Update: Krafton has shared a statement on the lawsuit's discovery phase, which I have included in full below.
Krafton believes the discovery requests made by the former executives are overly broad and extend beyond what is relevant to the core issues. We have complied, and will continue to comply, with all of the court’s rulings on discovery. We remain focused on developing Subnautica 2 and delivering the best possible experience to players.
One of the reasons given for the termination was the state of the game. The founders believed that it was and planned to go through with it; Krafton, meanwhile, believed it for its debut and that [[link]] the founders had been .
But there's been a surprising U-turn, with Krafton significantly changing its argument.
The lawsuit is now in the discovery phase, so Fortis Advisors, which represents the ousted founders, sought discovery to see if Krafton held evidence to back up its claims. "But despite its obvious relevance, Krafton feigned astonishment during the parties' meet and confers at how it could possibly be part of Phase I," Fortis said.
Essentially, Krafton said that documents relating to the readiness of the game were irrelevant to the termination—which is what this phase of discovery is focused on—despite this being the reason cited in the termination notices, which was also repeated publicly and in court.
"The termination notices of the founders gave one reason for their termination," said Fortis, "and that was the supposed lack of readiness of Subanutica 2 for release. Krafton reiterated that basis for its actions repeatedly."
Fortis called it a "seismic shift in the case" and "a little bit bewildering". This was also echoed by the judge, Lori W. Will, when the parties met for a ruling on the filed motions, saying: "Well, that's something that we definitely need to get to the bottom of today, because that is precisely what was cited as the reason in the answer."
Krafton's representatives were not clear about why this argument [[link]] has been taken off the table, only that it has been, and that it's no longer why they are saying the founders were terminated.
Instead, Krafton is focusing on the argument that the founders "abandoned their posts" and "deceived" their employer. Causing more confusion is the accusation that the founders downloaded files and kept devices with confidential information on them. This only came to light after the termination, so its relevance has been questioned.
Krafton's position is that this justified their termination after the fact, and it filed a motion to forensically inspect the founders' devices. The founders, meanwhile, contend that they had a right to those documents and devices, and that the motion is too invasive—and to the latter point, the judge agreed.
Fortis also alleged that Krafton hasn't been playing ball, pushing back against some of its requests for discovery and refusing to confer. It claimed it needs emails and documents that relate to the earnout (the founders have accused Krafton of intentionally delaying the game so it ) but Krafton is only willing to provide data from two people high up in the company, rather than employees who were "on the ground".
Another point of contention is what documents Krafton is willing to provide: specifically, only where the word "earnout" intersects with the word "termination".
"That's very narrow," the judge replied. "That sounds like a really terrible email [[link]] for someone to write, and it's hard for me to imagine that they'd be that blunt about it."
Krafton also argued that the plaintiff requested too many custodians—people who possess relevant data—and that it would take too long. The judge agreed the number was too high, but that the two parties would need to confer—something that Krafton had previously declined to do after it changed its argument. "That's very frustrating," the judge said.
The discussion of the motions ended with both parties agreeing to confer, at least, and confirmation that game readiness was not the reason why the founders were terminated.
Still, the whole thing remains rather messy, and it continues to be unclear why Krafton has made a U-turn when it was so adamant before that the state of Subnautica 2 was one of the reasons the founders were fired, which only happened after discovery was sought. What does seem clear, though, is that this likely won't be resolved any time soon.