Compuware co-founder sues firm over contract dispute

One of the men who founded a successful Michigan business recently filed a lawsuit accusing the firm of wrongfully canceling his ongoing consulting contract and seizing millions of dollars' worth of stock options in the company. The 70-year-old plaintiff, formerly Compuware's CEO, asserts that executives at Compuware acted illegally when they decided to terminate his $600,000 yearly employment contract.

The contract dispute began when Compuware chose to effectively invalidate its agreement with the man after he harshly chastised the firm's directors for irresponsible and ineffective management. He also criticized an out-of-state hedge fund, currently Compuware's most powerful shareholder, after it offered to completely buy out the company for $2.3 billion.

The lawsuit argues that the comments did not comprise a sufficient reason to break the terms of the plaintiff's contract, asserting that company officials wanted to completely remove the plaintiff from a position of influence but did not have legal grounds for such an action. This, according to the lawsuit, is what prompted the firm to blame the firing on the plaintiff's comments.

The lawsuit asserts that the company acted wrongfully in seizing the plaintiff's stock options, arguing that no legal basis exists for such a measure. As such, the plaintiff has demanded that the firm return the confiscated stock options. He also asked that a court issue a formal decision confirming that Compuware's leadership had no right to cancel the consulting contract.

Before the seizure, analysts with Bloomberg estimated that the businessman and Michigan native owned approximately 4.8 million shares in the firm, worth around $52 million in total. The plaintiff served as the business's CEO for many years before stepping down to become Compuware's executive chairman. He left that position in early 2013 and agreed to assist the company as a consultant before the firm canceled that deal in October of 2013.

Laws and regulations surrounding Michigan employment contracts can be extremely complex, making it difficult for those without extensive legal experience to understand the terms of such an agreement. Legal advice should be sought immediately if there is any inkling that contract terms have been violated.

Source:  Detroit Free Price, "Karmanos sues Compuware for canceling his consulting contract" JC Reindl, Nov. 18, 2013