BAKER v. GREENTECH CAPITAL ADVISORS (2022)

Order, Supreme Court, New York County (Jennifer Schecter, J.), entered on or about October 6, 2021, which, to the extent appealed from, denied plaintiff's motion for partial summary judgment, and granted defendants’ motion to dismiss the claims for breach of contract insofar as they alleged that defendant Greentech Capital Advisors, L.P. did not satisfy the contractual notice requirements of the third amended and restated limited partnership agreement (the partnership agreement) and otherwise breached Section 4.1(b) of the partnership agreement, and that Greentech violated article 6 of the New York Labor Law, unanimously affirmed, without costs.

Plaintiff failed to state a claim for violation of article 6 of the Labor Law, as her equity-based compensation did not constitute “wages” within the meaning of Labor Law § 190(1).  The ultimate value of plaintiff's equity-based compensation was contingent on the company's future market value, and thus, was dependent, at least in part, on the financial success of the business enterprise.  As a result, the compensation that plaintiff seeks to recover is a form of incentive compensation in the nature of a profit-sharing arrangement.  However, Labor Law article 6 contemplates an entirely different type of compensation – that is, compensation directly related to an employee's individual performance, as distinct from compensation based on the performance of the entire business enterprise (see Matter of Lerner v. Credit Suisse Sec. (USA) LLC, 193 A.D.3d 649, 650, 147 N.Y.S.3d 31 [1st Dept. 2021], lv denied 38 N.Y.3d 902, 2022 WL 839281 [2022];  Guiry v. Goldman, Sachs & Co., 31 A.D.3d 70, 72, 814 N.Y.S.2d 617 [1st Dept. 2006]).

As to plaintiff's motion for summary judgment, the call notice stating that Greentech intended to repurchase plaintiff's equity units was not, in fact, defective, and therefore, plaintiff did not continue to own those units after the repurchase.  The applicable Delaware law allows for the conclusion that Greentech's substantial compliance with the notice requirements in the partnership agreement was sufficient under the circumstances here, and thus, that Greentech did, in fact, effectively exercise its option to repurchase the units (see e.g. Kelly v. Blum, 2010 WL 629850, *8, n. 52, 2010 Del Ch LEXIS 31 [Del Ch, Feb. 24, 2010, CV–4516–VCP];  Arneault v. Diamondhead Casino Corp., 2019 WL 2498919, *3, 2019 U.S. Dist. LEXIS 93108 [D Del, June 4, 2019, C.A. No. 16–989–LPS];  IP Network Sols., Inc. v. Nutanix, Inc., 2022 WL 369951, *9, 2022 Del Super LEXIS 62 [Del Super Ct, Feb. 8, 2022, C.A. No. N21C–04–014 PRW CCLD]).  As a result, Supreme Court properly dismissed the claim that Greentech breached the partnership agreement by failing to abide by the notice requirements.  Similarly, because plaintiff no longer owned the equity units after the repurchase, Supreme Court properly dismissed the claims alleging that Greentech had breached section 4.1(b) of the partnership agreement by failing to pay a distribution to plaintiff for those equity units.