United States District Court, N.D. California, Oakland Division
Decided: June 20, 2014.
For Mike Maples, Jr., Plaintiff: Tania Beth Rose, LEAD ATTORNEY, Law Offices of Tania Rose, San Francisco, CA; Benjamin Francis Foster, Ahmad, Zavitsanos, Anaipakos, Alavi Mensing, P.C., Houston, TX; Demetrios Anaipakos, Ahmad, Zavitsanos & Anaipakos, P.C., Houston, TX.
For Solarwinds, Inc., Defendant: Gloria C. Franke, LEAD ATTORNEY, Nicholas M. Gross, Tami Kameda Sims, Katten Muchin Rosenman LLP, Los Angeles, CA; Zia Modabber, LEAD ATTORNEY, Katten Muchin Zavis Rosenman, Los Angeles, CA.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
SAUNDRA BROWN ARMSTRONG, United States District Judge.
This is a diversity jurisdiction action brought by Plaintiff Mike Maples (" Plaintiff" or " Maples" ), who alleges that Defendant SolarWinds, Inc. (" Defendant" or " SolarWinds" ) is refusing to allow him to exercise his stock options in violation of their written agreements. The parties are presently before the Court on Defendant's Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment. Dkt. 43. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby GRANTS IN PART and DENIES IN PART the motion for the reasons set forth below. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).
A. Factual Summary
SolarWinds is a Texas-based company that develops enterprise information technology (" IT" ) infrastructure management software for IT professionals. In 2007, SolarWinds became interested in retaining Maples, a venture-capitalist with experience in the technology sector, as an advisor. Foster Decl. Ex. 4 (" Van Zant Decl." )
¶ 4, Dkt. 58-5. Kenny Van Sant (" Van Sant" ), then SolarWinds' Chief Product Strategist, knew Maples from having worked with him at Motive Communications, a company Maples co-founded. Id ¶ 4. Then Chief Executive Officer Michael Bennett (" Bennett" ) and Van Zant discussed the terms and structure of the proposed relationship with Maples, and envisioned that the consulting agreement would " auto-renew" after the initial four-year term, until one party explicitly cancelled it. Id. ¶ 9.
On August 6, 2007, SolarWinds sent an offer letter (" Advisor Agreement" ) to Maples to memorialize their agreement. Compl. Ex. C. The first paragraph of the Advisor Agreement states:
This letter confirms SolarWinds.net, Inc.'s (" SolarWinds" ) invitation to you to serve as an Advisor for SolarWinds. Although currently, we do not expect to have any formal meeting of the Advisory Board, we would like you to provide advice to various members of our executive team from time-to-time as described below over a four year term beginning August 13, 2007. . . .
Id at 1. The services Maples was expected to provide included an introductory half-day meeting; bi-weekly hour-long telephone calls and informal calls with the Vice-Presidents of Marketing, Strategy and Product Marketing; and quarterly meetings with various executives. Id. In exchange for providing these services, SolarWinds agreed to compensate Maples solely in the form of stock options:
In consideration of your willingness to serve on our advisory board and attend its meetings, SolarWinds agrees to compensate you as follows:
[#x7e6] SolarWinds will grant you a non-statutory stock option to purchase 5000 shares of SolarWinds common stock.....The options will be granted pursuant to, and subject to the terms of, SolarWinds' standard stock option plan. Assuming an optionee's continued membership on the advisory board and participation in its meetings from the date of grant until four years from the grant date, these options will vest and will be become fully exercisable on that date. The options will expire on the earlier of three months after the termination of service on the advisory board (or such period as SolarWinds' board of directors may permit) or ten years from the date of the grant.
Id. at 2 (emphasis added). The Advisor Agreement was signed by Bennett on behalf of SolarWinds, and countersigned by Maples. Id.
In connection with his retention, Maples also executed a Stock Option Agreement. Section I of that agreement, entitled " Notice of Stock Option Grant," specifies that 5,000 stock options were granted as of October 25, 2007, and that the " Term/Expiration Date" of those options is October 25, 2017. Id. Ex. D at 1. That section also states that: " This Option shall be exercisable for ninety (90) days after the Participant ceases service or employment with the employer for reasons other than Cause, death or Disability. . . . Notwithstanding the foregoing, in no event may this Option be exercised after the Term/Expiration Date as provided above . . . ." Id. at 2 (emphasis added). The Stock Option Agreement " is governed
by the substantive laws but not the choice of law rule of Oklahoma." Id. at 5.
Though SolarWinds contemplated hiring additional advisors and forming an advisory board, that never transpired. Van Zant Decl. ¶ ¶ 6-8. Nonetheless, Maples provided advisory services in person, by telephone and email to various individuals at SolarWinds, including Van Zant, Bennett and Rita Selvaggi (" Selvaggi" ), SolarWinds' Vice-President of Marketing. Id. ¶ 11; Foster Decl. Ex. 2 ¶ 4, Dkt. 58-3. By 2010, Bennett, Van Zant and Selvaggi had left SolarWinds. Foster Decl. Ex. 4 ¶ 2; Sims Decl. Ex. A at 19:4-5, Dkt. 44-1; id. Ex. E at 9:8-18. The last time Maples provided consultation to anyone at SolarWinds was some time in 2010. Sims Decl. Ex. B at 150:3-11. However, Maples testified in his deposition that neither side has given notice to the other that his role as an advisor had been terminated, and to this day he remains willing and available to provide advice to SolarWinds. Foster Decl. Ex. 3 at 153:6-154:12, Dkt. 58-4.
Towards the end of 2011, Maples was going through a divorce. Foster Decl. Ex. 3 at 183:21-184:18. While having the means to support himself independently, Maples was concerned that his wife did not. Id. As a result, Maples believed that, given the high stock valuation , it was an opportune time to exercise his options. Id. Maples consulted his wife, and she agreed with his plan. Id. To that end, on December 2, 2011, Maples contacted SolarWinds through its Investor Relations email address, stating:
Hi! I am an advisor to SolarWinds and was awarded some options by Mike Bennett in 2007.
I was hoping to exercise and sell them but I am not sure who the best contact at SolarWinds is to close the loop. Could you please help me to ...