Where a plaintiff filed a complaint claiming to be owed severance benefits under her employment agreement, a judgment dismissing that complaint must be reversed under applicable Delaware law because the plaintiff adequately alleges that the defendant obligated itself to pay severance benefits by ending her employment under the agreement without cause.
“Valerie Sullivan worked for etectRx, Inc. (‘etectRx’), a digital health company, as its CEO from August 2020 until August 2021. Her one-year, automatically renewable employment agreement required etectRx to pay her twelve months of salary as severance benefits in the event her ‘employment [wa]s terminated by the Company’ without cause or if Sullivan terminated her employment for good reason. After etectRx decided that it no longer wished to continue its relationship with Sullivan as defined in the employment agreement and she subsequently left the company, etectRx refused to pay severance benefits. The company argued that it merely exercised its right not to renew the employment agreement and thus did not terminate Sullivan’s employment. The district court accepted this argument in granting etectRx’s motion to dismiss for failure to state a claim, and Sullivan timely appealed.
“We agree that a mere non-renewal of the employment agreement by etectRx would not have entitled Sullivan to severance benefits. But we also find that Sullivan’s complaint adequately alleges that etectRx obligated itself to pay severance...
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