Friday, July 10, 2020

Saw v. Avago Technologies Ltd. (Cal. Ct. App. - July 10, 2020)

It's too bad that the Court of Appeal can't certify this question to the Court of Appeal of the Republic of Singapore (which his the highest court in that country).

Mr. Saw works for Avago in Malaysia, and is entitled to receive shares in the company.  He buys 160,000 shares and is granted another 137,500 options.  The share agreement says it's governed by the law of Singapore but gets enforced (if necessary) in San Mateo.  The share agreement also says that the company gets to buy back Saw's shares if he's fired for any reason.

Saw gets laid off in 2009, and the company buys back his shares (which he bought for $5/share) at $6.76/share.  So he makes some money, but not a lot.  The thing is:  the shares are now worth tons more than the $6.76 that Saw was paid back then; they're now worth over $70 million.  Saw sues in Malaysia saying he was wrongfully fired, and sues in California saying that the company was wrong to steal his shares by firing him.

The Malaysia court says, yep, he was wrongfully fired, so get's going to get some damages.  But the big damages ($70 million-plus) are only at issue in the stock suit in California.  There, he loses.  The trial court -- and, today, the Court of Appeal -- says that it's okay to fire someone as a means to steal their shares.  There's no Singapore case directly on point.  But the contract says the company can take back the shares if the employee stops working "for any reason," there's no implied covenant of good faith and fair dealing under Singapore law, and the law of California and England (the latter of which is typically persuasive in Singapore) says that you can steal shares in such a manner.

Okay.  But the contract is governed by Singapore law.  The fact that California and England allow you to steal shares -- by firing someone illegally and then say "Oops, you no longer work here, so we're entitled to take your stock -- doesn't necessarily mean that Singapore would say the same thing.  Given that Singapore courts held that the guy was wrongfully fired (and entitled to damages), it's at least plausible that a Singapore court might say "You know what, no, I know the contract says that the company can take your shares if you stop working for any reason, but that's not kosher with us; we hold that, under Singapore law, if you're fired wrongfully, that vitiates the company's contractual ability to take your shares."  And if that's indeed Singapore law, then, pursuant to the contract (which is governed by that law), Mr. Saw should prevail in his California suit.

Unfortunately, we'll never know if that's indeed what Singapore law says.  The Court of Appeal (in California) can't ask 'em, because there's no provision of which I'm aware that allows an intermediate appellate tribunal in California to certify a question to a foreign sovereign's judiciary, so in California we have to guess what Singapore would decide.

And guess what?  We decide that Singapore would do . . . exactly what we do here in California on this issue.  Shocking, right?

I'm not sure that Justice Sanchez's prediction is wrong.  Maybe Singapore would really follow the foreign and other precedent that Justice Sanchez cites.

But maybe not.  I at least think -- based on my VERY limited exposure to Singapore law -- that it would be a closer issue than Justice Sanchez seems to think it is.

So it's too bad we can't ask.  'Cause if I could, I would.  Better than a guess.