cruise v. guillory complaint

8/18/2019 Cruise v. Guillory Complaint

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COMPLAINT FOR DECLARATORY RELIEF

JAMES N. KRAMER (STATE BAR NO. 154709) [email protected], HERRINGTON & SUTCLIFFE LLPThe Orrick Building405 Howard StreetSan Francisco, California 94105-2669Telephone: (415) 773-5700Facsimile: (415) 773-5759

BLAKE L. OSBORN (STATE BAR NO. 271849)[email protected], HERRINGTON & SUTCLIFFE LLP777 South Figueroa Street, Suite 3200Los Angeles, California 90017Telephone: (213) 629-2020Facsimile: (213) 612-2499

Attorneys for Plaintiffs

Cruise Automation, Inc. and Kyle Vogt

SUPERIOR COURT OF THE STATE OF CALIFORNIA

CITY AND COUNTY OF SAN FRANCISCO

CRUISE AUTOMATION, INC., a Delawarecorporation, and KYLE VOGT,

Plaintiffs,

v.

JEREMY GUILLORY,

Defendant.

Case No.

COMPLAINT FOR DECLARATORYRELIEF


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Pursuant to California Code of Civil Procedure Section 1060, plaintiffs Cruise

Automation, Inc. (“Cruise” or the “Company”) and Kyle Vogt bring this Complaint for

Declaratory Relief arising out of the claimed equity interests in Cruise by defendant Jeremy

Guillory. Plaintiffs allege on personal knowledge as to themselves and their own acts, and upon

information and belief as to all other matters, as follows:

INTRODUCTION

1. This case arises out of Defendant’s opportunistic and brazen attempts to extort

money from Cruise and Mr. Vogt. As alleged below, after mutually parting ways with Mr. Vogt

over two years ago, Mr. Guillory emerged from the shadows with his hand out within days of the

March 11, 2016 news that General Motors Company (“GM”) intends to acquire Cruise. As

explained below, Mr. Guillory should put his hand back into his pocket; he does not have any

stake in the Company.

2. Defendant’s shocking and opportunistic claim is an attempt to thwart, interfere or

otherwise delay GM’s merger acquisition of Cruise for his own pecuniary benefit. Knowing that

his claim could interfere with the GM transaction, Mr. Guillory hopes to leverage his extortionist

claims to achieve a pay-off from the Company. Declaratory relief is therefore necessary to

remove potential uncertainty regarding equity ownership, partnership interests, intellectual

property and trade secrets of the Company.

3. Mr. Guillory’s baseless allegations have also caused an unnecessary and damaging

delay in the sale of Cruise to General Motors. Time is truly of the essence in the highly

competitive and frenetic race in the development of autonomous technology. Any continued

delay damages Plaintiffs. As a result, Plaintiffs seek the Court’s immediate resolution of this

matter so that Cruise and General Motors may proceed to fulfill the respective benefits of their

bargain.

PARTIES

4.

Plaintiff Cruise is a corporation incorporated under the laws of the State of

Delaware with its headquarters and principal place of business in San Francisco, California.

Cruise is developing the software and necessary hardware to make it possible for vehicles to be


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driven autonomously on city streets. By developing autonomous vehicle technology, Cruise

seeks to increase mobility, reduce carbon emissions and oil consumption, regain time and hours

of lost productivity due to driving, and save billions of dollars and lives due to car accidents.

5. Plaintiff Kyle Vogt is an individual currently residing in California.

6. Defendant Jeremy Guillory is an individual currently residing in California.

JURISDICTION AND VENUE

7. This Court has jurisdiction over Defendant pursuant to Section 410.10 of the

California Code of Civil Procedure because Defendant resides in California, and has taken actions

in California that have injured the Company in this state.

8. Venue in this Court is proper, pursuant to Section 410.10 of the California Code of

Civil Procedure, because the subject matter of the litigation is ownership of and injury to a

company that is located in the City and County of San Francisco.

FACTUAL ALLEGATIONS

9. Mr. Vogt is the founder and Chief Executive Officer of Cruise. Prior to founding

Cruise, Mr. Vogt co-founded two other successful startups in Justin.tv, Inc. and Twitch. Twitch

was a subdivision of Justin.tv and became the ESPN of video gaming. Twitch was later acquired

by Amazon.com, Inc. for approximately $1 billion.

10. Embarking on his next company, Mr. Vogt incorporated Cruise as a Delaware C

Corporation in early to mid-September 2013. At the time, Cruise was a pure start up with no

products. Through the hard work and dedication of Mr. Vogt and others at Cruise over the course

of 2014, the Company developed a working prototype of an aftermarket addition to a vehicle,

containing cameras, radar, GPS and other sensors, and capable of delivering features such as

precision steering, car and lane tracking, adaptive speed control, and collision avoidance. The

Company shifted focus in 2015, and has since spent its efforts developing the software and other

technology for a fully autonomous vehicle capable of driving on city streets.

11.

On or about September 30, 2013, Danielle Fong, a common friend of Mr. Vogt

and Defendant, introduced the two via email due to their common interests. After the


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introduction, on or about October 3, 2013, Mr. Vogt and Defendant met for the first time to

discuss the autonomous vehicle space.

12. Between October 3, 2013 and November 11, 2013, after Mr. Vogt had already

founded Cruise, Mr. Vogt and Defendant exchanged various emails and correspondences where

they discussed a potential collaboration in working to develop Cruise (the “Early Discussion

Period”).

13. Despite these early conversations, by mid-November 2013, it became clear that

Mr. Vogt and Mr. Guillory had personalities and visions that were not compatible and the two

decided not to pursue any collaboration on Cruise. After this decision, Jeremy never participated

in or contributed to any Cruise business.

14.

During the Early Discussion Period between Mr. Guillory and Mr. Vogt:

(a) No stock of Cruise was issued to Defendant;

(b) Defendant did not invest in Cruise;

(c) Defendant did not pay any sum of money or other form of collateral for

any equity interest in Cruise;

(d) Defendant did not receive any stock options in Cruise;

(e) Defendant did not write code for any technology being developed by

Cruise;

(f) Defendant did not draft, file or create any patents for the technology being

developed by Cruise; and

(g) Defendant did not build any devices or technology for Cruise.

15. While Mr. Guillory had initially been listed on Cruise’s application to Y

Combinator, following the mutual decision between Defendant and Mr. Vogt to pursue separate

interests, on November 19, 2013, Mr. Vogt interviewed alone with Y Combinator partners. Y

Combinator is a company that provides seed funding—the earliest stage of venture funding to pay

expenses while a company is just starting—in return for small stakes in the companies it funds.

16. Mr. Guillory never took part in any fundraising efforts for Cruise. Already having

parted ways with Mr. Guillory, Mr. Vogt individually met with other executives of venture capita


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firms for seed funding in late November and December 2013. Following the interviews and

pitches with various venture capital firms, Mr. Vogt and Defendant did not exchange any emails

or communications about Cruise.

17. In January 2014, Cruise completed its first round of seed funding. As alleged

above, Defendant had no involvement with Cruise or in raising this capital.

18. After receiving its first round of seed funding, between January 2014 and

September 2015, Cruise hired employees to grow the Company, and to build and test prototypes

of its autonomous vehicle technology. Similar to most startup companies, Cruise granted certain

employees, officers, and directors equity in the form of stock options as part of their

compensation package. Early investors in the seed funding were also given equity in Cruise. As

alleged above, Defendant never received stock options in Cruise.

19. All of the stock option agreements issued to Cruise employees, officers or

directors contained a vesting schedule of four years with a one year cliff. In particular, Mr.

Vogt’s stock options were subject to the following vesting schedule:

The Vesting Shares, if any, shall be released from the Repurchase Option as hereafterdescribed in this Section 3(a)(iii) and in Section 3(a)(iv), provided, however, that suchscheduled releases from the Repurchase Option shall immediately cease as of the

Termination Date. Fractional shares shall be rounded to the nearest whole share. Subjectto the foregoing, 1/4th of the Vesting Shares shall be released from the Repurchase Optionon the 12-month anniversary of this Agreement, and an additional 1/48th of the VestingShares shall be released from the Repurchase Option on the corresponding day of eachmonth thereafter (and if no corresponding day, the last day of the month), until all VestingShares are released from the Repurchase Option.

…

Notwithstanding the foregoing, if Purchaser is terminated without Cause [] by theCompany [] in connection with or within 12 month(s) following the consummation of aChange of Control [], then the vesting of the Unvested Shares shall accelerate such thatthe Repurchase Option in Section 3(A) shall lapse as to 100% of the Unvested Shares.

20. This common Silicon Valley vesting schedule means that an employee, including

Mr. Vogt, earns equity in Cruise evenly every month for four years, but an employee is entitled to

zero equity if the employee departs Cruise in less than one year from their start date. Thus, while

Defendant never received any stock options in the Company, if he had, they would have been

subject to the same vesting schedule.


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21. In September 2015, Cruise completed its second round of funding for $12.5

million. Defendant again had no involvement with Cruise or in raising capital for this second

round. Indeed, on September 21, 2015, Defendant emailed Mr. Vogt a congratulatory message

about the second round of funding. Defendant’s email made no allegation or reference to any

equity ownership in Cruise.

22. From its inception to present, Cruise has grown from Mr. Vogt’s vision into a

fifty-person firm and is among the few companies with permits from the state of California to test

autonomous vehicles.

23. With hopes of speeding development of self-driving cars, on March 11, 2016, GM

announced that it was acquiring Cruise.

24.

Three days later on March 14, 2016, Defendant emerged from the shadows and for

the first time asserted that he had an equity ownership stake in Cruise. Prior to the announcement

of the acquisition, Defendant had never, in any form, made any allegation or reference to any

equity ownership in Cruise or contribution to Cruise’s source code or intellectual property.

25. Defendant’s sudden and shocking claim is a brazen and opportunistic attempt to

secure an unjustified payout from Cruise by threatening to interfere with or otherwise delay the

GM transaction.

26. Defendant has not disputed the fact that he did not invest in Cruise.

27. Defendant has not disputed the fact that no stock of Cruise was issued to him.

28. Defendant has not disputed the fact that he did not receive any stock option

agreement during his brief involvement with Cruise.

29. Defendant has not disputed the fact that even if he received stock in Cruise (which

he did not receive), it would be subject to a one year vesting cliff that, because of the decision to

part ways with Mr. Vogt, would not have been met.

30. Defendant has not disputed that his participation in any Cruise activities lasted for

less than 6 weeks in 2013.

31. Defendant did not hire or contribute to the recruiting or hiring of anyone who has

worked for or presently works for Cruise.


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32. Defendant has not disputed the fact that he did not write code for any technology

developed or being developed by Cruise.

33. Defendant has not disputed the fact that he has not filed any patents for the

technology developed or being developed by Cruise.

34. Defendant has not disputed the fact that he did not develop or build any device(s)

or technology for Cruise.

35. Defendant has not attempted to provide any facts that support his purported

conclusion that he is entitled to an ownership interest in Cruise.

CAUSES OF ACTION

First Cause of Action – Declaratory Judgment

(Equity Ownership Interest)

36. Plaintiffs allege the allegations set forth in Paragraphs 1 through 34 above and

incorporate them herein by this reference.

37. An actual controversy has arisen and now exists between the Plaintiffs and

Defendant concerning their respective rights. Specifically, Defendant contends that he has an

equity interest in Cruise. Plaintiffs deny that any such equity interest exists.

38.

Even if Defendant ever had an equity interest in Cruise (he does not), his equity

interest is subject to the vesting schedule applicable to all employees, officer and directors,

including Mr. Vogt. Cruise’s vesting schedule contains a one year cliff, which means that

Defendant must remain employed by or at the Company for at least one year before any

ownership interest vests.

39. Plaintiffs therefore seek a declaratory judgment that:

(a) Defendant has no equity ownership interest in Cruise; or

(b) In the alternative, if the Court finds that Defendant has some equity

ownership interest in Cruise, then that equity interest is subject to Cruise’s vesting schedule

containing a one year cliff and that equity interest never vested.


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40. A judicial determination of the parties’ rights and obligations as alleged herein is

necessary because Defendant has frustrated Cruise’s acquisition by GM, and to remove potential

uncertainty with respect to ownership of the Company.

Second Cause of Action – Declaratory Judgment

(Partnership)




Defendant concerning their respective rights. Specifically, Defendant contends that he has a

partnership with Plaintiff Vogt in Cruise. Plaintiffs deny that any such partnership exists orexisted. Even if Defendant had a partnership with Plaintiff Vogt in Cruise (he does not), the

partnership was terminated when Defendant left the Company in November 2013.

43. Plaintiffs therefore seek a declaratory judgment that:

(a) No partnership exists between Cruise and Defendant; and

(b) No partnership exists between Plaintiff Vogt and Defendant.


necessary because Defendant has frustrated Cruise’s acquisition by GM, and to remove potential

uncertainty with respect to a partnership of the Company.

Third Cause of Action – Declaratory Judgment

(Intellectual Property)



46.

An actual controversy has arisen and now exists between the Plaintiffs and

Defendant concerning their respective rights. Specifically, Defendant contends that he has rights

to certain intellectual property and the autonomous self-driving technology of Cruise. Plaintiffs

deny any such allegation. Specifically, Defendant never contributed to or worked on any

technology or intellectual property of Cruise.


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47. Plaintiffs therefore seek a declaratory judgment that Defendant has no rights

whatsoever to the intellectual property and autonomous self-driving technology of Cruise.


necessary to remove potential uncertainty with respect to the intellectual property of the

Company.

Fourth Cause of Action – Declaratory Judgment

(Trade Secrets)




Defendant concerning their respective rights. Specifically, Plaintiffs maintain certain trade

secrets regarding their autonomous self-driving technology, and given Defendant’s recent

allegations, Plaintiffs have reason to be concerned that Defendant may attempt to use such trade

secrets in his future endeavors.

51. Plaintiffs therefore seek a declaratory judgment that Defendant has no right to

own, use, or disclose any trade secrets of Cruise.

52.

A judicial determination of the parties’ rights and obligations as alleged herein is

necessary to remove potential uncertainty with respect to the trade secrets of the Company.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for the following relief:

1. For a declaration that Defendant has no equity ownership interest in Cruise;

2. For a declaration that no partnership exists between Cruise and Defendant;

3. For a declaration that no partnership exists between Plaintiff Vogt and Defendant;

4. For a declaration that Defendant has no rights whatsoever to the intellectual

property of Cruise;

5.

For a declaration that Defendant has no right to own, use, or disclose any trade

secrets of Cruise;

6. For costs of suit herein incurred;


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7. For reasonable attorneys’ fees and costs as allowed by law;

8. For such other and further relief as the Court may deem proper.

Dated: April 8, 2016 ORRICK, HERRINGTON & SUTCLIFFE LLP

James N. Kramer

Attorneys for PlaintiffsCruise Automation, Inc. and Kyle Vogt

cruise v. guillory complaint

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