Delaware judge cuts founders’ lawsuit over Ford-Journey merger payments

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A Ford logo is pictured in a store of the automaker. REUTERS / Edgard Garrido

  • Judge dismisses allegations of unjust enrichment and breach of Delaware wages law
  • Claims for breach of contract remain

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(Reuters) – Delaware judge scaled back lawsuit accusing Ford Motor Co’s mobility unit of failing to make certain payments to founders of vehicle-tracking technology company Journey Holding Corp after the companies merger .

Decision on a partial motion to reject, Vice-Chancellor Lori Will said on Thursday that Journey founders who claimed they were fired before receiving promised payments could not bring unjust enrichment and claims for violation of wage law of Delaware v Ford Smart Mobility LLC. She also rejected a claim for breach of contract.

Will, however, said the founders could argue that the company violated the fair use pact.

There remain two claims for breach of contract, which the company has not decided to reject.

Lawyers for plaintiffs Quinn Emanuel Urquhart & Sullivan and Ice Miller did not immediately respond to requests for comment on Friday. Ford representatives either.

Representatives for Journey, which operates as TransLoc, declined to comment on pending litigation and individual employment decisions. Ford and Journey lead attorney Katherine Smith of Gibson, Dunn & Crutcher, also declined to comment.

Journey was formed as a holding company for two transportation technology companies called Ride Systems LLC and DoubleMap which were started by Peter SerVaas, Ilya Rekhter, Justin Rees and Kelly Rees, according to the complaint.

Ford agreed to buy Journey in July 2019 for $ 40 million, according to the opinion. Journey was combined with Ford’s TransLoc, which created operating software for transportation companies, according to a press release.

In addition to the deal price, Ford has agreed to allocate up to $ 5 million in bonuses for founders and other successful employees. The deal also called for founders to receive around 30% of the merger price over a two-year period, according to the notice.

Ford fired the plaintiffs in June 2020, just a month before they were entitled to receive certain payments, according to Thursday’s opinion. Founders alleged in October 2020 complaint that they were wrongly fired and that Ford owed them about $ 12 million.

Ford has denied any wrongdoing and asked for four of the claims to be dismissed.

Ford versus in court documents that the founders were fired for misconduct, such as allegedly placing a nanny on one of Journey’s wages, and said they were no longer entitled to the money.

The judge said the founders could pursue their fair use violation claim because they sufficiently alleged that Ford had fired them as a pretext to cut costs.

Will dismissed the other complaints accusing Ford of violating the employment and merger agreements because they claimed that founders should always be employed to receive bonuses and that contracts did not distinguish between “no-claims” layoffs. pattern “or” for pattern “.

The case is Peter SerVaas et al v Ford Smart Mobility LLC et al, in the Delaware Court of Chancellery, No. 2020-0909.

For the Complainants: 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


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