Lim v. Radish Media, Inc.

Background

Jun Young Lim sued Radish Media, Inc. and Seung-Yoon Lee, alleging that he did not receive an equity interest he was entitled to based on his employment. Lim alleged that he and Lee agreed in 2015 that Lim would receive a salary and an equity interest, with the equity vesting over time. Lim later moved from Byline Media to Radish Media, where he alleged that the same compensation terms continued and that his equity stake increased to 1.5%.

Lim left Radish Media in June 2016. He alleged that Lee later calculated that 167.687 shares had vested, but Radish Media refused to provide the equity. Lim sued in 2021. After the court dismissed his original complaint and the Second Circuit affirmed in part, vacated in part, and remanded, Lim filed an amended complaint asserting breach of contract against Radish Media, unjust enrichment against Lee, and promissory estoppel against Radish Media.

Rule 12(b)(6) Standard

The defendants moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). At this stage, the court accepts the complaint’s factual allegations as true and asks whether they plausibly show an entitlement to relief. The court does not decide the ultimate merits of the dispute.

Breach of Contract

The court did not decide whether a contract was formed. Instead, it assumed for purposes of the motion that a contract existed and held that the claim still failed for two reasons.

First, the court held that the equity portion of the alleged agreement was covered by the statute of frauds. That rule makes certain agreements unenforceable unless supported by a sufficient signed writing. Because part of Lim’s equity was to vest over more than one year, the court held that the agreement could not be performed within one year and therefore required a sufficient writing.

The January 2015 emails did not satisfy that requirement because they did not state all of the agreement’s essential terms. The emails did not identify the type of equity, when it would be acquired, or the specific event that would allow Lim to demand performance. The unsigned draft letter also did not satisfy the rule because Lee told Lim not to sign it, and the allegations did not show that the parties intended to be bound by it.

Second, the court held that Lim had not adequately alleged a breach. Lim alleged that the equity would become available after an appropriate plan was put in place, and the draft letter made the equity grant subject to Radish Media establishing a stock plan and obtaining board approval. Lim did not allege facts showing that those conditions occurred. The breach-of-contract claim was therefore dismissed.

Unjust Enrichment

Lim’s unjust-enrichment claim against Lee sought recovery based on the same alleged oral agreement. The court held that Lim could not avoid the statute of frauds by labeling the claim unjust enrichment. It granted the motion to dismiss that claim.

Promissory Estoppel

Lim alleged that Lee, acting for Radish Media, promised him equity if he left his prior job and joined the company. Promissory estoppel generally requires a clear and definite promise, reasonable and foreseeable reliance, and an injury caused by that reliance.

The court held that Lim had not alleged a clear and definite promise because the equity grant was conditioned on implementing an appropriate plan, and Lim did not allege that the conditions were satisfied. The court said the claim failed under both New York and California law and granted the motion to dismiss it.

Leave to Amend and Disposition

The court denied leave to amend the breach-of-contract and unjust-enrichment claims because Lim had already been informed of similar defects and had not corrected them in his amended complaint. The court granted leave to amend the promissory-estoppel claim because additional facts might cure the pleading problem and the defendants did not argue that another amendment would cause undue delay or prejudice.

The court granted the defendants’ motion to dismiss. It dismissed the breach-of-contract and unjust-enrichment claims with prejudice and dismissed the promissory-estoppel claim without prejudice. Lim may file a second amended complaint concerning the promissory-estoppel claim by July 18, 2024. If he does not, the case will be closed.