One of the benefits of hiring a business law attorney who is also a longstanding business litigator is that you get someone who remains updated on recent court developments. That can be crucial when you are drafting your legal documents. It is always of interest to me when in my studies I come across a case that takes place in my backyard.
I have been saving Saw v. Avago Technologies Limited (2020) 51 Cal.App.5th 1102, 1102 [265 Cal.Rptr.3d 588] as a blog article to see if it might be further appealed. It has not, and the time to file has passed. This case is significant to employee and employers as it involves the terms of a stock buyback provision in an employee contract.
By way of brief summary, this case involved an employee in his 60s who was fired. His firing triggered a stock repurchase under the terms of his contact. Had this not been triggered and had been allowed to sell his stock mere months later, he expected to receive millions more in the stock sale as the company value appreciated. The employee argued that his firing was improperly motivated, and therefore, the repurchase of his stock shares was improper. He sought as damages those millions he could have received in a later stock sale date.
The Court Used What Law?
In its review of the applicable law, a San Mateo trial court granted a company’s motion for summary judgment and dismissed the case. The applicable law under the terms of the contract, was not California law, but the law of another jurisdiction. That jurisdiction did not recognize an implied term of good faith and fair dealings in contracts. Therefore, the company’s motivations for terminating him were irrelevant, and the company was within its contractual rights to repurchase his shares when it terminated his employment. On appeal, the First Appellate District affirmed.
The Court’s decision in Saw has real world implications for employers and employees, and not just fascinating nighttime reading for legal pinheads like me. Those “generic” contract terms (like “Choice of Law”) are often overlooked by many, but can unknowingly cost, or save, you millions. If you have questions about how to structure your business contracts, Contact CASHMAN LAW today for a free consultation. Whether Legacy or Business Planning, get the Plan You Deserve.™
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