Thursday, February 21, 2013

Gallagher v. Lambert case brief

Gallagher v. Lambert case brief summary
74 N.Y.2d 562
TOPIC: At-Will Employment

SYNOPSIS: Plaintiff former employee appealed from an order of the Appellate Division of the Supreme Court in the First Judicial Department (New York), which modified and, as modified, affirmed an order denying a motion by defendant close corporation for summary judgment dismissing the first three causes of action of plaintiff's complaint and directing specific performance of a stockholders' agreement.


-Plaintiff former employee purchased stock in the defendant close corporation with which he was employed. 
-The purchase of his interest was subject to a mandatory buy-back provision: if the employment ended for any reason before a certain date, the stock would return to the corporation for book value. The corporation fired plaintiff prior to the fulcrum date, after which the buy-back price would have been higher. 
-The court considered whether the former employee's dismissed causes of action, seeking the higher repurchase price based on an alleged breach of a fiduciary duty, should be reinstated. 

The court concluded that the causes should not be reinstated and affirmed the dismissal. The court found that there was no cognizable breach of any fiduciary duty owed to the former employee under the plain terms of the parties' repurchase agreement.


 Order denying defendants' motion for summary judgment dismissing the first three causes of action of plaintiff's complaint, and directing specific performance of the stockholders' agreement was affirmed, and the certified question was answered in the affirmative.

-Court here does not want to get into an employment dispute, reasoned that the P got what he bargained for.
-Parties negotiated a written k.
Dissent: D had no reason to terminate at the time he was terminated.
-If P was a minority shareholder he would have been protected “subject to the standard of good faith.”

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