EFTA00807802.pdf

1 RUTAN & TUCKER, LLP Richard K. Howell (State Bar No. 2 [email protected] ELECTRONICALLY ate Bar No. 3 FILED Superior Court of California. Bar No. County of San Francisco 4 1 Anton • ou evar , Suite 1400 12/22/ 2O17 Clerk of the Court 5 Costa Mcsa, C is -1931 BY DAVID YU! N Telephone: Deputy Clerk 6 Facsimile: 7 Attorneys for Plaintiff PROTEMPO LIMITED 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA I0 FOR THE COUNTY OF SAN FRANCISCO 11 12 PROTEMPO LIMITED, Case No. CGC-17-559617 13 Plaintiff, SECOND AMENDED COMPLAINT FOR: (1) Promissory Fraud; 14 vs. (2) Fraud and Intentional Deceit; (3) Negligent Misrepresentation; 15 ALIPHCOM, INC. d/b/a JAWBONE, a (4) Breach of Contract (Direct Claims); California corporation, HOSAIN RAHMAN, an (5) Unjust Enrichment; 16 individual, JASON CHILD, an individual, and (6) Breach of Warranty; DOES 1 through 10, inclusive (7) Conversion; 17 (8) Account Stated; Defendants. (9) Open Book Account; 18 (10) Breach of Contract (Assigned Claims); (11) Account Stated (Assigned Claims); 19 (12) Open Book Account (Assigned Claims); (13) Violation of Penal Code section 496(a). 20 21 22 23 24 25 26 27 28 RlItail 11 Tucker, LLP attorneys et taw 2152/033019-0002 11786640.1 912/2107 SECOND AMENDED COMPLAINT EFTA00807802  1 Plaintiff Protempo Limited ("Protempo") alleges the following on information and belief: 2 INTRODUCTION 3 I. This action concerns the fraudulent and otherwise wrongful conduct of defendants 4 AliphCom, Inc. cl/b/a Jawbone ("Jawbone"), its Chief Executive Officer Hosain Rahman 5 ("Rahman"), and its Chief Financial Officer, Jason Child ("Child"), in making or directing the 6 making of materially false statements and promises to Protempo before Protempo contracted with 7 Jawbone, to induce Protempo to pay Jawbone at least $1.9 million, making or directing the 8 making of false statements and promises of performance in the parties' contract itself, and 9 thereafter breaching that contract. Rahman and Child knew the statements were false when they 10 were made, and knew Jawbone would not and could not perform when the false promises were 11 made, but nevertheless participated in, directed, and authorized the making of the false statements 12 and promises. Then, when Protempo and Jawbone entered into their agreement, Jawbone 13 breached the agreement in numerous respects. As a result of Jawbone, Rahman and Child's 14 fraudulent and wrongful conduct, Protempo has incurred millions of dollars in damages for which 15 Protempo now seeks to hold the Defendants accountable. 16 PARTIES 17 2. Protempo is, and at all material times mentioned herein was, a New Zealand 18 corporation authorized to do business and doing business in California. 19 3. Jawbone is, and at all relevant times herein mentioned was, a California 20 corporation organized and existing under and by virtue of the laws of the State of California, and 21 which has its principal place of business in the State of California, County of San Francisco. 22 4. Rahman is, and at all relevant times mentioned herein was, an individual residing in 23 the State of California, County of San Francisco. Rahman, at all relevant times mentioned herein, 24 was serving as the Chief Executive Officer of Jawbone. 25 5. Child is, and at all relevant times mentioned herein was, an individual residing in 26 the State of California, County of San Francisco. Child, at all relevant times mentioned herein, 27 was serving as the Chief Financial Officer of Jawbone. 28 6. Protempo is presently unaware of the true names and capacities of defendants Does &Wart & Tucker. LLP attorneys et taw 2152(01)019-0002 11786640 1 412/21/17 SECOND AMENDED COMPLAINT EFTA00807803  1 1 through 10, inclusive, and therefore sues these defendants by such fictitious names. Protempo 2 will amend this Complaint to show the true names and capacities of such fictitiously-named 3 defendants when the same have been ascertained or upon proof at trial. Protempo is informed and 4 believes and based thereon alleges that each of the fictitiously-named defendants is in some 5 capacity legally responsible for the events and damages alleged herein. 6 7. At all relevant times mentioned herein, certain of the defendants, including the Doe 7 defendants, were acting as the partners, agents, servants, employees, alter egos, successors or 8 predecessors in interest, or conspirators, of others of the defendants, and were acting within the 9 course and scope of such relationship, with the knowledge, express or implied, of each such other 10 named defendant. Protempo sometimes refers to Jawbone, Rahman, Child and Does 1 through 10 11 herein collectively as "Defendants." 12 OPERATIVE FACTS 13 8. Protempo contracts with electronics manufacturers to remarket excess or trailing- 14 edge but still functional and salable products. 15 9. Jawbone was at one time considered a richly-valued maker of wearable gadgets and 16 wireless speakers. By mid-2016, however, unbeknownst to Protempo, Jawbone was on 17 increasingly shaky financial footing, as it struggled to pay key vendors and keep inventory in 18 stock. 19 10. On or about April 29, 2016, Protempo entered into an agreement (the "Original 20 Agreement") with Jawbone whereby Jawbone promised to provide brand-new products free and 21 clear of all encumbrances in exchange for payment by Protempo. Child signed the Original 22 Agreement on behalf of Jawbone. A true and correct copy of the Original Agreement is attached 23 hereto and incorporated herein as Exhibit A. 24 11. On June 2, 2016 and June 9, 2016, the parties amended the Original Agreement to 25 add additional products which Jawbone would sell to Protempo. True and correct copies of these 26 amendments arc attached hereto and incorporated herein as Exhibits B and C. 27 12. In August and September 2016, both Rahman and Child engaged in and directed 28 negotiations with Protempo for entry into a third amendment to the Original Agreement to sell RuLin L Tucker, LLP attorneys at law -3- 2152/0330194002 11786640.1 al2/21/17 SECOND AMENDED COMPLAINT EFTA00807804  1 Protempo what Jawbone represented was an additional $2.1 million of purportedly brand-new, 2 unencumbered products, ready for distribution. However, during the course of those negotiations, 3 Rahman and Child made and directed, approved, ratified and encouraged the making of several 4 misrepresentations and false promises, with the knowledge — shared by Rahman and Child and 5 others at Jawbone — that the statements were false and that Jawbone would not and could not 6 perform as promised. 7 13. On or about September II, 2016, Rahman and Child directed Steve Jordan of 8 Jawbone in writing and otherwise to encourage Protempo to immediately purchase a remaining 9 Jawbone inventory of products — which Jawbone had set aside to meet customer warranty claims — 10 in Tijuana, Mexico, so that Jawbone could quickly receive from Protempo a cash infusion to I1 continue Jawbone's flagging operations and meet overdue payment obligations to Jawbone's 12 vendors. 13 14. In a September 12, 2016 e-mail, Mr. Jordan wrote to Adam Brown of Protempo 14 that Rahman and Child "are looking to sell all remaining customer care units" to Protempo, 15 attaching an inventory of new, customer care units supposedly available for sale to Protempo. 16 15. On September 14, 2016, following the parties' negotiations and Defendants' 17 making of the false statements and promises alleged herein, Jawbone and Protempo entered into 18 their third amended agreement ("Amended Agreement") whereby Jawbone promised to sell an 19 additional $2,121,161 worth of products to Protempo. A true and correct copy of the Amended 20 Agreement is attached hereto and incorporated herein as Exhibit D. 21 16. More specifically, between August 27, 2016 and September 14, 2016 (among other 22 times), at both Rahman's and Child's direction, and with their approval, ratification and 23 encouragement, Jawbone made numerous false statements and promises to Protempo, including, 24 but not limited to, the following: 25 • During a face-to-face meeting in San Francisco on or about August 27, 2016. Mr. 26 Jordan of Jawbone informed Adam Brown. Adam Burke and Mark Priscott of 27 Protempo that Jawbone had an inventory of brand-new products available for sale 28 to Protempo. On or about September 10. 2016. and again on or about September Rutan a Tucker. LIP attorneys at taw -4- 2152/011019.0002 11786640.1 012421/17 SECOND AMENDED COMPLAINT EFTA00807805  11, 2016, via e-mail and video conference calls, Mr. Jordan of Jawbone represented to Adam Brown and Mark Priscott of Protemno that the products discussed on August 27,2016 were new, functioning. re-sellable, and available for immediate purchase by and delivery to Protemno, and were suitable for resale to Protempo's network of distributors. o These representations were further set forth at Exhibit A of the Amended Agreement, identifying $2,121,161 worth of specified products to be sold S and made available to Protempo. The Amended Agreement also 9 incorporated and reaffirmed the representations set forth at Section 5.3.1, I0 subsection (c) of the Original Agreement, stating that "the Products arc 11 brand new and are not refurbished or used stock." The Amended 12_ Agreement additionally incorporated and reaffirmed the Original 13 Agreement's statement that "Jawbone holds all right, title, and interest in 14 and to the Products, and the Products are free and clear of all liens, security 15 interest, and other third party claims to ownership of the Products" (Ex. A, 16 § 5.2.1(b)). 17 o The true facts — of which Rahman and Child were aware when they directed 18 the false representations be made, and when Child signed the Amended 19 Agreement, and Rahman directed that the Amended Agreement be signed 20 were that: 21 • The products were subject to a lien in favor of North American 22 Production Sharing, Inc. ("NAPS"), as a result of Jawbone's failure 23 to pay hundreds of thousands of dollars in storage and handling fees; 24 • As a result of Jawbone's intention not to pay and failure to pay its 25 outstanding invoices to NAPS, NAPS would not release the 26 products to Protempo; 27 • Jawbone did not have $2,121,161 worth of products available for 28 Protempo, and several months after entry into the Amended Pular & LLP attorneys a: ISW -5- 2152/033019-0002 11736640.1 312/21117 SECOND AMENDED COMPLAINT EFTA00807806  Agreement, had only delivered a fraction of the products Protempo was promised; • Jawbone was short thousands of units to be provided to Protempo, 1 many of which were units that were not fit for retail sales and did not pass quality tests; and, • Many of the same products promised to Protempo were already committed to use by Jawbone to fulfill customer warranty claims. • During a September 11.2016 video conference. Mr. Jordan reiterated to Adam 9 Brown of Protempo that the products were brand-new, in working order. and could 10 be and would be subject to warranties Jawbone would honor as to Protempo's 11 distributor customers. I2 o These representations were further set forth in the Amended Agreement, which provided (as incorporated from the Original Agreement and 14 reaffirmed in the Amended Agreement) that "the Products are brand new I5 and are not refurbished or used stock" (Ex. A, § 5.2.1(c)); and that 16 "Jawbone offers a limited warranty to end-user purchasers of its Products . . 17 . . Distributor shall direct end-user purchasers to Jawbone for resolution of 18 any Product warranty claims" (Ex. A, § 5.2.2). 19 o The true facts — of which Rahman and Child were aware when they directed 20 the false representations be made, and when Child signed the Amended 21 Agreement, and Rahman directed that the Amended Agreement be signed — 22 were that: 23 • The products were significantly aged, and were highly defective or 24 otherwise inoperative, and could not be re-sold; 25 • The products had an exorbitantly high rate of consumer complaints, 26 thus reinforcing that the products were significantly faulty and/or 27 not in working condition; and, 28 • Jawbone was not honoring warranties on its products, and had no Rutan 6 Tuck•,. LIP allOmayS at law -6- 2152,0330194002 11786(40.1 912/21/11 SECOND AMENDED COMPLAINT EFTA00807807  intention of honoring warranties on the products Defendants intended that Protempo purchase. • During the e-mails, videoconferences and meetings taking place on September 10, 11 and 12, 2016 (among other times), Mr. Jordan and Matt DeBenedetti, among others at Jawbone, represented to the identified Protempo emaoyees that the products Jawbone intended that Protempo purchase would be delivered or made available by Jawbone in a timely fashion, and in time for Protempo to have the S products for the crucial holiday sales season. o Exhibit A to the Amended Agreement likewise identified $2,121,161 worth of specified products to be sold and made immediately available to Protempo. I2 o The true facts — of which Rahman and Child were aware when they directed the false representations be made, and when Child signed the Amended Agreement, and Rahman directed that the Amended Agreement be signed — I5 were that: 16 ■ Shipment of the products was dependent on funding from Jawbone; 17 and, IS ■ Jawbone would not be able to timely pay its vendors, which would 19 delay shipment of the products. 20 17. Rahman and Child knew these statements were false and that Jawbone would not 21 and could not keep these promises to Protempo; nevertheless, Child signed the parties' 22 agreements, and Rahman directed that the agreements be signed with knowledge of their falsity 23 and Jawbone's intention not to perform and inability to perform. 24 18. Immediately following the parties' entry into the Amended Agreement, Protempo 25 paid Jawbone the full required $1,910,794, and expected to timely receive the brand-new, 26 unencumbered products it had been promised and had purchased. 27 19. Only after Jawbone had taken Protempo's $1,910,794 payment did Protempo 28 discover that Defendants' representations and promises were false. Rutin it Tucker. LLP attorneys at law -7- 2152/033019-0002 117866401a12/21)11 SECOND AMENDED COMPLAINT EFTA00807808  1 20. NAPS refused to release the products Protempo had purchased absent payment in 2 full of Jawbone's $450,000 debt for overdue storage and handling fees. Despite repeated requests 3 by Protempo to Jawbone to pay Jawbone's debt to NAPS so Protempo could obtain the products it 4 had purchased, Jawbone refused, leaving Protempo with no viable alternative but to pay NAPS the 5 $450,000 on Jawbone's behalf to obtain release of Protempo's products and allow Protempo to 6 fulfill its own obligations to downstream distributors. NAPS and Protempo executed a contract 7 ("Assignment of Debt") by which NAPS assigned its entire right, title, and interest in Jawbone's 8 debt to Protempo. 9 21. As a result of Jawbone's false representations and promises, and its failure to pay 10 NAPS to allow release of the products, the products were delivered to Protempo late, causing 11 Protempo to miss out on sales during the crucial holiday season and to lose Protempo's largest 12 deal with a distributor. 13 22. When Protempo finally received and could inspect the products it purchased under 14 the Amended Agreement, it discovered that $129,624 worth of products were missing. I5 Additionally, after taking delivery of the products and providing them for distribution, Protempo 16 discovered for the first time that numerous batches of Jawbone's UP2 wearable fitness product 17 were dead on arrival (including, for example, dead irreplaceable batteries and other malfunctions) 18 and the products experienced massive failure rates. 19 23. Rahman, Child and others at Jawbone nevertheless led Protempo to believe 20 otherwise and withheld information from Protempo in negotiating the parties' agreement, 21 committing a blatant "bait and switch" involving millions of dollars of faulty and encumbered 22 products in a desperate attempt to obtain the immediate cash infusion Jawbone required to pay its 23 mounting debts. 24 24. Jawbone's actions have caused significant injury to Protempo. To date, $1,234,621 25 worth of Jawbone's UP2 product purchased by Protempo under the parties' agreements are 26 defective and unsellable. In addition to its resulting financial damages, Protempo has suffered 27 significant disruptions to its business and to several of its important relationships with distributors 28 and others. Jawbone has also refused to reimburse Protempo the $450,000 debt that Protempo was Rutan a newer. Li, atfOrneyS at law -8- 2152/033019-0002 1146640.1 e12121111 SECOND AMENDED COMPLAINT EFTA00807809  1 forced to pay NAPS in order to secure the release of the purchased products; failed to deliver the 2 missing products totaling $129,624; and failed to take any action to remedy the product shortfall, 3 such as refunding Protempo's overpayment or delivering the promised products. Jawbone has 4 also failed to fix or otherwise address or remedy the numerous defective products it sold to 5 Protempo. 6 25. Protempo's damages are on-going and far exceed the jurisdictional minimum of 7 this Court. Despite oral and written demands by Protempo, Defendants have failed and refuse to 8 compensate Protempo for its damages. 9 FIRST CAUSE OF ACTION 10 (For Promissory Fraud Against All Defendants) 11 26. Protcmpo reallcges and incorporates by reference Paragraphs 1 through 25, above, 12 as if set forth in their entirety. 13 27. Between August and September 2016, at both Rahman's and Child's direction, and 14 with their involvement, approval, ratification and encouragement, Defendants made the false 15 promises of performance, orally (in face-to-face meetings and phone calls), and in writing 16 (including by e-mail), to Protempo's identified employees, including but not limited to Adam 17 Brown, Mark Priscott, and others, as set forth at Paragraph 16 of this Complaint. 18 28. At the time Defendants made the promises to Protempo, Defendants had no 19 intention of performing them. 20 29. Defendants made their promises with the intent to induce Protempo to pay its $1.9 21 million to Jawbone and enter into the Amended Agreement. 22 30. Protempo, at the time the promises were made and at the time Protempo took the 23 actions herein alleged, was ignorant of Defendants' secret intention not to perform, and Protempo 24 could not, in the exercise of reasonable diligence, have discovered Defendants' secret intention. 25 In reliance on Defendants' promises, Protempo paid its $1.9 million to Jawbone and entered into 26 the Amended Agreement. If Protempo had known of Defendants' actual intentions, Protempo 27 would not have taken such actions. 28 31. Defendants failed to abide by their promises as herein alleged, including but not Ru1an a Tucht,1.1.1. attcrneys et low -9- 2152/033019.0002 11786640107121/17 SECOND AMENDED COMPLAINT EFTA00807810  1 limited to as alleged at Paragraph 16 of this Complaint. 2 32. As a proximate result of Defendants' fraudulent conduct, Protempo has and \\ill 3 continue to suffer general, consequential, and compensatory damages, as alleged above. 4 33. The acts of Defendants were done with a conscious disregard ofProtempo's rights, 5 and with the specific intent to defraud Protempo into providing an up-front payment of $1,910,794 6 and to pay other sums, such as to constitute fraud, oppression and malice under California Civil 7 Code section 3294. By virtue of Defendant's willful and wrongful conduct, Protempo is entitled 8 to punitive and exemplary damages. 9 SECOND CAUSE OF ACTION 10 (For Fraud And Intentional Deceit Against All Defendants) 11 34. Protempo realleges and incorporates by reference Paragraphs 1 through 33, above, 12 as if set forth in their entirety. 13 35. Between August and September 2016, at both Rahman's and Child's direction, and 14 with their involvement, approval, ratification and encouragement, Defendants made the false I5 statements and misrepresentations, orally (in face-to-face meetings and phone calls), and in 16 writing (including by e-mail), to Protempo's identified employees, including but not limited to 17 Adam Brown, Mark Priscott, and others, as set forth at Paragraph 16 of this Complaint. 18 36. The representations made by Defendants were in fact false, and the true facts were 19 as set forth at Paragraph 16. 20 37. When Defendants made their representations, they knew them to be false and made 21 these representations with the intention to deceive and defraud Protempo and to induce Protempo 22 to pay its $1.9 million to Jawbone and enter into the Amended Agreement, or with the expectation 23 that Protempo would so act. 24 38. Protempo, at the time Defendants made their representations and at the time 25 Protempo took the actions herein alleged, was ignorant of the falsity of Defendants' 26 representations and believed them to be true. In reliance on these representations, Protempo was 27 induced to and did pay its $1.9 million to Jawbone and entered into the Amended Agreement. 28 Had Protempo known the actual facts, it would not have taken such actions. Protempo's reliance Roan A Tucker. LIP AffOrlityS at law -10- 21321033019-0002 11786601 012/21/17 SECOND AMENDED COMPLAINT EFTA00807811  1 on Defendants' representations was justified because, inter alia, Protempo could not, in the 2 exercise of reasonable diligence, have discovered the true facts (for example, the products at issue 3 were stored on other continents, and their condition was known only to Defendants, and Protempo 4 was without the necessary internal information for Jawbone). 5 39. As a proximate result ofDefendants' fraudulent conduct, Protempo has and will 6 continue to suffer general, consequential, and compensatory damages, as alleged above. 7 40. The acts of Defendants were done with a conscious disregard of Protempo's rights, 8 and with the specific intent to defraud Protempo into providing an up-front payment of $1,910,794 9 and to pay other sums, such as to constitute fraud, oppression and malice under California Civil 10 Code section 3294. By virtue of Defendant's willful and wrongful conduct, Protempo is entitled 11 to punitive and exemplary damages. 12 THIRD CAUSE OF ACTION 13 (For Negligent Misrepresentation Against All Defendants) 14 41. Protempo rcalleges and incorporates by reference Paragraphs 1 through 40 above, 15 as if set forth in their entirety. 16 42. Between August and September 2016, at both Rahman's and Child's direction, and 17 with their involvement, approval, ratification and encouragement, Defendants made the false 18 statements and misrepresentations, orally (in face-to-face meetings and phone calls), and in 19 writing (including by e-mail), to Protempo's identified employees, including but not limited to 20 Adam Brown, Mark Priscott, and others, as set forth at Paragraph 16 of this Complaint. 21 43. As set forth at Paragraph 16 of this Complaint, the information Defendants 22 provided to Protempo was in fact false. The true facts, of which Protempo was ignorant, were that 23 (i) the products were subject to NAPS' claim for substantial unpaid fees; (ii) NAPS would not 24 release the products until its unpaid fees were paid; (iii) Jawbone did not have the inventory to 25 fulfill its agreement with Protempo; and (iv) many of the products were inoperative and highly 26 defective. 27 44. If Defendants did not intentionally lead Protempo to believe false information as 28 alleged above, then Defendants had no reasonable grounds to believe the information they Rutin 8 Tucker, LLP 8110/1/0y$ at law -Il- 3152/071019.0002 11786610.1 812/21/17 SECOND AMENDED COMPLAINT EFTA00807812  1 provided was true. 2 45. Defendants intended for Protempo to rely on such negligent misrepresentations, 3 and Protempo did reasonably rely on the misrepresentations as alleged above. 4 46. As a direct, proximate, and foreseeable result of Defendants' conduct, Protempo 5 has and will continue to suffer general, consequential, and compensatory damages, as alleged 6 above. 7 FOURTH CAUSE OF ACTION (DIRECT CLAIMS) 8 (For Breach of Contract Against Jawbone and DOES 1-10) 9 47. Protempo realleges and incorporates by reference Paragraphs 1 through 46, above. 10 as if set forth in their entirety. 11 48. On or about September 14, 2016 Protempo entered into the Amended Agreement 12 with Jawbone, whereby Jawbone promised to provide brand-new products free and clear of all 13 encumbrances in exchange for payment in the amount of $2,121,161 by Protempo. 14 49. Protempo has performed all terms, conditions, and agreements on its part to be 15 performed under the Amended Agreement. 16 50. Jawbone has materially breached its obligations to Protempo under the Agreement 17 by failing to deliver $129,624 worth of products which Protcmpo purchased, and failing to honor 18 the warranties set forth in the Agreement, among other breaches. 19 51. The Amended Agreement contains an implied covenant of good faith and fair 20 dealing, which includes a covenant that neither party will deprive the other party of the intendcd 21 benefits of the agreement. When a condition in a contract involves the performance of an act 22 within the control of a party, the party has a duty to make a good faith effort to satisfy the 23 condition. 24 52. As a result of the conduct alleged above, and in particular, failing to deliver the full 25 product for which Protempo paid, Jawbone breached the implied covenant of good faith and fair 26 dealing. 27 53. As a direct and proximate result of Jawbone's breach of the Amended Agreement, 28 Protempo has been damaged in an amount to conform to proof at trial, but in no event less than Rutan & Tucker. UP attorneys at taO' -12- 21521073019-0001 117866401 412/21/17 SECOND AMENDED COMPLAINT EFTA00807813  1 $129,624, plus any and all accrued interest. 2 FIFTH CAUSE OF ACTION 3 (For Unjust Enrichment Against Jawbone and DOES 1-10) 4 54. Protempo realleges and incorporates by reference Paragraphs 1 through 53, above, 5 as if set forth in their entirety. 6 55. By virtue of its wrongful conduct toward Protempo alleged above, and specifically, 7 as a result of its failure to compensate Protempo for its out-of-pocket expenditures (including 8 payment of Jawbone's $450,000 debt to NAPS), Jawbone has been unjustly enriched. 9 56. It would be manifestly unjust for Jawbone to retain any of the benefits it has gained 10 through its wrongful conduct. Subject to and as alleged above, unless the Court orders restitution 11 to Protempo, Jawbone will unjustly benefit from its actions. 12 SIXTH CAUSE OF ACTION 13 (For Breach of Warranty Against Jawbone and DOES 1-10) 14 57. Protempo realleges and incorporates by reference Paragraphs 1 through 56, above, 15 as if set forth in their entirety. 16 58. Pursuant to the Original Agreement and each of its subsequent amendments, 17 Jawbone represented and warranted that products were unencumbered, were brand-new and not 18 refurbished, and were not previously used. 19 59. Jawbone breached the express warranties contained in the parties' agreements 20 regarding the quality of product sold to Protempo by delivering to Protempo products that were 21 dead on arrival and products which showed massive failure rates. In particular, the UP2 products 22 Jawbone sold to Protempo contained faulty batteries incapable of holding a charge. As a result of 23 such breaches, Protempo did not receive products as warranted by Jawbone. 24 60. After discovering the defects in the products sold and delivered to Protempo in 25 breach of Jawbone's express warranties, Protempo timely informed Jawbone both orally and in 26 writing of such breaches and of the nature of the damages suffered by Protempo as a result of such 27 breaches. Despite such notice, Jawbone has failed and refused and continues to fail and refuse to 28 respond to such notice or to otherwise compensate Protempo for the damages it has suffered. Puna 14 Tustin, LLP attorneys at law -13- 21521033019.0002 11786640 1312/21/17 SECOND AMENDED COMPLAINT EFTA00807814  I 61. As a direct and proximate result of Jawbone's breaches of warranties to Protempo, 2 Protempo has been damaged in an amount in excess of the jurisdictional minimum of this Court. 3 Protempo will establish the full nature and extent of its damages according to proof at the time of 4 trial, but currently believes its damages to exceed $1,234,621. 5 62. In addition to the monetary damages it has suffered, as a direct and proximate result 6 of Jawbone's decision to intentionally place a significant amount of knowingly defective and 7 faulty product into the market, Protempo has also suffered significant business disruptions and 8 related losses. 9 SEVENTH CAUSE OF ACTION 10 (For Conversion Against Jawbone and DOES 1-10) 11 63. Protempo realleges and incorporates by reference Paragraphs 1 through 62, alio% e. 12 as if set forth in their entirety. 13 64. Protempo has, and at all times relevant herein did have, the immediate right to 14 possession of the products for which it paid. 15 65. By the conduct alleged in this Complaint, Jawbone knowingly and intentionally 16 interfered with Protempo's property by refusing, without justification, to turn over possession to 17 Protempo of the products which Protempo purchased, despite the fact that the products lawfully 18 belong to Protempo. Jawbone has no rights to Protempo's property and is wrongfully retaining 19 and refusing to deliver Protempo's property despite multiple proper demands from Protempo that 20 the property be delivered. 21 66. As a direct and proximate result of Jawbone's unlawful conversion, Protempo has 22 suffered and will continue to suffer actual damages, including costs incurred attempting to 23 mitigate damages, and legal costs and expenses. Protempo is entitled to immediate possession of 24 the property (Le., the products it purchased) in an amount to be proven at trial. 25 67. The acts and omissions of Jawbone were knowing, intentional, malicious, and 26 oppressive, and were done with the intent and design to damage Protempo. For these reasons, 27 Protempo is entitled to recover punitive damages in an amount to be determined at the time of 28 trial. Rutin 8 tutkor.I.LP attorneys et ?SW -14- 71524013019-0003 117866401612,21/17 SECOND AMENDED COMPLAINT EFTA00807815  1 EIGHTH CAUSE OF ACTION 2 (For Account Stated Against Jawbone and DOES 1-10) 3 68. Protempo realleges and incorporates by reference Paragraphs 1 through 67, above, 4 as if set forth in their entirety. 5 69. Within the last two years, Jawbone became indebted to Protempo on an account 6 stated in the amount of at least $450,000. 7 70. Protempo is informed and believes and on that basis alleges that although repeated 8 demands for payment have been made and Jawbone admitted that it owed the $450,000 and 9 promised to pay that amount, the principal sum due to Protempo — currently $450,000, plus 10 interest thereon at the maximum legal rate according to proof— remains due, owing, and unpaid II from Jawbone to Protempo on an account stated. 12 NINTH CAUSE OF ACTION 13 (For Open Book Account Against Jawbone and DOES 1-10) 14 71. Protempo realleges and incorporates by reference Paragraphs 1 through 70 above, 15 as if set forth in their entirety. 16 72. Within the last year, Jawbone has become indebted to Protempo on an open book 17 account in the principal sum of $579,624, which includes Jawbone's unpaid debt of $450,000 to 18 NAPS and the $129,624 worth of products Jawbone failed to deliver to Protempo. 19 73. Protempo has kept an account of the debits and credits involved in the transactions. 20 Although repeated demands for payment have been made, as of the date of this Complaint, there is 21 now due, owing, and unpaid the principal sum of $579,624 together with interest accruing thereon. 22 TENTH CAUSE OF AC