Holmes v. Lerner
California Court of Appeals
88 Cal. Rptr. 2d 130 (1999)
Patricia Holmes (plaintiff) and Sandra Lerner (defendant) orally agreed to start the Urban Decay cosmetics business, with venture capitalist David Soward's (defendant) fund providing the $500,000 startup capital while Holmes and Lerner contributed no money; Holmes actively participated in board meetings, product development, and warehouse work, and Lerner publicly credited the business as Holmes's idea. As the company grew valuable (with experts later valuing it between $2 million and over $6 million), Holmes was gradually marginalized — excluded from an organizational chart, denied a full copy of incorporation documents, and eventually barred from the company entirely after being offered only a 1% ownership stake; she sued for breach of an oral partnership agreement, and the jury awarded her over $1 million in damages.
Whether a partnership may be found to exist between parties who orally agreed to conduct a business together, even though they never discussed or agreed on profit sharing.