$185,000
Employment Dispute
Employee (Plaintiff) was President of a Company (the Defendant). Defendant terminated Plaintiff after an eight-year tenure. In Plaintiff’s second year of his tenure, Defendant issued to Plaintiff shares of stock in the Company via a stock certificate as recognition for Plaintiff’s significant contributions to the Company’s growth in a private surprise ceremony of just Defendant’s CEO, Plaintiff, and Plaintiff’s spouse. The stock certificate was post-dated and had an invalid certificate identification number.
Defendant issued Plaintiff shares despite Plaintiff’s failure to meet the required revenue milestones to be entitled to ownership interest. Defendant never issued Plaintiff a K-1 tax form in the years to follow. Plaintiff never asked to be issued a K-1 tax form. Defendant never issued Plaintiff distributions. Plaintiff never asked to receive distributions. Defendant submitted various government certification documents in the years following the issuance of the stock certificate and Plaintiff was never listed as an owner. Plaintiff signed the same government certification documents. Defendant never recorded issuance of Plaintiff’s shares of stock on Defendant’s stock ledger.
Upon being terminated, Plaintiff asked to be compensated for the stock certificate. Plaintiff still had the original in his possession. Defendant refused to compensate Plaintiff. Defendant took the position the stock certificate was unenforceable and declined to negotiate. Plaintiff filed suit for breach of contract.
Defendant denied all material allegations and filed counterclaims alleging breach of fiduciary duties and violations of Plaintiff’s non-compete provision contained in his employment agreement with Defendant. The basis of Defendant’s counterclaims were allegations that Plaintiff purposefully bound Defendant to financial obligations Plaintiff knew were above-market-value, Plaintiff started a business that began competing with Defendant before his employment ended, and Plaintiff continued competing with Defendant after being terminated.
After months of hard-fought litigation, Defendant agreed to pay Plaintiff $185,000 and agreed to waive the remainder of Plaintiff’s non-compete prevision, allowing Plaintiff to resume his business.
Disclaimer: Case results depend on a variety of factors unique to each client’s matter. Past results, including this $185,000 settlement, do not guarantee or predict similar outcomes in any other cases.
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