Former top executive withdraws lawsuit against and its founder

A former top executive at has voluntarily dismissed with prejudice a lawsuit filed about two years ago against the company and its leadership, including founder Vishal Garg, that accuses the defendants of violating labor and securities laws when pursuing the firm’s goal to go public. 

Attorneys for Sarah Pierce — Better’s former executive vice president for customer experience, sales and operations — and the defendants sent a stipulation of voluntary dismissal with prejudice to a U.S. district court in New York on April 22. Her attorneys haven’t replied to HousingWire‘s request for comments. 

A spokesperson for Better said the company had no comment other than it is “pleased that the case is resolved.”

Pierce filed the lawsuit against Better Holdco, Garg and general counsel Nicholas Calamari on June 8, 2022, under multiple claims including violation of labor laws, defamation and breach of fiduciary duty. She asked for about $200 million in compensatory damages.   

Pierce, who started working at in September 2020 and reported directly to Garg, claims the company’s founder misled investors by stating that Better would reach profitability by the end of first-quarter 2022 when he knew that it was impossible.  

The company also made investors believe that 30% of its direct-to-consumer-funded loans in 2020 came through internet traffic converted without paid marketing efforts when the correct share was 12%. 

Pierce claims she faced retaliation, with the CEO blaming her for the company’s deteriorating financial situation, putting her on unexplained administrative leave, and shutting off access to her computer and email, per the lawsuit. Pierce’s employment ended in February 2022. 

In late September 2023, Judge Analisa Torres of the U.S. District Court of the Southern District of New York granted, Garg and Calamari a motion to dismiss most of Pierce’s claims.

But Torres also maintained the accusations related to New York Labor Law § 740 retaliation and the defamation claim under the theory of respondeat superior. Also, Garg’s motion to dismiss Pierce’s defamation claim was denied. 

In August 2023, Aurora Acquisition Corp. — the special purpose acquisition company working to make Better public — said the Securities and Exchange Commission (SEC) ended an inquiry of the companies that was prompted by Pierce’s lawsuit. There was no enforcement action. 

Better went public later than month through a deal with Aurora. 

In another litigation matter involving Pierce and Better, Torres decided that the former executive has to repay a loan to Better that, per the terms of the agreement, totals about $2.7 million (including interest).

That’s because the parties entered into two partial recourse promissory notes, whereby Better lent $2.27 million with repayment for a 51% recourse. The earliest due date was 120 days after the termination of her employment.  

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