2015 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-23-2015

Damian Cioni v. Globe Specialty Metals Inc

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Recommended Citation

"Damian Cioni v. Globe Specialty Metals Inc" (2015). 2015 Decisions. Paper 788.

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

No. 14-3404

_____________

DAMIAN J. CIONI,

 Appellant

v.

GLOBE SPECIALTY METALS, INC.; MALCOLM APPELBAUM; 

JEFFREY BRADLEY; ALAN KESTENBAUM; MARK COHEN

_____________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

(D.C. Civil No. 2-10-cv-01388)

District Judge: Honorable Esther Salas

____________

Submitted Under Third Circuit LAR 34.1(a)

June 26, 2015

____________

Before: CHAGARES, KRAUSE and BARRY, Circuit Judges

(Opinion Filed: July 23, 2015)

____________

OPINION*

____________

 

*

 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not 

constitute binding precedent. 
2

BARRY, Circuit Judge.

This matter arises out of a hiring agreement between Damian Cioni and Globe 

Specialty Metals, Inc. (“Globe”) in which Globe promised, but never granted, Cioni 

unvested options in company stock. Cioni appeals the District Court’s grant of summary 

judgment for the defendants. We will affirm. 

I.

Cioni was recruited to join Globe by its CFO, Malcolm Appelbaum, who believed 

that he had the authority to negotiate the terms of Cioni’s employment and compensation. 

On April 29, 2009, Cioni accepted and signed Appelbaum’s third offer of employment. 

The terms included a grant to Cioni of 30,000 unvested stock options, which were to vest 

in thirds on the first, second, and third anniversaries of Cioni’s employment. The 

agreement did not condition termination in any way, and Cioni understood that his 

employment at Globe could end before the options vested. Cioni began working at Globe 

on June 29, 2009 as its Vice President of Tax, reporting directly to Appelbaum. 

Sometime before October 2009, Appelbaum learned that he lacked authority to 

promise stock options to Cioni. Under Globe’s stock plan, the options could only be 

granted after approval from Globe’s Board of Directors (the “Board”), and Cioni’s grant 

was made “under and subject to the terms and conditions of our stock plan.” (App. 206.)

Cioni’s options were never put to the Board for a vote and, thus, never granted. When 

Appelbaum brought the options to Alan Kestenbaum, the Board’s Chairman, Kestenbaum 
3

refused to add the vote to the Board’s meeting agenda because he believed that a 30,000-

option grant was an “out-sized option package” relative to Cioni’s “reporting position[] 

. . ., which is not an income-generating type position” and that, as such, the grant was not 

in the interest of Globe’s shareholders. (Supp. App. 100–01, 103.) According to 

Kestenbaum, Appelbaum could have asked another Board member to put the grant to a 

vote, but there is no indication that he did so.

In October and November 2009, Globe attempted to renegotiate Cioni’s 

compensation. The Board delegated authority to Kestenbaum and Globe’s CEO, Jeffrey 

Bradley, to grant options, subject to an overall cap, to Cioni and two other employees 

whose compensation packages were to be adjusted. Under this authority, Bradley and 

Appelbaum made Cioni a written offer of 15,000 options. The offer was subject to 

Cioni’s acceptance by signature, which he never provided. Although the new offer did 

not expressly waive the originally promised 30,000 options, Cioni testified, when 

deposed, that he understood that the 15,000 options were offered “in lieu of” the 30,000 

options and that he never understood Globe to be offering him a total 45,000 options. 

(Supp. App. 71–72.) Appelbaum also assured Cioni that Globe would “try[] to make up 

some portion of the other half in cash through yearly bonuses.” (App. 110.) But when 

Cioni requested a written guarantee, Appelbaum declined.

Cioni rejected Globe’s offers and hired counsel. He did so against Appelbaum’s 

advice, who told him that Kestenbaum would not appreciate Cioni hiring counsel. On 

November 12, 2009, Cioni’s attorney spoke to Globe’s in-house counsel. The 
4

conversation appears to have been an attempt by Cioni to claim rights to both options 

offers. In the words of his attorney, the “entire conversation” was about the “45,000 stock 

options owed to Mr. Cioni,” as well as “some retaliation going on” against Cioni 

regarding the options. (Supp. App. 107–09.) 

Bradley fired Cioni the following day, November 13, 2009. The circumstances of

his termination are contested. Cioni testified that Bradley told him that his termination 

was due to “a legal issue.” (App. 87.) Globe’s interrogatory answers asserted various 

reasons: Cioni’s unwillingness to revise his compensation package; average to belowaverage performance; accessing inappropriate websites at work; and Cioni’s “bad faith 

claim[]” that he was entitled to 45,000 options. (App. 163.) Bradley testified that Cioni 

was terminated because he was under-performing. Appelbaum testified that he 

recommended Bradley terminate Cioni because Cioni was asking for more compensation 

than had been promised and because the working relationship had become “strained and 

difficult.” (App. 101–02.) Appelbaum further testified that, although Cioni’s work 

product had “certain issues,” that was not the reason he recommended termination. (Id.)

Cioni brought suit against Globe, Appelbaum, Kestenbaum, and Bradley1 on 

March 16, 2010, in an 11-count complaint. The defendants moved for summary judgment 

on eight of the counts on August 31, 2012, and the District Court granted the motion in 

its entirety on April 30, 2013. On June 26, 2013, the defendants sought leave to file a 

second motion for summary judgment on the remaining three counts, which the Court 

 

1 Cioni also named Mark Cohen, the headhunter who had recruited him to Globe, as a 

defendant, but no claims against Cohen have been appealed.
5

permitted,

2

and granted the motion in its entirety. Cioni timely appealed the Court’s grant 

of summary judgment on eight of the eleven counts.

II.

We have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over a 

grant of summary judgment, applying the same standard as the District Court. Sulima v. 

Tobyhanna Army Depot, 602 F.3d 177, 184 (3d Cir. 2010). “Summary judgment is

appropriate if, viewing the record in the light most favorable to the non-moving party, 

there are no genuine issues of material fact and the moving party is entitled to judgment 

as a matter of law.” Id. (citing Fed. R. Civ. P. 56(c)).

III.

A. Counts One and Two: Breach of Contract and Breach of the Implied 

Covenant of Good Faith and Fair Dealing

The parties agree that Globe breached its employment contract with Cioni by 

failing to grant the promised 30,000 unvested options, but disagree whether Cioni 

suffered damages from the breach. Cioni contends that stock options do have value, albeit 

a fluctuating one, and Globe’s breach denied him the anticipated value. He proffers an 

 

2 Cioni faults the District Court’s allowance of a second motion for partial summary 

judgment, which he contends was untimely because it was filed more than “30 days after 

the close of all discovery.” Fed. R. Civ. P. 56(b). That Rule is only a default timing 

provision, however; Rule 56 grants district courts discretion to “order[] otherwise.” Id. 

This discretion permits “[s]cheduling orders [to be] tailored to the needs of the specific 

case, perhaps adjusted as it progresses, [which is] likely to work better than default 

rules.” Fed. R. Civ. P. 56 comm. n. (2009). We find no error in the Court’s allowance of 

the motion, particularly as a trial date had not yet been set.
6

expert’s estimation of the options’ value and cites deposition testimony and out-of-state 

case law endorsing this valuation method. 

Cioni’s argument, however, supports valuing unexercised options – where an 

options holder possesses a present right to purchase shares – but not valuing unvested

options – where an options holder possesses only a conditional promise of a future right, 

but no present right, to purchase shares. Cioni himself acknowledged, when deposed, that 

unvested options were valueless to him. Without damages, of course, Cioni cannot 

sustain a claim for breach of contract.3 Cioni’s claims for breach of the implied covenant 

of good faith and fair dealing, however phrased,4fail for the same reason.

B. Counts Three and Nine: Wrongful Discharge and Retaliatory Discharge for 

Hiring Counsel

Cioni also claims that he was wrongfully terminated in retaliation for retaining an

attorney to advise him regarding his rights to the options. Unfortunately for Cioni, this 

claim runs up against New Jersey’s presumptive preference in favor of at-will 

 

3 Cioni alternatively argues that Globe’s breach harmed him because, by joining Globe, 

he relinquished stock options at his prior company. He did not, however, make this 

alternative harm argument before the District Court and cannot do so for the first time 

before us.

4 Cioni’s complaint pled his implied covenant claim as an unlawful termination that was 

not based on “willful misconduct,” “poor performance,” or “negligence,” (App. 56–57),

but in opposing summary judgment, he argued that Globe breached the implied covenant 

because he was terminated in bad faith to foreclose his claim to the unvested options. 

Even had Cioni shown that damages lie for such a claim, the claim would fail against 

New Jersey’s presumptive preference for an employer’s right to terminate an employee at 

will. See Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 512 (N.J. 1980); see also Leang v. 

Jersey City Bd. of Educ., 969 A.2d 1097, 1107 (N.J. 2009) (citing Pierce, 417 A.2d at 

512). Lastly, Cioni claimed that Globe breached the implied covenant by failing to 

present his options to the Board for approval, a claim unsustainable as a duplication of his 

breach of contract claim. 
7

termination. An employee has a claim for wrongful discharge only “when the discharge is 

contrary to a clear mandate of public policy.” Pierce, 417 A.2d at 512. Such public policy 

may be found in judicial decisions, among other sources. Id. Cioni contends that New 

Jersey has a clear public policy favoring an employee’s right to consult counsel and that 

this policy is expressed in a series of cases holding that an employee’s waiver of claims 

against his employer must be knowing and voluntary.5 See, e.g., Keelan v. Bell 

Commc’ns Research, 674 A.2d 603, 608 (N.J. Super. Ct. App. Div. 1996). To evaluate 

such waivers, courts consider, among other factors, whether the employee had an 

opportunity to consult counsel and whether the employer encouraged doing so. Swarts v. 

Sherwin-Williams Co., 581 A.2d 1328, 1332 (N.J. Super. Ct. App. Div. 1990). We are 

unconvinced that these factors – only two of eight non-exhaustive factors to be weighed 

in a totality of the circumstances test – constitute a clear public policy.

Even were these cases to establish a public policy protecting employees who 

consult counsel regarding potential waivers, however, Cioni has not pointed to evidence 

that that is what he was doing. Cioni testified that he understood that the 15,000 options 

were offered to replace the original 30,000, and his attorney testified that she contacted 

Globe to assert Cioni’s right to all 45,000 options. In other words, the record before us 

suggests that Cioni hired counsel to pursue his claim – not to advise him regarding a 

potential waiver. This distinction is vital because, under Pierce, employers may lawfully 

 

5 Cioni similarly claims the United States has a parallel public policy, and cites 29 U.S.C. 

§ 626(f)(1)(E). But § 626(f)(1)(E) is expressly limited to an employee’s waiver of claims 

of age discrimination under the Age Discrimination in Employment Act, which has no 

relevance here.
8

discharge employees who retain counsel in a dispute against the employer. See, e.g., 

Erickson v. Marsh & McLennan Co., 569 A.2d 793, 804 (N.J. 1990) (terminating an 

employee who “has retained a lawyer to protest the employer’s actions . . . is a legitimate, 

non-discriminatory method of handling the daily operations of a business”); Alexander v. 

Kay Finlay Jewelers, Inc., 506 A.2d 379, 381 (N.J. Super. Ct. App. Div. 1986) (“There is 

no statutory or regulatory proscription against a firing in retaliation for the institution of a 

civil action against the employer as a means of resolving a salary dispute.”).

C. Count Five: Defamation

Cioni claims Appelbaum defamed him by telling other Globe employees that he

was terminated for asking for more compensation than his contract offered. But, as 

discussed, Cioni’s attorney did assert that Cioni had a right to 45,000 stock options. He 

did not. He never accepted Globe’s second offer of 15,000 options and, moreover,

understood it to be an offer replacing the originally promised 30,000 options. Truth is a 

defense to defamation. G.D. v. Kenny, 15 A.3d 300, 310 (N.J. 2011).

D. Counts Six and Seven: Fraud and Negligent Misrepresentation 

In these counts, Cioni contends that Appelbaum induced Cioni to come to Globe 

by fraudulently, or negligently, misrepresenting that Globe would grant him 30,000 stock 

options without actually intending to do so. He also claims that Appelbaum endorsed the 

fraud after Cioni’s employment began by continuing to represent that Cioni’s options 

were forthcoming when they were, in fact, not. Because Cioni’s argument is, in essence, 
9

that Appelbaum promised Globe would grant options when Globe would not – the very 

same promise that Globe contracted to perform – Cioni’s claims are barred by the 

economic loss doctrine. See Spring Motors Distribs., Inc. v. Ford Motor Co., 489 A.2d 

660, 672–73 (N.J. 1985); Saratoga at Toms River Condo. Ass’n, Inc. v. Menk Corp., 2014 

WL 3510872, at *5 (N.J. Super. Ct. App. Div. July 17, 2014) (“[E]conomic expectations 

between parties to a contract are not entitled to supplemental protection by negligence 

principles.”).

Cioni, citing Kaplan v. GreenPoint Global, argues that the economic loss doctrine

does not bar claims of misrepresentations made to induce a party into a contract. But in 

Kaplan, the defendants allegedly misrepresented the company’s financial success to 

induce the plaintiff to join the company. See Civ. No. 11-4854, 2012 WL 2992572, at *6 

(D.N.J. July 20, 2012). The misrepresentations were apparently related to, but distinct 

from, the parties’ expectations under the contract. See also McConkey v. AON Corp., 804 

A.2d 572, 586 (N.J. Super. Ct. App. Div. 2002) (defendants misrepresented company’s 

future growth and likelihood of being sold, inducing plaintiff to accept employment only 

to be laid off seven months later when company was sold). Here, however, the 

representations were false promises to perform as contracted. Cf. Saltiel v. GSI 

Consultants, Inc., 788 A.2d 268, 280 (N.J. 2002) (holding architect’s cause of action 

under tort, alleging that turfgrass corporation negligently performed its contractual duties 

to prepare and design turf specifications for athletic field, arose only out of contract).
10

E. Count Ten: Tortious Interference with Contract

Finally, Cioni asserts that Kestenbaum tortiously interfered with Cioni’s 

employment contract in two ways: first, that he effectively vetoed Board approval of 

Cioni’s promised stock options; and second, that he caused Cioni’s termination. As to the 

first, Cioni has not pointed to evidence that Kestenbaum’s actions exceeded the scope of 

his duties as the Board Chairman. New Jersey’s tort of interference with contract cannot 

lie against Globe, a party to the contract, nor against Kestenbaum, unless he acted outside 

the scope of his duties. See Printing Mart-Morristown v. Sharp Elecs. Corp., 563 A.2d 

31, 37–38 (N.J. 1989); DiMaria Constr., Inc. v. Interarch, 799 A.2d 555, 561 (N.J. 

Super. Ct. App. Div. 2001). When deposed, Kestenbaum testified that his decision not to 

include a vote on Cioni’s options on the Board’s meeting agenda was within his authority 

as Chairman, and Cioni has not pointed to contrary evidence. Kestenbaum further 

testified that the other Board members also had authority to put Cioni’s options to a vote, 

yet Cioni has presented no evidence that any of them attempted to do so or that 

Kestenbaum improperly prevented any of them from doing so. Finally, Cioni has not 

shown that Kestenbaum did anything outside of his authority as Chairman that a jury 

could reasonably find caused Cioni’s termination.

V.

We will affirm the orders of the District Court.