Removal to Federal CourtCal. Super. - 6th Dist.March 22, 202110 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 CV381 535 Santa Clara - Civil Leodis C. Matthews, SBN 109064 leodismatthews@zhonglun.com Sara J. O’Connell, SBN 238328 sarajoconnell@zhonglun.com ZHONG LUN LAW FIRM LLP 4322 Wilshire Boulevard Suite 200 Los Angeles, CA 90010 Telephone: (323) 930-5690 Facsimile: (323) 930-5693 Attorneysfor DefendantXPT Limited Electronically Filed by Superior Court of CA, County of Santa Clara, on 7/8/2021 12:04 PM Reviewed By: R. Nguyen Case #21 CV381 535 Envelope: 6804568 SUPERIOR COURT OF STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA STEVEN ATNEOSEN and AMER AKHTAR Plaintiffs, V. XPT, Inc., XPT Limited, NIO USA, Inc., NIO Inc., and DOES 1-20, inclusive, Defendants. Case N0. 21CV381535 DEFENDANT XPT LIMITED’S NOTICE OF FILING OF NOTICE OF REMOVAL COMPLAINT FILED: MARCH 22, 2021 TRIAL DATE: NOT SET TO THE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on July 7, 2021, Defendant XPT Limited removed this action t0 the United States District Court for the Northern District of California, San Jose Division, by filing a Notice ofRemoval in that Court. A copy 0f the original Notice 0fRemoval is attached hereto as Exhibit A. Accordingly, and pursuant t0 28 U.S.C. § 1446(d), this Court may proceed stay any further proceedings, unless and until the case is remanded. NOTICE OF REMOVAL R. Nguyen 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: July 7, 2021 By; «4? r. “m“! Leodis Matthews, SBN 109064 leodismatthews@zhonglun.com ZHONG LUN LAW FIRM LLP 4322 Wilshire Boulevard Suite 200 Los Angeles, CA 90010 Telephone: (323) 930-5690 Facsimile: (323) 930-5693 NOTICE OF REMOVAL EXHIBIT A 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 1 of 64 Leodis C. Matthews, SBN 109064 leodismatthews@zhonglun.com Sara J. O’Connell, SBN 238328 sarajoconnell@zhonglun.com ZHONG LUN LAW FIRM LLP 4322 Wilshire Boulevard Suite 200 Los Angeles, CA 90010 Telephone: (323) 930-5690 Facsimile: (323) 930-5693 AttorneysforXPT Limited UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION STEVEN ATNEOSEN and Case N0. 21-cv-5250 AMER AKHTAR Plaintiffs» DEFENDANT XPT LIMITED’S NOTICE 0F REMOVAL V. (Santa Clara County Superior Court, Case N0. 21CV381535) XPT, INC., XPT LIMITED, NIO USA, INC., NIO INC., AND DOES 1-20, INCLUSIVE (DIVERSITY JURISDICTION) Defendants. PLEASE TAKE NOTICE that Defendant XPT Limited hereby invokes this Court’s jurisdiction under 28 U.S.C. §§ 1332(a), 1441(a), and 1446 and remove the above-entitled action to this Court from the Superior Court 0f the State of California for the County of Santa Clara. BACKGROUND 1. On March 22, 2021, Plaintiffs Steven Atneosen and Amer Akhtar (“Plaintiffs”) filed a civil complaint (“Complaint”) against Defendants XPT, Inc., XPT Limited, NIO USA, NIO Inc., and DOES 1-2 (“Defendants”) in Santa Clara County Superior Court. See EX. 1 (Complaint in Steven Atneoson andAmer Akhtar v. XPT, Inc. et. al., Case No. 21CV381535). 2. Plaintiffs filed a Civil Case Cover Sheet 0n May 7, 2021. See EX. 2 (Civil Cover Sheet). NOTICE OF REMOVAL 1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 2 of 64 3. Plaintiffs served the Complaint and related documents 0n Defendant XPT Limited 0n June 7, 2021. See EX. 3 (Summons, ADR Sheet, Signed Acknowledgment). 4. Plaintiffs have not served the Complaint 0n any other Defendant. See Decl. Matthews at 114 . 5. Defendant XPT Limited is thus the first-served defendant in this case. 6. Pursuant t0 28 U.S.C. § 1446(a), a true and correct copy 0f all pleadings, processes, and orders served against Defendant XPT Limited has been filed with this notice. See Exs. 1-3. 7. In accordance With 28 U.S.C. § 1446(d), the undersigned counsel certifies that Defendant shall promptly serve Plaintiffs a copy of this Notice of Removal and all supporting papers and file the same With the Clerk of the Santa Clara County Superior Court, fulfilling all procedural requirements under 28 U.S.C. § 1446. TIMELINESS OF REMOVAL 8. A defendant must generally file a notice of removal within thirty days of service 0f a civil complaint. 28 U.S.C. § 1446(b)(1). 9. Plaintiffs served the Complaint on Defendant 0n June 7, 2021. See EXS. 1, 3. 10. Thirty days after June 7, 2021 is July 7, 2021. See Decl. Matthews at 1] 3. 11. This notice is submitted on July 7, 2021, and is timely under 28 U.S.C. § 1446(b). JOINDER OF ALL DEFENDANTS 12. Upon information and belief, no Defendant other than Defendant XPT Limited has been served. See 1] 4, supra. For this reason, no Defendant other than Defendant XPT Limited must provide consent to removal. See Vargas v. Riley, N0. 18-cv-00567-JST, at *2 (N.D. Cal. May 17, 2018) citing 28 U.S.C. § 1446(b)(2)(A) (“When a civil action is removed solely under section 144 1 (a), all defendants Who have been properly joined and served must join in or consent to the removal of the action”) (emphasis added). 13. Defendants XPT Inc. and NIO USA, Inc. are fraudulently joined parties, and their consent t0 removal is unnecessary on this basis as well. See United Computer Sys. Inc. v. AT&T Corp, 298 F.3d 756, 762-63 (9th Cir. 2002) (“Although the usual rule is that all defendants in an NOTICE OF REMOVAL 2 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 3 of 64 action in a state court must join in a petition for removal. . . the "rule of unanimity" does not apply to . . . unknown or fraudulently joined parties”); see also Emrich v. Touche Ross C0,, 846 F.2d 1190, 1193 n.1 (9th Cir. 1988) (“Ordinarily, under 28 U.S.C. § 1446(a), all defendants in a state action must join in the petition for removal, except for nominal, unknown orfraudulently joined parties.”) (emphasis added). 14. Defendant Does 1-20 have not been identified, thus they are “unknown” parties, and their consent to removal is unnecessary 0n this basis. See Vargas, N0. 18-cv-00567-JST, at *3-4 (“All parties must consent to removal except ‘for nominal, unknown or fraudulently joined parties’. . . . The exception for ‘unknown’ parties includes a party that has not been served at the time of removal.”) (emphasis added). 15. Moreover, upon information and belief, Defendant Does 1- 20 have not been served, and need not consent to removal for this reason. See Vargas v. Riley, No. 18-CV-00567- JST, at *2 (ND. Cal. May 17, 2018) citing 28 U.S.C. § 1446(b)(2)(A). PRELIMINARY STATEMENT OF JURISDICTION, VENUE, AND DIVISION 16. Federal “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum 0r value of $75,000” and is between “citizens 0f different States[.]” 28 U.S.C. § 1332(a), (a)(l). This Court has original jurisdiction over this action under 28 U.S.C. § 1332 because, as is discussed in more detail below, the matter in controversy in this case exceeds $75,000.00 and this case is between citizens of different states. 17. Any “civil action brought in a State court ofWhich the district courts ofthe United States have original jurisdiction . . . may be removed by the defendant . . . to the district court 0f the United States for the district and division embracing the place Where such action is pending.” 28 U.S.C. § 1441(a). As discussed above, Plaintiff filed the Complaint in Santa Clara County Superior Court. The United States District Court for the Northern District of California is the proper venue for this removal as this district “embrac[es] the place where” the action is pending. 28 U.S.C. § 1441(a). NOTICE OF REMOVAL 3 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 4 of 64 18. A11 “civil actions which arise in the count[y] of Santa Clara. . .shall be assigned to the San Jose Division” 0f the United States District Court for the Northern District of California. N.D. Cal. Civil Local Rule 3-2(e). Removal 0f this action to the San Jose Division is proper as this matter arose in the county 0f Santa Clara. DIVERSITY JURISDICTION 19. Again, federal “district courts shall have original jurisdiction over all civil actions where the matter in controversy exceeds the sum or value 0f $75,000.00. . .and is between...citizens 0f different states.” 28 U.S.C. § 1332(a). Diversity jurisdiction exists When there is diversity of citizenship between every plaintiff and every defendant at the time the plaintiff files a lawsuit. Morris v. Princess Cruises, Ina, 236 F.3d 1061, 1067 (9th Cir. 2001) citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996) (“Section 1332 requires complete diversity 0f citizenship; each 0f the plaintiffs must be a citizen 0f a different state than each of the defendants”). The “sum claimed” in a complaint “controls if the claim is apparently made in good faith.” See Me. Cmty. Health Options v. Albertsons Cos., N0. 20-3593 1 , at *4 (9th Cir. Mar. 31, 2021. 20. Here, the value 0f the matter in controversy is at least $2,000,000.00, and thus exceeds the threshold $75,000.00. See Ex. 1 at 1] 23 (Complaint) (“As a result of the early termination of the agreements Without cause, [Plaintiffs] are each owed well over a million dollars.”). 21. A plaintiff is a citizen 0f a state “for diversity purposes” if he is “a citizen of the United States and. . .domiciled in the state.” Kantor v. Wellesley Galleries, Ltd., 704 F.2d 1088, 1090 (9th Cir. 1983). Diversity is determined as of the time the complaint was filed and at time the removal petition was filed. See Sellers v. Kohlberg C0., LLC, N0. C 01-01365 WHA, at *1 (N.D. Cal. June 29, 2001), citing 28 U.S.C. § 1332(a), 1441(a)-(b). “A party’s allegation 0f minimal diversity may be based on “information and belief.” See Ehrmcm v. Cox Commc ’ns, Ina, 932 F.3d 1223, 1227 (9th Cir. 2019) Citing Carolina Cas. Ins. C0. v. Team Equip, Ina, 741 F.3d 1082, 1087 (9th Cir. 2014). The pleading "need not contain evidentiary submissions." Id. (citations omitted). NOTICE OF REMOVAL 4 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 5 of 64 22. Plaintiffs’ complaint states Plaintiff Steven Atneosen is a natural person “residing in Minneapolis, Minnesota.” See EX. 1 at 1] 5 (Complaint). Upon information and belief, Plaintiff Atneosen is domiciled in Minnesota and is a citizen 0f Minnesota for diversity purposes. 23. Plaintiffs’ complaint states PlaintiffAmer Akhtar is a natural person “residing in Los Altos Hills, California.” See Ex. 1 at 1] 6 (Complaint). Upon information and belief, Plaintiff Akhtar is domiciled in California and is a citizen 0f California for diversity purposes. 24. A corporation “shall be deemed t0 be a citizen of every State and foreign state by Which it has been incorporated and of the State 0r foreign state Where it has its principal place 0f business. . . .” 28 U.S.C. § 1332(c)(1). A corporation’s principal place of business is where its “high level officers direct, control, and coordinate the corporation’s activities.” Hertz v. Friend, 130 S. Ct. 1181, 1186 (2010). 25. Plaintiffs’ complaint states Defendant NIO Inc. “is a company organized and existing pursuant t0 the laws of China, headquartered in Shanghai, China.” See Ex. 1 at 11 9 (Complaint). 26. Plaintiff is incorrect. In fact, NIO Inc. was incorporated under the laws of the Cayman Islands. See EX. 4 at 1, 47 (Excerpts from NIO Inc.’s Form 20-F Annual Report filed With the U.S. Securities and Exchange Commission for the fiscal year ended December 3 1 , 2020, available at: https://Www.sec.gov/Archives/edgar/data/O001736541/000110465921046834/nio- 20201231X20f.htm) (“We are a holding company incorporated under the laws of the Cayman Islands. . . .”). The address of NIO Inc.’s principal executive offices is Building 20, No. 56 AnTuo Road, Anting Town, Jiading District Shanghai 201804, People’s Republic 0f China. Id. at 1. Accordingly, NIO Inc. is a citizen 0f the Cayman Islands and China for diversity purposes. 27. Plaintiffs’ complaint fails to offer any information as t0 the place of incorporation 0r principal place 0f business 0f Defendant XPT Limited. See EX. 1 (Complaint). 28. XPT Limited was incorporated in Hong Kong. See EX. 4 at F-l 1. Accordingly, XPT Limited is a citizen of Hong Kong for diversity purposes. NOTICE OF REMOVAL 5 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 6 of 64 29. Plaintiffs’ complaint states Defendant XPT, Inc. “is a company organized and existing pursuant to the laws 0f the State of Delaware, having its principal place of business in San Jose, California.” See EX. 1 at fl 7 (Complaint). 30. Plaintiff is partially correct. XPT Inc. was organized in Delaware. 31. However, Plaintiffs are also partially incorrect. XPT, Inc. does not have a principal place of business in California. XPT, Inc. dissolved its corporate status in California on December 14, 2020. See EX. 5 (Certificate 0f Surrender of XPT Inc., Filing Number D1601627, Filing Date 12/14/2020) (“The corporation hereby surrenders its rights and authority to transact business in the State of Ca1if0rnia.”). By the time Plaintiffs’ Complaint was filed on March 22, 2021, XPT, Inc. was no longer an active California corporation, n0 longer had offices in California, and did n0 business in California. See Homestake Lead C0. ofMo. v. Doe Run Res. Corp, 282 F. Supp. 2d 113 1, 1136-37 (N.D. Cal. 2003) (holding that the place of a corporation's last transactions is relevant t0 the citizenship inquiry, but as a matter 0f law there can be no principal place ofbusiness citizenship after a substantial period of inactivity). Accordingly, XPT Inc. is a citizen 0f Delaware only. 32. Plaintiffs” complaint states Defendant NIO USA, Inc. “is a company organized and existing pursuant to the laws of the State of California, having its principal place ofbusiness in San Jose, California.” See EX. 1 at 1] 10 (Complaint). This is correct. See EX. 4 at F-ll (NIO Inc.’s Form 20-F Annual Report). Accordingly, NIO USA, Inc. is a citizen of California for diversity purposes. 33. Plaintiffs’ complaint fails to offer any information as t0 the place of incorporation 0r principal place 0f business of Defendant Does 1 through 20. See EX. 1 (Complaint). 34. Defendant Does 1 through 20 are completely fictitious, as the Complaint offers no information about them and the charges against them are so general as to give n0 clue of their identity or relationship t0 the action. See Chism v. National Heritage Life Ins. Ca, 637 F.2d 1328, 1330 (9th Cir. 1981). “Fictional defendants [do] not destroy diversity and [do] not divest the district court 0f jurisdiction.” See Gardiner Family, LLC v. Crimson Resource Management Corp, 147 F. Supp. 3d 1029, 1035 (E.D. Cal. 2015). Defendant Does 1 through 20 thus d0 not destroy diversity. NOTICE OF REMOVAL 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 7 of 64 35. Because Plaintiff Akhtar is a citizen 0f California for diversity purposes, as is Defendant NIO USA, Inc., initially it may seem there is not complete diversity between Plaintiffs and Defendants. However, as is further discussed below, Plaintiffs fraudulently joined Defendants XPT Inc. and NIO USA, Inc. in this lawsuit. 36. In determining Whether there is complete diversity, district courts may disregard the citizenship of a non-diverse defendant Who has been fraudulently joined. See Grancare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 2018), citing Chesapeake & Ohio Ry. C0. v. Cockrell, 232 U.S. 146, 152, (1914). Thus, the existence of Defendants Doe in this case does not deprive this Court 0f diversity jurisdiction. 37. Pursuant t0 28 U.S.C. §1332(c), Plaintiffs and the real Defendants NIO Inc. and XPT Limited had diverse citizenship at the time the complaint was filed in state court, and at the time of the instant removal petition. Accordingly, there is complete diversity between every Plaintiff and real Defendants NIO Inc. and XPT Limited. FRAUDULENT JOINDER OF DEFENDANTS XPT INC. AND NIO USA, INC. 38. A non-diverse defendant named in a state court action is disregarded for diversity jurisdiction purposes if the Court determines that the defendant’s joinder is a “sham” 0r “fraudulent” in that no valid cause 0f action has been stated against that defendant. Morris v. Princess Cruises, Ina, 236 F.3d 1061, 1067 (9th Cir. 2001). 39. “Fraudulent joinder is established . . . if a defendant shows that an “individual joined in the action cannot be liable on any theory.” See Grancare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 2018), citing Ritchey v. Upjohn Drug C0., 139 F.3d 1313, 1318 (9th Cir. 1998); see also United Comput. Sys. Inc. v. AT&T Corp, 298 F.3d 756, 761 (9th Cir. 2002) (plaintiffs claims against alleged sham defendant were predicated 0n a contract t0 Which the defendant was not a party); Kruso v. Int’l Tel. & Tel. Corp, 872 F.2d 1416, 1426-27 (9th Cir. 1989) (same). 40. Here, Plaintiff alleged causes of action against XPT Inc. and NIO USA, Inc. for: (1) Breach 0f Contract; (2) Breach of the Covenant of Good Faith and Fair; (3) Failure t0 Pay Wages in Violation of California Labor Code § 200 et. seq.; (4) Failure to Pay Wages at Time of Termination in Violation of Labor Code § 201 et. seq.; (5) Discrimination on the Basis of NOTICE OF REMOVAL 7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 8 of 64 Race and National Origin in Violation of Government Code § 12940(a); (6) Failure to Prevent Discrimination in Violation of Government Code § 12940(k); (7) Retaliation in Violation of Government Code § 12940(h); (8) Wrongful Termination in Violation 0fPublic Policy (FEHA); (9) Violation of the Unruh Civil Rights Act - California Civil Code §§ 51 and 52 et. seq.; and (1 0) Violation ofUnfair Competition Law - California Business and Professions Code §§ 17200 et. seq. See Ex. 1 at 1] 1] 29-104 (Complaint). 41. Plaintiffs fraudulently joined XPT Inc. and NIO USA, Inc., as there is n0 possibility that Plaintiffs will be able to establish any 0f the ten causes of action asserted against these sham Defendants: A. First Cause of Action: Breach 0f Contract 42. Plaintiffs allege Defendants XPT Inc. and NIO USA, Inc. breached Consultancy Agreements by terminating Plaintiffs’ employment before the end of their term. See EX. 1 atW 30-32 (Complaint). 43. T0 establish a breach of contract against Defendants XPT Inc. and NIO USA, Inc., Plaintiffs must prove, among other things, that each entered into a contract With Defendants XPT Inc. and NIO USA, Inc., See Judicial Council 0f California Civil Jury Instructions (2021 edition) CACI N0. 303 (Breach of Contract-Essential Factual Elements) (“To recover damages from [name of defendant] for breach of contract, [name of plaintiff] must prove all of the following: 1. That [name 0f plaintiff] and [name of defendant] entered into a contract . . . .”) 44. Here, Plaintiffs base this claim only 0n the Plaintiffs’ consultancy agreements With Defendant XPT Limited: On June 1, 2018, Plaintiffs and Defendant XPT Limited entered into written Consultancy Agreements defining the terms 0f Plaintiffs’ compensation, Which they both approved by signing their respective agreement. See EX. 1 at 1] 30 (Complaint) (emphasis added). 45. Plaintiffs d0 not allege that they signed a consultancy agreement or contract With Defendants XPT Inc. 0r NIO USA, Inc., 0r with any Defendant other than XPT Limited. NOTICE OF REMOVAL 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 9 of 64 46. Moreover, in California, a complaint or cross-complaint must contain “[a] statement 0f the facts constituting the cause of action, in ordinary and concise language.” See Cal. CiV. Proc. Code § 425.10, subd. (a)(l) (emphasis added). 47. Here, Plaintiffs do not plead anyfact supporting a claim that they entered into a consultancy agreement, or contract With Defendants XPT Inc. 0r NIO USA, Inc., or any Defendant other than XPT Limited. Instead, Plaintiffs offer only the following blanket assertions: Plaintiffs are informed and believe, and thereon allege, that all of the Defendants were joint employers of the Plaintiffs and that each of the Defendants was, at all times herein mentioned, the agent, employee, partner and/or representative 0f one 0r more 0f the remaining Defendants and was acting Within the course and scope 0f such relationship. Plaintiffs are further informed and believe that each of the Defendants herein gave consent t0, ratified, and authorized the acts alleged herein t0 each 0f the remaining Defendants. See EX. 1 at fl 12 (Complaint). Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. See EX. 1 at fl 36 (Complaint: First Cause 0f Action for Breach 0f Contract). 48. Neither Defendant XPT Inc. nor NIO USA, Inc. have entered into any consultancy agreement 0r contract With Plaintiffs. 49. Under no legal theory are Defendants XPT Inc. or NIO USA, Inc. liable for contracts entered into by XPT Limited. 50. For example, “[c]ontr01 is the key characteristic 0f the agent/principal relationship.” Sonora Diamond Corp. v. Superior Court, 83 Cal.App.4th 523, 541 (Cal. Ct. App. 2000). Only Where a parent corporation exercises such a degree of control over its subsidiary corporation that the subsidiary can legitimately be described as only a means through which the parent acts, or nothing more than an incorporated department of the parent, the subsidiary Will be deemed t0 be the agent 0f the parent in the forum state and jurisdiction Will extend to the parent. . . . The parent's general executive control over the subsidiary is not enough; rather there must be a strong showing beyond simply facts evidencing “the broad oversight typically indicated by [the] common ownership and common directorship” present in a normal parent - subsidiary relationship. . . . As a practical matter, the parent must be shown t0 have NOTICE OF REMOVAL 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 10 of 64 moved beyond the establishment of general policy and direction for the subsidiary and in effect taken over performance 0f the subsidiary's day to day operations in carrying out that policy. See Sonora Diamond Corp. at 541-42. 51. Here, neither XPT Inc. nor NIO USA, Inc. are alleged t0 be parents or holding companies for XPT Limited, or to have any ownership interest in XPT Limited, 0r Vice versa. 52. Nor have Plaintiffs alleged or pleaded facts t0 show that XPT Inc. or NIO USA, Inc. controls XPT Limited in any way (or Vice versa). 53. Nor have Plaintiffs alleged or pleaded facts to show that XPT Inc., NIO USA, Inc. or XPT Limited share executive leadership. 54. Under these circumstances, no agency relationship theory is possible. 55. Also, as an example, “[g]enerally, alter ego liability is reserved for the parent- subsidiary relationship.” Las Palmas Associates v. Las Palmas Center Associates, 235 Cal.App.3d 1220, 1249 (Cal. Ct. App. 1991). There are two general requirements to determine when an alter ego theory may be pursued: “(1) that there be such unity 0f interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result Will follow.” Mesler v. Bragg Management C0., 39 Ca1.3d 290, 300 (Cal. 1985) (emphasis added). 56. Here, Plaintiffs have not alleged nor pleaded facts to show that there is a unity of interest or ownership between any combination ofXPT Limited, XPT Inc. or NIO USA, Inc., such that an alter ego relationship may be invoked. 57. Under these circumstances, no alter ego liability theory is possible. 58. This first cause 0f action must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs cannot prove the essential element 0f the claim that they entered into contracts With these Defendants. See United Computer Sys. Ina, 298 F.3d at 761 (finding fraudulent joinder where defendant "is not a party to any relevant contract on which plaintiff could predicate a claim against her”). B. Second Cause 0f Action: Breach 0f the Covenant 0f Good Faith and Fair Dealing NOTICE OF REMOVAL 10 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 11 of 64 59. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 60. Plaintiffs allege “Plaintiffs’ Consultancy Agreements contained an implied-in- law covenant 0f good faith and fair dealing” and Defendants XPT Inc. and NIO USA, Inc. “breached the implied covenant When they took actions t0 prevent Plaintiffs from earning their fill] compensation during the full term 0f the agreements.” See Ex. 1 at 1H] 38-40 (Complaint). 61. T0 establish a breach 0f the implied covenant 0f good faith and fair dealing against Defendants XPT Inc. and NIO USA, Inc., Plaintiffs must prove, among other things, that each entered into a contract with Defendants XPT Inc. and NIO USA, Inc. See Judicial Council 0f California Civil Jury Instructions (2021 edition) CACI No. 325 (Breach of Implied Covenant 0f Good Faith and Fair Dealing- Essential Factual Elements) (“To establish this claim, [name of plaintiff] must prove all of the following: 1. That [name 0f plaintiff] and [name 0f defendant] entered into a contract . . . .”) See also Hewlett-Packam’ C0. v. Oracle Corp, H044371, at *56 (Cal. Ct. App. June 14, 2021) citing Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 3 17, 349 (“The covenant of good faith and fair dealing, implied by law in every contract, exists merely t0 prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made.”) (emphasis added) 62. Plaintiffs claim Plaintiffs’ Consultancy Agreements contained an implied-in-law covenant 0f good faith and fair dealing that neither party would do anything to injure the right 01‘ the other party to enjoy the actual benefits 0fthose contracts. See EX. 1 at 1] 38 (Complaint: Second Cause of Action for Breach 0f Good Faith). 63. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a Consultancy Agreement nor any other contract With Defendants XPT Inc. or NIO USA, Inc., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available to them by Which the Consultancy Agreements signed With XPT Limited could be construed as agreements with Defendants XPT Inc. 0r NIO USA, Inc. Plaintiffs d0 not allege that they entered into a contract with any defendant other than XPT Limited, nor d0 Plaintiffs plead any fact supporting a claim that they entered into a contract with any Defendant other than XPT Limited. NOTICE OF REMOVAL 1 1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 12 of 64 64. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs have not alleged, and cannot prove the essential element of the claim that they entered into contracts, nor have they plead any facts which would identify XPT Inc and NIO USA as their employer. C. Third Cause 0fAction: Failure t0 Pay Wages in Violation of California Labor Code, § 200 et. seq. 65. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 66. Plaintiffs allege “Plaintiffs signed Consultancy Agreements on June 1, 2018 . . . Plaintiffs performed all 0f the duties and obligations required ofthem by Defendants during their employment, including those duties and obligations that would entitle Plaintiffs to receive the wages described in the Consultancy Agreements . . . . Defendants have refused to pay Plaintiffs these wages. Defendants’ failure to pay Plaintiffs violates the California Labor Code. See, e.g., Lab. Code, § 200; id. § 204 (wages due in month earned); id. § 216 (refusal t0 make payment)” See EX. 1 at 1H] 46-49 (Complaint) (emphasis added). 67. T0 prove a Violation 0f Cal. Lab. Code for nonpayment of wages against Defendants XPT Inc. and NIO USA, Inc., Plaintiffs must prove, among other things, that they were not paid wages due t0 them for labor performed “under contract, subcontract, partnership, station plan, or other agreement.” See Cal. Lab. Code § 200(b) ("lab0r" includes “labor, work, or service Whether rendered 0r performed under contract, subcontract, partnership, station plan, or other agreement”) (emphasis added); see also Judicial Council of California Civil Jury Instructions (2021 edition) CACI N0. 2700 (Nonpayment 0f Wages - Essential Factual Elements) (“[Name 0f plaintiff] claims that [name of defendant] owes [him/her/nonbinary pronoun] unpaid wages. T0 establish this claim, [name of plaintiff] must prove all of the following: 1. That [name of plaintiff] performed workfor [name ofdefendant]; 2. That [name 0f defendant] owes [name 0f plaintiff] wages under the terms 0f the employment . . . .”) (emphasis added). NOTICE OF REMOVAL 12 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 13 of 64 68. Here, Plaintiffs allege that they “performed all 0f the duties and obligations required 0fthem by Defendants during their employment, including those duties and obligations that would entitle Plaintiffs to receive the wages described in the Consultancy Agreements.” See EX. 1 at 1] 47 (Complaint: Third Cause of Action for Failure t0 Pay Wages). 69. Again, Plaintiffs base this claim entirely 0n the Consultancy Agreements that they signed With XPT Limited. 70. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a consultancy agreement or any other contract with Defendants XPT Inc. or NIO USA, Inc., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available to them by which the consultancy agreements signed With XPT Limited could be construed as agreements With Defendants XPT Inc. or NIO USA, Inc. Plaintiffs d0 not allege that they signed a contract With any defendant other than XPT Limited, nor do Plaintiffs plead any fact supporting a claim that they entered into a contract with any Defendant other than XPT Limited. 71. Plaintiffs do not allege nor plead any fact showing that Defendants XPT Inc. 0r NIO USA, Inc. are joint employers With XPT Limited. For example, Plaintiffs d0 not allege nor plead any fact showing that Defendants XPT Inc. or NIO USA, Inc. controlled the terms or conditions 0f Plaintiffs’ employment by XPT Limited, 0r that Plaintiffs performed work for Defendants XPT Inc. or NIO USA, Inc. Plaintiffs d0 not allege nor plead any fact showing that any Defendant other than XPT Limited paid the salary 0r Social Security taxes ofXPT Limited’s employees and consultants; had the authority t0 hire, transfer, promote, discipline or discharge XPT Limited’s employees and consultants; had the authority to establish work schedules and assignments 0r determine the amount of compensation earned by XPT Limited’s employees and consultants; 0r had control over XPT Limited’s employees’ and consultants’ access t0 employment opportunities. 72. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs have not alleged, cannot prove the essential element 0f the claim that they performed labor under contract, subcontract, partnership, station plan, or other agreement with these Defendants. NOTICE OF REMOVAL 13 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 14 of 64 D. Fourth Cause of Action: Failure to Pay Wages at Time of Termination in Violation of Labor Code § 201 73. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 74. Plaintiffs allege “Plaintiffs signed Consultancy Agreements on June 1, 2018 . . . Labor Code section 201 requires employers t0 immediately pay their employee’s wages upon termination. . . . At the time 0f Plaintiffs’ terminations, Defendants knowingly and willfully failed to pay then all of the wages they had earned that were due at the time 0f their termination as provided by the Consultancy Agreements.)” See EX. 1 at W 53-55 (Complaint) (emphasis added). 75. T0 prove a Violation of Cal. Lab. Code § 201 against Defendants XPT Inc. and NIO USA, Inc, Plaintiffs must prove, among other things, that they were not paid wages due t0 them for labor performed “under contract, subcontract, partnership, station plan, 0r other agreement” With those Defendants. See Cal. Lab. Code § 201 (a) (“If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately”); see also Cal. Lab. Code § 200(a) ("Wages” includes all amounts for labor performed by employees of every description”) (emphasis added); Cal. Lab. Code § 200(b) ("Labor" includes labor, work, or service whether rendered or performed under contract, subcontract, partnership, station plan, 0r other agreement”). 76. Here, Plaintiffs allege that “[a]t the time 0f Plaintiffs’ terminations, Defendants knowingly and willfully failed to pay then all of the wages they had earned that were due at the time of their termination as provided by the Consultancy Agreements . . . .” See EX. 1 at 11 55 (Complaint: Fourth Cause ofAction for Failure to Pay Wages at Time ofTermination) (emphasis added). 77. Again, Plaintiffs base this claim entirely on the Consultancy Agreements that they signed With XPT Limited. 78. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a Consultancy Agreement or any other contract with Defendants XPT Inc. or NIO NOTICE 0F REMOVAL 14 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 15 of 64 USA, Inc., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available to them by which the consultancy agreements signed With XPT Limited could be construed as agreements With Defendants XPT Inc. 0r NIO USA, Inc. Plaintiffs d0 not allege that they entered into a contract With any defendant other than XPT Limited, nor do Plaintiffs plead any fact supporting a claim that they entered into a contract With any Defendant other than XPT Limited. 79. As has been explained in Section C, supra, Plaintiffs d0 not allege facts and cannot show that Defendants XPT Inc. or NIO USA, Inc. are joint employers With XPT Limited. For example, Plaintiffs do not allege nor plead any fact showing that Defendants XPT Inc. 0r NIO USA, Inc. controlled the terms or conditions of Plaintiffs’ employment by XPT Limited, nor do Plaintiffs plead any fact showing that they labored or performed work for Defendants XPT Inc. 0r NIO USA, Inc. 80. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs have not alleged, and cannot prove the essential element 0f the claim that they performed labor under contract, subcontract, partnership, station plan, 0r other agreement With these Defendants. E. Fifth Cause 0f Action: Discrimination 0n the Basis 0f Race and National Origin in Violation of Government Code § 12940(a) 81. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 82. To prove a Violation of California Government Code § 12940(a) against Defendants XPT Inc. and NIO USA, Inc, Plaintiffs must prove, among other things, that these Defendants were the Plaintiffs’ “employer”: It is an unlawfill employment practice, unless based upon a bona fide occupational qualification, 0r, except where based upon applicable security regulations established by the United States 0r the State of California: (a) For an employer, because of the race . . . to refuse t0 hire 0r employ the person . . . 0r to bar or t0 discharge the person from employment . . . or to discriminate against the person in compensation 0r in terms, conditions, 0r privileges of employment. NOTICE OF REMOVAL 1 5 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 16 of 64 See Cal. Gov. Code § 12940(a); see also Judicial Council of California Civil Jury Instructions (2021 edition) CACI No. 2502 (Disparate Impact- Essential Factual Elements, GOV. Code § 12940(a)) (“T0 establish this claim, [name of plaintiff] must prove all 0f the following: 1. That [name of defendant] was [an employer/[other covered entity]]; 2. That [name ofplaintiff] [was an employee oflname 0f defendant]/applied t0 [name of defendant] for a job/[other covered relationship t0 defendant] . . . “). 83. Here, Plaintiffs base this claim 0n the allegation that “Plaintiffs signed Consultancy Agreements on June 1, 2018. . . thus they effectively remained employees of the company and Plaintiffs are protected by FEHA, Gov. Code, sections 12940, et seq.” See EX. 1 at 1] 62 (Complaint: Fifth Cause of Action for Discrimination in Violation 0f Government Code § 12940(a)) (emphasis added). 84. Again, Plaintiffs base this claim entirely on the Consultancy Agreements that they signed With XPT Limited. 85. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a Consultancy Agreement or any other contract With Defendants XPT Inc. or NIO USA, Inc., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available to them by Which the consultancy agreements signed with XPT Limited could be construed as agreements With Defendants XPT Inc. or NIO USA, Inc. Plaintiffs d0 not allege that they signed a contract With any defendant other than XPT Limited, nor do Plaintiffs plead any fact supporting a claim that they entered into a contract with any Defendant other than XPT Limited. 86. As has been explained in Section C, supra, Plaintiffs d0 not allege facts and cannot show that Defendants XPT Inc. 0r NIO USA, Inc. are joint employers with XPT Limited. For example, Plaintiffs do not allege nor plead any fact showing that Defendants XPT Inc. 0r NIO USA, Inc. controlled the terms 0r conditions of Plaintiffs” employment by XPT Limited, nor d0 Plaintiffs plead any fact showing that they labored or performed work for Defendants XPT Inc. or NIO USA, Inc. NOTICE OF REMOVAL 16 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 17 of 64 87. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs have not alleged, and cannot prove the essential element of the claim that these 7“Defendants were their “employers,” or that they were these Defendants employees.” F. Sixth Cause 0f Action: Failure t0 Prevent Discrimination in Violation 0f Government Code § 12940(k) 88. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 89. T0 prove a Violation of Cal. Government Code § 12940(k) against Defendants XPT Inc. and NIO USA, Inc, Plaintiffs must prove, among other things, that these Defendants 3“were the Plaintiffs employer”: It is an unlawful employment practice, unless based upon a bona fide occupational qualification, 0r, except Where based upon applicable security regulations established by the United States 0r the State of California: (k) For an employer, labor organization, employment agency, apprenticeship training program, 0r any training program leading t0 employment, to fail to take all reasonable steps necessary t0 prevent discrimination and harassment from occurring. See Cal. GOV. Code § 129409(k) (emphasis added); see also Judicial Council of California Civil Jury Instructions (2021 edition) CACI No. 2527 (Failure to Prevent Discrimination- Essential Factual Elements - Employer 0r Entity Defendant, Gov. Code § 12940(k) (“To establish this claim, [name of plaintiff] must prove all 0f the following: 1. That [name ofplaintiff] [was an employee 0f [name 0f defendant]/ applied to [name of defendant] for a job/was a person providing services under a contract with [name 0f defendant]] . . . .”) (emphasis added). 90. Here, Plaintiffs base this claim 0n the allegation that “Plaintiffs signed Consultancy Agreements 0n June 1, 2018. . . thus they effectively remained employees 0f the company and Plaintiffs are protected by FEHA, GOV. Code, sections 12940, et seq.” See EX. 1 at 1] 71 (Complaint: Sixth Cause 0f Action for Discrimination in Violation of Government Code § 12940(k)) (emphasis added). 9 1. Plaintiffs thus appear to be proceeding under the theory that Defendants XPT Inc. 9“and NIO USA, Inc. are “employers” and they are the Defendants employees” under the statute, NOTICE OF REMOVAL 17 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 18 of 64 rather than any theory that the Defendants are a “labor organization, employment agency, apprenticeship training program, 0r any training program leading t0 employment.” 92. Again, Plaintiffs base this claim entirely 0n the Consultancy Agreements that they signed exclusively with XPT Limited. 93. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a consultancy agreement or any other contract With Defendants XPT Inc. or NIO USA, Inc., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available to them by which the consultancy agreements signed with XPT Limited could be construed as agreements with Defendants XPT Inc. or NIO USA, Inc. Plaintiffs do not allege that they entered into a contract With any defendant other than XPT Limited, nor do Plaintiffs plead any fact supporting a claim that they entered into a contract With any Defendant other than XPT Limited. 94. As has been explained in Section C, supra, Plaintiffs do not allege facts and cannot show that Defendants XPT Inc. or NIO USA, Inc. are joint employers With XPT Limited. For example, Plaintiffs d0 not allege nor plead any fact showing that Defendants XPT Inc. 0r NIO USA, Inc. controlled the terms or conditions of Plaintiffs’ employment by XPT Limited, nor do Plaintiffs do not plead any fact showing that they labored or performed work for Defendants XPT Inc. or NIO USA, Inc. 95. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs have not alleged the essential element 0f the claim that these Defendants were their 9““employers,” nor that they were these Defendants employees.” G. Seventh Cause of Action: Retaliation in Violation 0f Government Code § 12940(h) 96. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 97. T0 establish a Violation of Cal. Government Code § 12940(h) against Defendants XPT Inc. and NIO USA, Inc, Plaintiffs must prove, among other things, that these Defendants 7“were the Plaintiffs employer”: NOTICE OF REMOVAL 1 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 19 of 64 It is an unlawful employment practice, unless based upon a bona fide occupational qualification, 0r, except Where based upon applicable security regulations established by the United States or the State of California: (h) For any employer, labor organization, employment agency, 0r person to discharge, expel, 0r otherwise discriminate against any person because the person has opposed any practices forbidden under this part 0r because the person has filed a complaint, testified, 0r assisted in any proceeding under this part.” See Cal. GOV. Code § 12940(h) (emphasis added); see also Judicial Council 0f California Civil Jury Instructions (2021 edition) CACI N0. 2505 (Retaliation- Essential Factual Elements, GOV. Code § 12940(h), Directions for Use)(“give CACI No. 2509, “Adverse Employment Action” Explained, ifwhether there was an adverse employment action is a question 0f fact for the jury”); Judicial Council of California Civil Jury Instructions (2021 edition) CACI No. 2509 (“Adverse Employment Action” Explained) (“There is an adverse employment action if [name of defendant] has taken an action or engaged in a course 0r pattern 0fconduct that, taken as a Whole, materially and adversely affected the terms, conditions, or privileges 0f [name ofplaintiffl’s employment. An adverse employment action includes conduct that is reasonably likely t0 impair a reasonable employee’s job performance or prospects for advancement 01‘ promotion”) (emphasis added). 98. Here, Plaintiffs base this claim on the allegation that “Plaintiffs signed Consultancy Agreements 0n June 1, 2018. . . thus they effectively remained employees 0f the company and Plaintiffs are protected by FEHA, Gov. Code, sections 12940, et seq.” See EX. 1 at fl 80 (Complaint: Sixth Cause of Action for Discrimination in Violation of Government Code § 12940(k)) (emphasis added). 99. Plaintiffs thus appear t0 be proceeding under the theory that Defendants XPT Inc. 9“and NIO USA, Inc. are “employers” and they are the Defendants employees” under the statute, rather than any theory that the Defendants are a “labor organization, employment agency, apprenticeship training program, 0r any training program leading to employment.” 100. Again, Plaintiffs base this claim entirely on the Consultancy Agreements that they signed with XPT Limited. 101. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a consultancy agreement or any other contract With Defendants XPT Inc. 0r NIO NOTICE OF REMOVAL 19 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 20 of 64 USA, Inc., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available to them by which the consultancy agreements signed With XPT Limited could be construed as agreements With Defendants XPT Inc. 0r NIO USA, Inc. Plaintiffs d0 not allege that they signed a contract With any defendant other than XPT Limited, nor do Plaintiffs plead any fact supporting a claim that they entered into a contract With any Defendant other than XPT Limited. 102. As has been explained in Section C, supra, Plaintiffs do not allege facts and cannot show that Defendants XPT Inc. or NIO USA, Inc. are joint employers With XPT Limited. For example, Plaintiffs do not allege nor plead any fact showing that Defendants XPT Inc. or NIO USA, Inc. controlled the terms or conditions 0f Plaintiffs’ employment by XPT Limited, nor do Plaintiffs do not plead any fact showing that they labored 0r performed work for Defendants XPT Inc. or NIO USA, Inc. 103. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs has not alleged, and cannot prove the essential element of the claim that these 9“ Defendants were their “employers,” nor that they were these Defendants employees.” H. Eighth Cause 0f Action: Wrongful Termination in Violation of Public Policy (FEHA) 104. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 105 . Plaintiffs allege that “Defendants’ termination of Plaintiffs’ employment violated the fundamental public policy 0f the State 0f California embodied by FEHA that employers shall not discriminate against employees on the basis 0f race, color, national origin, or ancestry, 0r retaliate against employees for reporting discrimination” against Defendants XPT Inc. and NIO USA, Inc. See EX. 1 at fl 88 (Complaint: Eighth Cause of Action Wrongfill Termination in Violation of Public Policy) (emphasis added). 106. T0 establish this claim against Defendants XPT Inc. and NIO USA, Inc, Plaintiffs 9“must prove, among other things, that these Defendants were the Plaintiffs employer.” See NOTICE OF REMOVAL 20 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 21 of 64 Judicial Council of California Civil Jury Instructions (2021 edition) CACI No. 2430 (Wrongful Discharge in Violation of Public Policy) (“[Name of plaintiff] claims [he/she/nonbinary pronoun] was discharged from employment for reasons that Violate a public policy. . . . T0 establish this claim, [name 0f plaintiff] must prove all of the following: 1. That [name 0f plaintiff] was employed by [name of defendant] . . . .”) (emphasis added). 107. Here, Plaintiffs d0 not state the basis on Which they claim that Defendants XPT Inc. and NIO USA, Inc. were their “employers,” or that Defendants are XPT Inc. and NIO USA, Inc.’s “employees.” Plaintiffs do “re-allege and incorporate herein” the preceding paragraphs, however. See EX. 1 at 11 87 (Complaint: Eighth Cause of Action Wrongful Termination in Violation of Public Policy). 108. For the sake of argument, we will assume that Plaintiffs intended to base this claim 0n the incorporated allegation that “Plaintiffs signed Consultancy Agreements on June 1, 2018. . . thus they effectively remained employees of the company [XPT Limited] and Plaintiffs are protected by FEHA, Gov. Code, sections 12940, et seq. ” See EX. 1 at 1] 80 (Complaint: Sixth Cause of Action for Discrimination in Violation of Government Code § 12940(k)) (emphasis added). 109. Again, Plaintiffs base this claim entirely on the Consultancy Agreements that they signed with XPT Limited. 110. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a consultancy agreement or any other contract with Defendants XPT Inc. 0r NIO USA, 1110., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available t0 them by Which the consultancy agreements signed With XPT Limited could be construed as agreements With Defendants XPT Inc. 0r NIO USA, Inc. Plaintiffs do not allege that they signed a contract With any defendant other than XPT Limited, nor do Plaintiffs plead any fact supporting a claim that they entered into a contract With any Defendant other than XPT Limited. 111. As has been explained in Section C, supra, Plaintiffs do not allege facts and cannot show that Defendants XPT Inc. or NIO USA, Inc. are joint employers With XPT Limited. For example, Plaintiffs do not allege nor plead any fact showing that Defendants XPT Inc. or NOTICE OF REMOVAL 21 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 22 of 64 NIO USA, Inc. controlled the terms 0r conditions of Plaintiffs’ employment by XPT Limited, nor do Plaintiffs do not plead any fact showing that they labored or performed work for Defendants XPT Inc. or NIO USA, Inc. 112. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs has not alleged, and cannot prove the essential element of the claim that these 9“ Defendants were their “employers,” nor that they were these Defendants employees.” I. Ninth Cause 0f Action: Violation 0f the Unruh Civil Rights Act - California Civil Code §§ 51 and 52 et. seq. 113. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 114. Plaintiffs allege “Defendants’ policy and practice 0f discriminating against employees of non-Chinese national origin and descent constitutes unlawful discrimination in Violation of Sections 51(b) and 5 1 .5 0fthe Unruh Civil Rights Act.” See EX. 1 at 1] 97 (Complaint: Ninth Cause of Action Violation of Unruh Civil Rights Act) (emphasis added). They further allege that “Defendants’ intentional discrimination against Plaintiffs interfered with their right to full and equal services and their rights under their employment agreements.” See EX. 1 at 1] 96 (Complaint) (emphasis added). 115. First, the Unruh Civil Rights Act does not support causes of action for employment discrimination. Allford v. Barton, F074780, at *15-16 (Cal. Ct. App. Mar. 13, 2019) (“As a result, our Supreme Court's statement that the Unruh Civil Rights Act "has no application to employment discrimination"); see also Rojo v. Kliger, 52 Cal.3d 65, 77 (Cal. 1990) ([CiVil Code section 51] “the Unruh Civil Rights Act has n0 application t0 employment discrimination”) Plaintiffs’ claim must fail against all Defendants for this reason, including against Defendants XPT Inc. and NIO USA, Inc. 116. Even if the Unruh Civil Rights Act did support claims for employment discrimination, to establish this claim as stated against Defendants XPT Inc. and NIO USA, Inc, 9“ Plaintiffs would have to prove, among other things, that they were Defendants employees” and that they had “employment agreements” with these Defendants. NOTICE OF REMOVAL 22 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 23 of 64 117. Here, Plaintiffs d0 not state the factual or legal basis 0n Which they claim that they were “employees” of Defendants XPT Inc. and NIO USA, Inc. Plaintiffs do “re-allege and incorporate herein” the preceding paragraphs, however. See EX. 1 at 11 93 (Complaint: Ninth Cause 0f Action Violation of the Unruh Civil Rights Act). 118. For the sake 0f argument, we Will assume that Plaintiffs intended t0 base this claim on the allegation that “Plaintiffs signed Consultancy Agreements on June 1, 2018. . . thus they effectively remained employees 0fthe company and Plaintiffs are protected by FEHA, Gov. Code, sections 12940, et seq.” See Ex. 1 at 1] 80 (Complaint: Sixth Cause of Action for Discrimination in Violation of Government Code § 12940(k)) (emphasis added). 119. As has been explained in Section A, supra, Plaintiffs have not alleged that they entered into a consultancy agreement or any other contract with Defendants XPT Inc. 0r NIO USA, Inc., nor have they pleaded any fact illustrating that they have done so, nor is any legal theory available to them by Which the consultancy agreements signed with XPT Limited could be construed as agreements With Defendants XPT Inc. 0r NIO USA, Inc. Plaintiffs d0 not allege that they signed a contract with any defendant other than XPT Limited, nor d0 Plaintiffs plead any fact supporting a claim that they entered into a contract with any Defendant other than XPT Limited. 120. As has been explained in Section C, supra, Plaintiffs do not allege facts and cannot show that Defendants XPT Inc. or NIO USA, Inc. are joint employers with XPT Limited. For example, Plaintiffs do not allege nor plead any fact showing that Defendants XPT Inc. or NIO USA, Inc. controlled the terms 0r conditions 0f Plaintiffs’ employment by XPT Limited, nor d0 Plaintiffs d0 not plead any fact showing that they labored 0r performed work for Defendants XPT Inc. 0r NIO USA, Inc. 121. Plaintiffs do not allege nor plead any fact showing that Defendants XPT Inc. or NIO USA, Inc. controlled the terms or conditions 0f their employment by XPT Limited. 122. Plaintiffs do not plead any fact showing that they performed work for Defendants XPT Inc. or NIO USA, Inc. NOTICE OF REMOVAL 23 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 24 of 64 123. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs has not alleged, and cannot prove the essential element 0f the claim that they were these Defendants’ “employees.” J. Tenth Cause 0f Action: Violation of Unfair Competition Law - California Business and Professions Code §§ 17200 et. seq. 124. Defendant XPT Limited re-alleges and incorporates herein those statements made in the preceding paragraphs, supra. 125. Plaintiffs allege “Defendants’ policy and practice 0f discriminating against employees ofnon-Chinese national origin and descent harmed Plaintiffs and constitutes unlawful discrimination in Violation of the FEHA and Section 51(b) and 51.5 0f the Unruh Civil Rights Act. Plaintiffs have been banned through the reduction of job responsibilities and eventual termination, which constitute unfair business practices in Violation of Section 17200 of the California Unfair Competition Law.” See EX. 1 at 11 101 (Complaint: Tenth Cause of Action Violation of Unfair Competition Law). 126. Again, as discussed at Section I, supra, the Unruh Civil Rights Act does not support causes 0f action for employment discrimination, and Plaintiffs’ Unruh claim therefore must fail against all Defendants, including against Defendants XPT Inc. and NIO USA, Inc. 127. Also as discussed at Section I, supra, even if the Unruh Civil Rights Act did support claims for employment discrimination, Plaintiffs cannot establish that they were Defendant XPT Inc. and NIO USA, Inc.’s “employees” or that they had “employment agreements” With these Defendants, therefore their Unruh claim must fail against these Defendants. 128. Also, as discussed at Sections A, C and H, supra, Plaintiffs” FEHA claim must fail against Defendants XPT Inc. andNIO USA, Inc. because Plaintiffs cannot prove the essential element of the claim that these Defendants were their “employers,” nor that they were these Defendants’ “employees.” See Strong v. Blue Cross 0fCal., B232708, at *33 (Cal. Ct. App. Feb. 8, 2013) (“A Violation of FEHA may support a claim for unlawful business practices. Since Strong's cause of action for unlawful business practices under Business and Professions Code NOTICE OF REMOVAL 24 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 25 of 64 section 17200 et seq. rests on the same facts as her FEHA claims, it fails for the same reasons as those claims.”) (citations omitted). 129. As Plaintiffs cannot establish any underlying Violations oflaw against Defendants XPT Inc. and NIO USA, Inc., including Violations 0f FEHA and Section 51(b) and 51.5 0f the Unruh Civil Rights Act, the Unfair Competition claim must likewise fail. See Clark v. Hoag Mem'l Hosp. Presbyterian, G05 1949, at *30 (Cal. Ct. App. Mar. 30, 2017) (“The unlawful practices prong “borrows” Violations 0f other laws and treats them as unlawful practices that the unfair competition law makes independently actionable”), citing Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone C0. (1999) 20 Cal.4th 163, 180. 130. To establish this claim as stated against Defendants XPT Inc. and NIO USA, Inc, Plaintiffs must prove, among other things, that they had “employment agreements” With these Defendants. 13 1. Here, Plaintiffs do not state the basis on Which they claim that they had employment agreements With Defendants XPT Inc. and NIO USA, Inc. Plaintiffs d0 “re-allege and incorporate herein” the preceding paragraphs, however. See EX. 1 at 1] 100 (Complaint: Tenth Cause of Action Violation of Unfair Competition Law). 132. For the sake of argument, we Will assume that Plaintiffs intended t0 base this claim on the allegation that “Plaintiffs signed Consultancy Agreements on June 1, 2018. . . thus they effectively remained employees ofthe company and Plaintiffs are protected by FEHA, GOV. Code, sections 12940, et seq.” See EX. 1 at 1] 80 (Complaint: Sixth Cause of Action for Discrimination in Violation 0f Government Code § 12940(k)) (emphasis added). 133. While Plaintiffs base their claim entirely on the Consultancy Agreements that they signed with XPT Limited, Plaintiffs d0 not allege that they signed a contract With any defendant other than XPT Limited, nor do Plaintiffs plead any fact supporting a claim that they entered into a contract with any Defendant other than XPT Limited, nor is any legal theory available to them by which the Consultancy Agreements signed With XPT Limited could be construed as agreements with Defendants XPT Inc. 0r NIO USA, Inc. 134. Plaintiffs further state that “Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable NOTICE OF REMOVAL 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 26 of 64 for the harms committed against Plaintiffs.” See EX. 1 at 1] 104 (Complaint: Tenth Cause 0f Action Violation of Unfair Competition Law). 135. As has been explained in Section C, supra, Plaintiffs do not allege facts and cannot show that Defendants XPT Inc. or NIO USA, Inc. are joint employers With XPT Limited. For example, Plaintiffs d0 not allege nor plead any fact showing that Defendants XPT Inc. 0r NIO USA, Inc. controlled the terms or conditions of Plaintiffs’ employment by XPT Limited, nor d0 Plaintiffs do not plead any fact showing that they labored 0r performed work for Defendants XPT Inc. or NIO USA, Inc. 136. This claim must fail against Defendants XPT Inc. and NIO USA, Inc. because Plaintiffs have not alleged, and cannot prove the essential element of the claim that they had employment agreements, nor have they alleged any facts supporting an actual employment relationship With these Defendants. CONCLUSION 137. In summary, Plaintiffs do not allege, and cannot ever establish any of their ten causes 0f action against Defendants XPT Inc. and NIO USA, Inc. They fraudulently joined these Defendants in this case, likely in an intentional effort to destroy diversity jurisdiction. Because Plaintiffs and the remaining Defendants XPT Limited and Defendant NIO Inc. are citizens 0f different states, however, complete diversity exists between Plaintiffs and the real Defendants in this case. REQUESTED RELIEF 138. Defendants respectfully request that the above-captioned action pending in the Superior Court 0f California, County of Santa Clara be removed to this Court. Dated: July 7, 2021. By: /s/Leodis Matthews Leodis Matthews, SBN 109064 ZHONG LUN LAW FIRM LLP 4322 Wilshire Boulevard Suite 200 Los Angeles, CA 90010 Telephone: (323) 930-5690 Facsimile: (323) 930-5693 Attorneyfor DefendantXPT Limited NOTICE OF REMOVAL 26 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 27 of 64 EXHIBIT 1 RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-PWNA MNNMNNMNNAAAAAAAAAA mflmmng-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 28 of 64 E-FILED 3/22/2021 2:36 PM DAVID A. LOWE (SBN: 17881 1) Clerk 0f Court Email: dal@rezlaw.com Superior Court 0f CA, WILLIAM P. MCELHINNY (SBN 296259) County Of Santa Clara Email: wpm@rezlaw.com 21 CV381 535 RUDY, EXELROD, ZIEFF & LOWE, LLP ReViewed By: R. Tien 351 California Street, Suite 700 San Francisco, CA 94104 Telephone: (415) 434-9800 Facsimile: (415) 434-05 1 3 Attorneys for Plaintiffs STEVEN ATNEOSEN and AMER AKHTAR SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA STEVEN ATNEOSEN and Case N0. 21CV381535 AMER AKHTAR, . _ COMPLAINT FOR DAMANGES Plalntlffs, JURY TRIAL DEMANDED vs. XPT, Inc., XPT Limited, NIO USA, Inc., NIO Inc., and DOES 1-20, inclusive, Defendants. / COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mNCDU'IAOON-‘OtomemngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 29 of 64 INTRODUCTION 1. Chinese electric vehicle manufacturer NIO Inc. and its United States-based subsidiaries subjected two high level executives to openly hostile and discriminatory behavior 0n the basis of their race and national origin and eventually terminated them and refused t0 pay them the compensation owed in violation of their employment contracts. 2. Steven Atneosen and Amer Akhtar are prominent, well-respected executives Who were employed in California by XPT Limited (this and XPT, Inc., referred to as “XPT”), a Wholly owned advanced technology subsidiary of Chinese electric vehicle manufacturer NIO Inc. (“N10”). NIO and XPT have been described as the “rising star” 0f the electric and autonomous driving industry and Messrs. Atneosen and Akhtar were instrumental in ensuring that XPT achieved the key technological breakthroughs in the drive systems, energy storage systems, and software critical for NIO t0 meet market and investor expectations for its vehicles. 3. While NIO and XPT’s electric vehicle technology is undeniably cutting-edge, their corporate culture is rife with rampant favoritism exhibited toward employees of Chinese descent. The fact that non-Chinese employees are held to a higher standard is well known and commonly discussed within the company, and Messrs. Atneosen and Akhtar were frequently urged not to complain about the “Chinese way 0f doing things.” Despite these warnings, Messrs. Atneosen and Akhtar complained to company leadership 0n numerous occasions about the company’s discriminatory culture and how it had affected their status within the company, job assignments, and compensation, as well as impeded their ability to ensure the company successfully launched its first scale production vehicle, the ESS. 4. Rather than rewarding them for their efforts or offering t0 address their concerns about racial discrimination, XPT and NIO chose to retaliate against Messrs. Atneosen and Akhtar, forcing them t0 renegotiate their employment contracts With less favorable terms and ultimately terminating them Without cause eight and a halfmonths prior t0 the end date negotiated in their employment contracts. Terminating Messrs. Atneosen and Akhtar without cause- and in response to their complaints about racial discrimination- and failing t0 pay 1 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mflmmAwN-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 30 of 64 them the compensation owed under their employment contracts constitutes unlawful discrimination, retaliation, wrongfifl termination, and breach of contract. PARTIES 5. Plaintiff Steven Atneosen is a natural person residing in Minneapolis, Minnesota. 6. PlaintiffAmer Akhtar is a natural person residing in Los Altos Hills, California. 7. Defendant XPT, Inc. is a company organized and existing pursuant t0 the laws 0f the State 0f Delaware, having its principal place 0f business in San Jose, California, and doing business in the State of California and is a wholly-owned subsidiary ofNIO Inc. 8. Defendant XPT Limited is a Wholly-owned subsidiary 0fNIO Inc. 9. Defendant NIO Inc. is a company organized and existing pursuant t0 the laws 0f China, headquartered in Shanghai, China. 10. Defendant NIO USA, Inc. is a company organized and existing pursuant to the laws of the State of California, having its principal place 0f business in San Jose, California, and doing business in the State of California and is a wholly-owned subsidiary ofNIO Inc. 11. The true names and capacities of Defendants named herein as Does 1 through 20, inclusive, whether individual, corporate, associate 0r otherwise are unknown t0 Plaintiffs, who therefore sue said Defendants by fictitious names pursuant to California Code 0f Civil Procedure § 474. Plaintiffs Will amend this Complaint t0 show such true names and capacities of Does 1 through 20, inclusive, when they have been determined. 12. Plaintiffs are informed and believe, and thereon allege, that all of the Defendants were joint employers of the Plaintiffs and that each 0f the Defendants was, at all times herein mentioned, the agent, employee, partner and/or representative of one 0r more 0f the remaining Defendants and was acting Within the course and scope 0f such relationship. Plaintiffs are further informed and believe that each of the Defendants herein gave consent to, ratified, and authorized the acts alleged herein t0 each of the remaining Defendants. JURISDICTION AND VENUE 13. Venue is proper in this judicial district pursuant t0 California Code 0f Civil Procedure § 395.5 and California Government Code § 12965. Defendants transact business in 2 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mVODU'IAwN-‘OtomeU'lngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 31 of 64 Santa Clara County, and are Within the jurisdiction of this Court for purposes 0f service of process. For purposes 0f Section 395.5, liability arises Where the corporation’s principal place of business is situated. Defendants’ principle place of business is Santa Clara County. 14. Moreover, under Section 12965, an action may be brought in any county “in Which the unlawful practice is alleged to have been committed” or “in the county in Which [the Plaintiff] would have worked.” The unlawful practices were committed in Santa Clara County, where Plaintiffs performed work and experienced discrimination from Defendants. FACTUAL ALLEGATIONS A. XPT and NIO Breach Atneosen and Akhtar’s Employment Agreements. 15. Steven Atneosen initially joined Shanghai-based XPT as a consultant t0 Jack Cheng, Founder and CEO 0fXPT and a co-founder ofNIO. After months of demonstrating his value t0 the company and gaining Mr. Cheng’s trust and respect, Mr. Atneosen was given the role 0f Vice President of Corporate Development for the North American Region 0n December 5, 2016. Prior to his position With XPT, Mr. Atneosen was a Senior Vice President, Vice President, and a CEO for a number ofpublic and private enterprise technology companies. He has contributed to the growth and/or sale of CarParts Technologies, Aristocrat Technologies, StayWell Health, and a number of other technology startups as a key executive or advisor. He is respected in Silicon Valley and serves as an advisor and investor t0 several technology companies as well as a mentor t0 StartX (Stanford University), SkyDeck (University of California - Berkeley), Plug and Play, Nordic Innovation House and CleanTech Open technology company accelerators. He has also served as general counsel to both public and private technology companies. In his role as Vice President at XPT, he held responsibilities for all global strategy, business planning, M&A, as well as the operations related to XPT’s United States operations. 16. Amer Akhtar was part of XPT’s founding team, joining in April 2016 as COO and Head 0f its U.S. operations. Hired as XPT’s then-CEO Jack Cheng’s right-hand man, Mr. Akhtar was promised significant responsibility, including that he would be in charge of running all 0f XPT’S United States operations and managing global M&A. Prior t0 XPT, Mr. Akhtar was 3 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mflmmAwN-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 32 of 64 President of Yahoo Small Business where he was charged with spinning off a new $45B market cap public company, for Which he was to be co-CEO. Prior t0 Yahoo, Mr. Akhtar was an executive With Automatic Data Processing, Inc. (“ADP”) for almost a decade. He spent 4.5 years living in Shanghai as the CEO 0fADP China, and another 5 years in the United States with ADP as a senior executive for two different businesses. Before joining NIO, he had extensive operating and investing experience in both Asian and European markets. Mr. Akhtar is very well respected in Silicon Valley, and in addition t0 serving on the board 0f a publicly listed company, he is an investor and advisor to several technology companies worldwide. 17. NIO is a Chinese automobile manufacturer headquartered in Shanghai, specializing in the design, manufacture, and sale 0f electric vehicles. NIO manufactures electric vehicles integrated with next generation technologies and is seen as a main competitor to Tesla in the battle t0 develop the electric vehicles 0f the future. 18. XPT is a wholly-owned subsidiary 0fNIO, providing the electric drive systems, energy storage systems, and the software required for its electric vehicle. This technology was critical to NIO in delivering its first scale production model E88, a seven-seater electric SUV, and the ensuing ES6. 19. After having been employed by XPT since mid to late 2016, Messrs. Atneosen and Akhtar were forced by the company t0 sign new employment contracts with XPT on June 1, 201 8. The new contracts purported t0 change the nature of their employment from employee to independent contractor, however, there was nothing about the terms and conditions 0f their employment that changed- only their compensation- thus they effectively remained employees of the company. Pursuant to these agreements, Messrs. Atneosen and Akhtar continued in their senior roles advising XPT’s CEO, Jack Cheng. The consulting agreements specified the following service timelines and compensation: (i) Effective September 1, 2018 through August 3 1, 2019, Party A will pay Party B the same compensation and benefits as per Party B’s current full time employment at the effective date of this Agreement, including, but not limited to: a) health care coverage, short and long term disability, life and ADID, dental and Vision (together “Health Benefits”); b) 401k With existing company matching, mobile phone allowance and additional allowance for food, gym membership, etc. . . (together “Other Benefits”); and c) any additional federal and state taxes 4 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA meU‘lAwN-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 33 of 64 required t0 be paid by Party B due t0 the conversion 0f his employment to contractor status (“Gross Up Payments”). As a consultant, Party B will no longer have access t0 the company's physical location, internet/media portals and company paid membership without Party A's express consent and Will only represent the company as an external consultant herein. (ii) Effective September 1, 2019 through August 3 1, 2020, Party A will pay Party B the same compensation and benefits as per Party B’s current full time employment at the effective date of this Agreement, except for Party B’s Other Benefits. Notwithstanding the foregoing, Party B’s Gross Up Payments paid during this period will be related to Party B’s compensation and Health Benefits. As a consultant, Party B will n0 longer have access t0 the company’s physical location, internet/media portals, and company paid membership Without Party A’s express consent and will only represent the company as an external consultant herein. (iii) During the service timelines mentioned above, the NIO company ESOP which has been awarded t0 Party B will continue t0 vest pursuant t0 the plan as if Party B was employed by Party A. Party B however will n0 longer be eligible for any additional ESOP grants. A11 terms and conditions of company ESOP apply the same throughout these service period. (iv) If at any time during this Agreement Party B elects not to receive Health Benefits, Party A will pay Party B the monthly cash equivalent amount. Pursuant to Section 4 0f these agreements, XPT could only terminate the agreement if Messrs. Atneosen or Akhtar “commits a material breach and fails t0 correct the breach Within thirty (3 O) days 0f receiving notice of such breach” from the company. Material breaches include: (1) disclosing XPT’s confidential information; 0r (2) if Messrs. Atneosen or Akhtar are made “the subject 0f a bankruptcy action or appoints a trustee or beneficiary for the interest 0f a creditor.” 20. In August 2019, XPT’S CEO Jack Cheng reached out to Messrs. Atneosen and Akhtar to ask if they would be Willing t0 cut their contracts short by eight months. He said that the company would pay them until December 3 1, 2019, and ensure that all 0f their stock options would be vested by then. They declined the offer. Shortly thereafter, Mr. Cheng transitioned t0 a new role as Chairman ofXPT and was replaced by a new CEO, Alan Zeng. Upon taking over leadership of the company, Mr. Zeng also asked Messrs. Atneosen and Akhtar t0 cut their contracts short. During their conversation, Mr. Zeng admitted that the company had n0 right t0 unilaterally terminate the contracts. Once again, both men declined to cut short the terms 0f the agreements they had negotiated. /// 5 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA meU‘lng-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 34 of 64 21. On December 2, 2019, without any prior discussion, XPT sent Messrs. Atneosen and Akhtar instructions t0 advise on proj ects in which neither ofthem had any specific expertise. They responded Within 24 hours offering t0 speak with Mr. Zeng on how they could best assist the company noting, however, that the terms 0f their consulting contracts require the CEO to include them in determining “by mutual agreement what proj ects in which [Messrs Atneosen or Akhtar] will provide support.” N0 response was provided by the company. 22. On December 16, 2019, both men received a letter from the Zhong Lun law firm stating that their contracts were being terminated. Specifically, the letter stated: As you are aware, the CEO Whom you previously advised is no longer with the Company and your services as an independent contractor is n0 longer necessary nor needed. In August of this year, you were advised by XPT Limited that your independent contractor contract would be terminated. After discussions with the company, their decision was to extend your contract until now. After contacting XPT’s attorneys, they were informed that they would be paid through December 3 1, 2019. No information was provided about the status of their benefits paid through TriNet. 23. At n0 point did Messrs. Atneosen or Akhtar receive notice from the company informing them that they had materially breached their contracts, nor did the company ever allege either man had engaged in conduct that constituted a material breach or provide notice to such effect. Rather, the letter from XPT’S attorneys stated that they were being terminated because their “services as an independent contractor is no longer necessary nor needed,” Which is not grounds for early termination 0f the agreements. As a result of the early termination of the agreements without cause, Mr. Atneosen and Mr. Akhtar are each owed well over a million dollars. B. XPT and NIO Discriminated and Retaliated Against Atneosen and Akhtar. 24. Throughout their tenure at XPT, Mr. Atneosen and Mr. Akhtar worked t0 support NIO founders’ Vision and directive to create a platform for electric, connected, and automated vehicles and delivered alternative product solutions to ensure that the ES8 and ES6, the company’s next generation propulsion transportation systems, would be launched and delivered on schedule With a high level of quality. Unfortunately, despite Messrs. Atneosen and Akhtar’s exemplary credentials and strong performance on behalf ofXPT, their employment relationships 6 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mNODU'IAOON-‘OtomemngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 35 of 64 were sidetracked by the appallingly discriminatory culture cultivated at XPT and NIO. Messrs. Atneosen and Akhtar found themselves continually thwarted by, and held to a higher standard than, their Chinese and Chinese American colleagues. 25. For his part, Mr. Atneosen was offered a significantly less favorable compensation structure than many employees performing similar level work at the company and he had to fight to obtain even a nominal stock option grant, While other director-level and above employees received significantly more generous option grants. At the time of his hiring, Mr. Atneosen was promised that his stock option grant would either be in the form ofXPT stock (in a spinoff) or NIO stock. Mr. Atneosen never agreed t0 be treated differently from everyone else and repeatedly inquired about the status 0f his equity grant. Mr. Atneosen was frequently told that he had to respect the way in Which the Chinese do things and to not push the issue any faster than what XPT believed appropriate. Mr. Atneosen was told 0n every occasion that the issue would be remedied and that he would receive a stock option grant on par with other NIO Vice Presidents, such as his counterpart at NIO US, Mary Yang, Vice President 0f Corporate Development. Mr. Atneosen was ultimately never offered stock options in line With other director-level employees. 26. Similarly, When Mr. Akhtar was negotiating his compensation prior to joining XPT he was told that after the initial grant of equity there would be significant subsequent grants. Mr. Akhtar asked for a written agreement detailing his future grants, but was told t0 trust XPT and that as per “the Chinese way 0f doing things,” not every promise would be made in writing. When he requested additional cash and equity compensation commensurate with his high-level role and prior experience, he was told that it was impossible because he could not make more than his NIO counterpart, Padma Warrior. XPT led Mr. Akhtar to believe that his pay was equivalent t0 Ms. Warrior’s, however, he would come to learn that he had been misled by the company, as Ms. Warrior’s equity grant was more than 20x what he had been offered, despite their equivalent roles. 27. When Messrs. Atneosen and Akhtar complained about the double standard they faced at the company, or relayed concerns about the misuse 0f corporate resources by coworkers, 7 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mflmmng-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 36 of 64 they found themselves retaliated against based on these disclosures. Between 2016 and 201 8, Messrs. Atneosen and Akhtar reported numerous concerns they had to NIO’s founders, William Li, Lihong Qin, and Jack Cheng- concerns shared by numerous other corporate officers, as well as investors in NIO- about incompetence, misuse of company resources, and conduct that potentially constituted fraud against NIO’s investors by coworkers. What became clear With time was that both XPT and NIO had a double standard for employees who were Chinese, 0r 0f Chinese descent, often overlooking their inappropriate and bad faith conduct, While at the same time holding its non-Chinese employees to a much higher standard. When Messrs. Atneosen and Akhtar complained about this culture, they were retaliated against and eventually terminated. Some examples of the ways in which the company had two sets 0f rules - one for its Chinese 0r Chinese American employees and another for everyone else, include: 0 On January 24, 2017, NIO’s CEO William Li communicated t0 XPT and NIO’s U.S. based operations the critical importance of an 0n time launch of E88 and ES6. Mr. Atneosen was instructed to work with NIO’s U.S. office in order t0 integrate its software projects into XPT’s product road map to ensure that all necessary components 0f the E88 and ES6 proj ects were identified and delivered. However, NIO U.S. and XPT China coworkers refused t0 take any direction from Mr. Atneosen 0r meet, discuss, or jointly accomplish projects related t0 the ES8 and ES6 launches. When Mr. Atneosen complained t0 leadership of these employees’ failure t0 listen to company directives, he was told t0 drop his complaints and that their behavior was “t0 be expected of a Chinese company.” Mr. Atneosen was essentially forced to ensure a successful launch of E88 and ES6 without their assistance. In short, the company told Mr. Atneosen told that he was the problem. o Mr. Atneosen reported his concerns t0 leadership that Ms. Warrior, head ofNIO’s U.S. office, was communicating through NIO’s press relations staff the misimpression that she was “NIO’s CEO” both in public articles and at conferences. These misstatements sowed confusion among XPT’s customers and business partners and prevented many third parties from working with Mr. Atneosen, Mr. Akhtar, and XPT. When Mr. Akhtar met with prospective investors in Las Vegas as part of his job, he was asked by an investor when the problem With NIO U.S. would be addressed, implying that Ms. Warrior was the problem. Mr. Akhtar communicated this statement to the NIO founders, adding that Ms. Warrior’s reputation was making it difficult for Messrs. Atneosen and Akhtar to d0 their jobs at XPT effectively. However, n0 action was taken. o Early in Mr. Akhtar’s tenure he attempted t0 have a collaborative relationship with Ms. Warrior, including offering t0 attend NIO U.S. staff meetings in order to demonstrate a spirit of cooperation between the companies. Despite Ms. Warrior initially expressing support for the idea, when Mr. Akhtar reached out t0 Ms. Warrior’s assistant for an invite, the assistant told him that Ms. Warrior had instructed that he be barred from attending, as staff meetings were only for her direct reports. XPT executives in China turned a blind eye toward Ms. Warrior’s conduct. 8 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mflmmng-‘Otomflmmgwmé Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 37 of 64 0 Ms. Warrior pitted NIO’s U.S. and China based employees against one another t0 her own advantage. Ms. Warrior and her direct reports actively disparage Messrs. Atneosen and Akhtar, as well as engaged in insubordination 0fNIO founders’ direct instructions With the express purpose 0fharming Messrs. Atneosen and Akhtar’s reputations and thwarting the success ofXPT’s U.S. based operations so that she could pursue a competing business. o Ms. Warrior’s direct report, Mary Yang, served as Mr. Atneosen’s counterpart at NIO U.S. Despite the companies’ requirement that Ms. Yang and Mr. Atneosen work collaboratively, Ms. Yang refused t0 d0 so. Ms. Warrior’s employees continued to discriminate against Mr. Atneosen and thwarted delivery 0fkey deliverables required 0f him. Ms. Warrior instructed her employees to not support the work 0fXPT or that 0f Mr. Atneosen, yet XPT did nothing t0 rectify the situation. 0 Several employees directly complained t0 Mr. Atneosen and NIO’s founders about Ms. Yang’s misuse of company resources and inappropriate behavior. Regardless, Ms. Yang continued to receive promotions within NIO despite her insubordination. Ms. Yang is 0f Chinese descent. o Due to the insubordination 0f Ms. Warfior and her team, Messrs. Atneosen and Akhtar had t0 take 0n additional work ensuring that XPT could deliver an over- the-air update to ESS and ES6’s software, in the likely event that Ms. Warrior’s team failed t0 deliver their project 0n time. Despite missing several key deadlines, Ms. Warrior was never reprimanded for her team’s failings. Rather, it was XPT and NIO’s expectation that Messrs. Atneosen and Akhtar were responsible for ensuring nothing Ms. Warrior did adversely affected the company. Similarly, Messrs. Atneosen and Akhtar had t0 deliver an ADAS product for XPT’s enterprise customers, only after Ms. Warrior’s team missed several deadlines in providing its own solution. o In September 2017 NIO CEO, William Li, internally announced to NIO U.S. employees in San Jose, California that NIO U.S. would be “0n its own.” This was pursuant t0 Ms. Warrior’s demands t0 seek her own funding and spin off. This situation became untenable for Messrs. Atneosen and Akhtar, as they worked in NIO’s San Jose office and frequently experienced open hostility from Ms. Warrior and her direct reports; behavior that violated NIO’s policies. o Ms. Warrior further demonstrated an abusive demeanor toward many 0f her American colleagues, including Messrs. Atneosen and Akhtar. After Ms. Warrior yelled at Mr. Akhtar in a conference room at NIO headquarters, Mr. Akhtar complained to XPT executives, but no action was ever taken. At Ms. Warrior’s direction, Messrs. Atneosen and Akhtar’s desks were moved several times t0 successively more remote and uncomfortable spots in the NIO U.S. facility- often with n0 advanced notice, until one day their desks were removed with n0 advance notice leaving Messrs. Atneosen and Akhtar Without any office space. o Alan Zeng repeatedly disparaged and made false statements about Mr. Atneosen to third parties in an attempt t0 ingratiate himself With Ms. Warrior and NIO’s founders. His conduct undermined both Mr. Atneosen and XPT. However, when Messrs. Atneosen and Akhtar complained about Mr. Zeng’s conduct t0 leadership, there were never any repercussions. XPT’s then-CEO, Jack Cheng, even claimed that Mr. Zeng was not supporting XPT and that he should be fired. However, in mid-2019, Mr. Zeng was promoted t0 be XPT’s CEO, a position from which he was able to enact revenge 0n Messrs. Atneosen and Akhtar for their prior complaints, ultimately leading t0 their terminations (Mr. Zeng is Chinese). 9 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mflmmng-‘Otomflmmgwmé Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 38 of 64 0 One 0f Messrs. Atneosen and Akhtar’s main directives was to ensure that XPT could deliver a 75-1 SOkW permanent magnet motor (the “PM EDS”). Despite the critical importance 0f this task, Mr. Atneosen’s European counterpart Hui Zhang intentionally thwarted a key deal t0 ensure that XPT and NIO would have access to this technology. Despite working against the company’s obj ectives, Mr. Zhang continued t0 receive increased levels 0f responsibility and promotions from NIO’s founders (Mr. Zhang is Chinese). o Throughout his tenure at XPT, Mr. Akhtar found the scope 0f his responsibilities constantly undermined by executives in China. In early 201 8, an XPT executive told him that he would no longer report directly t0 the CEO ofXPT, but rather to his COO counterpart in China, a clear demotion from what was agreed to in Mr. Akhtar’s employment agreement. The XPT executive also told Mr. Akhtar that his role would be M&A for the U.S. and that his Chinese counterpart would handle M&A for Europe, another clear demotion given that Mr. Akhtar’s employment agreement stated he would be COO and Head ofM&A (not limited to any specific region). Despite Mr. Akhtar’s protests, the XPT executive refused t0 address Mr. Akhtar’s concerns that his promised authority was being stripped by XPT’s China based executives and the matter was left unresolved. o Mr. Akhtar was charged with leading the purchase of a European electric motor company. Despite this being understood by the entire XPT management team, Jason Zhang, then CFO ofXPT Limited, and Mr. Hui Zhang repeatedly interfered in the deal and would not allow Mr. Akhtar t0 perform his due diligence on the deal 0r keep him informed about their business trips to negotiate the deal. Mr. Akhtar let the XPT CEO Jack Cheng know 011 many occasions about the risks t0 the deal brought on by Mr. Zhang, however, nothing was done and the deal collapsed. The blame was put 0n Jason Zhang by XPT management, but there were no punitive actions taken against Mr. Zhang. This was a pattern often repeated, where Chinese members of the team were given liberty t0 pursue any direction, even at the expense of corporate objectives (Mr. Zhang is Chinese). 28. Messrs. Atneosen and Akhtar were repeatedly punished for calling out XPT and NIO’s culture that unfairly elevated the work and status 0f its Chinese employees, t0 the detriment 0f everyone else. XPT lashed out at Messrs. Atneosen and Akhtar for challenging its corporate culture and their ability to succeed and help XPT and NIO were severely curtailed after they lodged these complaints. Ultimately, the company demanded that Messrs. Atneosen and Akhtar renegotiate less favorable employment contracts in June 2018 and were eventually terminated on December 3 1, 2019. /// /// /// /// /// 10 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mNCDU'IAOON-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 39 of 64 FIRST CAUSE 0F ACTION (Breach 0f Contract 0n behalf 0f Complainants Atneosen and Akhtar against All Defendants) 29. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 30. On June 1, 201 8, Plaintiffs and Defendant XPT Limited entered into written Consultancy Agreements defining the terms of Plaintiffs’ compensation, which they both approved by signing their respective agreement. 3 1. Plaintiffs completed all conditions necessary to satisfy their obligations under the contracts by continuing t0 work for Defendants until they were terminated. 32. The Consultancy Agreement provided for a guaranteed term of Plaintiffs’ employment, with each contract running until August 31, 2020, during which time Plaintiffs’ would provide their services t0 Defendants in exchange for certain compensation, including base salary, benefits, and the continued vesting 0f stock options. Defendant XPT Limited could terminate the Consultancy Agreements only if Plaintiffs committed a material breach of their respective agreement and failed t0 correct such breach Within thirty (30) days 0f receiving notice of such breach from Defendant XPT Limited. 33. Defendants breached the agreements by terminating Plaintiffs’ employment before the end of their term. 34. Defendants further breached these agreements by failing to make these payments when they ended Plaintiffs’ employment prior to the end date of the agreements. 35. Accordingly, Plaintiffs are entitled t0 the compensation owed under the agreements and the compensation and stock option vesting they 10st because Defendants terminated their employment early. 36. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. /// /// 1 1 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mflmmng-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 4O of 64 SECOND CAUSE OF ACTION (Breach 0f the Covenant of Good Faith and Fair Dealing 0n behalf of Complainants Atneosen and Akhtar against All Defendants) 37. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 38. Plaintiffs’ Consultancy Agreements contained an implied-in-law covenant 0f good faith and fair dealing that neither party would do anything t0 injure the right of the other party t0 enj0y the actual benefits 0f those contracts. 39. Plaintiffs performed all of the duties and obligations required 0fthem by Defendants during their employment, including those duties and obligations that would entitle Plaintiffs to receive the compensation described in the Consultancy Agreements and to continued employment for agreements’ full term. 40. Defendants breached the implied covenant when they took actions t0 prevent Plaintiffs from earning their full compensation during the full term of the agreements. 41. Defendants’ termination of Plaintiffs was done in bad faith. 42. As a result 0f Defendants’ bad faith and unfair dealing in performing the terms of the Consultancy Agreements, Defendants are liable for breaching the covenant of good faith and fair dealing inherent in those agreements. 43. Accordingly, Plaintiffs are entitled t0 the payments owed under the Consultancy Agreements, included continued stock option vesting for the term of the agreements, and the compensation they lost because Defendants terminated their contracts early. 44. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. THIRD CAUSE 0F ACTION (Failure to Pay Wages in Violation 0f California Labor Code § 200 et seq. 0n behalf 0f Complainants Atneosen and Akhtar against All Defendants) 45. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 12 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA memth-‘OQmeC’TngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 41 of 64 46. Plaintiffs signed Consultancy Agreements 0n June 1, 2018, that purported to change the nature of their employment from employee to independent contractor, however, there was nothing about the terms and conditions 0f their employment that changed- only their compensation- thus they effectively remained employees 0f the company and Defendants are liable for wage claim Violations under California Labor Code § 200 et seq. 47. Plaintiffs performed all of the duties and obligations required 0fthem by Defendants during their employment, including those duties and obligations that would entitle Plaintiffs to receive the wages described in the Consultancy Agreements. 48. Defendants have refused to pay Plaintiffs these wages. 49. Defendants’ failure to pay Plaintiffs violates the California Labor Code. See, e.g., Lab. Code, § 200; id. § 204 (wages due in month earned); id. § 216 (refusal to make payment). 50. Thus, Defendants are liable to pay the unpaid wages, interest from the date the wages were due and payable, and attorney’s fees and costs. See id. §§ 218.5, 218.6; CiV. Code, §§ 3302, 3281, 3289(b). 5 1. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. FOURTH CAUSE OF ACTION (Failure to Pay Wages at Time of Termination in Violation 0f Labor Code § 201, et seq. on behalf 0f Complainants Atneosen and Akhtar against All Defendants) 52. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 53. Plaintiffs signed Consultancy Agreements on June 1, 201 8, that purported to change the nature of their employment from employee to independent contractor, however, there was nothing about the terms and conditions 0f their employment that changed- only their compensation- thus they effectively remained employees 0f the company and Defendants are liable for wage claim Violations under California Labor Code § 200 et seq. 54. Labor Code section 201 requires employers t0 immediately pay their employee’s wages upon termination, and Section 203 imposes a penalty upon employers who fail to d0 so. 1 3 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mNODU'IAOON-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 42 of 64 55. At the time 0f Plaintiffs’ terminations, Defendants knowingly and willfully failed to pay then all of the wages they had earned that were due at the time of their termination as provided by the Consultancy Agreements, as alleged herein and above. 56. Defendants knew that they owed Plaintiffs unpaid wages at the time of their terminations. Yet, they failed to pay the amounts due for more than thirty days and continued to fail t0 pay the amounts due. Such failure amounts t0 “willful” nonpayment 0fwages due. Accordingly, Plaintiffs are entitled to the maximum penalty equivalent t0 thirty days pay and attorney’s fees and costs. 57. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. FIFTH CAUSE OF ACTION (Discrimination 0n the Basis of Race and National Origin in Violation 0f Government Code § 12940(a) 0n behalf 0f Complainants Atneosen and Akhtar against All Defendants) 58. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 59. At all times herein mentioned, FEHA, Gov. Code, sections 12940, et seq., was in full force and effect and was fully binding upon Defendants. 60. Government Code section 12940(a) prohibits an employer from discriminating against an employee because of race, color, national origin, and ancestry. 61. Defendants are subj ect to FEHA because they regularly employ five or more persons. 62. Plaintiffs signed Consultancy Agreements 0n June 1, 2018, that purported to change the nature of their employment from employee to independent contractor, however, there was nothing about the terms and conditions 0f their employment that changed- only their compensation- thus they effectively remained employees of the company and Plaintiffs are protected by FEHA, Gov. Code, sections 12940, et seq. 63. Neither Mr. Atneosen nor Mr. Akhtar is of Chinese descent and both are members of a group protected by FEHA. 14 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA meU‘lAwN-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 43 of 64 64. Defendants gave preferential treatment t0 executives of Chinese ancestry and discriminated against Messrs. Atneosen and Akhtar by preventing them from achieving key deliverables. 65. Defendants reduced Messrs. Atneosen and Akhtar’s job responsibilities and eventually terminated them because 0f their race, color, national origin, and ancestry, in Violation of Government Code section 12940(a). 66. As a direct, foreseeable, and proximate result of Defendants’ unlawfifl actions, Plaintiffs have suffered and continue t0 suffer substantial losses in earnings and other employment benefits and have incurred other economic losses. 67. As a direct, foreseeable, and proximate result of Defendants’ unlawfifl actions, Plaintiffs have suffered emotional distress, humiliation, shame, anxiety, and embarrassment, all to Plaintiffs’ damage in an amount to be proven at the time 0f trial. 68. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention 0f injuring Plaintiffs, from an improper and evil motive amounting t0 malice, and in conscious disregard 0f Plaintiffs’ rights. Plaintiffs’ are thus entitled t0 recover punitive damages from Defendants in an amount according to proof. 69. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. SIXTH CAUSE OF ACTION (Failure t0 Prevent Discrimination in Violation 0f Government Code § 12940(k) 0n behalf 0f Complainants Atneosen and Akhtar against All Defendants) 70. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 71. Plaintiffs signed Consultancy Agreements on June 1, 2018, that purported t0 change the nature of their employment from employee t0 independent contractor, however, there was nothing about the terms and conditions of their employment that changed- only their compensation- thus they effectively remained employees of the company and Plaintiffs are protected by FEHA, Gov. Code, sections 12940, et seq. 15 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mflmmng-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 44 of 64 72. Defendants violated Government Code section 12940(k) because Defendants failed to take all reasonable steps necessary to prevent discrimination from occurring. 73. Defendants failed to train and adequately supervise their employees in order to ensure that they were not Violating FEHA in their treatment 0f other employees. 74. Defendants also failed to conduct a meaningful investigation into Messrs. Atneosen and Akhtar’s complaints 0f discrimination against their coworkers. Plaintiffs are informed and believe and thereon allege that Defendants did not take any corrective actions in response to their complaints. 75. As a direct, foreseeable, and proximate result 0f Defendants’ unlawful actions, Plaintiffs have suffered and continue t0 suffer substantial losses in earnings and other employment benefits, and have incurred other economic losses. 76. As a direct, foreseeable, and proximate result 0f Defendants’ unlawful actions, Plaintiffs have suffered emotional distress, humiliation, shame, anxiety, and embarrassment, all to their damage in an amount to be proven at the time 0f trial. 77. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention of injuring Plaintiffs, from an improper and evil motive amounting to malice, and in conscious disregard 0f Plaintiffs’ rights. Plaintiffs are thus entitled to recover punitive damages from Defendants in an amount according to proof. 78. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. SEVENTH CAUSE OF ACTION (Retaliation in Violation 0f Government Code § 12940(h) 0n behalf 0f Complainants Atneosen and Akhtar against All Defendants) 79. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 80. Plaintiffs signed Consultancy Agreements on June 1, 2018, that purported to change the nature 0f their employment from employee to independent contractor, however, there was nothing about the terms and conditions 0f their employment that changed- only their 16 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA meU‘lng-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 45 of 64 compensation- thus they effectively remained employees of the company and Plaintiffs are protected by FEHA, Gov. Code, sections 12940, et seq. 81. Government Code section 12940(h) makes it an unlawful employment practice for an employer to discriminate against any person because the person has opposed any practices forbidden under the FEHA. 82. Plaintiffs opposed and protested Defendants’ discriminatory actions against them based on their own race, color, national origin, and ancestry. In response, Defendants stripped them of responsibilities, forced them to renegotiate their employment contracts, and terminated their employment. 83. As a direct, foreseeable, and proximate result of Defendants’ unlawfifl actions, Plaintiffs have suffered substantial losses in earnings and other employment benefits and have incurred other economic losses. 84. As a fithher direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiffs have suffered emotional distress, humiliation, shame, and embarrassment all to their damage in an amount to be proven at time 0f trial. 85. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention 0f injuring Plaintiffs, from an improper and evil motive amounting t0 malice, and in conscious disregard 0f Plaintiffs’ rights. Plaintiffs are thus entitled t0 recover punitive damages from Defendants in an amount according to proof. 86. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. EIGHTH CAUSE OF ACTION (Wrongful Termination in Violation 0f Public Policy (FEHA) 0n behalf 0f Complainants Atneosen and Akhtar against All Defendants) 87. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 88. Defendants’ termination of Plaintiffs’ employment violated the fundamental public policy of the State of California embodied by FEHA that employers shall not discriminate 17 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA mVODU'IAwN-‘OtomemngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 46 of 64 against employees on the basis of race, color, national origin, or ancestry, 0r retaliate against employees for reporting discrimination. 89. As a direct, foreseeable, and proximate result 0f Defendants’ unlawful actions, Plaintiffs have suffered substantial losses in earnings and other employment benefits, and have incurred other economic losses. 90. As a further direct, foreseeable, and proximate result 0f Defendants’ unlawful actions, Plaintiffs have suffered emotional distress, humiliation, shame, and embarrassment all to their damage in an amount to be proven at time 0f trial. 91. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention of injuring Plaintiffs, from an improper and evil motive amounting to malice, and in conscious disregard 0f Plaintiffs’ rights. Plaintiffs are thus entitled to recover punitive damages from Defendants in an amount according to proof. 92. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. NINTH CAUSE OF ACTION (Violation of the Unruh Civil Rights Act - California Civil Code §§ 51 and 52 et seq. - 0n behalf 0f Complainants Atneosen and Akhtar against All Defendants) 93. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 94. Plaintiffs are entitled t0 the full and equal accommodations, advantages, facilities, privileges, 0r services in all business establishments of every kind whatsoever n0 matter their race or national origin and n0 business establishment 0f any kind whatsoever may discriminate against Plaintiffs because of their race 0r national origin. 95. Defendants reduced Messrs. Atneosen and Akhtar’s job responsibilities and eventually terminated them because of their race, color, national origin, and ancestry, and in doing so denied them the full and equal services of its business. 96. Defendants’ intentional discrimination against Plaintiffs interfered with their right t0 filll and equal services and their rights under their employment agreements. 18 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com Otomflmo'l-hOONA MNNMNNMNNAAAAAAAAAA meU‘lng-‘OtomflmmngA Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 47 of 64 97. Defendants’ policy and practice of discriminating against employees of non- Chinese national origin and descent constitutes unlawful discrimination in Violation of Sections 5 1(b) and 5 1 .5 0f the Unruh Civil Rights Act. 98. Pursuant t0 Section 52(a) 0f the Unruh Civil Rights Act, Plaintiffs are entitled to actual damages suffered, statutory damages of up t0 three times the amount of actual damages suffered per Violation, but n0 less than $4,000, and attorney’s fees. Pursuant t0 Section 52(0) of the Unruh Civil Rights Act, Plaintiffs are also entitled t0 injunctive relief against such unlawful practices in order to prevent future damages, for Which there is n0 adequate remedy at law, and to avoid a multiplicity of lawsuits. 99. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. TENTH CAUSE OF ACTION (Violation 0f Unfair Competition Law - California Business and Professions Code §§ 17200 et seq. - 0n behalf of Complainants Atneosen and Akhtar against All Defendants) 100. Plaintiffs re-allege and incorporate herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and allege as follows: 101. Defendants’ policy and practice of discriminating against employees of non- Chinese national origin and descent harmed Plaintiffs and constitutes unlawful discrimination in Violation of the FEHA and Section 51(b) and 5 1 .5 of the Unruh Civil Rights Act. Plaintiffs have been harmed through the reduction ofjob responsibilities and eventual termination, Which constitute unfair business practices in Violation of Section 17200 0f the California Unfair Competition Law. 102. Plaintiffs are entitled to injunctive relief and other equitable relief against such unlawful practices in order to prevent future damages, for Which there is no adequate remedy at law, and t0 avoid a multiplicity of lawsuits. 103. Under the California Unfair Competition Law, Plaintiffs are entitled to injunctive relief, including restitution 0f all wrongfully withheld salary, equity, and other compensation, and attorney’s fees. 19 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com O(DmeU'l-hooNA MNNMNNMNNAAAAAAAAAA mfimu‘lng-‘Olomflmmgwwé Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 48 of 64 104. Plaintiffs are informed and believe and thereon allege that each Defendant was at all times their joint employer and are, therefore, independently liable for the harms committed against Plaintiffs. PRAYER FOR RELIEF WHEREFORE, Plaintiffs pray for judgment against Defendants as follows: 1. For compensatory damages, including but not limited t0, lost back pay (including, but not limited to, salary and bonus wages), equity, and fringe benefits and future lost earnings, equity, and fringe benefits, emotional distress; with legal interest, according to proof as allowed by law; 2. For civil penalties as allowed by law; 3. For punitive damages as allowed by law; 4. For an award 0f costs 0f suit incurred herein and reasonable attorney’s fees; 5. For prejudgment interest and post-judgment interest as allowed by law; 6. For restitution of all wrongfully Withheld salary, equity, and other compensation; 7. For an injunction to prevent future Violations of Government Code § 12940; 8. A declaratory judgment that the practices complained of herein are unlawful and Violate Sections 51(b) and 5 1.5 of the Unruh Civil Rights Act, and Section 17200 et seq., of the California Unfair Competition Law; and, 9. For an award of such other and further relief as the Court deems just and proper. DATED: March 22, 2021 Respectfully submitted, RUDY, EXELROD, ZIEFF & LOWE, LLP By:Mk DAVIDMwfi WILLIAM P. McELHINNY Attorneysfor Plaintiffs Steven Atneosen andAmer Akhtar /// /// 20 COMPLAINT FOR DAMAGES CASE NO. RUDY EXELROD ZIEFF & LOWE LLP 351 CALIFORNIA STREET, SUITE 700 SAN FRANCISCO, CALIFORNIA 94104 PH (415) 434-9300 |Fx (415) 434-0513 | www.rezlaw.com O(DmeU'l-hooNA MNNMNNMNNAAAAAAAAAA mfimu‘lng-‘Olomflmmgwwé Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 49 of 64 DEMAND FOR JURY TRIAL Plaintiffs hereby request trial by jury. DATED: March 22, 2021 RUDY, EXELROD, ZIEFF & LOWE, LLP 5&1“ DAVIDMOVOE WILLIAM P. McELHINNY Attorneysfor Plaintiffs Steven Atneosen andAmer Akhtar 21 COMPLAINT FOR DAMAGES CASE NO. Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 50 of 64 EXHIBIT 2 CM-010 A'I'I'ORNEY OR PARTY WITHOUT ATTORNEY (Name, State Bar number, and address): David A. Lowe (1 7881 1 ), William P. McEIhinny (296259) Rudy, Exelrod, Zieff & Lowe, L.L.P. 351 California Street, Suite 700, San Francisco, California 94104 TELEPHONE N0.: (41 5) 434-9800 ATTORNEY FOR (Name): Plaintiffs Steven Atneosen and Amer Akhtar FAX No. (Optional): (41 5) 434-051 3 FOR COURTUSE ONLY Electronically Filed y Superior Court of CA, SUPERIOR COURT OF CALIFORNIA, COUNTY OF SAN FRANCISCO STREET ADDRESS: 161 North First Street MAILING ADDRESS: 161 North First Street CITY AND ZIP CODE: San Jose, California 951 13 BRANCH NAME: Old Courthouse County of Santa Clara, on 5/7/2021 11:45 AM Reviewed By: D Harris Case #21 CV381 535 CASE NAME: Envelope: 6400255 Steven Atneosen, et al. v. XPT, |nc., et al. CW"- CASE COVER SHEET Complex Case Designation CASE NUMBER . . . . , 21CV381 535E UnlImIted E LImIted E Counter E Jonnder 3:208:2th Egmoagged is Filed with first appearance by defendant JUDGE; exceeds $25,000) $25,000) (Cal. Rules of Court, rule 3.402) DEPT; Items 1-6 below must be completed (see instructions on page 2). 1. Check one box below for the case type that best describes this case: Auto Tort ContractE Auto (22) E Breach of contract/warranty (06)E Uninsured motorist (46) E Rule 3.740 collections (09) Other PIIPDIWD (Personal InjurylProperty E Other collections (09) DamageIWrongful Death) Tort E Insurance coverage (18)E Asbestos(04) . .. E Othercontract(37)E Productnabmty(24) RealpmpenyE Medical malpraCtice (45) E Eminent domain/lnverseE OtherPI/PD/WD(23) condemnation(14) Non-PI/PD/WD(0ther)Tort E Wrongfuleviction(33) Business tort/unfair business practice (07) E Other real property (26) Civil rights (08) Unlawful Detainer Defamation(13) E Commercial(31) Fraud (15) E Residential (32) Intellectualproperty(19) E Dru93(38) Professional negligence (25) JUdicia' ReVieW E Other non-PI/PD/WD tort (35) E Asset forfeiture (05) Employment E Petition re: arbitration award (11)E Wrongfultermination (36) E Writof mandate(02)E Otheremployment(15) E Otherjudicialreview(39) UDDDDE Provisionally Complex Civil Litigation (Cal. Rules of Court, rules 3.400-3.403)E Antitrust/Trade regulation (03)E Construction defect (10)E Mass tort (40)E Securities litigation (28)E Environmental/Toxic tort (30)E Insurance coverage claims arising from the above listed provisionally complex case types (41) Enforcement of JudgmentE Enforcement ofjudgment (20) Miscellaneous Civil ComplaintE RICO (27)E Other complaint (not specified above) (42) Miscellaneous Civil PetitionE Partnership and corporate governance (21)E Other petition (not specified above) (43) 2. This caseE is E is not factors requiring exceptional judicial management: a. E Large number of separately represented parties b. E Extensive motion practice raising difficult or novel issues that will be time-consuming to resolve c. E Substantial amount of documentary evidence court complex under rule 3.400 of the California Rules of Court. If the case is complex, mark the d. E Large number of witnesses e. E Coordination with related actions pending in one or more courts in other counties, states, or countries, or in a federal f. E Substantial postjudgmentjudicial supervision 3. Remedies sought (check allthatapply):a.E monetary b.E nonmonetary; declaratory orinjunctive relief c. E punitive 4. Number of causes of action (specify): Ten (1 O) 5. This caseE is E is not a class action suit. 6. If there are any known related cases, file and serve a notice of related case. (You’may us/Date: May 7, 2021 David A. Lowe (TYPE OR PRINT NAME) M-015) /(SIQNA1JJ§E OAPARTY 0R ATTORNEY FOR PARTY) NOTICE in sanctions. o File this cover sheet in addition to any cover sheet required by local court rule. other parties to the action or proceeding. Plaintiff must file this cover sheet with the first paper filed in the action or proceeding (except small claims cases or cases filed under the Probate Code, Family Code, or Welfare and Institutions Code). (Cal. Rules of Court, rule 3.220.) Failure to file may result - If this case is complex under rule 3.400 et seq. of the California Rules of Court, you must serve a copy of this cover sheet on all ° Unless this is a collections case under rule 3.740 or a complex case, this cover sheet will be used for statistical purposes only. Page 1 of 2 Form Adopted for Mandatory Use Judicial Council of California CM-010 [Rev. July 1, 2007] CIVIL CASE COVER SHEET Cal. Rules of Court, rules 2.30, 3.220, 3.400-3.403, 3.740; Cal. Standards ofJudicial Administration, std. 3.10 www.courts.ca.gov Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 51 of 64 INSTRUCTIONS 0N How To COMPLETE THE COVER SHEET CM-010 To Plaintiffs and Others Filing First Papers. If you are filing a first paper (for example, a complaint) in a civil case, you must complete and file, along with your first paper, the Civil Case Cover Sheet contained on page 1. This information will be used to compile statistics about the types and numbers of cases filed. You must complete items 1 through 6 on the sheet. In item 1, you must check one box for the case type that best describes the case. If the case fits both a general and a more specific type of case listed in item 1, check the more specific one. If the case has multiple causes of action, check the box that best indicates the primary cause of action. To assist you in completing the sheet, examples of the cases that belong under each case type in item 1 are provided below. A cover sheet must be filed only with your initial paper. Failure to file a cover sheet with the first paper filed in a civil case may subject a party, its counsel, or both to sanctions under rules 2.30 and 3.220 of the California Rules of Court. To Parties in Rule 3.740 Collections Cases. A "collections case" under rule 3.740 is defined as an action for recovery of money owed in a sum stated to be certain that is not more than $25,000, exclusive of interest and attorney's fees, arising from a transaction in which property, services, or money was acquired on credit. A collections case does not include an action seeking the following: (1) tort damages, (2) punitive damages, (3) recovery of real property, (4) recovery of personal property, or (5) a prejudgment writ of attachment. The identification of a case as a rule 3.740 collections case on this form means that it will be exempt from the general time-for-service requirements and case management rules, unless a defendant files a responsive pleading. A rule 3.740 collections case will be subject to the requirements for service and obtaining a judgment in rule 3.740. To Parties in Complex Cases. In complex cases only, parties must also use the Civil Case Cover Sheet to designate whether the case is complex. If a plaintiff believes the case is complex under rule 3.400 of the California Rules of Court, this must be indicated by completing the appropriate boxes in items 1 and 2. If a plaintiff designates a case as complex, the cover sheet must be served with the complaint on all parties to the action. A defendant may file and serve no later than the time of its first appearance a joinder in the plaintiff's designation, a counter-designation that the case is not complex, or, if the plaintiff has made no designation, a designation that the case is complex_ CASE TYPES AND EXAMPLES Auto Tort C°ntra°t Provisionally Complex Civil Litigation (Cal. Auto (22)_personal Injury/property Breach of Contract/Warranty (06) Rules of Court Rules 3.400-3.403) Damage/Wrongful Death Breach of RentaI/Lease Uninsured Motorist (46) (if the case involves an uninsured motorist claim subject to arbitration, check this item instead ofAuto) Other PIIPDIWD (Personal Injuryl Property DamagelWrongful Death) Tort Asbestos (04) Asbestos Property Damage Asbestos Personal Injury/ Wrongful Death Product Liability (not asbestos or toxic/environmental) (24) Medical Malpractice (45) Medical Malpractice- Physicians & Surgeons Other Professional Health Care Malpractice Other Pl/PD/WD (23) Premises Liability (e.g., slip and fall) Intentional Bodily Injury/PDNVD (e.g., assault, vandalism) Intentional Infliction of Emotional Distress Negligent Infliction of Emotional Distress Other Pl/PD/WD Non-PIIPDNVD (Other) Tort Business Tort/Unfair Business Practice (07) Civil Rights (e.g., discrimination, false arrest) (not civil harassment) (08) Defamation (e.g., slander, libel) (1 3) Fraud (16) Intellectual Property (19) Professional Negligence (25) Legal Malpractice Other Professional Malpractice (not medical or legal) Other Non-Pl/PD/WD Tort (35) Employment Wrongful Termination (36) Other Employment (1 5) CM-o10 [Rev. July 1, 2007] Contract (not unlawful detainer or wrongful eviction) Contract/Warranty Breach-Seller Plaintiff (not fraud or negligence) Negligent Breach of Contract/ Warranty Other Breach of Contract/Warranty Collections (e.g., money owed, open book accounts) (09) Collection Case-Seller Plaintiff Other Promissory Note/Collections Case Insurance Coverage (not provisionally complex) (1 8) Auto Subrogation Other Coverage Other Contract (37) Contractual Fraud Other Contract Dispute Real Property Eminent Domain/lnverse Condemnation (14) Wrongful Eviction (33) Other Real Property (e.g., quiet title) (26) Writ of Possession of Real Property Mortgage Foreclosure Quiet Title Other Real Property (not eminent domain, landlord/tenant, or foreclosure) Unlawful Detainer Commercial (31) Residential (32) Drugs (38) (if the case involves illegal drugs, check this item; otherwise, repon‘ as Commercial or Residential) Judicial Review Asset Forfeiture (05) Petition Re: Arbitration Award (1 1) Writ of Mandate (02) Writ-Administrative Mandamus Writ-Mandamus on Limited Court Case Matter Writ-Other Limited Court Case Review Other Judicial Review (39) Review of Health Officer Order Notice of Appe_a|-Labor Commnssnoner Appeals CIVIL CASE COVER SHEET Antitrust/Trade Regulation (03) Construction Defect (10) Claims Involving Mass Tort (40) Securities Litigation (28) Environmental/Toxic Tort (30) Insurance Coverage Claims (arising from provisionally complex case type listed above) (41) Enforcement of Judgment Enforcement of Judgment (20) Abstract of Judgment (Out of County) Confession of Judgment (non- domestic relations) Sister State Judgment Administrative Agency Award (not unpaid taxes) Petition/Certification of Entry of Judgment on Unpaid Taxes Other Enforcement of Judgment Case Miscellaneous Civil Complaint RICO (27) Other Complaint (not specified above) (42) Declaratory Relief Only Injunctive Relief Only (non- harassment) Mechanics Lien Other Commercial Complaint Case (non-tort/non-complex) Other Civil Complaint (non-tort/non-complex) Miscellaneous Civil Petition Partnership and Corporate Governance (21) Other Petition (not specified above) (43) Civil Harassment Workplace Violence EIder/Dependent Adult Abuse Election Contest Petition for Name Change Petition for Relief From Late Claim Other Civil Petition Page 2 of 2 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 52 of 64 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 53 of 64 EXHIBIT 3 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 54 of 64 SUM-1 00 SUMMONS FOR COURT USE ONLY (SOLO PARA USO DE LA CORTE) (CITACION JUDICIAL) E_ ILED NOTICE To DEFENDANT: 3/2 0021 2:36 PM (AVIso AL DEMANDADO): CI rk of Court XPT, INC., XPT LIMITED, Nlo USA, INC., Nlo INc., and DOES 1-20, inclusive Su erior Court of CA, Co nty of Santa Clara You ARE BEING SUED BY PLAINTIFF: 21 v381535 (Lo ESTA’ DEMANDANDO EL DEMANDANTE): Re iewed By: R Tien STEVEN ATNEOSEN and AMER AKHTAR En elope: 6083786 NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information below. You have 30 CALENDAR DAYS after this summons and legal papers are served on you to file a written response at this court and have a copy served on the plaintiff. A letter or phone call wi|| not protect you. Your written response must be in proper legal form if you want the court to hear your case. There may be a court form that you can use for your response. You can find these court forms and more information at the California Courts Online Self-Help Center (www.courtinfo.ca.gov/selfhelp), your county law library, or the courthouse nearest you. If you cannot pay the filing fee, ask the court clerk for a fee waiver form. If you do not file your response on time, you may lose the case by default, and your wages, money, and property may be taken without further warning from the court. There are other legal requirements. You may want to call an attorney right away. If you do not know an attorney, you may want to call an attorney referral service. If you cannot afford an attorney, you may be eligible for free legal services from a nonprofit legal services program. You can locate these nonprofit groups at the California Legal Services Web site (www.lawhelpcalifornia.org), the California Courts Online Self-Help Center (www.courtinfo.ca.gov/selfhelp), or by contacting your local court or county bar association. NOTE: The court has a statutory lien for waived fees and costs on any settlement or arbitration award of $10,000 or more in a civil case. The court's lien must be paid before the court wi|| dismiss the case. [A VISO! Lo han demandado. Si no responde dentro de 30 dias, la corte puede decidir en su contra sin escuchar su versio'n. Lea la informacio’n a continuacio’n. Tiene 30 DI'AS DE CALENDARIO después de que Ie entreguen esta citacio’n y papeles Iegales para presenter una respuesta por escrito en esta corte y hacer que se entregue una copia al demandante. Una carta o una Ilamada telefénica no Io protegen. Su respuesta por escrito tiene que estar en fonnato legal correcto si desea que procesen su caso en la code. Es posib/e que haya un formulan’o que usted pueda usar para su respuesta. Puede encontrar estos formularios de la corte y ma’s informacién en el Centro de Ayuda de Ias Cortes de California (www.sucorte.ca.gov), en Ia biblioteca de [eyes de su condado o en la corte que le quede ma’s cerca. Si no puede pagar la cuota de presentacic’zn, pida al secretario de la corte que le dé un formulario de exencién de pago de cuotas. Si no presenta su respuesta a tiempo, puede perder el caso por incumplimiento y la corte le podra’ quitar su sueldo, dinero y bienes sin ma’s advertencia. Hay otros requisites Iegales. Es recomendable que llame a un abogado inmediatamente. Si no conoce a un abogado, puede llamar a un sen/icio de remisio’n a abogados. Si no puede pagar a un abogado, es posible que cumpla con Ios requisites para obtener servicios Iegales gratuitos de un programa de servicios Iegales sin fines de lucro. Puede encontrar estos grupos sin fines de lucro en el sitio web de California Legal Services, (www.lawhelpcaliforniaorg), en el Centro de Ayuda de Ias Cortes de California, (www.sucorte.ca.gov) o poniéndose en contacto con Ia code o el colegio de abogados locales. AVISO: Por Iey, la corte tiene derecho a reclamarlas cuotas y los costos exentos por imponer un gravamen sobre cualquier recuperacio’n de $10,000 o' ma’s de valor recibida mediante un acuerdo o una concesio’n de arbitraje en un caso de derecho civil. Tiene que pagar e/ gravamen de la corte antes de que la corte pueda desechar e/ caso. The name and address of the court is: CASE NUMBER: (NL'Imero del Caso): (El nombre y direccio’n de la code es): 21 CV381 535 Santa Clara Superior Court 161 North First Street, San Jose, California 951 13 The name, address, and telephone number of plaintiff's attorney, or plaintiff without an attorney, is: (El nombre, la direccio’n y e/ nL'Imero de teléfono del abogado del demandante, o del demandante que no tiene abogado, es): David A. Lowe, Rudy, Exelrod, Zieff & Lowe, L.L.P., 351 California Street, Suite 700, San Francisco, California 94104, (415) 434-9800 DATE: Clerk, by _ , Deputy (Fecha) 3/22/2021 2:36 PM Clerk 0f Court (Secretan-o) R. TIen (Adjunto) (For proof of service of this summons, use Proof of Service of Summons (form POS-010).) (Para prueba de entrega de esta citatio’n use el formulario Proof of Service of Summons, (POS-010).) NOTICE TO THE PERSON SERVED: You are served 1. E as an individual defendant. 2. E as the person sued under the fictitious name of (specify): 3. m on behalf of(specify): XPT LIMITED under:E CCP 416.10 (corporation) E CCP 416.60 (minor)E CCP 416.20 (defunct corporation) E CCP 416.70 (conservatee)E CCP 416.40 (association or partnership) m CCP 416.90 (authorized person)E other (specify): 4. E by personal delivery on (date) [SEAL] Page 1 of 1 Form Adopted for Mandatory Use SUMMoNS Code of Civil Procedure §§ 41 2.20, 465 Judicial Council of Califomia www.courts.ca.gov SUM-100 [Rev. July 1, 2009] Case 5:21-cv-05250 Document 1 Filed 07/07/21 Paqe 55 of 64 SANTA CLARA COUNTY SUPERIOR COURT ALTERNATIVE DISPUTE RESOLUTION INFORMATION SHEET Many cases can be resolved to the satisfaction of all parties without the necessity of traditional litigation, which can be expensive, time consuming, and stressful. The Court finds that it is in the best interests of the parties that they participate in alternatives to traditional litigation, including arbitration, mediation, neutral evaluation, special masters and referees, and settlement conferences. Therefore, all matters shall be referred to an appropriate form of Alternative Dispute Resolution (ADR) before they are set for trial, unless there is good cause to dispense with the ADR requirement. What is ADR? ADR is the general term for a wide variety of dispute resolution processes that are alternatives to litigation. Types of ADR processes include mediation, arbitration, neutral evaluation, special masters and referees, and settlement conferences, among others forms. What are the advantages of choosing ADR instead of litigation? ADR can have a number of advantages over litigation: o ADR can save time. A dispute can be resolved in a matter of months, or even weeks, while litigation can take years. c ADR can save money. Attorney's fees, court costs, and expert fees can be reduced or avoided altogether. o ADR provides more participation. Parties have more opportunities with ADR to express their interests and concerns, instead of focusing exclusively on legal rights. o ADR provides more control and flexibility. Parties can choose the ADR process that is most likely to bring a satisfactory resolution to their dispute. o ADR can reduce stress. ADR encourages cooperation and communication, while discouraging the adversarial atmosphere of litigation. Surveys of parties who have participated in an ADR process have found much greater satisfaction than with parties who have gone through litigation. What are the main forms ofADR offered by the Court? Mediation is an informal, confidential, flexible and non-binding process in the mediator helps the parties to understand the interests of everyone involved, and their practical and legal choices. The mediator helps the parties to communicate better, explore legal and practical settlement options, and reach an acceptable solution ofthe problem. The mediator does not decide the solution to the dispute; the parties do. Mediation may be appropriate when: o The parties want a non-adversary procedure c The parties have a continuing business or personal relationship o Communication problems are interfering with a resolution o There is an emotional element involved o The parties are interested in an injunction, consent decree, or other form of equitable relief Neutral evaluation, sometimes called “Early Neutral Evaluation" or “ENE”, is an informal process in which the evaluator, an experienced neutral lawyer, hears a compact presentation of both sides of the case, gives a non-binding assessment ofthe strengths and weaknesses on each side, and predicts the likely outcome. The evaluator can help parties to identify issues, prepare stipulations, and draft discovery plans. The parties may use the neutral’s evaluation to discuss settlement. Neutral evaluation may be appropriate when: o The parties are far apart in their view of the law or value of the case o The case involves a technical issue in which the evaluator has expertise c Case planning assistance would be helpful and would save legal fees and costs o The parties are interested in an injunction, consent decree, or other form of equitable relief -OV6F- cv-5003 REV 10/21/2020 ALTERNATIVE DISPUTE RESOLUTION INFORMATION SHEET CIVIL DIVISION Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 56 of 64 Arbitration is a less formal process than a trial, with no jury. The arbitrator hears the evidence and arguments of the parties and then makes a written decision. The parties can agree to binding or non-binding arbitration. In binding arbitration, the arbitrator’s decision is final and completely resolves the case, without the opportunity for appeal. In non-binding arbitration, the arbitrator’s decision could resolve the case, without the opportunity for appeal, unless a party timely rejects the arbitrator’s decision within 30 days and requests a trial. Private arbitrators are allowed to charge for their time. Arbitration may be appropriate when: o The action is for personal injury, property damage, or breach of contract c Only monetary damages are sought o Witness testimony, under oath, needs to be evaluated c An advisory opinion is sought from an experienced litigator (if a non-binding arbitration) Civil Judge ADR allows parties to have a mediation or settlement conference with an experienced judge of the Superior Court. Mediation is an informal, confidential, flexible and non-binding process in which thejudge helps the parties to understand the interests of everyone involved, and their practical and legal choices. A settlement conference is an informal process in which the judge meets with the parties or their attorneys, hears the facts of the dispute, helps identify issues to be resolved, and normally suggests a resolution that the parties may accept or use as a basis for further negotiations. The request for mediation or settlement conference may be made promptly by stipulation (agreement) upon the filing of the Civil complaint and the answer. There is no charge for this service. Civil Judge ADR may be appropriate when: o The parties have complex facts to review o The case involves multiple parties and problems o The courthouse surroundings would he helpful to the settlement process Special masters and referees are neutral parties who may be appointed by the court to obtain information or to make specific fact findings that may lead to a resolution of a dispute. Special masters and referees can be particularly effective in complex cases with a number of parties, like construction disputes. Settlement conferences are informal processes in which the neutral (a judge or an experienced attorney) meets with the parties or their attorneys, hears the facts of the dispute, helps identify issues to be resolved, and normally suggests a resolution that the parties may accept or use as a basis for further negotiations. Settlement conferences can be effective when the authority or expertise of the judge or experienced attorney may help the parties reach a resolution. What kind of disputes can be resolved byADR? Although some disputes must go to court, almost any dispute can be resolved through ADR. This includes disputes involving business matters; civil rights; collections; corporations; construction; consumer protection; contracts; copyrights; defamation; disabilities; discrimination; employment; environmental problems; fraud; harassment; health care; housing; insurance; intellectual property; labor; landlord/tenant; media; medical malpractice and other professional negligence; neighborhood problems; partnerships; patents; personal injury; probate; product liability; property damage; real estate; securities; sports; trade secret; and wrongful death, among other matters. Where can you get assistance with selecting an appropriate form ofADR and a neutral foryour case, information aboutADR procedures, or answers to other questions about ADR? Contact: Santa Clara County Superior Court ADR Administrator 408-882-2530 cv-5003 REV 10/21/2020 ALTERNATIVE DISPUTE RESOLUTION INFORMATION SHEET CIVIL DIVISION Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 57 of 64 POS A'I'I'ORNEY OR PARTY WITHOUT ATTORNEY: STATE BAR NO: FOR COURTUSE ONLY NAME: David A. Lowe (SBN: 21CV381535); William P. McEIhinny (SBN: 296259) FIRM NAME: Rudy, Exelrod, Zieff & Lowe, LLP STREETADDRESS: 351 California Street, Suite 700 CITY: San Francisco STATE: CA ZIP CODE: 941 04 TELEPHONE No.: 41 5.4349800 FAX No.: 41 5.434.051 3 E-MAILADDRESS: dal@rezlaw.com; wpm@rezlaw.com ATrORNEY FOR (Name): Steven Atneosen and Amer Akhtar SUPERIOR COURT OF CALIFORNIA COUNTY OFSANTA CLARA STREET ADDRESS: 191 N. First Street MAILING ADDRESS: 191 N. First Street CITY AND ZIP CODE: San Jose, CA 951 13 BRANCH NAME: Downtown Superior Court Plaintiff/Petitioner: STEVEN ATNEOSEN and AMER AKHTAR Defendant/Respondent: XPT |NC., et al. CASE NUMBER: NOTICE AND AC NO LED MENT OF RECEIPT CIVIL 21CV381 535 TO (insert name ofparty being served): XPT LIMITED (Via email) NOTICE The summons and other documents identified below are being served pursuant to section 415.30 of the California Code of Civil Procedure. Your failure to complete this form and return it within 20 days from the date of mailing shown below may subject you (or the party on whose behalf you are being served) to liability for the payment of any expenses incurred in serving a summons on you in any other manner permitted by law. If you are being sewed on behalf of a corporation, an unincorporated association (including a partnership), or other entity, this form must be signed by you in the name of such entity or by a person authorized to receive service of process on behalf of such entity. In all other cases, this form must be signed by you personally or by a person authorized by you to acknowledge receipt of summons. If you return this form to the sender, service of a summons is deemed complete on the day you sign the acknowledgment of receipt below. Date of mailing: May 17, 2021 (via email) (TYPE OR PRINT NAME) (SIGNAT/URE OFLSENDERLMd/T NOT BE A PARTY IN THIS CASE) AC NO LED MENT OF RECEIPT This acknowledges receipt of (to be completed by sender before mailing): 1. E A copy of the summons and of the complaint. 2. E Other (specify): Santa Clara Superior CourtAIternative Dispute Resolution Information Sheet (To be completed by recipient): Date this form is signed: June 7, 2021 LEODIS C. MATTHEWS, Attorney for XPT Limited (TYPE OR PRINT YOUR NAME AND NAME OF ENTITY, IF ANY, (SIGNAT RE OF PE.RSON ACKNOWLEDGING RECEIPT, WITH TITLE IF ON WHOSE BEHALF THIS FORM IS SIGNED) ACKNOWLEDGMENT IS MADE ON BEHALF 0F ANOTHER PERSON OR ENTITY) p Form Adopted for Mandatory Use NoTICEAND Ac No LED MENT OF RECEIPT CIVIL Code of Civil Procedure, Judicial Council of Califomia §§ 415.30, 417.10 POS-015 [Rev. Jan uary 1, 2005] www.courtinfo.ca.gov Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 58 of 64 EXHIBIT 4 6/17/2021 Case EuflmweéaaflkrcmmmmtamoofiflmflwmmbmRwenfiaazfifiénxzomm Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) D REGISTRATION STATEMENT PURSUANT T0 SECTION 12(b) OR 12(g) 0F THE SECURITIES EXCHANGE ACT OF 1934 0R ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 0F THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020. 0R D TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) 0F THE SECURITIES EXCHANGE ACT 0F 1934 For the transition period from to 0R D SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report................... Commission file number: 001-38638 NIO Inc. (Exact Name of Registrant as Specified in Its Charter) N/A (Translation 0f Registrant’s Name Into English) Cayman Islands (Jurisdiction of Incorporation or Organization) Building 20, No. 56 AnTuo Road, Anting Town, Jiading District Shanghai 201804, People’s Republic of China (Address of Principal Executive Offices) Wei Feng, Chief Financial Officer Building 20, No. 56 AnTuo Road, Anting Town, Jiading District Shanghai 201804, People’s Republic 0f China Telephone: +8621-6908 2018 Email: ir@nio.com (Name, Telephone, Email and/or Facsimile number and Address 0fCompany Contact Person) Securities registered 0r t0 be registered pursuant to Section 12(b) 0f the Act: Title 0f Each Class Trading Symbol Name of Each Exchange On Which Registered American depositary shares (each NIO New York Stock Exchange representing one Class A ordinary share, par value US$0.00025 per share) Class A ordinary shares, par value US$0.00025 per share* *Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares. Securities registered 0r t0 be registered pursuant to Section 12(g) 0f the Act: https://www.sec. gov/Arch ives/edgar/data/OOO 1 73654 1 /0001 1 0465921 046834/nio-20201 23 1 x20f. htm 1/298 6/1 7/2021 Case EuflmwaéawrcmewmmtamooF?'dmflwowmmRwerfifimfim xzormm Table of Contents We may not be able t0 obtain certain benefits under relevant tax treaty 0n dividends paid by our PRC subsidiaries t0 us through our Hong Kong subsidiary. We are a holding company incorporated under the laws 0f the Cayman Islands and as such rely 0n dividends and other distributions on equity from our PRC subsidiaries to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently applies to dividends paid by a PRC “resident enterprise” t0 a foreign enterprise investor, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance ofDouble Taxation and Tax Evasion 0n Income, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC enterprise. Furthermore, the Administrative Measures for Non- Resident Enterprises to Enjoy Treatments under Treaties, Which became effective in January 2020, require non-resident enterprises to determine Whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file relevant report and materials with the tax authorities. There are also other conditions for enjoying the reduced withholding tax rate according t0 other relevant tax rules and regulations. See “Item 10. Additional InformationiE. TaxationiPeople’s Republic of China Taxation.” As 0f December 3 1, 2020, most of our subsidiaries and variable interest entities at that time located in the PRC reported accumulated loss and therefore they had no retained earnings for offshore distribution. In the future, we intend to re- invest all earnings, if any, generated from our PRC subsidiaries for the operation and expansion 0f our business in China. Should our tax policy change to allow for offshore distribution of our earnings, we would be subject to a significant Withholding tax. Our determination regarding our qualification to enjoy the preferential tax treatment could be challenged by the relevant tax authority and we may not be able t0 complete the necessary filings with the relevant tax authority and enjoy the preferential withholding tax rate of 5% under the arrangement with respect t0 dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiary. We face uncertainty with respect t0 indirect transfers 0f equity interests in PRC resident enterprises by their non-PRC holding companies. In February 2015, the State Administration of Taxation, 0r the SAT, issued the Circular on Issues ofEnterprise Income Tax on Indirect Transfers ofAssets by Non-PRC Resident Enterprises, or Circular 7. Circular 7 extends its tax jurisdiction to not only indirect transfers but also transactions involving transfer 0f other taxable assets, through the offshore transfer 0f a foreign intermediate holding company. In addition, Circular 7 provides certain criteria on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale 0f equity through a public securities market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person Who is obligated t0 pay for the transfer) of the taxable assets. Where a non-resident entelpn'se conducts an “indirect transfer” by transfening the taxable assets indirectly by disposing of the equity interests 0f an overseas holding company, the non-resident enterprise being the transferor, or the transferee, 0r the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose ofreducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subj ect t0 PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer 0f equity interests in a PRC resident enterprise. On October 17, 2017, the SAT issued Circular on Issues of Tax Withholding regarding Non-PRC Resident Enterprise Income Tax, or Circular 37, which came into effect 0n December 1, 2017 and was amended on June 15, 2018. Circular 37 fimher clarifies the practice and procedure of the withholding of nonresident enterprise income tax. We face uncertainties on the reporting and consequences 0f future private equity financing transactions, share exchanges 0r other transactions involving the transfer 0f shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-PRC resident enterprises with respect to a filing or the transferees with respect to Withholding obligations, and request our PRC subsidiaries to assist in the filing. As a result, we and non-PRC resident enterprises in such transactions may become at risk 0fbeing subj ect t0 filing obligations or being taxed under Circular 7 and Circular 37, and may be required t0 expend valuable resources t0 comply With them or t0 establish that we and our non-PRC resident enterprises should not be taxed under these regulations, which may have a material adverse effect on our financial condition and results 0f operations. If the custodians 0r authorized users 0f controlling non-tangible assets 0f our company, including our corporate chops and seals, fail tofulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely aflected. Under PRC law, legal documents for corporate transactions are executed using the chops or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant branch of the SAMR. https://www.sec. gov/Arch ives/edgar/data/OOO 1 73654 1 /0001 1 0465921 046834/nio-20201 23 1 x20f. htm 75/298 6/17/2021 Case Euflmme5awrcmewmmtflmPHfiflWOWfibmRagermzanfifim xzormm 47 https://www.sec. gov/Arch ives/edgar/data/OOO 1 73654 1 /0001 1 0465921 046834/nio-20201 23 1 x20f. htm 76/298 6/17/2021 Case EuflmweéaaflkrcmmmmtamoofiflmflwmmbmRwerfizmfiénxzomm NIO INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except for share and per share data) 1. Organization and Nature of Operations NIO Inc. (“NIO”, or “the Company”) was incorporated under the laws of the Cayman Islands in November 2014, as an exempted company with limited liability. The Company was formerly known as NextCar Inc.. It changed its name t0 NeXtEV Inc. in December 2014, and then changed to NIO Inc. in July 2017. The Company, its subsidiaries and consolidated variable interest entities (“VIEs”) are collectively refeITed to as the “Group”. The Group designs and develops high-perfonnance fully electric vehicles. It launched the first volume manufactured electric vehicle, the E88, t0 the public in December 2017. The Group jointly manufactures its vehicles through strategic collaboration With other Chinese vehicle manufacturers. The Group also offers Energy and Service Packages t0 its users. As 0f December 31, 2019 and 2020, its primary operations are conducted in the People’s Republic of China (“PRC”). The Group began to sell its first vehicles in June 2018. As of December 31, 2020, the Company’s principal subsidiaries and VIEs are as follows: Equity Place and date of incorporation “ ' '" ice interest held or date of acquisition Pri ‘r ' activities NIO NextEV Limited (“NIO HK") (formerly known as NextEV Limited) 100% Hong Kong, February 2015 Investment holding NIO GmbH (formerly known as NextEV GmbH) 100% Germany, May 20 1 5 Design and technology development NIO Holding Co., Ltd. ("NIO Holding") (formerly named NIO (Anhui) Holding Co‘, Ltd.) 100% Anhui, PRC, November 2017 Headquarter and technology development NIO Co‘, Ltd, (“NIO SH”) (formerly known as NextEV Co., Ltd.) 100% Shanghai, PRC, May 2015 Headquarter and technology development NIO USA, Inc. (“NIO US”) (formerly known as NextEV USA, Inc.) 100% United States, November 201 5 Technology development XPT Limited (“XPT”) 100% Hong Kong, December 2015 Investment holding NIO Performance Engineering Limited ("NPE") 100% United Kingdom, July 2019 Marketing and technology development NIO Sport Limited (“NIO Sport”) (formerly known as NextEV NIO Sport Limited) 100% Hong Kong, April 2016 Racing management XPT Technology Limited (“XPT Technology”) 100% Hong Kong, April 2016 Investment holding XPT Inc. (“XPT US”) 100% United States, April 2016 Technology development XPT (Jiangsu) Investment Co., Ltd. (“XPT Jiangsu”) 100% Jiangsu, PRC, May 2016 Investment holding Shanghai XPT Technology Limited 100% Shanghai, PRC, May 2016 Technology development XPT (Nanjing) E-Powertrain Technology Co‘, Ltd‘ (“XPT NJEP”) 100% Nanjing, PRC, July 2016 Manufacturing of E-Powemain XPT (Nanjing) Energy Storage System Co., Ltd. (“XPT NJES”) 100% Nanjing, PRC, October 2016 Manufacturing ofbattery pack NIO Power Express Limited (“PE HK) 100% Hong Kong, January 201 7 Investment holding NextEV User Enterprise Limited (“UE HK”) 100% Hong Kong, February 2017 Investment holding Shanghai NIO Sales and Services Co., Ltd. (“UE CNHC”) 100% Shanghai, PRC, March 2017 Investment holding and sales and after sales management NIO Energy Investment (Hubei) C0,, Ltd. (“PE CNHC”) 100% Wuhan PRC, April 2017 Investment holding Wuhan NIO Energy Co‘, Ltd‘ (“PE WHIV”) 100% Wuhan, PRC, May 2017 Investment holding XTRONICS (Nanjing) Automotive Intelligent Technologies Co. Ltd. (“XPT NJWL”) 50% Nanjing, PRC, June 2017 Manufacturing of components XPT (Jiangsu) Automotive Technology Co., Ltd. (“XPT AUTO”) 100% Nanjing, PRC, May 2018 Investment holding Economic Place and Date of incorporation VIE and VIE’s subsidiaries interest held or date of acquisition Prlme Hubs lelted (“Prlme Hubs”) 100% BVI, October 2014 NIO Technology C0., Ltd. (“NIO SHTECH”) (formerly known as Shanghal NextEV Technology Co., Ltd.) 100% Shanghal, PRC, November 2014 Beljmg NIO Network Technology Co., Ltd. (“NIO BJTECH”) 100% Beljmg, PRC, July 2017 Shanghal Anbln Technology C0., Ltd. (“NIO ABTECH”) 100% Shanghal, PRC, Aprll 2018 As of December 31, 2020, the Company indirectly held 86.476% of total paid-in capital of NIO Holding. In accordance with NIO Holding's share purchase agreement, the redemption of the non-controlling interests is at the holders‘ option and is upon the occurrence 0f the events that are not solely within the control of the Company. Therefore, these redeemable non- controlling interests in NIO Holding were classified as mezzanine equity and are subsequently accreted to the redemption price using the agreed interest rate as a reduction of additional paid in capital (Note 22). Excluding the redeemable non-controlling interests, the Company indirectly held 100% 0f the equity interests ofNIO Holding as of December 31, 2020. As of December 31, 2020, the Company indirectly held 51% of total paid-in capital of PE WHJV. In accordance with the joint investment agreement, the investment by Wuhan Donghu is accounted for as a loan because it is only entitled to fixed interests and subject t0 repayment within five years 01' upon the financial covenant Violation (Note 13(iV)). Excluding the interests held by Wuhan Donghu, the Company indirectly held 100% of the equity interests of PE WHJV as of December 31, 2020. https://www.sec. gov/Arch ives/edgar/data/OOO 1 73654 1 /0001 1 0465921 046834/nio-20201 23 1 x20f. htm 243/298 Case 5:21-cv-05250 Document 1 Filed 07/07/21 Page 63 of 64 EXHIBIT 5 Seemmwbtsmo Documentl Filefiqfiféwzl P Certificate of Surrender (Foreign Qualified Corporation ONLY) Secretary 0f State State of California IMPORTANT - Read Instructions before completing this form. D1601627 There is No Fee for filing a Certificate of Surrender . . Fllmg Number Copy Fees - First page $1.00; each attachment page $0.50; 12/14/2020 Certification Fee - $5.00 Filing Date Note: For information about Franchise Tax Board final tax return requirements. go to ftb.ca.gov. This Space For Office Use Only (Enter the exact name of the corporation as it is recorded with the California Secretary of State. Note: If you registered 1' corporate Name in California using an assumed name, see instructions.) XPT, Inc. 2. 7-Digit Secretary of State Entity Number 3. Jurisdiction (State, foreign country or place where this corporation is formed.) 3899689 Delaware 4. Mailing Address to mail copies of Legal Service (Enter the complete mailing address where the California Secretary of State may forward copies of any legal documents against the corporation that are sewed on the Secretary of State intended for the corporation.) Mailing Address of Corporation City (no abbreviations) State Zip Code 919 North Market Street, Suite 950 New Castle DE 19801 5. Required Statements (Do not alter the Required Statements - ALL must be true to file this Certificate of Surrender.) Statements 5(a) - 5(d) are true: a) The corporation hereby surrenders its rights and authority to transact intrastate business in the State of California. b) The corporation hereby revokes its designation of agent for service of process in California. c) The corporation consents to process against it in any action upon any liability or obligation incurred within the State of California prior to the filing of this Certificate of Surrender may be served upon the California Secretary of State. d) All final returns required under the California Revenue and Taxation Code have been or will be filed with the California Franchise Tax Board. 6. Read and Sign Below (See Instructions. Office or title not required.) I am a corporate officer a d am authorized to sign on behalf of the foreign corporation. Kelly Lu Signature l J Type or Print Name SURC (REV 12/2020) 2020 California Secretaly of State bizfile.sos.ca.gov \OOOQQ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Certificate of Service [California Code of Civil Procedure ’ ’ 1013a & 2015.5] | am employed in the County of Los Angeles, State of California. | am over the age of 18 and not a party within the action. My address is 4322 Wilshire Boulevard, Suite 200, Los Angeles, CA 90010. On July 8, 2021 served the foregoing document(s), described as follows, on all interested parties in this action by placing a true copy thereof Title of Documents: Defendant XPT Limited’s Notice of Filing of Notice of Removal Case Number: 21CV381535 Name and Address(es) or Person(s) Served: David A. Lowe dal@rezlaw.com William P. McElhinny wpm@rez|aw.com Rudy, Exelrod, Ziefe & Lowe, LLP 351 California St. Suite 700 San Francisco, CA 94104 Attorneys for Plaintiffs Steven Atneosen and Amer Ahhtar X ELECTRONIC MAIL: On the above date | caused the above-described document(s) to be sent vial electronic mail to the addressee. X REGULAR MAIL: D | deposited such envelope(s) in the United States Mail at Los Angeles, California with the postage thereon fully prepaid. D | caused such envelope(s) to be deposited in the mail at Los Angeles, California with postage thereon fully prepaid. | am readily familiar with the firm’s practice of collection and processing correspondence for mailing. It is deposited with the U.S. Postal Service on the same day in the ordinary course of business. lam aware that on motion of the party served, service is presumed invalid of postal cancellation date or postage meter date is more than one day after the date of deposit for mailing in this affidavit. Ideclare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on July 8, 2021 at Los Angeles, California. eonie Chen
