Delaware judge trims founders’ suit over Ford-Journey merger payments
Print/DownloadA Ford logo is pictured at a store of the automaker. REUTERS/Edgard Garrido
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- Judge dismisses unjust enrichment and Delaware wage law violation claims
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(Reuters) – A Delaware judge pared back a lawsuit accusing Ford Motor Co’s mobility unit of failing to make certain payments to the founders of vehicle tracking technology company Journey Holding Corp after the companies’ merger.
Ruling on a partial motion to dismiss, Vice Chancellor Lori Will on Thursday said Journey founders who claimed they were fired before receiving the promised payments could not bring unjust enrichment and Delaware wage law violation claims against Ford Smart Mobility LLC. She also dismissed a breach of contract claim.
Will, however, said that the founders could pursue a claim that the company violated the covenant of fair dealing.
Two breach of contract claims, which the company did not move to dismiss, remain.
The plaintiffs’ attorneys from Quinn Emanuel Urquhart & Sullivan and Ice Miller did not immediately respond to requests for comment on Friday. Neither did representatives for Ford.
Representatives for Journey, which does business as TransLoc, declined to comment on pending litigation and individual employment decisions. Ford and Journey’s lead attorney, Katherine Smith of Gibson, Dunn & Crutcher, also declined to comment.
Journey was formed as a holding company for two transportation technology enterprises called Ride Systems LLC and DoubleMap that were launched by Peter SerVaas, Ilya Rekhter, Justin Rees and Kelly Rees, according to the complaint.
Ford agreed to purchase Journey in July 2019 for $40 million, the opinion said. Journey was combined with Ford’s TransLoc, which made operations software for transportation companies, according to a press release.
In addition to the deal price, Ford agreed to allocate up to $5 million to bonuses for founders and other retained employees. The agreement also called for the founders to receive roughly 30% of the merger price over the course of two years, the opinion said.
Ford fired the plaintiffs in June 2020, just one month before they were set to earn the right to receive certain payments, according to Thursday’s opinion. The founders alleged in an October 2020 complaint that they were wrongfully terminated, and that Ford owed them roughly $12 million.
Ford denied wrongdoing and moved to have four of the claims dismissed.
Ford countered in court papers that the founders were fired for misconduct, such as allegedly placing a nanny on one of the Journey company’s payroll, and said they were no longer entitled to the money.
The judge said the founders could pursue their breach of fair dealing claim because they had adequately alleged Ford fired them as a pretext to cut costs.
Will dismissed the other claims accusing Ford of breaching employment and merger agreements because they stated that the founders still had to be employed to receive the bonuses and the contracts didn’t distinguish between terminations “without cause” or “for cause.”
The case is Peter SerVaas et al v. Ford Smart Mobility LLC et al, in the Delaware Court of Chancery, No. 2020-0909.
For the plaintiffs: Renita Sharma of Quinn Emanuel Urquhart & Sullivan and George Gasper of Ice Miller
For Ford Smart Mobility and Journey: Katherine Smith and Jason Mendro of Gibson, Dunn & Crutcher
