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New York Supreme Court Dismisses Employee's Complaint Against KM&M Client Seeking $20 Million In Allegedly Unpaid Compensation

August 22, 2002

The New York State Supreme Court recently dismissed a seven-count complaint filed against a KM&M client, a major Internet company, by a former employee seeking recovery of a minimum of $20 million in allegedly unpaid compensation. The plaintiff, a former high-level company manager, alleged that our client had promised to pay him commissions and other compensation for a period of three years, whether or not he remained employed, and then failed to fulfill these promises. We moved to dismiss the complaint, which included claims for breach of contract, violation of New York State Labor Law and five other common-law claims.

In ruling on our motion, the court held that the plaintiff's breach of contract claim was barred by the Statute of Frauds, a statute requiring that contracts be in writing if they are incapable of being performed within one year. As evidence of the alleged agreement to pay commissions for three years the plaintiff relied on writings that, the court observed, did not contain all of the material terms of such an agreement. Concluding that the Statute of Frauds prohibited reliance on other purported oral communications to supplement the writings, the court ruled that the contract claim failed as a matter of law. With no contract to enforce, the court also dismissed all of the plaintiff's other claims, which were premised upon quasi-contractual and other related theories of recovery.