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Weride Corp. v. Kun Huang

United States District Court for the Northern District of California, San Jose Division

April 16, 2020, Decided; April 24, 2020, Filed

Case No. 5:18-cv-07233-EJD

Opinion

ORDER GRANTING MOTION FOR SANCTIONS; OVERRULING EVIDENTIARY OBJECTIONS; GRANTING ADMINISTRATIVE MOTION TO FILE SUPPLEMENTAL EXPERT DECLARATION

Re: Dkt. Nos. 330, 391, 431

Plaintiffs WeRide Corp. and WeRide Inc. (collectively "WeRide") have moved the Court to issue sanctions, through Federal Rule of Civil Procedure 37(b), Federal Rule of Civil Procedure 37(e), and the Court's inherent power against Defendants Jing Wang, Kun Huang, Zhong Zhi Xing Technology Co. Ltd. ("ZZX"), [*3]  and AllRide.AI, Inc. (collectively with ZZX, "AllRide"). WeRide brings the motion in response to Defendants' alleged spoliation of evidence. Having considered the Parties' papers and listened to their oral arguments, the Court grants the motion.1

I. Background

a. Factual Allegations

WeRide brings this suit against its former CEO, Wang; its former Head of Hardware Technology, Huang; Huang's LLC, ZKA; Wang and Huang's current company, AllRide; and AllRide's corporate alter-ego, Kaizr, Inc ("Kaizr"). Second Amended Complaint ("SAC") ¶ 1. Against all Defendants, WeRide brings claims for trade secret misappropriation under the Federal Defend Trade Secrets Act (18 U.S.C. § 1836) and California's Uniform Trade Secrets Act (Cal. Civ. Code §§ 3426 et seq.) arising out of the alleged misappropriation of WeRide's trade secret source code. SAC ¶¶ 137-48, 149-60. Based on Wang's alleged false and damaging statements to WeRide's investors and potential investors, WeRide brings claims against him for Defamation and Intentional Interference with Prospective Economic Advantage. Id. ¶¶ 161-73, 174-90. Based on those alleged defamatory statements, his alleged solicitation of WeRide employees to join AllRide, and his alleged use of WeRide's confidential [*4]  information, WeRide also brings claims against Wang for Breach of Contract and Intentional Interference with Contract. Id. ¶¶ 201-09, 219-29. Against Huang, WeRide bring claims for Breach of Fiduciary Duty and Duty of Loyalty, and Breach of Contract arising from his alleged theft of source code and other confidential material belonging to WeRide, and from his alleged solicitation of WeRide employees to join AllRide. Id. ¶¶ 191-200, 210-18. WeRide brings claims against AllRide and Kaizr for Actual Fraudulent Transfer (Cal. Civ. Code § 3439.04(a)(1)), Constructive Fraudulent Transfer (Cal. Civ. Code §§ 3439.04(a)(2) and 3439.05), and Common Law Fraudulent Conveyance stemming from AllRide's alleged fraudulent transfer of its business to Kaizr. SAC ¶¶ 230-41, 242-51, 252-60.

In January 2018, WeRide alleges, it removed Wang as CEO and that he then executed a separation agreement that included a non-disparagement provision. Id. ¶¶ 51-53. Huang was employed at WeRide at that time. See id. ¶ 75. Both Wang and Huang executed a confidentiality agreement that was required of all WeRide employees. See id. ¶¶ 43, 52, 84. WeRide alleges that Wang then founded AllRide to compete with WeRide, but he attempted to hide this conduct. Id. ¶¶ 56-59. Through the summer and [*5]  early fall of 2018, Wang allegedly began disparaging WeRide to actual and potential investors. Id. ¶¶ 60-73. WeRide alleges that his statements caused investors to withhold or delay tens of millions of dollars of funding. Id. ¶¶ 68-73.

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2020 U.S. Dist. LEXIS 72738 *

WERIDE CORP., et al., Plaintiffs, v. KUN HUANG, et al., Defendants.

Prior History: WeRide Corp. v. Kun Huang, 2019 U.S. Dist. LEXIS 22915 (N.D. Cal., Feb. 12, 2019)

CORE TERMS

AllRide, Huang, email, source code, spoliation, preliminary injunction, laptop, deleted, destroyed, sanctions, files, terminating sanctions, employees, Video, documents, logs, destruction, Capabilities, discovery, git, servers, contends, modified, recovered, alleges, factors, solicit, opined, weekly, saved