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Wrongful Termination Of Employee

$440,000 Verdict – Employment Contract – Breach Of Written Guarantee

U.S. Dist., Newark
This was an action in which the plaintiff, an engineer in his late 50’s at the time, contended that the individual defendant principal of the parent corporation of his employer and the parent corporation itself breached a written contract in which the defendants guaranteed that the underlying contract between the plaintiff and the employer would be satisfied in the event the employer failed to honor its obligations. The underlying written employment contract between the plaintiff and the employer was for a term of five years and provided for the payment of $100,000 per year, with yearly increments after the first year which would correspond to inflation. The evidence revealed that the plaintiff held a senior position with the employer. Shortly after the plaintiff commenced working for the employer, the employer filed for corporate reorganization under Chapter 11 of the Bankruptcy Act, enabling it to continue operations. The plaintiff, who had been paid every two weeks, contended that although he did not receive his salary checks during July after the filing of Chapter 11, he continued working. The salary resumed in August in accord with the Chapter 11 reorganization. The plaintiff contended that in October, his benefits previously paid by the company had lapsed, and that he did not receive his salary check relating to a two week period in October. The plaintiff ceased working shortly after his check was due in October. The plaintiff contended that prior to obtaining the position, he had inquired as to the financial health of the employer, and contended that the principal of both corporations misrepresented the extent of any difficulties. Punitive damages were, therefore, also demanded.

The plaintiff indicated that prior to his accepting employment with the employer, he learned that the division of his prior employer was being phased out. He testified that had he not taken the new position, he would have been re-assigned within the prior company, and presented two supervisory employees from this previous employer. The plaintiff contended that when he entered into negotiations with the new employer, although he was advised that the company was not presently profitable, he was not advised of the extent of the difficulties. The defendant contended that the plaintiff was fully advised of the financial difficulties and vigorously denied that any misrepresentation occurred. The defendant also contended that the plaintiff had voluntarily left the employment. The defendant maintained that the plaintiff was advised that the July check would be paid when such remuneration was arranged in conjunction with the bankruptcy proceedings. The defendant further contended that the plaintiff was advised that he should pay the premium benefits and would be reimbursed. The defendant also contended that the October check was only several days late when the plaintiff ceased working. The plaintiff maintained that he had entered into the written guarantee with the employer’s parent corporation and its principal, and that he should not, therefore, be required to wait for payment and reimbursement by the employer.

COMMENTARY: The defendant argued that the plaintiff had, in actuality, breached the contract, emphasizing that the salary check which had not been paid shortly after the employer filed under Chapter 11 would have been satisfied in conjunction with the bankruptcy proceedings, that the plaintiff would have been reimbursed for his payment of benefit premiums, and that the salary check which was not provided several days before the plaintiff ceased work would have been paid shortly thereafter if the plaintiff had not left the company. The plaintiff, in overcoming this position, stressed that he had entered into a written contract with the principal of the parent corporation for the guarantee of salary and benefits in the event the employer failed to satisfy its obligations, arguing that in view of this factor the defendant’s position should not be accepted. Regarding damages, the plaintiff had kept extensive documentation of numerous inquiries made in his job search, and utilized this documentation during his trial to refresh his memory. In this regard, the plaintiff was able to effectively present detailed testimony relating to his endeavors to obtain alternative work, arguing that in view of this testimony, it was clear that he had made every reasonable attempt to mitigate his damages.

(Verdict of $440,000)

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