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J. Noah Hagey, Esq. (SBN: 262331)
hagey@braunhagey.com
Matthew Borden, Esq. (SBN: 214323)
borden@braunhagey.com
Amit Rana, Esq. (SBN: 291912)
rana@braunhagey.com
BRAUNHAGEY & BORDEN LLP
220 Sansome Street, Second Floor
San Francisco, CA 94104
Telephone: (415) 599-0210
Facsimile: (415) 276-1808
ATTORNEYS FOR PLAINTIFF
ASHBURY HEIGHTS CAPITAL, LLC
ELECTRONICALLY
FILED
Superior Court of California,
County of San Francisco
07/05/2018
Clerk of the Court
BY: DAVID YUEN
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
ASHBURY HEIGHTS CAPITAL, LLC,
Plaintiff,
Vv.
FACTSET RESEARCH SYSTEMS, INC., a
Connecticut corporation; BEDE, LLC, a
Delaware limited liability company, fik/a
REVERE DATA, LLC; DOUG ENGMANN,
an individual; and Does 1 through 20,
Defendants.
Case No. CGC 14-542833
PLAINTIFF ASHBURY HEIGHTS
CAPITAL, LLC’S TRIAL BRIEF
Date: July 9, 2018
Time: 9:00 a.m.
Dept: 306
Judge: — Hon. Richard B. Ulmer, Jr.
Trial Date: July 9, 2018
Complaint Filed: November 20, 2014
First Am. Compl. Filed: January 14, 2015
Case No. CGC 14-542833
PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN
Plaintiff Ashbury Heights Capital, LLC (“Ashbury”) respectfully submits this trial brief for
the trial on July 9, 2018 against Defendants FactSet Research Systems, Inc. (“FactSet”), Bede,
LLC, f/k/a Revere Data, LLC (“Revere”), and Doug Engmann.
INTRODUCTION
Ashbury invented and developed a groundbreaking method for analyzing stock market data
and predicting stock movements. Defendant Revere, a data mining company, licensed the
technology from Ashbury. Before Ashbury, Revere had a 10-year track record of minimal sales
and three customers. As a result of the interest created by Ashbury’s invention, Revere’s data sales
skyrocketed, and it began getting sales meetings with the most established quantitative funds.
Because Ashbury’s intellectual property was driving Revere’s sales, Revere agreed that Ashbury
would get 20% of all data sales, for as long as the customer continued to buy Revere’s data. These
terms were agreed upon by Revere’s principal, Doug Engmann and memorialized in writing in
email exchanges between Mr. Engmann and Ashbury. The parties intended to later enter into a
long-form agreement but never did for a variety of reasons, most of which have to do with Revere’s
desire to avoid paying Ashbury.
After entering into the license agreement, Revere purported to perform under the agreed
upon terms. However, Revere intentionally underreported its sales to avoid paying Ashbury.
Revere used Ashbury’s intellectual property to pump up its data sales, while Mr. Engmann was
trying to sell the company. In August 2013, Defendant FactSet acquired Revere’s assets, including
Revere’s contract with Ashbury, which is expressly listed as an asset in the purchase agreement.
Shortly after the acquisition, FactSet purported to cancel the contract with Ashbury, but continued
to use Ashbury’s intellectual property to sell data. At the same time, FactSet continues to collect
revenue for sales of data to former Revere customers, for whom it was obligated to pay Ashbury’s
20% royalty.
FactSet has refused to pay Ashbury, and Revere has taken the position that it never had any
contract with Ashbury in the first place. After executing an addendum to the purchase agreement
allocating Defendants’ liability to Ashbury, Defendants intentionally destroyed evidence on the
servers FactSet acquired from Revere.
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PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN
Ashbury has asserted five causes of action against Defendants: breach of contract, fraud,
breach of confidence, quantum meruit, and promissory estoppel. All of these claims are jury
claims except for promissory estoppel. Ashbury seeks compensation for past royalties from Revere
and FactSet and future royalties from FactSet in an amount exceeding $45,000,000.
RELEVANT FACTS
A. Statement of the Case
Eric McGill invented and developed a novel technique for assessing the impact of micro-
and macro-economic events on companies and industries, using a computer to map, store and
analyze information on actual and estimated economic relationships between companies. Nobody
in the market had ever done anything remotely similar. Eric started up Ashbury with Paul
Mingardi, a friend he had met while they were students at MIT. Ashbury applied for a patent for
its process in 2011 and received its patent on July 29, 2015.
Ashbury licensed its IP to Revere in 2010. Thereafter, sales of Revere’s Relationship Data,
the data used by Ashbury’s invention, skyrocketed. But because Revere was gaming the parties’
license agreement, Ashbury terminated it on July 3, 2012. At Mr. Engmann’s urging, the parties
negotiated a new license, which is the one at issue in this case. In August 2013, FactSet and
Revere executed an agreement for FactSet to acquire Revere. The sale closed on September 1,
2013. On October 22, 2013, FactSet sent notice to Ashbury and its counsel purporting to terminate
FactSet’s contract with Ashbury. Thereafter, FactSet “wiped” numerous documents related to this
litigation from the servers that it had acquired from Revere.
B. Procedural History
Ashbury commenced this action on November 20, 2014 and served its first discovery on
Defendants on December 10, 2014. Ashbury filed its First Amended Complaint on January 14,
2015. On February 23, 2015, Defendants filed a petition to compel arbitration and motion to stay
proceedings and set the petition and motion hearing for June 12, 2015.
The Court denied Defendants’ petition to compel arbitration on June 29, 2015. Defendants
thereafter took an interlocutory appeal, which was denied on August 16, 2016. The remittitur
issued on October 21, 2016.
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During the pendency of appeal and while waiting for the remittitur to issue, Defendants did
nothing to collect or search for responsive documents. Instead, Defendants delayed the progression
of this matter by needlessly complicating and drawing out discussions regarding the production of
electronically stored information. Then, on September 13, 2017, because it had dragged its feet on
its discovery obligations for literally years, Defendants convinced the Court to continue the trial
date and further delay adjudication of Ashbury’s claims.
In late 2017, Defendants finally produced some documents (as noted in Ashbury’s Motion
in Limine Nos. | and 3, FactSet had already destroyed many categories of documents and simply
refused to produce many others). On May 31, 2018, the Court rejected Defendants’ Motion for
Summary Judgment in its entirety. A jury trial is scheduled to commence on July 9, 2018.
The legal issues in this case are relatively straightforward, as the Court’s ruling denying
summary judgment and summary adjudication eliminated many of the legal contentions between
the parties. However, certain limited legal issues remain to be resolved.
First, Defendants intentionally destroyed the servers housing critical emails and documents,
rendering the entire record in this action unreliable. The spoliation took place during the pendency
of this dispute and after the lawyers for the parties had become involved. Defendants’ spoliation of
evidence is further discussed in Plaintiff's Motion in Limine No. 1. Separately, however, the
spoliation entitles Ashbury to a jury instruction.
Second, the First Amended Complaint states a claim for quantum meruit/assumpsit, for
which the CAC] jury instruction requires modification. Therefore, Plaintiff is entitled to a special
jury instruction on this claim. Similarly, no CACI jury instruction is available for Plaintiffs claim
for breach of confidence and Plaintiff is entitled to a special jury instruction on this claim also.
Third, the First Amended Complaint states a claim for promissory estoppel. This equitable
claim should be decided by the Court after the jury rules on Plaintiffs legal claims.
Fourth, to the extent that evidence on punitive damages are bifurcated, Plaintiff is entitled to
obtain discovery on the financial status of all Defendants.
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I. ASHBURY IS ENTITLED TO A JURY INSTRUCTION REGARDING
DEFENDANTS’ INTENTIONAL DESTRUCTION OF EVIDENCE
As detailed in Plaintiff's Motion in Limine No. | and the attached deposition testimony,
Defendants destroyed evidence knowing that this litigation was forthcoming. On November 11,
2016, FactSet finally admitted that it destroyed the server that it acquired from Revere in the
acquisition without preserving critical evidence that was on it, and confirmed the same in verified
discovery responses on April 27, 2017 and through the deposition testimony of its person most
knowledgeable on the topic on June 7, 2018. FactSet only migrated network folders and emails
from Revere personnel who continued their employment at FactSet after the acquisition and then
“wiped” the servers, destroying all the data on them. Revere personnel who did not continue
employment at FactSet include Defendant Engmann, his brother Mike Engmann who was a co-
owner of Revere, and the key salespeople who marketed Ashbury’s technology, including Rob
Martinez, Scott Porter, Steve Tenney and Stuart Bell. FactSet destroyed this evidence, and Revere
failed to make backups of this evidence, with full knowledge that this litigation would occur
because prior to destroying the evidence, FactSet and Revere entered into an amendment to the
Asset Purchase Agreement, in which they agreed how to allocate liability arising from Ashbury’s
claims.
In Plaintiff's Motion in Limine No. 1, Ashbury has requested evidentiary sanctions and an
adverse inference arising from Defendants’ intentional spoliation of evidence. Ashbury is also
entitled to a special jury instruction, which Ashbury will be submitting, explaining that Defendants
have intentionally spoliated evidence and that the jury must presume that the evidence they
destroyed was unfavorable to Defendants.
Il. ASHBURY’S BREACH OF CONFIDENCE CLAIM
“An actionable breach of confidence will arise when an idea, whether or not protectable, is
offered to another in confidence, and is voluntarily received by the offeree in confidence with the
understanding that it is not to be disclosed to others, and it is not to be used by the offeree for
purposes beyond the limits of the confidence without the offeror's permission.” Tele-Count
Engineers, Inc. v. Pacific Tel. & Tel. Co., 168 Cal. App. 3d 455, 462 (1985). A cause of action for
breach of confidence “arises whenever an idea, offered and received in confidence, is later
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disclosed without permission.” Davies v. Krasna, 14 Cal.3d 502, 510 (1975). This cause of action
is not limited to fiduciary relationships, "but could exist in any number of situations, such as
principal and agent, partners, joint venturers, and in a buyer/seller relationship where a trade secret
is disclosed in the course of confidential negotiations on the price to be paid for the secret." Faris v.
Enberg, 97 Cal. App. 3d 309, 321 (1979).
Revere disclosed Ashbury’s IP to FactSet during the acquisition without informing
Ashbury. This was a breach of confidence because it exceeded the scope of the information
Ashbury gave to Revere in confidence. Further, to the extent that Defendants claim that they had
no contract that required paying Ashbury for using Ashbury’s intellectual property to market
Revere’s data, they had no right to disseminate the confidential and proprietary techniques Ashbury
invented and which they agreed under an NDA not to disclose.
Il. ©THE QUANTUM MERUIT CLAIM
In the event that a jury somehow finds that there was no contract between the parties (and if
a jury finds that FactSet terminated the Agreement), Ashbury is still entitled to compensation for
the benefit that it bestowed on Defendants through its claim of quantum meruit, known under the
common law as assumpsit — which is a claim that must be decided by a jury. Jogani v. Superior
Court, 165 Cal. App. 4th 901, 907 (2008).
Quantum meruit is not a contract claim based on the parties’ intent; it involves a situation
where “the law will imply a contract (or rather, a quasi-contract), without regard to the parties’
intent, in order to avoid unjust enrichment.” McBride v. Boughton, 123 Cal. App. 4th 379, 388
(2004). The doctrine applies “where the defendant obtained a benefit from the plaintiff by fraud,
duress, conversion, or similar conduct.” /d. “*Quasi-contract’ is simply another way of describing
the basis for the equitable remedy of restitution when an unjust enrichment has occurred. Often
called quantum meruit, it applies ‘[w]here one obtains a benefit which he may not justly retain...
The quasi-contract, or contract ‘implied in law,’ is an obligation created by the law without regard
to the intention of the parties, and is designed to restore the aggrieved party to his former position
by return of the thing or its equivalent in money.’”” /d. (quoting | Witkin, Summary of Cal. Law,
Contracts § 91, at 122) (alterations in original).
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w
The CAC] jury instruction related to a quantum meruit theory for recovery (CACI 371)
deals with a situation where the defendant has requested the plaintiffs services. This instruction,
however, excludes the form of quantum meruit that entitles a plaintiff to restitution for inequitable
conduct. Ashbury therefore requests the following modification of CACI 371:
1. That [name of defendant] obtained through fraud, duress or
conversion, or requested, by words or conduct, for [name of plaintiff]
[perform services/deliver goods] for the benefit of [name of
defendant];
2. That [name of plaintiff] [performed the services/delivered the
goods] as requested;
3. That [name of defendant] has not paid [name of plaintiff] for the
[services/goods]; and
4, The reasonable value of the [goods/services] that were provided.
This theory of quantum meruit is supported in the case law above and supported by the
underlying purpose of preventing unjust enrichment. “A quantum meruit or quasi-contractual
recovery rests upon the equitable theory that a contract to pay for services rendered is implied by
law for reasons of justice.” Hedging Concepts, Inc. v. First Alliance Mortgage Co., 41 Cal. App.
4th 1410, 1419 (1996).
To the extent the jury finds no contract between the parties, Ashbury is entitled to recover
unjust enrichment under its quantum meruit theory. See Earhart v. William Low Co., 25 Cal. 3d
503, 507-508 (1979) (holding that in absence of a valid contract, plaintiff was entitled to recover
for all work done on defendant’s property which was the subject of the contract that was never
fulfilled). “When a contract does not determine the amount of the consideration, nor the amount by
which it is to be ascertained, or when it leaves the amount thereof to the discretion of an interested
party, the consideration must be so much money as the object of the contract is reasonably worth.
In such a case it is the function of the trier of fact to ascertain and declare the reasonable value of
the services.” Zint v. Topp Industries, Inc., 184 Cal. App. 2d 240, 244 (1960).
In light of the foregoing, Ashbury is submitting a special jury instruction.
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IV. THE COURT SHOULD DECIDE THE PROMISSORY ESTOPPEL CLAIM AFTER
THE JURY RULES
Unlike each of the claims above, promissory estoppel is an equitable claim that must be
tried to the Court. As a general proposition, the jury trial is a matter of right in a civil action at law,
but not in equity. C&K Engineering Contractors v. Amber Steel Co., Inc., 23 Cal.3d 1, 8 (1978).
But promissory estoppel is an equitable claim that must be tried to the Court. Jd. at 9.
Where both legal and equitable issues or claims are to be tried, the order of trial becomes
significant because findings of fact on the issues first tried may affect the issues tried later. The
order of proof at trial is generally discretionary with the trial judge. Evid. Code § 320; Unilogic,
Inc. v. Burroughs Corp., 10 Cal. App. 4th 612, 622 (1992) (legal claims were heard first by the
jury, with equitable claims heard next); Hughes v. Dunlap, 91 Cal. 385 (1891) (hearing jury issues
before equitable issues in order to preserve the “jury trial” right).
Here, the evidence for the promissory estoppel claim substantially, if not entirely, overlaps
the evidence for the jury claims. Under such circumstances, the most efficient way to proceed is
for all evidence to be presented, and for the Court to decide the equitable claim after the jury
renders its verdict, or in the alternative, permit the jury to decide the equitable claims after the legal
claims are heard first. See Unilogic, 10 Cal. App. 4th at 622.
The elements of promissory estoppel are: “(1) a promise, (2) the promisor should
reasonably expect the promise to induce action or forbearance on the part of the promisee or a third
person, (3) the promise induces action or forbearance by the promisee or a third person (which we
refer to as detrimental reliance), and (4) injustice can be avoided only by enforcement of the
promise.” West v. JPMorgan Chase Bank, NA, 214 Cal. App. 4th 780, 803 (2013). “For a promise
to be enforceable, it need only be ‘definite enough that a court can determine the scope of the
duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the
assessment of damages.’” /d. at 804 (quoting Bustamante v. Intuit, Inc., 141 Cal. App. 4th 199,
209 (2006)).
All the elements are met here: (1) Revere promised to pay Ashbury 20% of all Relationship
Data sales for customers after September 2012: (2) Revere understood that by making this promise,
Ashbury would allow Revere to use Ashbury’s intellectual property and would not go partner with
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another data company; (3) as a result of Revere’s promise, Ashbury allowed Revere to use its
intellectual property to generate data sales; and (4) under these circumstances, it would be unjust
for this promise not to be enforced. FactSet acquired all of Revere’s obligations to Ashbury, which
included a continuing obligation to pay royalties on the customers it acquired from Revere.
Vv. IF PUNITIVE DAMAGES ARE BIFURCATED, ASHBURY SHOULD BE
ALLOWED DISCOVERY ON DEFENDANTS’ FINANCIAL INFORMATION
Defendants have sought, in limine, for an order (1) bifurcating trial of the amount of any
punitive damages award and (2) excluding evidence of Defendants’ financial condition and net
worth. Plaintiff has filed a partial non-opposition to the motion in limine agreeing to limit any
evidence or reference to Defendants’ financial status to the extent it is necessary for Ashbury’s
affirmative case in chief to establish non-punitive forms of relief. However, if the jury finds fraud,
oppression or malice, Defendants should be required to produce evidence of each Defendants’
worth and financial status so the jury can determine the appropriate punitive damages award. Mike
Davidov Co. v. Issod, 78 Cal. App. 4th 597, 609 (2000) (“We see no problem with a trial court, in
its discretion, ordering a defendant to produce evidence of his or her financial condition following a
determination of the defendant's liability for punitive damages, even though the plaintiff had not
previously done any of those three things”); StreetScenes v. ITC Entm't Grp., Inc., 103 Cal. App.
4th 233, 243 (2002) (“a court may order a defendant to produce evidence of his or her financial
condition following a determination of liability for punitive damages even if the plaintiff has not
attempted to obtain that information prior to trial”).
Dated: July 5, 2018 Respectfully Submitted,
BRAUNHAGEY & BORDEN LLP
By >
Matthew Borden
Attorneys for Plaintiff Ashbury Heights
Capital, LLC
8 Case No. CGC 14-542833
PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEF
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nN J. Noah Hagey, Esq. (SBN: 262331) hagey@braunhagey.com Matthew Borden, Esq. (SBN: 214323) borden@braunhagey.com Amit Rana, Esq. (SBN: 291912) rana@braunhagey.com BRAUNHAGEY & BORDEN LLP 220 Sansome Street, Second Floor San Francisco, CA 94104 Telephone: (415) 599-0210 Facsimile: (415) 276-1808 ATTORNEYS FOR PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC ELECTRONICALLY FILED Superior Court of California, County of San Francisco 07/05/2018 Clerk of the Court BY: DAVID YUEN Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO ASHBURY HEIGHTS CAPITAL, LLC, Plaintiff, Vv. FACTSET RESEARCH SYSTEMS, INC., a Connecticut corporation; BEDE, LLC, a Delaware limited liability company, fik/a REVERE DATA, LLC; DOUG ENGMANN, an individual; and Does 1 through 20, Defendants. Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEF Date: July 9, 2018 Time: 9:00 a.m. Dept: 306 Judge: — Hon. Richard B. Ulmer, Jr. Trial Date: July 9, 2018 Complaint Filed: November 20, 2014 First Am. Compl. Filed: January 14, 2015 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN Plaintiff Ashbury Heights Capital, LLC (“Ashbury”) respectfully submits this trial brief for the trial on July 9, 2018 against Defendants FactSet Research Systems, Inc. (“FactSet”), Bede, LLC, f/k/a Revere Data, LLC (“Revere”), and Doug Engmann. INTRODUCTION Ashbury invented and developed a groundbreaking method for analyzing stock market data and predicting stock movements. Defendant Revere, a data mining company, licensed the technology from Ashbury. Before Ashbury, Revere had a 10-year track record of minimal sales and three customers. As a result of the interest created by Ashbury’s invention, Revere’s data sales skyrocketed, and it began getting sales meetings with the most established quantitative funds. Because Ashbury’s intellectual property was driving Revere’s sales, Revere agreed that Ashbury would get 20% of all data sales, for as long as the customer continued to buy Revere’s data. These terms were agreed upon by Revere’s principal, Doug Engmann and memorialized in writing in email exchanges between Mr. Engmann and Ashbury. The parties intended to later enter into a long-form agreement but never did for a variety of reasons, most of which have to do with Revere’s desire to avoid paying Ashbury. After entering into the license agreement, Revere purported to perform under the agreed upon terms. However, Revere intentionally underreported its sales to avoid paying Ashbury. Revere used Ashbury’s intellectual property to pump up its data sales, while Mr. Engmann was trying to sell the company. In August 2013, Defendant FactSet acquired Revere’s assets, including Revere’s contract with Ashbury, which is expressly listed as an asset in the purchase agreement. Shortly after the acquisition, FactSet purported to cancel the contract with Ashbury, but continued to use Ashbury’s intellectual property to sell data. At the same time, FactSet continues to collect revenue for sales of data to former Revere customers, for whom it was obligated to pay Ashbury’s 20% royalty. FactSet has refused to pay Ashbury, and Revere has taken the position that it never had any contract with Ashbury in the first place. After executing an addendum to the purchase agreement allocating Defendants’ liability to Ashbury, Defendants intentionally destroyed evidence on the servers FactSet acquired from Revere. 1 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN Ashbury has asserted five causes of action against Defendants: breach of contract, fraud, breach of confidence, quantum meruit, and promissory estoppel. All of these claims are jury claims except for promissory estoppel. Ashbury seeks compensation for past royalties from Revere and FactSet and future royalties from FactSet in an amount exceeding $45,000,000. RELEVANT FACTS A. Statement of the Case Eric McGill invented and developed a novel technique for assessing the impact of micro- and macro-economic events on companies and industries, using a computer to map, store and analyze information on actual and estimated economic relationships between companies. Nobody in the market had ever done anything remotely similar. Eric started up Ashbury with Paul Mingardi, a friend he had met while they were students at MIT. Ashbury applied for a patent for its process in 2011 and received its patent on July 29, 2015. Ashbury licensed its IP to Revere in 2010. Thereafter, sales of Revere’s Relationship Data, the data used by Ashbury’s invention, skyrocketed. But because Revere was gaming the parties’ license agreement, Ashbury terminated it on July 3, 2012. At Mr. Engmann’s urging, the parties negotiated a new license, which is the one at issue in this case. In August 2013, FactSet and Revere executed an agreement for FactSet to acquire Revere. The sale closed on September 1, 2013. On October 22, 2013, FactSet sent notice to Ashbury and its counsel purporting to terminate FactSet’s contract with Ashbury. Thereafter, FactSet “wiped” numerous documents related to this litigation from the servers that it had acquired from Revere. B. Procedural History Ashbury commenced this action on November 20, 2014 and served its first discovery on Defendants on December 10, 2014. Ashbury filed its First Amended Complaint on January 14, 2015. On February 23, 2015, Defendants filed a petition to compel arbitration and motion to stay proceedings and set the petition and motion hearing for June 12, 2015. The Court denied Defendants’ petition to compel arbitration on June 29, 2015. Defendants thereafter took an interlocutory appeal, which was denied on August 16, 2016. The remittitur issued on October 21, 2016. 2 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN During the pendency of appeal and while waiting for the remittitur to issue, Defendants did nothing to collect or search for responsive documents. Instead, Defendants delayed the progression of this matter by needlessly complicating and drawing out discussions regarding the production of electronically stored information. Then, on September 13, 2017, because it had dragged its feet on its discovery obligations for literally years, Defendants convinced the Court to continue the trial date and further delay adjudication of Ashbury’s claims. In late 2017, Defendants finally produced some documents (as noted in Ashbury’s Motion in Limine Nos. | and 3, FactSet had already destroyed many categories of documents and simply refused to produce many others). On May 31, 2018, the Court rejected Defendants’ Motion for Summary Judgment in its entirety. A jury trial is scheduled to commence on July 9, 2018. The legal issues in this case are relatively straightforward, as the Court’s ruling denying summary judgment and summary adjudication eliminated many of the legal contentions between the parties. However, certain limited legal issues remain to be resolved. First, Defendants intentionally destroyed the servers housing critical emails and documents, rendering the entire record in this action unreliable. The spoliation took place during the pendency of this dispute and after the lawyers for the parties had become involved. Defendants’ spoliation of evidence is further discussed in Plaintiff's Motion in Limine No. 1. Separately, however, the spoliation entitles Ashbury to a jury instruction. Second, the First Amended Complaint states a claim for quantum meruit/assumpsit, for which the CAC] jury instruction requires modification. Therefore, Plaintiff is entitled to a special jury instruction on this claim. Similarly, no CACI jury instruction is available for Plaintiffs claim for breach of confidence and Plaintiff is entitled to a special jury instruction on this claim also. Third, the First Amended Complaint states a claim for promissory estoppel. This equitable claim should be decided by the Court after the jury rules on Plaintiffs legal claims. Fourth, to the extent that evidence on punitive damages are bifurcated, Plaintiff is entitled to obtain discovery on the financial status of all Defendants. 3 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN I. ASHBURY IS ENTITLED TO A JURY INSTRUCTION REGARDING DEFENDANTS’ INTENTIONAL DESTRUCTION OF EVIDENCE As detailed in Plaintiff's Motion in Limine No. | and the attached deposition testimony, Defendants destroyed evidence knowing that this litigation was forthcoming. On November 11, 2016, FactSet finally admitted that it destroyed the server that it acquired from Revere in the acquisition without preserving critical evidence that was on it, and confirmed the same in verified discovery responses on April 27, 2017 and through the deposition testimony of its person most knowledgeable on the topic on June 7, 2018. FactSet only migrated network folders and emails from Revere personnel who continued their employment at FactSet after the acquisition and then “wiped” the servers, destroying all the data on them. Revere personnel who did not continue employment at FactSet include Defendant Engmann, his brother Mike Engmann who was a co- owner of Revere, and the key salespeople who marketed Ashbury’s technology, including Rob Martinez, Scott Porter, Steve Tenney and Stuart Bell. FactSet destroyed this evidence, and Revere failed to make backups of this evidence, with full knowledge that this litigation would occur because prior to destroying the evidence, FactSet and Revere entered into an amendment to the Asset Purchase Agreement, in which they agreed how to allocate liability arising from Ashbury’s claims. In Plaintiff's Motion in Limine No. 1, Ashbury has requested evidentiary sanctions and an adverse inference arising from Defendants’ intentional spoliation of evidence. Ashbury is also entitled to a special jury instruction, which Ashbury will be submitting, explaining that Defendants have intentionally spoliated evidence and that the jury must presume that the evidence they destroyed was unfavorable to Defendants. Il. ASHBURY’S BREACH OF CONFIDENCE CLAIM “An actionable breach of confidence will arise when an idea, whether or not protectable, is offered to another in confidence, and is voluntarily received by the offeree in confidence with the understanding that it is not to be disclosed to others, and it is not to be used by the offeree for purposes beyond the limits of the confidence without the offeror's permission.” Tele-Count Engineers, Inc. v. Pacific Tel. & Tel. Co., 168 Cal. App. 3d 455, 462 (1985). A cause of action for breach of confidence “arises whenever an idea, offered and received in confidence, is later 4 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN disclosed without permission.” Davies v. Krasna, 14 Cal.3d 502, 510 (1975). This cause of action is not limited to fiduciary relationships, "but could exist in any number of situations, such as principal and agent, partners, joint venturers, and in a buyer/seller relationship where a trade secret is disclosed in the course of confidential negotiations on the price to be paid for the secret." Faris v. Enberg, 97 Cal. App. 3d 309, 321 (1979). Revere disclosed Ashbury’s IP to FactSet during the acquisition without informing Ashbury. This was a breach of confidence because it exceeded the scope of the information Ashbury gave to Revere in confidence. Further, to the extent that Defendants claim that they had no contract that required paying Ashbury for using Ashbury’s intellectual property to market Revere’s data, they had no right to disseminate the confidential and proprietary techniques Ashbury invented and which they agreed under an NDA not to disclose. Il. ©THE QUANTUM MERUIT CLAIM In the event that a jury somehow finds that there was no contract between the parties (and if a jury finds that FactSet terminated the Agreement), Ashbury is still entitled to compensation for the benefit that it bestowed on Defendants through its claim of quantum meruit, known under the common law as assumpsit — which is a claim that must be decided by a jury. Jogani v. Superior Court, 165 Cal. App. 4th 901, 907 (2008). Quantum meruit is not a contract claim based on the parties’ intent; it involves a situation where “the law will imply a contract (or rather, a quasi-contract), without regard to the parties’ intent, in order to avoid unjust enrichment.” McBride v. Boughton, 123 Cal. App. 4th 379, 388 (2004). The doctrine applies “where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar conduct.” /d. “*Quasi-contract’ is simply another way of describing the basis for the equitable remedy of restitution when an unjust enrichment has occurred. Often called quantum meruit, it applies ‘[w]here one obtains a benefit which he may not justly retain... The quasi-contract, or contract ‘implied in law,’ is an obligation created by the law without regard to the intention of the parties, and is designed to restore the aggrieved party to his former position by return of the thing or its equivalent in money.’”” /d. (quoting | Witkin, Summary of Cal. Law, Contracts § 91, at 122) (alterations in original). 5 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN w The CAC] jury instruction related to a quantum meruit theory for recovery (CACI 371) deals with a situation where the defendant has requested the plaintiffs services. This instruction, however, excludes the form of quantum meruit that entitles a plaintiff to restitution for inequitable conduct. Ashbury therefore requests the following modification of CACI 371: 1. That [name of defendant] obtained through fraud, duress or conversion, or requested, by words or conduct, for [name of plaintiff] [perform services/deliver goods] for the benefit of [name of defendant]; 2. That [name of plaintiff] [performed the services/delivered the goods] as requested; 3. That [name of defendant] has not paid [name of plaintiff] for the [services/goods]; and 4, The reasonable value of the [goods/services] that were provided. This theory of quantum meruit is supported in the case law above and supported by the underlying purpose of preventing unjust enrichment. “A quantum meruit or quasi-contractual recovery rests upon the equitable theory that a contract to pay for services rendered is implied by law for reasons of justice.” Hedging Concepts, Inc. v. First Alliance Mortgage Co., 41 Cal. App. 4th 1410, 1419 (1996). To the extent the jury finds no contract between the parties, Ashbury is entitled to recover unjust enrichment under its quantum meruit theory. See Earhart v. William Low Co., 25 Cal. 3d 503, 507-508 (1979) (holding that in absence of a valid contract, plaintiff was entitled to recover for all work done on defendant’s property which was the subject of the contract that was never fulfilled). “When a contract does not determine the amount of the consideration, nor the amount by which it is to be ascertained, or when it leaves the amount thereof to the discretion of an interested party, the consideration must be so much money as the object of the contract is reasonably worth. In such a case it is the function of the trier of fact to ascertain and declare the reasonable value of the services.” Zint v. Topp Industries, Inc., 184 Cal. App. 2d 240, 244 (1960). In light of the foregoing, Ashbury is submitting a special jury instruction. 6 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN IV. THE COURT SHOULD DECIDE THE PROMISSORY ESTOPPEL CLAIM AFTER THE JURY RULES Unlike each of the claims above, promissory estoppel is an equitable claim that must be tried to the Court. As a general proposition, the jury trial is a matter of right in a civil action at law, but not in equity. C&K Engineering Contractors v. Amber Steel Co., Inc., 23 Cal.3d 1, 8 (1978). But promissory estoppel is an equitable claim that must be tried to the Court. Jd. at 9. Where both legal and equitable issues or claims are to be tried, the order of trial becomes significant because findings of fact on the issues first tried may affect the issues tried later. The order of proof at trial is generally discretionary with the trial judge. Evid. Code § 320; Unilogic, Inc. v. Burroughs Corp., 10 Cal. App. 4th 612, 622 (1992) (legal claims were heard first by the jury, with equitable claims heard next); Hughes v. Dunlap, 91 Cal. 385 (1891) (hearing jury issues before equitable issues in order to preserve the “jury trial” right). Here, the evidence for the promissory estoppel claim substantially, if not entirely, overlaps the evidence for the jury claims. Under such circumstances, the most efficient way to proceed is for all evidence to be presented, and for the Court to decide the equitable claim after the jury renders its verdict, or in the alternative, permit the jury to decide the equitable claims after the legal claims are heard first. See Unilogic, 10 Cal. App. 4th at 622. The elements of promissory estoppel are: “(1) a promise, (2) the promisor should reasonably expect the promise to induce action or forbearance on the part of the promisee or a third person, (3) the promise induces action or forbearance by the promisee or a third person (which we refer to as detrimental reliance), and (4) injustice can be avoided only by enforcement of the promise.” West v. JPMorgan Chase Bank, NA, 214 Cal. App. 4th 780, 803 (2013). “For a promise to be enforceable, it need only be ‘definite enough that a court can determine the scope of the duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.’” /d. at 804 (quoting Bustamante v. Intuit, Inc., 141 Cal. App. 4th 199, 209 (2006)). All the elements are met here: (1) Revere promised to pay Ashbury 20% of all Relationship Data sales for customers after September 2012: (2) Revere understood that by making this promise, Ashbury would allow Revere to use Ashbury’s intellectual property and would not go partner with i Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEFnN another data company; (3) as a result of Revere’s promise, Ashbury allowed Revere to use its intellectual property to generate data sales; and (4) under these circumstances, it would be unjust for this promise not to be enforced. FactSet acquired all of Revere’s obligations to Ashbury, which included a continuing obligation to pay royalties on the customers it acquired from Revere. Vv. IF PUNITIVE DAMAGES ARE BIFURCATED, ASHBURY SHOULD BE ALLOWED DISCOVERY ON DEFENDANTS’ FINANCIAL INFORMATION Defendants have sought, in limine, for an order (1) bifurcating trial of the amount of any punitive damages award and (2) excluding evidence of Defendants’ financial condition and net worth. Plaintiff has filed a partial non-opposition to the motion in limine agreeing to limit any evidence or reference to Defendants’ financial status to the extent it is necessary for Ashbury’s affirmative case in chief to establish non-punitive forms of relief. However, if the jury finds fraud, oppression or malice, Defendants should be required to produce evidence of each Defendants’ worth and financial status so the jury can determine the appropriate punitive damages award. Mike Davidov Co. v. Issod, 78 Cal. App. 4th 597, 609 (2000) (“We see no problem with a trial court, in its discretion, ordering a defendant to produce evidence of his or her financial condition following a determination of the defendant's liability for punitive damages, even though the plaintiff had not previously done any of those three things”); StreetScenes v. ITC Entm't Grp., Inc., 103 Cal. App. 4th 233, 243 (2002) (“a court may order a defendant to produce evidence of his or her financial condition following a determination of liability for punitive damages even if the plaintiff has not attempted to obtain that information prior to trial”). Dated: July 5, 2018 Respectfully Submitted, BRAUNHAGEY & BORDEN LLP By > Matthew Borden Attorneys for Plaintiff Ashbury Heights Capital, LLC 8 Case No. CGC 14-542833 PLAINTIFF ASHBURY HEIGHTS CAPITAL, LLC’S TRIAL BRIEF