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Thursday, August 7, 2008

Court Allows Associate's Claim to Proceed for Nominal Damages Only Because Damages (for Not Making Partner) are Too Speculative

Courts3cIn 1999, plaintiff Patrick Hoeffner ("Hoeffner") began working in Orrick's New York office as an associate in the IP group. In 2002, two of Orrick's New York IP partners left for Chadbourne & Park. Hoeffner was solicited by the departing partners to leave for Chadbourne, but based on alleged promises of partnership made by certain Orrick partners ("Partners"), Hoeffner stayed at Orrick. In early 2004, Hoeffner was not "put up" for partner and alleges that he did not, as promised, receive the full support of the Partners. Hoeffner sued for, among other things, breach of contract.

A New York trial court (Fried., J) recently denied defendants' motion for summary judgment and allowed the breach of contract cause of action to go forward for nominal damages only. The court reasoned that Hoeffner's alleged damages based on not making partner are "speculative and contingent rather than proximate and certain." Here's a taste:

The claim seeks to recover damages which Hoeffner allegedly suffered from: the loss of the salary, fringe benefits and other income that he would have received if Orrick made him a partner in January 2004; the "cost of seeking out partnership opportunities at a new firm"; the loss of "future earnings because of the delay in becoming a partner"; and/or the loss of the future income Hoeffner would have earned if he had become a partner at a firm with lower partnership compensation levels than Orrick. * * *

However, as the defendants correctly assert, Hoeffner's fourth cause of action fails to allege any damages that are recoverable on a breach of contract claim. "[B]reach of contract damages are intended to place a party in the same position as he or she would have been in if the contract had not been breached." * ** "'The damages for which a party may recover for a breach of contract are such as ordinarily and naturally would flow from the non-performance. They must be proximate and certain, or capable of certain ascertainment, and not remote, speculative or contingent.'"* * *

The damages which Hoeffner seeks in his breach of contract claim are speculative and contingent rather than proximate and certain. All of the purported damages are predicated upon losses that Hoeffner allegedly suffered because Orrick did not make him a partner in January 2004. However, even assuming that the Partners had performed their purported obligations under the Agreement -- i.e., that the Partners had given their full support and encouragement in helping Hoeffner to become a partner and that Anthony had put Hoeffner up to Orrick's executive committee for partnership in the end of 2003 and/or beginning of 2004 -- it is not reasonably certain that Hoeffner would, as a consequence, have been made a partner in January 2004. Rather, his becoming a partner would have been contingent upon the occurrence of an additional event over which the Partners did not exercise control, namely, the executive committee's approval and recommendation of Hoeffner to Orrick's full partnership for election to partnership in January 2004.

Hoeffner v. Orrick, Herrington & Sutcliffe, No. 602694/2005 (Aug. 1, 2008).

[Eds note: Update: Explanation Corrected.]

[Meredith R. Miller]

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There is a similar case pending in Ontario, albeit also framed as a gender discrimination claim:

"Diane LaCalamita has sued McCarthy Tetrault for $12-million and is seeking, among other things, a declaration from the Ontario Superior Court that her former firm discriminated against her on the basis of gender when it didn't offer her an equity partnership, which is an ownership stake in the firm.
...

Ms. LaCalamita, an intellectual property lawyer and litigator who has been practising since 1992, claims McCarthy lawyers wooed her from Aird & Berlis in 2003 to help build the firm's IP litigation group. However, the "representations and promises to the plaintiff were negligently made, were not honoured and in the result were not true."

She alleges in her statement of claim that an offer to become an equity partner never materialized as promised and her 'practice was artificially restricted and isolated and commitments made regarding compensation and admission to equity partnership were disregarded.'

She alleges that her complaints about the breach of promises made to her were 'ignored' and that this all played out in a law firm environment allegedly 'plagued by systemic gender-based discrimination and a culture of discrimination.'

The claim alleges that 'there is anomalous representation of women in the ranks of the partners as compared to the number of (i) partners and (ii) women lawyers in those groups.'

To support that allegation, she refers to firm statistics on who made partner and a Catalyst Inc. report commissioned by the firm."

Source: "Lawsuit alleges sexist practices"
Jim Middlemiss, Financial Post Published: Wednesday, June 25, 2008

http://www.financialpost.com/related/links/story.html?id=611054

Posted by: Antonin I. Pribetic | Aug 7, 2008 3:37:40 PM

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