Richard Garriott Sues NC Soft Over Millions in Stock Options

May 6, 2009 -

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 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 late in 2008. Garriott's dismissal is news in itself, as his departure from the company was presented to the gaming community by NCsoft 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...

 

Despite Mr. Garriott's repeated objections, NCsoft refused to retract its misstatements regarding the nature of Mr. Garriott's departure and the cancellation of his stock options...

In his lawsuit, Garriott alleges breach of contract, fraud and negligent misrepresentation on the part of NCsoft. He clams to have suffered "more than $27,000,000 in actual damages."

DOCUMENT DUMP: Grab a copy of Garriott's complaint here.


Comments

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

It might be ironic to look back at this in a couple more years and then see he did well out of it anyway. I guess what I'm saying is that it seems kind of sketchy to insist that the market share for NCSoft will have improved by 2011 and claim lost earnings.

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

It is not that he could have made a killing in that time, it was the fact that because NCSoft changed his termination reasoning after the fact and thus took his right to sell his stock when he felt it was profitable for him to do so. All he has to show is that the stock improved between the time he was forced to sell and when he filed the court case to prove loss of earnings. Even if that improvement was a penny a share.

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

He doesn't even need to do that. All he needs to point out is that he was scammed/coerced into selling his stock. Period. That's theft, fraud, etc and will earn him sooo much more than his potential stock loss. Even if stocks have gone down from the time he sold until now, they still scammed him in such a way so as to be highly illegal.

-If an apple a day keeps the doctor away....what happens when a doctor eats an apple?-

-Optimum est pati quod emendare non possis-It is best to endure what you cannot change-

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Actually, you're wrong.  He would have to prove damages, and, considering what the market has been doing, he probably would have been screwed had he held on to it.  I can see him winning the case, but I doubt he'd be able to prove very much as far as damages are concerned.

 

 

Freedom of speech means the freedom to say ANYTHING, so long as it is the truth. This does not exclude anything that might hurt someone's feelings.

--- With the first link, the chain is forged.

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

True enough, Zachary.

 

And true enough here, though theft and fraud are usually covered by criminal suits whereas this would be a tort, wouldn't it?

 

And thanks for splitting that hair, Mona. :)

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

 Stock option= right to PURCHASE. Not an option to sell. You don't own the stock until you exercise your stock option. Financially he would've been better off not selling but holding on to the stock. NCSoft didn't tell him to sell. They made him buy now, or lose the right to purchase at the contract price later. 

Re: Richard Garriott Sues NC Soft Over Millions in Stock Options

I have no sympathy for the man whatsoever, he's a multi-millionaire in his own right even if he gets or got nothing from NCSoft. He's also kind of a douche...  Anyone see that video tour he gave of his house? Yah... poor, poor little Ricky G.

Now, having said that if he's right then I think he should clean them out on principle. So, I have no sympathy for him, but I also think that if this report is accurate and what he's saying is true then on principle I  support him fully.

Finally, it occurs to me that we don't know everything. There is a possibility that the reason why they fired him while he was in quarantine is that they didn't WANT him to leave his brand new, barely released game for six weeks right after launch and they told him so and he ignored them and went anyway. It's very likely that HE says he was fired, but the reality is that NCSoft said "If you do this and you're not in the office on <day> at <time> then we'll consider that to be your resignation" and he called them on their bluff... and it wasn't a bluff. In which case he deserved to both lose his job and have it called a resignation.

I don't know... I'm only mildly curious about this story, but that thought occured to me.

Re: Richard Garriott Sues NC Soft Over Millions in Stock Options

"If you're not here on [this] day, we're considering that your resignation."

"Well I'm sorry, but I'll be in SPACE, as I've been planning for the past few MONTHS to do so. You're probably bluffing."

"It doesn't matter, we want you here this day. Period. Oh you're not coming? Space or no space, you need to be here. That's it. It's time for you to resign. There's no other option."

-If an apple a day keeps the doctor away....what happens when a doctor eats an apple?-

-Optimum est pati quod emendare non possis-It is best to endure what you cannot change-

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Most companies (including every company I've ever worked for) have written policies regarding when an employee can take time off and in what increments they can do so.  If NCSoft has such a policy worded in a way that says, "You can not take more than two weeks off at a time.  Any absences longer than such must be approved by [insert corporate drone here].  Failure to communicate or receive approval of such absences may result in immediate termination and loss of benefits," then Garriott doesn't have a leg to stand on.  (And, yes, a phrase very similar to that is in my employment contract at my Human Resources Dept.)

Then why would NCSoft tell people the "departure was mutually agreed upon and amicable?"  Because if they announced "We fired Garriott because his game sucked, lost money, and he's a jerk," then they could get sued for defamation.

 

 

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

 Section III subsection C paragraph 18.  According to the document filed, he was in fact given permission by management to take a leave of absence and go into space.   It would be a plausible defense for NCsoft though if they were able to show that he did NOT have permission for the extended absence.

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Wow, you have determined that he is a douche and not entitled to what was promised him in a contract because of the tour you saw of his house?  So what if he is a multi-millionaire?  He worked for it, made the right choices and got paid what companies felt he was worth.  We should all be so fortunate.

I have met Richard on several occassions as he and I were speakers at a few of the same conferences. Very nice, approachable and down to earth guy.

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

dear game trades....he is nice,approachable and down to earth..?

and you are out to lunch

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

sure...but don't do business with him

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Agreed. His naysayers tend to be WoW fanboys.

 

-- Dan "SWATJester" Rosenthal; Executive Director, http://www.gameslaw.net

-- Dan Rosenthal

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Am I the only one that thinks this statement makes no sense whatsoever?

What does someone's MMO preference have to do with whether they like some guy or not?
---
I'm not under the affluence of incohol as some thinkle peep I am. I'm not half as thunk as you might drink. I fool so feelish I don't know who is me, and the drunker I stand here, the longer I get.


---
I'm not under the affluence of incohol as some thinkle peep I am. I'm not half as thunk as you might drink. I fool so feelish I don't know who is me, and the drunker I stand here, the longer I get.

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

WoW players won't be playing games by this guy...? Makes sense to me. People that bash Xbox 360 generally are Sony fanboys, people that bash WoW can be huge RuneScape fanboys (or the other way around). If you support one type of a genre, there's a chance you'll extremely dislike the other type, hence the fanboy comment.

-If an apple a day keeps the doctor away....what happens when a doctor eats an apple?-

-Optimum est pati quod emendare non possis-It is best to endure what you cannot change-

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Interesting theory.

"Hey, Garriott, we need you to get out there and promote this game that isn't selling nearly as well as we had hoped."

"Nah, I'm going into space."

"If you do that, don't bother coming back."

"You're bluffing because I'm totally awesome and live in a castle."

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Yah, that's pretty much what I'm suggesting.

I have no idea if it's true or not or what the likelihood is, but if this IS the case then I won't be surprised.

Re: Richard Garriott Sues NC Soft Over Millions in Stock Options

If Garriot is not just doing a crazy rant (he has done it in the past...) and actually speaking fact, then I hope he takes their asses down. No one deserves to basically be told: " You are fired. Oh and you have two options about severance, make the choice....NOW! "

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

further more...any one who keeps a dead persons body in his basement is rather strange.

you can see this on his vidio he had made in his house.

I hope it isnt one of my loved ones..

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

 what crazy rant?

don't ever do a patch for him. I did the TMA-13/ISS ladies patch..

he and space adventures ate my lunch..

actually don't do any business with him.

 

 

 

Re: Richard Garriott Sues NC Soft Over Millions in Stock Options

Thing is, I doubt that this was the company in general.   My guess is that it is just one or two guys, and because of this they are costing NC Soft millions.

 

Foaming at the mouth

Foaming at the mouth

Re: Richard Garriott Sues NC Soft Over Millions in Stock Options

But, these one or two guys probably made a couple hundred thousand or a few million from this and secured their place in the business as well.

-If an apple a day keeps the doctor away....what happens when a doctor eats an apple?-

-Optimum est pati quod emendare non possis-It is best to endure what you cannot change-

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

That's some pretty underhand behaviour from NCSoft if that really is the way things played out.

I suppose the really sad fact is that, after reading about the behaviour of some other companies recently, I wouldn't be all the surprised if it was.

Re: Richard Garriott Sues NC Soft Over Millions in Stock ...

Kotaku broke the lawsuit news? how you guys got the details?

How the Ultima RPG master lost millions? with that kind of new I may keep on hip hop music news or just make sure I got a glass of cold water LOL.


Those space flights are crazy in my idea anyway.

 
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