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Knox v. Microsoft Corp.8/31/1998
Source of Appeal: Appeal from Superior Court of King County Docket No: 95-2-11369-9 Judgement or order under review Date filed: 11/13/96 judge signing: Hon. Carol Schapira
PUBLISHED
A terminated employee sued the employer for breach of contract. The issue on appeal is whether the employee was entitled to seek money damages in his wrongful termination case for "lost" stock options, where the stock option agreements provided that if the employee was terminated, he would lose any unvested stock options and would be required to exercise any vested stock options within a certain time period. We conclude that the employee was entitled to pursue such damages. Accordingly, we reverse.
FACTS
Appellant Charles Knox held a management position at Microsoft Corporation for approximately 9° years. During those years, he was granted stock options on several occasions. With each stock option grant, he signed an agreement which provided that if he was terminated, any unvested options would be canceled, and any vested options had to be exercised within 90 days for the options granted under the 1981 Stock Option Plan, and within three months for the options granted under the 1991 Stock Option Plan.
Knox was terminated in January 1995. Apparently, he exercised his vested options within the specified time periods, and Microsoft canceled his unvested options. Knox subsequently sued Microsoft for wrongful termination, claiming breach of an employment contract. Microsoft maintained the position that Knox had an "at will" employment relationship with the company, while Knox attempted to show that Microsoft's handbooks, policies, and practices revealed a relationship that could be terminated only for cause or only through certain internal procedures. The jury returned a verdict in Knox's favor, awarding him $650,000 in damages.
However, the trial court had previously granted Microsoft two summary Judgement motions which precluded the jury from awarding any damages for the unvested stock options that were canceled, and for the "early exercise" of the vested stock options. Knox appeals these summary Judgement orders, and also appeals the final Judgement insofar as it precluded such damages.
Discussion
A. Damages for Breach of Employment Contract
A trial court's grant of summary Judgement is reviewed de novo. Kruse v. Hemp, 121 Wn.2d 715, 722, 853 P.2d 1373 (1993). Summary Judgement is proper if no genuine issue of material fact exists and the moving party is entitled to Judgement as a matter of law. CR 56(c). The moving party bears the burden of demonstrating the absence of any genuine issue of material fact and entitlement to Judgement as a matter of law. Young v. Key Pharm., 112 Wn.2d 216, 225, 770 P.2d 182 (1989); see CR 56(c), (e).
The only question presented here is the measure of damages Knox was entitled to seek in his wrongful termination case. General contract principles apply, as Knox's wrongful termination action was based on a breach of employment contract theory. See Kloss v. Honeywell, 77 Wn. App. 294, 298, 890 P.2d 480 (1995) ("Employment contracts are governed by the same rules as other contracts."); see generally Henry H. Perritt, Jr., 1 Employee Dismissal Law and Practice sec.sec. 4.1, 4.62 (3d ed. 1992). As such, back pay is a ""make whole' remedy,' intended to return the claimant to the financial position he would have been in had the initial unlawful firing (or, in this case, breach of contract) not occurred." Kloss, 77 Wn. App. at 303; see Mason v. Mortgage Am., Inc., 114 Wn.2d 842, 849, 792 P.2d 142 (1990) ("Contract damages are ordinarily based on the injured part
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