Delaware Business Litigation Report

Superior Court Grants Plaintiff's Motion for Summary Judgment and Finds that Former Employee Was Obligated to Repay Gains Realized from Exercising Stock Options

W.R. Berkley Corp. v. Hall, C.A. No. 03C-12-146WCC, 2005 WL 406348 (Del. Super. Ct. Feb. 16, 2005). The Plaintiff brought an action in the Superior Court to enforce a provision under the Stock Option Plan (the "Plan") and subsequent agreements. Under the provisions of the Plan, if a former employee engaged in "Noncompetitive Action" within six months of termination and exercised stock options within that time frame, the company could recapture the profits. The court found the agreement to be enforceable, and granted the plaintiff's motion for summary judgment. The plaintiff, W.R. Berkley Corporation, argued that it was entitled to recover the profits gained by the defendant, Gary L. Hall, when he exercised stock options within six months of terminating his employment to work for a company that competed with plaintiff. The defendant did not dispute the terms of the Plan. However, he argued that the provisions should not be enforced because: 1) the plaintiff failed to determine that his new employer was a competitor and 2) the payback provision of the agreement was an unenforceable liquidated damages provision. The court rejected both of these arguments, and granted summary judgment for the plaintiff. Interestingly, the court spends the last paragraph of the opinion "questioning whatever happened to the business world of a person being bound by his word and accepting the consequences of his personal decision." Authored by: Jason C. Jowers 302-888-6860 jjowers@morrisjames.com Share