As previously detailed in the Hedge Fund Law Report, Gentry Beach (Beach), and Robert A. Vollero (Vollero, and collectively, the plaintiffs), two former employees of Touradji Capital Management, LP (Touradji Capital), filed a lawsuit in 2009 in New York State Supreme Court against Touradji Capital and its founder Paul Touradji (collectively, the Defendants). See “New York State Supreme Court Upholds Former Portfolio Managers’ Claims Against Hedge Fund Manager Touradji Capital for Breach of Contract and Intentional Infliction of Emotional Distress; Dismisses Remaining Causes of Action
,” Hedge Fund Law Report, Vol. 2, No. 39 (Oct. 1, 2009). In that lawsuit, Beach and Vollero, each of whom has since started his own hedge fund management firm, asserted that the defendants owed them almost $50 million in bonuses and profit sharing, and that Touradji had threatened Beach’s welfare. On November 4, 2009, Touradji filed a countersuit against Beach and Vollero, claiming that, while employed by Touradji Capital, the two breached their fiduciary duties to the firm, and that after they left, they committed unfair competition, tortiously interfered with Touradji Capital’s business relationships, stole its trade secrets and defamed the firm. See “Touradji Capital Management Countersues Ex-Hedge Fund Portfolio Managers
,” Vol. 2, No. 46 (Nov. 19, 2009). Then, on May 18, 2010, Judge Richard B. Lowe of New York State Supreme Court granted summary judgment with respect to Plaintiffs’ claim of intentional infliction of emotional distress. Four of Plaintiffs’ other claims were dismissed in September 2009 and a remaining claim relates to breach of contract. The instant ruling confirms that the pleading burden for a claim of intentional infliction of emotional distress in the hedge fund context is nearly insurmountable; adequate pleading of such a claim requires physical manifestations of egregious psychological harm of a sort rarely, if ever, encountered in the business world. We summarize the background of the action and the court’s legal analysis.