Multiple Documents Held Sufficient to Satisfy Statute of Frauds, Employer Bound by Salary Continuation Agreement

Multiple Documents Held Sufficient to Satisfy Statute of Frauds, Employer Bound by Salary Continuation Agreement

      In a recent decision from the Kentucky Supreme Court, it affirmed and applied the rule that the statute of frauds may be satisfied by a combination of written instruments. Baumann Paper Co., Inc. v. Kenneth Holland, No. 2016-SC-000511-DG, 2018 WL 2979413 (Ky. June 14, 2018).

      Holland had been an employee of Baumann Paper, commencing employment in in 1971 and ending with early retirement in September 2013, his early retirement being consequent to certain heart problems. In 1987, Baumann had terminated its (apparently defined benefit) pension plan and substituted a variety of options including a salary continuation agreement (“SCA”). An SCA agreement had been signed by Holland and Baumann pursuant to the signature of the corporate secretary, Mitchell Baumann. However, Fred Baumann, the corporate president, did not sign the SCA. The agreement had, however, been approved by Baumann’s Board of Directors, and it had directed that the corporate president sign same. That resolution read:

IT is hereby resolved that Baumann Paper Co., Inc. approves the Non-qualified Salary continuation (sic) Agreement, dated August 12, 1987 which had been executed by Kenneth Holland and the president of Baumann Paper Co., Inc. on behalf of Baumann Paper Co., Inc., and subject to ratification.

      When Holland sought to collect under the SCA, Baumann Paper argued that there existed no enforceable agreement, and that the statute of frauds barred its enforcement. Holland argued that the various writings were sufficient to satisfy the statute of frauds which, generally, requires that any agreement which is not to be performed within the year must be in a signed writing. KRS § 371.010.

      The Supreme Court, affirming the Court of Appeals, held that the combination of the signed SCA and the corporate resolutions adopted in connection therewith were sufficient to satisfy the statute of frauds.

Though the SCA lacked Fred Baumann’s signature, the corporate resolution and the SCA signed by the corporate secretary satisfy the statute of frauds. Separate writings may form the memorandum of contract required by the Statute of Frauds. *3.

      The Court also found that the corporate secretary had implied authority to, on behalf of the corporation, sign the SCA.

      The case was remanded to the trial court to make findings of fact regarding the breach of contract, the extent of Holland’s disability, damages, and a fraud claim.

The Franchisor as the Employer of the Franchisee’s Employees: Settlement of McDonald's Lawsuit Rejected

The Franchisor as the Employer of the Franchisee’s Employees: Settlement of McDonald's Lawsuit Rejected

      In recent years both the National Labor Relations Board (the “NLRB”) and private parties have brought suits asserting that, at least upon particular situations, a franchisor should be treated as the joint-employer of the employees of a franchisee. One of those suits brought by the NLRB related to McDonald’s, as the franchisor, and various of its franchisees, the suit based upon the theory that McDonald’s could be held liable for franchisee violations of labor laws.

      It has been reported that McDonald’s, representatives of the franchisees and of the aggrieved employees had negotiated a settlement of the dispute. Specifically, as reported in an article published on Law360, Worker Advocates Say NLRB Deal Let’s McDonald’s Off Hook (May 7, 2018):

According to settlement documents, McDonald’s franchisees agreed to post notices that collectively address all obligations in the complaints and give full back pay to certain workers along with taxes, interest and, potentially, monetary payments in lieu of reinstatement for individuals who were discharged.

McDonald’s, meanwhile, agreed to support the settlement by taking responsibility for the establishment of a $250,000 settlement fund, an amount provided by the franchisees, and distributing any unused funds back to franchisees at the end of a specified period. The settlement documents also contain language that McDonald’s and its franchisees are not joint employers.

      That proposed settlement has now been rejected by the NLRB's administrative law judge. Apparently one basis for the rejection was that the settlement would not go as far as would a potential finding that McDonald’s, as the franchisor, is a joint-employer with the franchisee.

       Obviously, this debate will continue.

       On a related point, in 2017, the Kentucky General Assembly passed amendments to a number of Kentucky statutes governing the employer/employee relationship and stating expressly that the franchisor is not a joint employer with the franchisee. See Rutledge, The 2017 Amendments to Kentucky’s Business Entity Statutes, 56 Louisville Law Review 55,footnote 155 (Fall 2017).; HERE IS A LINK to that article.

More on the Unfinished Business Doctrine

More on the Unfinished Business Doctrine

            The Unfinished Business Doctrine is a topic upon which I have written previously, including Conflicting Views as to the Unfinished Business Doctrine, 46 Texas Journal of Business Law 1 (2015); HERE IS A LINK to that article.

            Most recently, I have returned to the topic in an article published in the July/Aug. 2018 Journal of Passthrough Entities; that article is titled:

Much Ado About Not That Much: RUPA 401(h) and the Unfinished Business Doctrine

This article particularly focuses upon the effect of Section 401(h) of the Revised Uniform Partnership Act and how its application militates certain of the objections that have been made to the Unfinished Business Doctrine.

HERE IS A LINK to the article. I hope you find it of interest.

Uniform Law Commission Annual Meeting

Uniform Law Commission Annual Meeting

            The 2018 Annual Meeting of the Uniform Laws Commission had its kick-off today here in Louisville.