$1.96 million to inventor of diesel fuel additive for breach of implied employment contract. Los Angeles County.

Facts and Background

• Facts and Background:

  Plaintiff was an employee with Kern Oil & Refining Company (subsidiary of Casey Co.) beginning in 1983. In the mid-1990s, plaintiff developed an innovative diesel fuel additive which helped defendant to meet strict California diesel fuel emissions standards. Plaintiff was also responsible for marketing and sales strategies for the diesel fuel additive, which generated millions of dollars in profits yearly over a 10 year period.

  In 2007, Casey Co. offered plaintiff a unique profit-sharing agreement on the sales of the diesel fuel additive, as well as splitting off the additive sale business into a new company, Kern Fuels Research, LLC. As part of this new arrangement, plaintiff was also given the position of Vice President of the new company. Under the new profit-sharing agreement, plaintiff continued to be the sole salesperson for the diesel fuel additive, generating over $70 million in profits in 2007 and 2008 for Casey Co.

  In 2009, after honoring its profit-sharing agreement with plaintiff for two years, Casey Co. breached the profit-sharing agreement by reducing plaintiff's profit share by half for 2009 and a discretionary bonus for 2010 and beyond.

  In the early and mid-2000s, plaintiff signed several agreements acknowledging his status as an “at-will” employee while at Kern Oil & Refining Company. Furthermore, in May 2008, Casey Co. had plaintiff sign an “Employee Intellectual Property, Confidential Information, and Non-Disclosure Agreement” that within its terms contained an acknowledgment that his employment at Casey Co. was “at-will”. 

  During the early months of 2009, plaintiff attempted to get Casey Co. to honor its 2007 agreement. However, in June of 2009, Casey Co. made it unequivocally clear that it would not honor the profit-sharing agreement and would continue with the demotion. Shortly thereafter, plaintiff resigned from his employment on June 3, 2009.

• Plaintiff's Contentions:

  That his move to Kern Fuels Research, LLC in 2007, the conduct and promises of Casey Co., and plaintiff’s unique position as the only employee with a profit-sharing agreement in company history, made him no longer an “at-will” employee; that Casey Co. could only demote him for good cause. Plaintiff also contended that the 2008 Intellectual Property Agreement was either signed without consideration, or was not intended to be a modification of his employment status, or was signed under duress.

  Plaintiff contended that defendant had breached an implied contract by changing the terms of his compensation without good cause.

• Defendant's Contentions:

  That: (1) Plaintiff was “at-will” and could be demoted at any time without good cause; or (2) Plaintiff was not demoted by the change in his compensation; or (3) Defendant had good cause to demote Plaintiff.