Former Sens executive sues team for $1.5M, alleges friction with Melnyk
'Melnyk would flippantly make comments ... often mused about replacing the entire executive management team'
A former Ottawa Senators executive is suing the team for $1.5 million, alleging, among other things, that owner Eugene Melnyk berated his management team following his return from medical leave in 2016 and amid poor ticket sales.
The lawsuit, filed last month by Peter O'Leary, said O'Leary was hired as the team's chief marketing officer and vice-president of ticket sales in September 2014.
He was fired in December 2016 and claims his dismissal was in breach of his contract and without just cause.
In the statement of claim, O'Leary alleges Melnyk's return to the team in early 2016, following his 2015 liver transplant, "created extreme difficulty for the members of the Ottawa Senators executive management team, including Mr. O'Leary.
"Mr. Melnyk would flippantly make comments about being unhappy with a particular aspect of the business and often mused about replacing the entire executive management team," according to the statement of claim.
"At times, he used profanity and leveled insults at executive team members, including constantly calling into question their competency. Mr. Melnyk sent abusive emails to the executive team and frequently threatened to dismiss them."
New CFO hired, responsibilities change
By August 2016 team CFO Ken Taylor had been let go and was replaced by Stephen Brooks. Taylor had reported to then-president Cyril Leeder, but Brooks reported directly to Melnyk instead, "greatly diminishing Mr. Leeder's authority," according to the statement of claim.
Brooks was also required to clear all O'Leary's decisions on ticket inventory, pricing and promotions.
Prior to the 2016-17 NHL season, the team made changes to his authority and job functions by offloading some responsibility onto others, the claim alleges.
"Even after the significant cuts to Mr. O'Leary's duties and responsibilities, removing his authority over, or ability to correct, the ticket sales issue, Mr. Melnyk nonetheless continued to berate Mr. O'Leary about poor ticket sales," the claim reads.
'All time lows under my watch'
"How and when did you get the title of 'Chief Marketing Officer'???" Melnyk asked in one of the emails to O'Leary included in the statement of claim.
"Peter — all time lows under my watch. Start thinking you are OFF all other projects other than selling immediate tickets. Drop the CMO title — MARKETING??? — Drop the 2017 stuff, how are you making us money??? I lose millions this way...You will force us to start laying off dozens of people the day after the seasons ...just to make up these sub par performances...We will see you Monday...if you are one of those executives that think there are holidays during the season end — forget it, I guess you have not spoken to Cyril about that yet..." reads another.
Other employees were copied on some of the email exchanges by Melnyk, but the statement of claim did not specify which employees.
Leeder — who was replaced by Tom Anselmi in January — had given O'Leary favourable performance reviews in 2015 and halfway through 2016, according to the claim, and was entitled to a $20,000 bonus for "several milestones" he met in 2016.
Both Leeder and Taylor told O'Leary he would be paid, but the payment wasn't made that summer or fall, the claim alleges.
"Leeder confirmed on numerous occasions that Mr. O'Leary met the criteria entitling him to a bonus of $20,000. However, Mr. Melnyk had advised Mr. Leeder not to pay bonuses, including that of Mr. O'Leary," the claim reads.
Taken together, the changes to O'Leary's responsibilities, his title, and the still unpaid bonus meant that the team had "constructively dismissed" O'Leary by November 2016, the claim argues, and email exchanges with Melnyk didn't resolve the issue.
On Nov. 29, Leeder left O'Leary a handwritten note stating that the bonus would be paid that night, apologizing that it had taken so long. Outstanding employer RRSP contributions were also paid, according to the statement of claim.
Brooks, Melnyk said payment made 'in error'
On Dec. 5, Brooks sent O'Leary an email stating that the payment was made "'in error' and that he must immediately return it," according to the claim. O'Leary asked for an explanation and the next day O'Leary lost network access, including his work email and mobile phone, and was removed from the company directory.
After a series of exchanges between lawyers for O'Leary, lawyers for the Senators and Brooks, Melnyk sent an email to O'Leary on Dec. 8 "stating that Mr. O'Leary had to repay the bonus 'no later than 5 pm tomorrow,'" and that if he failed to do so, "the Ottawa Senators would have 'no choice but to terminate [his] employment for cause,'" according to the claim.
O'Leary responded the next day, saying he wouldn't because Leeder, Taylor and human resources confirmed he was entitled to the bonus, and that it had been paid.
Then, on Dec. 12, O'Leary's employment was terminated for refusing to return the bonus, among other reasons not laid out in the statement of claim.
"Mr. Melnyk signed the termination letter, alleging that Mr. O'Leary was 'dishonest' and that his performance was 'dismal as a result of, among other issues, [his] persistent absenteeism, insubordination and failure to cooperate with outside consultants,'" the claim reads.
Allegations not yet tested in court
O'Leary is seeking $650,000 (two years of his base salary in lieu of reasonable termination notice), $200,000 in lost bonuses, as well as $700,000 in various damages, arguing that "the Ottawa Senators' actions in this matter are of such a reprehensible nature that damages should deter the Ottawa Senators from any such future conduct," the claim reads.
None of the allegations against Melnyk and the team has been tested in court.
Melnyk, who is being represented by a lawyer from the Toronto-based firm Cassels Brock, filed a notice of intent to defend last month.