Shabbat Parashat Bamidbar 5782

P'ninat Mishpat: Aftermath of a Complex Partnership – part III

Case: The sides worked together in marketing other companies’ technological products. The defendant (=def1) is the owner of a company (=def2). The plaintiff (=pl1) worked for def2, but he took on an increasingly central role, with agreements in 2010 and 2014. In the 2010 agreement, pl1 was appointed vice-chairman of def2 (and was envisioned to run it) and received stock options in it. The 2014 agreement mentions products received from Company A which were supposed to be sold and have the profits split between def2 and pl1. Def2 refuses to pay because they claim that the products were sold after the 2016 split between the parties. The two also disagree if after the 2014 agreement, pl1 is still considered a partner with stock options in def2.

Ruling: On the matter of the sale of the product, beit din fundamentally agrees with pl1. The product was received to be sold before the agreement and its profits were earmarked for distribution. Since it is not a matter of being paid for work after the work is over but realizing an anticipated profit, pl1 is deserving. However, def2’s claims that storage fees are to be reduced from the profits is correct because pl1 did not prove that the delay in the sale was done in bad faith.

Regarding the continued profit sharing after the 2014 agreement, it is necessary to analyze pl1’s claims. First it is noteworthy that pl1’s options in def2 were in the case that it was sold or pl1 was fired. Pl1 explained that he was interested in separating from def2 because he was unhappy in the way it was being run, and that a process had started by which some of def2’s clients were being transferred to pl2, a subsidiary owned by pl1, and thereby his profits were to be made in that way. Even if, as pl1 claimed, he would in the meantime continue to receive operating profits from def2, it would make sense only that this would be as a worker and not as a partner in def2, from which he was separating. This is evidenced by the division of profits not being based on the percentage in stock options. Therefore, pl1 would not, after the 2014 agreement, be able to receive half of the value of def2. Even if this understanding were not clear, the burden of proof is on pl1. This is because def1 was the original owner of def2, and he is still listed in the company registry as its sole owner. While pl1 has an explanation as to why he did not want to be listed, he still has the burden of proof that the agreements should be understood in the manner he claims.

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