Wang v. Ehang Holdings Limited

Background

Gary Wang brought employment-related claims against EHang Holdings Limited, Guangzhou EHang Intelligent Technology Co., Ltd., Huazhi Hu, Derrick Yifang Xiong, Shang-Wen Hsiao, and Richard Jian Liu. His third amended complaint asserted breach of contract, fraud or false promise, and failure to pay wages. The order addressed whether defendants were equitably estopped—a fairness doctrine that can prevent a party from relying on a legal defense because its conduct caused another person to delay filing suit—from asserting statute-of-limitations defenses to the false-promise and unpaid-wages claims.

Before trial, defendants said they would assert statute-of-limitations defenses to those claims. Wang said he would argue that defendants were barred from doing so. The jury found that Huazhi Hu, Guangzhou EHang Intelligent Technology Co., Ltd., and EHang Holdings Limited were liable on the false-promise and unpaid-wages claims, that Wang filed both claims late, and that defendants were estopped from asserting the filing deadlines. The court explained that the jury’s estoppel findings were advisory because equitable estoppel is an equitable issue for the judge.

Findings of Fact

Wang’s last day of work was August 31, 2016. Before and after he left, he asked Richard Liu and Shang-Wen Hsiao about restricted share units that had been promised as compensation. Liu told him the units could not yet be distributed because the board had not approved an employee stock option plan and that the plan would not be approved until after a Series C financing. Liu also said the units would be distributed retroactively. Hsiao told Wang that the units were delayed, not denied, and suggested that Wang establish an offshore account to hold the shares once they were distributed.

Wang agreed to wait and continued asking company officers about the plan and his stock units. The Series C financing closed in approximately September 2017, and the employee stock option plan was approved shortly afterward, but the company did not notify Wang. In November 2019, Wang learned from the company’s public filings that the financing and plan had been completed and that certain directors, officers, and employees had received restricted share units. After further communications, Hu told Wang that he would have Liu handle matters as Wang had been promised, but Liu did not contact him. Wang filed suit in January 2020.

The jury found, as to both claims, that defendants had said or done something causing Wang to believe that he did not need to file a lawsuit; that he relied on that conduct; that his reliance was reasonable; and that he filed diligently after discovering the need to proceed.

Conclusions of Law

The court applied California’s four equitable-estoppel elements: the party to be estopped knew the relevant facts; that party intended, or reasonably appeared to intend, that its conduct would be acted upon; the person asserting estoppel did not know the true facts; and that person relied on the conduct to his injury.

The court found all four elements satisfied as to EHang Holdings Limited and Guangzhou EHang Intelligent Technology Co., Ltd. It determined that Liu and Hsiao acted as financial officers for both companies and that their conduct was attributable to both. The court found that they knew Wang claimed the stock units, intentionally delayed his action by representing that distribution would occur after the financing and employee stock option plan, failed to notify him when those events occurred, and caused him reasonably to delay filing suit.

The court also found all four elements satisfied as to Huazhi Hu. Although the court found that Hu did not directly make representations to Wang before December 2019, it found that Hu was the chief executive officer of both companies, was the superior of Liu and Hsiao, monitored business matters, and had final authority. The court found a reasonable inference that Liu and Hsiao acted at Hu’s direction and that Hu’s 2019 statement that Liu would handle Wang’s promised compensation caused Wang to wait longer before filing suit.

Order

The court found that EHang Holdings Limited, Guangzhou EHang Intelligent Technology Co., Ltd., and Huazhi Hu are equitably estopped from asserting statute-of-limitations defenses to Wang’s false-promise and unpaid-wages claims. The order stated that it concluded the action in its entirety as to all parties and claims and that the court would enter final judgment under Federal Rule of Civil Procedure 58 concurrently with the order.