Oversee.net’s motion for summary judgment is denied.
The court presiding over Monte Cahn vs. Oversee.net has given a victory to the former Moniker CEO in its final act of 2011.
The court denied (pdf) Oversee.net’s motion for summary judgment, in which Oversee.net asked the judge to toss out Cahn’s claim of breach of contract over an incentive plan.
A defendant’s burden for a motion for summary judgment is very high, but some of the judge’s rationale in his decision is certainly a win for Cahn.
Oversee.net had argued that none of the business segment goals under the incentive plan were met. Yet the judge noted that the company only provided the court with a one page spreadsheet showing the results. This does not appear to comply with Fed. R. Evid. 1006, which requires documentation for such a summary.
The court also disagreed with Oversee on whether the management incentive plan was a contract. Oversee.net said it wasn’t, but the judge wrote “Courts recognize incentive plan offered to induce employment as binding contractual agreements.”
Also at issue was that Oversee.net never set a goal for the “Oversee Business Segment” in the incentive plan. It was left as “TBD” in the plan, and Oversee.net said its board had the discretion to not set any goal at all (as it did).
But the court viewed it differently:
“Rather, the Court finds that the MIP in the instant action is more plausibly read as vesting Oversee with discretion as to where to set the applicable target or goal that would be used to determine whether a bonus payment was due, not unfettered discretion as to whether to set a target or goal at all. The Court thus agrees with Cahn that Oversee was bound by the implied covenant of good faith and fair dealing to set such a target
The court noted that had Oversee.net simply set a goal (even if it was really high), Cahn wouldn’t have grounds to complain.
Oversee.net also had said that, even if an award was due under the plan, Cahn had failed to specify the plan’s recipients as required by the plan. The judge said there remains an issue of fact around this and thus it can’t be settled at the summary judgment stage.
James says
I hate to think how much this is costing – would probably have been cheaper to settle on day one at 50%.