1 | John C. Hueston, State Bar No. 164921
jhueston@hueston.com ig SL 1
2| Robert Klieger, State Bar No. 192962 ;
rkieger@hueston.com
3 | Bric Hayden, State Bar No. 254107
chayden@huieston.com 7
4 | HUESTON HENNIGAN LLP
620 Newport Center Drive, Suite 1300
5 | Newport Beach, California 92660
Telephone: (949) 229-8640
6|Facsimile: (888) 775-0898
7 | Attomeys for Plaintif
Tesla Motors, Ine.
8
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
10 COUNTY OF SANTA CLARA
uN
12| TESLA MOTORS, INC., casero, 1602999 16
13 Plaintiff, COMPLAINT FOR:
14 vs. (1) VIOLATION OF CALIFORNIA
PENAL CODE § 528.5
15 @) UNLAWFUL, DECEPTIVE, AND
‘TODD A. KATZ, individually and in his UNFAIR BUSINESS ACTS AND
16 | capacity as Chief Financial Officer of QUEST PRACTICES IN VIOLATION OF
INTEGRITY GROUP, LLC; and DOES 1 CALIFORNIA BUSINESS &
17| through 10, inclusive, PROFESSIONS CODE § 17200
18 Defendants. DEMAND FOR JURY TRIAL
COMPLAINT
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Plaintiff Tesla Motors, Inc. (“Tesla”), for its Complaint against Todd A. Katz (“Katz”),
individually and in his capacity as Chief Financial Officer of Quest Integrity Group, LLC, and
Does | through 10, inclusive (the “Doe Defendants”), alleges as follows:
SUMMARY OF DISPUTE
1, On August 3, 2016, Defendant Katz, the Chief Financial Officer of a management
firm that is regularly engaged by some of the world’s largest oil and gas companies, impersonated
Tesla CEO Elon Musk in an email to Tesla’s CFO by which he sought to misappropriate highly
confidential and proprietary Tesla business information. On information and belief, Katz intended
to use that information in furtherance of his employer’s and its clients’ business and financial
interests. Tesla brings this action to recover the damages it suffered as a result of Katz’s criminal
misconduct and to enjoin Katz and his cohorts from engaging in such deplorable and unlawful
activities going forward.
PARTIES
2, Plaintiff’ Tesla Motors, Inc. is a publicly traded Delaware corporation with its
principal place of business in Palo Alto, California.
3. Defendant Todd A. Katz (“Katz”) is an individual who, on information and belief,
resides in Dublin, California,
4, The true names and capacities of the Doe Defendants named herein as Does 1
through 10, inclusive, whether individual, corporate, or otherwise, are currently unknown to Tesla,
which therefore sues such defendants by fictitious names pursuant to Code of Civil Procedure
section 474, Tesla is informed and believes, and based thereon alleges, that each of the fictitiously
named defendants
responsible in some manner for the occurrences alleged herein, and that the
damages as alleged herein were proximately caused by their conduct. Tesla will amend this
Complaint to identify the true names and capacities of each of the fictitiously named defendants
when such names and capacities have been determined.
BACKGROUND
5. Tesla designs, develops, manufactures, and sells high-performance fully electric
vehicles, advanced electric vehicle powertrain components, and stationary energy storage systems.
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COMPLAINT
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Tesla’s mission is to accelerate the world’s transition to sustainable energy, including by catalyzing
‘amass market for electric cars. As a leading force in the move to electric vehicles and sustainable
‘energy, Tesla has come under constant attack from the oil industry. In recent years, oil companies
have spent billions on legislative efforts and campaigns aimed at blocking progress toward electric
cars and other sustainable energy solutions in the United States and abroad.
6. Quest Integrity Group, LLC (“Quest Integrity”) is a subsidiary of Team, Ine.
(NYSE:TISI) that provides pipeline services and other management solutions for the oil and gas
industry. Quest Integrity’s clients include many of the world’s largest oil companies including BP,
Chevron, CITGO Petroleum, ConocoPhillips, ExxonMobil, Koch Pipeline Company, Occidental
Petroleum, Petrobras, Shell, Sinclair Oil, Sunoco, Tesoro, and Valero. Among other things, Quest
Integrity boasts that it has “improved operational planning and increased profitability for pipeline
operators around the world.”
7. Katzis Chief Financial Officer of Quest Integrity. Prior to joining Quest Integrity,
he spent nine years in the mergers and acquisitions groups at several leading Wall Street
investment banks, including Morgan Stanley and Merrill Lynch, Quest Integrity touts Katz’s
experience in the energy and technology industries, among others.
8. On August 3, 2016, Tesla released its financial results for the second quarter ended
June 30, 2016. ‘Tesla management hosted a live webcast that day to discuss the results and outlook.
During the webcast, Elon Musk and Jason Wheeler, Tesla’s CEO and CFO, respectively, fielded
questions on a variety of topics, including Tesla’s gross margin targets and expected deliveries for
the remainder of the fiscal year.
9. Later that same evening, Tesla CFO Jason Wheeler received an email purporting to
be from CEO Elon Musk. The email, which was sent from the email address
“clontesla@yahoo.com,” read:
why you so cautious w Q3/4 gm guidance on call?
also what are your thoughts on disclosing current M3 res #? Pros/cons from
ir pov?
what is ur best guess as to where we actually come in on q3/4 deliverables.
eo
‘COMPLAINT
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honest best guess? no bs.
thx 4 hard work prepping 4 today
em
10. Tesla CEO Elon Musk did not, in fact, author and send the above email. Rather, it
was sent by Katz, who was impersonating Musk in an attempt to unlawfully obtain material, non-
public information -- including Tesla’s financial trade secrets ~ from Tesla’s CFO through fraud,
artifice, and deception, On information and belief, Katz, Quest Integrity, and/or their oil company
clients intended to use that non-public and trade secret information to further their own agendas
and to harm Tesla,
11, On information and belief, Katz created the “clontesla@yahoo.com” email address
for the purpose of impersonating Tesla’s CEO, including in connection with the above email. Katz
replicated a similar email address that has been used by Musk.
12, As of now, Katz’s electronic impersonation of Musk in order to acquire material
non-public information described above is the only attempt known to Tesla, But Tesla is
concerned and has had to investigate whether there have been other attempts by Katz. successful
or otherwise ~ to obtain material non-public information from others via impersonation of Tesla
employees.
13, Asa result of Katz’s impersonation of Musk, Tesla -- a publicly traded company
responsible for ensuring the integrity of its non-public financial information, trade secrets, and data
~ has incurred costs, damages, and losses. Among other things, Tesla had to pay investigators and
expend IT and other resources to identify the source of the message, investigate other potential
impersonation attempts and efforts to gain access to the company’s servers, in order to ensure no
disclosures of non-public information had been made and to protect against future such attempts to
acquire non-public information through electronic impersonation and other improper and unlawful
means.
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‘COMPLAINT
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FIRST CLAIM FOR RELIEF
Violation of California Penal Code § 528.5,
14, Tesla realleges and incorporates by reference each of the foregoing paragraphs as
though fully set forth herein,
15, California Penal Code section 528.5 makes it a crime to knowingly and without
consent credibly impersonate another actual person by electronic means for purposes of harming,
intimidating, threatening, or defrauding another person, Subdivision (¢) of section 528.5 creates a
private right of action for a person who suffers damage or loss by reason of a violation of that
section.
16,” Katz. willfully violated section 528.5 by knowingly and without consent credibly
impersonating Tesla CEO Elon Musk for purposes of harming and/or defrauding Tesla and its
CFO, Jason Wheeler. Katz made this credible impersonation through electronic means, including
by means of opening an email account in Tesla CEO Elon Musk’s name.
17. On information and belief, each of the Doe Defendants aided and abetted Katz’s
violation of section 528.5, or advised or encouraged its commission, such that they are considered
principals in the criminal act pursuant to California Penal Code section 31.
18. Asa direct and proximate result of Katz’s and the Doe Defendants’ violations of
section 528.5, Tesla has suffered damage or loss in an amount to be proven at trial,
19, Through Katz’s and the Doe Defendants’ actions in violation of section $28.5, Katz
and the Doe Defendants are guilty of oppression, fraud, or malice as defined in subdivision (c) of
section 3294 of the California Civil Code, thus entitling Tesla to an award of punitive or exemplary
damages. Specifically, Katz’s impersonation of Tesla CEO Elon Musk and the proprietary, non-
public information Katz sought fraudulently to obtain through that impersonation constituted a
willful and conscious disregard of the rights of Tesla to protect its confidential, proprietary
information and trade secrets.
20. On information and belief, unless restrained and enjoined by this Court, Katz. and
the Doe Defendants will continue to engage in the unlawful actions alleged herein, thereby causing
inreparable harm to Tesla that cannot be fully compensated by damages. Tesla therefore has no
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COMPLAINT
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adequate remedy at law. Tesla is entitled to preliminary and permanent injunctive relief barring
Katz and the Doe Defendants from continuing to engage in their unlawful conduct.
SECOND CLAIM FOR RELIEF
Unlawful, Deceptive, and Unfair Business Acts and Practices in Violation of
California Business and Professions Code §§ 17200, et seq.
21. Tesla realleges and incorporates by reference each of the foregoing paragraphs as
though fully set forth herein,
22. The actions of Katz and the Doe Defendants as alleged herein constitute unlawful,
deceptive, and/or unfair business acts and practices within the meaning of California Business and
Professions Code sections 17200, et seq.
23. Katz and the Doe Defendants, by their actions alleged herein, directly committed,
aided and abetted, or advised and encouraged commission of the following unlawful, deceptive,
and/or unfair acts:
a. knowingly and without consent credibly impersonating Tesla CEO Elon
Musk by electronic means for purposes of harming and/or defrauding Tesla and its CFO,
Jason Wheeler (Cal. Penal Code § 528.5); and
b. knowingly attempting to obtain Tesla’s trade secrets by fraud, artifice, or
deception, with intent to convert those trade secrets to the economic benefit of Katz, his,
employer, or its clients, and intending or knowing that the offense would injure Tesla (Cal.
Penal Code § 499c), where those trade secrets are also related to products used or intended
for use in interstate or foreign commerce (8 U.S.C. § 1832).
24, Through the impersonation email, Katz attempted to steal and obtain proprietary
Tesla financial, business, and econot
information and plans that Tesla, as a publicly traded
company and sophisticated business, takes reasonable measures to keep secret. Tesla obtains
actual and potential independent economic value from those financial, business, and economic
information and plans not being generally known to and not being readily ascertainable through
proper means by another person who can obtain economic value from the disclosure or use of such
information,
Ss
COMPLAINT
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25. Pursuant to California Business and Professions Code section 17203, Tesla seeks an
injunction enjoining Katz and the Doe Defendants from engaging in further unlawful, deceptive,
and/or unfair business acts and practices directed at Tesla and its personnel, including Elon Musk.
PRAYER FOR RELIEF
WHEREFORE, Tesla respectfully prays for relief as follows:
A. For preliminary and permanent injunctive relief enjoining Katz and the Doe
Defendants, and all persons or entities acting in concert or participation therewith, from
impersonating Tesla executives or employees for purposes of harassing, intimidating, threatening,
or defrauding another person or engaging in other unlawful, deceptive, and/or unfair business acts
and practices in violation of California Penal Code section 528.5 and/or California Business and
Professions Code section 17200;
B. For compensatory damages in an amount to be proven at trial;
C. For punitive and exemplary damages;
D. For prejudgment interest according to law;
E, For forfeiture of any and all computers, computer systems, computer networks, or
software or data used in the commission of the violation of California Penal Code section 528.5;
F, For recovery of attorneys’ fees, costs, and expenses incurred in this action; and
G. For such other and further relief as the Court may deem just and proper.
Dated: September 14, 2016
‘C. Hueston
Attomeys for Plaintiff
Tesla Motors, Inc.
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COMPLAINT
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Plaintiff Tesla Motors, Inc. hereby demands a trial by jury of all issues so triable.
Dated: September 14, 2016
DEMAND FOR JURY TRIAL
JGhn C. Heston
Attorneys for Plaintiff
Tesla Motors, Inc.
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COMPLAINT