Richard Garriott Says He Was 'Forced Out' Of NCsoft, Sues For $27m
Ultima Online and Tabula Rasa creator Richard Garriott is suing his former employer NCsoft for $27 million, alleging that the online game publisher engaged in "multi-million dollar fraud" by mis-characterizing his departure from the company.
The suit, filed by Garriott's attorneys yesterday in a U.S. District Court in Texas, says that South Korea-based NCsoft breached its stock option agreement with the game designer, which was established when NCsoft acquired Garriott's Destination Games in 2001.
The complaint, obtained by Gamasutra, also claims that Garriott did not depart NCsoft voluntarily as widely reported in November 2008. The suit alleged that around that time, Chris Chung, president of NCsoft's North American operations, told Garriott that NCsoft had decided to "part company" with the famed game creator.
The suit said that Garriott "objected to his dismissal," but claimed "Chung insisted the decision was final -- Mr. Garriott had to go." The filing said at that point, Garriott was prepared to leave NCsoft.
However, Garriott's complaint claims that Chung had meanwhile internally "re-characterized" his termination as "voluntary." The problem is that the alleged re-characterization of the dismissal would have a significant impact on Garriott's stock options.
The suit said if Garriott was terminated by NCsoft, the options would remain in effect until June 2011. However, upon a voluntary resignation, NCsoft would terminate those stock options unless exercised within 90 days of his departure.
Garriott's complaint said NCsoft gave him the "Hobson's choice" of "exercising his options prematurely or risking that NCsoft would refuse to honor the options later."
As a result, according to the filing, Garriott exercised the options within the 90 day window, "[forcing] him to sell into one of the worst equity markets in modern history." The complaint said the move caused Garriott to take on "hundreds of thousands of dollars" in costs and taxes, as well as lose "millions of dollars in value" having lost two-and-a-half years of his options period.
Garriott is suing for breach of contract, fraud, and/or negligent misrepresentation. He seeks to recover damages, interest and legal fees. The complaint claimed Garriott has "suffered more than $27 million in actual damage" from NCsoft's alleged actions.
An NCsoft rep told Gamasutra over the phone that due to the pending litigation, the company cannot comment on the suit in detail. "NCsoft will respond to the complaint as required by law," she stated.
One of Garriott's lawyers, Steve Fox with Dallas' Fish & Richardson told us, "We are confident that this dispute between Mr. Garriott and NCsoft will be resolved in due course."
Fired Upon Return From Space, Suit Claims
The announcement of Garriott's departure came around the same time NCsoft announced that it would soon be shutting down the game designer's most recent MMORPG project, Tabula Rasa. Garriott had also been taking a working leave of absence for space exploration around that time.
The suit alleges that in late October 2008, NCsoft terminated his employment while he was still in quarantine in Russia from his recent space flight to the International Space Station, via a phone call from NCsoft North America head Chung.
Chung allegedly said Garriott's time with NCsoft was "over." The suit said Garriott "protested" the alleged decision by Chung.
NCsoft had subsequently issued what was portrayed to the public as an "open letter" written by Garriott to his fans on the Internet, a letter that claimed Garriott was leaving to pursue "new interests" following his space flight, the suit said. The filing stated that Garriott approved the letter, but in hindsight, the plaintiff suspects that NCsoft was setting up a means to show that Garriott's departure was voluntary.
In 2008, Garriott had taken a working leave of absence to travel to the International Space Station through Russia's space program. He said he went on leave as Tabula Rasa was up and running and he was between major projects. NCsoft had approved the leave, the suit said.