Ex-IPG Volpe Battles With Agency Over Facebook Profits
Former Interpublic Group account executive Ray Volpe and the holding company continue to battle in court over the company’s profit from its investment in Facebook and how much of those
proceeds, if any, belong to Volpe. The case has taken a new twist -- in the form of an unusual letter writing campaign to the judge hearing the case.
Volpe sued this summer in New York State Supreme Court, arguing that he is entitled to the entire profit on IPG’s original investment of $2.5 million. Volpe contends that IPG CEO Michael Roth OK'd a deal via email that gave Volpe and Howard Draft, now executive chairman of Draftfcb, rights to all profits on the block of Facebook shares that IPG bought in 2006.
Volpe essentially argues that the email exchange with Roth
constituted a verbal and enforceable contract.
Facebook granted IPG the right to buy the shares on condition that the company’s clients would also buy $10 million worth of advertising on Facebook over a specified time. Volpe argues that he orchestrated the agreement and brought it to IPG.
The catch to being awarded the profits on the stock investment, according to Volpe,
was that he and Draft were held personally responsible for making sure that clients bought the $10 million in advertising that IPG agreed would be sold. Any balance due would be deducted from their
year-end bonuses, per Volpe.
Last year, the company sold half of its Facebook investment for a pre-tax profit of $132 million. The remaining half, which IPG has retained for now, was valued at $95 million as of Sept. 30 -- reflecting the decline in Facebook shares since it went public earlier this year.
IPG has asked the court to dismiss the case. It argued that there was no agreement to give Volpe and Draft the profits on the entire block of shares and that even if there was a verbal agreement to do so, as Volpe contends, Volpe’s employment contract with IPG at the time specifically stated that it could not be altered by verbal agreement. Thus, the “side agreement” that Volpe argues grants him the Facebook stock profits would not be enforceable.
In October, Volpe responded to IPG’s dismissal request -- asking the court to deny it, and citing a number of past precedents that allegedly support his case.
Then, earlier this month, having run out of motions to file, Volpe’s lawyers continued to press their client’s case with a letter to New York State Supreme Court Justice Eileen Bransten
citing yet another decision allegedly supporting Volpe’s argument. It was handed down shortly before they filed the motion opposing IPG’s dismissal request, but didn't mention it in their
brief. “The papers before this court -- together with this letter -- adequately detail why IPG’s [dismissal] motion must be denied,” Volpe’s lawyer wrote.
IPG responded last week with its own letter to Justice Bransten, arguing that Volpe’s letter was out of line and not allowed under the court’s established procedures. “Plaintiff resorts to more and improper argument ... in an attempt to distract from the dispositive issues. Even if considered, it gets Plaintiff nowhere,” IPG argued.
Both IPG and Volpe have raised the prospect of oral argument. Justice Bransten has not yet ruled on whether she will hear it.