there's no WAY an experienced founder like kyle would have given 50% of the company away, especially without a vesting schedule.
Given that the plaintiff has turned down multi-million settlement offers, and given that there's two quite reputable law firms working for the plaintiff who aren't in the habit of taking no-hoper cases, what's more likely - that the case is 'total bullshit', or that something actually was missed and overlooked in the early days that's now going to cost the company dearly?
If they initially agreed to a 50-50 split and then never nailed down the vesting paperwork or resolved the ownership issue after the plaintiff's departure - well, that's unfortunate, but that's on them.
Sam alludes to it in his blogpost...
here's a direct quote from sam's post (http://blog.samaltman.com/cruise) : "Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity."
but as he alludes to no agreement exists, there is no "standard" in contract terms to rely on.
unless it was assumed in the YC application. Thus not mentioned. Thus no evidence of a verbal agreement. Ergo it doesn't exist.
Therein lies the danger of assumptions.