Legal Niches

Richard Garriott Sues NC Soft Over Millions in Stock Options

By gamepolitics

The once-happy business union of Ultima series creator Richard Garriott and Korea-based MMO publisher NCsoft turned vicious at its end, according to documents filed by Garriott with U.S. District Court in Texas.

Kotaku broke the news of the lawsuit yesterday, but only GamePolitics has the details - and they're ugly.

Garriott, best known for the Ultima RPG series, alleges that he lost millions when NCsoft manipulated him into cashing out stock options earlier this year after firing him. Garriott's dismissal is news in itself, as his departure from the company was presented to the gaming community as voluntary.

From the complaint:

In... November 2008, Chris Chung, President of NCSoft's North American operations, informed Mr. Garriott that NCSoft has decided to "part company." Although Mr. Garriott objected to his dismissal, Mr. Chung insisted that the decision was final - Mr. Garriott had to go.

 

As Mr. Garriott prepared to leave NCSoft, however, Mr. Garriott learned that NCsoft had internally re-characterized his termination by Mr. Chung as a "voluntary" resignation... This mischaracterization had profound and detrimental effects on Mr. Garriott's stock options: if NCsoft terminated Mr. Garriott's employment (which it did) then the options - worth tens of millions of dollars - would remain in effect until 2011; but if Mr. Garriott resigned voluntarily (which he did not), then NCsoft might have terminated those options... within ninety days of his departure...

 

NCsoft forced Mr. Garriott into a Hobson's choice of exercising his options... and forced him to sell into one of the worst equity markets in modern history...

Garriott claims that he not only lost millions by prematurely selling his options, but also incurred hundreds of thousands of dollars in tax liability associated with the unwanted deal.

Garriott's well-publicized turn as a space tourist also comes up in the suit:

Following the lauch of the Tabula Rasa game, Mr. Garriott took a leave of absence... to pursue a different kind of launch... Mr. Garriott used the considerable media coverage surrounding his space-launch to publicize and promote Tabula Rasa for NCsoft. For example, Mr. Garriott send a coded message to the Tabula Rasa player base during his space launch...

 

NCsoft terminated Mr. Garriott's employment while he was still in quarantine from his space flight...

In his lawsuit, Garriott alleges breach of contract, fraud and negligent misrepresentation on the part of NCsoft. He seeks $24 million in damages.

Full post as published by GamePolitics.com on May 06, 2009 (boomark / email).