Amir Tadjedin (OSB 055613)

DEFENDANTS SOULPANCAKE, LLC AND RAINN WILSON’S ANSWER AND COUNTER-CLAIMS

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Amir Tadjedin (OSB 055613) [email protected] Andrew N. Harris (OSB 071273) [email protected] MARKUN ZUSMAN & COMPTON LLP 811 SW Naito Parkway, Suite 420 Portland, Oregon 97204 Telephone: (503) 224-9294 Facsimile: (503) 224-1123

Benjamin W. White, CASB No. 221532 (Pro Hac Vice Application Pending) [email protected] LAW OFFICES OF BENJAMIN W. WHITE 1331 N. California Blvd, Suite 200 Walnut Creek, California 94596 Telephone: (925) 280-0100 Facsimile: (925) 407-2846

Attorneys for Defendants and Counter-Claimants SOULPANCAKE, LLC and RAINN WILSON

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

THINK BRILLIANT MEDIA STUDIOS, LLC, an Oregon limited liability company,

Plaintiff,

vs.

SOULPANCAKE, LLC, a California limited liability company, dba SOUPLPANCAKE.COM, and RAINN WILSON, an individual,

Defendants.

______________________________________

Case No. CV 10-796 PK

DEFENDANTS SOULPANCAKE, LLC

AND RAINN WILSON’S ANSWER AND COUNTER-CLAIMS

DEMAND FOR TRIAL BY JURY

Case 3:10-cv-00796-PK Document 4 Filed 07/22/10 Page 1 of 31 Page ID#: 21


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_______________________________________

SOULPANCAKE, LLC and RAINN WILSON,

Counter-Claimants,

vs.

THINK BRILLIANT MEDIA STUDIOS, LLC,

Counter-Respondent,

and

AVIV HADAR, DAVID FIELDS, TOM FITE, DARREN BUCKNER, and SAM WESTON,

Third-Party Respondents.

Defendants SOULPANCAKE, LLC (“SoulPancake”) and RAINN WILSON (“Mr.

Wilson”) (collectively, “Defendants” or “Counter-Claimants”), in response to the Complaint

filed by Plaintiff THINK BRILLIANT MEDIA STUDIOS, LLC (“Think Brilliant”), allege as

follows:

ANSWER TO COMPLAINT

1) Defendants are without knowledge or information sufficient to form a belief as to

the truth of the allegations in Paragraph 1 and on that basis deny the allegations of this

paragraph.

2) The allegations contained in Paragraph 2 of the Complaint as to SoulPancake are

admitted. Mr. Wilson admits that he is a resident of California, but states that although he is the

largest single shareholder in SoulPancake, his ownership percentage does not exceed 50%.

3) Paragraph 3 of the Complaint states legal conclusions as to which no response is

required.

4) Paragraph 4 of the Complaint states legal conclusions as to which no response is

required.

5) Defendants admit the allegations of Paragraph 5 of the Complaint.



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6) Defendants admit the allegations of Paragraph 6 of the Complaint but further

allege that the discussions regarding a potential equity stake were preliminary and based on a

possible future long-term relationship. In October 2008, SoulPancake admits that it had already

paid Think Brilliant, but denies that it was a “small” payment as alleged. The amount of the

payment was $20,000.

7) Defendants admit the allegations of contained in the first sentence of Paragraph 7

of the Complaint. As to the remaining allegations, Defendants admit that they agreed to further

payments but further deny that “increased work” was the only condition to be met by Plaintiffs in

order to receive further payments. More specifically, they allege that a condition precedent to

the payment of any compensation to Plaintiff (whether in the form of money or equity in

SoulPancake or SoulPancake.com) was that Plaintiff agreed to dedicate all of its human

resources, energies and efforts to SoulPancake.com.

8) Defendants deny the allegations of Paragraph 8 of the Complaint. Defendants

allege that a condition precedent to the payment of any compensation to Plaintiff (whether in the

form of money or equity in SoulPancake or SoulPancake.com) was that Plaintiff agreed to

dedicate all of its human resources, energies and efforts to SoulPancake.com. Defendants further

allege that the description of Plaintiff’s total potential equity interest was referred to as

“transitive equity” in SoulPancake.com, not SoulPancake, LLC. Defendants further allege that

the discussions regarding Plaintiff’s potential equity interest included a condition that any equity

interest would be subject to a vesting period of at least 24 months.

9) Defendants admit the allegations of Paragraph 9 of the Complaint.

10) Defendants are without knowledge or information sufficient to form a belief as to

the truth of the allegations in Paragraph 10 and on that basis deny the allegations of this

paragraph. Defendants further allege as follows. SoulPancake and Think Brilliant discussed

granting Think Brilliant an equity stake in SoulPancake.com as additional compensation for its

services. These discussions occurred over the course of many months and culminated in a

proposal in or around November 2009, pursuant to which Think Brilliant could potentially earn



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up to 18% equity in SoulPancake.com. In addition, SoulPancake and Think Brilliant discussed

an equity exchange in which each company would receive a 3% interest in the other as a mutual

bonus for a long-term relationship. Defendants further allege that a condition precedent to the

payment of any compensation to Plaintiff (whether in the form of money or equity in

SoulPancake or SoulPancake.com) was that Plaintiff agreed to dedicate all of its human


11) Defendants admit the allegations of Paragraph 11 of the Complaint, but further

allege the Plaintiff’s plan was rejected by Defendants when Defendants became aware of

Plaintiff’s wrongful actions as alleged herein and in Defendants’ Counter-Claim.

12) Defendants admit the allegations of Paragraph 12 of the Complaint, with the

exception that Mr. Wilson never requested that Plaintiff “do the work for no immediate

compensation.”

13) Defendants deny the allegations of Paragraph 13 of the Complaint.

14) Defendants deny the allegations of Paragraph 14 of the Complaint. Neither

SoulPancake nor Mr. Wilson (nor any other SoulPancake employee) “surreptitiously hacked”

into Think Brilliant’s database. Indeed, as Think Brilliant is well aware, on or about June 21,

2010, at the request of SoulPancake employee Devon Gundry (“Mr. Gundry”), Aviv Hadar (“Mr.

Hadar”) of Think Brilliant sent an email to Mr. Gundry containing a link to click to a code

repository website where Mr. Gundry could review Think Brilliant’s work on SoulPancake.com.

When Mr. Gundry clicked on the link that Mr. Hadar had emailed, he was instantly granted full

access to all areas of the code repository website. To Mr. Gundry’s utter shock and dismay, the

code repository clearly showed that for several months, Think Brilliant had been covertly doing

extensive work on the development of another software project (called Ziphook), which was a

blatant violation of Think Brilliant’s agreement with SoulPancake and a direct contradiction to

representations Mr. Hadar had previously made to SoulPancake.

15) With respect to Paragraph 15 of the Complaint, Mr. Wilson admits that he sent

two emails on July 1, 2010, but denies that they included any false accusations or that they



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constitute defamation. Mr. Wilson further denies all other allegations in Paragraph 15 of the

Complaint, including the allegation that he sent an email on July 6, 2010 making any false

allegations about Plaintiff.

16) With respect to Paragraph 16 of the Complaint, Defendants deny any promise to

deliver 20.16 percent ownership in SoulPancake to Plaintiff. SoulPancake and Think Brilliant

discussed granting Think Brilliant an equity stake in SoulPancake.com as additional

compensation for its services. These discussions occurred over the course of many months and

culminated in a proposal in or around November 2009, pursuant to which Think Brilliant could

potentially earn up to 18% equity in SoulPancake.com. In addition, SoulPancake and Think

Brilliant discussed an equity exchange in which each company would receive a 3% interest in the

other as a mutual bonus for a long-term relationship. Defendants further allege that a condition

precedent to the payment of any compensation to Plaintiff (whether in the form of money or

equity in SoulPancake or SoulPancake.com) was that Plaintiff agreed to dedicate all of its human


17) In response to Paragraph 17 of the Complaint, Defendants hereby incorporate by

reference each and every admission, denial and allegation in Paragraphs 1-16, inclusive, of their

Answer as though set forth fully herein.













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29) Defendants deny the allegations of Paragraph 29 of the Complaint, and further

allege that Plantiff has seized possession of and claimed unlawful ownership of LabCoat, which

was entirely funded by Defendants and is the sole property of Defendants.




AFFIRMATIVE DEFENSES

Defendants allege the following affirmative defenses to the allegations in the Complaint:

FIRST AFFIRMATIVE DEFENSE

33) The Complaint fails to state a claim upon which relief may be granted.

SECOND AFFIRMATIVE DEFENSE

34) Plaintiff's defamation claim is barred because the statements about which Plaintiff

complains are not defamatory.

THIRD AFFIRMATIVE DEFENSE

35) Plaintiff's defamation claim is barred because the statements about which Plaintiff

complains are true.



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FOURTH AFFIRMATIVE DEFENSE

36) Defendants allege that at all relevant times Plaintiff had unclean hands and acted

inequitably toward them.

FIFTH AFFIRMATIVE DEFENSE

37) Defendants allege that, by its conduct and actions, and by the conduct of its

officers, employees and agents, Plaintiff has waived any of its rights against Defendants.

SIXTH AFFIRMATIVE DEFENSE

38) Defendants allege that, by its conduct, Plaintiff is estopped from asserting any

claims for relief against Defendants.

SEVENTH AFFIRMATIVE DEFENSE

39) Defendants allege that, by its conduct, Plaintiff has breached the express and

implied terms of the agreements with Defendants, and, due to its breach of contract, Plaintiff

cannot assert any claims for relief against Defendants.

EIGHTH AFFIRMATIVE DEFENSE

40) Defendants allege that Plaintiff has breached the implied covenant of good faith

and fair dealing, which is implied in every contract, and therefore cannot assert any claims for

relief against Defendants.

NINTH AFFIRMATIVE DEFENSE

41) Defendants allege that any damages purportedly suffered by Plaintiff must be

offset against all sums owed by Plaintiff to Defendants.

TENTH AFFIRMATIVE DEFENSE

42) Defendants allege that Plaintiff is not entitled to obtain any recovery against them

because, as to each and every written, oral, implied or other contract alleged by Plaintiff in the

Complaint, any duty on the part of Defendants was excused due to the breach of contract and



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other wrongful conduct on the part of Plaintiff.

ELEVENTH AFFIRMATIVE DEFENSE

43) Defendants allege that the agreements with Plaintiff are unenforceable because

Plaintiff failed to satisfy a condition precedent in the agreements.

TWELFTH AFFIRMATIVE DEFENSE

44) Plaintiff’s damages, if any, should be reduced by the amount owed by Plaintiff to

Defendants as a result of Plaintiff’s fraudulent and inequitable conduct, and by the amount owed

to Defendants pursuant to their Counter-Claim.

THIRTEENTH AFFIRMATIVE DEFENSE

45) The damages for which Plaintiff seeks to hold Defendants liable resulted in whole

or in part from Plaintiff’s own acts or omissions, and Defendants are not responsible for or liable

to Plaintiff for its own wrongful or negligent acts or omissions.

FOURTEENTH AFFIRMATIVE DEFENSE

46) The damages for which Plaintiff seeks to hold Defendants liable resulted in whole

or in part from acts or omissions of third parties, and Defendants are not responsible for or liable

to Plaintiff for the wrongful or negligent acts or omissions by these third parties

FIFTEENTH AFFIRMATIVE DEFENSE

47) Defendants allege that Plaintiff, by its conduct, approved, authorized, and/or

ratified Defendants’ actions.

SIXTEENTH AFFIRMATIVE DEFENSE

48) Defendants allege that attorneys’ fees are not recoverable by Plaintiff.

SEVENTEETH AFFIRMATIVE DEFENSE

49) Defendants allege that exemplary and/or punitive damages cannot be awarded



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against Defendants.

50) Defendants reserve all affirmative defenses under Rule 8(c) of the Federal Rules

of Civil Procedure and any other defenses, at law or in equity, that may be available now or may

become available in the future based on discovery or any other factual investigation in this case

COUNTER-CLAIM

INTRODUCTION AND SUMMARY

1) This case is about a brazen fraud and breach of trust that was perpetrated by

Think Brilliant, its principals and its employees. SoulPancake hired Think Brilliant starting in

mid-2008 to develop SoulPancake’s website, SoulPancake.com. From January 2010 through

June 2010, SoulPancake funded all of Think Brilliant’s monthly expenses, including salaries and

health insurance benefits for all five Think Brilliant employees, as well as office expenses and

business taxes, in exchange for Think Brilliant’s agreement to work exclusively on

SoulPancake.com. Unbeknownst to SoulPancake, however, Think Brilliant flagrantly breached

its obligations and fraudulently diverted its resources to the development of a secret project,

called “Ziphook.” In effect, Think Brilliant stole from SoulPancake by taking the money that it

was being paid to work solely on SoulPancake.com and using it to fund the development of

Ziphook, which Think Brilliant intended to market as its own.

2) SoulPancake paid Think Brilliant nearly $400,000 between June 2008 and July

2010 for its work on SoulPancake.com. The scope of work Think Brilliant was to perform and

the compensation that it would receive for its work were discussed and determined via emails

and phone conversations. Every two to three months, SoulPancake and Think Brilliant would

come to an understanding of the work that needed to be done on www.SoulPancake.com and

establish a payment schedule. The monies would then be distributed as agreed by Mr. Wilson's

business manager. Because there appeared to be an open and trusting working relationship that



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was beneficial to both parties, SoulPancake and Think Brilliant continued to work in this manner

throughout their relationship.

3) SoulPancake and Think Brilliant also discussed granting Think Brilliant an equity

stake in SoulPancake.com as additional compensation for its services. These discussions

occurred over the course of many months and culminated in a proposal in or around November

2009, pursuant to which Think Brilliant could potentially earn up to 18% equity in

SoulPancake.com. Additionally, SoulPancake and Think Brilliant discussed an equity exchange

in which each company would receive a 3% interest in the other as a mutual bonus for a long-

term relationship.

4) A key aspect of SoulPancake’s relationship with Think Brilliant – especially as

the relationship progressed – was Think Brilliant’s agreement and continuous representations

that it was dedicating, all of its human resources, energies and efforts to SoulPancake.com.

However, Think Brilliant intentionally deceived SoulPancake by devoting a significant amount

of time and resources to the development of Ziphook and then lying about its conduct when

confronted about its actions. SoulPancake would never have agreed to continue funding all of

Think Brilliant’s monthly expenses had it been aware of Think Brilliant’s significant work in

developing Ziphook. In addition, since the payments to Think Brilliant consumed the vast

majority of SoulPancake’s total monetary resources, SoulPancake was unable to devote adequate

funding to other arms of its business, such as content, marketing, ad sales, and other items.

5) By virtue of Think Brilliant’s fraudulent and wrongful conduct as alleged herein

(i.e. the covert development of Ziphook using SoulPancake’s resources), SoulPancake is entitled

to money damages and Think Brilliant is not entitled to receive any stake in SoulPancake,

SoulPancake.com, or any of the projects it worked on using SoulPancake’s funds. SoulPancake

is also entitled to ownership of Ziphook, as it essentially funded the development of this

program.



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JURISDICTION AND VENUE

6) This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332.

7) The amount in controversy exceeds $75,000 as Counter-Claimants are seeking an

award of compensatory, punitive, and other damages in an amount that exceeds $75,000.

PARTIES

8) Counter-Claimant SOULPANCAKE, LLC (“SoulPancake”) is a California

limited liability company.

9) Counter-Claimant RAINN WILSON (“Mr. Wilson”) is a resident of the State of

California.

10) For ease of reference, SoulPancake and Mr. Wilson are collectively referred to

hereinafter as “Counter-Claimants.”

11) At all relevant times, Counter-Respondent THINK BRILLIANT MEDIA

STUDIOS, LLC, (“Think Brilliant”) was and is an Oregon limited liability company with its

principal place of business in Portland, Oregon.

12) On information and belief, SoulPancake alleges that Third-Party Respondent

AVIV HADAR (“Mr. Hadar”) is a resident of the State of Oregon and is the majority owner of

Think Brilliant.


DAVID FIELDS (“Mr. Fields”) is a resident of the State of Oregon and is a principal of Think

Brilliant.


TOM FITE (“Mr. Fite”) is a resident of the State of Montana and is an employee of Think

Brilliant.


DARREN BUCKNER (“Mr. Buckner”) is a resident of the State of Oregon and is an employee

of Think Brilliant.



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SAM WESTON (“Mr. Weston”) is a resident of the State of Oregon and is an employee of Think

Brilliant.

17) For ease of reference, Think Brilliant, Mr. Hadar, Mr. Fields, Mr. Fit, Mr.

Buckner and Mr. Weston are collectively referred to hereinafter as “Counter-Respondents.”

18) SoulPancake is informed and believes and thereon alleges that at all times

relevant to the facts alleged herein, each Counter-Respondent was the agent, servant or employee

of each of the other Counter-Respondents, and as such was acting within the course and scope of

such agency and employment, and with the express permission of, consent to and ratification by

each of the other Counter-Respondents.

SUMMARY OF SOULPANCAKE

19) SoulPancake was founded by Defendant Rainn Wilson and his business partner

Devon Gundry (“Mr. Gundry”).

20) One of SoulPancake’s projects is www.SoulPancake.com. SoulPancake.com is a

spirituality website that is a place for people to explore life's big questions. As described on the

website:

SoulPancake is a place to speak your mind, unload your questions,

and figure out what it means to be human.

***

SoulPancake is more of a mission than a Web site. It's a

MOVEMENT to wrestle with and chew on LIFE'S BIG

QUESTIONS. … It's a space to ENGAGE in art, philosophy,

creativity, truth, and beauty. And ultimately, SoulPancake is a

community of people who are digging DEEPER to figure out what

it means to be human…



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SOULPANCAKE HIRED THINK BRILLIANT TO DEVELOP ITS WEBSITE

SOFTWARE

21) In or around mid-2008, in order to begin development of the web platform of the

SoulPancake brand, SoulPancake retained the services of Think Brilliant. Think Brilliant was

tasked with developing the first version of SoulPancake.com website, which Think Brilliant

decided to build on the KickApps Social Networking Software Platform.

22) SoulPancake agreed to compensate Think Brilliant for its work through periodic

cash payments in exchange for work and, indeed, made cash payments to Think Brilliant as

follows:

• $5,000 in or around June 2008;

• $15,000 in or around August 2008;

• $5,000 in or around November 2008;

• $3,000 in or around January 2009;

• $8,000 in or around February 2009.

• $8,395 in or around March 2009;

• $11,000 in or around April 2009;

• $6,000 in or around May 2009.

• $12,000 in or around early June 2009.

23) In or around June 2009, after experiencing repeated technological limitations with

the KickApps Platform, SoulPancake and Think Brilliant agreed to leave KickApps and build a

custom platform for the SoulPancake.com website. In response, Think Brilliant submitted a

written proposal to SoulPancake, in which SoulPancake would wholly fund Think Brilliant to

develop a custom software platform for SoulPancake.com during the period of June 2009

through Sept 2009. This software, which would be 100% owned by SoulPancake, would not

only run the SoulPancake.com website, but would eventually be developed into a product that

could be licensed to other companies as a means of generating revenue for SoulPancake.com.

This software platform eventually became known as “LabCoat.” Think Brilliant estimated the



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monthly cost of this development effort would be $23,650 with some additional potential

monthly expenses of $1,000 to $1,500.

24) SoulPancake agreed to move forward with the proposal submitted by Think

Brilliant and, thus, made the following payments to Think Brilliant:

• $30,000 in or around late June 2009;

• $25,000 in or around early August 2009;

• $25,000 in or around early September 2009

25) In August 2009, Think Brilliant notified SoulPancake that Think Brilliant would

not be able to complete the development within the timeline outlined in the June proposal, and

SoulPancake notified Think Brilliant that it would not be able to continue paying the $25,000 to

$30,000 per month that it was paying Think Brilliant. Thus, in or around the middle of August

2009, Mr. Hadar sent an email to Mr. Gundry wherein he proposed a monthly operating budget

of $17,200 and stated as follows:

I’ve broken down what we need to continue working on

SoulPancake full-time after September. This amount doesn’t

include new Markup, or anything outside the scope, like iPhone

app, et cetera. This funding would keep the team together moving

forward, continuously working around the clock on the roadmap

that we’ve outlined.

26) After this email and some discussions, a budget was agreed upon, and

SoulPancake secured investments to make cash payments to Think Brilliant as follows:

• $18,000 in or around October 2009;

• $15,000 in or around November 2009;

• $16,500 in or around December 2009.

27) In or around January 2010, Think Brilliant submitted a written proposal to

SoulPancake for additional development work. In connection with the discussions about this

proposal, Mr. Hadar proposed that SoulPancake pay all of Think Brilliant’s monthly expenses,



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including all salaries, health insurance benefits, office expenses, and business taxes in exchange

for Think Brilliant’s guarantee that it would work exclusively on SoulPancake.com, and no other

projects.

28) After further discussions, a budget was agreed upon and SoulPancake secured

both an investment and a loan to fund the entirety of Think Brilliant’s monthly expenses with the

following payments:

• $26,000 on or about January 4, 2010;

• $26,000 on or about January 18, 2010;

• $26,650 on or about March 1, 2010.

29) By the Spring of 2010, SoulPancake secured additional investment and was able

to increase the salaries of two Think Brilliant employees. Thus, in April through June 2010,

SoulPancake continued to cover the entirety of Think Brilliant’s monthly expenses by making

monthly payments of $29,998.64 (totaling $89,995.92) to Think Brilliant.

30) Think Brilliant received total payments of $399,510.92 for its services to

SoulPancake between June 2008 and July 2010.

31) As the working relationship between SoulPancake and Think Brilliant progressed,

the payment of monetary compensation and the potential equity grants that were considered. All

of these considerations and discussions were expressly conditioned on Think Brilliant’s

agreement to devote one hundred percent of Counter-Respondents’ time to work on

SoulPancake.com.

SOULPANCAKE AND THINK BRILLIANT DISCUSSED EXCHANGING EQUITY

STAKES

32) In March 2009, SoulPancake and Think Brilliant had preliminary discussions

about granting Think Brilliant an equity stake of up to 18% (with a vesting period of 24 months)

in SoulPancake.com to further incentivize and reward Think Brilliant for its work.

33) In or around October and November 2009, SoulPancake and Think Brilliant had



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further discussions about granting Think Brilliant an equity stake of up to 18% (with an

appropriate vesting period) in SoulPancake.com.

34) In addition, SoulPancake and Think Brilliant discussed exchanging equity grants

pursuant to which each company would receive a 3% interest in the other as a mutual bonus for a

longer-term working relationship.

35) Although there were discussions about equity grants, the discussions between the

parties were never formalized into a final agreement.

36) Furthermore, a condition precedent to the payment of any compensation to Think

Brilliant (whether in the form of money or equity in SoulPancake or SoulPancake.com) was that

Think Brilliant agreed to dedicate all of its human resources, energies and efforts to

SoulPancake.com.

SOULPANCAKE AND THINK BRILLIANT DECIDED TO PART WAYS

37) The relationship between SoulPancake and Think Brilliant had been positive from

its inception in 2008 through 2009. However, things began to change in 2010.

38) In or around January 2010, Think Brilliant began removing layers of transparency

that had previously existed, which had the effect of making it difficult for SoulPancake to track

Think Brilliant’s progress on projects on which it was supposed to be working.

39) On information and belief, Think Brilliant removed transparency in order to work

on projects other than SoulPancake.com in breach of its agreement with SoulPancake.

40) In May 2010, SoulPancake became concerned about Think Brilliant’s pace of

work because the amount of progress did not seem to be reflective of the amount of time Think

Brilliant claimed to be inputting. As a result, on or about May 17, 2010, Mr. Gundry sent an

email to Mr. Hadar inquiring about Think Brilliant’s work on SoulPancake.com. In response,

Mr. Hadar sent an email on or about May 18, 2010 stating as follows:

99.99% of everyone's time is spent managing and developing

SoulPancake, its code, surrounding partnerships and business



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prongs. When I say we work at least 12 hours a day, it's on

SoulPancake. Every once in a while, MacBlogz will have a hiccup,

and we will need to fix it, but we're talking about a few hours every

few months. Nothing more. MacBlogz is an aggregator, so nothing

is done to it on a daily basis. With the ThinkBrilliant site, again,

this impacts nothing when it comes to our time on SoulPancake.

These are bare bones sites, with almost no functionality, that take

no time to run. We redesigned the ThinkBrilliant site in about 3

hours, over the course of 6 weeks. Rough estimate, I'd say each

engineer puts in around 100 hours a week on SoulPancake. This

can tip under or over at any given time, but generally, that's how

much of our time is spent on SP.

41) After several months of an increasingly difficult working relationship,

SoulPancake and Think Brilliant decided to end the working relationship.

SOULPANCAKE DISCOVERED THINK BRILLIANT’S FRAUDULENT CONDUCT

42) On or about June 1, 2010, in an interview-based article published with

FastCompany, Mr. Hadar made the first known public mention of Ziphook and represented that

he “He hopes to launch with the City of Portland as his partner.”

43) On or about June 4, 2010, SoulPancake became aware that Mr. Hadar had been

sending instant messages to a mutual acquaintance in which Mr. Hadar discussed Think

Brilliant’s other work, including a “secret” software development project (Ziphook) that Think

Brilliant was working on in breach of its agreement with SoulPancake.

44) In one of the instant messages sent on or about March 11, 2010, Mr. Hadar

confirms his interactions with the Portland, Oregon mayor’s office, extending the scope of Think

Brilliant’s work on Ziphook beyond internal software development and into the realm of

significant business and partnership strategies:



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Aviv: I met with the mayor's office yesterday

here in PDX

me: haha wtf

Aviv: major, major meeting

***

basically... PDX wants to get behind TB

in a big way

the mayor

and the entire city

double branding initiative, and to showcase us as a company

I want you to be involved

well, you have to be

I'm hoping this brings in any money, and potentially I could pay

you something again

so, the meeting went really well

they LOVE thinkbrilliant

and love what we do

***

It's the government

and they were saying some incredible stuff

what they've got access to

and so on

there's also a whole bunch more

but I can't say, (yet)

give me two weeks or so

45) In one of the instant messages Mr. Hadar sent on or about March 25, 2010, Mr.

Hadar disclosed Think Brilliant’s work on Ziphook. The instant message stated in relevant part:



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Aviv:

6:56 PM can I tell you a secret

super secret

we're working on a HUGELY secret project

it's called Ziphook

as time goes on, I'll let you in on it more and more

we're doing it just us 5, and hopefully you too

it's a software application, entry level is $24.99/month

up to $99.99/month

***

Aviv: it's gonna bridge the business and social media worlds

immensely

me: like gametap

or netflix

its good

Aviv: exactly

anyways... don't tell ANYONE about this

nobody, anywhere

***

it can't get out that we're working on this

just yet

me: oh no problem

6:58 PM Aviv: as you learn more and more about it, it'll blow your

mind

me: hahaha

Aviv: I've been meaning to tell you about it

46) Contrary to the allegations in the Complaint, neither SoulPancake nor Mr. Wilson



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(nor any other SoulPancake employee) “surreptitiously hacked” into Think Brilliant’s database.

Indeed, as Think Brilliant is well aware, on or about June 21, 2010, at the request of Mr. Gundry,

Mr. Hadar sent an email to Mr. Gundry containing a link to click to a code repository website

where Mr. Gundry could review Think Brilliant’s work on SoulPancake.com. When Mr. Gundry

clicked on the link, he was instantly granted access to all areas of the code repository website.

To his utter shock and dismay, the code repository clearly showed that for several months, Think

Brilliant had been covertly doing extensive work on the development of Ziphook, which was a

blatant violation of Think Brilliant’s agreement with SoulPancake and a direct contradiction of

what Mr. Hadar had conveyed to Mr. Gundry in his email on May 18.

47) On or about June 24, 2010, Mr. Wilson sent an email to Mr. Hadar wherein he

inquired as follows:

Also, what is this ‘ziphook’ thing. not sure what this is, but I just

want to make sure the 3 coders we’re paying aren’t working on

this, since they’re only supposed to be working on SP.

48) In direct contradiction to the instant messages Mr. Hadar had sent as early as

March 2010 – as well as the information Mr. Hadar provided to Mr. Gundry via the website link

Mr. Hadar emailed to Mr. Gundry on June 21, 2010 – Mr. Hadar responded to Mr. Wilson’s

email as follows:

The engineers SP pays for work exclusively on SoulPancake, it’s

always been that way.

Ziphook is a possible idea that we’ve had, considering trying to

make it happen. First need feedback to see if the idea is worth a

grain of salt.

49) During a telephone call on June 30, 2010, in which Mr. Wilson, Mr. Gundry, Mr.

Hadar and Mr. Fields participated, Mr. Wilson asked both Mr. Hadar and Mr. Fields the

following:

In terms of working on SoulPancake, do you reiterate as you said



21

in many emails … that 99.9 % of the time the coders were working

on SoulPancake and not working on any other projects, i.e.

Ziphook?

50) Rather than admitting the truth, Mr. Hadar responded as follows:

Hundred percent. That is one-hundred percent the truth … All it is,

is a setup for that splash page – which is a splash page to get

feedback on the idea. There is nothing. Nothing with Ziphook.

Absolutely nothing. This is, this is nothing…You’d be suing us over

nothing. You’d be suing us over a page that says ‘enter your email

address so we can share the idea with you to get some feedback.’

51) Additionally, Mr. Hadar asserted the following:

I have never, ever, lied about anything. I swear on my life. And so

has Dave. We have never gone behind your back and tried to build

a piece of software without telling you. That is crazy. We are an

ethical group of people who have tried as hard as we can in every

effort that we have. And if you think we would go behind a

celebrity millionaire’s back and try and build a piece of software,

and then try and market it and sell it and all that shit, is crazy to

me. I just want you to know that that is crazy to me. And it is

absolutely not at all what happened.

52) The website link Mr. Hadar emailed to Mr. Gundry on June 21, 2010 clearly

shows the magnitude of Think Brilliant’s development work on ZipHook to be dramatically

more than “a splash page to get feedback on the idea” as asserted by Mr. Hadar. The large body

of code constitutes a complex piece of software, methodically architected, designed, and

engineered over a period of several months while Think Brilliant continually received and

accepted payments of approximately $30,000 per month and guaranteed exclusive, full-time

work on SoulPancake.com.



22

53) Moreover, Mr. Hadar referred to Ziphook in emails as a “hugely secret” project

which he discussed (apparently in some detail) with the Portland, Mayor’s office and touted to

the magazine Fast Company. Such discussions are hardly consistent with a “splash page” aimed

at getting feedback

54) On information and belief, Counter-Claimants allege that Mr. Fields, Mr. Fite,

Mr. Buckner and Mr. Weston each had knowledge of Think Brilliant’s agreement to dedicate all

of its human resources, energies and efforts to SoulPancake.com, and further had knowledge of

Think Brilliant’s actions and misrepresentations alleged herein which breached that agreement.

THINK BRILLIANT UNLAWFULLY SEIZES SOULPANCAKE’S PROPERTY

55) On June 28, Mr. Gundry requested that Think Brilliant turn over the entirety of

the SoulPancake.com and LabCoat codebases to SoulPancake. When Mr. Gundry received the

codebase from Mr. Hadar, Mr. Gundry asked Mr. Hadar the following via email:

i see the "soulpancake_repo" repository shared here. is the code

for all soulpancake-related tests that we've written contained

within this repository? also, please give me access to any labcoat

repositories.

56) To this, Mr. Hadar replied to Mr. Gundry via email:

I've given you access to the SP repos. Yes, everything is there.

57) On information and belief, SoulPancake Mr. Hadar knowingly and intentionally

lied about the contents of the ‘soulpancake_repo’ code repository, assuming that the non-

technical principals of SoulPancake would have no way of knowing that this did not contain the

LabCoat codebase, which was located in a separate repository in Think Brilliant’s possession.

58) In response, Mr. Gundry replied to Mr. Hadar via email:

We have analyzed the code in "soulpancake_repo" and LabCoat

does not exist within this repository. We know that LabCoat is a

separate application and therefore should have a separate



23

repository. Please give us access to this repository immediately.

59) Mr. Hadar completely ignored this request and failed to grant access to the

repository.

60) Mr. Gundry and Mr. Wilson then further pursued Mr. Hadar to obtain possession

of LabCoat, at which point Mr. Hadar emailed the following to both individuals, effectively

manipulating facts and unlawfully seizing ownership of SoulPancake property:

Please provide documented evidence that SoulPancake had

purchased LabCoat outright in its entirety, and not one vertical

instance of LabCoat designed specifically for SoulPancake.com…

61) Nowhere in any of Think Brilliant’s software development proposals to

SoulPancake is it stated that SoulPancake would fund the development of software that Think

Brilliant would own. On the contrary, in Mr. Hadar’s own words, SoulPancake agreed to wholly

fund “architecting, implementing and deploying a completely proprietary engine for

SoulPancake.” LabCoat is this engine.

62) Any software that Think Brilliant developed at the behest and payment of

SoulPancake is the sole property of SoulPancake, including, but not limited to the

SoulPancake.com and LabCoat codebases.

MR. HADAR’S DISPARAGING COMMENTS ABOUT SOULPANCAKE

63) In addition to the instant messages discussing Think Brilliant’s covert work on

Ziphook, Mr. Hadar sent messages in which he disparaged SoulPancake, Mr. Wilson and Mr.

Gundry. For example, on or about February 16, 2010, Mr. Hadar stated in an instant message:

Aviv: TB is meant to move on

we're meant to move on and Devon is meant to get a wake up call

between you and I

SP is ours



24

Devon can go f**k1

I'll take that to my f**king grabe

himself

grave*

me: will devon be any part of it you think?

Aviv: without TB it's NOTHING

absolutely not a f**king thing

and teh content?

the content?

9:55 PM is a f**king JOKE

you could CUT IT TOMORROW

me: yeah

Aviv: and the site would THRICE

THIVE

THRIVE*

nobody would tell the f**king differnece

***

ya know what Mike?

Rian?

Rainn?

in a few months

doesn't have the decisions anymore

if nobody is paying TB

and TB is running this

it's mine

without a doubt

1 All profanities in the cited communications have been edited, using ** in place of certain letters.



25

I'll take that to the f**king courst

courts

9:56 PM with my legal team

and my f**king people behind me

no bulls**t

it's my technology

CAUSES OF ACTION

FIRST CAUSE OF ACTION

Fraud

(Against All Counter-Respondents)

64) SoulPancake re-alleges and incorporates by reference paragraphs 1- 63 above.

65) Counter-Respondents engaged in a fraudulent scheme of promising to work solely

on SoulPancake.com in order to receive funding from SoulPancake, with the intention of

working on a separate project, Ziphook. Mr. Hadar and Mr. Fields also falsely asserted to

Counter-Claimants that they were working solely on SoulPancake.com.

66) When Counter-Respondents made the representations alleged herein, they knew

them to be false and made these representations with the intention to deceive and defraud

Counter-Claimants and to induce Counter-Claimants to act in reliance on these representations in

the manner herein alleged. Further, Counter-Respondents, and each of them, took affirmative

steps to conceal the true facts from Counter-Claimants.

67) Counter-Claimants, at the time these representations were made by Counter-

Respondents, and each of them, and at the time Counter-Claimants took the actions herein

alleged, were unaware of the falsity of Counter-Respondents’ representations and believed them

to be true, and relied on the representations.

68) Had Counter-Claimants known the actual facts, they would not have agreed to the

payments and the potential equity grants alleged herein.



26

69) Counter-Claimants’ reliance on the representations of Counter-Respondents was

justified because of the special relationship of confidence and trust that existed between them.

70) As a proximate result of the fraudulent conduct of defendants as herein alleged,

Counter-Claimants have been damaged in at least the sum in excess of the jurisdictional amount

of this Court, and additional amounts according to proof at time of trial.

71) The aforementioned conduct of Counter-Respondents was an intentional

misrepresentation, deceit, or concealment of a material fact known to each of the Counter-

Respondents with the intention on the part of the Counter-Respondents of thereby depriving

Counter-Claimants of property or legal rights or otherwise causing injury, and was despicable

conduct that subjected plaintiff to a cruel and unjust hardship and conscious disregard of

Counter-Claimants’ rights, so as to justify an award of exemplary and punitive damages.

SECOND CAUSE OF ACTION

Negligent Misrepresentation



73) Counter-Claimants allege that each of the representations described above was

false or misleading when made by Counter-Respondents (as described above), was made without

a reasonable basis for believing it to be true, and was made with intent to mislead and deceive

Counter-Claimants. The representations were made with the intent to induce Counter-Claimants’

reliance.

74) Each of the Counter-Respondents had a duty to disclose the true information on

the grounds that the information was material. Counter-Respondents’ failure to disclose these

material facts to Counter-Claimants’ therefore constitutes negligent misrepresentation.

75) Had Counter-Claimants known the actual facts, they would not have agreed to the

payments and the potential equity grants alleged herein.

76) As a proximate result of the conduct of Counter-Respondents as herein alleged,



27

Counter-Claimants have been damaged in at least the sum in excess of the jurisdictional amount

of this Court, and additional amounts according to proof at time of trial, including interest,

attorneys’ fees and costs.

THIRD CAUSE OF ACTION

Conversion



78) Counter-Claimants hired Counter-Respondents to work exclusively on

SoulPancake.com and Counter-Respondents agreed to do so.

79) Instead of doing so, Counter-Respondents took Counter-Claimants’ money and

diverted it for their own use, specifically the development of a separate software called Ziphook.

80) Counter-Respondents also have improperly retained possession and improperly

claim ownership of LabCoat, which was developed using Counter-Claimant’s money.

81) Counter-Respondents’ action alleged herein constitute an illegal conversion of

property for which they are liable.

82) As a direct and proximate result of the conduct herein alleged, Counter-Claimants

have been damaged in at least the sum in excess of the jurisdictional amount of this Court, and

additional amounts according to proof at time of trial, including interest, attorneys’ fees and

costs.

FOURTH CAUSE OF ACTION

Breach of Contract


83) SoulPancake re-alleges and incorporates by reference paragraphs 1-82 above.

84) Counter-Respondents breached their agreement to work solely and exclusively on

SoulPancake.com.

85) Counter-Claimants have performed all conditions precedent.



28




costs.

FIFTH CAUSE OF ACTION

Breach of the Covenant of Good Faith and Fair Dealing


87) SoulPancake re-alleges and incorporates by reference paragraphs 1-86 above.

88) Oregon and California law imply in every contract a covenant of good faith and

fair dealing that, among other things, each party will not do anything to unfairly interfere with

the right of any other party to receive the benefits of the contract.

89) After entering into the agreements with SoulPancake to work solely on

SoulPancake.com, Counter-Respondents breached the implied covenant of good faith by failing

to work solely on SoulPancake.com and instead diverted their resources to the development of a

secret project, Ziphook.

90) In addition, Counter-Respondents further breached the implied covenant of good

faith and fair dealing by falsely stating on several occasions in response to inquiries by Counter-

Claimants that Counter-Respondents were spending all of their time on SoulPancake.com.




costs.

SIXTH CAUSE OF ACTION

Violation of California Business & Professions Code §§ 17200, et seq.





29

93) Pursuant to Sections 17200 et seq. of the California Business and Professions

Code, unfair business practices include any unlawful, unfair or fraudulent business practice.

94) Counter-Respondents, as a part of their business practices, failed to work solely

on SoulPancake.com in breach of their agreement with Counter-Claimants, and instead diverted

their resources to the development of a secret project, Ziphook.

95) The conduct of Counter-Respondents as alleged herein is an unlawful, unfair or

fraudulent practice within the provisions of Sections 17200 et seq. of the California Business and

Professions Code, and, accordingly, constitutes a violation of Sections 17200 et seq. of the

California Business and Professions Code.

96) As a direct and proximate result of the unfair business practices of Counter-

Respondents as herein alleged, Counter-Claimants have been damaged in at least the sum in

excess of the jurisdictional amount of this Court, and additional amounts according to proof at

time of trial, including interest, attorneys’ fees and costs. Accordingly, Counter-Claimants are

entitled to restitution, plus interest, attorneys’ fees and costs.

SEVENTH CAUSE OF ACTION

Declaratory Relief



98) An actual present and justiciable controversy exists between Counter-Claimants

and Counter-Respondents because Think Brilliant seeks an order from the Court finding that it is

entitled to an ownership interest in SoulPancake and/or SoulPancake.com. In addition, Counter-

Claimants are claiming complete ownership of LabCoat and Ziphook, despite the fact that

SoulPancake paid for the development of those products and is entitled to ownership thereof.

99) Counter-Claimants seek a declaratory judgment declaring the following:

a) Think Brilliant does not have any ownership stake in SoulPancake or

SoulPancake.com;



30

b) SoulPancake owns 100% of LabCoat because it was developed using

SoulPancake’s money; and

c) SoulPancake owns 100% of Ziphook because it was developed using

SoulPancake’s money.

PRAYER FOR RELIEF

WHEREFORE, SoulPancake and Mr. Wilson pray for judgment as follows:

1) That Plaintiff take nothing by way of its Complaint and that all claims and causes

of action therein be dismissed in their entirety with prejudice

2) For compensatory damages in an amount according to proof at time of trial, but at

least in the amount of approximately $400,000;

3) For exemplary and punitive damages in the amount to be determined in the

discretion of the Court;

4) A declaratory judgment declaring the following:

a) Think Brilliant does not have any ownership stake in SoulPancake or

SoulPancake.com;

b) SoulPancake owns 100% of LabCoat because it was developed using

SoulPancake’s money; and

c) SoulPancake owns 100% of Ziphook because it was developed using

SoulPancake’s money

5) An injunction requiring Think Brilliant to return all of SoulPancake and

SoulPancake.com’s property (including, but not limited to, LabCoat) to SoulPancake, and

prohibiting Think Brilliant from using any property of SoulPancake or SoulPancake.com

(including, but not limited to, LabCoat);

6) For interest in an amount according to proof at time of trial;

7) For attorneys’ fees and costs; and

8) For such other and further relief as this court may deem just and proper.



31

DEMAND FOR JURY TRIAL

SoulPancake and Rainn Wilson hereby demand a jury trial on the issues set forth above.

DATED: July 22, 2010

Amir Tadjedin (OSB 055613) s/ Amir Tadjedin

[email protected] Andrew N. Harris (OSB 071273) [email protected] MARKUN ZUSMAN & COMPTON LLP 811 SW Naito Parkway, Suite 420 Portland, Oregon 97204 TELEPHONE: (503) 224-9294 FACSIMILE: (503) 224-1123 Attorney for Defendants and Counter-Claimants SOULPANCAKE, LLC and RAINN WILSON

Benjamin W. White, CASB No. 221532 s/ Benjamin W. White

(Pro Hac Vice Application Pending) [email protected] LAW OFFICES OF BENJAMIN W. WHITE 1331 N. California Blvd, Suite 200 Walnut Creek, California 94596 Telephone: (925) 280-0100 Facsimile: (925) 407-2846 Attorney for Defendants and Counter-Claimants SOULPANCAKE, LLC and RAINN WILSON


DEFENDANT AND COUNTER-CLAIMANT SOULPANCAKE, LLC’S CORPORATE DISCLOSURE STATEMENT

1

Amir Tadjedin (OSB 055613) [email protected] Andrew N. Harris (OSB 071273) [email protected] MARKUN ZUSMAN & COMPTON LLP 811 SW Naito Parkway, Suite 420 Portland, Oregon 97204 Telephone: (503) 224-9294 Facsimile: (503) 224-1123

Benjamin W. White, CASB No. 221532 (Pro Hac Vice Application Pending) [email protected] LAW OFFICES OF BENJAMIN W. WHITE 1331 N. California Blvd, Suite 200 Walnut Creek, California 94596 Telephone: (925) 280-0100 Facsimile: (925) 407-2846

Attorneys for Defendants and Counter-Claimants SOULPANCAKE, LLC and RAINN WILSON

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

THINK BRILLIANT MEDIA STUDIOS, LLC, an Oregon limited liability company,

Plaintiff,

vs.

SOULPANCAKE, LLC, a California limited liability company, dba SOUPLPANCAKE.COM, and RAINN WILSON, an individual,

Defendants.

Case No. CV 10-796 PK

DEFENDANT AND COUNTER-CLAIMANT SOULPANCAKE, LLC’S CORPORATE

DISCLOSURE STATEMENT

Case 3:10-cv-00796-PK Document 4-1 Filed 07/22/10 Page 1 of 2 Page ID#: 52

DEFENDANT AND COUNTER-CLAIMANT SOULPANCAKE, LLC’S CORPORATE DISCLOSURE STATEMENT

2

SOULPANCAKE, LLC and RAINN WILSON,

Counter-Claimants,

vs.

THINK BRILLIANT MEDIA STUDIOS, LLC,

Counter-Respondent,

and

AVIV HADAR, DAVID FIELDS, TOM FITE, DARREN BUCKNER, and SAM WESTON,

Third-Party Respondents.

Pursuant to Fed. R. Civ. P. 7.1 and LR 7.1-1, Defendant and Counter-Claimant

SOULPANCAKE, LLC (SoulPancake) states that it is a California limited liability company that

does not have a parent corporation and no publicly held corporation owns 10% or more of its

stock. SoulPancake’s members are citizens from the state of California and Tennessee.

DATED this 22nd day of July, 2010.

Amir Tadjedin (OSB 055613) s/ Amir Tadjedin________________________

[email protected] MARKUN ZUSMAN & COMPTON LLP 811 SW Naito Parkway, Suite 420 Portland, Oregon 97204 Telephone: (503) 224-9294 Facsimile: (503) 224-1123

Benjamin W. White, CASB No. 221532 _s/ Benjamin W. White____________________

(Pro Hac Vice Application Pending) [email protected] LAW OFFICES OF BENJAMIN W. WHITE 1331 N. California Blvd, Suite 200 Walnut Creek, California 94596 Telephone: (925) 280-0100 Facsimile: (925) 407-2846

Case 3:10-cv-00796-PK Document 4-1 Filed 07/22/10 Page 2 of 2 Page ID#: 53

mailto:[email protected]�

mailto:[email protected]�

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Amir Tadjedin (OSB 055613)