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July 23, 2007 04:56 PM Eastern Daylight Time
United States Court of Appeals for the Third Circuit (New Jersey) Upholds $15 Million Contract Claim in Appeal Against IDT Corporation
NEW YORK--(BUSINESS WIRE)--Sullivan & Worcester LLP (S&W), late Friday, won a reversal in the United States Court of Appeals for the Third Circuit, which ruled that the lower court erroneously determined that a $15 million handwritten agreement between IDT Corporation (NYSE: IDT), of Newark, New Jersey, and telecommunications entrepreneur Alfred West, of Brooklyn, New York, was non-binding.
IDT had argued that Mr. West was not entitled to enforce the handwritten agreement, which was drafted and signed by IDT’s Chairman, Howard Jonas, while recruiting Mr. West in February 2001. Mr. West had formerly served as the CEO and Chairman of Econophone, Inc., later known as Destia, Inc. (Nasdaq, DEST), and as an officer of Viatel Inc.
Barry Pollack, a partner at S&W and a former federal prosecutor in the Newark, New Jersey Office of the United States Attorney, stated: “Given the value of the stock and other compensation set forth in the agreement with IDT, we will likely seek the entry of a judgment well in excess of $15 million.”
The appellate court ruled that the lower court improperly prevented Mr. West from seeking to enforce the two-page handwritten agreement. In a 9-page opinion, the court explained that it was “clear” that the lower court had made a mistake when it ruled that the agreement was not a binding contract, “especially in light of the express language in the agreement to the contrary.” In the agreement, Mr. Jonas wrote: “The parties will complete formal contracts as soon as possible, but this is binding.” The court also rejected a defense that IDT asserted, in which it alleged that Mr. West did not obtain for it all of the intellectual property it expected. The appellate court explained that IDT could not rely on a defense that West was unable to transfer to it certain intellectual property because “[w]hether the happening of that contingency rendered the deal ‘of little value to [IDT]’ is irrelevant, as the agreement itself specifically provides for what would happen if it did occur.”
Pollack added, “At a trial in July 2005, a jury rejected IDT’s claim that Mr. West was owed nothing, but awarded Mr. West only $1.5 million because the trial court instructed the jury to determine merely the value of the 6 months that he worked for IDT. Now a court can provide Mr. West with the full contract value that IDT promised him, which we believe is worth well in excess of $15 million.”
Mr. West was represented on appeal by Barry Pollack and Joshua Solomon of S&W in Boston, Massachusetts, and by Joseph Scholz of McCarter & English, LLP, in Newark, New Jersey.
Mr. West is currently the President and CEO of Xchange Telecom, Inc., of Brooklyn, New York.
IDT is a publicly traded company, listed on the New York Stock Exchange. IDT’s counsel on appeal were Alan Grayson of Grayson & Kubli in Virginia, Donald Robinson of Robinson & Livelli in Newark, New Jersey, and Cari Schiff of McDermott, Will & Emery in New York, New York.
About Sullivan & Worcester LLP
Sullivan & Worcester LLP is a leading corporate law firm providing counsel to domestic and international clients ranging from Fortune 500 companies to emerging businesses. With 200 lawyers in Boston, New York and Washington D.C., the firm offers services in a wide range of areas including litigation, white collar defense, corporate finance; securities; mergers and acquisitions; tax; real estate; private equity and venture capital; bankruptcy; regulatory law and employment and benefits. Sullivan & Worcester is also recognized for its representation of REITs and its deep expertise in energy, environmental and mutual fund law. For more information please visit www.sandw.com.
Contacts
For Sullivan & Worcester LLP:
Barry Pollack, 617-338-2910 or 617-970-7075
bpollack@sandw.com
or
Tammi Kent, 617-338-2803
tkent@sandw.com
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