• October 31, 2014
Yo-Yo

Yo-Yos, Motion With No Progress, and The Cost of U.S. Civil Litigation…

What makes civil litigation expensive? Well, one thing that makes fighting expensive is fighting about where you are going to fight.

Best Buy promised employees of MindSHIFT something of value if the MindSHIFT employees stuck around for three years after Best Buy bought MindSHIFT. But, within the three years, Best Buy decided to dump MindSHIFT rather than MindSHIFT employees ditching Best Buy. So MindSHIFT employees brought suit against Best Buy in a putative class action in Minnesota state court based on the alleged broken promise.

Best Buy removed the lawsuit to federal court, claiming the U.S. District Court for the District of Minnesota had jurisdiction under a federal statute governing some class action litigation, the CAFA. To meet the CAFA standard, Best Buy had to make a showing that there was more than $5 million at stake in the litigation and Best Buy argued:

The amount in controversy exceeds $5,000,000 in the aggregate. The putative class that Plaintiffs Restrepo and Mattero purport to represent consists of ‘All persons who (a) were granted the option to purchase shares in Best Buy under Best Buy’s Long-Term Incentive Program Award Agreement; and (b) were employed by MindSHIFT, Inc. as of February 1, 2014; and (c) who owned Restricted Shares that had not vested prior to February 1, 2014.’ At the time of the sale of MindSHIFT to Ricoh, the collective value of unvested stock grants to MindSHIFT employees exceeded $5,000,000.

What is an “option to purchase shares” and what are “unvested stock grants”? Which one was involved here? What is the value of one vs. the value of the other? As of when?

I don’t know. Neither did U.S. District Court Judge Joan N. Ericksen (D. Minn.) after the issue was briefed before her and she had to decide whether to send the case back to Hennepin County District Court.

Sorry, for the confusion,” Best Buy counsel implored the Court (I paraphrase). “Best Buy seeks to make clear that the awards at issue are stock grants, as opposed to stock options” (I quote) (emphasis added). “Unlike a stock option, the value of which depends on the exercise price, the value of a stock grant depends only on the market price of the stock,” Best Buy sought to clarify (again, quoting)…

But Best Buy goes on to concede:

Because those shares were not vested as of the time of the sale of MindSHIFT (and, in fact, would not yet be vested even if MindSHIFT were still part of the Best Buy Company Group), it is not possible to precisely calculate their value.

Yes. That was the point of the remand.

Last week, Judge Ericksen rejected Best Buy’s request for reconsideration of her decision to remand the case to state court.

"Phodopus sungorus - Hamsterkraftwerk" by Mylius - Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

“Phodopus sungorus – Hamsterkraftwerk” by Mylius – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

Think of the delay and the cost of the removal of this lawsuit from state court and the cost and delay of the briefing of the fight to remand to state court.

In the end, the same law will supposedly apply whether the case is decided in state court or federal court.

Bill Griffith's "Zippy the Pinhead"

Bill Griffith’s “Zippy the Pinhead”

"Phodopus sungorus - Hamsterkraftwerk" by Mylius - Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

“Phodopus sungorus – Hamsterkraftwerk” by Mylius – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

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