Wang v. Ehang Holdings Limited

Background

Gary Wang sued EHang Holdings Limited, Guangzhou EHang Intelligent Technology Co., Ltd., Huazhi Hu, Derrick Yifang Xiong, Shang-Wen Hsiao, and Richard Jian Liu over alleged promises of Restricted Share Units as part of his employment compensation. His operative complaint asserted breach of employment contract, false promise, and failure to pay wages. A jury found EHang Holdings, EHang Intelligent, and Hu liable and awarded Wang $3,500,000 in compensatory damages and $15,000,000 in punitive damages. The jury found Xiong, Hsiao, and Liu not liable.

The defendants EHang Holdings, EHang Intelligent, and Hu moved for a new trial under Federal Rule of Civil Procedure 59. That rule allows a court to order another trial when, among other reasons, a jury verdict is against the clear weight of the evidence or the trial was unfair.

False-Promise Liability

The court granted a new trial on the false-promise claim. It concluded that the record contained no evidence that Hu made a promise to Wang in 2015 or 2016 concerning the Restricted Share Units. Wang had testified that he negotiated compensation with Xiong and Hsiao, and that Hu did not discuss the details of his compensation with him in 2015. The court also found no evidence that Hu made the alleged 2016 promise.

The court rejected Wang’s reliance on its earlier equitable-estoppel findings. Those findings addressed conduct that induced Wang to delay filing suit, not whether Hu personally made a false promise. The court also rejected Wang’s argument that Hu’s approval of an offer letter signed by Hsiao transformed the letter into a promise by Hu. Because the companies’ liability for false promise was based on vicarious liability for Hu’s alleged promise, the court granted a new trial for EHang Holdings and EHang Intelligent as well.

The new trial is limited to Wang’s false-promise claims against EHang Holdings, EHang Intelligent, and Hu. The court stated that Xiong, Hsiao, and Liu would not be included because the jury found them not liable and Wang did not challenge that verdict.

Compensatory Damages

The court denied a new trial on the $3,500,000 compensatory-damages award. Wang testified about how he would have sold or held the stock units after the companies’ initial public offering and explained his valuation method. The court found that testimony credible and sufficient to support the award, and concluded that the defendants had not shown that the jury’s damages calculation was unsupported.

Punitive Damages and Order

The court granted a new trial on the $15,000,000 punitive-damages award because the false-promise claim was the only claim that could support punitive damages, and the court had ordered a new trial on that claim. The court did not separately decide whether the punitive-damages amount was excessive.

Judge Beth Labson Freeman granted the motion for a new trial in part and denied it in part: the motion was granted as to the false-promise claim and the corresponding punitive-damages award, and denied as to compensatory damages. The court also set a case-management conference for December 1, 2022, to set a trial schedule.