Ashcraft & Gerel v. Coady, 244 F.3d 948, 2001 Issue Reasoning The K specified that material breaches triggered the liquidated damages provision. o The liquidated damages amount was not unreasonable given his increased responsibility and value to the firm. Re Rule of PR: inapplicable because the liquidated damages were no linked to his decision to compete. 83 Rule Liquidated damages provisions are valid so long as the amount agreed to by the parties prior to the breach is reasonable. Rest 2nd K: Liquidated Damages o Damages for beach may be liquidated o Only at amount that is reasonable In light of the anticipated or actual loss caused by breach o Unreasonably large liquidated damages are un-enforceable on PP as a penalty. Facts Coady (managing attorney of Ashcraft & Gerel’s Boston office and the only expert in the field of practice) was fired for deliberate acts of misconduct including attempts to steal clients and sabotage the firm’s DB. The firm sued him for breach of K and asked that he pay the K’s liquidated damages (of $400K) as this was a substantial breach. o The K provided that the liquidated damages go up every year starting at $50K in 1994 and going up to $400K in 1998. In his defense, he produced evidence showing that the firm was planning to fire him and that it took various discretionary decisions which Foreseeability worked to his disadvantage including mis-calculations that resulted in minimizing his bonus. Held Proc П argues Δ argues Affirm that firm was not barred from suing for beach of K. Affirm refusal to strike the firm’s claim for liquidated damages. Reverse judgment and remand to allow Coady to present evidence of the firm’s manipulation of his bonus. DC excluded Coady’s evidence(of bonus manipulation) and found that he breached his employment K; He, therefore, was required to pay the liquidated damages. Appeals: manipulation of his bonus was a breach of K by the firm and is admissible evidence. o But that did not justify him in staying on the job and working against the interests of his ER (the firm). He is the only L in that offices with substantial experience in the firm’s Boston practice area. Termination is isruptive and creates both considerable losses and expenses. Estimated business opportunities lost = $1Mil-$1.5Mil Courts should look suspiciously at the liquidated damages provision. Look at Rule of Professional Conduct: L has the right to practice after termination. Northern Illinois Gas Co. v. Energy Cooperative, Inc., 461 N.E.2d 1049, 1984 Issue Reasoning Held Proc П argues 88 Rule Facts o
"Ashcraft _ Gerel v. Coady"