   IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE


STACEY KOTLER,                           )
                                         )
                        Plaintiff,       )
                                         )
               v.                        )    C.A. No. 2017-0457-JRS
                                         )
SHIPMAN ASSOCIATES, LLC,                 )
a Delaware limited liability company,    )
                                         )
                        Defendant.       )



                         MEMORANDUM OPINION

                        Date Submitted: May 15, 2019
                        Date Decided: August 21, 2019


A. Thompson Bayliss, Esquire, Adam K. Schulman, Esquire and Daniel J. McBride,
Esquire of Abrams & Bayliss LLP, Wilmington, Delaware and Steve Wolosky,
Esquire and Renée M. Zaytsev, Esquire of Olshan Frome Wolosky LLP, New York,
New York, Attorneys for Plaintiff Stacey Kotley.

Blake Rohrbacher, Esquire, Kevin M. Gallagher, Esquire, John M. O’Toole, Esquire
and Ryan D. Konstanzer, Esquire of Richards, Layton & Finger, P.A., Wilmington,
Delaware, Attorneys for Defendant Shipman Associates, LLC.




SLIGHTS, Vice Chancellor
         Marissa Shipman (“Marissa”) began making cosmetics in her kitchen in

1999.1 She formed The Balm.com, Inc. later that year and changed the company’s

name to Shipman Associates, Inc. four years later.2 In 2003, Marissa hired her

friend, Stacey Wexler (now Stacey Kotler), to sell The Balm cosmetics as an

independent contractor. By all accounts, Kotler was a highly effective salesperson

and the Company flourished.

         The Company paid Kotler only on sales commissions. Accordingly, after she

had demonstrated her worth to the Company, as reflected in the Company’s steady

growth, Kotler asked the Company to reward her with equity. Marissa’s father,

Robert Shipman (“Robert”), had joined the Company soon after its formation to

assist his daughter with the business side of the Company’s operations. Robert

responded to Kotler’s inquiry about equity, in essence, by telling her that she

deserved equity and assuring her the Company would work with her to make that

happen. Over time, as the Company seemed to string her along, Kotler would renew

her request for equity and Mr. Shipman would renew his response. Still, nothing

happened. All the while, the Company continued to grow.




1
    I refer to the Shipmans by first name to avoid confusion.
2
 As explained below, in 2014, Shipman Associates, Inc. (the “Company”) became
Defendant, Shipman Associates, LLC.

                                               1
      Eventually, the discussions turned from providing Kotler with straight equity

to granting her a warrant to purchase shares. Over several months in 2006 and early

2007 the parties exchanged drafts of a warrant agreement. Both sides engaged

counsel to assist in the negotiations. The Company engaged White & Case LLP;

Kotler cannot recall the name of the attorney or law firm she hired.

      The evidence regarding the negotiations leading to the execution of the

warrant agreement is thin. Neither side retained emails nor other correspondence

and neither side can recall specific discussions. The only contemporaneous evidence

of any real value are the various drafts of the warrant agreement. These drafts reflect

that the Company wanted to condition the grant of the warrant on Kotler’s agreement

to a perpetual post-separation non-competition/non-solicitation covenant. Kotler

would agree only to a pre-separation non-compete or, at most, a non-compete with

an 18-month tail. Neither side recalls ever having altered their respective position

on this material term.     Nevertheless, both parties believed they had reached

agreement and signed a binding warrant agreement in 2007. The problem is, given

the haphazard manner in which drafts were exchanged, the parties were not signing

the same draft of the agreement and the key non-compete language was never

agreed to.

      Kotler eventually left the Company to start a business that sold cosmetics for

companies that competed with the Company. She had sporadic contact with the

                                          2
Company after she left. In 2013, as the Company was considering a sale or

reorganization that might trigger the warrant, the Company discovered that Kotler

had previously sent the Company a signed version of the warrant that contained

language, including non-compete language, that neither Marissa nor Robert had seen

before much less agreed to. When Kotler was contacted about the discrepancy, she

advised the Company that she had a version of the warrant with “wet ink” signatures

that contained only a pre-separation non-compete covenant. The Company cried

“fraud.” Kotler alleged the Company was attempting to shirk its commitment to

give her earned equity. She demanded the Company honor the warrant agreement.

When the Company refused, this litigation followed.

      In this post-trial opinion, I conclude that Kotler has failed to prove the

existence of a binding warrant agreement by a preponderance of the evidence.

In reaching this conclusion, I acknowledge that my verdict is quite possibly the

product of the harsh reality that trials do not always replicate real life events. Trial

outcomes are driven by burdens of proof and evidence as gathered and presented to

the factfinder. In this case, Kotler proved to be an incomplete and unreliable

historian, the drafting history was inconclusive and the circumstances surrounding

the final execution of the warrant agreement supported the Company’s version of

events as much as, if not more than, Kotler’s version. Under these circumstances,

judgment must be entered for the Defendant.

                                           3
                              I. FACTUAL BACKGROUND

         I have drawn the facts from the parties’ pre-trial stipulation, evidence admitted

at trial and those matters of which the Court may take judicial notice. 3 The trial

record consists of 415 joint trial exhibits, 553 pages of trial testimony and eight

lodged depositions. The following facts were proven by a preponderance of the

competent evidence.

     A. Parties and Relevant Non-Parties

         Plaintiff, Stacey Kotler, née Wexler, worked for the Company as a sales

consultant from 2003 until she resigned in May or June 2019.4

         Defendant, Shipman Associates, LLC, a Delaware limited liability company,

does business as “theBalm Cosmetics.”5 Founded by Marissa Shipman in 1999, the

Company was originally known as The Balm.com, Inc.6 It designs and produces

cosmetics, which it then sells around the world.7




3
 I cite to the Verified Complaint as “Compl. ¶”; the Joint Pre-Trial Stipulation and Order
as “PTO ¶”; the joint trial exhibits as “JX #”; and the trial transcript as “Tr. #
(witness name).”
4
    Tr. 9:7–8, 57:22–58:2 (Kotler); PTO ¶ 8.
5
    PTO ¶ 9.
6
 JX 128 at 2, 6. In 2003, the Company became known as Shipman Associates, Inc. before
becoming Shipman Associates, LLC in 2014. JX 128 at 5.
7
    Tr. 197:6–12 (Marissa).

                                               4
           Non-party, Marissa Shipman, is the Company’s founder and CEO.8 She

provides strategic vision and manages the development of the Company’s products.9

           Non-party, Robert Shipman, Marissa’s father, is the President of the

Company.10 He oversees the Company’s cash flow, inventory control and sales.11

He and Marissa together have always made the important strategic and financial

decisions for the Company.12

           Non-party, Heather Lourie, is the Company’s Chief Operating Officer.13

Before joining the Company in July 2017 as a full-time employee, Lourie was hired

as a consultant to ready the Company for a sale process.14

           Non-party, Hillary Chassin, née Seegul, was one of the Company’s first

employees.15 As explained below, Chassin was given a small equity stake in the

Company soon after she joined.


8
    Tr. 195:16 (Marissa); PTO ¶ 12.
9
    Tr. 200:19 (Marissa).
10
     PTO ¶ 13.
11
     Tr. 402:1–2 (Robert).
12
     Tr. 10:4–14 (Kotler).
13
     Tr. 491:18–19 (Lourie).
14
     Id.
15
  Tr. 198:20–22 (Marissa). During its first few years of operation, the Company had no
more than five employees or consultants. Tr. 10:21–11:2 (Kotler); JX 102 (“Robert Dep.”)
43:14–24, 46:23–25, 47:1–4.

                                           5
          Non-party, Oliver Brahmst, an attorney at White & Case LLP, assisted the

Company with drafting the warrant.16

          Non-party, theBalm Cosmetics Holdings, Inc. (“Holdings”), a Delaware

corporation, is now the Company’s largest unitholder.17 It has three stockholders:

Marissa, Robert and Chassin.18

          Non-party, Balm DISC, Inc. (“DISC”), is a Delaware corporation formed by

Marissa and Robert in 2014 as an interest charge domestic international sales

corporation (IC-DISC) under the Internal Revenue Code.19

      B. The Company

          In 1999, after holding a number of jobs in the media industry, Marissa had an

idea to start to a new business. She began making cosmetics in her kitchen.20 Robert,

who was then retired, joined Marissa to help develop her business.21 The Company




16
     PTO ¶ 16.
17
     Id. ¶ 10.
18
     Id. ¶¶ 10, 14.
19
     Id. ¶ 11.
20
     PTO ¶ 9; Tr. 195:19–196:20 (Marissa).
21
     Tr. 197:23–198:11 (Marissa); Tr. 401:8–21 (Robert).

                                             6
was incorporated in Delaware that same year.22 At the time, Marissa, Robert and

Chassin were the Company’s sole stockholders.23

         Today, the Company sells its cosmetics products in over 100 countries.24

During 2016 and 2017, the Company took part in a sale process during which its

financial advisor valued the Company’s equity at over $500 million.25 In a 2017

report, The Wall Street Journal projected the Company’s value as $600–$700

million.26

         While the Company’s revenues saw steady growth, Robert and Marissa

continued to run the Company as if it still operated out of Marissa’s kitchen. Of

particular relevance here, the Company’s record retention practices were, at best,

careless. It appears that Robert stored corporate records in his homes in Connecticut

and Florida, and in several locations in California where Marissa worked.27 At some

point after 2007, the Company lost (or misplaced depending on who one believes)

many of its corporate records––including its stock ledger and all issued stock


22
     JX 57; PTO ¶ 9.
23
     JX 68 at 3–4.
24
     JX 78 at 8.
25
     JX 84 at 2–3.
26
     JX 87.
27
  Tr. 470:21–24 (Robert) (“Q. The papers were scattered between your homes in
Connecticut and Florida and the Company’s offices in California. A. I would say yes.”).

                                          7
certificates.28 Consequently, it was forced to hire a consultant to assist in locating

or replacing its missing corporate books and records.29

      C. Kotler Joins the Company

         In 2001, after moving to San Francisco, Kotler became friends with Marissa.30

Two years later, in 2003, Kotler joined the Company as a sales consultant, though

she had no previous cosmetics experience.31 Because she was Canadian citizen, she

was required to obtain immigration clearance under the North American Free Trade

Agreement, which allowed her to work exclusively for the Company.32 She never

signed a written consulting agreement with the Company; instead, she worked under

an oral agreement and a handshake.33 Her compensation was based exclusively on




28
  See JX 68 at 2–3 (“prior to the Reorganization, the original corporate records . . . of the
Old Shipman Associates . . . were misplaced and, after an exhaustive search in connection
with the Reorganization, the stockholders and the board of directors of the Old Shipman
Associates concluded that such original corporate records were lost”); JX 121; JX 101
(“Dennis Dep.”) 30:11–13; JX 105 (“Lourie Dep.”) 36:25–37:7. But see Tr. 501:23–24
(Lourie) (stating the Company’s records “were never lost”); Tr. 283:18–24, 324:5–9
(Marissa); Tr. 419:6–11, 446:9–21 (Robert). Whether lost or misplaced, it is clear, as
Marissa acknowledged, that the Company had issues with “sloppy recordkeeping.”
Tr. 283:5–7 (Marissa).
29
     JX 68 at 2–3.
30
     Tr. 8:7–13 (Kotler).
31
     Tr. 9:7–8, 104:9–12 (Kotler), Tr. 201:11–202:1 (Marissa); PTO ¶ 8.
32
     Tr. 105:1–21 (Kotler).
33
     Tr. 9:22–24, 12:13–16 (Kotler), Tr. 468:7–469:12 (Robert).

                                             8
sales commissions. Eventually it was agreed that Kotler would earn fifteen percent

commission on all of her sales for the Company.34               Although apparently an

independent contractor, she was enrolled in the Company’s healthcare insurance

plan.35

         By all accounts, Kotler performed very well in her sales role.36 She quickly

took on greater responsibility at the Company and eventually earned the title

“Vice President of Sales and Business Development.”37 Though her oral consulting

agreement did not contemplate equity in the Company, Kotler soon began requesting




34
   Tr. 12:6–7 (Kotler), Tr. 202:14–23 (Marissa), Tr. 403:1–9 (Robert). The commission
rate was later reduced as the Company grew larger. Tr. 12:7–16 (Kotler).
35
     Lourie Dep. 65:6–17.
36
   See Tr. 202:9–10, 265:23–266:1 (Marissa) (testifying that Kotler was an “excellent”
salesperson, was “very, very good at sales,” and “could sell anything to anyone”);
Robert Dep. 53:20, 58:18–59:3 (testifying that Kotler performed “well”, was “valuable” to
the Company and did well in sales); Tr. 11:10–16 (Kotler) (testifying that she “started with
a small territory,” but her territory “grew exponentially,” particularly compared to the
Company’s only other salesperson at that time, Marissa’s sister, Jordana Shipman).
37
  Tr. 11:19–24 (Kotler) (“Within my first year, I went from ten accounts to over a hundred.
And at that time Marissa said, ‘We’ll make you vice president of the company.’ And I
received my first business card and it was vice president of sales and business
development.”).

                                             9
equity.38 Out of over 50 former and current Company employees, only Marissa,

Robert, Chassin and Alex Britt had ever possessed equity rights in the Company.39

         From the moment Kotler first requested equity, Robert continued to assure her

that the Company would honor her request.40 When Kotler renewed her request in

September 2004 with a more urgent tone, Robert responded, “[b]e patient, you will

have equity shortly and there is no imminent sale of the company[,]” emphasizing

he would make it a “priority.”41 During the summer of 2005, Kotler brought up

equity again.42 And, again, Robert dawdled.43




38
  Tr. 12:17–22, 106:21, 111:10–22 (Kotler); PTO ¶ 15; JX 65. See also Tr. 202:17–19,
206:10–12 (Marissa) (“[Kotler] was already making money, so we didn’t need to
incentivize her to come in to be at the company.”).
39
   PTO ¶ 14; Tr. 202:18–204:20 (Marissa) (The Company provided Chassin with equity
since it “couldn’t pay her what she would be making if she took a job somewhere else”––
Chassin took a reduced salary in exchange for 5% of the Company.); Tr. 204:2–205:7
(Marissa) (The Company “couldn’t afford to pay [Britt] the salary that she deserved[,]” so
Marissa promised Britt 1% of any proceeds from a sale of the Company.).
40
  Robert Dep. 53:20, 58:18–59:3, 61:22–62:1; JX 1 (In April 2004, Robert emailed Kotler:
“You will have equity. We are working on it and will have a [sic] ready by May.”).
41
     JX 3.
42
     Tr. 17:5–9 (Kotler); JX 116 at 35.
43
     Tr. 17:10–13 (Kotler).

                                           10
      D. The Company Negotiates a Warrant with Kotler

         By early 2007, the Company decided to offer Kotler the right to purchase

shares of the Company under certain conditions instead of straight equity.44 The

Company believed a warrant would properly “reward” Kotler for her work and

“incentivize” her to remain at the Company.45

         As requested by the Company, Oliver Brahmst, a partner at White & Case

LLP, assisted in drafting versions of the warrant.46 Brahmst did not communicate

directly with Kotler or anyone representing her.47 Instead, he communicated with

Robert, who would then negotiate with Kotler directly.48




44
     Robert Dep. 64:23–65:4; JX 124; Tr. 206:13–17 (Marissa)
45
     Tr. 301:15–302:12 (Marissa).
46
   JX 112 (“Brahmst Dep.”) 18:16–22, 43:11–44:18, 95:6–9; Robert Dep. 90:15–17.
Brahmst did not charge for drafting the warrant because Marissa had promised him that
she would hire White & Case to represent the Company when she decided it was time to
sell. Tr. 207:2–16 (Marissa). Nine years later, the Company did just that. Tr. 237:15–21
(Marissa). Unfortunately, it appears the Company and White & Case are now embroiled
in litigation relating to that representation. JX 86; JX 106.
47
  PTO ¶ 16; Tr. 22:3–9 (Kotler), Tr. 207:17–19 (Marissa), Tr. 541:4–6 (Brahmst). Indeed,
during the negotiations, Kotler did not even know White & Case was representing the
Company in connection with the warrant. Tr. 165:22–24, 166:1–2 (Kotler).
48
  Brahmst Dep. 43:24–25; Robert Dep. 13:8–24; Tr. 206:18–23 (Marissa), Tr. 426:7–13
(Robert).

                                           11
         The drafts of the warrant span approximately eight months.49 Although the

Company designated Robert as the person most knowledgeable about the

negotiations of the warrant, he remembered almost nothing about them.50 Kotler,

likewise, had little to offer by way of specifics. Indeed, incredibly, she was unable

even to recall the name of her counsel or the law firm she engaged to represent her.51

With memories purportedly faded, in the age of emails and text messages, one would

naturally turn to those sources to gain some understanding of what was happening

in real time. But none exist—neither side could produce contemporaneous emails

or text messages of any relevance.52 What is left as evidence, then, are the sequential




49
  See Tr. 23:6–7 (Kotler) (“Q. Over what period of time did you and the company negotiate
the warrant? A. February 2007 to September 2007.”).
50
   Robert could recall virtually nothing about when the parties reached agreement, any
details regarding the number of shares offered, purchase price, or forfeiture language.
Tr. 452:4–6, 430:2–431:11 (Robert). According to Robert, Kotler simply accepted the
terms offered by the Company; there were no “real negotiations.” Tr. 430:4–12, 451:17–
19, 426:21–427:3 (Robert) (“We had our lawyers make up a warrant and we presented it
to her, and we agreed upon it, and that’s all that I know.”). Because she was not directly
involved in the negotiations, Marissa also recalled nothing about them. Tr. 251:11–24
(Marissa).
51
   Tr. 115:3–8, 189:1–190:19, 112:22–113:3 (Kotler) (“I know that it was a legal
document. . . . I knew I had counsel. I don’t remember who proposed changes, made
changes. I don’t recall. And that’s the truth. I don’t remember. I have no emails about it.
We couldn’t find the lawyer who worked on it. I don’t recall.”).
52
     Tr. 112:22–113:3 (Kotler), Tr. 463:14–20 (Robert), Tr. 240:9—241:8 (Marissa).

                                            12
drafts of the warrant agreement and the few emails relating to those drafts produced

by White & Case.53

         1. The February 25 Draft

         In February 2007, the Company sent Kotler an initial draft of a warrant

agreement (the “February 25 Draft”).54 The February 25 Draft was prepared with

the assistance of Brahmst and Julia Popowitz, née Schwartzman, a lawyer who also

provided services to the Company.55

         By all accounts, the February 25 Draft was a “very early version.”56 It granted

Kotler the right to purchase “up to 1,055” shares of the Company’s common stock.57

It was governed by Delaware law and did not contain any forfeiture conditions

(including non-compete covenants)—though the draft did envision termination of




53
     See, e.g., JX 300; JX 301; JX 315.
54
  JX 4; Tr. 21:9–11, 25:19–21, 116:11–13 (Kotler); JX 55. Both parties produced a copy
of the February 25 Draft. Id. Its metadata, recovered from Kotler’s backup drive,
demonstrates that the document was “last modified” on February 25, 2007. JX 4; JX 201.
A scanned version of the February 25 Draft produced by the Company includes a
handwritten note, “Final Stacey Sent 2/26/07.” JX 5.
55
     JX 4; Brahmst Dep. 65:9–12; Robert Dep. 63:22–64:16.
56
     Brahmst Dep. 65:18–19 (White & Case “started with some portions of other warrants”).
57
     JX 4 at 1.

                                            13
the warrant rights after 10 years.58 Kotler did not agree to or sign the February 25

Draft.59

       2. The June 8 Draft

       The Company sent a revised draft of the warrant agreement to Kotler in June

of 2007 (the “June 8 Draft”).60 This draft stated Kotler would have a right to acquire

five percent of the Company’s equity on a fully diluted basis, which represented

533 Company shares.61 This basic understanding remained constant until the very

end of the parties’ negotiations.

       The June 8 Draft also contained a new Section entitled “Forfeiture,” providing

Kotler would forfeit her warrant if she breached very broad and perpetual non-




58
   Id. at 1, 5; Tr. 307:19–24, 308:14–18, 309:1–8 (Marissa). Although this early draft did
not contain non-compete or non-solicitation covenants, Marissa maintained the Company
would never allow Kotler to take equity in the Company but then compete as soon as her
consulting relationship with the Company terminated––it was “a nonstarter.” Tr. 224:3–
10, 307:6–14 (Marissa). When confronted with the absence of these provisions in this
initial draft of the warrant agreement, she stated, “[y]ou got to start somewhere.” Tr. 309:5
(Marissa)
59
   Tr. 26:9–15 (Kotler). Indeed, this version does not have a signature block for Kotler.
Id.
60
 See JX 6; Tr. 405:14–23 (Robert); JX 202; Tr. 26:12–15, 116:11–117:17 (Kotler). The
metadata from the June 8 Draft shows that it was “last modified” on June 8, 2007. JX 202.
61
  JX 6 at 1; Tr. 136:10–15 (Kotler), Tr. 405:10–12 (Robert); JX 103 (“Kotler First Dep.”)
86:20–87:4 (“Five percent was the number that was discussed . . . . To the best of my
knowledge, that was a number that was agreed [upon]”); Robert Dep. 101:14 (“I recall it
was 5 percent”); JX 209.

                                             14
compete and non-solicit covenants.62 From the Company’s perspective, the June 8

Draft included the key terms, the departure from which would break the deal:

Kotler’s right to acquire 5% equity in exchange for a perpetual non-compete/non-

solicit.63 The June 8 Draft also changed the governing law from Delaware to New

York, where the Company was advised that a perpetual non-compete provision in a

warrant agreement would be enforceable so long as the employee leaves the

company voluntarily.64

         The June 8 Draft was not ready for execution, however. Kotler’s first name

was spelled incorrectly in the preamble, there still was no signature line for Kotler

and the first page still bracketed the warrant number (for identification in the ledger)




62
   JX 6 § 15 (“This Warrant and any and all rights of any Holder set forth herein shall
immediately terminate and be forfeited in the event the Original Holder (Kotler) (i) directly
owns, manages operates, controls, is employed by or participates in the ownership,
management, operation or control of, or is connected in any manner with, any business of
the type and character engaged in and competitive with that conducted by the Company or
any of its Subsidiaries or their Affiliates”); Tr. 117:21–118:14 (Kotler), Tr. 406:9–18
(Robert), Tr. 207:20–209:3, 224:3–6 (Marissa) (emphasizing that the absence of the
Forfeiture terms would be a deal-breaker for the Company).
63
     Tr. 405:10–13, 408:2–3 (Robert); Tr. 306:22–307:1 (Marissa).
64
  JX 6 § 16; Tr. 226:11–13 (Marissa). See Lenel Sys. Int’l, Inc. v. Smith, 106 A.D.3d 1536
(N.Y. App. Div. 2013) (allowing forfeiture of stock options if the employee violates post-
employment non-compete covenant).

                                             15
and the date.65 More importantly, Kotler did not approve of the new Forfeiture

provision.66

         3. The August 6 Draft

         On August 6, 2007, Brahmst sent Robert a redline of the warrant showing

Kotler’s proposed edits to the June 8 Draft (the “August 6 Draft”).67 Although

unclear in the record, it appears the parties were negotiating the warrant after the

June 8 Draft and counsel was advising Kotler by this time.68




65
     JX 6 at 1; Tr. 27:15–28:9 (Kotler).
66
  Tr. 28:23–24, 29:1–13 (Kotler). Of course, as noted, Kotler recalled none of the specifics
regarding the negotiations of the Forfeiture provision. The best she could say was, “[t]his
would have been a section that would have been discussed.” Tr. 119:23–24 (Kotler).
67
  JX 8; JX 9; Tr. 210:3–11 (Marissa), Tr. 407:9–21 (Robert). At his deposition and at trial,
Robert acknowledged that he had received the August 6 Draft from White & Case, but
nevertheless said it was a “fake.” Tr. 450:18–20, 451:2–8 (Robert); Robert Dep. 109:7–
14.
68
   Id.; Tr. 24:6 (Kotler) (“I must have had counsel to help me with that agreement.”). Since
only Kotler would have benefited from the redlined edits, including the more narrow scope
of the Forfeiture provision, it is reasonable to assume that the August 6 Draft incorporates
Kotler’s proposed edits. Tr. 210:9–14 (Marissa) (Marissa testifying that Kotler proposed
the changes to the forfeiture provision); Tr. 407:16–21 (Robert) (Robert testifying that he
“presume[d]” Kotler proposed the edits reflected in the August 6 Draft). This conclusion
is supported by the fact that Kotler’s edits never made it into the White & Case system,
proving that the Company did not propose them. In post-trial arguments, Kotler suggests
that the edits were not hers because White & Case created JX 9. Pl.’s Post-Trial
Opening Br. 16–17. I reject this suggestion. The redline demonstrates Brahmst simply
compared two documents saved to his computer desktop. JX 9 at 28. In other words,
though Brahmst created the redline version, the edits were Kotler’s.

                                            16
         The August 6 Draft reiterated that Kotler would be granted the right to acquire

533 shares of the Company’s common stock.69 But this draft corrected the spelling

of Kotler’s name70 and narrowed the Forfeiture provision by prohibiting Kotler from

competing or soliciting only for specified time periods.71 Kotler—or possibly her

counsel—also proposed decreasing the non-solicit lookback period from two years

to 18 months.72



                        Remainder of page intentionally left blank




69
     JX 8 at 2.
70
     JX 9 at 15; Tr. 120:1–13 (Kotler).
71
   JX 8 at 11 (providing that the warrant “shall immediately terminate and be forfeited” in
the event that Kotler, “during the time [Kotler] is in a consulting relationship with the
Company or during the eighteenth (18th) month period immediately succeeding the
termination of such consulting arrangement” engages in certain specified non-competition
or non-solicitation activities). See also JX 9 at 24 (reflecting Kotler’s proposed language
in redline); Tr. 210:11 (Marissa).
72
   See JX 9 at 25. Kotler also proposed replacing “a reasonable time” with “ten (10)
business days” in Section 3, and “five (5) days after receipt” with “ten (10) days after
receipt” in Section 6(b)(ii). JX 9 at 17–18.

                                            17
       The Company rejected Kotler’s edits.73 Neither of the Shipmans were keen

to give Kotler equity if she could compete (at any time) after separating from the

Company.74 Thus, neither party signed the August 6 Draft.75

       4. The September 5 Execution Draft

       On September 5, 2007, Brahmst sent Robert a revised, unsigned draft of the

warrant agreement (the “September 5 Execution Draft”), saving it as version 7 on

White & Case’s system.76 From Kotler’s perspective, both parties had agreed to all

terms of the warrant as of September 6, 2007.77 The Company thought so too.




73
  Tr. 408:6–8 (Robert) (“Q. Did you or anyone at the company ultimately agree to those
edits? A. No.”); Tr. 211:1–5 (Marissa) (same).
74
  See, e.g., Tr. 210:23–211:2 (Marissa) (“Well, she couldn’t compete with the company
while she was at the company anyway. And I really felt strongly about a perpetual
noncompete and a perpetual nonsolicit, so I rejected this language.”); Tr. 408:2–5, 482:9–
18 (Robert) (similar).
75
  Tr. 32:6–18 (Kotler). Of course, there was nowhere for Kotler to sign the August 6
Draft; it still lacked a signature block for her. JX 9 at 12.
76
   JX 13; JX 300; Tr. 121:12–18 (Kotler); Tr. 269:3–7 (Marissa) (testifying that this was
the first “version 7” draft sent to Kotler). Brahmst also prepared a redline on September 5.
Compare JX 300 at 1, with id. at 28. Unlike the August 6 Draft containing Kotler’s
proposed edits, the September 5 Execution Draft was saved on White & Case’s document
system. Thus, the redline attached to JX 300 compares the September 5 Execution Draft
to the June 8 Draft. See JX 300 at 28 (comparing versions 6 and 7).
77
  Tr. 120:14–17 (Kotler) (“Q. Now, as of September 6, 2007, the parties had agreed on all
of the terms of the warrant. Correct? A. Yes.”).

                                            18
Accordingly, Brahmst added an execution date—the next day, September 6—as well

as a signature line for Kotler (then Wexler).78

         On September 12, 2007, Brahmst re-sent the September 5 Draft to Robert

because, apparently, Robert had not received Brahmst’s September 5 transmittal

email.79 Since Brahmst never keyed Kotler’s August 6 edits into White & Case’s

system, the execution version still misspelled Kotler’s first name in the opening

paragraph, even though her name was spelled correctly in the signature block.80

Kotler’s other proposed changes also did not appear in the September 5 Execution

Draft.81

         What did appear in the September 5 Execution Draft were the material terms

of the warrant agreement, at least from the Company’s perspective: it provided

Kotler with the right to purchase 533 shares of common stock of the Company

(i.e., 5% of the Company post-exercise),82 and it included a perpetual non-compete




78
  JX 300 at 15, 25; Tr. 409:11–16 (Robert) (testifying that adding the date was the last step
before execution).
79
  JX 301; Tr. 410:5–8 (Robert). The attachments to Brahmst’s September 12 email were
the same attachments to his September 5 email. JX 304; Tr. 410:9–19 (Robert).
80
     JX 300 at 2, 12; Tr. 121:24–122:2 (Kotler).
81
  Compare JX 9 at 17–18 (with Kotler’s changes), with JX 300 at 4–5 (not including
Kotler’s changes).
82
     Tr. 136:10–12 (Kotler).

                                              19
and non-solicit.83 Marissa testified, “[t]his is the draft, to my knowledge, that

I signed and we executed.”84

         5. The September 12 Draft

         On September 12, Robert sent the latest execution draft he had received from

Brahmst to Kotler for signing (the “September 12 Draft”).85 Though Kotler did not

sign the September 12 Draft, she did save it to her computer.86 She then made her

edits:87 she fixed the spelling of her name in the first paragraph88; she reduced the

two-year non-solicit lookback period to 18 months (as she had proposed in

August)89; she modified the reference to the Company in the opening paragraph,




83
  JX 300 at 2, 11 (providing that the warrant “shall immediately terminate and be forfeited”
in the event Kotler takes part in specified non-competition or non-solicitation activities
without any time or geographic limitations); Kotler First Dep. 108:3 (explaining “[t]o the
best of her knowledge” this version contained the non-compete and non-solicit language
the Company proposed); Tr. 268:18–269:1, 339:22–340:2, 385:2–9 (Marissa); Tr. 405:10–
13 (Robert).
84
     Tr. 212:16–17 (Marissa).
85
     JX 301; Tr. 124:1–7, 141:15–142:6 (Kotler); Tr. 212:18–20 (Marissa).
86
     JX 301; Tr. 124:5–7 (Kotler).
87
     JX 19; Tr. 146:2–148:15, 193:8–21 (Kotler).
88
     JX 19 at 1; Tr. 123:14–21 (Kotler).
89
  Compare JX 9 at 25 (showing Kotler’s August proposal of an 18-month lookback), with
JX 19 at 10 (showing the return of the 18-month lookback language).

                                             20
adding “(dba theBalm)” to the name “Shipman Associates, Inc”90; and she changed

the Forfeiture provision, adding the limiting phrase “during the time [Kotler] is in a

consulting relationship with the Company.”91 This last edit made the restrictive

covenant even less favorable to the Company than the 18-month tail period Kotler

had proposed, and the Company had rejected, only a month earlier.92 The Company

never agreed to Kotler’s suggested language.93 Indeed, neither Brahmst, Marissa

nor Robert had even seen Kotler’s Forfeiture language until well after Kotler had

left the Company.94


90
  JX 19 at 1; Tr. 123:14–21 (Kotler). This edit does not appear in any draft possessed by
the Company or created by White & Case, only in drafts coming from Kotler.
91
 JX 19 § 15.11. This specific language also had not appeared in any draft created by the
Company or shared between the parties.
92
     See JX 9 at 24; Tr. 225:19–226:1 (Marissa).
93
   Tr. 222:18–223:1 (Marissa); Tr. 477:1–17 (Robert). Here again, Kotler cannot recall
when (or why) the Company capitulated and agreed to her backward looking restrictive
covenant language when it had rejected her 18-month tail language only a month before.
Tr. 126:21–128:1 (Kotler). This simply is not credible testimony. As I characterized the
point at post-trial argument, the Company capitulating on the most controversial point in
the negotiations would have been a “champagne moment” for Kotler—she would have
gotten her 5% and she could have left the Company the next day to start her own competing
business. Post-Trial Argument Tr. 19. And yet she recalls nothing about it. Incredible.
94
   Tr. 543:23–545:8 (Brahmst) (“[N]o, I wouldn’t have drafted this warrant. . . . [T]here
are some things in the first three lines [of Section 15] that I did not draft. . . . The language
that I drafted in Section 15 always had a different temporal test than the test that is in these
first two and a half lines.”); Tr. 286:16–18 (Marissa) (“So what was given to Bob
[i.e., Robert] was different than what Bob gave Stacey to sign. There was a little
switcheroo there.”); Tr. 214:9–12 (Marissa) (testifying that Kotler “completely wonkied
[sic] out the ‘Forfeiture’ section and put [‘]when she is in a consulting relationship with
the company,[’] which basically invalidated the entire section”) Tr. 412:3–7 (Robert)
                                               21
         6. The September 17 Draft

         On September 17, 2007, Kotler printed and signed her revised version of the

Company’s September 12 Draft and then, apparently, sent it to Robert without

advising him of the significant changes she had made.95 It appears Robert did not

carefully review the document nor did he send it to Marissa for execution.96

         7. Marissa’s Signature Page

         The exact circumstances surrounding the transmittal of a signature page to

Marissa are unclear and, of course, none of the witnesses had a clear memory of

what happened. The most credible version is that Kotler sent either a blank signature

page or perhaps her marked-up version of the September 12 Draft (without advising

the Company of her changes) by mail to Marissa for signature.97 Kotler never sent

an electronic draft of her version of the warrant agreement to anyone at the




(“Q. Does that accurately reflect the company’s agreement with Ms. Kotler? A. No.
Q. Why do you say that? A. I’ve never seen that language before.”).
95
     JX 15; JX 19; JX 301. See Tr. 127:9–128:1 (Kotler); Tr. 422:21–423:4 (Robert).
96
     Tr. 423:5–7 (Robert); Tr. 313:19–314:19 (Marissa).
97
  Tr. 321:15–322:2 (Marissa), Tr. 128:20 (Kotler) (“I sent it by mail for execution.”),
Tr. 124:14–127:8 (Kotler) (conceding the September 17 draft came from her system);
Tr. 124:11–14 (Kotler) (conceding she likely sent the signature page to Marissa by mail).

                                             22
Company.98 Consequently, Brahmst did not see the Kotler-edited draft until months

later.99

         The signature page Kotler sent to Marissa in San Francisco was accompanied

by a return envelope with Kotler’s New York address.100 As noted, what exactly

Kotler sent to Marissa is unclear.101 What is clear is that Kotler sent Marissa at least

a blank signature page, which Marissa signed and returned to Kotler.102

         Assuming what she received was a signature page for the execution version

of the warrant circulated by White & Case, Marissa did not re-read whatever Kotler

mailed her or any other version of the warrant agreement.103 Instead, Marissa called




98
     Tr. 383:14–384:6 (Marissa).
99
     Tr. 539:8–11, 542:21–543:2 (Brahmst).
100
      Tr. 218:5–219:5, 252:10–19 (Marissa).
101
    Marissa could not remember whether Kotler sent (a) a signature page only, (b) the
Company-approved version of the 533-share warrant with the perpetual restrictive
covenants, or (c) the unapproved version of the 533-share warrant with the more narrow
restrictive covenant language that Kotler wanted. Tr. 213:9–12, 217:12–218:7, 221:5–10,
253:1–7 (Marissa); JX 104 (“Marissa Dep.”) 115:1–13. Marissa does clearly remember,
however, that she did not sign a 502-share warrant. Tr. 215:8–13 (Marissa); Marissa Dep.
123:2–124:16.
102
   See, e.g., Tr. 219:14 (Marissa) (“It did not have any signature on it, because if it also
had her signature on it, I probably would have made a copy of it or kept it or done
something with it.”); Tr. 260:2–3–261:4–8, 321:15–21 (Marissa). See Tr. 277:20–22
(Marissa) (“Q. That signature wasn’t forged. That’s your writing. Correct? A. You are
correct. 100 percent.”).
103
      Tr. 221:16–222:12 (Marissa).

                                              23
Robert and asked him whether she should sign for the Company.104 Robert told

Marissa he had received Kotler’s signature (erroneously assuming it was on White

& Case’s execution draft) and authorized Marissa to sign for the Company.105

Marissa executed the warrant around September 17 and returned it to Kotler in New

York.106 Marissa made no copy of the signature page because, at the time, it included

only her signature and a blank line for Kotler’s signature.107 The material terms of

the warrant Marissa believed she had signed—and intended to sign—were

“533 shares, . . . a perpetual noncompete, a perpetual nonsolicit, for 5 percent of the

company.”108

      E. Kotler’s ‘Wet Ink’ ‘Fully Executed’ Warrant

         After sending her signed signature page to Kotler, Marissa believed the parties

had a final agreement consistent with the terms of the September 12 Draft.109 For


104
      Tr. 252:10–17 (Marissa).
105
      Tr. 213:4–22, 219:1–222:12 (Marissa).
106
    Tr. 219:6–8 (Marissa). That was to be Marissa’s only signature on the Warrant.
Tr. 220:9–10 (Marissa); PTO ¶ 18. Upon receipt of Marissa’s signature page, Kotler alone
possessed Marissa’s signature on the warrant. See Tr. 160:2–15 (Kotler).
107
    Tr. 219:12–19, 220:16–221:2 (Marissa). To reiterate, had Kotler signed the page she
sent to Marissa, Marissa would have made a copy. Id. In order for the Company to possess
a fully executed version, Kotler would have had to sign three times and she concedes that
she only signed twice. Tr. 35:2–6 (Kotler); PTO ¶ 17.
108
      Tr. 222:21–223:1 (Marissa).
109
      Tr. 227:10–14 (Marissa).

                                              24
her part, Kotler signed her September 17 Draft and left to visit her parents in

Montreal.110 Upon her return home on September 24, Kotler stopped off to visit

Robert at his home in Connecticut.111 It appears during this visit that Robert and

Kotler agreed to decrease the share count in the warrant from 533 to 502––even

though 533 represented 5%.112 When Kotler returned to her New York apartment

on September 25, she changed her Word version of the warrant from 533 shares to

502 shares (“Kotler’s September 25 Draft”).113



110
      Tr. 130:18–21 (Kotler).
111
   Tr. 41:2-9, 131:8–132:1 (Kotler); JX 314. Kotler stated she “visited Marissa and Robert
Shipman at their home” in Connecticut. Tr. 40:17–18 (Kotler). But Marissa lives in San
Francisco, and she was not at Robert’s house in Connecticut on September 24, 2007.
Tr. 22:21–23 (Kotler); Tr. 215:14–19 (Marissa).
112
    See Tr. 129:12–22 (Kotler); Tr. 231:23–232:5 (Marissa). Neither Kotler nor Robert
could remember discussing the share count in the draft warrant on September 24.
Tr. 131:19–22 (Kotler); Tr. 437:22–439:14 (Robert). It is likely, however, that Robert
suggested the change. See Tr. 458:11–13 (Robert) (Robert testified that he “doubt[ed]”
Kotler would have proposed to reduce her share count from 533 to 502); Tr. 273:4–8
(Marissa) (Marissa testified that “I’m pretty sure that Oliver [Brahmst] spoke to Bob and
Bob told him that it was 502 shares.”).
113
   See JX 19 (an unsigned version of the final warrant agreement, in .doc format, with a
typewritten date of September 6, 2007 (the “Native Version”)); JX 20 (the metadata on the
Native Version recovered from Kotler’s backup drive reveals the document was
“last modified” on September 25, 2007 at 4:45 p.m.); Tr. 42:8–44:18, 52:2-11, 137:4–23,
147:10–148:15, 193:8–21 (Kotler). Aside from the change to the share count, the Word
version of the warrant agreement on Kotler’s system was identical to the September 17
Draft. See JX 15; Tr. 146:18–21 (Kotler). Both documents referred to the Company as
“dba theBalm,” and both included Kotler’s altered Forfeiture language. Compare JX 19
(September 25 Word version) at 1, 10, with JX 15 (September 17) at 1, 10. The Company’s
execution draft (JX 300; JX 301) did not contain Kotler’s Forfeiture language or the “dba
theBalm” reference. Tr. 150:22–151:1 (Kotler).

                                           25
         Despite her testimony that she did not understand the impact of the changed

share count,114 the evidence reflects that Kotler knew full well what the change

meant to her. Kotler created a detailed spreadsheet during the warrant negotiations

to evaluate her potential equity interest in the Company.115               She performed

sophisticated calculations based on the Company’s capital structure and confirmed

that, while 502 shares represented 5% of the issued and outstanding shares,

533 shares was 5% of the fully diluted post-exercise shares.116 Even so, Kotler

agreed to the lower share count, seemingly without pushback, because Kotler was

motivated to get the deal done.117

         Robert told Brahmst orally about the share count change and Brahmst then

prepared another execution draft on September 25 (“Brahmst’s September 25

Draft”).118 In this draft, Brahmst endeavored to include all the deal points the parties




114
      Tr. 47:6–11 (Kotler).
115
      JX 130; Tr. 133:1–135:3 (Kotler).
116
      Tr. 133:3–136:23 (Kotler); JX 130.
117
    See Tr. 135:8–9 (Kotler) (“[T]hey said 502, so the number was 502. I didn’t question
it.”); Tr. 137:2–3 (Kotler) (emphasizing the goal “was to get the documents signed”).
Tr. 317:20–24 (Marissa) (“[T]here’s no reason to lower your share count if you don’t have
incentives. . . . [T]he incentive would have been not to get caught.”).
118
      See JX 315 (attachment); JX 316 (indicating last-modified date of September 25, 2007).

                                              26
had agreed to after the September 5 Draft.119 It includes the correct spelling of

Kotler’s name and her right to purchase 502 shares of the Company’s common

stock.120 It also includes an 18-month non-solicit lookback period.121 It does not

include Kotler’s more narrow non-compete language.122 If there ever were to be a

version of the warrant agreement the Company would sign off on as the final

embodiment of the parties’ agreement, Brahmst’s September 25 Draft likely would

have been it.123

         Since Brahmst was updating the draft warrant for execution, he revised the

effective date on the draft from September 6 to September 25.124 What happened

next is not entirely clear, since memories on the next steps are dim (to put it mildly).

But it appears Kotler told Robert she would simply adjust the share count on her



119
    See Tr. 233:15–22 (Marissa); JX 317 (redline comparing Brahmst’s September 25 Draft
to the September 5 Draft).
120
      JX 315 at 3; JX 317 at 2.
121
      JX 315 at 12; JX 317 at 11.
122
      JX 315 at 12; JX 317 at 11.
123
    See Tr. 276:15–22 (Marissa). Brahmst’s September 25 Draft does not contain Kotler’s
addition of the “dba theBalm” to the Company’s name in the opening paragraph, her
“ten (10) business days” language in Section 3, her “five (5) days after receipt” language
in Section 6(b)(ii) or, as noted, her edit to the Forfeiture provision. JX 315 at 3, 5–6.
It does contain the Company’s Forfeiture language with a perpetual non-compete. JX 315
at 12; JX 317 at 11.
124
      JX 315 at 3.

                                           27
version and then retain that version for her records.125 With that, Robert told

Brahmst “not to work on the warrant anymore.” 126 Brahmst’s September 25 Draft

remained uncirculated on White & Case’s system until Kotler’s “fully executed”

warrant surfaced in 2013.127

          So, how did Kotler come to have a fully executed warrant in her possession

that contained her narrow non-compete Forfeiture language?                           From the

preponderance of the evidence, the best explanation I can muster is that Kotler

printed her modified September 25 Draft from her computer,128 added her own



125
      See JX 19; Tr. 193:8–23 (Kotler).
126
      Tr. 545:24–546:2 (Brahmst); Tr. 458:17–459:2 (Robert).
127
   See JX 315. Indeed, if Kotler disseminated her updated and revised electronic draft, the
Company would likely have forwarded it to Brahmst, as the Company’s keeper of the
drafts, who would have redlined it and then detected Kotler’s changes. Tr. 384:3–6
(Marissa).
128
      At trial, I asked Kotler to drill down on this point:

          Q. And I’m just trying to understand who makes the changes to this document
          that reflect these later iterations of the warrant. One of them is changing your
          name to reflect the correct spelling, and then one is––and I know there are
          other changes––but one is to change the number of shares at issue. Who did
          that? Who made those changes? Is it your belief—I mean, I know you’re
          not recalling sitting down at a screen with your computer and having the
          document up and making changes. But is it your belief that you or
          someone—your lawyer or someone under your direction made these
          changes?

          A. Yes.

          Q. It is, okay. All right. I just wanted to be clear on that.

                                                 28
signature and attached Marissa’s September 17 signature page.129 She then kept the

document in her files, but did not circulate it or discuss it with anyone at the

Company.130

         To be clear, Kotler’s purported fully executed warrant permits her to compete

immediately after ending her consulting relationship with the Company while

maintaining her warrant rights.131 In other words, Kotler’s Forfeiture provision

effectively gave the Company zero protection.132 It is not surprising, then, that there


Tr. 193:8–23 (Kotler).
129
    See Tr. 154:5–7 (Kotler) (acknowledging her fully executed document was signed “in
two different colored inks, so, presumably, it was signed not together.”). Kotler initially
alleged that she and Marissa both executed the warrant on September 6, 2007. JX 88 ¶ 15;
JX 94 ¶ 22. She conceded at trial that this allegation was incorrect. Tr. 138:1–6 (Kotler).
The night before her deposition, Kotler amended that allegation to say that the document
was executed “[o]n or about September 25.” JX 109 ¶ 22; Tr. 138:9–12 (Kotler).
As discussed below, while the Company cries “fraud” and argues Kotler engaged in an
intentional “switcheroo,” I am not prepared to, and need not, go that far. Tr. 286:16–18
(Marissa) (“So what was given to Bob [i.e., Robert] was different than what Bob gave
Stacey to sign. There was a little switcheroo there.”). Kotler may have believed she was
attaching Marissa’s signature to a warrant agreement the Company had agreed to. If so,
she was wrong.
130
      Tr. 226:22–23 (Marissa); Tr. 164:6–10 (Kotler).
131
    JX 23 § 15 (barring competition only “during the time [Kotler] is in a consulting
relationship with the Company”).
132
    I say “zero protection” because, as noted above, it appears Kotler was not authorized to
compete while she was in a consulting relationship with the Company. As a Canadian
citizen, her North American Free Trade Agreement status in the United States appears to
have allowed her to work only for the Company. Tr. 106:1–3 (Kotler) (“Q. So at the time,
your TN status allowed [you] to work just for theBalm. Correct? A. It did.”); Tr. 225:1–
5 (Marissa) (explaining that Kotler could not compete with the Company while she worked
there); Tr. 224:17–18 (Marissa) (“[Kotler’s language] completely invalidates all of it. The
whole thing is moot. It doesn’t make any sense.”); Tr. 226:3–4 (Marissa) (“I mean, it just
                                             29
is no evidence—beyond Kotler’s “fully executed” warrant—that the Company ever

agreed to Kotler’s version of the non-compete.133

      F. Kotler Resigns, Leaves the Company and Immediately Competes

         By 2009, Kotler had come to believe the Company was not adequately valuing

her contributions.134 She decided it was time to renegotiate her compensation

package.135 Foremost, Kotler “want[ed] more [e]quity in theBalm. Not [w]arrants—

straight equity.”136 She also wanted a 20% commission on all orders she originated,

along with a periodic bonus, and she wanted the arrangement to be memorialized in

writing.137 Lastly, Kotler requested an expanded role in business decisions.138




doesn’t make any sense that [Kotler’s Forfeiture language] would be okay but the
18 months [previously proposed by Kotler and rejected by the Company] wasn’t okay.”).
133
   Tr. 151:15–18 (Kotler). See also Tr. 537:19–21 (Brahmst) (“It’s based on a document
that I worked on, but it’s not a document that was produced by White & Case or by me.”);
Tr. 538:10–12 (Brahmst) (“The forms of warrants that I drafted included a provision in
Section 15 that was different from the Section 15 that is in this warrant.”); Tr. 538:3–7
(Brahmst) (“[T]here is a clause in this [purported warrant] that I had never seen . . .
Section 15 of the warrant.”).
134
      Tr. 53:14–54:7 (Kotler); JX 124 at 1–3.
135
      Tr. 54:10–15 (Kotler).
136
      JX 124 at 1.
137
      JX 124 at 1; JX 113 (“Kotler Second Dep.”) 31:7–17.
138
      JX 124 at 1; Kotler First Dep. 20:11–13.

                                                 30
         On May 20, 2009, Kotler presented her demands to Marissa and Robert.139

The phone conversation did not go well; Marissa and Robert rejected all of Kotler’s

demands prompting Kotler to announce she would resign from the Company.140

Nevertheless, Kotler agreed to stay on for an interim period to help onboard her

replacements.141 On May 26, 2009, Kotler could no longer access her Company




139
      Tr. 55:9–57:13 (Kotler); JX 117 at 28.
140
   Tr. 57:1–10 (Kotler); JX 124; JX 117 at 27 (“i realize how miserable marissa and her
dad made me––i was totally abused and taken advantage of for so many years . . .”). Kotler
married around this time and received her green card. JX 117 at 2–3, 23. She could now
leave the Company and start her own business.
141
   Tr. 57:11–19 (Kotler); JX 117 at 28; Tr. 290:3–13 (Marissa). Kotler initially swore that
her termination took full effect on June 9, 2009. JX 88 ¶ 5 (Complaint); JX 94 ¶¶ 7, 27
(First Amended Complaint); Kotler First Dep. 32:5–6, 36:4–7 (confirming she “believed
that that date was correct”). When it became clear the Company would take the position
that Kotler was soliciting customers and competing prior to her resignation on June 9, and
thereby forfeited her warrants even under her version of the Forfeiture clause, Kotler
amended her complaint and her sworn testimony to say that she actually resigned on
May 26, 2009. See JX 109 ¶ 7; Tr. 61:13–62:6 (Kotler). While I could hold Kotler to her
earlier sworn testimony as an admission, see, e.g., AT&T Corp. v. Lillis, 953 A.2d 241, 257
(Del. 2008) (stating that “a party may offer earlier versions of its opponent’s pleadings as
evidence of the facts therein” (internal quotation marks omitted)); Bruce E.M. v. Dorothea
A.M., 455 A.2d 866, 869 (Del. 1983) (holding “pleadings which have been superseded by
amendment . . . may be taken as admissions against the interest of the pleading party with
respect to the facts alleged therein”), and thereby could find she forfeited her warrant even
under her version of the warrant agreement, I need not address that issue as I am satisfied
Kotler has not proven her version of the warrant reflects a binding contract between the
parties.

                                               31
email account.142 By June 1, 2009, she was no longer a participant in the Company’s

health insurance plan.143

         As Kotler prepared to the leave the Company, she began to explore her options

for next steps.144        She sent cover letters and her resume to potential new

employers.145       She also brainstormed the idea of starting her own cosmetics

consulting business and began to plant seeds to form that business.146 As part of that




142
    Tr. 61:13–14 (Kotler); Tr. 226:24–227:6 (Marissa); JX 24; JX 25. On May 26, 2009,
Jordana Shipman, Marissa’s sister, went to Kotler’s New York apartment to retrieve
Kotler’s Company laptop. Tr. 61:2–9 (Kotler), Tr. 293:14–16 (Marissa). Kotler could no
longer access her corporate email account without that laptop. Tr. 61:2–12 (Kotler).
On the same day, Kotler reached out to her friends, colleagues and clients from her personal
email account and her personal Facebook account’s messaging service to inform them of
her separation from the Company. JX 24 at 1 (“After 6 years with theBalm, I have decided
that it’s time to make a change. I am leaving my role as VP of Sales as of today.”); JX 25
(“I want to let you all know, that today is my last day at theBalm.”); JX 117 at 32 (“[H]aving
kind of a crazy week. [J]ust left my job at thebalm after 6 years”); Id. at 17 (“[O]bviously
you’ve heard by now that [I]’ve left thebalm.”).
143
   Lourie Dep. 65:12–17 (“Q. When did Ms. Kotler receive healthcare benefits from the
company? . . . THE WITNESS: I have been unable to verify when it started, but I can tell
you it concluded June 1st of ’09.”).
144
      JX 117 at 14 (“I just left and went out on my own in May––all new and exciting.”).
145
      See, e.g., JX 29; JX 31.
146
   Kotler First Dep. 150:15–17 (“Post-May 26 . . . the initial thoughts for Smart Beauty
Now were coming to be.”); JX 125 at 1 (stating “in May of 2009 Smart Beauty Now was
born”); Tr. 171:10–17 (Kotler) (testifying she owned, managed and controlled Smart
Beauty Now); JX 125 (Smart Beauty Now mission statement).

                                              32
process, Kotler began contacting Company accounts and competitors.147

On May 28, 2009, Kotler reached out to a representative of Sohum Cosmetics,

stating that while she was still “enjoy[ing] her position at theBalm Cosmetics,” she

wanted to pitch an idea for a new competing venture.148 During this time, Kotler

recruited a Company employee, Danielle Crepeau, to work at her new competing

firm, Smart Beauty Now.149

      G. The Shipmans Learn of Kotler’s ‘Fully Executed’ Warrant

         On July 24, 2009, approximately one week before she incorporated her

competing venture, Kotler subito sent a letter to the Company in which claimed she

held a 502-share warrant and requested notice of any Triggering Event

(the “Confirmation Letter”).150 Kotler sent the Confirmation Letter by certified mail




147
    See Tr. 99:19–100:5 (Kotler). Kotler acknowledges her “database” and “network”
included Company customers and clients. Tr. 169:4–21 (Kotler); see also JX 26; JX 29;
JX 30.
148
    JX 27. Kotler went on to say that she maintained “a database of over 5,000 potential
accounts, and a tremendous network of boutiques, spas, and salons that [she had]
established over the last several years.” Id. See also Tr. 192:4–193:2 (Kotler)
(when confronted with the fact that this email (JX 27) strongly suggests she was competing
with the Company while still “enjoying her position there,” Kotler in essence
acknowledged she was not being truthful with the recipient of the email); JX 117 at 12, 18
(Kotler writing on May 28, 2009, that she was “thinking about a change” despite her
testimony that she had already resigned as of May 26, 2009).
149
      See JX 117 at 24; Tr. 228:15–17 (Marissa).
150
   JX 34; Tr. 160:16–161:2 (Kotler). Kotler thoroughly explained her motive for sending
the Confirmation Letter at trial but, at her deposition, she could “not recall” what prompted
                                             33
and copied an attorney.151       She did not enclose her version of the warrant,

however.152 From Marissa’s perspective, therefore, the warrant to which Kotler

referred was for 533 shares with a Forfeiture provision that contained a perpetual

non-compete and non-solicit.153 Since Marissa had never seen a draft of a warrant

for 502 shares, “nothing [in the Confirmation Letter] made sense” to her.154 Upon

receipt of the Confirmation Letter, Marissa “called [Robert] and said, I got this weird

letter. And he said, put it in a file. I said, Okay. I put it in a file.” 155 Since the

Company had no reason to believe Kotler was in violation of the Forfeiture clause

of the warrant agreement, it did not respond to the Confirmation Letter or send it to

White & Case.156

         In mid-August 2009, not long after receiving Kotler’s Confirmation Letter,

members of the Shipman family, including Robert, saw that Kotler had a booth for



her to send the letter. See Tr. 73:1–8, 161:7–9 (Kotler). Indeed, the phrase “I do not
recall” appears 94 times in Kotler’s first deposition alone. JX 103.
151
      JX 35; JX 36.
152
      Tr. 228:22–24 (Marissa).
153
      Tr. 227:12–14 (Marissa).
154
   Tr. 229:7–10 (Marissa) (“Nothing made sense. This didn’t make any sense. The 502
shares didn’t make any sense. And I hadn’t seen that.”).
155
      Tr. 229:2–4 (Marissa).
156
   Marissa Dep. 121:13–124:5–23; Robert Dep. 151:20–24; PTO ¶ 19; JX 98 at 4–5;
JX 218.

                                          34
her business at the New York Gift Show very close to the Company’s booth.157 The

next day, the Shipmans took screenshots of Kotler’s Facebook page to demonstrate

she was competing with the Company.158 From then on, Marissa assumed whatever

warrant Kotler had was void.159

         Four years later, in 2013, when the Company was experiencing significant

growth and was considering a possible reorganization, the Shipmans collected

relevant Company books and records and saw, for the first time, a copy of the

warrant agreement with Kotler’s signature.160 They promptly sought legal advice on

July 10, 2013.161 Brahmst recommended that the Shipmans gather evidence of




157
      Tr. 227:24–228:4 (Marissa); Tr. 415:9–15 (Robert).
158
   JX 54; JX 319; Tr. 396:17–398:7 (Marissa) (testifying Kotler “wasn’t supposed to be
competing, because [the Company] had issued her a warrant that had a perpetual nonsolicit
and a perpetual noncompete”). That the Company was gathering evidence of Kotler’s post-
separation competition and seeking counsel on the subject is strong circumstantial evidence
the Company believed Kotler’s warrant would be forfeited if she competed with the
Company after her separation.
159
   Tr. 228:10 (Marissa) (testifying Kotler had simply “made a choice,” picking Smart
Beauty Now over her rights to equity in the Company); Tr. 468:1–2 (Robert) (“[Kotler]
made a business decision to do what she was going to do.”).
160
    Tr. 229:18–230:1 (Marissa) (describing when she first saw a warrant with Kotler’s
signature); Tr. 234:1–2 (Marissa) (noting the Company had “tak[en] off” during 2013);
Tr. 499:3–6 (Lourie) (stating that by the end of December 2013, “it became clear that the
company, for the first time in its history, was about to become substantially profitable”);
JX 70 at 8.
161
      Tr. 230:2–4, 338:2–20 (Marissa); JX 218; JX 315.

                                             35
Kotler’s competition.162 Because they had already done so, the Shipmans were able

to assemble their evidence very quickly.163

      H. The Company Reorganizes

            After experiencing significant growth, the Shipmans sought to decrease their

tax liability.164 In January 2014, Shipman Associates, Inc. switched from a C-

corporation to an S-corporation in order to avoid double taxation.165 In October

2014, the Shipmans formed DISC, an interest charge domestic international sales

corporation, again for income tax purposes.166 Marissa and Robert originally wholly

owned DISC, but they “agreed to offer [Chassin] shares in [DISC] in the same

percentage as [her] ownership in [the Company]” in recognition of Chassin’s loyalty

as a Company stockholder.167


162
      JX 315 at 1 (email advising the Shipmans to “find as much misconduct as you can”).
163
   See, e.g., JX 42 (sending screenshots from Kotler’s LinkedIn page); JX 39 (sending
screenshots from her Facebook page); Tr. 335:14–336:15 (Marissa).
164
      Tr. 499:3–22 (Lourie).
165
      Id.
166
    Tr. 498:17–18 (Lourie); JX 81; JX 47. DISC has no operations, physical assets or
employees. Id. It was formed by Marissa and Robert and was neither a parent nor a
subsidiary of the Company. See JX 120; Tr. 493:2–5 (Lourie); JX 43. As an IC-DISC,
DISC operates as a commissioned sales agent under its commission agreement with the
Company. Tr. 492:4–9 (Lourie); JX 49. Under IRS regulations, the Company is able to
deduct the commission it pays to DISC, and DISC’s stockholders receive favorable tax
treatment on the profits DISC earns. Tr. 492:4–23 (Lourie).
167
  JX 43; Tr. 327:2–14 (Marissa). See also Tr. 493:20–22 (Lourie) (explaining the
Company was not required to offer Chassin equity in DISC); Summa Hldgs., Inc. v.
                                             36
         The Company completed the reorganization on December 31, 2014.168 First,

the Company’s stockholders transferred all of their Company stock to Holdings in

exchange for an equal number of Holdings common shares.169 Then, the Company

was converted into an LLC, with Holdings becoming the Company’s sole holder of

Class B units.170 Finally, the Company issued Class A units of Shipman Associates,

LLC to Holdings, Robert and Chassin.171




Comm’r, 848 F.3d 779, 782–84 (6th Cir. 2017) (noting “[a] DISC’s shareholders often
will”—but need not—“be the same individuals who own the export company”).
Nevertheless, for nominal consideration, the Company provided Chassin 2.24% of the
issued and outstanding shares of DISC matching the percentage ownership Chassin held
(and still holds) in the Company. Tr. 326:7–12 (Marissa); JX 47; JX 96; JX 43; Lourie
Dep. 69:11–13.
168
      Tr. 499:3–22 (Lourie); JX 68 at 2.
169
    JX 58; JX 68 at 2–3. At the time of the reorganization, the Company’s common
stockholders were Marissa (7,400 shares), Robert (2,400 shares) and Hillary Chassin
(223 shares)––for a total of 10,023 shares. JX 68 at 3. The Company, however, completed
the Reorganization on the false belief that Marissa held 7,332 shares, Robert held 2,444
shares and Chassin held 224 shares––for a total of 10,000 shares. JX 68 at 2–3.
In November 2016, the stockholders ratified the Reorganization and the incorrect share
ownership figures. JX 68.
170
      JX 57; JX 68 at 3–4; JX 46 at 1 (Plan of Conversion ¶ 6).
171
    PTO ¶ 25. See also JX 83 (capitalization table displaying post-issuance capital
structure); JX 206 at Tab “A4ǀFacts,” Cell B14 (confirming issuances were made on
12/31/2014). Kotler found out about the conversion through counsel in August 2016, and
about the reorganization and equity issuances through discovery in this action. Tr. 87:6–
88:20 (Kotler).

                                              37
         The Company also began to make distributions to equity holders in 2014.172

After its reorganization, the Company made distributions to its holders of Class A

units: Holdings, Robert and Chassin.173 Holdings then paid dividends to its three

stockholders: Marissa, Robert and Chassin.174 DISC also paid dividends to its

stockholders for tax years 2014–18.175

      I. The Company Pursues a Sale

         The Company launched a sale process in 2016 and hired a team of advisors.176

Specifically, the Company retained Lazard Middle Market LLC as its financial

advisor and White & Case as its legal advisor.177 The Company then hired Heather

Lourie as a consultant to “prophylactically analyze the [C]ompany from a potential

buyer’s perspective and help the [C]ompany prepare for a transaction.”178 The



172
   JX 96; JX 115; PTO ¶ 29. From 2014 through 2017, the Company, Holdings and DISC
collectively distributed approximately $39 million to their equity holders. Id. Because the
Shipmans believed her warrant had been forfeited, neither the Company nor any of its
affiliates made any payments or transfers to Kotler in connection with any dividends or
distributions. Tr. 91:21–23 (Kotler); Tr. 228:10–14 (Marissa).
173
   JX 96; PTO ¶ 30; Tr. 182:18–21 (Kotler) (conceding the Company paid no distributions
to DISC).
174
      JX 96; PTO ¶ 30.
175
      JX 96.
176
      Tr. 237:4–21 (Marissa); PTO ¶¶ 34, 36; Tr. 508:1–510:20 (Lourie).
177
      JX 72 at 2; JX 86.
178
      Tr. 491:11–13 (Lourie).

                                             38
Company also engaged a controller and a staff accountant to repair and improve its

recordkeeping.179

         After reviewing the Company’s files, Lourie found the Kotler-signed

September 17 Draft of the warrant in Robert’s Connecticut office—but she did not

find any fully executed version or any 502-share version.180 For the sake of

achieving clarity as the Company prepared itself for sale, Lourie recommended that

the Company “investigate” and “resolve” the warrant matter.181

         In July 2016, the Company retained Jonathan Dennis, a California attorney

who had previously worked at White & Case, to contact Kotler and determine what

versions of the warrant she had in her possession.182 On August 23, 2016, Kotler




179
   JX 78 at 12. As noted, the Company’s record keeping and record retention practices
were sloppy. Marissa was (and is) a creative force but she lacks basic business instincts.
For his part, Robert joined his daughter to add his business acumen to the Company but he
demonstrated a lack of attention to detail when it came to documenting important Company
decision making. That experts were needed to locate or reconstitute Company records in
advance of the sale process speaks volumes.
180
      Tr. 502:22–504:11 (Lourie).
181
      Tr. 505:3–6 (Lourie); JX 228; JX 230.
182
    Tr. 240:13–17 (Marissa) (“Because we didn’t have anything . . . Heather [Lourie]
wanted to figure out where we were, and she didn’t like surprises, so she was like, Figure
it out.”); JX 60; PTO ¶ 37; Dennis Dep. 10:23–11:2, 13:15–21. Around July 8, 2016,
Dennis called Kotler and left a voicemail. JX 60; Tr. 78:14–79:21 (Kotler). Dennis
indicated he had been retained by the Company to help clean up its corporate records, and
he asked for a copy of the fully-executed warrant agreement. JX 60; Tr. 79:6–14 (Kotler).

                                              39
replied through counsel, who provided a copy of her version of the warrant.183 After

receiving Kotler’s “fully executed” version of the warrant, Marissa’s husband,

Andre Hakkak, who had been friendly with Kotler prior to her involvement with the

Company, reached out to the Kotlers in a botched effort to resolve the dispute that

was beginning to percolate.184 When those efforts failed, litigation followed.

      J. Procedural Posture

         Kotler filed this lawsuit on June 16, 2017.185 The Court held a two-day trial

on November 27 and 28, 2018. Having read the pretrial briefs, I made clear at the

start of trial that my verdict would likely turn on the credibility of witnesses since

the applicable law was relatively straightforward and basically undisputed.186

         During her deposition, it became clear that Kotler intended to rest her case on

her “fully executed” warrant with its “wet ink” signatures.187 She recalled virtually




183
      Tr. 81:22–82:7 (Kotler); JX 61; JX 62; JX 63; PTO ¶ 38.
184
   Tr. 239:9–24, 346:6–13 (Marissa); JX 116. Hakkak began his communications with the
Kotlers by cajoling and ended them with threats. Tr. 86:4–14 (Kotler). His involvement
with the Kotlers did nothing to advance the Company’s cause. Marissa would have been
far better off if she had addressed the matter directly. Tr. 239:21–24 (Marissa) (testifying
that she did not review or approve her husband’s communications with the Kotlers).
185
  JX 88. This filing was eight days following a Wall Street Journal article reporting the
Company was worth $600 million. JX 87.
186
      Tr. 5:12–6:8.
187
   See, e.g., Kotler First Dep. 125:18–19 (“I don’t remember, but I have an executed
agreement.”), 128:23–129:3 (“I do not remember how the actual signature process came to
                                             40
nothing about the warrant negotiations or execution.188 At the pretrial conference,

I emphasized that Kotler would “have a burden to demonstrate that there was an

agreement.”189 Apparently, this admonition sparked a recuperation of her memory

at trial.190

                                       II. ANALYSIS

         “To prevail on a breach of contract claim, the plaintiff must [first] prove the

existence of a contract.”191 Kotler was obliged to meet this burden with proof by a


be, but I have an executed warrant agreement with both of our signatures on it with an
agreed upon document.”).
188
   Indeed, at her first deposition, Kotler’s constant refrain was she did not know or did not
recall anything relating to the warrant negotiations or how it came to be executed by the
parties. See, e.g., Kotler First Dep. 12:12, 45:15, 47:6, 48:8, 49:10, 50:11–52:4, 60:16–24,
61:14, 72:3, 73:5–13, 84:5–20, 85:3–89:23, 90:1–95:22, 98:11–100:3, 102:7, 104:7,
107:16, 110:15, 112:6, 114:8, 115:6–119:12, 121:23, 122:3, 124:3, 125:11–18, 126:1–
130:21, 132:19–136:14, 157:6, 189:4, 191:1, 197:12–19.
189
      Telephonic Pretrial Conference on Pl.’s Mot. in Limine and Pl.’s Mot. to Strike at 5.
190
      See, e.g., Tr. 111:23–114:11 (Kotler).
191
    Zayo Gp., LLC v. Latisys Hldgs., LLC, 2018 WL 6177174, at *10 (Del. Ch. Nov. 26,
2018). See also Bakerman v. Sidney Frank Importing Co., 2006 WL 3927242, at *19
(Del. Ch. Oct. 10, 2006) (same). I note each of the drafts of the warrant agreement that
were circulated after the initial draft contained a New York choice of law clause. As to
matters of contract formation and interpretation, however, Delaware and New York law
are not in conflict. See Viking Pump, Inc. v. Century Indem. Co., 2 A.3d 76, 90 (Del. Ch.
2008). Since the conflict is “false,” I look to both Delaware and New York law for basic
principles. See Rohe v. Reliance Training Network, Inc., 2000 WL 1038190, at *8 (Del.
Ch. July 21, 2000) (Strine, V.C.) (discussing the doctrine of “false conflicts”). In reaching
this conclusion, I acknowledge that Defendant would have me apply Delaware law since
the warrant’s choice of law provision, like the rest of it, is invalid and the dispute is more
closely related to Delaware than New York. See Restatement (Second) of Conflict of Laws
§ 200 (1971) (“The validity of a contract, in respects other than capacity and formalities,
is determined by the law selected by application of the rules of §§ 187–88.”); see also id.
                                               41
preponderance of the evidence.192 In deciding whether Kotler carried her burden of

proving that a binding contract was created, I must first consider whether Kotler

proved that the parties reached a meeting of the minds.193

      A. Kotler Failed To Demonstrate a Meeting of the Minds

        To form an enforceable contract, the parties must have a meeting of the minds

on all essential terms.194 “Whether both of the parties manifested an intent to be

bound is to be determined objectively based upon their expressed words and deeds


§ 188 (referencing “(a) the place of contracting, (b) the place of negotiation of the contract,
(c) the place of performance, (d) the location of the subject matter of the contract, and
(e) the domicile, residence, nationality, place of incorporation and place of business of the
parties”). While this may be an accurate assessment of the choice of law analysis, I need
not go there because, again, the conflict is “false.”
192
    “Proof by a preponderance of the evidence means proof that something is more likely
than not. It means that certain evidence, when compared to the evidence opposed to it, has
the more convincing force and makes you believe that something is more likely true than
not.” Del. Express Shuttle, Inc. v. Older, 2002 WL 31458243, at *17 (Del. Ch. Oct. 23,
2002) (internal quotation marks omitted) (quoting Del. P.J.I. Civ. § 4.1 (2000)).
Put another way, if the Court is unable to discern what likely is or is not the truth, then the
plaintiff has not carried her burden. Cuonzo v. Shore, 958 A.2d 840, 844 (Del. 2008)
(“If the evidence is evenly balanced between the parties, then the plaintiff has failed to
meet his burden.”).
193
    Morton v. Evans, 1998 WL 276228, at *1 (Del. Ch. May 15, 1998); accord Fried v.
Kelly, 2007 WL 1821697, at *6 (S.D.N.Y. June 26, 2007) (noting the party contending a
contract was formed has the burden of showing the parties mutually intended to be bound),
aff’d, 317 F. App’x 86 (2d Cir. 2009).
194
    See Ramone v. Lang, 2006 WL 4762877, at *11 (Del. Ch. Apr. 3, 2006) (Strine, V.C.)
(finding there was no binding contract because “[t]he record is clear that [the parties] never
reached accord on the final terms of those instruments”); Schurr v. Austin Galleries of Ill.,
Inc., 719 F.2d 571, 576 (2d Cir. 1983) (“Under New York contract law, the fundamental
basis of a valid, enforceable contract is a meeting of the minds of the parties. If there is no
meeting of the minds on all essential terms, there is no contract.”) (citations omitted).

                                              42
as manifested at the time rather than by their after-the-fact professed subjective

intent.”195 “[I]f the Court finds substantial ambiguity regarding whether both parties

have mutually assented to all material terms, then the Court can neither find, nor

enforce, a contract.”196 As our Supreme Court recently reiterated, “all essential or

material terms must be agreed upon before a court can find that the parties intended

to be bound by it and, thus, enforce an agreement as a binding contract.”197

      At first glance, a wet ink, signed version of a contract looks to be solid

evidence of a meeting of minds. But it is not evidence so powerful that it negates

all other evidence to the contrary. Put another way, even if a purported agreement

is executed by both parties, when the parties’ “understandings of [a contractual]

prohibition or permission are incompatible,” and where the plaintiff “offered no




195
   Black Horse Capital, LP v. Xstelos Hldgs., Inc., 2014 WL 5025926, at *12 (Del. Ch.
Sept. 30, 2014) (internal quotation marks and citation omitted).
196
   Prince of Peace Enters., Inc. v. Top Quality Food Mkt., LLC, 760 F. Supp. 2d 384, 397–
98 (S.D.N.Y. 2011) (internal quotation marks omitted) (“Even if the parties intend to be
bound by a contract, it is unenforceable if there is no meeting of the minds, i.e., if the
parties understand the contract’s material terms differently.”) (alteration in original)
(internal quotation marks omitted).
197
    Eagle Force Hldgs., LLC v. Campbell, 187 A.3d 1209, 1230 (Del. 2018) (stating that
“in resolving this issue of fact, the court may consider evidence of the parties’ prior or
contemporaneous agreements and negotiations in evaluating whether the parties intended
to be bound by the agreement”) (footnote omitted).

                                           43
further evidence indicating” a meeting of the minds, “no enforceable agreement [is]

created.”198

       Kotler’s proffered “wet ink,” “fully executed” version of the warrant

agreement does not overcome the credible and convincing evidence that these parties

were not operating from the same page, or more precisely the same agreement, as

they negotiated its material terms. The circumstances surrounding the execution of

the warrant agreement, cloudy as they are, reflect it is just as (if not more) likely

Marissa believed she was signing a version with a perpetual non-compete as one

with Kotler’s diluted covenants. This is particularly so since Kotler could recall

nothing of importance regarding the negotiations or circumstances surrounding the

execution of the warrant agreement. Incredibly, she could not even recall who she

engaged as counsel to represent her during the negotiations, thereby cutting off a

likely source of contemporaneous evidence. The Company had already rejected




198
   Id. at 398–99. See also Ramone v. Lang, 2006 WL 4762877, at *11 (Del. Ch. Apr. 3,
2006) (Strine, V.C.) (“If terms are left open or uncertain, this tends to demonstrate that an
offer and acceptance did not occur.”); Schurr, 719 F.2d at 576 (where two parties executed
a consent judgment, but certain language rendered it “an utter nullity,” the court held “there
was no meeting of the minds on the meaning of the crucial language regarding scope, and
that, consequently, the consent judgment must now be declared a nullity and
unenforceable.”); Jackson v. Nocks, 2018 WL 1935961, at *6 (Del. Ch. Apr. 24, 2018)
(“Plaintiff fails to identify a single piece of contemporaneous evidence that reflects any
negotiation, let alone any agreement, to these terms. Therefore, I find that the Parties did
not create an enforceable contract under Delaware law.”).

                                             44
Kotler’s proposed 18-month tail.199 Yet Kotler could recall nothing about the

circumstances surrounding the Company’s abrupt decision to agree to a Forfeiture

clause that contained no forward-looking non-compete. Given that this was the key

area of disagreement, it is reasonable to expect that the party who got the better of

this deal term would remember something about when and how that occurred. That

Kotler could not undermined her credibility.

         Other contemporaneous and after-the-fact circumstantial evidence further

reveals the disconnect.200 If Kotler’s warrant reflected the final operative agreement,

why did White & Case prepare the Brahmst September 25 Draft—the draft that was,

from the Company’s perspective, meant to be the final execution draft—and why

did that draft not contain Kotler’s more narrow Forfeiture clause? 201 If Kotler’s

warrant reflected the final operative agreement, why would the Shipmans have

scrambled to gather evidence of Kotler’s post-employment competition?202 That

evidence would serve no purpose if the parties had agreed Kotler could compete the

moment she separated from the Company.


199
      Tr. 225:15–226:4 (Marissa).
200
    Delaware courts consider the “parties’ actions following the deal [as] informative” of
whether they reached a meeting of the minds. Trexler v. Billingsley, 2017 WL 2665059,
at *4 (Del. June 21, 2017) (ORDER).
201
      See JX 317.
202
      JX 39; JX 42; JX 54; JX 319; JX 320; JX 321; JX 323.

                                            45
         Moreover, while perhaps not as focused on details as one might expect of a

CEO, Marissa’s testimony that she would never agree to the Forfeiture language in

Kotler’s warrant—language that would allow Kotler to take equity in the Company

and then leave to compete with the Company the next day—was credible.203 Absent

credible evidence as to why the Company would have agreed to this, I have no reason

to believe the Company would ever have waivered from its position that Kotler’s

post-separation competition was a deal-breaker.204

      B. I Decline to Reach Defendant’s Fraud Defense

         Defendant urges me to find that Kotler’s purported warrant is the product of

fraud. Specifically, it contends that Kotler, knowing the Company would not agree

to her Forfeiture language, orchestrated a scheme to secure Marissa’s signature by

fraud and then affixed that signature to a version of the warrant agreement the

Company had never seen nor agreed to. While I agree the preponderance of the

evidence supports that Marissa had not seen Kotler’s version of the warrant when

she executed the signature page Kotler mailed to her, that Kotler then appended that

signature page to her warrant, and that Kotler then proffered that “fully executed”

warrant as the definitive agreement, I need not grapple with the competing evidence




203
      Tr. 241:20–242:3, 398:8–18 (Marissa); Tr. 413:3–14 (Robert) (same).
204
      See Tr. 208:4–209:3 (Marissa); Tr. 413:3–14, 468:1–11 (Robert).

                                             46
regarding Kotler’s mental state, or mens rea, as these events unfolded.205 I have

found the parties failed to reach a meeting of the minds regarding a material term

(the Forfeiture clause). That is enough to enter judgment for the Defendant.206

                                III.   CONCLUSION

      Because I find Plaintiff did not prove the existence of a valid contract, I find

she has not proven a breach of contract. She also has not proven her claims for

declaratory judgment or breach of the implied covenant of good faith and fair

dealing. My verdict, therefore, is for Defendant. The parties shall confer and submit

an implementing final judgment and order within ten (10) days.




205
   See, e.g., Tr. 305:19–22 (Kotler) (“Q. Would you agree with me, though, that sending a
doctored document to your boss is a good way to get fired? A. Yes, I do.”).
206
   Black Horse Capital, LP, 2014 WL 5025926 at *12 (internal quotation marks omitted)
(To accept a contract, parties must demonstrate a clear showing of assent “based upon their
expressed words and deeds as manifested at the time[.]”).

                                            47
