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Kantor v. Bigtip, Inc.

United States District Court, W.D. Washington

April 3, 2018

MICHAEL KANTOR, et al., Plaintiffs,
v.
BIGTIP, INC., et al., Defendants.

          ORDER ON DEMANDBASE, INC.'S MOTION FOR SUMMARY JUDGMENT

          HONORABLE MARSHA J. PECHMAN UNITED STATES SENIOR DISTRICT COURT JUDGE

         The above-entitled Court having received and reviewed:

1. Demandbase, Inc.'s Motion for Summary Judgment (Dkt. No. 139),
2. Plaintiffs' Opposition to Motion for Summary Judgment by Demandbase, Inc. (Dkt. No. 168),
3. Demandbase, Inc.'s Reply in Support of Its Motion for Summary Judgment (Dkt. No. 190),

         all attached declarations and exhibits, and relevant portions of the record, rules as follows:

         IT IS ORDERED that the motion is GRANTED; Plaintiffs' claims against Demandbase, Inc. are DISMISSED with prejudice.

         This case concerns derivative and individual claims filed by a group of investors against Defendant Matt Rowlen, the CEO/founder of the company Plaintiffs invested in (called BigTip, Inc.); BigTip, Inc. itself; the next company formed by Rowlen (called WhoToo, Inc.); and the company which bought WhoToo, Inc. (Demandbase, Inc.). Demandbase seeks summary judgment of dismissal of all claims against it with prejudice.

         Background

         Demandbase is a California-based corporation which “provides business-to-business marketing and advertising technology that allows businesses to identify other potential businesses to sell to, engage those businesses, and turn that engagement into sales activity.” (Dkt. No. 139, Motion at 2.)

         In August of 2015, Demandbase acquired WhoToo as a wholly-owned subsidiary in a deal structured as a “reverse triangular merger” - Demandbase formed an “acquisition subsidiary” which it called “WhoToo Merger Sub, Inc.” which then merged into WhoToo, which left Demandbase as the sole shareholder and parent company of WhoToo. Both companies were advised by independent legal counsel; the price of the acquisition is disputed (Demandbase says it was approximately $7, 430, 000 in cash and stock, Plaintiffs say the deal was worth $13 million), but is not a fact material to this motion.

         It is undisputed that Demandbase's acquisition of WhoToo occurred four years after Plaintiffs' investment in BigTip and three years after Plaintiffs allege that Rowlen wrongfully transferred BigTip assets to WhoToo. Demandbase claims that a search of the WhoToo files maintained by Demandbase revealed no “source code” or “platform” from BigTip; only some “small, open source utility programs” with “no marketable or operational value.” (Id. at 5-6; Dkt. No. 141, Hanson Decl. at ¶ 3.) Plaintiffs produced no evidence to the contrary.

         The company further alleges that the database which BigTip owned (the “Starnium database”) was assigned to Rowlen, but never transferred to WhoToo or Demandbase. (Dkt. No. 147, Rowlen Decl. at ¶ 36.) Plaintiffs point to testimony by Rowlen that “[t]he email database that I received for compensation, which then I gave to WhoToo… would have been part of that [transfer to Demandbase]… there wasn't anything carved out that they didn't want.” (Dkt. No. 176-2; Rowlen/WhoToo Depo, 51:1-53:12, 58:25-60:2.) Plaintiffs have moved to strike the ...


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