A federal court in New York has set aside several allegations lodged against digital nonbank lender Better.com and some of its top executives.
The dismissed claims, made by Sarah Pierce, a former Better.com executive, included potential labor and securities law breaches. Judge Analisa Torres of the Southern District of New York did, however, give the green light for the case to move forward with other charges like retaliation and intimidation, as indicated in recent court documents.
Pierce, a former executive vice president for sales and operations, alleged that CEO Vishal Garg and Better.com had violated securities laws and misled investors and then retaliated by “scapegoating her for the company’s deteriorating financial state” before eventually terminating her on Feb. 4, 2022. The 2022 lawsuit sought $195 million in compensatory and punitive damages.
Defendants in the case include Better Holdco, Garg, the company's founder, and General Counsel Nicholas Calamari.
Key points of the decision:
- Judge Torres approved Better's request to dismiss several claims, specifically those related to the Sarbanes-Oxley Act and the Dodd-Frank Act.
- The motion to dismiss certain claims against Garg and Calamari was granted, but Pierce's charges related to New York labor law and defamation remained intact.
- In another facet of the dispute, Judge Torres ruled that Pierce must repay a loan to Better, along with interest.
- Pierce had been extended an offer by Better to purchase 450,000 shares of its common stock at $5.06 per share.
Pierce's attorney Neal Brickman said the decision is still a victory for his client.
“We consider the Judge’s decision denying Better’s attempt to dismiss Ms. Pierce’s seminal claim – for retaliatory discharge pursuant to New York Labor Law Section 740 – to be a resounding win," Brickman said. "Ms. Pierce will now be able to conduct detailed discovery as to what actually went on with respect to her termination, including ascertaining additional facts showing that her termination was in retaliation for her engaging in protected activity."
He added that they are considering further action against the company "related to the material misrepresentations that Better and Aurora made in their zeal to go public. Everything Ms. Pierce warned the company and its investors about has come to fruition. Now under public scrutiny, the stock price has tumbled from an opening public trade of $2.40 per share, to today’s price of 46 cents. A company that has acknowledged losses approaching $1 billion since Ms. Pierce’s termination, cannot possibly survive in this high interest rate environment," Brickman said.
In a statement, a spokesperson from Better underscored that Judge Torres' decision came after different entities dismissed other claims against the company.
"We are pleased with Judge Torres’ recent decision to dismiss a majority of the claims made by Sarah Pierce against Better HoldCo. This decision follows OSHA’s dismissal of Ms. Pierce’s whistleblower claims in August 2022, as well as the SEC’s decision not to take enforcement action against Better and end its investigation. Better will continue to defend itself in this lawsuit and looks forward to a favorable resolution," a Better.com spokesman said.
Better debuted in the public market on Aug. 23, 2023, via a merger with special purpose acquisition company (SPAC) Aurora Acquisition Corp. Following the successful SPAC transaction, substantial bonuses were allocated to various Better employees, including Garg, Calamari, and CFO Kevin Ryan.