Preview
1 Kimberly Pallen (SBN 288605)
kimberly.pallen@withersworldwide.com
2 Christopher N. LaVigne (NYBN 4811121) ELECTRONICALLY
(admitted Pro Hac Vice)
3 christopher.lavigne@withersworldwide.com F I L E D
Superior Court of California,
Withers Bergman LLP County of San Francisco
4 505 Sansome Street, 2nd Floor
San Francisco, California 94111 08/18/2021
Clerk of the Court
5 Telephone: 415.872.3200 BY: EDNALEEN ALEGRE
Facsimile: 415.549 2480 Deputy Clerk
6
Attorneys for Defendants Payward, Inc., a
7 California Corporation d/b/a Kraken; and Kaiser
NG, an individual
8
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
10 COUNTY OF SAN FRANCISCO
11
12 NATHAN PETER RUNYON, an individual, Case No. CGC-19-581099
13 Plaintiff, DECLARATION OF KIMBERLY A.
PALLEN IN SUPPORT OF
14 v. DEFENDANTS’ OPPOSITION TO
PLAINTIFF’S MOTION TO COMPEL
15 PAYWARD, INC., a California Corporation FURTHER RESPONSES FROM
d/b/a KRAKEN; and Kaiser NG, an PAYWARD, INC. TO SUPPLEMENTAL
16 individual; and DOES 1 through 50, inclusive, REQUESTS FOR PRODUCTION OF
DOCUMENTS AND PRIVILEGE LOG
17 Defendants.
Filed Concurrently with: Opposition Brief to
18 Plaintiff’s Motion to Compel Further
Responses to Supplemental Requests for
19 Production of Documents and Privilege Log;
Defendants’ Response to Plaintiff’s Separate
20 Statement to Compel Further Responses
21 Date: August 30, 2021
Time: 9:00 a.m.
22 Dept.: 302
23 The Hon. Ethan P. Schulman
24 Action Filed: November 26, 2019
Sept
Trial Date: September 13, 2021
25
I, KIMBERLY A. PALLEN, declare as follows:
26
1. The facts stated in this declaration are based on my personal knowledge, and, if called
27
to testify, I could and would competently testify to them. I submit this declaration pursuant to
28
NY28571/0001-US-9748617/1
W ITHERS
B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER
RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS
1 California Rules of Court, Rule 3.1202(c) as Payward’s showing of statutory basis for granting relief
2 ex parte, and Rule 3.1204 as evidence of the notice provided by Payward of the ex parte application.
3 2. I am an attorney duly licensed to practice law in the State of California. I am an
4 attorney at the law firm of Withers Bergman LLP, counsel for plaintiff Payward, Inc. (“Payward”
5 or “Defendant”) in the above-entitled matter.
6 3. Plaintiff Nathan Runyon’s (“Runyon” or “Plaintiff”) filed his First Amended
7 Complaint against Payward on January 3, 2020. A true and correct copy is attached hereto as
8 Exhibit A.
9 4. On February 14, 2020, Runyon propounded his Request for Production of
10 Documents to Payward, Set One, to Payward. A true and correct copy is attached hereto as Exhibit
11 B.
12 5. Since then the parties have engaged in extensive discovery. As Plaintiff
13 acknowledges, Payward has scoured its records and produced thousands of documents, totaling
14 more than 7,000 pages. Runyon has produced only PDFs consisting of approximately 1,500 pages
15 that contain no metadata. Most of the documents in that PDF are Payward documents, including
16 screenshots of a privileged email conversation between Payward and its outside counsel.
17 Furthermore, Runyon only produced those documents after hiding for almost a year and a half that
18 Runyon possessed Payward flash drives full of Payward documents. Runyon alerted Payward to the
19 existence of these documents on the evening before his deposition in this case, and then spent two
20 weeks filing frivolous and bad faith motions, including for the appointment of a groundwater rights’
21 special master, in an attempt to delay production of these documents and insulate his counsel from
22 any wrongdoing. This Court rejected those repeated motions out of hand.
23 6. The parties have conducted five fact depositions. Payward was only able to secure
24 the deposition testimony of the main witness in this case – referred to as “Employee 5” in Runyon’s
25 FAC – after successfully moving to compel her deposition after Ms. Cochran repeatedly refuse to
26 allow that witness to testify.
27 7. Runyon’s primary fraud claim is that he uncovered a scheme by Payward’s CFO,
28 Kaiser Ng, to defraud employees out of stock options. Runyon’s main allegations regarding this
NY28571/0001-US-9748617/1 2
W ITHERS
B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER
RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS
1 scheme are that a November 2017 written board consent set forth a 4-year vesting schedule for
2 “Employee 5” (former Payward employee Connie Wong), yet Mr. Ng input a 6-year vesting
3 schedule for Ms. Wong in the company’s cap table management system.
4 8. Payward has proven these allegations false. The day he was terminated, Runyon
5 called Ms. Wong, convinced her she was entitled to a 4-year vesting schedule (by discussing the
6 contents of the confidential November 2017 board consent) and therefore entitled to exercise
7 additional options, and convinced her to sue Payward and Mr. Ng for defrauding her out of those
8 additional options. A true and correct copy of excerpts of the deposition transcript of Ms. Connie
9 Wong, dated May 21, 2021, is attached hereto as Exhibit C.
10 9. In February 2020, Ms. Wong, also represented by Ms. Cochran, threatened to sue
11 Payward in San Francisco Superior Court on the exact vesting schedule fraud claims asserted by
12 Mr. Runyon. True and correct copies of Ms. Wong’s letter to Payward, and Payward’s response
13 thereto, are attached hereto as Exhibit D.
14 10. Ms. Cochran threatened to sue publicly on Ms. Wong’s claims, despite knowing that
15 Ms. Wong was subject to a binding arbitration agreement. Accordingly, Payward was forced to file
16 an arbitration demand to enforce that agreement. A true and correct copy of Payward’s Demand for
17 Arbitration, dated March 25, 2020, is attached hereto as Exhibit E.
18 11. After a two-day merits hearing in April 2021, the AAA-appointed arbitrator denied
19 all of Ms. Wong’s claims and granted Payward’s breach of contract claim. A true and correct copy
20 of the Arbitrator’s Interim Award, dated May 25, 2021, is attached hereto as Exhibit F.
21 12. The arbitrator issued a Final Award on August 2, 2021, which was included in
22 Payward’s publicly-filed petition to confirm the Final Award. A true and correct copy of the
23 Arbitrator’s Final Award, dated August 2, 2021, is attached hereto as Exhibit G.
24 13. Specifically, the arbitrator found that Ms. Wong’s fraud claims, which are based on
25 the exact same allegations Runyon makes in the instant case, are (1) totally without merit (e.g., id.,
26 Ex. 6 at 7 (“There is zero evidence on which this Arbitrator could conclude that the Board actually
27 intended to grant a four-year vesting schedule to Ms. Wong.”)) and (2) based on allegations that
28 were known to be false (to both Wong and Runyon) at the time they were made. (See id., Ex. 6 at 2,
NY28571/0001-US-9748617/1 3
W ITHERS
B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER
RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS
1 n.1 (“The evidence presented at the Arbitration Hearing by Ms. Wong was markedly different from
2 the facts alleged in her Amended Demand for Arbitration filed June 24, 2020. Particularly striking
3 are that the Amended Demand misstated facts underlying her claim of fraudulent inducement that
4 should have been known personally to Ms. Wong as being false as of the date of the Amended
5 Demand.”).) The Arbitrator also found that “every document signed by Ms. Wong and Payward[,
6 which] reflect[] the six-year schedule.” When asked how these additional documents demanded by
7 Runyon are relevant at all to this issue in light of the undisputed facts in this case, Ms. Cochran
8 never responded.
9 14. This is particularly true for Mr. Ng’s DocuSign history. Payward specifically asked
10 Ms. Cochran how Mr. Ng’s entire DocuSign history is relevant when (1) his allegations of fraud
11 relating to Payward’s Board have been disproven, (2) his fraud allegations are extremely limited in
12 scope and involve at most two unanimous board consents, (3) Mr. Ng never signed any board
13 consents, and (4) in many cases, such as with the approval for the June 30, 2019, Board consent,
14 Mr. Ng. simply secured approval by Board members via email, not DocuSign. Confronted with
15 these facts, Ms. Cochran simply did not respond, and instead filed the instant motion weeks later,
16 and on the eve of Payward’s deadline to file its reply in support of summary judgment.
17 15. Ms. Cochran was well aware of this last fact, as she was provided by Runyon, without
18 Payward’s knowledge, a privileged email between Payward and its counsel regarding a draft of this
19 June 30, 2019 Board consent. Payward became aware that Runyon possessed this document when
20 Ms. Cochran showed the privilege documents to Mr. Ng during his deposition in a surprise attempt
21 to get him to waive Payward’s privilege. When confronted about this tactic, Ms. Cochran conceded
22 the document was privileged. This was a clear violation of Ms. Cochran’s legal and ethical
23 obligations.
24 16. Despite this unequivocal Arbitration ruling, Ms. Cochran and Runyon have
25 continued to assert these same exact fraud claims and arguments against Payward in this case. These
26 claims are entirely devoid of merit and are the definition of frivolous. (Id. Ex. F at 9, n.5 (“The
27 factual bases for Ms. Wong’s fraud claim . . , moreover, were not proven, and were in fact
28 contradicted by Ms. Wong’s own testimony.”).)
NY28571/0001-US-9748617/1 4
W ITHERS
B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER
RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS
1 17. Payward filed its motion for summary adjudication in this case on May 27, 2021. A
2 true and correct copy of Defendants’ Motion for Summary Adjudication is attached hereto as
3 Exhibit H. A hearing on this motion is scheduled for Thursday, August 19, 2021. In light of that
4 motion, Runyon dropped several of his discrimination-related claims, cause of actions one, two and
5 eight. The remaining claims at issue in the summary judgment motion include Payward’s failure to
6 accommodate Runyon’s alleged request for medical leave and Runyon’s fraud claims. Trial in the
7 State Case is set for September 13, 2021. Fact discovery is closed.
8 18. On May 28, 2021, Plaintiff served a second set of document requests on Payward. A
9 true and correct copy of the second set of requests is attached hereto as Exhibit I.
10 19. Payward responded to those requests on July 8, 2021. A true and correct copy of
11 Payward’s responses to that second set of requests is attached hereto as Exhibit J.
12 20. On July 16, 2021, Plaintiff sent a meet and confer correspondence to Payward
13 regarding Payward’s objections and responses. A true and correct copy of that letter is attached
14 hereto as Exhibit K.
15 21. On July 19, 2021, Payward produced documents in response to these supplemental
16 requests. Payward responded to Plaintiff’s July 16 meet and confer letter on July 25, 2021. A true
17 and correct copy of that letter is attached hereto as Exhibit L.
18 22. Ms. Cochran claims that Payward must produce a document bearing Bates numbers
19 PAYWARD4792-93 in response to Runyon’s Request No. 72. However, Payward properly
20 responded that it had “already produced responsive and non-privileged documents in its possession,
21 custody and control responsive to this Request.” As Payward has explained multiple times to Ms.
22 Cochran and her associate Ms. Sorensen this document is a privileged draft Board document that
23 was withheld on privilege grounds and appears in Payward’s August 19, 2020, Supplemental
24 Privilege Log. Indeed, the email attaching this document, and the document itself, appear on lines
25 634 and 635, respectively, of the privilege log. A true and correct copy of an excerpt from Payward’s
26 supplemental privilege log is attached hereto as Exhibit M.
27 23. I have also explained to Runyon’s counsel, Ms. Sorensen, that all of the entries
28 Runyon questioned on the privilege log are indeed privileged as they are drafts of Board minutes
NY28571/0001-US-9748617/1 5
W ITHERS
B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER
RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS
1 sent to our client by its then-lawyers, or that reflected legal advice from outside counsel. I also
2 informed Ms. Sorensen in February 2021 that Mr. Runyon’s time to file a motion to compel
3 pertaining to any privilege logs had expired, and if he wanted to file a motion to compel, Payward
4 would oppose it on that basis, among others. Runyon never filed a motion to compel. Finally, I
5 explained that all of the privilege log entries Mr. Runyon complains of in his motion (rows 629 –
6 636) are indeed drafts of Board consents and are, as such, privileged. Ms. Cochran’s statement that
7 “Defendants have repeatedly failed” to provide additional information about these privilege log
8 entries (Plaintiff’s Sep. Stmt. at 7) is completely disingenuous. Payward has explained that these
9 entries reflect privilege draft board documents and privileged communications attaching those board
10 documents in numerous calls and emails with both Ms. Sorensen and Ms. Cochran.
11 24. Ms. Cochran appears to argue in the improper separate statement that Payward’s
12 entire privilege log is inadequate. (Id. at 5-6.) This is wholly improper. Ms. Cochran’s sole meet and
13 confer letter on this issue identified only specific entries 630-636 on the privilege log that she wanted
14 additional information for. Again, Payward has repeatedly explained what these entries are. To the
15 extent Ms. Cochran is now challenging Payward’s entire privilege log, the motion to compel must
16 be denied because she failed to meet and confer with Payward about this challenge.
17 25. Ms. Cochran claims this document is purportedly responsive to Runyon’s Request
18 No. 71. That request seeks documents “created by Mr. Runyon tracking country codes and related
19 OPEC data.” (Plaintiff’s Sep. Stmt. at 3:7-9.) Payward responded to this request that it would
20 produce “any additional responsive, non-privileged documents” it was “able to locate after a diligent
21 search and reasonable inquiry.” After performing this search, Payward was unable to locate any
22 additional responsive documents, including the Google document reference in PAYWARD005166.
23 26. Payward possess no documents reflecting that Mr. Runyon tracked “related OPEC
24 data.” Payward, nor Mr. Runyon, were in any involved with tracking data regarding the
25 Organization of the Petroleum Exporting Countries. In addition, Payward is unable to confirm
26 whether this Google document, while linked to Mr. Christie by Runyon, was in fact created by Mr.
27 Runyon. I have reviewed the metadata for this particular document and have found no indication
28 that Runyon was its author.
NY28571/0001-US-9748617/1 6
W ITHERS
B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER
RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS
1 27. Even assuming Ms. Cochran meant to seek documents created by Runyon tracking
2 related “OFAC” data, neither this document nor any document possessed by Payward reflects that
3 Mr. Runyon was tracking OFAC data. Indeed, as both Mr. Christie and Mr. Ng testified, Mr. Runyon
4 never raised any OFAC related concerns. Mr. Runyon himself confirmed that the Slack message
5 produced as PAYWARD005166 do not reflect that he was tracking or reporting any OFAC related
6 data. A true and correct copy of excerpts of the deposition transcript of Mr. Steven Christie, dated
7 July 22, 2021, is attached hereto as Exhibit N. A true and correct copy of excerpts of the deposition
8 transcript of Mr. Kaiser Ng, dated July 20, 2021, is attached hereto as Exhibit O. A true and correct
9 copy of excerpts of the deposition transcript of Mr. Nathan Runyon, dated May 13, 2021, is attached
10 hereto as Exhibit P.
11 28. Payward is entitled to attorneys’ fees in a sum of $12,973.50. This number includes
12 the following:
13 a. Kimberly Pallen, a partner at Withers Bergman LLP with 13 years of
14 experience, spent 6.2 hours at a rate of $530/hour for a total of $3,286.
15 b. Christopher LaVigne, a partner at Withers Bergman LLP with 12 years of
16 experience, spent 10.5 hours at a rate of $740/hour for a total of $7,770.
17 c. Lalindra Sanichar, a paralegal at Withers Bergman LLP with 10 years of
18 experience, spent 6.5 hours at a rate of $295/hour for a total of $1,917.50.
19 I declare under penalty of perjury under the laws of the State of California that the foregoing
20 is true and correct, except as to matters stated on information and belief and as to those matters, I
21 believe them to be true.
22 Executed this 17th day of August, 2021 at San Francisco, California.
23
24
Kimberly Pallen
25 Attorneys for Plaintiff Payward, Inc. and Kaiser Ng
26
27
28
NY28571/0001-US-9748617/1 7
W ITHERS
B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER
RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS
EXHIBIT A
1 Claire E. Cochran (SBN 222569)
Natalie A. Xifo (SBN 280930)
2 LAW OFFICES OF CLAIRE COCHRAN, P.C.
100 Pine Street, Suite 1250
3 San Francisco, CA 94111
Telephone: (415) 580-6019
4 Facsimile: (415) 745-3301
5 Attorneys for Plaintiff
NATHAN PETER RUNYON
6
7
8 SUPERIOR COURT OF CALIFORNIA
9 FOR THE COUNTY OF SAN FRANCISCO
10 [UNLIMITED JURISDICTION]
11
12
NATHAN PETER RUNYON, an individual Case No.: CGC-19-581099
13
Plaintiff, PLAINTIFF’S FIRST AMENDED
14 COMPLAINT FOR DAMAGES FOR:
v.
15 1. Discrimination in Violation of Cal. Govt.
PAYWARD, INC., a California Corporation Code § 12940, et. seq. (Veteran Status);
16 d/b/a KRAKEN; and KAISER NG an 2. Discrimination in Violation of Cal. Govt.
individual; and DOES 1-50, inclusive Code § 12940, et. seq. (Medical
17 Condition/Disability);
18 Defendants. 3. Failure to Engage in the Interactive Process
in Violation of Cal. Govt. Code § 12940,
19 et. seq.;
4. Failure to Accommodate in Violation of
20 Cal. Govt. Code § 12940, et. seq.;
5. Retaliation in Violation of Cal. Govt. Code
21 § 12940, et. seq.;
22 6. Failure to Prevent Harassment and
Retaliation under Cal. Govt. Code 12940;
23 7. Wrongful Termination in Violation of Cal.
Govt. Code § 12940, et. seq.;
24 8. Breach of Covenant of Good Faith and Fair
Dealing
25 9. Wrongful Termination in Violation of
26 Labor Code § 1102.5;
10. Wrongful Termination in Violation of
27 Public Policy;
11. Intentional Infliction of Emotional
28 Distress; and
1
RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT
CASE NO. CGC-19-581099
1 12. Breach of Contract.
2 REQUEST FOR PUNITIVE DAMAGES
3 DEMAND FOR JURY TRIAL
4
5
6
Plaintiff NATHAN PETER RUNYON alleges as follows on knowledge as to himself and
7
his own acts/interactions, and on information and belief as to all other matters:
8
PARTIES
9
1. Plaintiff, NATHAN PETER RUNYON, (hereinafter “Plaintiff” or “Runyon”) is a resident
10
of San Francisco, California. He worked for a Payward, Inc. d/b/a Kraken (“Kraken”) a corporation
11
based in San Francisco. Plaintiff is a decorated Marine wartime Veteran.
12
2. Plaintiff is informed and believes Defendant, PAYWARD, INC. d/b/a KRAKEN
13
(hereinafter “Defendant” or “Kraken”) originally incorporated in Delaware and registered in
14
California as a foreign Corporation on September 3, 2013. Its principal place of business is located
15
at 703 Market Street, 7th and 11th floors, San Francisco CA, 94111. Defendants’ mailing address is
16
located at 237 Kearny St., #102, San Francisco, CA 94108. Kraken is a cryptocurrency exchange
17
where market participants can trade the various cryptocurrencies. The participants are allowed to
18
buy or sell the cryptocurrencies using various fiat currencies, that include U.S. dollars, Canadian
19 dollars, euros, and the Japanese yen. It provides the easy movement of money to and from the
20 linked bank accounts of the participant, and the movement of cryptocoins to and from the
21 participant's digital wallets from Kraken-linked trading accounts. The company was founded in
22 2011 and it formally launched the trading operations in 2013 and is headquartered in San Francisco,
23 California.
24 3. Defendant, KAISER NG (hereinafter “Ng”) is, and at all times mentioned in this
25 Complaint, the Chief Financial Officer. At all times known to Plaintiff, Ng has been a resident of
26 San Francisco.
27 4. Plaintiff is ignorant of the true names and capacities of the defendants who are sued herein
28 as DOES 1 through 50, inclusive, and therefore sues these defendants by such fictitious names.
2
RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT
CASE NO. CGC-19-581099
1 Plaintiff will amend this complaint to allege their true names and capacities when ascertained.
2 Plaintiff is informed and believes, and thereon alleges, that each of said fictitiously named
3 defendants is responsible in some manner for the occurrences herein alleged, and that Plaintiff’s
4 injuries as herein alleged were proximately caused by such unlawful conduct.
5 5. Plaintiff is informed and believes and thereon alleges that Defendants, and each of them, at
6 all times relevant herein, were the agents and/or employees of their co-defendants, and in doing the
7 things alleged in this complaint were acting in the course and scope of such agency and/or
8 employment. Defendants, and each of them, are the employers of the managers and supervisors
herein complained of, and supervising over Plaintiff, and therefore Defendants, and each of them,
9
are liable for the discriminatory and harassing acts conducted by their agents, employees and
10
supervisors, under the theory of Respondeat Superior.
11
JURISDICTION & VENUE
12
6. Plaintiff brings this action pursuant to and under the provisions of the Fair Employment
13
and Housing Act, California Government Code §§ 12940, et seq. (hereinafter referred to as FEHA);
14
California's Family Rights Act, California Government Code 12945, et seq. (hereinafter referred to
15
as CFRA), California Constitution, Article I, § 1; and other common and statutory laws.
16
7. The amount in controversy exceeds the minimum jurisdictional threshold of this Court.
17
8. At all times set forth herein, Defendants have employed 5 or more employees for each
18
working day in each of twenty or more calendar weeks in the current or preceding calendar year
19
and is otherwise subject to the provisions of FEHA and other applicable laws.
20
9. Defendants, and each of them are, and at all times relevant hereto, have been, “employers”
21
as defined by FEHA.
22 10. Jurisdiction is proper pursuant to California Code of Civil Procedure § 410.10.
23 11. Plaintiff is informed and believes, and thereon alleges, that most of the witnesses and
24 evidence relevant to this case are located in San Francisco County in California and at other
25 locations in the State of California.
26 12. Plaintiff is informed and believes, and thereon alleges, that the relative costs and burdens to
27 the parties herein favor the filing of this lawsuit in this Court. Defendant suffers no burden or
28 hardship by having to defend this case in this Court. However, Plaintiff would suffer severe and
3
RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT
CASE NO. CGC-19-581099
1 undue burden and hardship if he was required to file in an alternative forum, if any such forum
2 exists. Such burden and hardship on Plaintiff include, but is not limited to, prohibitive monetary
3 expenses for travel, obtaining counsel in a different venue and/or jurisdiction, increased expenses to
4 investigate and obtain evidence and depose and interview witnesses.
5 13. State policy favors jurisdiction and venue in the County of San Francisco, California
6 because the State of California has a policy of protecting California residents and ensuring the
7 applicability of FEHA, and other applicable California laws.
8 14. Venue is proper in this Court because the acts and events set forth in this Complaint
occurred in whole or in part in the County of San Francisco, California.
9
15. Plaintiff exhausted his administrative remedies by timely filing a complaint for the issues
10
required to be raised herein against all defendants with the California Department of Fair
11
Employment and Housing (“DFEH”) and thereafter received a “Right to Sue” letter from the
12
DFEH, which allowed Plaintiff one year to file this action.
13
GENERAL FACTUAL ALLEGATIONS COMMON TO ALL CAUSES OF ACTION
14
16. Plaintiff re-alleges and incorporates herein by reference paragraphs 1 through 15, as though
15
fully set forth herein.
16
17. On March 14, 2018, Kraken extended an offer of employment to Nathan Peter Runyon
17
(“Runyon”) as a Financial Analyst. Runyon was to begin work on March 26, 2018, reporting to Ng,
18
Chief Financial Officer. Runyon was offered a $110,000 annual salary.
19
18. For the first week Runyon worked at Kraken he trained under Employee “1”1 the US
20
Controller to help Runyon better understand the financials and the layout of the company. It soon
21
became apparent that the Controller was not very competent because he asked Runyon for help
22 understanding simple finance questions such as “what causes the price of bitcoin to go up and
23 down” (market supply/demand), “who owns the blockchain” (he thought it was a physical chain of
24 blocks held in a vault somewhere, instead of a distributed ledger), and he thought there was 1-sided
25 accounting (instead of 2 sided = debits and credits). Runyon helped educate Employee “1” on the
26
1
27 In an effort to avoid potentially breaching Kraken’s overly broad confidentiality agreement signed by
Plaintiff when he was hired, the names of non-public employees, specific software systems and financial
28 terms offered to employees shall be kept confidential with use of vague identifications such as “Employee
1.”
4
RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT
CASE NO. CGC-19-581099
1 supply and demand concept of Bitcoin pricing and helped him understand how cryptocurrency
2 works. Kraken’s accountant, Employee “2” and Ng were present for several of these conversations
3 with Employee “1” and Runyon.
4 19. Runyon was an asset to the company. Within less than a week at Kraken, Ng agreed to
5 separate Runyon’s work from Employee “1”’s and informed Employee “1” that Runyon did not
6 report to him nor could tasks be assigned to him. Runyon even created an automated reconciliation
7 tool for Employee “1” to use that automatically matched debits with credits. Within a few months
8 Employee “1” was terminated as it was revealed through Runyon’s competency and work
performance that Employee “1” had a significant lack of understanding of the company and how to
9
operate the accounting team.
10
20. Beginning March 30, 2018, Runyon’s first assignment was to help with an audit, “Kraken
11
FAS Registration AUP.” Runyon created policy letters and documentation for the company even
12
though he had only been working at Kraken for four days and knew nothing about the details.
13
Runyon worked long hours and did not leave the office until after 10:00 or 11:30 p.m. to ensure that
14
Kraken received all materials for the audit. Ng told Runyon to come up with anything for the audit
15
list that would satisfy the audit questions without regard to how accurate the info was. Ng wanted
16
something to “check the box.” This was the first time Runyon questioned Ng’s judgment and
17
ethical obligations to the company.
18
21. Ng relied upon Runyon and his dedication to the company to accomplish tasks outside of
19
his job duties and beyond his agreement with Kraken. Ng expected full devotion from Runyon to
20
help accomplish these tasks, including cancelling his vacation in February 2019 to help finalize
21
option grants. For example, Runyon completed a Data Analytics bootcamp at UC Berkeley in July
22 2019 after Ng expressed concern that Employee “3,” did not have the code skills she claimed. In
23 late December 2018, Ng suggested to Runyon that he look into code school because he believed
24 Employee “3” lied that about her skills with Python and Sequel. Again, this was beyond the
25 agreement between Runyon and Kraken. Runyon found a 6-month Data Analytics course at UC
26 Berkeley Extension which required 10 hours of weekly classroom study and 20+ hours of time
27 outside the classroom to complete the course. The class met Monday and Wednesday from 6:30
28 p.m. until 9:30 p.m. and Saturday from 10:00 a.m. until 2:00 p.m. The course began February 4,
5
RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT
CASE NO. CGC-19-581099
1 2019 and ended July 30, 2019. Ng suggested Runyon take the course. Runyon already worked
2 between 55-65 hours a week at Kraken and after the 10 hours of weekly classes and completing the
3 school assignments and projects Runyon spent another 30-40 hours a week on the class. Runyon
4 was never paid for the hours he spent on taking the class that Ng required he enroll in for
5 Kraken, nor did Ng alter his employment agreement to reflect his new and extended duties
6 and responsibilities. Runyon quickly implemented his new skills at work and was proficient in
7 Tableau and SQL. He also taught other employees how to use the programs. Yet another example
8 occurred in February 2019, when Runyon was scheduled to take a week-long vacation for his best
friend’s wedding which was approved by Ng. The day before Runyon was scheduled to leave, Ng
9
told Runyon he needed him to stay to help because the option grant from the Board required more
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work before it was finalized. The department managers kept requesting changes and Ng stated that
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he did not have the time and expected Runyon to not take his properly noticed vacation time to
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complete the task. Being a loyal and dedicated employee, Runyon canceled his trip and stayed at
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work to finish the option grants.
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15 Kraken and Ng Expected Its Employees to Ignore its Unethical and Illegal Business Tactics
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22. Runyon came across numerous questionable business tactics that Ng condoned or was
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responsible for. Runyon questioned Ng’s business decisions but for the most part, given Ng’s
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response, Runyon noted the issue and moved on. It was not until May 2019, that Runyon’s multiple
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challenges to Ng’s fraudulent conduct became his last. The following are only a few examples of
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incidents Runyon discovered, reported and were summarily ignored.
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23. In August 2018, after only working at Kraken for a few months, Ng asked Runyon if he
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could use Runyon’s home address for applications for banks and regulators. N
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1 Kimberly Pallen (SBN 288605) kimberly.pallen@withersworldwide.com 2 Christopher N. LaVigne (NYBN 4811121) ELECTRONICALLY (admitted Pro Hac Vice) 3 christopher.lavigne@withersworldwide.com F I L E D Superior Court of California, Withers Bergman LLP County of San Francisco 4 505 Sansome Street, 2nd Floor San Francisco, California 94111 08/18/2021 Clerk of the Court 5 Telephone: 415.872.3200 BY: EDNALEEN ALEGRE Facsimile: 415.549 2480 Deputy Clerk 6 Attorneys for Defendants Payward, Inc., a 7 California Corporation d/b/a Kraken; and Kaiser NG, an individual 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 COUNTY OF SAN FRANCISCO 11 12 NATHAN PETER RUNYON, an individual, Case No. CGC-19-581099 13 Plaintiff, DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF 14 v. DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION TO COMPEL 15 PAYWARD, INC., a California Corporation FURTHER RESPONSES FROM d/b/a KRAKEN; and Kaiser NG, an PAYWARD, INC. TO SUPPLEMENTAL 16 individual; and DOES 1 through 50, inclusive, REQUESTS FOR PRODUCTION OF DOCUMENTS AND PRIVILEGE LOG 17 Defendants. Filed Concurrently with: Opposition Brief to 18 Plaintiff’s Motion to Compel Further Responses to Supplemental Requests for 19 Production of Documents and Privilege Log; Defendants’ Response to Plaintiff’s Separate 20 Statement to Compel Further Responses 21 Date: August 30, 2021 Time: 9:00 a.m. 22 Dept.: 302 23 The Hon. Ethan P. Schulman 24 Action Filed: November 26, 2019 Sept Trial Date: September 13, 2021 25 I, KIMBERLY A. PALLEN, declare as follows: 26 1. The facts stated in this declaration are based on my personal knowledge, and, if called 27 to testify, I could and would competently testify to them. I submit this declaration pursuant to 28 NY28571/0001-US-9748617/1 W ITHERS B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS 1 California Rules of Court, Rule 3.1202(c) as Payward’s showing of statutory basis for granting relief 2 ex parte, and Rule 3.1204 as evidence of the notice provided by Payward of the ex parte application. 3 2. I am an attorney duly licensed to practice law in the State of California. I am an 4 attorney at the law firm of Withers Bergman LLP, counsel for plaintiff Payward, Inc. (“Payward” 5 or “Defendant”) in the above-entitled matter. 6 3. Plaintiff Nathan Runyon’s (“Runyon” or “Plaintiff”) filed his First Amended 7 Complaint against Payward on January 3, 2020. A true and correct copy is attached hereto as 8 Exhibit A. 9 4. On February 14, 2020, Runyon propounded his Request for Production of 10 Documents to Payward, Set One, to Payward. A true and correct copy is attached hereto as Exhibit 11 B. 12 5. Since then the parties have engaged in extensive discovery. As Plaintiff 13 acknowledges, Payward has scoured its records and produced thousands of documents, totaling 14 more than 7,000 pages. Runyon has produced only PDFs consisting of approximately 1,500 pages 15 that contain no metadata. Most of the documents in that PDF are Payward documents, including 16 screenshots of a privileged email conversation between Payward and its outside counsel. 17 Furthermore, Runyon only produced those documents after hiding for almost a year and a half that 18 Runyon possessed Payward flash drives full of Payward documents. Runyon alerted Payward to the 19 existence of these documents on the evening before his deposition in this case, and then spent two 20 weeks filing frivolous and bad faith motions, including for the appointment of a groundwater rights’ 21 special master, in an attempt to delay production of these documents and insulate his counsel from 22 any wrongdoing. This Court rejected those repeated motions out of hand. 23 6. The parties have conducted five fact depositions. Payward was only able to secure 24 the deposition testimony of the main witness in this case – referred to as “Employee 5” in Runyon’s 25 FAC – after successfully moving to compel her deposition after Ms. Cochran repeatedly refuse to 26 allow that witness to testify. 27 7. Runyon’s primary fraud claim is that he uncovered a scheme by Payward’s CFO, 28 Kaiser Ng, to defraud employees out of stock options. Runyon’s main allegations regarding this NY28571/0001-US-9748617/1 2 W ITHERS B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS 1 scheme are that a November 2017 written board consent set forth a 4-year vesting schedule for 2 “Employee 5” (former Payward employee Connie Wong), yet Mr. Ng input a 6-year vesting 3 schedule for Ms. Wong in the company’s cap table management system. 4 8. Payward has proven these allegations false. The day he was terminated, Runyon 5 called Ms. Wong, convinced her she was entitled to a 4-year vesting schedule (by discussing the 6 contents of the confidential November 2017 board consent) and therefore entitled to exercise 7 additional options, and convinced her to sue Payward and Mr. Ng for defrauding her out of those 8 additional options. A true and correct copy of excerpts of the deposition transcript of Ms. Connie 9 Wong, dated May 21, 2021, is attached hereto as Exhibit C. 10 9. In February 2020, Ms. Wong, also represented by Ms. Cochran, threatened to sue 11 Payward in San Francisco Superior Court on the exact vesting schedule fraud claims asserted by 12 Mr. Runyon. True and correct copies of Ms. Wong’s letter to Payward, and Payward’s response 13 thereto, are attached hereto as Exhibit D. 14 10. Ms. Cochran threatened to sue publicly on Ms. Wong’s claims, despite knowing that 15 Ms. Wong was subject to a binding arbitration agreement. Accordingly, Payward was forced to file 16 an arbitration demand to enforce that agreement. A true and correct copy of Payward’s Demand for 17 Arbitration, dated March 25, 2020, is attached hereto as Exhibit E. 18 11. After a two-day merits hearing in April 2021, the AAA-appointed arbitrator denied 19 all of Ms. Wong’s claims and granted Payward’s breach of contract claim. A true and correct copy 20 of the Arbitrator’s Interim Award, dated May 25, 2021, is attached hereto as Exhibit F. 21 12. The arbitrator issued a Final Award on August 2, 2021, which was included in 22 Payward’s publicly-filed petition to confirm the Final Award. A true and correct copy of the 23 Arbitrator’s Final Award, dated August 2, 2021, is attached hereto as Exhibit G. 24 13. Specifically, the arbitrator found that Ms. Wong’s fraud claims, which are based on 25 the exact same allegations Runyon makes in the instant case, are (1) totally without merit (e.g., id., 26 Ex. 6 at 7 (“There is zero evidence on which this Arbitrator could conclude that the Board actually 27 intended to grant a four-year vesting schedule to Ms. Wong.”)) and (2) based on allegations that 28 were known to be false (to both Wong and Runyon) at the time they were made. (See id., Ex. 6 at 2, NY28571/0001-US-9748617/1 3 W ITHERS B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS 1 n.1 (“The evidence presented at the Arbitration Hearing by Ms. Wong was markedly different from 2 the facts alleged in her Amended Demand for Arbitration filed June 24, 2020. Particularly striking 3 are that the Amended Demand misstated facts underlying her claim of fraudulent inducement that 4 should have been known personally to Ms. Wong as being false as of the date of the Amended 5 Demand.”).) The Arbitrator also found that “every document signed by Ms. Wong and Payward[, 6 which] reflect[] the six-year schedule.” When asked how these additional documents demanded by 7 Runyon are relevant at all to this issue in light of the undisputed facts in this case, Ms. Cochran 8 never responded. 9 14. This is particularly true for Mr. Ng’s DocuSign history. Payward specifically asked 10 Ms. Cochran how Mr. Ng’s entire DocuSign history is relevant when (1) his allegations of fraud 11 relating to Payward’s Board have been disproven, (2) his fraud allegations are extremely limited in 12 scope and involve at most two unanimous board consents, (3) Mr. Ng never signed any board 13 consents, and (4) in many cases, such as with the approval for the June 30, 2019, Board consent, 14 Mr. Ng. simply secured approval by Board members via email, not DocuSign. Confronted with 15 these facts, Ms. Cochran simply did not respond, and instead filed the instant motion weeks later, 16 and on the eve of Payward’s deadline to file its reply in support of summary judgment. 17 15. Ms. Cochran was well aware of this last fact, as she was provided by Runyon, without 18 Payward’s knowledge, a privileged email between Payward and its counsel regarding a draft of this 19 June 30, 2019 Board consent. Payward became aware that Runyon possessed this document when 20 Ms. Cochran showed the privilege documents to Mr. Ng during his deposition in a surprise attempt 21 to get him to waive Payward’s privilege. When confronted about this tactic, Ms. Cochran conceded 22 the document was privileged. This was a clear violation of Ms. Cochran’s legal and ethical 23 obligations. 24 16. Despite this unequivocal Arbitration ruling, Ms. Cochran and Runyon have 25 continued to assert these same exact fraud claims and arguments against Payward in this case. These 26 claims are entirely devoid of merit and are the definition of frivolous. (Id. Ex. F at 9, n.5 (“The 27 factual bases for Ms. Wong’s fraud claim . . , moreover, were not proven, and were in fact 28 contradicted by Ms. Wong’s own testimony.”).) NY28571/0001-US-9748617/1 4 W ITHERS B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS 1 17. Payward filed its motion for summary adjudication in this case on May 27, 2021. A 2 true and correct copy of Defendants’ Motion for Summary Adjudication is attached hereto as 3 Exhibit H. A hearing on this motion is scheduled for Thursday, August 19, 2021. In light of that 4 motion, Runyon dropped several of his discrimination-related claims, cause of actions one, two and 5 eight. The remaining claims at issue in the summary judgment motion include Payward’s failure to 6 accommodate Runyon’s alleged request for medical leave and Runyon’s fraud claims. Trial in the 7 State Case is set for September 13, 2021. Fact discovery is closed. 8 18. On May 28, 2021, Plaintiff served a second set of document requests on Payward. A 9 true and correct copy of the second set of requests is attached hereto as Exhibit I. 10 19. Payward responded to those requests on July 8, 2021. A true and correct copy of 11 Payward’s responses to that second set of requests is attached hereto as Exhibit J. 12 20. On July 16, 2021, Plaintiff sent a meet and confer correspondence to Payward 13 regarding Payward’s objections and responses. A true and correct copy of that letter is attached 14 hereto as Exhibit K. 15 21. On July 19, 2021, Payward produced documents in response to these supplemental 16 requests. Payward responded to Plaintiff’s July 16 meet and confer letter on July 25, 2021. A true 17 and correct copy of that letter is attached hereto as Exhibit L. 18 22. Ms. Cochran claims that Payward must produce a document bearing Bates numbers 19 PAYWARD4792-93 in response to Runyon’s Request No. 72. However, Payward properly 20 responded that it had “already produced responsive and non-privileged documents in its possession, 21 custody and control responsive to this Request.” As Payward has explained multiple times to Ms. 22 Cochran and her associate Ms. Sorensen this document is a privileged draft Board document that 23 was withheld on privilege grounds and appears in Payward’s August 19, 2020, Supplemental 24 Privilege Log. Indeed, the email attaching this document, and the document itself, appear on lines 25 634 and 635, respectively, of the privilege log. A true and correct copy of an excerpt from Payward’s 26 supplemental privilege log is attached hereto as Exhibit M. 27 23. I have also explained to Runyon’s counsel, Ms. Sorensen, that all of the entries 28 Runyon questioned on the privilege log are indeed privileged as they are drafts of Board minutes NY28571/0001-US-9748617/1 5 W ITHERS B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS 1 sent to our client by its then-lawyers, or that reflected legal advice from outside counsel. I also 2 informed Ms. Sorensen in February 2021 that Mr. Runyon’s time to file a motion to compel 3 pertaining to any privilege logs had expired, and if he wanted to file a motion to compel, Payward 4 would oppose it on that basis, among others. Runyon never filed a motion to compel. Finally, I 5 explained that all of the privilege log entries Mr. Runyon complains of in his motion (rows 629 – 6 636) are indeed drafts of Board consents and are, as such, privileged. Ms. Cochran’s statement that 7 “Defendants have repeatedly failed” to provide additional information about these privilege log 8 entries (Plaintiff’s Sep. Stmt. at 7) is completely disingenuous. Payward has explained that these 9 entries reflect privilege draft board documents and privileged communications attaching those board 10 documents in numerous calls and emails with both Ms. Sorensen and Ms. Cochran. 11 24. Ms. Cochran appears to argue in the improper separate statement that Payward’s 12 entire privilege log is inadequate. (Id. at 5-6.) This is wholly improper. Ms. Cochran’s sole meet and 13 confer letter on this issue identified only specific entries 630-636 on the privilege log that she wanted 14 additional information for. Again, Payward has repeatedly explained what these entries are. To the 15 extent Ms. Cochran is now challenging Payward’s entire privilege log, the motion to compel must 16 be denied because she failed to meet and confer with Payward about this challenge. 17 25. Ms. Cochran claims this document is purportedly responsive to Runyon’s Request 18 No. 71. That request seeks documents “created by Mr. Runyon tracking country codes and related 19 OPEC data.” (Plaintiff’s Sep. Stmt. at 3:7-9.) Payward responded to this request that it would 20 produce “any additional responsive, non-privileged documents” it was “able to locate after a diligent 21 search and reasonable inquiry.” After performing this search, Payward was unable to locate any 22 additional responsive documents, including the Google document reference in PAYWARD005166. 23 26. Payward possess no documents reflecting that Mr. Runyon tracked “related OPEC 24 data.” Payward, nor Mr. Runyon, were in any involved with tracking data regarding the 25 Organization of the Petroleum Exporting Countries. In addition, Payward is unable to confirm 26 whether this Google document, while linked to Mr. Christie by Runyon, was in fact created by Mr. 27 Runyon. I have reviewed the metadata for this particular document and have found no indication 28 that Runyon was its author. NY28571/0001-US-9748617/1 6 W ITHERS B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS 1 27. Even assuming Ms. Cochran meant to seek documents created by Runyon tracking 2 related “OFAC” data, neither this document nor any document possessed by Payward reflects that 3 Mr. Runyon was tracking OFAC data. Indeed, as both Mr. Christie and Mr. Ng testified, Mr. Runyon 4 never raised any OFAC related concerns. Mr. Runyon himself confirmed that the Slack message 5 produced as PAYWARD005166 do not reflect that he was tracking or reporting any OFAC related 6 data. A true and correct copy of excerpts of the deposition transcript of Mr. Steven Christie, dated 7 July 22, 2021, is attached hereto as Exhibit N. A true and correct copy of excerpts of the deposition 8 transcript of Mr. Kaiser Ng, dated July 20, 2021, is attached hereto as Exhibit O. A true and correct 9 copy of excerpts of the deposition transcript of Mr. Nathan Runyon, dated May 13, 2021, is attached 10 hereto as Exhibit P. 11 28. Payward is entitled to attorneys’ fees in a sum of $12,973.50. This number includes 12 the following: 13 a. Kimberly Pallen, a partner at Withers Bergman LLP with 13 years of 14 experience, spent 6.2 hours at a rate of $530/hour for a total of $3,286. 15 b. Christopher LaVigne, a partner at Withers Bergman LLP with 12 years of 16 experience, spent 10.5 hours at a rate of $740/hour for a total of $7,770. 17 c. Lalindra Sanichar, a paralegal at Withers Bergman LLP with 10 years of 18 experience, spent 6.5 hours at a rate of $295/hour for a total of $1,917.50. 19 I declare under penalty of perjury under the laws of the State of California that the foregoing 20 is true and correct, except as to matters stated on information and belief and as to those matters, I 21 believe them to be true. 22 Executed this 17th day of August, 2021 at San Francisco, California. 23 24 Kimberly Pallen 25 Attorneys for Plaintiff Payward, Inc. and Kaiser Ng 26 27 28 NY28571/0001-US-9748617/1 7 W ITHERS B ERGMAN LLP DECLARATION OF KIMBERLY A. PALLEN IN SUPPORT OF PLAINTIFF’S MOTION TO COMPEL FURTHER RESPONSES TO SUPPLEMENTAL REQUESTS FOR PRODUCTION OF DOCUMENTS EXHIBIT A 1 Claire E. Cochran (SBN 222569) Natalie A. Xifo (SBN 280930) 2 LAW OFFICES OF CLAIRE COCHRAN, P.C. 100 Pine Street, Suite 1250 3 San Francisco, CA 94111 Telephone: (415) 580-6019 4 Facsimile: (415) 745-3301 5 Attorneys for Plaintiff NATHAN PETER RUNYON 6 7 8 SUPERIOR COURT OF CALIFORNIA 9 FOR THE COUNTY OF SAN FRANCISCO 10 [UNLIMITED JURISDICTION] 11 12 NATHAN PETER RUNYON, an individual Case No.: CGC-19-581099 13 Plaintiff, PLAINTIFF’S FIRST AMENDED 14 COMPLAINT FOR DAMAGES FOR: v. 15 1. Discrimination in Violation of Cal. Govt. PAYWARD, INC., a California Corporation Code § 12940, et. seq. (Veteran Status); 16 d/b/a KRAKEN; and KAISER NG an 2. Discrimination in Violation of Cal. Govt. individual; and DOES 1-50, inclusive Code § 12940, et. seq. (Medical 17 Condition/Disability); 18 Defendants. 3. Failure to Engage in the Interactive Process in Violation of Cal. Govt. Code § 12940, 19 et. seq.; 4. Failure to Accommodate in Violation of 20 Cal. Govt. Code § 12940, et. seq.; 5. Retaliation in Violation of Cal. Govt. Code 21 § 12940, et. seq.; 22 6. Failure to Prevent Harassment and Retaliation under Cal. Govt. Code 12940; 23 7. Wrongful Termination in Violation of Cal. Govt. Code § 12940, et. seq.; 24 8. Breach of Covenant of Good Faith and Fair Dealing 25 9. Wrongful Termination in Violation of 26 Labor Code § 1102.5; 10. Wrongful Termination in Violation of 27 Public Policy; 11. Intentional Infliction of Emotional 28 Distress; and 1 RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT CASE NO. CGC-19-581099 1 12. Breach of Contract. 2 REQUEST FOR PUNITIVE DAMAGES 3 DEMAND FOR JURY TRIAL 4 5 6 Plaintiff NATHAN PETER RUNYON alleges as follows on knowledge as to himself and 7 his own acts/interactions, and on information and belief as to all other matters: 8 PARTIES 9 1. Plaintiff, NATHAN PETER RUNYON, (hereinafter “Plaintiff” or “Runyon”) is a resident 10 of San Francisco, California. He worked for a Payward, Inc. d/b/a Kraken (“Kraken”) a corporation 11 based in San Francisco. Plaintiff is a decorated Marine wartime Veteran. 12 2. Plaintiff is informed and believes Defendant, PAYWARD, INC. d/b/a KRAKEN 13 (hereinafter “Defendant” or “Kraken”) originally incorporated in Delaware and registered in 14 California as a foreign Corporation on September 3, 2013. Its principal place of business is located 15 at 703 Market Street, 7th and 11th floors, San Francisco CA, 94111. Defendants’ mailing address is 16 located at 237 Kearny St., #102, San Francisco, CA 94108. Kraken is a cryptocurrency exchange 17 where market participants can trade the various cryptocurrencies. The participants are allowed to 18 buy or sell the cryptocurrencies using various fiat currencies, that include U.S. dollars, Canadian 19 dollars, euros, and the Japanese yen. It provides the easy movement of money to and from the 20 linked bank accounts of the participant, and the movement of cryptocoins to and from the 21 participant's digital wallets from Kraken-linked trading accounts. The company was founded in 22 2011 and it formally launched the trading operations in 2013 and is headquartered in San Francisco, 23 California. 24 3. Defendant, KAISER NG (hereinafter “Ng”) is, and at all times mentioned in this 25 Complaint, the Chief Financial Officer. At all times known to Plaintiff, Ng has been a resident of 26 San Francisco. 27 4. Plaintiff is ignorant of the true names and capacities of the defendants who are sued herein 28 as DOES 1 through 50, inclusive, and therefore sues these defendants by such fictitious names. 2 RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT CASE NO. CGC-19-581099 1 Plaintiff will amend this complaint to allege their true names and capacities when ascertained. 2 Plaintiff is informed and believes, and thereon alleges, that each of said fictitiously named 3 defendants is responsible in some manner for the occurrences herein alleged, and that Plaintiff’s 4 injuries as herein alleged were proximately caused by such unlawful conduct. 5 5. Plaintiff is informed and believes and thereon alleges that Defendants, and each of them, at 6 all times relevant herein, were the agents and/or employees of their co-defendants, and in doing the 7 things alleged in this complaint were acting in the course and scope of such agency and/or 8 employment. Defendants, and each of them, are the employers of the managers and supervisors herein complained of, and supervising over Plaintiff, and therefore Defendants, and each of them, 9 are liable for the discriminatory and harassing acts conducted by their agents, employees and 10 supervisors, under the theory of Respondeat Superior. 11 JURISDICTION & VENUE 12 6. Plaintiff brings this action pursuant to and under the provisions of the Fair Employment 13 and Housing Act, California Government Code §§ 12940, et seq. (hereinafter referred to as FEHA); 14 California's Family Rights Act, California Government Code 12945, et seq. (hereinafter referred to 15 as CFRA), California Constitution, Article I, § 1; and other common and statutory laws. 16 7. The amount in controversy exceeds the minimum jurisdictional threshold of this Court. 17 8. At all times set forth herein, Defendants have employed 5 or more employees for each 18 working day in each of twenty or more calendar weeks in the current or preceding calendar year 19 and is otherwise subject to the provisions of FEHA and other applicable laws. 20 9. Defendants, and each of them are, and at all times relevant hereto, have been, “employers” 21 as defined by FEHA. 22 10. Jurisdiction is proper pursuant to California Code of Civil Procedure § 410.10. 23 11. Plaintiff is informed and believes, and thereon alleges, that most of the witnesses and 24 evidence relevant to this case are located in San Francisco County in California and at other 25 locations in the State of California. 26 12. Plaintiff is informed and believes, and thereon alleges, that the relative costs and burdens to 27 the parties herein favor the filing of this lawsuit in this Court. Defendant suffers no burden or 28 hardship by having to defend this case in this Court. However, Plaintiff would suffer severe and 3 RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT CASE NO. CGC-19-581099 1 undue burden and hardship if he was required to file in an alternative forum, if any such forum 2 exists. Such burden and hardship on Plaintiff include, but is not limited to, prohibitive monetary 3 expenses for travel, obtaining counsel in a different venue and/or jurisdiction, increased expenses to 4 investigate and obtain evidence and depose and interview witnesses. 5 13. State policy favors jurisdiction and venue in the County of San Francisco, California 6 because the State of California has a policy of protecting California residents and ensuring the 7 applicability of FEHA, and other applicable California laws. 8 14. Venue is proper in this Court because the acts and events set forth in this Complaint occurred in whole or in part in the County of San Francisco, California. 9 15. Plaintiff exhausted his administrative remedies by timely filing a complaint for the issues 10 required to be raised herein against all defendants with the California Department of Fair 11 Employment and Housing (“DFEH”) and thereafter received a “Right to Sue” letter from the 12 DFEH, which allowed Plaintiff one year to file this action. 13 GENERAL FACTUAL ALLEGATIONS COMMON TO ALL CAUSES OF ACTION 14 16. Plaintiff re-alleges and incorporates herein by reference paragraphs 1 through 15, as though 15 fully set forth herein. 16 17. On March 14, 2018, Kraken extended an offer of employment to Nathan Peter Runyon 17 (“Runyon”) as a Financial Analyst. Runyon was to begin work on March 26, 2018, reporting to Ng, 18 Chief Financial Officer. Runyon was offered a $110,000 annual salary. 19 18. For the first week Runyon worked at Kraken he trained under Employee “1”1 the US 20 Controller to help Runyon better understand the financials and the layout of the company. It soon 21 became apparent that the Controller was not very competent because he asked Runyon for help 22 understanding simple finance questions such as “what causes the price of bitcoin to go up and 23 down” (market supply/demand), “who owns the blockchain” (he thought it was a physical chain of 24 blocks held in a vault somewhere, instead of a distributed ledger), and he thought there was 1-sided 25 accounting (instead of 2 sided = debits and credits). Runyon helped educate Employee “1” on the 26 1 27 In an effort to avoid potentially breaching Kraken’s overly broad confidentiality agreement signed by Plaintiff when he was hired, the names of non-public employees, specific software systems and financial 28 terms offered to employees shall be kept confidential with use of vague identifications such as “Employee 1.” 4 RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT CASE NO. CGC-19-581099 1 supply and demand concept of Bitcoin pricing and helped him understand how cryptocurrency 2 works. Kraken’s accountant, Employee “2” and Ng were present for several of these conversations 3 with Employee “1” and Runyon. 4 19. Runyon was an asset to the company. Within less than a week at Kraken, Ng agreed to 5 separate Runyon’s work from Employee “1”’s and informed Employee “1” that Runyon did not 6 report to him nor could tasks be assigned to him. Runyon even created an automated reconciliation 7 tool for Employee “1” to use that automatically matched debits with credits. Within a few months 8 Employee “1” was terminated as it was revealed through Runyon’s competency and work performance that Employee “1” had a significant lack of understanding of the company and how to 9 operate the accounting team. 10 20. Beginning March 30, 2018, Runyon’s first assignment was to help with an audit, “Kraken 11 FAS Registration AUP.” Runyon created policy letters and documentation for the company even 12 though he had only been working at Kraken for four days and knew nothing about the details. 13 Runyon worked long hours and did not leave the office until after 10:00 or 11:30 p.m. to ensure that 14 Kraken received all materials for the audit. Ng told Runyon to come up with anything for the audit 15 list that would satisfy the audit questions without regard to how accurate the info was. Ng wanted 16 something to “check the box.” This was the first time Runyon questioned Ng’s judgment and 17 ethical obligations to the company. 18 21. Ng relied upon Runyon and his dedication to the company to accomplish tasks outside of 19 his job duties and beyond his agreement with Kraken. Ng expected full devotion from Runyon to 20 help accomplish these tasks, including cancelling his vacation in February 2019 to help finalize 21 option grants. For example, Runyon completed a Data Analytics bootcamp at UC Berkeley in July 22 2019 after Ng expressed concern that Employee “3,” did not have the code skills she claimed. In 23 late December 2018, Ng suggested to Runyon that he look into code school because he believed 24 Employee “3” lied that about her skills with Python and Sequel. Again, this was beyond the 25 agreement between Runyon and Kraken. Runyon found a 6-month Data Analytics course at UC 26 Berkeley Extension which required 10 hours of weekly classroom study and 20+ hours of time 27 outside the classroom to complete the course. The class met Monday and Wednesday from 6:30 28 p.m. until 9:30 p.m. and Saturday from 10:00 a.m. until 2:00 p.m. The course began February 4, 5 RUNYON v. PAYWARD and NG FIRST AMENDED COMPLAINT CASE NO. CGC-19-581099 1 2019 and ended July 30, 2019. Ng suggested Runyon take the course. Runyon already worked 2 between 55-65 hours a week at Kraken and after the 10 hours of weekly classes and completing the 3 school assignments and projects Runyon spent another 30-40 hours a week on the class. Runyon 4 was never paid for the hours he spent on taking the class that Ng required he enroll in for 5 Kraken, nor did Ng alter his employment agreement to reflect his new and extended duties 6 and responsibilities. Runyon quickly implemented his new skills at work and was proficient in 7 Tableau and SQL. He also taught other employees how to use the programs. Yet another example 8 occurred in February 2019, when Runyon was scheduled to take a week-long vacation for his best friend’s wedding which was approved by Ng. The day before Runyon was scheduled to leave, Ng 9 told Runyon he needed him to stay to help because the option grant from the Board required more 10 work before it was finalized. The department managers kept requesting changes and Ng stated that 11 he did not have the time and expected Runyon to not take his properly noticed vacation time to 12 complete the task. Being a loyal and dedicated employee, Runyon canceled his trip and stayed at 13 work to finish the option grants. 14 15 Kraken and Ng Expected Its Employees to Ignore its Unethical and Illegal Business Tactics 16 22. Runyon came across numerous questionable business tactics that Ng condoned or was 17 responsible for. Runyon questioned Ng’s business decisions but for the most part, given Ng’s 18 response, Runyon noted the issue and moved on. It was not until May 2019, that Runyon’s multiple 19 challenges to Ng’s fraudulent conduct became his last. The following are only a few examples of 20 incidents Runyon discovered, reported and were summarily ignored. 21 23. In August 2018, after only working at Kraken for a few months, Ng asked Runyon if he 22 could use Runyon’s home address for applications for banks and regulators. N