Want to Pay $4 Billion? Ignore A Contract
In our last webinar (replay available here), we discussed the importance of reading an employee’s employment agreement before taking action against him/her. Here are 4.1 billion (that’s “billion” with a “b”) reasons why ignoring a contract can be hazardous to your company’s health . . .
The Los Angeles Superior Court has reportedly issued a decision affirming a $4.1 billion arbitration award against iFreedom Communications, International Holdings, Ltd. and its founder in favor of former Chief Marketing Officer Paul Chester.
The Allegations
Chester alleged that the company made lots of promises when it hired him regarding future commissions. According to his attorney, Scot Bernstein: “When the promised compensation was not forthcoming, Mr. Chester raised the issue with his employers. By then, the employers had obtained the benefits of Mr. Chester’s knowledge and expertise, and they quickly terminated him without cause.”
The Award
According to Bernstein, the arbitrator found that the employer obtained Chester’s services through “false representations and fraud” and awarded him his unpaid salary, commissions, travel expenses, unissued company stock, unreturned intellectual property, statutory penalties, interest, attorneys’ fees and punitive damages equal to the amount of compensatory damages. The total price tag? $4.1 billion.
The Bottom Line
As Bernstein so aptly put it: “Employers should be aware that, if they make promises, they have to keep them.”














