Motion to Strike Initial Pleading in NATHAN PETER RUNYON VS. PAYWARD, INC., A CALIFORNIA CORPORATION ET AL| Trellis.Law

On November 26, 2019 a Hearing was filed involving a dispute between Runyon, Nathan Peter, and Does 1-50, Inclusive, Ng, Kaiser, Payward, Inc., A California Corporation, for civil in the District Court of San Francisco County.

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1 Pierce Bainbridge Beck Price & Hecht LLP
Andrew E. Calderon (SBN 316673)
2 acalderon@piercebainbridge.com ELECTRONICALLY
355 South Grand Avenue, 44th Floor F I L E D
3 Los Angeles, California 90071 Superior Court of California,
County of San Francisco
Tel: (213) 262-9333
4 Fax: (213) 279-2008 02/06/2020
Clerk of the Court
BY: EDNALEEN ALEGRE
5 Christopher N. LaVigne (NY Bar No. 4811121) Deputy Clerk
(Application for Admission Pro Hac Vice Pending)
6
clavigne@piercebainbridge.com
7 277 Park Avenue, 45th Floor
New York, NY 10172
8 Tel.: (646) 694-9666
Fax: (646) 968-412
9
Attorneys for Defendants Payward,
10 Inc. d/b/a Kraken and Kaiser NG
11
SUPERIOR COURT OF THE STATE OF CALIFORNIA
12 FOR THE COUNTY OF SAN FRANCISCO
13 NATHAN PETER RUNYON, an Case No. CGC-19-581099
individual
14 Assigned to the Hon. Ethan P. Schulman
Plaintiff, Courtroom: Room 302
15
v. DEFENDANTS PAYWARD, INC.
16 D/B/A KRAKEN’S AND KAISER
PAYWARD, INC., a California
17 Corporation d/b/a/ KRAKEN; and NG’S MOTION TO STRIKE
Kaiser NG, an individual; and IRRELEVANT, FALSE OR
18 DOES 1 through 10, inclusive IMPROPER MATTER IN THE
FIRST AMENDED COMPLAINT;
19 Defendants. MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT
20 THEREOF
21
[Filed Concurrently with Declaration of
22 Andrew E. Calderon, [Proposed] Order
and Demurrer]
23
Hearing Date: March 5, 2020
24 Hearing Time: 9:30 am
Location: Rm. 302
25
Reservation ID: 02040305-17
26
Compl. Filed: November 26, 2019
27

28
Notice of Motion to Strike Irrelevant, False, and Improper Matters from the
FAC
1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that on

2 March 5, 2020, at 9:30 a.m., or as soon thereafter as the matter may be heard in Department 302 of

3 the San Francisco Superior Court, 400 McAllister Street, San Francisco, CA 94102, Defendants

4 PAYWARD, INC. D/B/A KRAKEN and KAISER NG’S (“Defendants”) will, and hereby do, move

5 the Court to strike the following specific allegations from Plaintiff’s First Amended Complaint

6 (“FAC”)1:

7 (1) Paragraph 2, Page 2, Approximately Line 15: “703 Market Street, 7 th and 11th floors . .

8 . .” [Confidential, Prejudicial, and Irrelevant] 2

9 (2) Paragraph 18, Page 4, Approximately Line 19 to Page 5, Line 3: “For the first week

10 Runyon worked at Kraken he trained under Employee ‘1’ the US Controller to help Runyon better

11 understand the financials and the layout of the company. It soon became apparent that the Controller

12 was not very competent because he asked Runyon for help understanding simple finance questions

13 such as ‘what causes the price of bitcoin to go up and down’ (market supply/demand), ‘who owns the

14 blockchain’ (he thought it was a physical chain of blocks held in a vault somewhere, instead of a

15 distributed ledger), and he thought there was 1-sided accounting (instead of 2 sided = debits and

16 credits). Runyon helped educate Employee ‘1’ on the supply and demand concept of Bitcoin pricing

17 and helped him understand how cryptocurrency works. Kraken’s accountant, Employee ‘2’ and Ng

18 were present for several of these conversations with Employee ‘1’ and Runyon.” [Defamatory,

19 Prejudicial, and Irrelevant]

20 (3) Paragraph 19, Page 5, Approximately Lines 4-10: “Within less than a week at Kraken,

21 Ng agreed to separate Runyon’s work from Employee ‘1’’s and informed Employee ‘1’ that Runyon

22 did not report to him nor could tasks be assigned to him. Runyon even created an automated

23 reconciliation tool for Employee ‘1’ to use that automatically matched debits with credits. Within a

24 few months Employee ‘1’ was terminated as it was revealed through Runyon’s competency and work

25
1
Defendants also move to strike these allegations from the initial Complaint or, should the Court grant
26 this motion in whole or in part, for the sake of convenience Defendants move to strike the initial
Complaint in its entirety and strike only these specific allegations from the operative FAC.
27 2
For the Court’s convenience, Payward briefly notes the basis for each strike here, and further explains
28 the factual and legal bases for the strikes in the attached Memorandum.
–1–
Notice of Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 performance that Employee ‘1’ had a significant lack of understanding of the company and how to

2 operate the accounting team.” [Defamatory, Prejudicial, and Irrelevant]

3 (4) Paragraph 20, Page 5, Approximately Lines 15-18: “Ng told Runyon to come up with

4 anything for the audit list that would satisfy the audit questions without regard to how accurate the

5 info was. Ng wanted something to ‘check the box.’ This was the first time Runyon questioned Ng’s

6 judgment and ethical obligations to the company.” [Defamatory, Prejudicial, and Irrelevant]

7 (5) Paragraph 21, Page 5, Approximately Lines 22-24: “. . . . after Ng expressed concern

8 that Employee ‘3,’ did not have the code skills she claimed. In late December 2018, Ng suggested to

9 Runyon that he look into code school because he believed Employee ‘3’ lied that about her skills with

10 Python and Sequel.” [Defamatory and Irrelevant]

11 (6) Paragraph 23, Page 6, Approximately Lines 22 and 27-28: “for applications for banks

12 and regulators” and “on legal, licensing and banking documents[.]” [Defamatory, Prejudicial, and

13 Irrelevant]

14 (7) Paragraph 23, Page 7, Approximately Lines 7-9: “The attorney explained that Jesse

15 Powell, CEO, did the same thing to her by using her apartment address and never compensated her

16 with the agreed upon rent.” [Defamatory, Prejudicial, and Irrelevant]

17 (8) Paragraph 24, Page 7, Approximately Lines 10-14: “In April 2018, Runyon posted in

18 the Slack channel suggestion box that Kraken remove the gendered bathrooms. Ng pulled Runyon

19 aside and told him that not everyone thought his joke was funny. Runyon defended himself and

20 explicitly stated that his recommendation was not a joke and that Kraken should make the bathroom

21 non-gender specific. Runyon later discovered Ng contemplated firing Runyon for this suggestion

22 because they considered Runyon a ‘liability.’” [Prejudicial and Irrelevant]

23 (9) Paragraph 25, Page 7, Approximately Lines 15-23: “In the summer of 2018, Runyon

24 put the suggestion into the #SF-Office-Suggestions channel on Slack that the internet ports need to be

25 changed. Christina Yee (‘Yee’) (the girlfriend to the CEO, Jesse Powell), Head of KX/Kraken

26 Experience, responded that the appearance of the office was more important than the functionality and

27 Kraken would not be changing the ports. After a few months of nothing being changed along with

28 extraordinarily poor and slow internet connections in the office, Runyon suggested to Kraken’s IT
–2–
Notice of Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 Specialist, Employee ‘4’ via Slack that not having good connections was ‘a pain in the ass to deal

2 with’ because it severely and negatively impacted Runyon’s work and caused delays. For example,

3 meetings were routinely delayed because the internet connections would take nearly ten minutes to

4 work. Additionally, Runyon was routinely late to call into meetings because the connections were not

5 working.” [Defamatory, Prejudicial, and Irrelevant]

6 (10) Paragraph 26, Page 8, Approximately Lines 8-11: “Ng asked Runyon inside his office

7 and began to yell at Runyon about how he could not talk to Yee in that manner and whether Runyon

8 understood that Yee and the CEO Jesse Powell (‘Powell’) were dating. Ng warned him that because

9 of this relationship Runyon needed to be careful about what he said to the CEO’s girlfriend.”

10 [Defamatory, Prejudicial, and Irrelevant]

11 (11) Paragraph 27, Page 8, Approximately Lines 12-20: “A couple weeks later, during Ng

12 and Runyon’s weekly 1-on-1 meeting Ng asked Runyon if he ever heard ‘rumors’ that Yee and Powell

13 were dating. Runyon was confused by the question as it was Ng who told Runyon the CEO and Head

14 of KX were dating. Ng explained how Runyon should not listen to those rumors because it was false.

15 Ng’s eyes darted back and forth at his phone as if it were on speaker for the listener to hear Ng’s

16 directive and Runyon’s response. Runyon felt incredibly uncomfortable as Ng was clearly

17 contradicting himself and was behaving strangely. Runyon later discovered that Powell and Yee’s

18 relationship could not be public given their roles as officers and major shareholders of Kraken as this

19 created a conflict of interest and issues with the SEC.” [Defamatory, Prejudicial, and Irrelevant]

20 (12) Paragraph 28, Page 8, Approximately Line 21 to Page 9, Approximately Line 9: “On

21 February 20, 2019, at 1:15 p.m. Runyon sent an email to Kraken’s Compliance Officer, Steve Christie

22 (‘Christie’), along with a link to a country list to check on the countries that Kraken earned revenue

23 from. Runyon was concerned about how Kraken aligned the countries for revenue reporting and

24 mostly worried that Kraken could not operate in those countries. Runyon made numerous requests to

25 Christie in person and via Slack messages to seek clarification on revenue alignment for each region

26 regarding the topic. Runyon believed that Kraken could not receive revenue from many of the

27 countries they did business with. Runyon explained to Christie in person (approximately five separate

28 occasions) and on slack (three separate occasions) that some of the countries and businesses that
–3–
Notice of Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 Kraken received revenue from were on the United States Department of the Treasury’s Office of

2 Foreign Assets Control Specially Designated Nationals and Blocked Persons List (‘OFAC List’).

3 Runyon also raised these same concerns to Ng numerous times in person and on slack. On a slack

4 channel with NG, Christie and Runyon, Runyon continued to ask Christie for his assistance in

5 reviewing the OFAC List. Christie never responded and Ng never pursued the subject with Christie

6 or Runyon. Runyon also raised this issue to Ng numerous times in their weekly meetings. Ng

7 reassured Runyon that he would follow up with Christie and ‘it would be resolved.’ Runyon realized

8 that Christie would never address his questions and concerns about this subject and Ng’s lack of

9 concern spoke volumes. Runyon eventually figured out that he should drop the issue to avoid further

10 frustrating Ng.” [Defamatory, Prejudicial, and Irrelevant]

11 (13) Paragraph 29, Page 9, Approximately Lines 10-20: “In March 2019, Ng asked Runyon

12 to help with reconciling the bank balances with the customer balances in Kraken’s system. This

13 involved Runyon looking into Kraken’s system and looking up the total expected customer and

14 operating account balances for U.S. Dollars, British Pounds, Canadian Dollars, Japanese Yen, Korean

15 Won and Euros, then comparing that with Kraken’s actual bank balances. Runyon discovered that

16 Kraken’s bank balances were short of customer deposits. After a thorough matching of deposits and

17 withdrawals, Runyon concluded the bank accounts were short millions of dollars, but more research

18 was needed to clarify why there was still a discrepancy. Runyon brought this to Ng’s attention during

19 weekly meetings and implored Ng to investigate where the missing funds are. Runyon was concerned

20 that someone hacked into the system or found a loophole and was able to bleed the funds. In response,

21 Ng immediately` removed Runyon from working on the project after his discovery.” [Defamatory,

22 Prejudicial, and Irrelevant]

23 (14) Paragraph 77, Page 20, Approximately Lines 17-18: “and whistleblowing activities”.

24 [Prejudicial and Irrelevant]

25 (15) Paragraph 105, Page 24, Approximately Line 8: “CEO’s”. [Defamatory, Prejudicial,

26 and Irrelevant]

27 This Motion is based on this notice and the accompanying memorandum of points and

28 authorities, the pleadings and papers on file in this action, and on all other and further evidence and
–4–
Notice of Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 argument that may be presented or considered by the Court in connection with this Motion. A

2 proposed order is filed concurrently herewith.

3 Dated: February 6, 2020 Respectfully submitted,

4 Pierce Bainbridge Beck Price & Hecht LLP
5

6 By:
Andrew E. Calderon
7
Attorneys for Defendants Payward, Inc. d/b/a
8 Kraken and Kaiser NG

28
–5–
Notice of Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 TABLE OF CONTENTS
2 I. INTRODUCTION ................................................................................................1
3 II. STATEMENT OF FACTS ...................................................................................2
4 A. Payward’s Confidential Physical Address ................................................2
5 B. Defendants’ Alleged Discrimination and Retaliation Against Plaintiff
Based on Plaintiff’s Veteran Status, Disability, and Reports of Vesting
6 Discrepancies ............................................................................................3
7 C. Plaintiff’s Hodge-Podge of Irrelevant and Improper Allegations.............5
8 III. LEGAL STANDARD ...........................................................................................7
9 IV. ARGUMENT ........................................................................................................7
10 A. Payward’s Physical Address Should Be Stricken Because It Is Not
Essential to Any Claim or To Establish Jurisdiction and Is Sensitive and
11 Confidential...............................................................................................8
12 B. Allegations of a Personal Relationship Between Payward Executives
Should be Stricken Because they are Irrelevant to Plaintiff’s Claims and
13 are Solely Intended to be Scandalous .......................................................9
14 C. The Irrelevant Allegations Regarding Payward’s Internet Should be
Stricken ...................................................................................................10
15
D. The Allegations Regarding Employee Incompetence Are Irrelevant and
16 Unnecessarily Involve and Impugn Two Non-Party Former Employees
.................................................................................................................10
17
E. Plaintiff’s Allegations That He Requested Gender Neutral Bathrooms
18 Are Irrelevant to His Claims and Intended Solely to Prejudice Payward
.................................................................................................................11
19
F. Plaintiff’s Allegations Regarding Defendants’ Vague and Irrelevant
20 Financial Improprieties Should Be Stricken ...........................................11
21 G. Runyon’s Irrelevant Allegations Are Designed to Prejudice Payward ...13
22 V. CONCLUSION ...................................................................................................15
23

28
–i–
Motion to Strike Irrelevant, False, and Improper Matters from the Complaint
TABLE OF AUTHORITIES
1
Page(s)
2

3 Cases

4 Baral v. Schnitt,
1 Cal. 5th 376 (2016) ..............................................................................................................8
5
Beasley v. Lucky Stores, Inc.,
6 400 F. Supp. 3d 942 (N.D. Cal. 2019) ....................................................................10, 12, 2, 3
7 Coal. Against Police Abuse v. Superior Court,
8 170 Cal. App. 3d 888 (1985) ................................................................................................12

9 Coles v. Glaser,
2 Cal. App. 5th 384 (2016) .....................................................................................................3
10
Flaxel v. Johnson,
11 541 F. Supp. 2d 1127 (S.D. Cal. 2008) .................................................................................10
12 re Meeting With Bitwise Asset Management, Inc., NYSE Arca, Inc., and Vedder
Price P.C.,
13
SEC, Mar. 20, 2019, available at https://www.sec.gov/comments/sr-
14 nysearca-2019-01/srnysearca201901-5164833-183434.pdf ...................................................9

15 Mercury Interactive Corp. v. Klein,
158 Cal. App. 4th 60 (2007) ...........................................................................................11, 12
16
Oiye v. Fox,
17 211 Cal. App. 4th 1036 (2012) ...............................................................................10, 12, 2, 3
18 Overstock.com, Inc. v. Goldman Sachs Grp., Inc.,
19 231 Cal. App. 4th 471 (2014) .......................................................................................9, 11, 4

20 Scher v. Burke,
192 Cal. Rptr. 3d 70 ..............................................................................................................10
21
Scher v. Burke,
22 192 Cal. Rptr. 3d 704 (Ct. App. 2d Dist. 2015) ......................................................................3
23 Seelig v. Infinity Broad. Corp.,
24 97 Cal. App. 4th 798 (Ct. App. 1st Dist. 2002) ......................................................................3

25 Warner v. Warner,
135 Cal. App. 2d 302, 287 P.2d 174 (1955) ...........................................................................4
26
Statutes
27
Cal. Code Civ. Pro. § 431.10(b)-(c) ..............................................................................................7
28
– ii –
Motion to Strike Irrelevant, False, and Improper Matters from the Complaint
Cal. Code Civ. Pro. § 436(a) ...............................................................................................7, 11, 5
1
Cal. Evid. Code § 452(h) ........................................................................................................3, 10
2

3 Cal. Lab. Code § 1102.5 .........................................................................................................5, 10

4 Securities Act of 1933 .................................................................................................................10

5 Other Authorities

6 Ana Alexandre, Former Kraken Employee Sues Exchange for ‘Unethical and
Illegal Business Tactics’, Cointelegraph (Dec. 18, 2019),
7 https://cointelegraph.com/news/former-kraken-employee-sues-exchange-
8 for-unethical-and-illegal-business-tactics; ............................................................................14

9 Brian Fung, Why bitcoin exchanges keep getting hacked – and how to protect
yourself, The Washington Post, June 20, 2018,
10 https://www.washingtonpost.com/news/the-switch/wp/2018/06/20/why-
bitcoin-exchanges-keep-getting-hacked-and-how-to-protect-
11 yourself/?utm_term=.ab72f3bcf185 .......................................................................................2
12 David Gerard, Kraken crypto exchange sued by whistleblowing ex-employee —
13 allegations (Dec. 17, 2019),
https://davidgerard.co.uk/blockchain/2019/12/17/kraken-exchange-sued-by-
14 whistleblowing-ex-employee-allegations/ ............................................................................14

15 Daniel Palmer, Kraken, the U.S.-based cryptocurrency exchange, is being sued
by and ex-employee who alleges the company unfairly fired him for raising
16 serious issues with its business practices, Coindesk (Dec. 18, 2019, 12:30
UTC), https://www.coindesk.com/ex-kraken-employee-alleges-unethical-
17
and-illegal-tactics-in-discrimination-lawsuit; .......................................................................14
18
SEC, EDGAR, Payward, Inc., available at https://www.sec.gov/cgi-bin/browse-
19 edgar?action=getcompany&CIK=0001785695&owner=exclude&count=40 ......................10

20 U.S. Securities and Exchange Commission, Investor Alert: Bitcoin and Other
Virtual Currency-Related Investments ....................................................................................3
21
Yessi Perez, Whistelblower alleges crypto exchange Kraken violated
22
international sanctions, TNW (Dec. 18, 2019, 15:25 UTC),
23 https://thenextweb.com/hardfork/2019/12/22/bitcoin-books-2019 ......................................14

28
– iii –
Motion to Strike Irrelevant, False, and Improper Matters from the Complaint
1 MEMORANDUM OF POINTS AND AUTHORITIES

2 I. INTRODUCTION

3 On November 26, 2019, Plaintiff Nathan Runyon (“Runyon”) filed a Complaint against his

4 former employer, Payward, Inc. d/b/a Kraken (“Payward”), his former supervisor, Kaiser Ng, and Doe

5 defendants alleging that he was discriminated against due to his veteran status and disability and

6 because he reported certain discrepancies regarding stock option vesting schedules. On January 6,

7 2020, Plaintiff filed the FAC. Apart from dropping certain claims against individual Defendant Ng,

8 the FAC contains the same allegations and causes of actions set forth in the initial Complaint. Both

9 the Complaint and the FAC include numerous scandalous and vague allegations that are irrelevant to

10 Plaintiff’s causes of action.3

11 These gratuitous allegations include, among other things:
12
 Payward’s strictly confidential and non-public physical address;
13  the alleged courtship between Payward’s CEO and another executive;
 the supposed incompetence of non-party Payward employees that are irrelevant to the
14 alleged discrimination or retaliation at issue;
 Plaintiff’s alleged request for gender-neutral bathrooms;
15
 Plaintiff’s complaint that Payward’s internet was too slow;
16  Plaintiff’s belief that Payward received revenue from countries blocked by the Treasury
Department;
17  Plaintiff’s inability to reconcile customer and operating account balances with Payward’s
bank balances; and
18
 Mr. Ng’s alleged use of Plaintiff’s address for “legal, licensing, and banking” purposes.
19  the Payward CEO’s similar use of a secondary address.

20 Plaintiff makes one main whistleblower claim – that he objected to improper stock vesting

21 schedules, refused to implement them, and was fired as a result. 4 It appears at first that several of the

22 above allegations describe additional whistleblower claims. But when the FAC is read carefully, it

23
3
24 While this memorandum and the specific allegations set forth in the accompanying notice of motion
reference the allegations in the FAC, the same allegations exist in the initial Complaint and, as such,
25 Defendant moves to strike these allegations in both the initial Complaint and the FAC. Alternatively,
should the Court grant the motion to strike in whole or in part, Defendants move to strike the initial
26 Complaint in its entirety in order to conserve the Court’s time and resources and to strike only the
specific allegations from the operative FAC.
27 4
As detailed in the concurrently-filed Demurrer, even for this claim, Payward believes Runyon has
failed to allege that his whistleblowing was directed to an illegal act, and he therefore falls short of the
28 necessary elements for any such claim under California law.
–1–
Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 becomes clear that Plaintiff only sets forth a whistleblowing claim relative to the stock option

2 allegations. (See, e.g., FAC ¶112 (“Plaintiff engaged in a protected activity when he opposed the

3 changes made to certain employee stock vesting schedules that differed from what the Board of

4 Directors voted.”); id. at 10 (“Runyon was Terminated after Discovering Ng was Defrauding Kraken

5 Employees.”).)

6 Plaintiff’s additional allegations are unrelated to Plaintiff’s discrimination, retaliation,

7 whistleblower, wrongful termination, or breach of contract causes of action, and are included solely

8 because they sound salacious. They seem designed to make a splash, garner public attention, or

9 pressure Kraken into settling this matter. They were also seemingly inserted in an effort to improperly

10 expand the scope of discovery to include other senior executives like the Chief Executive Officer and

11 Chief Brand Officer. Accordingly, and for the following reasons, these allegations should be stricken

12 from the FAC.

13 II. STATEMENT OF FACTS

14 A. Payward’s Confidential Physical Address

15 Payward operates a cryptocurrency exchange and maintains its primary place of business in

16 San Francisco, California. (See FAC ¶¶ 1-2.) Payward critically relies on confidential business

17 information to maintain the security of its operations. Because of the nature of its business, Payward

18 is subject to constant physical and electronic hacking attempts, and security is of the utmost importance

19 to ensure Plaintiff’s successful and continuing business operation. See Brian Fung, Why bitcoin

20 exchanges keep getting hacked – and how to protect yourself, The Washington Post, June 20, 2018

21 (“The price of bitcoin took a tumble early Wednesday after a major South Korea-based cryptocurrency

22 exchange, Bithumb, admitted hackers made off with more than $31 million worth of virtual

23 currency.”), available at https://www.washingtonpost.com/news/the-switch/wp/2018/06/20/why-

24 bitcoin-exchanges-keep-getting-hacked-and-how-to-protect-yourself/?utm_term=.ab72f3bcf185;

25 U.S. Securities and Exchange Commission, Investor Alert: Bitcoin and Other Virtual Currency-

26 Related Investments, May 7, 2014 (“Bitcoins also may be stolen by hackers. . . . A Bitcoin exchange

27 in Japan called Mt. Gox recently failed after hackers apparently stole bitcoins worth hundreds of

28
–2–
Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 millions of dollars from the exchange.”). 5 Consequently, Payward keeps its physical address strictly

2 confidential. Payward instructs its employees not to disclose its physical addresses, employs security

3 measures to protects its offices, and requires both employees and visitors to sign non-disclosure

4 agreements (“NDAs”). As an employee working from Payward’s San Francisco office, Plaintiff

5 signed an NDA and was aware of these precautions. (See FAC at 4 n.1.)

6 Plaintiff could have provided Payward’s public mailing address and alleged that Payward’s

7 principal place of business was in San Francisco. These allegations would have been sufficient to

8 establish jurisdiction and venue with this Court. Instead, Plaintiff intentionally included Payward’s

9 physical address despite knowing this physical address is highly confidential. Payward has been

10 forced to adopt additional expensive security measures to mitigate the risk from Plaintiff’s unnecessary

11 disclosure.

12 B. Defendants’ Alleged Discrimination and Retaliation Against Plaintiff Based on
13 Plaintiff’s Veteran Status, Disability, and Reports of Vesting Discrepancies
Kraken employed Runyon as a financial analyst from approximately March 26, 2018 until
14
August 1, 2019. (See FAC ¶¶ 17, 39-40.) Plaintiff claims that Mr. Ng harassed Runyon based on his
15
veteran status and disability, and because Plaintiff uncovered purported stock option vesting
16
discrepancies in Payward’s online program that manages these options and vesting schedules. (See
17
id. at 10-13, ¶¶ 31-40.)
18
Runyon alleges that he was subjected to harassment for his veteran status. (See id. ¶¶ 36-38.)
19
Runyon claims that in July 2019 Mr. Ng laughed and told him “You don’t look disabled” when he
20
learned that Runyon was designated as a disabled veteran in Kraken’s human resources program. (Id.
21
¶ 36.) Runyon alleges that on a separate occasion another employee asked him if he ever killed anyone
22

24 5
Pursuant to this Motion, the Court may take judicial notice of the fact that cryptocurrency exchanges
are concerned with security and protecting themselves against physical and electronic hacking
25 attempts, as this fact is readily ascertainable and indisputable. Cal. Evid. Code § 452(h); Scher v.
Burke, 192 Cal. Rptr. 3d 704 (Ct. App. 2d Dist. 2015) (taking judicial notice of article from United
26 States Department of the Interior’s website concerning public land survey system); Seelig v. Infinity
Broad. Corp., 97 Cal. App. 4th 798, 807 n.5 (Ct. App. 1st Dist. 2002) (“[D]efendants ask this court to
27 take judicial notice of news articles discussing the Show published before and after its airing on
network television. . . . We grant the request, exercising our discretion to judicially notice matters that
28 were subject to discretionary judicial notice by the trial court.”).
–3–
Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 while overseas.6 (See id. ¶ 37.) Finally, Runyon claims that Ng frequently yelled at him because he

2 believed that Ng could handle it based on his military training and background. (See id. ¶ 38.)

3 Beginning in April 2019, Plaintiff alleges that he spent his time working with a software

4 program that managed equity vesting rights for Kraken employees. (See id. ¶ 31.) Runyon alleges

5 that he found discrepancies for three employees’ equity rights, because the rights shown in the program

6 varied from those approved by Kraken’s Board. (See id. ¶¶ 31-35.) Runyon claims that Mr. Ng was

7 responsible for the entries that varied from the Board’s minutes and that Ng eventually restricted him

8 from making changes. (See id.)

9 Around July 2019, Runyon alleges that he asked Ng if he could take medical leave for the

10 entire month of August to manage the symptoms of his depression, insomnia, and anxiety. (See id. ¶

11 39.) Runyon alleges that Ng terminated his employment on Runyon’s first day of leave. (See id. ¶

12 40.)

13 These allegations – and only these allegations – underpin nearly all of Plaintiff’s claims.

14 Plaintiff asserts twelve causes of action in the FAC. These allegations form the foundation for

15 Runyon’s FEHA claims, which allege harassment “due to his veteran status” (FAC at 14, ¶ 44),

16 discrimination for failure to accommodate his need for “medical and mental care” (id. at 15, ¶ 51),

17 failure to engage in the interactive process to determine if Defendants could “make [a] reasonable

18 accommodation for [Plaintiff’s] medication condition” (id. at 16-17, ¶ 59), failure to accommodate

19 Plaintiff’s medical condition (see id. at 17-18, ¶ 69), retaliation (see id. at 18-19, ¶¶ 76-77), failure to

20 prevent harassment and retaliation based on Plaintiff’s “disability, veteran status, and whistleblowing

21 activities” (id. at 19-20, ¶¶ 86-87), and wrongful termination “because of [Plaintiff’s] disability” (id.

22 at 21-22, ¶ 94). These allegations also underpin Plaintiff’s whistleblower claim and claim for wrongful

23 termination in violation of public policy. (See, e.g., id. at 23-25, ¶¶ 105-107 (asserting a whistleblower

24 claim under Cal. Lab. Code § 1102.5 because he was terminated for “reporting and insisting on using

25 the correct vesting schedules for employees’ stock options”); id. at 25-26, ¶ 112 (asserting claim for

26 wrongful termination in violation of public policy because “Plaintiff engaged in a protected activity

28 6
Plaintiff does not allege Payward or Mr. Ng were aware of this alleged statement.
–4–
Motion to Strike Irrelevant, False, and Improper Matters from the FAC
1 when he opposed the changes made to certain employee stock vesting schedules”). These allegations

2 form the basis for Plaintiff’s claim for intentional infliction of emotional distress (“IIED”). (See id. at

3 26-27, ¶ 118 (asserting IIED claim based on Defendants’ “harassing and discriminatory conduct”).) 7

4 But Plaintiff makes no attempt to tailor the FAC to facts relevant to these causes of action.

5 Instead, he intentionally includes extraneous allegations solely because they sound scandalous and

6 paint Payward as a bad actor.

7 C. Plaintiff’s Hodge-Podge of Irrelevant and Improper Allegations

8
Plaintiff’s FAC otherwise adopts a kitchen-sink approach, including an array of vague, muddled
9
accusations that are irrelevant to his causes of action. They appear to have been included simply to
10
give the impression that Payward has engaged in scandalous behavior. It also appears that Plaintiff
11
inserts these allegations in an effort to impose intrusive, apex-level discovery on Payward’s Chief
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Executive Officer, Chief Brand Officer, and Chief Compliance Officer.
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1. Plaintiff’s Belief That Two Payward Employees Were Incompetent
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Plaintiff alleges “Employee 1,” Payward’s U.S. Controller, was incompetent because “he asked
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Runyon for help understanding simple finance questions.” (Id. ¶¶ 18-19.) Plaintiff also \alleges he
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was somehow responsible for Employee 1’s firing. (See id. ¶ 19). Plaintiff similarly alleges that Mr.
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Ng expressed concern that “Employee 3” lacked the requisite coding skills and had lied about her skill
18

Case Info

Judge

Samuel K. Feng Track Judge’s New Case

Case No.

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Document Filed Date

February 06, 2020

Case Filing Date

November 26, 2019

County

Parties

CALDERON, ANDREW E. Attorney for the Defendant
COCHRAN, CLAIRE E. Attorney for the Plaintiff
DOES 1-50, INCLUSIVE Defendant
EMPLOYEE 5 Other
FORD, BRENDAN M. Attorney
LAVIGNE, CHRISTOPHER N. Attorney for the Defendant
NG, KAISER Defendant
PAYWARD, INC., A CALIFORNIA CORPORATION Defendant
RUNYON, NATHAN PETER Plaintiff
STEVENS, GREGORY W. Attorney for the Plaintiff
Natalie Xifo Attorneys for Plaintiffs
Kimberly Pallen Attorneys for Defendants
Claire Eberhard Attorney
Howard Strong Attorneys for Plaintiffs
Eduardo Dominguez Attorney
Aaron Minnis Attorney
Christopher Layne Attorney

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Hearing: NATHAN PETER RUNYON VS. PAYWARD, INC., A CALIFORNIA CORPORATION ET AL

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