GARRIOTT v. NCSOFT CORP. No. 10-50939.
661 F.3d 243 (2011)
Richard GARRIOTT, Plaintiff-Appellee, v. NCSOFT CORPORATION, Defendant-Appellant.
United States Court of Appeals, Fifth Circuit.
October 21, 2011.
Stephen Edward Fox, David Brandon Conrad, Kelly Dean Hine (argued), Fish & Richardson, P.C., Dallas, TX, William Thomas Jacks, Fish & Richardson, P.C., Austin, TX, for Plaintiff-Appellant.
Douglas Harry Hallward-Driemeier (argued), Ropes & Gray, L.L.P., Washington, DC, Robert B. Gordon, Ryan Patrick Mc-Manus, Ropes & Gray, L.L.P., Boston, MA, for Defendant-Appellant.
Before REAVLEY, ELROD and GRAVES, Circuit Judges.
NCsoft Corporation appeals a jury verdict awarding damages to its former employee, Richard Garriott, for breach of a stock options contract. NCsoft argues that the jury instruction misstated the governing Korean law, that the jury's verdict relied on legally insupportable evidence, and that the district court applied the wrong law when determining attorney's fees. Because NCsoft fails to demonstrate reversible error, we AFFIRM.
In 2001, Richard Garriott sold a computer game development company to NCsoft Corporation.
Seven years later, NCsoft decided to terminate Garriott's employment. The company also determined to shut down a computer game called Tabula Rasa—a poor-performing game that Garriott had developed. By October 2008, NCsoft's founder and global CEO, T.J. Kim, directed the senior officer in North America, Chris Chung, to remove Garriott from the company. Consequently, Chung told Garriott that after talking with Kim, they decided that Garriott's "time with NCsoft is over." Garriott objected, said he did not want to leave, and asked if there was any way to appeal the decision. Chung replied that NCsoft's executive management was involved in the decision, there was no possibility of appeal, and the decision was final. Later that day, NCsoft sent Garriott a press release announcing his departure to Tabula Rasa fans. Garriott reviewed and signed the announcement, which stated that "I am leaving NCsoft to pursue [other] interests." NCsoft subsequently prepared a resignation letter for Garriott's signature addressed from him to the company, but Garriott did not sign the letter.
In December 2008, NCsoft informed Garriott that the company classified his departure as a voluntary resignation, rather than a forced termination. This distinction impacted the stock options contract, which provided that if Garriott voluntarily resigned he must exercise his options within 90 days. Although Garriott had intended to hold his options until after NCsoft released a game called Aion to the market, the 90-day period required Garriott to exercise his options by a new date imposed by the company, which he did in January 2009. To meet this deadline, Garriott scrambled to raise enough money by obtaining loans from family members and business colleagues, liquidating personal holdings, and borrowing from his IRA.
Garriott sued NCsoft on May 5, 2009, claiming that NCsoft breached the options contract by classifying his discharge as a voluntary resignation, thereby forcing him to exercise his options prematurely.
During trial, Dr. Allen Jacobs presented different models of calculating Garriott's damages. Jacobs testified without objection that Garriott would have received an additional $46.3 million if he had been allowed to retain his options, basing the valuation on various scenarios of when Garriott could have exercised the options.
At the close of trial, NCsoft objected because the district court did not include a proposed jury instruction that, under Korean law, an employee's resignation is deemed voluntary unless obtained through coercion or intimidation.
The jury returned a verdict that NCsoft terminated Garriott's employment and awarded him $28 million in damages.
After the verdict, NCsoft filed a motion for judgment as a matter of law, disputing the jury's verdict on breach of contract but not contesting the damages. The district court found more than sufficient evidence of Garriott's termination, and although NCsoft did not object to damages, the district court noted the "ample evidence" for the jury's award. Specifically, Garriott's brother exercised his identical options in July and August of 2009 without being forced to do so, and the district court found evidence from which the jury could believe that Garriott would have sold his stock at the same time if given the opportunity.
Then, NCsoft filed a motion for new trial or to alter or amend the judgment, and Garriott moved for attorney's fees. The district court addressed NCsoft's challenge, raised for the first time, that insufficient evidence supported the damages award because it was based entirely on speculation. The district court pointed to its earlier finding that there existed sufficient evidence that Garriott would have exercised his options with Robert after Aion's release, and the record established that Garriott would have received an additional $28.2 million had he done so. In addition, the district court looked at the evidence presented by Dr. Jacobs that alternative models would calculate a higher damages award. Accordingly, the district court denied NCsoft's motion.
Finally, the district court used Korean choice-of-law rules to apply Texas law in awarding Garriott $1,416,235.43 in attorney's fees. This appeal followed.
First, NCsoft contends that it is entitled to a new trial because the jury instruction erroneously stated the governing Korean law. Specifically, NCsoft argues that under Korean law a resignation is deemed voluntary unless the court finds that the employer used coercion or intimidation. The district court rejected NCsoft's jury instruction that would have required the jury to find either coercion or
Having reviewed the case law provided by the parties, we agree with the district court that under Korean law coercion or intimidation are sufficient, but not necessary, conditions for an involuntary resignation. Half of the cases in the last decade that dealt with this issue have made no mention of coercion or intimidation. As the district court noted, it would be strange to conclude that NCsoft's alleged prerequisites are mandatory findings under Korean law when they are so often ignored by Korean courts. For example, the most recent Korean Supreme Court precedent held that the employees' resignations were involuntary in a case dealing with employer conduct similar to that of NCsoft, and the Court never mentioned a required showing of intimidation or coercion. Supreme Court, 2005Da38270, Nov. 25, 2005 (S.Kor.). In that case, the employer selected the employees for dismissal, demanded their resignation, and fired those who refused, much like how NCsoft selected Garriott for dismissal, told him that his time was finished, and insisted there was no possibility of appeal. Rather than holding that coercion or intimidation are prerequisites, the Korean Supreme Court issued a legal standard that mirrors the jury instruction given by the district court below.
Thus, NCsoft fails to establish that a finding of coercion or intimidation is a prerequisite for an involuntary resignation, and we hold that the district court did not abuse its discretion by excluding those elements from the jury charge.
Second, NCsoft argues for a new trial on damages because the jury award: (1) impermissibly includes stock appreciation after the breach; and (2) relies entirely on speculation.
We review the denial of a motion for a new trial for a clear showing of abuse of discretion. Duff v. Werner Enter., Inc.,
NCsoft contends that damages for a stock options agreement must exclude
A motion for a new trial or to amend a judgment "cannot be used to raise arguments which could, and should, have been made before the judgment issued." Simon v. United States,
Had NCsoft raised these arguments, Garriott could have addressed its concerns at trial. Instead, NCsoft chose to wait and see what the jury would do. Displeased with the jury's decision, NCsoft now asks for a mulligan. Courts look skeptically at such claims for a do-over, especially in the context of a jury verdict. See Nissho-Iwai Co., Ltd. v. Occidental Crude Sales, Inc.,
NCsoft gives no justification for its failure to object. Instead, it argues that the district court exercised its discretion to address the damages arguments in the motion for a new trial and thereby preserved appellate review. Quest Med., Inc. v. Apprill,
We do not consider matters first raised on appeal except for plain error.
NCsoft also argues for a new trial on damages because the jury had a complete absence of evidence, absent speculation, to determine when Garriott would have exercised his options. Unlike the argument dealing with post-breach appreciation, the district court discussed NCsoft's speculation challenge when denying the motion for a new trial. By so doing, the district court exercised its discretion to address the potentially waived argument and preserved the issue for appeal. See Quest, 90 F.3d at 1087.
Although damages based on when Garriott might have sold his shares may be too speculative if based on "assumptions without basis in the real world," In re Air Crash Disaster at New Orleans,
Given the amount of evidence supporting the verdict—presented to the jury without objection—we hold that the district court did not abuse its discretion in denying NCsoft's motion for a new trial on damages.
Finally, NCsoft objects to the district court's award of attorney's fees under
When deciding the appropriate law governing attorney's fees, the district court determined that the parties contracted for Korean choice-of-law rules, which called for Texas law to govern attorney's fees in this case. Then, the district court applied Texas law to carefully reduce the initial claim of $7.4 million in fees to the final $1.4 million award. NCsoft does not dispute that the award would be proper under Texas law. Instead, NCsoft argues that the district court erred by not applying Korean law for attorney's fees.
We need not decide, however, whether the district court erred in this choice-of-law analysis because the result would be the same under either Korean or Texas law. Although Korean law generally provides caps on attorney's fees, these caps are not mandatory.
NCsoft fails to prove that the district court abused its discretion in excluding a requirement of coercion or intimidation from the jury instructions. Moreover, the district court did not abuse its discretion in denying NCsoft's motion for a new trial on damages. Finally, the award of attorney's fees would be permitted under either Texas or Korean law. For the foregoing reasons, the judgment of the district court is AFFIRMED.
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