Case Background
A former media-company president sued his old employer after the company refused to pay severance and other compensation following his termination. The employer countered that the executive deceived its Compensation Committee and owed the company money for disloyal conduct. The case went to a five-day jury trial in the Southern District of New York.
Andrew Q. Kraft joined The Maven Inc., the company that later became The Arena Group Holdings Inc., in December 2018 as Chief Revenue Officer. He moved through several senior positions and eventually served as Chief Operating Officer and then President, Operations. On January 1, 2021, Kraft signed an Amended and Restated Executive Employment Agreement. The Maven Inc. renamed itself The Arena Group Holdings Inc. in September 2021.
Through 2023, Arena searched for an investor. In August 2023, Manoj Bharghava, a businessman who founded the 5-Hour Energy caffeine beverage brand, signed a letter of intent through his entity to acquire a majority stake of approximately 65 percent in the company. Around the same time, effective August 1, 2023, Kraft and Arena amended his contract: the company promoted him to President, Operations, set his annual salary at $500,000, and restructured his bonus. On December 5, 2023, Arena ended Kraft's employment. Kraft maintained the company terminated him without cause; Arena later claimed it fired him for cause. Kraft filed suit in April 2024.
Cause
Kraft sued because Arena refused to pay the severance, salary continuation, bonuses, stock options, restricted stock units, and health-coverage reimbursement his agreements guaranteed after a without-cause termination. He also accused Bharghava of directing Arena to fire him without board approval and of causing Arena to withhold his compensation.
Injury
Kraft alleged the company's refusal left him without the compensation his contracts promised, including unpaid severance equal to a year of salary and a year of bonus, unpaid 2023 quarterly bonus amounts, lost COBRA reimbursement, and stock options and restricted stock units that never vested or transferred to him.
Damages Sought
In his complaint, Kraft sought no less than $1,000,000 in severance, consisting of one year of his $500,000 salary and one year of his $500,000 bonus. He also sought $375,000 for the first three quarters of his 2023 annual bonus, $500,000 in salary continuation under a separate change-in-control agreement, and $300,000 for a bonus tied to the closing of the business-combination deal with Simplify Inventions LLC. He further asked for reimbursement of up to 18 months of COBRA premiums, full vesting and extended exercise rights for his stock options and restricted stock units, prejudgment interest, and the costs of the lawsuit.
Key Arguments and Proceedings
Legal Representation
Plaintiff: Andrew Q. Kraft
· Counsel for Plaintiff: Anthony R. Filosa | Brett D. Zinner | Arthur S. Laitman
Defendant: The Arena Group Holdings Inc. and Manoj Bharghava
· Counsel for Defendant the Arena Group Holdings Inc.: Adam M. Meehan | Kerstin M. Miller
· Counsel for Defendant Manoj Bharghava: Eric J. Pelton | Lauren Walas
Key Arguments or Remarks by Counsel
The Court narrowed the case before trial. On December 27, 2024, it dismissed Kraft's tortious-interference claim against Bharghava with prejudice under Rule 12(b), leaving Kraft's breach-of-contract claim against Arena and Arena's three counterclaims for the jury. Judge Lewis J. Liman presided over a five-day trial on April 21, 22, 23, 24, and 27, 2026.
In his complaint, Kraft maintained that he performed all terms of his employment agreement, that the company never furnished him with the written for-cause notice his contract required, and that Arena recast his firing as "for cause" weeks later in a backdated letter to avoid its payment obligations. In its answer and counterclaims, Arena maintained that Kraft forfeited his compensation through disloyal conduct tied to executive compensation proposals and his dealings with the company's buyer.
Claims
Kraft brought two claims. The first, against Arena, alleged breach of the employment agreement: Kraft alleged the company owed him severance, salary continuation, quarterly bonuses, COBRA reimbursement, stock options, and restricted stock units after a without-cause termination and paid him none of it. The second, against Bharghava, alleged tortious interference; Kraft alleged Bharghava directed Arena to fire him without board approval in violation of the company's bylaws and Delaware law, and caused Arena to withhold his compensation. The Court dismissed the second claim before trial.
Defense
Arena denied it owed Kraft anything and countered that it terminated him for cause based on his conduct around executive compensation in the months before the sale. Arena raised twenty-three affirmative defenses and pressed three counterclaims.
Faithless servant. Arena alleged Kraft breached his duty of loyalty by pushing through compensation for himself and close colleagues without proper Compensation Committee approval and by hiding those moves from the company's buyer.
Fraudulent concealment. Arena alleged Kraft told the Compensation Committee that the buyer had discussed and approved certain change-in-control bonuses when no such discussion or approval existed.
Breach of fiduciary duty to disclose. Arena alleged Kraft failed to tell the Compensation Committee and the board that the buyer had asked the company to hold off on new severance and compensation packages.
In his complaint, Kraft maintained that his salary increases, title promotion, and the terms of the August 2023 agreement were all approved by the Compensation Committee.
Jury Verdict
The jury returned its verdict on April 27, 2026, and it favored Kraft on every issue submitted. On the breach-of-contract claim, the jury found that Kraft substantially performed all terms of his employment agreement. It further found that Arena failed to prove it furnished Kraft with a written notice of termination for cause that set forth the termination date and stated, in reasonable detail, the circumstances claimed to provide a basis for termination, as required by Section 1.3(b)(i) of the agreement. Under the verdict form's instructions, that finding required the jury to treat the termination as not for cause.
The jury found that the Compensation Committee approved the August 1, 2023 agreement in accordance with corporate governance procedures required by the governing bylaws and charter. It also found that Kraft earned unpaid quarterly bonuses for 2023, setting his performance-metric attainment at 50 percent for the first quarter, 50 percent for the second quarter, and zero for the third quarter.
The jury rejected all three counterclaims. It found that Arena failed to prove Kraft breached his duty of loyalty and care to the company, failed to prove by clear and convincing evidence that Kraft made a false statement of material fact, and failed to prove Kraft breached his duty to disclose material facts to the Compensation Committee. The jury also rejected Arena's mutual-mistake defense.
Judgment
On July 10, 2026, Judge Liman entered judgment for Kraft and against Arena for $1,105,269. That total covered $500,000 in severance equal to his annual salary, $500,000 in severance equal to his annual bonus, $50,269 in COBRA reimbursement, and $27,500 each for his first quarter and second-quarter 2023 bonuses. The judgment did not include the $500,000 change-in-control salary continuation, the $300,000 deal-closing bonus, or the stock-option and RSU vesting that Kraft also sought. The Court dismissed all three counterclaims on the merits and confirmed that the tortious-interference claim against Bharghava remained dismissed with prejudice. The judgment awarded Kraft his Court costs, post-judgment interest under 28 U.S.C. § 1961, and prejudgment interest at nine percent per annum under CPLR 5001 and CPLR 5004 — running from July 19, 2024 on the $1,000,000 severance, from September 12, 2024 on the $50,269 COBRA amount, and from December 5, 2023 on the $55,000 in quarterly bonuses. The Court reserved any award of attorneys' fees for a later motion.
Court documents are available upon request at [email protected]
