Facebook and Oculus VR Founder Move for JMOL During Breach of Contract Trial

Last Saturday, defendant Facebook asked the court to resolve the entirety of a breach of contract suit in their favor on the basis that plaintiff Total Recall Technologies (TRT) failed to establish the essential elements of its breach of contract and constructive fraud claims. The case against Facebook Technologies LLC (FBT) and virtual reality headset company founder Palmer Luckey centers on Luckey’s alleged failure to deliver the VR headset known as the “Rift” to TRT after delivering two prior prototypes that he agreed to make.

The case began in May 2015, 14 months after Facebook purchased Oculus VR for more than $2 billion following the start-up’s commercialization of the Rift. TRT claimed that Oculus VR used a design that Luckey created when he was under contract with the company, and therefore that it has an ownership interest in the Rift. Notably, one TRT partner, Ron Igra, wanted to pursue a lawsuit against Luckey while the other, Thomas Seidl, did not. According to this week’s motion, Seidl claimed that Igra’s suit is meritless.

In June 2020, the Ninth Circuit Court of Appeals reversed the district court’s grant of summary judgment in the defendants’ favor. The ruling found that TRT principal Ron Igra had the authority to bring the suit on behalf of the partnership. 

In the past few weeks, the court has overseen five days of trial before a San Francisco, California jury. The trial is scheduled to resume on Tuesday.

In last week’s motion, the defendants averred that no reasonable jury could conclude that TRT proved its breach contract claim. The partnership did not present evidence that Luckey breached a lawful contract for exclusivity, the filing says. To illustrate the purported tenuousness of the plaintiff’s viewpoint, the defendants argue that “TRT believes that Luckey signed away the rights to his life’s work in a two-sentence email and agreed to be TRT’s indentured servant for a period that is apparently indefinite.”

As to the second claim, FBT’s alleged constructive fraud, the motion asserted that the plaintiff has not established prerequisites of the claim, including that TRT and Luckey were in a “confidential relationship.” A reasonable jury could not find that partner Seidl was “vulnerable” to Luckey, then a teenager, “because Luckey had more experience with [head mounted displays], despite Seidl’s extensively detailed view that he was an innovator in the field,” the motion said.

At a minimum, FBT asked for dismissal from the case. “FBT never had a contractual relationship with Seidl or TRT; the only claim against it is for constructive fraud. TRT’s theory for holding FBT liable, as reflected in its proposed jury instructions, hinges on the alleged conduct of FBT’s former CEO, non-party Brendan Iribe,” the defendant argued. 

Palmer Luckey and FBT are represented by Mayer Brown LLP and Cooley LLP. Luckey is additionally represented by Durie Tangri LLP. TRT is represented by  Quinn Emanuel Urquhart & Sullivan LLP.