Shah v. Skillz Inc., 101 Cal. App. 5th285 (2024)

Gautam Shah sued his former employer Skillz, Inc. for breach of contract, alleging that Skillz did not have cause to terminate his employment and wrongfully prevented him from exercising the stock options he had earned as a Skillz employee. The company allegedly terminated Shah “for cause” because he had forwarded a confidential business report to his personal email; Shah, on the other hand, alleged he was terminated in retaliation for asserting his right to vested benefits. The jury found Skillz liable and awarded Shah a total of approximately $11.6 million for the loss of his stock options. The trial court conditioned its denial of Skillz’s new trial motion on Shah’s accepting a remittitur in the amount of $4.4 million; Shah accepted the remittitur before both sides appealed. The Court of Appeal reversed the judgment with directions that the trial court award damages to Shah in the amount of $6.7 million, which was the value of the lost stock options as calculated by Skillz’s expert witness using the average price of Skillz stock after the IPO and the six-month lock-up period had ended (three and a half years after Shah’s termination in January 2018). The Court further held that stock options are not “wages” under the Labor Code and, therefore, Shah was not entitled to recover any tort damages, including punitive damages or attorney’s fees.