In Klig v. Deloitte LLP, et al., C.A. No. 4993–VCL (Del. Ch. Nov. 21, 2011), read opinion here, the Court of Chancery granted summary judgment against the plaintiff, Steven Klig, a former tax partner at Deloitte who brought an action for, among other things, wrongful dissociation from the defendants’ partnerships and breach of the partnership agreements. The summary of a prior Chancery decision in this matter is available here, and other Delaware decisions involving Deloitte and its partners are available here.

Klig was terminated as a partner of Deloitte after he pled guilty to a criminal charge relating to allegedly stalking and harassing an ex-lover. After learning of his arrest, Deloitte management placed Klig on an unpaid leave of absence. Klig originally agreed to the unpaid leave of absence but then later asked to return to work. Deloitte management decided to resume paying Klig his approximately $1.4 million in annual compensation, but otherwise would not allow him to come into the office or to resume his practice. When his compensation was reduced by 90% in 2010 as part of Deloitte’s standard review of partnership performance, Klig filed suit claiming breach of the partnership agreement arguing that the senior management of Deloitte who acted in terms of refusing to allow Klig to return to Deloitte, lacked the authority to act as they did, resulting in Klig’s wrongful disassociation from the Deloitte partnerships (in which he was a partner) and breaches of the Deloitte partnership agreements.

The Court granted summary judgment for Deloitte and against Klig on the claim for breach of the partnership agreements on the grounds that the ratification by the Deloitte board of the acts of the senior management was a proper exercise of informed decision making. The Court noted that “[t]he Deloitte board was entitled to rely on management’s judgment and the involvement of trusted executives—including Deloitte’s senior human services partner—in responding to a volatile personnel issue.” In addition, the Court found that Klig failed to establish a “dissociation . . . in breach of an express provision of the partnership agreement . . . .” 6 Del. C. § 15-602(b)(1)” therefore the Court granted summary judgment for Deloitte and against Klig on his wrongful dissociation claim.

Kevin F. Brady of Connolly Bove Lodge & Hutz LLP prepared this summary.