Less than one year after being named as president of The Greenbrier, the CSX Corporation-owned resort in White Sulphur Springs, West Virginia, Paul Ratchford resigned. His departure was unexpected, as reflected by this editorial entitled, "Ratchford – We barely knew him," which appeared in The (Beckley, West Virginia) Register- Herald on September 19, 2007. One sentence stands out: “We don’t know the details surrounding his departure and likely never will.”
That statement is no longer true, thanks to a lawsuit filed in the Circuit Court of Greenbrier County, West Virginia last week by Ratchford against CSX, its West Virginia subsidiary, and several individuals. Here are the complaint, courtesy of the plaintiff’s counsel, Barry L. Bruce, and the Associated Press story on the lawsuit.
Ratchford has asserted claims for violation of the West Virginia Wage Payment and Collection Act, breach of contract, wrongful discharge, tortious interference with contractual relationship, intentional infliction of emotional distress, California labor statute violation, and fraud. He seeks damages of $50 million.
Ratchford alleges that after being recruited to The Greenbrier from his position as general manager of the Ritz Carlton resort in Half Moon Bay, California, and receiving assurances that, if he desired, he could remain as president of The Greenbrier for the rest of his career, he was terminated by Michael Ward, CEO of the CSX Corporation, “without cause or explanation and within a 45 second conversation” on September 18, 2007.
Here are some of Ratchford’s allegations in support of his wrongful discharge claim:
During the Plaintiff’s investigation into how to return the Company [The Greenbrier] to profitability, he uncovered that the executives of CSX and/or CSX Corporation were receiving an enormous amount of free benefits for themselves, their families, and their friends all at great expense to the Greenbrier.
CSX executives were receiving free meals and excessive discounts from the food and beverage outlets and greatly discounted merchandise from the Greenbrier shops. None of such benefits were attributed as “income” to said executives, all in contravention of West Virginia tax laws. Said executives were also receiving hotel rooms free or at greatly discounted rates. Executives had accounts with the Greenbrier known as “city ledger accounts”, all of which were not paid or paid at a fraction of their cost to said executives. Plaintiff also learned that CSX Corporation executives and families, including retired executives and directors, received highly discounted rooms and meals, all without counting same as income.
Plaintiff immediately discontinued these policies and reported his findings to Michael Ward and others at CSX Corporation.
Plaintiff advised Defendant, Michael Ward, he was going to stop the aforesaid policy and institute a policy that all employees would be limited to a flat 25% discount which was approved by Michael Ward.
Plaintiff’s investigation uncovered that executives of CSX and CSX Corporation were receiving "free” medical/physical examinations from The Greenbrier Clinic, an independently owned and operated business, in exchange for said business not having to pay fair market rent to the Company. Again, the employees receiving these benefits did not count same as income in contravention of West Virginia tax laws.
In support of his claim for fraud, Ratchford alleges that:
As a direct and proximate result of CSX and/or CSX Corporation’s fraud, the Plaintiff has suffered the equivalent of a career death sentence in the resort industry. Plaintiff suffers from Post Traumatic Stress and has come under a psychologists’ [sic] care. Plaintiff purchased a home in West Virginia as he had full intention to stay at the Greenbrier for the rest of his working career; a decision that was completely reasonable given Ted Kleisner and Bruce Rosenberger’s statements to Plaintiff about the President’s position.
Ratchford has attached as an exhibit to the complaint his offer letter, which provided, inter alia, that if his employment was terminated by CSX, other than for cause, or if he terminated his employment for good reason, prior to completing five years of employment, he would receive a lump sum severance payment equal to two times his annual base salary (which was $350,000 per year when he started in 2006). Both "cause" and "good reason" are defined in the letter. Ratchford received his severance pay of $700,000 on October 26, 2007, but alleges that because the payment was made more than 72 hours after his termination, it violated the the West Virginia Wage Payment and Collection Act.