff means by
the phrase that PCD has been in existence "in one form or another" since the 1970's.
2. Denies the allegations set forth in paragraph 2 of the Complaint.
3. Denies the allegations set forth in paragraph 3 of the Complaint.
4. Denies the allegations set forth in paragraph 4 of the Complaint.
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5. Denies the allegations set forth in paragraph 5 of the Complaint.
6. Denies the allegations set forth in paragraph 6 of the Complaint, except
admits that PCD terminated Christopher's employment, effective on September 4, 2012, and
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations of paragraph 6 regarding who controls Reliance and AirTyme.
7. Denies the allegations set forth in paragraph 7 of the Complaint, except
admits that Christopher became the CEO of AirTyme on September 5, 2012.
8. Denies the allegations set forth in paragraph 8 of the Complaint, except
admits that, on August 16, 2012, PCD's board of directors passed a resolution terminating
Christopher's employment as CEO ofPCD, effective on September 4, 2012.
9. Denies the allegations set forth in paragraph 9 of the Complaint, except
admits that, from early August, 2012 through September 4, 2012, Christopher engaged in
negotiations to remain at PCD as its Chairman and to continue at PCD in some capacity but,
despite Christopher's good faith efforts, Jonathan Steams (a managing director ofPineBridge
and the PCD board member responsible for negotiating a transition agreement with Christopher),
discriminated against Christopher based upon his age and refused to negotiate, in good faith,
with Christopher. Instead, Steams was determined to humiliate Christopher and, instead of
providing for a proper transition for PCD's customers, suppliers and employees, Steams
recklessly deprived PCD of a smooth transition and caused substantial damage to PCD.
10. Denies the allegations set forth in paragraph 1 0 of the Complaint.
11. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 11 of the Complaint.
12. Denies the allegations set forth in paragraph 12 of the Complaint.
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13. Denies the allegations set forth in paragraph 13 of the Complaint.
14. Denies the allegations set forth in paragraph 14 of the Complaint, except
admits that Christopher met with Mike Narula and Louis Antoniou on the Sunday of Labor Day
weekend 2012 at the Hamlet Country Club at which time Antoniou and Narula attempted to
persuade Christopher to join AirTyme.
15. Denies the allegations set forth in paragraph 15 of the Complaint, except
admits that Narula informed Antoniou and Christopher that AirTyme would indemnify them if
they were sued by PCD.
16. Denies the allegations set forth in paragraph 16 of the Complaint, except
admits that Narula, from time to time and perhaps at the Labor Day weekend meeting, told
Christopher that he had access to $150 million of capital to invest in AirTyme.
17. Denies the allegations set forth in paragraph 17 of the Complaint, except
admits that Antoniou accepted an offer of employment made by Mike Narula on behalf of
AirTyme and denies having knowledge or information sufficient to form a belief as to the truth
or falsity of the allegations regarding whether Antoniou and VanGinhoven met at PCD's office
and what they talked about.
18. Denies the allegations set forth in paragraph 18 of the Complaint, except
admits that, by September 4, 2012, it became obvious that PCD (and, particularly, Jonathan
Stearns of PineBridge ), was not willing to engage in good faith negotiations for a transition
agreement and Christopher's employment with PCD was terminated, effective as of September
4, 2012 and that PineBridge announced its decision to replace Christopher, with George Appling,
at PCD's August 16 Board of Directors and Operations Meeting.
19. Denies the allegations set forth in paragraph 19 of the Complaint.
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20. Denies the allegations set forth in paragraph 20 of the Complaint.
21. Denies the allegations set fmih in paragraph 21 of the Complaint, except
denies having sufficient knowledge to form a belief as to what persons other than Christopher
might have said.
22. Denies the allegations set forth in paragraph 22 of the Complaint and
refers to Christopher's employment agreement for the terms thereof.
23. Denies the allegations set forth in paragraph 23 of the Complaint, except
denies having knowledge or information sufficient to form a belief regarding the precise amounts
that Reliance owed to PCD on particular dates.
24. Denies the allegations set forth in paragraph 24 of the Complaint and aver,
upon information and belief, that, prior to the date on which Hitachi allegedly terminated its
contract with PCD, PCD repudiated the Hitachi contract.
25. Denies the allegations set forth in paragraph 25 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding the email referred to in the second sentence of paragraph 25 of the
Complaint.
26. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 26 of the Complaint.
27. Admits the allegations set forth in paragraph 27 of the Complaint.
28. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 28 of the Complaint, except admits
that Kastamonitis is an individual.
29. Admits the allegations set forth in paragraph 29 of the Complaint.
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30. Admits the allegations set forth in paragraph 30 of the Complaint.
31. Denies the allegations set forth in paragraph 31 of the Complaint, except
admits that the majority of the services performed by Christopher for plaintiff were performed in
New York.
32. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 32 of the Complaint, except admits
that Christopher's principal place ofbusiness is in New York.
33. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 33 of the Complaint.
34. Admits the allegations set forth in paragraph 34 of the Complaint as to the
period on or before September 4, 2012 and denies having knowledge or information sufficient to
form a belief as to the truth or falsity of the allegations set forth in paragraph 34 of the Complaint
with respect to the period thereafter.
35. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 35 of the Complaint because
defendant does not know what plaintiff means by the phrase "one form or another" and, further
alleges that PCD was not formed until2008 and the first cell phone was not sold until1983.
36. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set fmih in paragraph 36 of the Complaint, except admits
that PCD had sales of approximately $2.8 billion in 2011 and had approximately 200 employees
by the end of2011.
3 7. Denies the allegations set forth in paragraph 3 7 of the Complaint, except
admits that, on August 16, 2012, PCD's board voted to replace Christopher as CEO, effective on
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September 4, 2012, and advised key employees of Christopher's termination at an August 16,
2012 Operations Meeting and further alleges that Christopher was led to believe, by Jonathan
Stearns, that Christopher would be retained as CEO until Stearns told Christopher otherwise on
July 26, 2012.
38. Denies the allegations set forth in paragraph 3 8 of the Complaint, except
admits that AirTyme repaired phones and sold refurbished phones and denies having knowledge
or information sufficient to form a belief as to the truth or falsity of the allegations set forth in
paragraph 3 8 of the Complaint regarding whether AirTyme competed with PCD prior to
Christopher's departure from PCD.
39. Denies the allegations set forth in paragraph 39 of the Complaint, except
denies having knowledge or information sufficient to fotm a belief as to the truth or falsity of the
allegations regarding the ownership of AirTyme and Reliance as well as whether Reliance ever
competed with PCD and admits that, prior to Christopher's departure from PCD, Reliance was a
customer ofPCD and attempted to purchase PCD.
40. Admits the allegations set forth in paragraph 40 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding Kastamonitis's current employment and his precise departure date from
PCD and avers that Kastamonitis's title was vice president for Verizon products.
41. Admits the allegations set forth in paragraph 41 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding Antoniou's precise departure date from PCD and avers that Antoniou
announced that he was leaving PCD's employ on or about August 16, 2012.
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42. Admits the allegations set forth in paragraph 42 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding VanGinhoven's precise departure date from PCD.
43. Admits the allegations set forth in paragraph 43 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding Ms. Klug's precise departure from PCD.
44. Admits the allegations set forth in paragraph 44 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding Ms. McGilly's precise departure from PCD.
45. Admits the allegations set forth in paragraph 45 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding Ms. Rabinowitz's precise departure from PCD.
46. Denies the allegations set forth in paragraph 46 of the Complaint, except
denies having knowledge or information sufficient to fmm a belief as to the truth or falsity of the
allegations regarding Narula's alleged email to American Express.
4 7. Denies the allegations set forth in paragraph 4 7 of the Complaint.
48. Denies the allegations set forth in paragraph 48 of the Complaint.
49. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 49 of the Complaint, except denies
that Christopher resigned from PCD and avers, upon information and belief, that the employees
referred to in paragraph 49 of the complaint gave PCD two weeks' notice and did not join
AirTyme until the end of such notice period.
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50. Denies the allegations set forth in paragraph 50 of the Complaint, except
admits that Christopher became an employee of AirTyme on September 5, 2012 and contacted
customers and suppliers who had also done business with PCD and who were well known to
anyone who transacted business in the cellular phone industry to introduce AirTyme's new
turnkey concept to them.
51. Denies the allegations set forth in paragraph 51 of the Complaint, except
admits that PCD performed work on several Pantech devices and that AirTyme made an offer on
a Pantech device that PCD had refused to purchase after Pantech contacted Christopher and
requested that AirTyme support a new model telephone that was not sold by PCD.
52. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 52 of the Complaint, except denies
that Christopher gave VanGinhoven any instructions regarding the recruitment and solicitation of
PCD employees to work at AirTyme and avers that the exodus of employees was caused by,
inter alia: (a) a speech by Jonathan Steams in which he misrepresented to employees, the status
of the lease for PCD's office building and disparaged Christopher by declaring that "we finally
got rid of the old man"; and (b) failed to ensure a proper transition of management.
53. Denies the allegations set forth in paragraph 53 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the actions of
Kastamontis, Antoniou, Klug, Rabinowitz and McGilly.
54. Denies the allegations set forth in paragraph 54 of the Complaint.
55. Denies the allegations set forth in paragraph 55 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
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allegations regarding what McGilly allegedly told O'Hara or to what "reception" plaintiff is
referring.
56. Denies the allegations set forth in paragraph 56 of the Complaint.
57. Denies having the knowledge or information sufficient to form a belief as
to the truth or falsity of the allegations set forth in paragraph 57 of the Complaint.
58. Denies having the knowledge or information sufficient to form a belief as
to the truth or falsity of the allegations set forth in paragraph 58 of the Complaint.
59. Denies the allegations set forth in paragraph 59 of the Complaint.
60. Denies the allegations set forth in paragraph 60 of the Complaint, except
admits that several PCD employees left PCD to join AirTyme as a result of Jonathan Stearns and
PineBridge' statements and conduct and denies having knowledge or information sufficient to
form a belief as to the truth or falsity of the allegations regarding the precise number of
employees who left PCD and joined AirTyme.
61. Denies the allegations set forth in paragraph 61 of the Complaint.
62. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 62 of the Complaint, except denies
that Christopher provided Kastamonitis with any PCD employee salary information.
63. Denies the allegations set forth in paragraph 63 of the Complaint.
64. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 64 of the Complaint.
65. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 65 of the Complaint.
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66. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 66 of the Complaint, except denies
that Christopher controlled AirTyme or directed anyone to take any of the actions referred to in
paragraph 66 of the Complaint.
67. Denies the allegations set forth in paragraph 67 of the Complaint.
68. Denies the allegations set forth in paragraph 68 of the Complaint, except
admits that AirTyme made an offer on a Pantech product that, upon information and belief, PCD
had refused to purchase.
69. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 69 of the Complaint, except denies
that Christopher played a role in or had knowledge of the acts referred to in paragraph 69 of the
Complaint.
70. Admits that Christopher had a duty of loyalty to PCD and fulfilled that
duty and denies the remainder of allegations set forth in paragraph 70 ofthe Complaint.
71. Denies the allegations set forth in paragraph 71 of the Complaint.
72. Denies the allegations set forth in paragraph 72 of the Complaint and
refers to the email quoted in paragraph 72 of the Complaint for the terms thereof.
73. Denies the allegations set forth in paragraph 73 of the Complaint and
refers to the email quoted in paragraph 73 of the Complaint for the terms thereof.
74. Denies the allegations set forth in paragraph 74 of the Complaint.
75. Denies the allegations set forth in paragraph 75 of the Complaint and
refers to the email quoted in paragraph 75 of the Complaint for the terms thereof.
76. Denies the allegations set forth in paragraph 76 of the Complaint.
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77. Denies the allegations set forth in paragraph 77 of the Complaint.
78. Denies the allegations set forth in paragraph 78 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding what PCD "learned" from Alex Seo and D.J. Kang ofPantech.
79. Denies the allegations set forth in paragraph 79 of the Complaint.
80. Denies the allegations set forth in paragraph 80 of the Complaint, except
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding the email referred to in paragraph 80 of the Complaint.
81. Denies the allegations set forth in paragraph 81 of the Complaint.
82. Denies having knowledge or information sufficient to set forth a belief as
to the truth or falsity of the allegations set forth in paragraph 82 of the Complaint, except denies
that Verizon's request was the first request of the kind referred to in paragraph 82 of the
complaint.
83. Denies the allegations set forth in paragraph 83 of the Complaint and
refers to the email allegedly quoted by plaintiff for the te1ms thereof.
84. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 84 of the Complaint, except denies
that Christopher lied about PCD.
85. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 85 of the Complaint and avers that any
loss ofbusiness with Verizon is the result ofPCD's acts and omissions.
86. Denies the allegations set forth in paragraph 86 of the Complaint.
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87. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 87 of the Complaint, except denies
that Christopher disparaged PCD.
88. Denies the allegations set forth in paragraph 88 of the Complaint.
89. Admits the allegations set forth in paragraph 89 of the Complaint.
90. Denies the allegations set forth in paragraph 90 of the Complaint.
91. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 91 of the Complaint.
92. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 92 of the Complaint.
93. Denies the allegations set forth in paragraph 93 of the Complaint.
94. Denies the allegations set forth in paragraph 94 of the Complaint.
95. Denies the allegations set forth in paragraph 95 of the Complaint.
96. Denies the allegations set forth in paragraph 96 of the Complaint.
97. Admits the allegations set forth in paragraph 97 of the Complaint for the
period on or before September 4, 2012 and denies knowledge or information sufficient to form a
belief as to the truth or falsity of the allegations set forth in paragraph 97 for the period
thereafter.
98. Admits the allegations set forth in paragraph 98 of the Complaint and
refers to the Hitachi contract for the terms thereof.
99. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 99 ofthe Complaint, except admits
that, from time to time, Hitachi and PCD entered into amendments.
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100. Admits the allegations set forth in paragraph 100 of the Complaint.
1 01. With respect to the allegations set forth in paragraph 101 of the
Complaint, Christopher refers to Amendment 4 for the terms thereof.
1 02. Denies having knowledge or information sufficient to set forth a belief as
to the truth or falsity of the allegations set forth in paragraph 102 of the Complaint.
1 03. Denies the allegations set forth in paragraph 103 of the Complaint.
104. Denies the allegations set forth in paragraph 104 of the Complaint.
105. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 1 05 of the Complaint, except admits
that Hitachi and AirTyme entered into a non-binding letter of intent and avers that such letter did
not relate to any existing PCD product.
106. Denies having knowledge or information sufficient to set forth a belief as
to the truth or falsity of the allegations set forth in paragraph 1 06 of the Complaint, except denies
that Christopher directed his contacts at Hitachi to ignore PCD's tenders of performance.
1 07. Denies having knowledge or information sufficient to set fmih a belief as
to the truth or falsity of the allegations set forth in paragraph 1 07 of the Complaint.
108. Denies the allegations set forth in paragraph 108 of the Complaint.
109. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 109 of the Complaint, except denies
that Christopher interfered with PCD's contract with Hitachi.
110. Denies the allegations set forth in paragraph 11 0 of the Complaint.
111. Denies the allegations set forth in paragraph 111 of the Complaint.
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112. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 112 of the Complaint, except denies
that Christopher lied about PCD's operating condition or that Hitachi breached its contract with
PCD.
113. Denies the allegations set forth in paragraph 113 of the Complaint, except
admits that Christopher often had business dinners including Verizon executives and Narula.
These dinners were in PCD's best interests because Reliance, PCD and Verizon had common
business interests (indeed, Reliance is one of only three authorized Verizon distributors), and
denies having knowledge or information sufficient to form a belief as to the truth or falsity of the
allegations regarding the dates of those dinners.
114. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 114 of the Complaint.
115. Admits the allegations set forth in paragraph 115 of the Complaint.
116. Admits that Christopher entered into the Employment Agreement and
refers to the Employment Agreement for the terms thereof.
117. Admits that Christopher entered into the Employment Agreement and
refers to the Employment Agreement for the terms thereof.
118. Denies the allegations set forth in paragraph 118 of the Complaint.
119. Denies the allegations set forth in paragraph 119 of the Complaint.
120. Denies the allegations set forth in paragraph 120 of the Complaint.
AS TO COUNT I
121. With respect to the allegations set forth in paragraph 121 of the
Complaint, Christopher repeats the answers set forth above.
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122.
123.
duty ..
124.
125.
126.
Admits the allegations set forth in paragraph 122 of the Complaint.
Admits that Christopher had a duty of loyalty to PCD and fulfilled that
Denies the allegations set forth in paragraph 124 of the Complaint.
Denies the allegations set forth in paragraph 125 of the Complaint.
Denies the allegations set forth in paragraph 126 of the Complaint.
AS TO COUNT II
127. With respect to the allegations set forth in paragraph 127 of the
Complaint, Christopher repeats the answers set forth above.
128. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 128 of the Complaint, except denies
that any of the alleged actions were done to benefit Christopher or pursuant to Christopher's
request.
129. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 129 of the Complaint.
130. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 130 of the Complaint.
AS TO COUNT III
131. With respect to the allegations set forth in paragraph 131 of the
Complaint, Christopher repeats the answers set forth above.
132. Denies having knowledge or information sufficient to set forth a belief as
to the truth or falsity of the allegations set forth in paragraph 132 of the Complaint.
133. Denies the allegations set forth in paragraph 133 of the Complaint.
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134. Denies the allegations set forth in paragraph 134 of the Complaint.
135. Denies the allegations set forth in paragraph 135 of the Complaint.
136. Denies the allegations set forth in paragraph 136 of the Complaint.
AS TO COUNT IV
13 7. With respect to the allegations set fmih in paragraph 13 7 of the
Complaint, Christopher repeats the answers set forth above.
138. Denies the allegations set forth in paragraph 138 of the Complaint.
139. Denies the allegations set forth in paragraph 139 of the Complaint.
140. Denies the allegations set forth in paragraph 140 of the Complaint.
ASTOCOUNTV
141. With respect to the allegations set forth in paragraph 141 of the
Complaint, Christopher repeats the answers set forth above.
142. Admits the allegations set forth in paragraph 142 of the Complaint, except
denies having knowledge or information sufficient to fmm a belief regarding the precise date that
the agreement was entered.
143. Denies the allegations set forth in paragraph 143 of the Complaint, except
admits that the employment agreement was a valid and binding contract.
144. Admits that Christopher entered the Employment Agreement and refers to
the Employment Agreement for the terms thereof.
145. Admits that Christopher entered the Employment Agreement and refers to
the Employment Agreement for the terms thereof.
146. Denies the allegations set forth in paragraph 146 of the Complaint.
14 7. Denies the allegations set fmih in paragraph 14 7 of the Complaint.
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148. Denies the allegations set fmih in paragraph 148 of the Complaint.
AS TO COUNT VI
149. With respect to the allegations set forth in paragraph 149 of the
Complaint, Christopher repeats the answers set forth above.
150. Denies having knowledge or infmmation sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 150 of the Complaint, except admits
that PCD transacted business with Pantech, Hitachi, Verizon and HTC on or before September 4,
2012.
151. Denies the allegations set forth in paragraph 151 of the Complaint.
152. Denies the allegations set forth in paragraph 152 of the Complaint.
153. Denies the allegations set forth in paragraph 153 of the Complaint.
154. Denies the allegations set forth in paragraph 154 of the Complaint.
155. Denies the allegations set forth in paragraph 155 of the Complaint, except
admits that Christopher knew that PCD transacted business with Pantech, Hitachi, Verizon and
HTC on or before September 4, 2012.
156. Denies the allegations set forth in paragraph 156 of the Complaint.
AS TO COUNT VII
157. With respect to the allegations set forth in paragraph 157 of the
Complaint, Christopher repeats the answers set forth above.
158. Denies the allegations set forth in paragraph 158 of the Complaint.
159. Denies the allegations set forth in paragraph 159 of the Complaint.
160. Denies the allegations set forth in paragraph 160 of the Complaint.
161. Denies the allegations set forth in paragraph 161 of the Complaint.
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162. Denies the allegations set forth in paragraph 162 of the Complaint.
AS TO THE SECOND COUNT VIII
163. With respect to the allegations set forth in paragraph 163 of the
Complaint, Christopher repeats the answers set forth above.
164. Denies having knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations set forth in paragraph 164 of the Complaint, except admits
that Christopher was aware that Hitachi and PCD entered into a contract.
165. Denies the allegations set forth in paragraph 165 of the Complaint.
166. Denies the allegations set forth in paragraph 166 of the Complaint.
167. Denies the allegations set forth in paragraph 167 of the Complaint.
AFFIRMATIVE DEFENSES
AS AND FORA FIRST AFFIRMATIVE DEFENSE
168. The Complaint fails to state a claim upon which relief can be granted.
AS AND FORA SECOND AFFIRMATIVE DEFENSE
169. All damages caused to PCD were the result ofthe acts and omissions of
plaintiff, its controlling member, PineBridge, and PineBridge's managing director, Steams,
including, inter alia: (i) damaging plaintiffs relationship with Hitachi High Technologies
("Hitachi"), by reneging on an agreement entered into between plaintiff and Hitachi, plaintiffs
largest supplier, resulting in plaintiff losing Hitachi as a supplier; (ii) damaging its relationship
with another key supplier (Pantech) by refusing to purchase product from Pantech or to
accommodate Pantech's need to ship product before the end ofPantech's fiscal year; (iiii) failing
to exercise "price protection" rights with respect to Pantech's model C8995 (Breakout); (iv)
damaging plaintiffs relationship with Pan tech by delaying implementation of an agreement to
21
liquidate an old product "Breakout" in order to make room for the launch ofPantech's new
product, "Perception", and failing to pay $70 million due Pantech; (v) liquidating inventory at
below-market prices; (vi) damaging plaintiffs relationship with its banks, vendors, key
employees and suppliers by misrepresenting plaintiffs intention to retain Christopher as CEO
and/or enter into a proper transition agreement with Christopher; (vii) ignoring warnings by
plaintiffs bank, vendors, management and customers to provide a proper transition from
Christopher to plaintiffs current CEO and, thereby, damaging plaintiffs relationships with its
bank, management, customers and vendors; (viii) damaging plaintiffs relationship with Verizon
(plaintiffs largest customer) by, in an attempt to discredit Christopher, sharing information
regarding dinners attended by Christopher with Verizon executives (which, unknown to
Christopher, apparently violated Verizon' s Code of Conduct but did not violate plaintiffs "gift"
or "expense account" policies), resulting in four Verizon executives being fired and V erizon
reducing the amount ofbusiness Verizon does with plaintiff; (ix) damaging plaintiffs
relationship with another supplier, Cellon (PCD's exclusive manufacturer for Latin America), by
failing to pay Cellon and, thereby, losing Cellon's business in South America and, thus, costing
plaintiff$120 million ofrevenue and $12 million of profit; (x) damaging plaintiffs relationship
with another supplier, Meta-7, by failing to fulfill plaintiffs agreement to pay non-recurring
engineering ("NRE") costs (which had been incurred by Meta-7) thereby, destroying Meta-7's
relationship with PCD and preventing the development of additional products; (xi) failing to
execute an agreement that had been negotiated by Christopher to reduce plaintiffs debt to HTC
America Inc. ("HTC") from $190 million to $150 million; (xii) failing to pay HTC $142 million
due HTC; (xiii) hurting the morale of employees by bringing back previously discharged
employees who had bad mouthed plaintiff; (xiii) causing employees to leave plaintiff as a result
22
of Jonathan Steams' false representations to employees regarding the renewal of plaintiffs office
lease; (xiv) causing employees to leave plaintiff by failing to implement an appropriate transition
or succession plan after firing Christopher as CEO; (xv) causing employees to leave plaintiff as a
result of Jonathan Steams' disparaging remarks to employees about Christopher's age; (xvi)
compromising Christopher's ability to lead plaintiff by insisting that Steams, rather than
Christopher, run plaintiffs management meetings; (xvii) causing employees to leave plaintiff by
failing to take into account plaintiffs existing corporate culture in retaining a new CEO; (xviii)
causing employees to leave plaintiff by refusing to negotiate a transition agreement with
Christopher in good faith; (xiv) causing employees to leave plaintiff by failing to fulfill
plaintiffs promises to issue "C" units in plaintiff to employees; (xx) causing employees to leave
plaintiff by not consulting with key employees (including Christopher and Antoniou) about
plaintiffs retention of a new CEO; (xxi) causing employees to leave plaintiffs employ by failing
to renew plaintiffs office lease and, thereby, causing insecurity among employees and a belief
that plaintiffwas preparing to move its operations out ofNew York; (xxii) causing employees to
leave plaintiff because plaintiff, PineBridge and Steams refused to consider any current
employees for plaintiffs CEO position; (xxiii) failing to provide warranty services despite being
contractually obligated to do so; (xxiv) refusing to sell phones to distributors whom they deemed
to have a close relationship with Christopher; (xxv) causing employees to leave because Steams
was the sole member ofPCD's Compensation Committee (after Marshall Cohen left PCD's
Board) and PineBridge refused to name a second member; (xxvi) terminating any board member
who voiced any disagreement with Steams and PineBridge, including Mickey Cohen; and (xxvii)
appointing an independent director who was not truly independent, as evidenced by the director's
23
vote to terminate Christopher's employment at the very same board meeting at which the board
resolved to appoint her as an independent director.
AS AND FORA THIRD AFFIRMATIVE DEFENSE
170. While Christopher remained loyal to plaintiff until September 4, 2012, any
duty of loyalty Christopher had to plaintiff terminated upon plaintiff deciding to replace
Christopher as CEO.
AS AND FORA FOURTH AFFIRMATIVE DEFENSE
171. Plaintiffs claims are barred by Christopher's employment contract which
contains no post-employment covenant not to compete or any restriction on Christopher's right
to join (or create) a competitor of plaintiff.
AS AND FORA FIFTH AFFIRMATIVE DEFENSE
172. All of the statements allegedly made by Christopher are true.
AS AND FORA SIXTH AFFIRMATIVE DEFENSE
1 73. Plaintiff has no standing to assert claims for damages resulting from
statements allegedly made by Christopher about PineBridge and Jonathan Stearns.
AS AND FORA SEVENTH AFFIRMATIVE DEFENSE
174. The claims set forth in the complaint are subject to mandatory arbitration
pursuant to the terms of Christopher's employment agreement.
AS AND FORAN EIGHTH AFFIRMATIVE DEFENSE
175. Plaintiff is estopped from asserting the claims set forth in the complaint.
24
AS AND FORA NINTH AFFIRMATIVE DEFENSE
176. Plaintiffs claims are barred by the doctrine of"unclean hands".
AS AND FORA TENTH AFFIRMATIVE DEFENSE
1 77. Plaintiff has failed to mitigate damages.
AS AND FORAN ELEVENTH AFFIRMATIVE DEFENSE
178. Plaintiffhas a duty to indemnify Christopher for any damages obtained
against Christopher in this action.
employees.
contract.
AS AND FORA TWELFTH AFFIRMATIVE DEFENSE
179. Christopher is not legally responsible for the conduct of plaintiffs
AS AND FORA THIRTEENTH AFFIRMATIVE DEFENSEAS AND FOR A
180. Any claim for breach of contract is barred by plaintiffs prior breaches of
COUNTERCLAIMS
AS AND FORA FIRST COUNTERCLAIM PURSUANT TO THE
NEW YORK STATE HUMAN RIGHTS LAW AGAINST PERSONAL COMMUNICATIONS DEVICES, LLC AND JONATHAN STEARNS
181. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
180 as if completely set forth herein.
182. Christopher is a sixty-four (64) year-old man who resides in Suffolk
County, New York.
25
183. Upon information and belief, PCD is a Delaware limited liability company
with its principal place ofbusiness in Suffolk County, New York.
184. Upon information and belief, PineBridge Direct Investments, LLC (f/k/a
AIG Direct Investments, LLC) is a Delaware limited liability company that maintains its
principal place ofbusiness at 399 Park Avenue, 4th Floor, New York, New York 10022.
185. Upon information and belief, PineBridge Global Invesments, LLC (f/k/a
AIG Global Investments, LLC) is a Delaware limited liability company that maintains its
principal place ofbusiness at 399 Park Avenue, 4th Floor, New York, New York 10022.
186. Upon information and belief, PineBridge Investments, LLC (f/k/a AIG
Investments, LLC) is a Delaware limited liability company that maintains its principal place of
business at 399 Park Avenue, 4th Floor, New York, New York 10022.
187. PCD, based in Hauppauge, New York, is in the business ofbuying cellular
phones from equipment manufacturers and customizing those phones for sale to PCD's
customers.
188. PCD employs more than four (4) employees and therefore is an employer
within the meaning ofthe New York State Executive Law§§ 296 et seq. ("State Human Rights
Law").
189. At all relevant times, Stearns was a member ofPCD's Board ofDirectors
and the Managing Director of PineBridge Investments, a private capital firm which was the
majority shareholder ofPCD.
190. Venue is properly laid in this County because Christopher resides in, and
PCD has its principal place ofbusiness in, Suffolk County, New York.
26
191. Jurisdiction is conferred upon the Court by Article 15 of the State Human
Rights Law, specifically New York State Executive Law §§ 296 et seq.
192. Christopher commenced employment with Audiovox Corporation, a
predecessor entity ofPCD, in or around 1970.
193. In or around 1992, Christopher became President and Chief Executive
Officer ("CEO") of Audiovox Communications Corp. ("ACC"), a wholly owned subsidiary of
Audiovox Corporation.
194. ACC was acquired by UTStarcom, Inc. in or around 2004 and ACC
became a subsidiary ofUTStarcom, Inc. known as UTStarcom Personal Communications LLC
("UTPC"). Christopher continued in his role as President and CEO.
195. In 2008, Christopher structured a management leveraged buy-out of
UTPC, invested $2.5M ofhis personal money in the buy-out, and created PCD.
196. On or around June 30, 2008, PCD and Christopher signed a four (4) year
Employment Agreement.
197. Pursuant to the Employment Agreement, PCD agreed to employ
Christopher, and he continued to be employed in his position as President and CEO of the
company.
198. During his tenure as President and CEO ofPCD, Christopher worked with
the top wireless carriers in North and South America, including Verizon Wireless, Sprint,
AT&T, T-Mobile and top carriers in Canada and Latin America.
199. As President and CEO of PCD, Christopher was responsible for bringing
many major brand manufacturers to the Americas, including HTC, Pantech, Casio, Sharp,
Alcatel, Cellon, Huawei and Meta-7.
27
200. During Christopher's tenure as President and CEO ofPCD, its revenues
grew from $1.7 Billion to $2.8 Billion.
201. Notwithstanding Christopher's dedicated and excellent performance as
President and CEO ofPCD and his many valuable contributions to the success of the company,
Christopher was subjected to incessant age-related comments and harassment by Jonathan
Steams beginning in or around January 2012 and continuing through the date of Christopher's
termination in August 2012.
202. Steams repeatedly told Christopher and other PCD employees that he
wanted to bring in a "younger" CEO and that Christopher, who he referred to as the "old man",
should be replaced with someone who had "younger ideas."
203. Steams made age-related negative comments about Christopher and often
referred to his belief that PCD needed "new blood", "fresh blood" and "young blood" in the PCD
leadership position.
204. From approximately May through July of2012, Steams undermined
Christopher's authority by, among other things, conducting his own monthly operations
meetings. These meetings were designed, by Steams, to undermine Christopher's authority at
PCD.
205. On or about July 26, 2012, Steams informed Christopher that his
employment was going to be terminated. Steams stated that he had executed an agreement with
a new CEO and that Christopher should clean his office out.
206. On or about August 16, 2012, PCD's Board of Directors removed
Christopher as President and CEO of PCD and replaced him with George Appling. Appling is
approximately forty-five ( 45) years of age.
28
207. Christopher's last day of employment with PCD was September 4, 2012.
On or around September 6, 2012, Stearns met with numerous PCD employees and told them that
"we had to get rid of the old man," referring to Christopher.
208. PCD and Stearns discriminated against Christopher on the basis of his age
with respect to the terms, conditions, or privileges of his employment and by terminating his
employment in violation of the provisions of the State Human Rights Law.
209. As a direct and proximate result of PCD and Stearns discriminating
against Christopher on the basis ofhis age in violation of the provisions of the State Human
Rights Law, Christopher has suffered damages and is entitled to relief including, but not limited
to, an award, inter alia, of reinstatement, back pay, front pay, benefits, attorneys' fees and
compensatory damages for emotional and physical distress against PCD and Stearns in amounts
to be determined at trial.
AS AND FORA SECOND COUNTERCLAIM PURSUANT TO THE
NEW YORK CITY HUMAN RIGHTS LAW AGAINST PERSONAL COMMUNICATIONS DEVICES, LLC AND JONATHAN STEARNS
210. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
209 as if completely set forth herein.
211. PCD is an employer within the meaning ofthe New York City
Administrative Code§ 8-502 ("City Human Rights Law").
212. In addition to its main office located in Suffolk County, PCD does
significant business in New York City.
213. In the course of performing his duties as CEO ofPCD, Christopher
attended meetings in New York City on a regular and frequent basis with PCD vendors,
customers and prospective customers, and he met with PCD employees in New York City
29
several times each month. Such meetings included product presentations to customers,
presentations by customers, sales pitches and client services.
214. Christopher also traveled extensively and regularly in furtherance of
PCD's business, both domestically and internationally, flying out of LaGuardia Airpmi and JFK
Airport in New York City.
215. Upon information and belief, the decision to terminate Christopher's
employment as CEO of PCD was made inN ew York City.
216. PCD and Steams discriminated against Christopher on the basis ofhis age
with respect to the terms, conditions, or privileges of his employment and by terminating his
employment in violation of the provisions of the City Human Rights Law.
217. A copy of this answer with counterclaims is being served upon the New
York City Commission on Human Rights and the New York City Corporation Counsel in
accordance with§ 8-502(c) ofthe City Human Rights Law.
218. As a direct and proximate result of PCD and Steams discriminating
against Christopher on the basis of his age in violation of the provisions of the City Human
Rights Law, Christopher has suffered damages and is entitled to relief, including but not limited
to an award, inter alia, ofreinstatement, back pay, front pay, benefits, punitive damages,
attorneys' fees and compensatory damages for emotional and physical distress against PCD and
Steams in amounts to be determined at trial.
AS AND FORA THIRD COUNTERCLAIM
PURSUANT TO THE NEW YORK STATE HUMAN RIGHTS LAW AGAINST JONATHAN STEARNS
219. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
218 as if completely set forth herein.
30
220. Steams aided and abetted PCD's age-based discrimination against
Christopher in violation of the provisions of the State Human Rights Law.
221. Aiding and abetting PCD' s age-based discrimination against Christopher
constitutes a violation of the State Human Rights Law.
222. As a direct and proximate result of Steams' discriminating against
Christopher on the basis of his age in violation of the provisions of the State Human Rights Law,
Christopher has suffered damages and is entitled to relief, including but not limited to an award,
inter alia, of reinstatement, back pay, front pay, benefits, attorneys' fees and compensatory
damages for emotional and physical distress against Steams in amounts to be determined at trial.
AS AND FORA FOURTH COUNTERCLAIM PURSUANT TO THE NEW YORK CITY HUMAN RIGHTS LAW AGAINST JONATHAN STEARNS
223. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
222 as if completely set forth herein.
224. Steams aided and abetted PCD's age-based discrimination against
Christopher in violation of the provisions of the City Human Rights Law.
225. Aiding and abetting PCD's age-based discrimination against Christopher
constitutes a violation of the City Human Rights Law.
226. As a direct and proximate result of Steams' discriminating against
Christopher on the basis of his age in violation of the provisions of the City Human Rights Law,
Christopher has suffered damages and is entitled to relief, including but not limited to an award,
inter alia, of reinstatement, back pay, front pay, benefits, punitive damages, attorneys' fees and
compensatory damages for emotional and physical distress against Steams in amounts to be
determined at trial.
31
AS AND FORA FIFTH COUNTERCLAIM PURSUANT TO
THE AGE DISCRIMINATION IN EMPLOYMENT ACT AGAINST PERSONAL COMMUNICATIONS DEVICES, LLC
227. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
226 as if completely set forth herein.
228. PCD discriminated against Christopher on the basis of his age with respect
to the terms, conditions, and/or privileges of his employment and by terminating his employment
in violation of the provisions of the Age Discrimination in Employment Act of 1967, 29 U.S.C.
§§ 621-634 ("ADEA").
229. Jurisdiction is conferred upon the Court by 29 U.S.C. § 626(c)(l).
230. PCD employs more than twenty (20) employees and therefore is an
employer within the meaning of the ADEA.
231. Christopher fully complied with the administrative prerequisite to the
filing of this action. On April 8, 2013, Christopher timely filed charges of discrimination against
PCD with the United States Equal Employment Opportunity Commission ("EEOC")
complaining of the unlawful acts of discrimination alleged herein.
232. Christopher filed his ADEA claim in this Court after waiting sixty (60)
days, pursuant to 29 U.S.C. § 626(d).
233. As a direct and proximate result ofPCD discriminating against
Christopher on the basis ofhis age in violation of the provisions of the ADEA, Christopher has
suffered damages and is entitled to relief, including but not limited to an award, inter alia, of
reinstatement, back pay, front pay, benefits, liquidated damages, punitive damages, attorneys'
fees and compensatory damages for emotional and physical distress against PCD in amounts to
be determined at trial.
32
AS AND FORA SIXTH COUNTERCLAIM FOR BREACH OF CONTRACT
AGAINST PERSONAL COMMUNICATIONS DEVICES, LLC
234. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
233 as if completely set forth herein.
235. On or about August 16, 2012, the board of directors ofPCD decided not to
renew Christopher's Employment Agreement and resolved to terminate Christopher's
employment at PCD, effective on September 4, 2012.
236. Paragraph 3(b) of the Employment Agreement provides:
Annual Bonus. During the Term, the Executive shall be eligible to earn an annual gross cash bonus (the "Annual Bonus") equal to 2.50% ofthe Company's Pre-Tax Income for each calendar year. As used herein, "Pre-Tax Income" means, for any period, the net income of the Company for such period as set forth in the Company's audited financial statements, without reduction for any of the foregoing: (i) the annual management fee, Transactions Fees and fees and expenses reimbursed on the date hereof under the Advisory Agreements between the Company and AIG Global Investment Corp. and Alumni Capital Network Management Company, LLC; (ii) all foreign, federal, state and local taxes based on income, receipts or revenue; and (iii) any transaction costs, financing fees, and expenses relating to the negotiation and execution of the Merger Agreement and the Company's Operating Agreement and the consummation of the Transactions contemplated thereby. The Company shall conclusively determine the Company's Pre-Tax Income for each calendar year as soon as practicable following the receipt of the Company's audited financial statements for such year.
237. Pursuant to paragraph 5(c) of the Employment Agreement:
payment of the Annual Bonus (pro rated through the date of termination) (or, if greater, $700,000) payable in a lump sum within thirty (30) days after the date that the Annual Bonus would have been paid.
33
238. Pursuant to paragraph 3(b) quoted above Christopher is entitled to an
Annual Bonus in an amount to be determined at trial but believed to be at least $500,000 for the
period ending August 31, 2012.
239. Christopher performed all ofhis obligations under the Employment
Agreement.
240. PCD has failed to pay Christopher any portion of the Annual Bonus.
241. By reason of the foregoing, Christopher is entitled to damages, and PCD is
liable to Christopher, in an amount to be determined at trial but believed to be at least $500,000
plus interest.
AS AND FORA SEVENTH COUNTERCLAIM FOR BREACH OF CONTRACT AGAINST PERSONAL COMMUNICATIONS DEVICES, LLC
242. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
241 as if completely set forth herein.
243. Paragraph 4(i) ofthe Employment Contract provides:
(i) Indemnification. To the maximum extent legally petmissible, including under applicable provisions of Delaware law, the Operating Agreement of the Company and Buyer, or the Certificate of Incorporation and Bylaws of the Company and Buyer, if applicable, and any indemnification agreement entered into by the Company and the Executive, the Company shall indemnify the Executive with respect to any actions commenced against the Executive in his capacity as an officer or director of the Company, whether by or on behalf of the Company, its shareholders or third-parties, and the Company shall advance to the Executive an amount equal to the reasonable fees and expenses incurred in defending such actions, after receipt of (i) an itemized request for such advance, and (ii) an undertaking from the Executive to repay the amount of such advance, with interest at the applicable federal rate with annual compounding under Section 1274 of the Internal Revenue Code of 1986, as amended (the "Code"), form the date of the request as determined by the Company, if it shall ultimately be determined in a final and nonappealable judgment that he is not entitled to be indemnified against such expenses. For the avoidance of
34
doubt, the Company will not only indemnify Executive if required, but also will indemnify him to the maximum extent the Company is legally permitted to indemnify him when such indemnification may be optional.
244. By this action, PCD seeks damages against Christopher for acts allegedly
committed by Christopher in his capacity as an officer and director ofPCD.
245. Pursuant to paragraph 4(i) of the Employment Agreement, Christopher has
submitted an itemized request for reimbursement of fees and expenses as well as an undertaking
as required by paragraph 4(i).
246. PCD has failed to reimburse Christopher for any of the fees and expenses
that he has incurred in defending this lawsuit.
24 7. By reason of the foregoing, Christopher is entitled to damages, and PCD is
liable to Christopher, in the amount of at least $168,039.39, plus interest.
AS AND FORAN EIGHTH COUNTERCLAIM AGAINST
PERSONAL COMMUNICATION DEVICES, LLC, PINEBRIDGE INVESTMENTS AND JONATHAN STEARNS
(Tortious Interference With Contractual Relationship)
248. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
24 7 as if completely set forth herein.
249. Before and during Christopher's tenure as President and CEO ofPCD, he
developed and maintained material business relationships with wireless carriers such as Verizon
Wireless, Sprint, AT&T, T-Mobile as well as top carriers in Canada and Latin America, and used
those relationships to the benefit ofPCD. He also developed and maintained material business
relationships with other vendors, suppliers, and distributors.
250. PineBridge, though its agent, Stearns, exercised control ofPCD's board of
directors. PineBridge and Stearns, however, ignored the fact that PCD's business was heavily
35
driven by personal relationships and did not realize the impact that terminating Christopher
would have on PCD's business or on employee morale (the employees understanding that the
business was relationship driven) as well as relationships with PCD's bank, vendors and
customers.
251. PCD' s Board of Directors passed a resolution terminating Christopher's
employment on or about August 16, 2012. Christopher, as well as representatives from PCD's
bank, vendors and customers warned Steams that Christopher's departure would have a
deleterious impact on their relationships with PCD. Indeed, prior to the public announcement
that Christopher would be replaced as PCD, Steams falsely assured those representatives that
Christopher would not be terminated as CEO. Upon information and belief, Steams' false
representations caused a loss of confidence in PCD on the part ofPCD's bank, vendors and
suppliers.
252. After the August 16, 2012 resolution, Board member and vice president at
PCD, Louis Antoniou, argued vigorously that Christopher's employment should not be
terminated. When that failed, Antoniou, already unhappy with Steams, immediately notified the
Board that he would be resigning his employment with PCD.
253. Once PCD's senior management had been forced out or left, other
employees left in a mass exodus for a several reasons, including them the recognition that PCD
had committed a serious error in a relationship driven business. These employees were not
recruited by Christopher, but rather followed Antoniou and other senior management to their
new places of employment.
254. Belatedly realizing that they had opened the bam door, PCD, PineBridge,
and Steams tried to close it. Less than ten (1 0) days after Christopher had been forced out of
36
PCD, on September 12, 2012, PCD, PineBridge, and Steams offered Christopher $7 million to
return to PCD as Chairman Emeritus (without an office), conditioned upon his ability to bring
Antoniou and another employee back with him. Christopher had always sought PCD's success
and was interested in ensuring that the money, time and effort he had put into growing the
company did not go to waste. He also wanted to protect his multimillion dollar equity
investment in PCD. Contrary to the allegations in the Second Amended Complaint that these
employees had been working in concert with Christopher, however, the two employees both
refused to return to PCD, citing the culture ofPineBridge. Thus, Christopher could not return to
PCD on the conditions mandated by PineBridge and Steams.
255. Once his employment with PCD ended, Christopher was not subject to any
restrictive covenant. Thus, he was free to work anywhere he wanted in the cell-phone industry,
even for a competitor ofPCD.
256. After he was forced to leave PCD, Christopher joined AirTyme, a
company owned by Ashima Narula, the wife ofParveen (Mike) Narula. With the assistance of
Christopher, AirTyme developed a "tum-key" solution in the reverse logistics cell-phone market.
·This was a new business model in the cell-phone industry.
257. AirTyme, through Christopher, sought a business relationship with
Verizon Wireless and was successfully winning business with Verizon Wireless.
258. Until much too late in the game, PCD, PineBridge, and Steams ignored
the fact that they were operating in a market in which relationships were key. Having damaged
their own business, they then set out to destroy Christopher's business relationships with
AirTyme, Verizon Wireless and other wireless carriers, as well as vendors, suppliers, and
distributors. Christopher was not subject to any restrictive covenant after his employment with
37
PCD ended. PCD, PineBridge, and Stearns schemed to effectively and wrongfully create a
restrictive covenant and drive Christopher from the industry by filing this meritless lawsuit and
engaging in other wrongful conduct designed to hurt Christopher's business reputation and make
him toxic in the cell-phone industry.
259. PCD, PineBridge, and Stearns successfully sought to damage
Christopher's business reputation and thereby destroy his relationship with Verizon Wireless.
260. At the direction ofPineBridge and Jonathan Stearns, PCD's new CEO sent
credit-card receipts to Verizon Wireless' corporate security department showing that Christopher
had entertained certain Verizon Wireless executives. PCD, PineBridge, and Stearns accused
Christopher (and, along with him, the Verizon Wireless executives) of violating the Verizon
Wireless corporate code of conduct. PCD, PineBridge and Stearns provided Verizon Wireless
with the receipts for the sole purpose of embarrassing and humiliating Christopher with no
corresponding benefit to PCD.
261. Notably, such entertainment did not violate PCD's code of conduct, nor
was Christopher aware that such conduct violated Verizon Wireless' code of conduct. Indeed,
PCD, PineBridge, and Stearns were aware that Christopher routinely entertained executives.
Stearns even participated in the entertainment of executives from Verizon Wireless and other
companies on several occasions. Moreover, during his four-year tenure as President and CEO of
PCD, Christopher regularly submitted monthly expense reports documenting the entertainment
of such executives and attaching the receipts for such activities. These expense reports were
subject to regular audit by an audit committee ofPCD's Board of Directors, which included at
least one executive of PineBridge. The audit committee never questioned any of these expenses.
38
Importantly, neither PCD, PineBridge, nor Steams had ever previously questioned these
expenses.
262. Once it received this information from PCD, PineBridge, and Steams,
Verizon Wireless stopped taking Christopher's phone calls, ignored his efforts to engage in
communications, and otherwise completely refused to deal in any manner with Christopher.
263. PCD also knew that interfering with Christopher's relationship with
Verizon Wireless would destroy his relationship with AirTyme. PCD knew that the Narula
family's flagship company was Reliance Communications, LLC ("Reliance"), a former
defendant in this litigation. PCD further knew that Reliance's primary business is as a Verizon
Wireless distributor and that Reliance would not risk the business it received from Verizon
Wireless. By interfering with Christopher's relationship with Verizon Wireless, PCD,
PineBridge, and Steams intended to induce, and did successfully induce, the Narula family to
cause AirTyme to terminate its business relationship with Christopher.
264. Upon information and belief, PCD's CEO also called several wireless
carriers to inform them of this lawsuit and otherwise publicize disparaging infonnation about
Christopher, including a fabricated investigation of Christopher by the Federal Bureau of
Investigation.
265. In their scheme to destroy Christopher's business relationships, however,
PCD, PineBridge, and Steams blindly failed to recognize that this conduct served no legitimate
interest ofPCD. Indeed, after receiving the information from PCD, Verizon Wireless fired four
executives-- executives who were friendly to PCD and proponents ofPCD- thus weakening
PCD's contacts with Verizon Wireless and limiting PCD's opportunities to win future business
from Verizon Wireless.
39
266. PineBridge and Steams, operating through PCD, also brought this lawsuit,
which is nothing more than another example of their scheme to destroy Christopher's current and
prospective business relationships. The lawsuit alleges that Christopher was the cause of the
collapse ofPCD, when it was, in fact, the reckless decision-making ofPineBridge and Steams
that destroyed PCD's business. Upon information and belief, with respect to the filing of this
lawsuit, Steams has stated that he has "lots of lawyers" and that he will put Christopher "out of
business."
267. The lawsuit is objectively meritless and that PCD knows that it is
meritless. In previous incarnations, this meritless lawsuit incredibly alleged that Christopher
breached fiduciary duties to PCD after he had already left PCD. Christopher filed a motion to
dismiss arguing that he could not possibly owe such duties to the company after he had left its
employ. In a transparent effort to do nothing more than continue its meritless attack on
Christopher's reputation and business relationships, PCD, PineBridge and Stearns responded to
the motion to dismiss by, in essence, changing the dates in the complaint, so that conduct
previously said to have occurred after Christopher had departed PCD (notably alleged in a
verified complaint) is now said to have occurred before Christopher departed the company (now
alleged in a non-verified complaint). The failure to submit a verification in support of the facts
alleged in the Second Amended Complaint demonstrates that PCD, PineBridge and Steams
recognize that the facts alleged in the Second Amended Complaint are false.
268. This wrongful conduct by PCD, PineBridge, and Steams had the desired
effect: Christopher became toxic in the industry. AirTyme terminated his employment. Verizon
Wireless stopped doing business with him. Other wireless carriers also stopped doing business
40
with Christopher. Suppliers, vendors, and distributors also stopped doing business with
Christopher.
269. Further evidence for the punitive nature of the suit can be found in the
"settlement" with a former defendant in this lawsuit, AirTyme. Once AirTyme terminated
Christopher, PCD, PineBridge, and Steams dropped AirTyme from the lawsuit for, upon
information and belief, no consideration other than what AirTyme already owed PCD.
270. At all relevant times, a valid and enforceable contract existed between
Christopher and AirTyme, a third party. Pursuant to that contract, Christopher was to be receive
a signing bonus, a percentage of the equity, a monthly salary, and a guarantee of the value of his
shares in PCD if PCD did not redeem his shares.
271. At all relevant times, PCD, PineBridge, and Steams had knowledge of the
existence of the contract between Christopher and AirTyme.
272. PCD, PineBridge, and Steams tortiously interfered with and damaged the
contractual relationship between Christopher and AirTyme, resulting in damages to Christopher.
273. Specifically, the conduct ofPCD, PineBridge, and Steams as described
above, constitutes intentional interference with AirTyme's performance under its contract with
Christopher.
274. The tortious interference ofPCD, PineBridge, and Steams directly
resulted in AirTyme's termination of the existing contract between AirTyme and Christopher.
275. PCD, PineBridge, and Stearns have no reasonable justification or excuse
for its conduct.
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276. As a direct result of the actions ofPCD, PineBridge, and Steams,
Christopher's contractual relationship with AirTyme was damaged, and Christopher suffered
significant financial losses as a result.
AS AND FORA NINTH COUNTERCLAIM AGAINST
PERSONAL COMMUNICATION DEVICES, LLC, PINEBRIDGE INVESTMENTS AND JONATHAN STEARNS
(Tortious Interference With Existing Business Relations/Existing Economic Relations)
277. Christopher repeats and realleges the allegations set forth in paragraphs 1 -
276 as if completely set forth herein.
278. At all relevant times, Christopher had valid business or economic
relationships with, among others, AirTyme, the top wireless carriers in North and South
America, including Verizon Wireless, Sprint, AT&T, T-Mobile and the top carriers in Canada
and Latin America, along with manufacturers, vendors, suppliers, and distributors, including but
not limited to Hitachi High Technologies America, Inc. ("Hitachi"), Pantech Co. Ltd and
Pantech Wireless Inc. (collectively, "Pantech"), ZTE Corporation and ZTE USA Inc.
(collectively, "ZTE"), and Brightstar Corp. ("Brightstar").
279. At all relevant times, PCD, PineBridge, and Steams were aware of
Christopher's business or economic relationships.
280. PCD, PineBridge, and Steams tortiously interfered with and damaged
these existing business and/or economic relationships, resulting in damages to Christopher.
281. Specifically, the conduct ofPCD, PineBridge, and Steams, as described
above, constitutes intentional interference with Christopher's business and/or economic
relationships. As described above, PCD, PineBridge, and Steams interfered with Christopher's
existing relationships with AirTyme and Verizon Wireless. Moreover, each ofPantech, ZTE,
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and Brightstar had offered Christopher high level executive positions, accompanied by offers of
significant compensation. After the conduct ofPCD, PineBridge, and Stearns, as described
above, these companies will no longer deal with Christopher and the offers have been
withdrawn.
282. The actions ofPCD, PineBridge, and Steams were taken with the sole
purpose of harming Christopher or by wrongful, improper, or dishonest means.
283. As a result of the conduct ofPCD, PineBridge, and Steams, Christopher's
business relationships were harmed.
284. As a result of the conduct ofPCD, PineBridge, and Steams, and the
ensuing damage to Christopher's business relationships, Christopher suffered damages including,
but not limited to, economic and financial losses.
AS AND FORA TENTH COUNTERCLAIM AGAINST
PERSONAL COMMUNICATION DEVICES, LLC, PINEBRIDGE INVESTMENTS AND JONATHAN STEARNS
(Tortious Interference With Prospective Business Relations/Economic Advantage)
285. Christopher repeats and realleges the allegations set forth in paragraphs 1
- 284 as if completely set forth herein.
286. At all relevant times, Christopher had prospective business and/or
economic relationships with, among others, AirTyme, the top wireless carriers in North and
South America, including Verizon Wireless, Sprint, AT&T, T-Mobile and top carriers in Canada
and Latin America, along with manufacturers, vendors, suppliers, and distributors, including but
not limited to Hitachi, Pantech, ZTE, and Brightstar.
287. At all relevant times, PCD, PineBridge, and Steams were aware of
Christopher's prospective business or economic relationships.
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288. PCD, PineBridge, and Steams tortiously interfered with and damaged
these prospective business and/or economic relationships, resulting in damages to Christopher.
289. At all relevant times, PCD, PineBridge, and Steams used dishonest, unfair,
wrongful or improper means in interfering with Christopher's prospective business and
economic relationships.
290. The conduct ofPCD, PineBridge, and Steams described above constitutes
intentional interference with Christopher's prospective business and/or economic relationships.
291. PCD, PineBridge, and Steams instituted this lawsuit in bad faith, intending
only to harass Christopher and cause Christopher to be fired by AirTyme and destroy his
relationships in the cell phone industry.
292. PCD, PineBridge, and Steams instituted the lawsuit without any intent to
bring the asserted claims to full adjudication.
293. This lawsuit was filed with the intent to interfere directly with
Christopher's prospective business and/or economic relationships, via the use of the legal
process itself, as opposed to any interference or harm that would result from any potential
outcome of the lawsuit.
294. As a direct result of the interference ofPCD, PineBridge, and Steams,
Christopher's prospective business and economic relationships were damaged. As described
above, PCD, PineBridge, and Steams interfered with Christopher's existing and prospective
relationships with AirTyme and Verizon Wireless. Moreover, each ofPantech, ZTE, and
Brightstar had previously offered Christopher high level executive positions, accompanied by
offers of significant compensation. After the conduct ofPCD, PineBridge, and Steams, as
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described above, these companies will no longer deal with Christopher and the offers have been
withdrawn.
295. As a result of the conduct ofPCD, PineBridge, and Steams, and the
ensuing damage to Christopher's prospective business and economic relationships, Christopher
suffered damages including, but not limited to, economic and financial losses.
WHEREFORE, Defendant-Counterclaimant Christopher demands judgment against
Counterclaim-Defendants PCD, PineBridge, and Steams as follows:
1. On the first, second, third, fourth and fifth counterclaims,
(A) Declaring that the acts and practices complained of herein are in violation
of the State Human Rights Law, the City Human Rights Law and the Age Discrimination in
Employment Act,
(B) Enjoining and permanently restraining PCD and Steams from further
violations of the State Human Rights Law, the City Human Rights Law, and the Age
Discrimination in Employment Act,
(C) Directing Steams and PCD to take such affirmative steps as are necessary
to ensure that the effects of their unlawful acts and practices are eliminated and do not continue
to effect Christopher's employment opportunities,
(D) Awarding to Christopher compensatory damages, including, but not
limited to, back pay, front pay, benefits of employment, and damages for mental, emotional and
physical injury, distress, pain and suffering and injury to Christopher's reputation, in an amount
to be determined at trial, and
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(E) A warding to Christopher liquidated damages, punitive damages and
attorneys' fees in amounts to be determined at trial;
2. On the sixth counterclaim, damages in the amount of at least $500,000.00,
plus interest;
3. On the seventh counterclaim, damages in the amount of at least
$168,039.39, plus interest;
4. On the eighth, ninth, and tenth counterclaims,
(A) Awarding to Christopher compensatory and consequential damages,
including, but not limited to, lost profits and earnings, loss of good will, and damages for mental,
emotional and physical injury, distress, pain and suffering and injury to Christopher's reputation,
in an amount to be determined at trial, and
(B) Awarding to Christopher punitive damages in an amount to be determined
at trial;
5. Pre-judgment and post-judgment interest at the maximum rate allowable at
law;
6. Costs, fees and expenses incurred including attorneys' fees and experts
fees and costs; and,
7. Such further legal and equitable relief as this Court may deem proper.
Dated: June 21, 2013 Garden City, New York ::@:&KLEIN,PC
Alan E. Marder
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Attorneys for Philip Christopher 990 Stewart A venue, Suite 300 Post Office Box 9194 Garden City, New York 11530-9194 (516) 741-6565
Gerard S. Catalanello Vincent J. Nolan III DUANE MORRIS, LLP Attorneys for Philip Christopher 1540 Broadway New York, NY 10036-4086 (212) 692-1000
TO: Goodwin & Procter
945309
Attorneys for Personal Communications Devices, LLC and Jonathan Stearns The New York Times Building 620 Eighth A venue New York, NY 10018
Westerman Ball Ederer Miller & Sharfstein, LLP
Attorneys for Kostas Kastamonitis 1201 RXR Plaza Uniondale, NY 11556
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