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WENCESLAO CASARES CROSS-COMPLAINT
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KEKER & VAN NEST LLPSTEVEN P. RAGLAND - # 221076 [email protected] BENJAMIN BERKOWITZ - # 244441 [email protected] ERIN E. MEYER - #274244 [email protected] BRIGGS MATHESON - # 291287 [email protected] 633 Battery Street San Francisco, CA 94111-1809 Telephone: 415 391 5400 Facsimile: 415 397 7188
Attorneys for Defendants WENCESLAO CASARES and CYNTHIA MCADAM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SANTA CLARA
LEMON, INC. and LEMON ARGENTINA, S.R.L.,
Plaintiffs,
v.
WENCESLAO CASARES; FEDERICO MURRONE; FABIAN CUESTA; MARTIN APESTEGUIA; CYNTHIA MCADAM; and DOES 1 through 10,
Defendants.
Case No. 114-CV-268767 DEFENDANT WENCESLAO CASARES CROSS-COMPLAINT FOR: (1) BREACH OF CONTRACT; (2) BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING; (3) CONVERSION; (4) UNJUST ENRICHMENT; AND (5) DECLARATORY RELIEF
DEMAND FOR JURY TRIAL
Judge: Hon. Peter H. Kirwan Date Filed: Aug. 1, 2014
WENCESLAO CASARES,
Cross-Complainant,
v.
LEMON, INC. and LIFELOCK, INC.,
Cross-Defendants.
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Pursuant to California Code of Civil Procedure 428.10 and 428.20, Defendant and
Cross-Complainant Wenceslao Casares (Casares), by and through his attorneys, hereby files
this Cross-Complaint against Plaintiff and Cross-Defendant Lemon, Inc. (Lemon) and Cross-
Defendant LifeLock, Inc. (LifeLock) (collectively, Cross-Defendants) as follows:
I. NATURE OF ACTION
1. This is an action necessary to hold Cross-Defendants Lemon and LifeLock
accountable for their willful breach of contract and tortious conduct against Cross-Complainant
Wences Casares.
2. Wences Casares is a Silicon Valley-based entrepreneur who has successfully
founded and led multiple companies. In July 2011, Casares founded Lemon, where he oversaw
the development of the Lemon Walleta cloud-based digital wallet that allowed users to store
digital copies of credit cards, debit cards, reward cards, and personal identification.
3. LifeLock acquired Lemon in December 2013, and asked Casares to remain with
the company during the transition period. Casares agreed on the condition that Lemons new
parent corporation would not interfere with his management of the Lemon team. LifeLock
assured Casares that it would not interfere with his management of Lemons operations, and
agreed to automatically accelerate the vesting of certain stock options if the company materially
diminished his responsibilities as Lemons General Manager. Specifically, as part of the
LifeLock/Lemon acquisition, Casares entered into (i) an Option Cancellation, Assumption and
Revesting Agreement with Lemon (the Option Assumption Agreement), and (ii) a Restricted
Stock Purchase Agreement with LifeLock (the RSA) (collectively, the Stock Agreements).
Pursuant to the Option Assumption Agreement, Lemon assumed Casares unvested stock options
in the company, making them exercisable for approximately 31,208 shares of LifeLock common
stock and subjecting them to new, lengthier vesting terms. As LifeLock wished to have even
more of Casares equity subject to vesting terms, it required under the RSA that he purchase
approximately 38,877 shares of LifeLock common stock by paying LifeLock approximately
$295,000. Separately, on information and belief, Casares received restricted stock units worth
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approximately $1.3 million at the time of the acquisition as part of a retention package for
continuing Lemon employees.
4. Casares lived up to his contractual promises and, in the weeks leading up to the
closing of the LifeLock/Lemon deal, worked with his team to prepare and launch the LifeLock
Wallet, a new and rebranded version of the Lemon Wallet app that represented the first step in
integrating the LifeLock and Lemon products. The Lemon team working under Casares had
previously developed new versions of the Wallet app quickly, and finished the all-new LifeLock
Wallet in just over a month. Contrary to their agreement, however, immediately following the
Lemon acquisition, LifeLock repeatedly and consistently obstructed Casaress management of the
Lemon team and directly obstructed his development of the next generation LifeLock Wallet.
LifeLocks highly dysfunctional management proved itself to be adept at corporate infighting and
bureaucracy, and ultimately unwilling to support the innovative Lemon team that it had acquired,
or to permit that team to be led by Casares without interference. LifeLocks dysfunctional
managementand its willful and intentional post-acquisition breaches of its agreements with
Casares and his teamsquandered the success of its acquired company, and then sought to blame
everyone but themselves for their mistakes. By torpedoing the LifeLock Wallet app, and
preventing Casares from doing his job, LifeLock not only willfully breached its contract with
Casares, but virtually guaranteed the failure of its acquisition, Lemon.
5. Indeed, by mid-2014, LifeLock had decimated post-acquisition Lemons entire
team, and Casares was hamstrung and left unable to salvage the Wallet product. In late July
2014, Casares tendered his resignation for Good Cause, which triggered automatic vesting of
Casares shares of LifeLock common stock under the Stock Agreements.
6. LifeLock, and its subsidiary, Lemon, then fraudulently and willfully breached its
contract with Casares, purporting to terminate Casares employment for Cause on August 1,
2014 and thereafter purporting to cancel his LifeLock shares. Through this fraud, LifeLock
wrongfully and willfully breached its contract with Casares and sought to deprive Casares of the
value of equity in LifeLock, which he was entitled to under the Stock Agreements.
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II. PARTIES
7. Cross-Complainant Wenceslao Casares is a resident and citizen of California. He
is formerly the founder and CEO of Cross-Defendant Lemon, Inc.
8. On information and belief, Lemon, Inc. is a corporation organized and existing
under the laws of the State of Delaware, with its principal place of business in Mountain View,
California.
9. On information and belief, LifeLock, Inc. is a corporation organized and existing
under the laws of Delaware, with its principal place of business in Tempe, Arizona, and maintains
offices in at least six locations in California. LifeLock is the parent company of Lemon, Inc. and
Lemon Argentina, S.R.L.
10. On information and belief, at all times relevant hereto, Lemon and LifeLock, and
each of them, acted in concert with and/or was the agent, partner, affiliate, co-conspirator, aider
and abettor, servant, associate, representative, predecessor-in-interest, and/or successor-in-interest
of the other, and in engaging in the acts hereinafter alleged, Lemon and LifeLock were acting in
concert with and within the course and scope of their authority as agent, partner, affiliate, co-
conspirator, aider and abettor, servant, associate, representative, predecessor-in-interest and/or
successor-in-interest of the other.
III. JURISDICTION AND VENUE
11. Jurisdiction in this Court is proper because Cross-Complainant asserts California
state law claims and seeks relief regarding money and property with the value in excess of the
jurisdictional minimum of this Court.
12. The Court has personal jurisdiction over Lemon, Inc. because its principal place of
business is in California and regularly and continuously conducts business in California.
13. This Court has personal jurisdiction over LifeLock because it maintains offices
throughout California and regularly and continuously conducts business in California.
14. Venue is proper in Santa Clara, California because the injuries alleged herein
occurred in this county.
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IV. RELEVANT FACTS
A. Casares Launches Lemon
15. Casares founded Lemon in July 2011. Within a few months of its founding,
Lemon released its feature product, the Lemon Walleta mobile device app that allowed users
to store digital images of the contents of a physical walletinitially receipts and subsequently
expanded to include copies of credit cards, debit cards, and personal identification. The Wallet
quickly became a success, and within just two years attracted nearly five million users.
16. Around the time he founded Lemon in 2011, Casares first learned about bitcoina
software-based digital currency that is not tied to any countrys central bank or government.
Casares soon became fascinated by the currency, and began experimenting with different bitcoin-
related technologies in his spare time.
17. In the spring of 2013, Casares suggested to Lemons Board of Directors that the
company explore adding a way for the Lemon Wallet app to connect to the bitcoin infrastructure
to enable bitcoin transactional features for the Lemon Wallet. The Board agreed to test the idea
but after just a few months determined that transactional features would be incompatible with the
Lemon Wallet, which was designed to be a storage backup of digital images of credit cards and
receipts, not a platform for digital currency payments. The Board also did not want to jeopardize
Lemons success with the Lemon Wallet by adding a feature based on a new and untested digital
currency. In or around July 2013, the Lemon Board abandoned the project of trying to connect
the Lemon Wallet to the bitcoin infrastructure.
B. LifeLock Acquires Lemon
18. In 2010, LifeLock agreed to pay $11 million to the Federal Trade Commission
(FTC) and another $1 million to a group of 35 state attorneys general to settle charges that
LifeLock had engaged in false advertising to promote its identity theft protection services. As
part of the settlement, LifeLock entered into a stringent Consent Order with the FTC, which
imposes various ongoing conduct, record keeping, and reporting obligations on the company and
its founder and CEO, Todd Davis, and requires that LifeLock submit to ongoing compliance
monitoring by the FTC.
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19. Following this episode, LifeLock hired Hilary Schneider as its new president. On
information and belief, Schneider previously served as a technology consultant and executive at
Yahoo, Inc. in Sunnyvale, California. On information and belief, shortly after hiring Schneider,
LifeLock opened a new office in Silicon Valley, with the goal of expanding LifeLocks presence
there.
20. In May 2013, LifeLock approached Lemon about the possibility of a strategic
partnership between the two companies. On information and belief, LifeLock lacked its own
mobile product at the time and sought a partnership with Lemon in an effort to expand into the
mobile application market and broaden LifeLocks aging user base.
21. Following several discussions, the two companies decided not to pursue a strategic
partnership at that time.
22. Instead, in or around August 2013, LifeLock contacted Casares to ask if he would
sell Lemon to LifeLock. Over the next several weeks, Casares discussed with Hilary Schneider,
LifeLocks President, and Villi Iltchev, LifeLocks then-Executive Vice President of Corporate
Strategy and Development, the possibility of LifeLock acquiring Lemon. Casares explained to
the LifeLock executives that he wanted to sell Lemon so that he would be free to work on a
separate bitcoin-related business, Xapo Ltd. (Xapo). In September 2013, Casares agreed to
sell Lemon to LifeLock.
23. In preparation for the acquisition, LifeLock formed Lemon Argentina, a new
wholly-owned LifeLock subsidiary that would assume the operational responsibilities of Lemons
Buenos Aires office following the acquisition.
24. During the weeks leading up to the closing of the LifeLock/Lemon acquisition,
Casares and his team of Lemon engineers in Buenos Aires developed the LifeLock Wallet, a
new version of the Lemon Wallet app, which would be released as soon as the acquisition was
complete.
25. In November 2013, LifeLock asked Casares to stay on at Lemon after the
acquisition. Casares agreed to do so, but only on the condition that LifeLock would not interfere
with his management of the post-acquisition Lemon team. LifeLocks President, Hilary
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Schneider, assured Casares that Lemons new parent corporation would not intrude into the
Lemon teams operations, and that Casares would be free to run Lemon as he had before the
acquisition.
26. On December 4, 2013, Schneider sent Casares a letter offering him the position of
General Manager of Mobile at Lemon. Casares offer letter is attached hereto as Exhibit A.
27. The offer letter provides:
[LifeLock] is delighted that effective on or about December 12, 2013, subject to the closing of the transaction between LifeLock and Lemon, we will welcome you to the LifeLock family. We are confident that you will find your role within the LifeLock family to be one in which you can make significant contributions.
The following represents our conditional offer to you for employment beginning January 1, 2014, as General Manager, Mobile. Your position will report to Hilary Schneider, President of LifeLock, and the Board of Directors at Lemon. This offer is specifically conditioned on the closing of the transaction currently in negotiation between LifeLock and Lemon, Inc.
28. On December 11, 2013, LifeLock and Lemon executed the Agreement and Plan of
Merger, in which Lemons shareholders sold their interests in Lemon to LifeLock for
approximately $43 million. As shareholders in Lemon, Casares, Cynthia McAdam, Federico
Murrone, Martin Apesteguia, and Fabian Cuesta received their prorated share of the proceeds
from the sale, which totaled approximately 5% of the proceedsless the approximately $750,000
of proceeds pocketed by LifeLock by requiring Casares, Murrone, and Apesteguia to purchase
their stock in the company. The LifeLock Wallet was released the next day.
29. Also on December 11, 2013, as a condition to the closing of the acquisition,
Casares entered into two additional agreements with LifeLock and its post-acquisition subsidiary
Lemon: (i) an Option Cancellation, Assumption and Revesting Agreement (the Option
Assumption Agreement) with Lemon, and (ii) a Restricted Stock Purchase Agreement (the
RSA) with LifeLock (collectively, the Stock Agreements), which are attached hereto as
Exhibits B and C, respectively.
30. Pursuant to the Option Assumption Agreement, Casares agreed to assign[],
transfer[] and surrender to [Lemon] for cancellation . . . all of [his] right, title and interest in and
to the Vested Options and the shares of Common Stock Options in Lemon in exchange for
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certain consideration. Casares further agreed in the Option Assumption Agreement that his
Unvested Option[s] in Lemon would be assumed by LifeLock, and that the unvested options
would thereupon become exercisable for shares of LifeLock common stock.
31. The Option Assumption Agreement also contains an acceleration clause, which
provides that [i]n the event that [Casares] Continuous Services [to post-acquisition Lemon] is
terminated (A) by the Company or an Affiliate without Cause or (B) by [Casares] for Good
Reason, 100% of the LifeLock common stock subject to Casares unvested stock options in
Lemon shall become vested and immediately exercisable.
32. Good Reason is defined in the Option Assumption Agreement to include, among
other things, a material diminution in [Casares] title, duties or responsibilities to a level below
those set forth in his December 4, 2013 offer letter.
33. The Option Assumption Agreement also sets forth the circumstances and
procedures by which Lemon may terminate Casares employment for Cause. Except in limited,
specified circumstances that do not apply here, the agreement requires Lemon to provide Casares
with written notice of the basis for termination, and a reasonable period of time after receipt of
written notice to remedy any alleged problem.
34. Under the terms of the other Stock Agreement, the RSA, Casares agreed to
purchase from LifeLock approximately 38,877 shares of LifeLock common stock, for which
Casares paid approximately $295,000 in consideration.
35. The RSA, like the Option Assumption Agreement, contains an Acceleration of
Vesting clause, which provides that in the event that [Casares] Continuous Services is
terminated (i) by [LifeLock] or an Affiliate without Cause or (ii) by [Casares] for Good Reason,
100% of the Unvested Shares shall become Vested Shares. Good Reason and Cause have
the same definitions in the RSA as in the Option Assumption Agreement.
36. Also as part of the closing of the LifeLock/Lemon acquisition, on information and
belief, LifeLock granted Casares restricted stock units worth approximately $1.3 million at the
time as part of a retention package for continuing Lemon employees.
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C. LifeLock and Lemon Materially Diminish Casares Duties and Responsibilities as Lemons General Manager of Mobile
37. Following the acquisition, Casares began working as Lemons General Manager of
Mobile on or around January 1, 2014.
38. Despite LifeLocks repeated assurances that it would not interfere with Casares
management of the Lemon Mobile team, within weeks of Casares assuming the position of
General Manager, LifeLock, and in particular its legal department, began to interfere in all
aspects of the Lemon teams operations, ultimately causing its work to grind to a halt.
39. Based on extensive discussions with LifeLocks President and its head of product,
one of Casares first objectives as Lemons General Manager of Mobile following the acquisition
was to develop an update to the recently-launched LifeLock Wallet that would integrate coupons
and other offers from third-party vendors into the app. However, LifeLock, apparently
apprehensive about its ongoing complianceor non-compliancewith the FTC Consent Order,1
repeatedly and continuously interfered with the project at every step, imposing significant product
changes and requiring even the slightest of contemplated changes to go through countless rounds
of review and second-guessing from LifeLocks dysfunctional corporate offices.
40. LifeLocks interference caused significant delays in the development and release
of updates to the LifeLock Wallet. As a result of LifeLocks corporate infighting and
mismanagement, Casares and his team were repeatedly forced to suspend their work on the
LifeLock Wallet while they waited for LifeLocks corporate bureaucracy.
41. LifeLocks corporate infighting and mismanagement reached such a level that at
one point, LifeLocks General Counsel, Clarissa Cerda, insisted that the legal department review
and approve every product development decision made by Lemon mobiles development team.
1 Upon information and belief, during the time that LifeLocks legal department and dysfunctional management was interfering with the mobile teams development of the LifeLock Wallet, obstructing efforts by Casares and his team to update the LifeLock Wallet app, and breaking their promises to Casares, LifeLock was violating the terms of the FTC Consent Order. On information and belief, on or about July 21, 2015, the FTC filed a new complaint against LifeLock in federal court in Arizona asserting that LifeLock violated the 2010 settlement with the agency and 35 state attorneys general by continuing to make deceptive claims about its identity theft protection services, and by failing to take steps required to protect its users data.
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This malignant corporate infighting among LifeLocks top managers ground development to a
halt and made it impossible for the Lemon team to navigate the LifeLock corporate bureaucracy.2
42. In addition, as a result of LifeLocks mismanagement and interference with the
Lemon mobile team, as well as the corporate infighting between LifeLocks top managers,
Lemon was forced to abandon deals that Casares and his team had negotiated with third-party
vendors.
43. LifeLocks interference with Casares and his team not only represented gross
personal dysfunction at LifeLocks highest levels, but was directly contrary to the assurances that
LifeLock and its President, Hilary Schneider, had provided to Casares when he agreed to lead the
Lemon mobile team during the post-acquisition transition.
44. In or around January 2014, Casares met with Hilary Schneider and informed her
that he could not continue as General Manager as long as LifeLock insisted on controlling every
aspect of the Mobile teams operations. Schneider told Casares to be more patient and requested
that he withdraw his resignation. Casares agreed to the request.
45. In or around February 2014, Casares again met with Schneider and Todd Davis,
LifeLocks Chief Executive Officer, at LifeLocks headquarters in Tempe, Arizona, and again
informed them that he could no longer serve as General Manager of Mobile due to LifeLocks
bureaucratic mismanagement of the Lemon team. Schneider and Davis again assured Casares
that they would address problems with LifeLocks interference with the Lemon team, including
by terminating the employment of LifeLocks General Counsel, Clarissa Cerda.
46. Despite these assurances to Casares, LifeLock again failed to make any changes to
address its interference with the mobile teams development of the LifeLock Wallet, and in fact
continued to obstruct efforts by Casares and his team to update the LifeLock Wallet app.
47. On March 6, 2014, Casares again met with Schneider to inform her that he planned
to resign from LifeLock because he was being prevented from doing his work to develop the next
2 When Casares initially raised these issues regarding Cerdas interference with the Lemon mobile team to LifeLocks CEO Todd Davis and its President Hilary Schneider, Davis and Schneider suggested hiring a professional consultant to provide Cerda with management training. Casares does not know whether Cerda ultimately competed such training, but has become aware that she no longer serves as LifeLocks General Counsel.
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generation of the Lemon product. He told Schneider that rather than continue to be bogged down
by LifeLocks bureaucracy and mismanagement, it made more sense for him to focus on his
separate work at Xapo full-time. Schneider told Casares that she shared his frustrations about
Cerda, but asked Casares to remain at Lemon for at least a few more months, and requested that
he wait to announce the launch of Xapo until after LifeLocks next analyst meeting on March 12.
Casares agreed to both requests, and withdrew his resignation.
48. On or around March 12, 2014, Schneider sent an email informing LifeLocks
employees that Casares has let us know that he is leaving LifeLock to become the Chairman of
Xapo, a company that provides safe storage for Bitcoin. Schneider praised Casares for
buil[ding] a strong and capable team that has good momentum, and noted that Casares would
remain at LifeLock for a period of time to ensure a smooth transition.
49. The following week, and without discussion with Casares, LifeLock suspended the
Lemon mobile teams managersincluding Murrone, Apesteguia, and Cuestashuttered the
Lemon Argentina offices, and ceased all work on the LifeLock Wallet. Shortly thereafter,
LifeLock fired Murrone, Apesteguia, Cuesta, and the remaining members of Casares team at
Lemon.
50. In or around May 2014, LifeLock removed the LifeLock Wallet app from online
marketplaces such as iTunes and Google Play, and suspended the app indefinitely.
51. On July 31, 2014, Casares, who by now was left with no responsibilities or duties
whatsoever at LifeLock/Lemon and was increasingly troubled by LifeLock/Lemons
unprofessional and improper conduct, sent a letter to Clarissa Cerda providing notice of his
resignation for Good Reason. The letter, which is attached hereto as Exhibit D, provides:
This letter serves as notice of the termination of my continuous services to LifeLock for Good Reason, as defined in the Restricted Stock Purchase Agreement and Option Cancellation, Assumption and Revesting Agreement that were part of the LifeLock-Lemon transaction. LifeLock created the Good Reason for this action because LifeLock, through its Chief Executive Officer, President, and/or board of directors, has caused a material diminution in my duties or responsibilities to a level below the duties or responsibilities set forth in my December 4, 2013 offer letter from LifeLock.
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52. The very next day, on August 1, 2014, Todd Davis sent a letter to Casares
purportedly terminating his employment for Cause. LifeLock did not provide Casares with
written notice of his termination prior to Davis August 1 letter, nor did LifeLock provide a
reasonable period of time after receipt of written notice for Casares to remedy the alleged basis
for his termination, as required under the Stock Agreements.
53. On or around August 1, 2014, LifeLock cancelled all of the restricted stock and
unvested stock options that were subject to the Stock Agreements accelerated vesting clauses.
On information and belief, the cancelled stock and options represented more than $2 million in
equity in LifeLock.
54. In addition, LifeLock cancelled all of Casares LifeLock restricted stock units,
which he had been granted as part of the retention package for continuing Lemon employees. On
information and belief, Casares restricted stock units represent more than an additional $1.3
million in equity in LifeLock.
FIRST CLAIM FOR RELIEF Breach of Contract Stock Agreements (against all cross-defendants)
55. Casares hereby incorporates by reference each of the allegations in the preceding
paragraphs as though fully set forth here.
56. On or about December 11, 2013, Casares entered into a valid and enforceable
Option Cancellation, Assumption and Revesting Agreement (Option Assumption Agreement)
with Lemon, pursuant to which Casares acknowledged and agreed that his unvested stock options
in Lemon would be assumed by LifeLock, and become exercisable for approximately 31,208
shares of LifeLock common stock. The Option Assumption Agreement further provided that
100% of the unvested shares associated with Casares shall become fully vested and exercisable in
the event Casares terminates his employment services with Lifelock/Lemon for Good Reason, as
defined in the Agreement.
57. On or about December 11, 2013, Casares entered into a valid and enforceable
Restricted Stock Purchase Agreement (RSA) with LifeLock, pursuant to which Casares
purchased approximately 38,877 shares of common stock in LifeLock. The RSA further provided
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that 100% of the unvested shares associated with Casares shall become fully vested and
exercisable in the event Casares terminates his employment services with Lifelock/Lemon for
Good Reason, as defined in the RSA.
58. Casares timely, fully, and adequately performed the terms and conditions
prescribed in the Option Assumption Agreement and RSA (collectively, the Stock Agreements)
and imposed by law, to the extent performance was within Casares power without the
cooperation of Lemon or LifeLock.
59. Casares terminated his employment with LifeLock/Lemon for Good Reason on
July 31, 2014.
60. As detailed above, Cross-Defendants materially breached the Stock Agreements
by failing to acknowledge and implement the accelerated vesting of the unvested stock options
associated with Casares, and by preventing Casares from exercising them.
61. As a direct and proximate result of Cross-Defendants material breaches of the
Stock Agreements, Casares has suffered, and will continue to suffer, damages in an amount not
yet ascertained, but which Casares is informed and believes, and therefore alleges, exceeds the
Courts jurisdictional amount.
SECOND CLAIM FOR RELIEF Breach of the Implied Covenant of Good Faith and Fair Dealing
(against all cross-defendants)
62. Casares hereby incorporates by reference each of the allegations in the preceding
paragraphs as though fully set forth here.
63. As detailed above, Casares entered into valid, enforceable Stock Agreements with
Lemon and LifeLock.
64. Casares timely, fully, and adequately performed the terms and conditions
prescribed in the Stock Agreements and imposed by law, to the extent performance was within
Casares power without the cooperation of Lemon or LifeLock.
65. Cross-defendants were under an obligation to acknowledge and implement the
accelerated vesting of 100% of the unvested stock options associated with Casares under the
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13WENCESLAO CASARES CROSS-COMPLAINT
Case No. 114-CV-268767962834
Stock Agreements, and also under a duty to do everything that the Stock Agreements presupposed
Cross-Defendants would do to accomplish the purpose of the Stock Agreements.
66. Cross-defendants breached the implied covenant of good faith and fair dealing by
failing to acknowledge and implement the accelerated vesting of the unvested stock options
associated with Casares under the Stock Agreements; by preventing Casares from exercising
those stock options; and otherwise interfering with and failing to cooperate with Casares in the
performance of the Stock Agreements, as alleged above.
67. As a direct and proximate result of Cross-defendants breach, Casares has suffered,
and will continue to suffer, damages in an amount not yet ascertained, but which Casares is
informed and believes, and therefore alleges, exceeds the Courts jurisdictional amount.
THIRD CLAIM FOR RELIEF Conversion (against all cross-defendants)
68. Casares hereby incorporates by reference each of the allegations in the preceding
paragraphs as though fully set forth here.
69. Casares entered into valid, enforceable Stock Agreements with Lemon and
LifeLock, pursuant to which he acquired rights to unvested shares of LifeLock common stock.
The Stock Agreements provided that 100% of the unvested LifeLock shares associated with
Casares shall become fully vested and exercisable in the event Casares terminates his
employment services with Lifelock/Lemon for Good Reason, as defined in the Stock Agreements.
70. Casares terminated his employment with LifeLock/Lemon for Good Reason on
July 31, 2014. As a result, 100% of the unvested LifeLock shares associated with Casares vested
and became exercisable on that date.
71. Pursuant to the Stock Agreements, Casares is the rightful owner of fully vested
and exercisable shares of LifeLock common stock.
72. As detailed above, Cross-defendants have wrongfully assumed dominion over the
above-described unvested stock options associated with Casares under the Stock Agreements.
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14WENCESLAO CASARES CROSS-COMPLAINT
Case No. 114-CV-268767962834
73. As a direct result of Cross-Defendants wrongful assumption of control over the
above-described stock options, Casares has suffered, and will continue to suffer, actual damages
in an amount to be proven at trial.
74. Cross-defendants conduct was willful, malicious, oppressive, and in conscious
disregard of Casares rights, and Casares is therefore entitled to an award of punitive damages to
punish Cross-defendants wrongful conduct and deter future wrongful conduct.
FOURTH CLAIM FOR RELIEF Unjust Enrichment (against all cross-defendants)
75. Casares hereby incorporates by reference each of the allegations in the preceding
paragraphs as though fully set forth here.
76. As a result of the illegal and wrongful conduct alleged herein, Cross-defendants
have been and will continue to be unjustly enriched at the expense of Casares in an amount to be
proven at trial. Specifically, Cross-defendants have wrongfully assumed ownership and control
over the unvested stock options associated with Casares under the Stock Agreements by failing to
acknowledge and implement the accelerated vesting to which he was entitled under those
agreements. These stock options rightfully belong to Casares.
77. Cross-defendants should be required to disgorge and return to Casares all the ill-
gotten gains that Cross-defendants illegally and wrongfully obtained at Casares expense, and a
constructive trust should be imposed thereon.
FIFTH CLAIM FOR RELIEF Declaratory Relief (against all cross-defendants)
78. Casares hereby incorporates by reference each of the allegations in the preceding
paragraphs as though fully set forth here.
79. An actual controversy has arisen and now exists between Casares and Cross-
defendants concerning Casares rights and Cross-defendants duties under the Stock Agreements.
80. Specifically, Casares contends that pursuant to the Stock Agreements, he acquired
rights to unvested shares of LifeLock common stock, which became fully vested and exercisable
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15WENCESLAO CASARES CROSS-COMPLAINT
Case No. 114-CV-268767962834
when Casares terminated his employment services with Lifelock/Lemon for Good Reason on July
31, 2014.
81. Casares desires a judicial determination of his rights and a declaration that (1) he is
the rightful owner of the fully vested and exercisable shares of LifeLock common stock
associated with him under the Stock Agreements; and (2) Cross-Defendants must acknowledge
and implement the accelerated vesting to which Casares is entitled under the Stock Agreements.
DEMAND FOR JURY TRIAL
82. Cross-Claimant Casares hereby demands a jury trial on all issues so triable.
PRAYER FOR RELIEF
WHEREFORE, Cross-Claimant Casares requests that this Court enter judgment in his
favor and against Cross-Defendants Lemon and LifeLock as follows:
1. A monetary award to be entered as damages against Lemon and LifeLock in an
amount to be determined at trial;
2. An award of punitive damages to be entered against Lemon and LifeLock in an
amount to be determined at trial;
3. A declaration of Casares rights under the Stock Agreements;
4. All equitable remedies to which Casares is entitled based on the facts and claims
alleged herein;
5. An award of attorneys fees as allowed by law, an award of costs of suit as allowed
by law, any interest on damages allowed by law; and
6. Any other relief that the Court deems proper, fair, equitable, just, and appropriate.
Dated: July 24, 2015
By:
KEKER & VAN NEST LLP
/s/ Steven P. Ragland STEVEN P. RAGLAND
Attorneys for Defendants WENCESLAOCASARES and CYNTHIA MCADAM
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