Monte Cahn Files Multimillion-Dollar Lawsuit Against

LOS ANGELES—In what one observer says may turn out to be the domain industry’s version of Clash of the Titans, Moniker founder Monte Cahn filed a multi-million dollar lawsuit in Los Angeles May 3 against, which purchased Moniker for $35 million in early 2008, as well as Oversee’s co-founder, Lawrence Ng, and its president and chief executive, Jeff Kupietzkty.

The 20-page complaint alleges a litany of abusive behavior on the part of his former employer—breach of contract, intentional representation, unfair competition, among others—for failing to pay Cahn upwards of $13 million in promised incentives for agreeing to continue to run Moniker following the sale. According to the complaint, the sale was contingent upon Cahn agreeing to stay onboard as president of

“The negotiated price of Moniker was $35,000,000. However, Oversee stated that it would not purchase Moniker unless Cahn, as one of the leaders in the industry of domain name sales and valuations, agreed to join for at least three years after the sale,” the complaint read. “As an inducement for Cahn to join, Oversee proposed a ‘Management Incentive Plan’ (MIY) whereby Cahn would be able to earn up to $13,000,000 through a goal oriented bonus structure. Kupietzky and Ng were primarily responsible for the negotiations on behalf of Oversee and in making the false representations and assurances to Cahn that he would be able to earn up to $13,000,000 in bonuses.

“The bonus structure set forth under the proposed MIP was based on Cahn's attainment of certain performance goals in four categories: the Registrar Business Segment, the Domain Sales Business Segment, the Trafficclub Business Segment, and Oversee EBITDA (earnings before interest, taxes, depreciation and amortization),” the complaint continued. “Cahn's performance was to be determined, in good faith, by the board of directors, and was based upon Oversee's Interim Financial Statements or the Determination Period Financial Statements.”

The complaint further alleges that it was sometime around December 2007, the same time he entered into the MIP with, that its upper management “formed the intent, and actively concealed and misrepresented the true fact that they intended to withhold payments under the MIP and deprive Cahn of his benefits under the MIP.”

The MIP was in effect from Oct. 1, 2007 through Dec. 31, 2010. The company announced his departure Dec. 3, effective the last day of his contract.

“Oversee appreciates all of Monte’s contributions to the company and to the industry,” said Oversee CEO and President Jeff Kupietzky, in a press release issued at the time. “We respect his desire to part ways and look forward to working with him in new capacities.”

“I want to express my sincere gratitude to all those that have worked with me at Moniker, SnapNames and Oversee and helped build an industry-leading brand and company. I know that their successes as individuals and as a company will continue for years to come,” Cahn is quoted as saying in the same announcement. “I also want to express my thanks to our loyal customers and business partners who believed in and contributed to the domain name industry. It has been a real pleasure serving the industry for the past 15 years.”

Cahn is now contending that “Oversee improperly interfered with his ability to attain his goals pursuant to the MIP, and thereby interfered with his ability to receive his bonuses under the MIP by, amongst other things, improperly diverting substantial revenues and profits from Moniker to other subsidiaries of Oversee; reducing his staff by more than 33 percent; and improperly and incorrectly reporting Moniker's Selling, General & Administrative Expenses.”

In seeking his bonuses, he further claims that for the years 2009 and 2010 met its yearly EBITDA goals, and as such he is entitled at a minimum to his awards under the MIP. He also states that he performed all required duties and responsibilities and was even asked to take on additional responsibilities overseeing SnapNames and Domain Sponsor. He also says promised but failed to pay him 50 percent of its commission on the sale of earlier this year.

The lawsuit seeks compensatory damages to be determined at trial as well as punitive damages.

In a comment issued following the filing of the lawsuit, VP of Corporate Communications Mason Cole responded sharply, “Predictably, the path Monte Cahn has chosen is needlessly confrontational and provocative. Regrettably, his perceived dispute with Oversee is a result of his own falling short of expectations. This action will do nothing to further his cause and will only result in the needless expense of time and attorneys fees. It is unfortunate that Monte’s actions will impact employees and clients of Moniker, the company he helped found.

“Monte’s unfounded claims are well overstated and singularly without merit,” the statement continued. “We will vigorously defend this action and we look forward to resolving this in court at the earliest possible opportunity.”

The Cahn complaint can be accessed here.