Rhee v. Sante Ventures

Background

Rhee worked for Santé Ventures under a 2010 offer letter providing a cash bonus equal to 1% of capital she directly helped raise. The offer letter described payment in quarterly installments over three years. Rhee helped secure an investment commitment from the Pennsylvania Public School Employees Retirement System (PSERS), including investments connected to Santé’s Funds III and IV.

At an earlier trial, a jury found that Santé breached the offer letter by failing to pay Rhee’s cash bonus, but found no breach concerning carried interest. After post-trial proceedings, Rhee rejected a reduced verdict and chose a new damages trial. In June 2024, a jury awarded her $1.4 million. Santé then renewed its request for judgment as a matter of law, which asks the court to overturn a jury finding when no reasonable jury had enough evidence to reach it. Rhee moved to add prejudgment interest.

Fund IV bonus

The court denied Santé’s request to eliminate the Fund IV damages. The jury had been instructed to decide whether PSERS made a binding legal commitment to invest in a Santé fund before Rhee left her employment. The court held that the Fund III agreement, signed during Rhee’s employment, could reasonably be read as binding PSERS to invest $75 million in Fund IV, subject to specified conditions.

The court rejected Santé’s argument that no Fund IV bonus could be earned until PSERS signed the separate Fund IV agreement in April 2021. Under the jury instruction accepted by the parties, the relevant event was when PSERS made a binding legal commitment, not when the investment’s final steps occurred. The court also held that contractual conditions allowing a party to avoid performance in specified circumstances did not necessarily make the commitment nonbinding.

Fund III bonus

The court granted Santé’s motion to the extent it challenged the amount awarded for Fund III. It held that the only reasonable conclusion from the trial evidence was that Santé’s $300,000 payment to Rhee in March 2020 was compensation for securing PSERS’s Fund III investment. Because the full Fund III bonus was $750,000, Rhee could recover no more than the remaining $450,000 for Fund III. Allowing her to recover the full $750,000 in addition to the $300,000 payment would give her more than the contract provided.

Damages and prejudgment interest

The court held that the maximum damages were $450,000 for Fund III plus $750,000 for Fund IV, or $1.2 million. Because the verdict form gave only one combined figure, the court could not determine whether the jury had already accounted for the $300,000 payment. Applying the least intrusive approach to reducing an excessive verdict, the court remitted the award to $1.2 million.

The court also addressed prejudgment interest, which compensates for the time that money was owed before judgment. It held that interest was available beginning on the dates the unpaid bonus installments became due. For Fund III, the $300,000 payment covered the first four quarterly installments and $50,000 of the next installment, leaving interest to begin on the unpaid $12,500 portion of the July 2020 installment and on later installments when due. For Fund IV, the court held that interest applied to each $62,500 quarterly installment beginning July 31, 2019, because the Fund IV bonus vested when the Fund III agreement was signed.

Disposition

The court granted in part and denied in part Santé’s renewed motion for judgment as a matter of law. It also granted in part and denied in part Rhee’s motion for prejudgment interest. Rhee must choose between accepting the reduced $1.2 million verdict, together with prejudgment interest calculated under the opinion, and proceeding with a new trial limited to damages.