Summary
The court denies Susan Miele's post-trial motions for judgment notwithstanding the verdict and a new trial following a jury verdict in favor of Foundation Medicine, Inc. The jury found that Miele breached non-solicitation provisions in a transition agreement, entitling Foundation Medicine to withhold approximately $228,779 in severance benefits and recover approximately $952,150 in previously paid benefits. The court rejects Miele's arguments concerning forfeiture of earned compensation, tax withholding, the duration and scope of the restrictive covenants, and the jury instructions.
Topics
Practice areas
Questions Presented
- Whether enforcement of the Transition Agreement's clawback provision constituted an unlawful forfeiture of earned compensation.
- Whether FMI's recovery was limited to the net after-tax amount of severance benefits rather than the full amount paid to or for Miele's benefit.
- Whether the one-year restricted period began when Miele received notice of termination in February 2020 or when she actually separated from FMI on December 15, 2020.
- Whether the jury instructions and related evidentiary ruling improperly allowed liability based on an attempted hire or solicitation that did not result in an actual hire.
- Whether evidence that Miele solicited Jackie Pfeifer after FMI had already stopped paying severance was inadmissible after-acquired evidence.
- Whether the jury verdicts were legally unsupported or sufficiently contrary to the weight of the evidence to warrant judgment notwithstanding the verdict or a new trial.
Holdings
- The clawback was enforceable and did not constitute an unlawful forfeiture because the benefits represented accelerated vesting of otherwise unvested equity and were expressly conditioned on compliance with the restrictive covenants.
- FMI was entitled to recover the full amount of Transition Benefits paid to or for Miele's benefit, not merely the amount remaining after tax withholding.
- The one-year Restricted Period began when Miele actually separated from FMI on December 15, 2020, and ran through December 15, 2021, rather than beginning when she received notice of termination in February 2020.
- The non-solicitation provision covered attempts to persuade employees to leave FMI and participation in or facilitation of an attempted hire; an actual completed hire was not required for breach.
- The evidence was admissible because no after-acquired-evidence rule barred FMI from introducing evidence of material contractual breaches discovered after it stopped paying severance.
Key quotations
“The trial judge must determine whether, in light of all the evidence, viewed in the light most favorable to the prevailing party, and without weighing the relative credibility of witnesses, the jury could reasonably return a verdict in favor of that party.” (2)
“Only where judicial intrusion is required to avert a manifest miscarriage of justice should allowance of one of these motions be granted.” (4)
“The resulting loss of $952,150 in payments for such unvested equity is not an unlawful forfeiture of earned compensation.” (7)
“The unmistakable purpose of this remedial provision is to restore FMI to the position it occupied ante breach.” (9)
“The unmistakable purpose of the contract's non-solicit covenant was to prohibit Ms. Miele from doing anything to bring about or attempt to bring about an employee's decision to leave FMI.” (15)
“There is no "after-acquired evidence" doctrine that applies in common law contract cases like this one, because the legal question presented is whether there was or was not a breach entitling FMI to terminate Ms. Miele's severance compensation.” (20)
Factual background
Miele, a former chief human resources officer of Foundation Medicine, entered into a Transition Agreement incorporating a Restrictive Covenants Agreement. The Transition Agreement accelerated vesting of otherwise unvested equity-based compensation and provided severance benefits subject to Miele's compliance with restrictive covenants, including a one-year post-separation non-solicitation period. After her December 15, 2020 separation, Miele engaged in efforts involving former FMI employees Richard Horlbeck, Max Walker, and Jackie Pfeifer in connection with employment at Gingko Bioworks. The jury found that these activities materially breached the non-solicitation provisions, entitling FMI to withhold unpaid benefits and recover previously paid benefits.
Procedural history
The jury unanimously found that Miele materially breached non-solicitation provisions incorporated into her Transition Agreement. The parties had stipulated to the amounts of damages, including $228,778.88 in unpaid severance benefits and $952,150 in previously paid severance benefits subject to repayment. Miele challenged the clawback, the gross rather than net amount of repayment, the duration and interpretation of the restrictive covenants, the jury instructions, and admission of evidence concerning her solicitation of Jackie Pfeifer. The Superior Court denied both post-trial motions.