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Fish Cases

Richard Garriott: Space Travel, Stock Options, and Korean Law

Litigation, Commercial Litigation

Fish Cases

Richard Garriott: Space Travel, Stock Options, and Korean Law

Litigation, Commercial Litigation

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Video game legend, Richard Garriott engaged Fish & Richardson in a breach of contract case against South Korea-based NCSoft Corp. Mr. Garriott was among the first to develop and market role-playing and massively multi-player online (MMO) games for the PC. NCsoft acquired Mr. Garriott's company, Destination Games, in 2001. As part of the acquisition, Mr. Garriott received stock options valid through May 30, 2011. The options were to remain in place in the event of his termination, but would expire within 90 days if he left the company voluntarily.

"The jury was clearly convinced, returning a verdict of $28 million in damages, the exact amount sought. All aspects of the decision were subsequently affirmed on appeal, resulting in a judgment of $32 million. "

In-Depth

Video game legend, Richard Garriott engaged Fish & Richardson in a breach of contract case against South Korea-based NCSoft Corp. Mr. Garriott was among the first to develop and market role-playing and massively multi-player online (MMO) games for the PC. NCsoft acquired Mr. Garriott’s company, Destination Games, in 2001. As part of the acquisition, Mr. Garriott received stock options valid through May 30, 2011. The options were to remain in place in the event of his termination, but would expire within 90 days if he left the company voluntarily.

Mr. Garriott took a pre-approved leave of absence from NCsoft in 2008 to travel to the International Space Station aboard a Russian Soyuz spacecraft to fulfill a life-long dream to follow his father, a NASA astronaut, into space. During the post-flight quarantine, NCsoft informed Mr. Garriott that his time with the company was over. NCsoft, however, later designated Mr. Garriott’s termination as voluntary, which forced him to sell his stock options more than two years early, costing him millions of dollars. His only recourse was to sue the company.

The case was tried in Texas but under Korean Law, a novel experience for both the court and our attorneys. NCsoft contended that, under Korean law, involuntary termination could not be proved without evidence of “intimidation and coercion.” Fish’s attorneys however, showed the court a line of similar cases from South Korea’s highest court that made no mention of either intimidation or coercion. The court accepted our view of Korean law and, based on the judge’s instructions about the correct legal standard, the jury decided Mr. Garriott’s termination has, as he contended, been involuntary.

The jury then had to decide a dollar amount to award Mr. Garriott. This was no easy task, given the poor state of the world’s stock markets at the time of trial. The pricing model usually invoked in such cases would have unfairly understated Mr. Garriott’s losses. A more creative approach was called for, which is why we directed the jury’s attention to what his brother Robert Garriott had done with his stock when he left NCsoft at roughly the same time. Robert had been allowed to retain his options for the full two years allowed under the option agreement. The time difference made Robert’s options worth tens of millions of dollars more than Richard’s.

The jury was clearly convinced, returning a verdict of $28 million in damages, the exact amount sought. All aspects of the decision were subsequently affirmed on appeal, resulting in a judgment of $32 million.