Beryl v. Navient Corporation

Background

Louis Beryl founded Earnest, Inc., an online student-lending company that Navient Corporation acquired for approximately $155 million. Navient hired Beryl and his team to operate a new Navient entity called Earnest LLC, but terminated Beryl after several months.

Beryl sued Navient on several theories, including claims for severance benefits under the Employee Retirement Income Security Act (ERISA), breach of fiduciary duty, breach of his employment contract, and California waiting-time penalties. A jury decided the contract claim and found that Navient did not have cause to terminate Beryl. The court separately determined that Beryl was entitled to benefits under the ERISA plan and to waiting-time penalties.

The employment agreement provided for restricted stock units (RSUs) and performance cash units (PCUs). The jury awarded Beryl $1 million in RSUs instead of the $125,000 amount stated in the original new-hire grant provision, and $1.4 million in PCUs instead of $350,000. Navient filed a post-trial motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), or alternatively for a new trial under Rule 59. Navient challenged only whether substantial evidence supported the RSU and PCU awards.

Court’s analysis

RSUs. The original employment agreement provided for a $125,000 RSU grant. A November 2017 email from Beryl’s supervisor proposed increasing the RSUs by $875,000, subject to approval by Navient’s compensation committee. Beryl testified that he accepted the offer on January 4, 2018; his supervisor testified that he did not accept it.

The court held that substantial evidence supported the jury’s $1 million RSU award. The jury credited Beryl’s testimony, including his testimony that the board-approval condition was part of the November proposal but was changed during a later discussion. The court therefore did not disturb the RSU award.

PCUs. The agreement listed PCUs in annual installments. It provided for 150,000 four-year PCUs in 2018, 150,000 in 2019, 350,000 in 2020, and 350,000 in 2021, as well as 200,000 two-year PCUs in each of 2018 and 2019. Each installment was to be granted after the beginning of its applicable 12-month period, provided Beryl remained employed through the grant date.

The agreement also provided a special rule for termination without cause during the first 12-month period. Under that rule, outstanding PCUs could vest and be settled. Because Beryl was terminated during that period, the court ruled that he was entitled to the 150,000 four-year PCUs and 200,000 two-year PCUs outstanding at termination, worth $350,000. The court held that the contract did not accelerate vesting for PCUs that had not yet been granted.

Disposition

Judge Beeler granted Navient’s Rule 50(b) motion in part. The court ruled that Beryl was entitled to only $350,000 for PCUs, while substantial evidence supported the jury’s $1 million RSU award. The order states that this resolved Navient’s post-trial motion.