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1 Claire E. Cochran (SBN 222529)
Natalie A. Xifo (SBN 280930) ELECTRONICALLY
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LAW OFFICES OF CLAIRE COCHRAN, P.C.
100 Pine Street, Suite 1250
F I L E D
3 Superior Court of California,
San Francisco, CA 94111 County of San Francisco
4 Telephone: (415) 580-6019 05/04/2021
Facsimile: (415) 745-3301 Clerk of the Court
BY: EDNALEEN ALEGRE
5 Deputy Clerk
6 Attorneys for Plaintiff
NATHAN PETER RUNYON
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8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 FOR THE COUNTY OF SAN FRANCISCO
10 [UNLIMITED JURISDICTION]
11 Case No. CGC-19-581099
NATHAN PETER RUNYON
12 DECLARATION OF NATALIE A. XIFO,
Plaintiff, ESQ. IN SUPPORT OF PLAINTIFF’S
13 OPPOSITION TO DEFENDANTS’
v. MOTION TO COMPEL DEPOSITION
14 OF WITNESS AND FOR SANCTIONS
15 PAYWARD, INC., a California Corporation
d/b/a KRAKEN; and KAISER NG an individual
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and DOES 1-50, inclusive
17 Date: May 17, 2021
Time: 9:00 a.m.
Defendants. Dept.: 301
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1 DECLARATION OF NATALIE A. XIFO, ESQ.
2 I, NATALIE A. XIFO, ESQ., declare as follows:
3 1. I am an attorney licensed to practice law in the State of California. I am a Senior
4 Associate of the law firm Law Offices of Claire Cochran, P.C. (“LOCC”), attorneys of record
5 for Plaintiff NATHAN PETER RUNYON (“Plaintiff”) in the within civil proceeding. If called
6 upon as a witness, I could and would competently testify to the following:
7 2. This Declaration is in support of Plaintiff’s Opposition to Defendant’s Motion to
8 Compel Deposition of Witness and for Sanctions.
9 3. Plaintiff’s initial demand letter was dispatched on September 13, 2019. On
10 October 24, 2019, we received correspondence from Payward’s newly retained attorney,
11 Christopher LaVigne of Pierce Bainbridge. Mr. LaVigne responded that Plaintiff’s allegations
12 in his demand letter were false and Payward had documents which proved Plaintiff’s
13 “allegations of improprieties with Ms. Wong’s and Mr. Mason’s vesting schedules are false. As
14 Kraken has already explained, and the attached offer letter and Board Consent show, 1/6th of
15 Ms. Wong’s shares vested on the one-year anniversary of her vesting commencement and
16 1/72nd of her total shares vested in monthly installments thereafter.” Mr. LaVigne attached a
17 copy of Ms. Wong’s employment offer and the Action by Unanimous Written Consent of the
18 Board of Directors of Payward, Inc (“November 2017 Board Consent”). A true and correct copy
19 of Mr. LaVigne’s letter (absent the attachments, due to the Confidential nature of the
20 documents) is attached hereto as Exhibit “A.”
21 4. After receipt of Mr. LaVigne’s October 24, 2019, correspondence I was
22 informed that Plaintiff had a copy of the November 2017 Board Consent which supported his
23 contention that the November 2017 Board Consent Mr. LaVigne sent on October 24 was
24 falsified and not the true and correct version our client relied upon when he populated the Carta
25 program. As such, Plaintiff dropped off a USB flash drive which contained a few documents he
26 obtained during his employment which supported his whistleblower complaints.
27 5. On November 14, 2019, I plugged the USB flash drive into my office Mac Mini
28 computer. There were only screenshots of an email exchange my client had with Goodwin law
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DECLARATION OF NATALIE A. XIFO
1 firm wherein he asked for a copy of the November 2017 Board Consent. They responded with
2 an attachment of the November 2017 Board Consent.
3 6. On October 25, 2019, LOCC informed Mr. LaVigne of the issues they
4 discovered with the November 2017 Board Consent he provided. Ms. Cochran explained “The
5 most pressing and concerning issue in this case which we fear you are not aware of is the
6 November 2017 Board Consent produced by Kraken. Our client is adamant that he has never
7 seen the version you produced and attached to your letter dated October 24. He believes the
8 Board Consent you sent (dated October 18, 2017) differs in many respects from the version he
9 reviewed when entering employees’ vesting schedules in Carta. During the course of our
10 client’s employment, Mr. Ng provided Mr. Runyon with the Board Consent in a shared google
11 drive folder sometime in February 2019. Ms. Anastasia Burtseva, the accounting manager, also
12 provided Mr. Runyon with the November 2017 Board Consent. Mr. Runyon also received the
13 Board Consent from the Goodwin law firm via File Transfer Portal in April 2019. The version
14 Mr. Runyon received from Mr. Ng, Ms. Burtseva and the Goodwin firm is not the version your
15 firm emailed on October 24th. Attached to this Correspondence, we have a copy of the
16 November 2017 Board Consent which supports our client’s position that the Board Consent
17 differed from what Mr. Ng directed Mr. Runyon to input into Carta for Ms. Wong and Mr.
18 Rapp. It also supports our position that the Board voted on a different vesting schedule for Ms.
19 Wong than what was provided to her in her Stock Options Plan. We are enclosing a copy of the
20 November 27, 2017 Board Consent provided to our client identified as Batestamp
21 CONFIDENTIAL_RUNYON 000001-000011. The attached Board Consent supports our
22 position that Mr. Runyon was fired for whistleblowing and challenges the authenticity of your
23 client’s Board Consent produced yesterday.” A copy of Ms. Cochran’s letter cannot be attached
24 as it was marked as Confidential due to settlement communications.
25 7. Following this correspondence Mr. LaVigne advised LOCC to file a
26 Complaint and any settlement negotiations ceased.
27 8. I am the only person in possession of the USB flash drives. Plaintiff did not
28 make copies of the documents on the USB flash drives. The confidential documents have not
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DECLARATION OF NATALIE A. XIFO
1 been in his possession since October 30, 2019.
2 9. The only time any of the documents on the USB flash drive have been produced
3 was in Confidential Settlement Communications with Mr. LaVigne and in response to
4 Defendants’ Request for Production of Documents pursuant to a Stipulated Protective Order and
5 marked CONFIDENTIAL. LOCC has not produced, provided, distributed shared or shown any
6 of the documents on the USB flash drive to any other individual, including, but not limited to
7 Employee 5. As soon as Plaintiff produced the November 2017 Board Consent in response to
8 Defendant’s Request for Production, they filed a lawsuit against him in U.S. District court
9 alleging, among other false accusations, that Plaintiff hacked into their computer database and
10 illegally obtained various confidential documents.
11 10. The documents on the UBS flash drives were obtained by Plaintiff through the
12 course of his employment at Payward. After the Board of Directors voted on or around June 30,
13 2019 and did not change Ms. Wong’s vesting schedule from four to six years, Plaintiff became
14 concerned. Plaintiff believed if the vesting schedules of various Payward employees did not
15 match the Board Minutes he would be held responsible if and when Payward was audited. He
16 continually reminded his manager, Kaiser Ng, of this issue. Because Mr. Ng never rectified this,
17 Plaintiff saved documents that supported his position that Mr. Ng and Payward were defrauding
18 their employees and manipulating their compensation.
19 11. There is a public policy exception to confidentiality agreements to protect
20 whistleblowers who appropriate company documents. Whistleblowers often need documentary
21 evidence to substantiate their allegations. The party seeking to invoke the public policy
22 exception must justify why removal of the documents was reasonably necessary to support the
23 allegations of wrongdoing. Plaintiff saved only documents that he had properly accessed in the
24 course of performing work as a Financial Analyst and each document on the USB flash drive he
25 saved was he believed were related to his allegations of Kaiser Ng’s wrongdoing which he
26 raised to Kaiser Ng during his employment. In response to Defendant’s Request for Production
27 of Documents, Plaintiff produced relevant documents from this USB flash drive. The rest of the
28 documents were determined at that time to not be responsive to any of Defendant’s requests. It
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DECLARATION OF NATALIE A. XIFO
1 was not until March 2021 when Defendants sought to take the deposition of Plaintiff on March
2 4, 2021 that the documents on the USB flash drive needed to be reviewed and produced.
3 12. More importantly, all the documents and how and when the documents were
4 saved onto the USB flash drives are essential in defending Plaintiff in the Payward v. Runyon
5 federal case. Payward is suing Plaintiff for hacking into their database after he was fired and
6 alleged he obtained confidential documents which Plaintiff only produced in response to
7 Defendant’s discovery requests in this action. Due to Payward’s retaliatory and punitive
8 litigation tactics (i.e. suing their former employee in federal court by wrongfully accusing him
9 of hacking their database and filing the underlying motion for sanctions seeking an award of
10 over $160,000) our firm spent numerous hours and met with experts in order to take the
11 appropriate and correct procedural steps to produce the USB flash drives all while also
12 protecting our client’s ability to defend himself in the federal case. Absent a forensic
13 examination and simply sending the USB flash drives back to Payward would have deprived
14 Plaintiff of the ability to properly and successfully defend himself in the pending federal case.
15 13. In preparation for Plaintiff’s deposition on March 4, 2021 and related document
16 production pursuant to his deposition notice, we prepared production in our usual custom and
17 practice. On March 1, 2021, I spoke Tom Howe, Electronic Discovery Lawyer certified in
18 Computer Forensics, mobile forensics and TSCM Counter Surveillance at Howe Law Firm. Mr.
19 Howe is one of the leading e-discovery lawyers in the country and advises attorneys on the
20 production and extraction of ESI. I was advised by Mr. Howe that we should not simply
21 produce the documents as we would in the regular course of discovery nor should we just return
22 the USB flash drive to opposing counsel. We were advised that we needed to retain an expert to
23 forensically image the USB flash drives Plaintiff created prior to production. We needed a
24 forensic road map to prove who, when and how the documents were downloaded. Simply
25 returning the USB flash drives would prevent us from proving that Plaintiff did not hack any
26 Payward database. However, Mr. Howe would not review the USB flash drives absent a Court
27 Order or a stipulation from both parties that the Confidential data can be examined by an expert
28 or third party.
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DECLARATION OF NATALIE A. XIFO
1 14. On March 3, 2021, LOCC advised Mr. Lavigne of this issue and requested he
2 stipulate to a joint expert. He refused and instead demanded we immediately return the flash
3 drives.
4 15. Plaintiff’s deposition proceeded as scheduled on March 4, 2021 for over 6 hours.
5 Mr. LaVigne questioned Plaintiff about the USB drives and the contents therein. As an effort to
6 meet and confer Ms. Cochran offered that Plaintiff would sit for a second day of deposition after
7 Payward received the contents of the USB drives along with the production of records from
8 Plaintiff’s therapist. However, Mr. LaVigne declined the offer and never set a second day of
9 deposition of Plaintiff; instead LOCC was served with Defendants’ Motion to Compel and
10 Sanctions.
11 16. To preserve the evidence properly Plaintiff filed an ex parte application on
12 March 12, 2021 requesting this Honorable Court appoint a joint forensic ESI expert and/or
13 special master. Plaintiff’s motion was denied. The Court did not order or even state Plaintiff
14 must produce the documents without delay.
15 17. On March 17, 2021, LOCC retained an expert in Los Angeles who was willing to
16 conduct a forensic examination of the USB drives absent a court order. The other 3 experts
17 LOCC tried to retain refused to accept the job absent a stipulation and/or Court Order. On
18 March 29, 2021, LOCC produced the contents of the USB flash drives and a Declaration from
19 this expert on what he discovered on the USB flash drives, how they were downloaded and
20 saved. (See Declaration of Kevin Cohen filed concurrently herein). To date, Defendants have
21 not requested a second day of Plaintiff’s deposition. Instead they filed a request to continue the
22 trial.
23 18. This Declaration is not intended to be, nor shall it be construed as being, a waiver
24 of attorney-client privilege or attorney-client work product doctrine. I have no client authority
25 to waive the attorney work-product doctrine, and I do not intend to do so by anything set forth
26 herein.
27 I declare under penalty of perjury under the laws of the State of California that the
28 foregoing is true and correct.
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DECLARATION OF NATALIE A. XIFO
1 Executed on May 4, 2021, at Los Angeles, California.
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DECLARATION OF NATALIE A. XIFO
Exhibit A
Christopher N. LaVigne
I PIERCE BAINBRIDGE I Andrew Calderón
355 S. Grand Avenue, 44th Floor
Los Angeles, CA 90071
clavigne@piercebainbridge.com
acalderon@piercebainbridge.com
(213) 262-9333
VIA EMAIL
October 24, 2019
Claire E. Cochran
Law Offices of Claire Cochran, P.C.
100 Pine Street, Suite 1250
San Francisco, CA 94111
(415) 580-6019
claire@clairecochranlegal.com
Re: Nathan Runyon’s Demand Letter and Draft Complaint [Runyon v. Payward, Inc. d/b/a
Kraken, et al.]
Counsel,
We represent Payward, Inc. d/b/a Kraken (“Kraken”) in connection with Nathan Runyon’s
threatened litigation against Kraken and Mr. Ng as reflected in Mr. Runyon’s September 13th demand
letter and his most recent draft complaint, dated October 18, 2019. Your most recent communication
with my clients indicates Mr. Runyon has declined Kraken’s settlement offer of $55,000 (representing 6-
months’ severance for Mr. Runyon) and counter-demanded $575,000. Kraken declines this counter
demand and, as you note, has no intent to engage in a “step-by-step” series of counter offers with your
client.
Instead, we write in preparation for litigation regarding the persistent factual and legal problems
contained in Mr. Runyon’s draft complaint. Among other things, the draft complaint includes numerous
demonstrably false allegations and contains confidential, irrelevant, and salacious allegations with no
bearing on Mr. Runyon’s claims. Kraken has repeatedly attempted to engage with you regarding these
issues, but you have made it clear that Mr. Runyon intends to include these irrelevant and false
allegations notwithstanding Kraken’s objections. Accordingly, should Mr. Runyon fail to correct these
deficiencies before filing his complaint, Kraken reserves the right to pursue all available remedies,
including asserting counterclaims, moving to strike, and seeking sanctions.
1. Mr. Runyon’s Confidential, Irrelevant, and Salacious Allegations are Improper
Mr. Runyon’s draft complaint contains many unnecessary, and false, allegations that do not form
the basis of any claim and are only included because they sound salacious. For example, Mr. Runyon’s
accusations about personal relationships and overseas revenue have no bearing on any cause of action.
Their inclusion is a blatant attempt to force Kraken to pay Mr. Runyon an exorbitant amount of money.
Pierce Bainbridge Beck Price & Hecht LLP
BOS | CLE | DC | LA | NY
PIERCE BAINBRIDGE
Claire E. Cochran
October 24, 2019
Page 2
Most of these unnecessary allegations also violate Mr. Runyon’s confidentiality agreement,
which you possess. These include, among others, Mr. Runyon’s allegations of employee incompetence
and termination, audits and policy letters, employee coding capabilities, personal relationships, revenue
sources and trade volume, bank balances and deposits, and employee compensation. Kraken is a
dynamic company in a competitive tech-based market, in which confidentiality is of paramount
importance, and these trade secrets have significant commercial value. Kraken’s in-house counsel has
raised these issues with you on multiple occasions to no avail.
If these irrelevant, false, and improper allegations remain in any complaint you file on behalf of
Mr. Runyon, Kraken will move to strike all of them. Moreover, by insisting on including these
allegations, Mr. Runyon is exposing himself to potential liability for breaching the confidentiality
agreement and Kraken reserves its right to pursue counterclaims against him for breaching that
agreement.
2. Mr. Runyon’s Inclusion of Known False Allegations is Sanctionable
Code of Civil Procedure Section 128.7 requires, in part, that “[t]he allegations and other factual
contentions [of a pleading] have evidentiary support or, if specifically so identified, are likely to have
evidentiary support after a reasonable opportunity for further investigation or discovery.” CCP
§ 128.7(b)(3). The attached documents prove that Mr. Runyon’s allegations of improprieties with Ms.
Wong’s and Mr. Mason’s vesting schedules are false. As Kraken has already explained, and the
attached offer letter and Board Consent show, 1/6th of Ms. Wong’s shares vested on the one-year
anniversary of her vesting commencement and 1/72nd of her total shares vested in monthly installments
thereafter. The attached records also indicate, as Kraken has also already explained, that Mr. Mason had
two classes of options, one of which was a performance-based option that required a placeholder email
until he qualified for it.
Additionally, the attached record of the Slack messages from the incident with Ms. Katy Bouvier
includes Mr. Ng’s statement to Mr. Runyon that he had “never seen as many people conflicts as [Mr.
Runyon] ha[s] caused in [his] 20 years [sic] career.” These messages directly contradict your client’s
recollection of events.
In light of these documents, it would behoove you to have a very frank conversation with your
client to ascertain what really happened here. Kraken reserves the right to seek sanctions if you insist on
including such improper, frivolous, or unsupported allegations in the complaint. CCP § 128.7(c)
(authorizing sanctions against an attorney, law firm, or party for improper, frivolous, or unsupported
claims or contentions in a pleading).
We ask that Mr. Runyon revise his complaint to (1) remove all allegations from his complaint
that are disproved by the documents now in your possession; (2) remove all allegations from his
complaint that do not form the factual basis for a cause of action; and (3) remove unnecessary details
from the complaint that violate the confidentiality agreement, or stipulate to filing the complaint under
seal to preserve the confidentiality of any relevant allegations that constitute confidential information.
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PIERCE BAINBRIDGE
Claire E. Cochran
October 24, 2019
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We are willing to meet and confer via teleconference to discuss these matters if desired. Please
direct all future communication in this matter to us.
Sincerely,
___________________________
Christopher N. LaVigne
Andrew E. Calderón
Encl.
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1 Claire E. Cochran (SBN 222529) Natalie A. Xifo (SBN 280930) ELECTRONICALLY 2 LAW OFFICES OF CLAIRE COCHRAN, P.C. 100 Pine Street, Suite 1250 F I L E D 3 Superior Court of California, San Francisco, CA 94111 County of San Francisco 4 Telephone: (415) 580-6019 05/04/2021 Facsimile: (415) 745-3301 Clerk of the Court BY: EDNALEEN ALEGRE 5 Deputy Clerk 6 Attorneys for Plaintiff NATHAN PETER RUNYON 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 FOR THE COUNTY OF SAN FRANCISCO 10 [UNLIMITED JURISDICTION] 11 Case No. CGC-19-581099 NATHAN PETER RUNYON 12 DECLARATION OF NATALIE A. XIFO, Plaintiff, ESQ. IN SUPPORT OF PLAINTIFF’S 13 OPPOSITION TO DEFENDANTS’ v. MOTION TO COMPEL DEPOSITION 14 OF WITNESS AND FOR SANCTIONS 15 PAYWARD, INC., a California Corporation d/b/a KRAKEN; and KAISER NG an individual 16 and DOES 1-50, inclusive 17 Date: May 17, 2021 Time: 9:00 a.m. Defendants. Dept.: 301 18 19 20 21 22 23 24 25 26 27 28 1 DECLARATION OF NATALIE A. XIFO, ESQ. 2 I, NATALIE A. XIFO, ESQ., declare as follows: 3 1. I am an attorney licensed to practice law in the State of California. I am a Senior 4 Associate of the law firm Law Offices of Claire Cochran, P.C. (“LOCC”), attorneys of record 5 for Plaintiff NATHAN PETER RUNYON (“Plaintiff”) in the within civil proceeding. If called 6 upon as a witness, I could and would competently testify to the following: 7 2. This Declaration is in support of Plaintiff’s Opposition to Defendant’s Motion to 8 Compel Deposition of Witness and for Sanctions. 9 3. Plaintiff’s initial demand letter was dispatched on September 13, 2019. On 10 October 24, 2019, we received correspondence from Payward’s newly retained attorney, 11 Christopher LaVigne of Pierce Bainbridge. Mr. LaVigne responded that Plaintiff’s allegations 12 in his demand letter were false and Payward had documents which proved Plaintiff’s 13 “allegations of improprieties with Ms. Wong’s and Mr. Mason’s vesting schedules are false. As 14 Kraken has already explained, and the attached offer letter and Board Consent show, 1/6th of 15 Ms. Wong’s shares vested on the one-year anniversary of her vesting commencement and 16 1/72nd of her total shares vested in monthly installments thereafter.” Mr. LaVigne attached a 17 copy of Ms. Wong’s employment offer and the Action by Unanimous Written Consent of the 18 Board of Directors of Payward, Inc (“November 2017 Board Consent”). A true and correct copy 19 of Mr. LaVigne’s letter (absent the attachments, due to the Confidential nature of the 20 documents) is attached hereto as Exhibit “A.” 21 4. After receipt of Mr. LaVigne’s October 24, 2019, correspondence I was 22 informed that Plaintiff had a copy of the November 2017 Board Consent which supported his 23 contention that the November 2017 Board Consent Mr. LaVigne sent on October 24 was 24 falsified and not the true and correct version our client relied upon when he populated the Carta 25 program. As such, Plaintiff dropped off a USB flash drive which contained a few documents he 26 obtained during his employment which supported his whistleblower complaints. 27 5. On November 14, 2019, I plugged the USB flash drive into my office Mac Mini 28 computer. There were only screenshots of an email exchange my client had with Goodwin law Page | 1 DECLARATION OF NATALIE A. XIFO 1 firm wherein he asked for a copy of the November 2017 Board Consent. They responded with 2 an attachment of the November 2017 Board Consent. 3 6. On October 25, 2019, LOCC informed Mr. LaVigne of the issues they 4 discovered with the November 2017 Board Consent he provided. Ms. Cochran explained “The 5 most pressing and concerning issue in this case which we fear you are not aware of is the 6 November 2017 Board Consent produced by Kraken. Our client is adamant that he has never 7 seen the version you produced and attached to your letter dated October 24. He believes the 8 Board Consent you sent (dated October 18, 2017) differs in many respects from the version he 9 reviewed when entering employees’ vesting schedules in Carta. During the course of our 10 client’s employment, Mr. Ng provided Mr. Runyon with the Board Consent in a shared google 11 drive folder sometime in February 2019. Ms. Anastasia Burtseva, the accounting manager, also 12 provided Mr. Runyon with the November 2017 Board Consent. Mr. Runyon also received the 13 Board Consent from the Goodwin law firm via File Transfer Portal in April 2019. The version 14 Mr. Runyon received from Mr. Ng, Ms. Burtseva and the Goodwin firm is not the version your 15 firm emailed on October 24th. Attached to this Correspondence, we have a copy of the 16 November 2017 Board Consent which supports our client’s position that the Board Consent 17 differed from what Mr. Ng directed Mr. Runyon to input into Carta for Ms. Wong and Mr. 18 Rapp. It also supports our position that the Board voted on a different vesting schedule for Ms. 19 Wong than what was provided to her in her Stock Options Plan. We are enclosing a copy of the 20 November 27, 2017 Board Consent provided to our client identified as Batestamp 21 CONFIDENTIAL_RUNYON 000001-000011. The attached Board Consent supports our 22 position that Mr. Runyon was fired for whistleblowing and challenges the authenticity of your 23 client’s Board Consent produced yesterday.” A copy of Ms. Cochran’s letter cannot be attached 24 as it was marked as Confidential due to settlement communications. 25 7. Following this correspondence Mr. LaVigne advised LOCC to file a 26 Complaint and any settlement negotiations ceased. 27 8. I am the only person in possession of the USB flash drives. Plaintiff did not 28 make copies of the documents on the USB flash drives. The confidential documents have not Page | 2 DECLARATION OF NATALIE A. XIFO 1 been in his possession since October 30, 2019. 2 9. The only time any of the documents on the USB flash drive have been produced 3 was in Confidential Settlement Communications with Mr. LaVigne and in response to 4 Defendants’ Request for Production of Documents pursuant to a Stipulated Protective Order and 5 marked CONFIDENTIAL. LOCC has not produced, provided, distributed shared or shown any 6 of the documents on the USB flash drive to any other individual, including, but not limited to 7 Employee 5. As soon as Plaintiff produced the November 2017 Board Consent in response to 8 Defendant’s Request for Production, they filed a lawsuit against him in U.S. District court 9 alleging, among other false accusations, that Plaintiff hacked into their computer database and 10 illegally obtained various confidential documents. 11 10. The documents on the UBS flash drives were obtained by Plaintiff through the 12 course of his employment at Payward. After the Board of Directors voted on or around June 30, 13 2019 and did not change Ms. Wong’s vesting schedule from four to six years, Plaintiff became 14 concerned. Plaintiff believed if the vesting schedules of various Payward employees did not 15 match the Board Minutes he would be held responsible if and when Payward was audited. He 16 continually reminded his manager, Kaiser Ng, of this issue. Because Mr. Ng never rectified this, 17 Plaintiff saved documents that supported his position that Mr. Ng and Payward were defrauding 18 their employees and manipulating their compensation. 19 11. There is a public policy exception to confidentiality agreements to protect 20 whistleblowers who appropriate company documents. Whistleblowers often need documentary 21 evidence to substantiate their allegations. The party seeking to invoke the public policy 22 exception must justify why removal of the documents was reasonably necessary to support the 23 allegations of wrongdoing. Plaintiff saved only documents that he had properly accessed in the 24 course of performing work as a Financial Analyst and each document on the USB flash drive he 25 saved was he believed were related to his allegations of Kaiser Ng’s wrongdoing which he 26 raised to Kaiser Ng during his employment. In response to Defendant’s Request for Production 27 of Documents, Plaintiff produced relevant documents from this USB flash drive. The rest of the 28 documents were determined at that time to not be responsive to any of Defendant’s requests. It Page | 3 DECLARATION OF NATALIE A. XIFO 1 was not until March 2021 when Defendants sought to take the deposition of Plaintiff on March 2 4, 2021 that the documents on the USB flash drive needed to be reviewed and produced. 3 12. More importantly, all the documents and how and when the documents were 4 saved onto the USB flash drives are essential in defending Plaintiff in the Payward v. Runyon 5 federal case. Payward is suing Plaintiff for hacking into their database after he was fired and 6 alleged he obtained confidential documents which Plaintiff only produced in response to 7 Defendant’s discovery requests in this action. Due to Payward’s retaliatory and punitive 8 litigation tactics (i.e. suing their former employee in federal court by wrongfully accusing him 9 of hacking their database and filing the underlying motion for sanctions seeking an award of 10 over $160,000) our firm spent numerous hours and met with experts in order to take the 11 appropriate and correct procedural steps to produce the USB flash drives all while also 12 protecting our client’s ability to defend himself in the federal case. Absent a forensic 13 examination and simply sending the USB flash drives back to Payward would have deprived 14 Plaintiff of the ability to properly and successfully defend himself in the pending federal case. 15 13. In preparation for Plaintiff’s deposition on March 4, 2021 and related document 16 production pursuant to his deposition notice, we prepared production in our usual custom and 17 practice. On March 1, 2021, I spoke Tom Howe, Electronic Discovery Lawyer certified in 18 Computer Forensics, mobile forensics and TSCM Counter Surveillance at Howe Law Firm. Mr. 19 Howe is one of the leading e-discovery lawyers in the country and advises attorneys on the 20 production and extraction of ESI. I was advised by Mr. Howe that we should not simply 21 produce the documents as we would in the regular course of discovery nor should we just return 22 the USB flash drive to opposing counsel. We were advised that we needed to retain an expert to 23 forensically image the USB flash drives Plaintiff created prior to production. We needed a 24 forensic road map to prove who, when and how the documents were downloaded. Simply 25 returning the USB flash drives would prevent us from proving that Plaintiff did not hack any 26 Payward database. However, Mr. Howe would not review the USB flash drives absent a Court 27 Order or a stipulation from both parties that the Confidential data can be examined by an expert 28 or third party. Page | 4 DECLARATION OF NATALIE A. XIFO 1 14. On March 3, 2021, LOCC advised Mr. Lavigne of this issue and requested he 2 stipulate to a joint expert. He refused and instead demanded we immediately return the flash 3 drives. 4 15. Plaintiff’s deposition proceeded as scheduled on March 4, 2021 for over 6 hours. 5 Mr. LaVigne questioned Plaintiff about the USB drives and the contents therein. As an effort to 6 meet and confer Ms. Cochran offered that Plaintiff would sit for a second day of deposition after 7 Payward received the contents of the USB drives along with the production of records from 8 Plaintiff’s therapist. However, Mr. LaVigne declined the offer and never set a second day of 9 deposition of Plaintiff; instead LOCC was served with Defendants’ Motion to Compel and 10 Sanctions. 11 16. To preserve the evidence properly Plaintiff filed an ex parte application on 12 March 12, 2021 requesting this Honorable Court appoint a joint forensic ESI expert and/or 13 special master. Plaintiff’s motion was denied. The Court did not order or even state Plaintiff 14 must produce the documents without delay. 15 17. On March 17, 2021, LOCC retained an expert in Los Angeles who was willing to 16 conduct a forensic examination of the USB drives absent a court order. The other 3 experts 17 LOCC tried to retain refused to accept the job absent a stipulation and/or Court Order. On 18 March 29, 2021, LOCC produced the contents of the USB flash drives and a Declaration from 19 this expert on what he discovered on the USB flash drives, how they were downloaded and 20 saved. (See Declaration of Kevin Cohen filed concurrently herein). To date, Defendants have 21 not requested a second day of Plaintiff’s deposition. Instead they filed a request to continue the 22 trial. 23 18. This Declaration is not intended to be, nor shall it be construed as being, a waiver 24 of attorney-client privilege or attorney-client work product doctrine. I have no client authority 25 to waive the attorney work-product doctrine, and I do not intend to do so by anything set forth 26 herein. 27 I declare under penalty of perjury under the laws of the State of California that the 28 foregoing is true and correct. Page | 5 DECLARATION OF NATALIE A. XIFO 1 Executed on May 4, 2021, at Los Angeles, California. 2 3 4 NATALIE A. XIFO, ESQ. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Page | 6 DECLARATION OF NATALIE A. XIFO Exhibit A Christopher N. LaVigne I PIERCE BAINBRIDGE I Andrew Calderón 355 S. Grand Avenue, 44th Floor Los Angeles, CA 90071 clavigne@piercebainbridge.com acalderon@piercebainbridge.com (213) 262-9333 VIA EMAIL October 24, 2019 Claire E. Cochran Law Offices of Claire Cochran, P.C. 100 Pine Street, Suite 1250 San Francisco, CA 94111 (415) 580-6019 claire@clairecochranlegal.com Re: Nathan Runyon’s Demand Letter and Draft Complaint [Runyon v. Payward, Inc. d/b/a Kraken, et al.] Counsel, We represent Payward, Inc. d/b/a Kraken (“Kraken”) in connection with Nathan Runyon’s threatened litigation against Kraken and Mr. Ng as reflected in Mr. Runyon’s September 13th demand letter and his most recent draft complaint, dated October 18, 2019. Your most recent communication with my clients indicates Mr. Runyon has declined Kraken’s settlement offer of $55,000 (representing 6- months’ severance for Mr. Runyon) and counter-demanded $575,000. Kraken declines this counter demand and, as you note, has no intent to engage in a “step-by-step” series of counter offers with your client. Instead, we write in preparation for litigation regarding the persistent factual and legal problems contained in Mr. Runyon’s draft complaint. Among other things, the draft complaint includes numerous demonstrably false allegations and contains confidential, irrelevant, and salacious allegations with no bearing on Mr. Runyon’s claims. Kraken has repeatedly attempted to engage with you regarding these issues, but you have made it clear that Mr. Runyon intends to include these irrelevant and false allegations notwithstanding Kraken’s objections. Accordingly, should Mr. Runyon fail to correct these deficiencies before filing his complaint, Kraken reserves the right to pursue all available remedies, including asserting counterclaims, moving to strike, and seeking sanctions. 1. Mr. Runyon’s Confidential, Irrelevant, and Salacious Allegations are Improper Mr. Runyon’s draft complaint contains many unnecessary, and false, allegations that do not form the basis of any claim and are only included because they sound salacious. For example, Mr. Runyon’s accusations about personal relationships and overseas revenue have no bearing on any cause of action. Their inclusion is a blatant attempt to force Kraken to pay Mr. Runyon an exorbitant amount of money. Pierce Bainbridge Beck Price & Hecht LLP BOS | CLE | DC | LA | NY PIERCE BAINBRIDGE Claire E. Cochran October 24, 2019 Page 2 Most of these unnecessary allegations also violate Mr. Runyon’s confidentiality agreement, which you possess. These include, among others, Mr. Runyon’s allegations of employee incompetence and termination, audits and policy letters, employee coding capabilities, personal relationships, revenue sources and trade volume, bank balances and deposits, and employee compensation. Kraken is a dynamic company in a competitive tech-based market, in which confidentiality is of paramount importance, and these trade secrets have significant commercial value. Kraken’s in-house counsel has raised these issues with you on multiple occasions to no avail. If these irrelevant, false, and improper allegations remain in any complaint you file on behalf of Mr. Runyon, Kraken will move to strike all of them. Moreover, by insisting on including these allegations, Mr. Runyon is exposing himself to potential liability for breaching the confidentiality agreement and Kraken reserves its right to pursue counterclaims against him for breaching that agreement. 2. Mr. Runyon’s Inclusion of Known False Allegations is Sanctionable Code of Civil Procedure Section 128.7 requires, in part, that “[t]he allegations and other factual contentions [of a pleading] have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.” CCP § 128.7(b)(3). The attached documents prove that Mr. Runyon’s allegations of improprieties with Ms. Wong’s and Mr. Mason’s vesting schedules are false. As Kraken has already explained, and the attached offer letter and Board Consent show, 1/6th of Ms. Wong’s shares vested on the one-year anniversary of her vesting commencement and 1/72nd of her total shares vested in monthly installments thereafter. The attached records also indicate, as Kraken has also already explained, that Mr. Mason had two classes of options, one of which was a performance-based option that required a placeholder email until he qualified for it. Additionally, the attached record of the Slack messages from the incident with Ms. Katy Bouvier includes Mr. Ng’s statement to Mr. Runyon that he had “never seen as many people conflicts as [Mr. Runyon] ha[s] caused in [his] 20 years [sic] career.” These messages directly contradict your client’s recollection of events. In light of these documents, it would behoove you to have a very frank conversation with your client to ascertain what really happened here. Kraken reserves the right to seek sanctions if you insist on including such improper, frivolous, or unsupported allegations in the complaint. CCP § 128.7(c) (authorizing sanctions against an attorney, law firm, or party for improper, frivolous, or unsupported claims or contentions in a pleading). We ask that Mr. Runyon revise his complaint to (1) remove all allegations from his complaint that are disproved by the documents now in your possession; (2) remove all allegations from his complaint that do not form the factual basis for a cause of action; and (3) remove unnecessary details from the complaint that violate the confidentiality agreement, or stipulate to filing the complaint under seal to preserve the confidentiality of any relevant allegations that constitute confidential information. 2 PIERCE BAINBRIDGE Claire E. Cochran October 24, 2019 Page 3 We are willing to meet and confer via teleconference to discuss these matters if desired. Please direct all future communication in this matter to us. Sincerely, ___________________________ Christopher N. LaVigne Andrew E. Calderón Encl. 3