A business court in the New York State Supreme Court handed Reese Marketos client Array U.S., Inc. a complete trial victory, eliminating a former executive’s $90 million claim for 5% equity in the fintech firm. In a Nov. 3 written decision following the week-long trial, Justice Joel M. Cohen found that Array and plaintiff Jason Owen never reached an oral agreement for equity ownership in Array.
Justice Cohen further held that, even if an oral contract had been reached, it would not have met the standard required under Delaware corporate law to enforce an equity transfer. The decisive ruling cements Justice Cohen’s ruling from the bench issued minutes after the parties’ Oct. 17 closing arguments and underscores RM’s commitment to trying large commercial disputes in any venue.
In his lawsuit, plaintiff Jason Owen claimed he reached an agreement with Array CEO and founder Martin Toha during a phone call in September 2020 in which Toha, Array’s sole stockholder, allegedly promised to give Owen 5 percent of the company as part of his compensation as the company’s chief strategy officer.
At trial, the RM team demonstrated that the evidence completely contradicted Owen’s claim that an agreement had been reached – including both parties’ conduct and communications after the agreement was supposedly struck. The record showed conduct that was inconsistent with a binding contract, and nothing in writing reflected or alluded to a binding equity agreement. Array made no cap-table entries and took no corporate action to issue equity. Over the course of a year after the supposed agreement, Owen never claimed any right to ownership of 5 percent of the company.
While making his ruling from the bench, Justice Cohen emphasized the real-world requirements for equity awards: “Experienced people like Mr. Toha and Mr. Owen would understand that multimillion-dollar equity grants generally are not accomplished by a phone call with your boss.”
Array hired Reese Marketos just a few months before trial after its efforts to have the case dismissed on the law were denied. “How does a company prove at trial that an alleged oral agreement worth tens of millions of dollars never happened?” said RM partner Tyler Bexley. “To prove a negative, our firm imagined a world in which the agreement had actually occurred. Then we showed how the conduct of both parties in real life materially differed from what one would expect to see. The court saw it our way.”
“Array trusted us to protect what they built,” added RM partner Jamison Joiner. “That is when we are at our best.”
In addition to Bexley and Joiner, RM partners Pete Marketos and Leslie Chaggaris and associate Whitney Wendel were instrumental in Array’s success.