As an employee of Skillz Inc., Gautam Shah received awards of stock options.  Under the Skillz plan, Mr. Shah could exercise his vested options within three months of his termination of employment.  However, his options expired on the date of his employment termination if the termination was for cause.  When Skillz terminated Mr. Shah's employment, he expressed a desire to exercise his options but was told "the penalty for being terminated with cause is the company takes back all the options".   After the company's initial public offering, Mr. Shah sued Skillz, for among other things, breach of contract.

After a jury trial found in favor of Mr. Shah, both sides appealed.  Skillz argued that the value of Mr. Shah’s lost stock options should have been measured as of the date of breach—i.e., the date of Shah’s termination.  The Court of Appeal, however, held that under both California and Delaware law, damages for lost stock options in a breach of contract action may be measured from a date other than the date of breach based on equitable considerations, including whether a reasonably available market for the stock exists at the time of breach.  Shah v. Skillz Inc., 

Mr. Shah argued that the stock options were wages under the California Labor Code and thus he was entitled to pursue tort damages, including punitive damages and attorneys' fees.  Neither the trial court nor the Court of Appeal was so persuaded, however.  The Court of Appeal distinguished the California Supreme Court's holding in Schachter v. Citigroup, Inc.,  47 Cal. 4th 610 (2009) on the basis that case involved restricted stock, not stock options.

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