fox mobile

1 Plaintiffs Aidan Foley (“Foley”) and AF Double Eagle, Inc. (“Double Eagle.” and together

2 with Foley, “Plaintiffs”) allege in their Complaint against Defendants Elliot Aintabi, Jason Aintabi

3 (together the “Aintabis”), Jesta Digital, LLC (“Jesta Digital”), and Does I through 10, inclusive

4 (collectively “Defendants”), as follows:

5 INTRODUCTION

6 1. Aidan Foley has over 20 years of executive level management experience in the

7 technology and entertainment industries. Foley founded and is CEO of Double Eagle. Prior to

8 founding Double Eagle, Foley was the Chief Marketing Officer and President of the Enterprise

9 Solutions Group of Ascent Media, an $800 million global business of Liberty Media. Prior to

10 Ascent Media, Foley served as CEO of Kodak’s Digital Entertainment Division.

ii 2. In or about October 2009, Foley was contacted by personnel at Fox Mobile Group

12 (“Fox obile”), a division of News Corp., about News Corp.’s plan to sell Fox Mobile. The

13 opportunity to bid on the asset was strictly confidential and open to select bidders by invitation only.

14 News Corp. invited Foley to bid on Fox Mobile. As a result, Foley, on behalf of Double Eagle,

15 enteied into a non-disclosure agreement with News Corp (the “Fox NDA’) to protect the

16 confidential nature of the sale of Fox Mobile.

17 3. After he signed the Fox NDA, Foley began looking for investors to contribute capital

18 for the purchase of Fox Mobile. He offered the investment opportunity to a small group of hand-

19 picked investors and entered into a non-circumvention agreement with each of them to protect

20 Foley’s and Double Eagle’s right and interest in the purchase of Fox Mobile.

21 4. One of these hand-picked investors was the Aintabi family, who conduct business

22 through the name “Jesta Group.” The business is controlled by father and son, Defendants Elliot

23 Aintabi and Jason Aintabi, respectively.

24 5. On or about December 17, 2009, Double Eagle and the Aintabis entered into a

25 Confidentiality and Non-Circumvention Agreement (the “Non-Circumvention Agreement”). The

26 Non-Circumvention Agreement was intended to, and does. preserve and protect Foley’s/Double

27 Eagle’s right to purchase Fox Mobile. The Aintabis had neither the right nor the ability to purchase

28 Fox Mobile on their own; the Non-Circumvention Agreement expressly prohibited it.

149023.1COMPLAINT

1 6. The name “Jesta Group” is on the Non-Circumvention Agreement. However, on

2 information and belief “Jesta Group” was not a legally-formed or legally-existing entity at the time

3 the contract was entered into and at the time the wrongdoing herein occurred.

4 7. “Jesta Group” is defined in the Non-Circumvention Agreement as including any

5 “subsidiaries, affiliates, partners, or related entities” of any of the parties to that agreement. As such,

6 this includes Elliot Aintabi, Jason Aintabi and Jesta Digital, the Defendants named herein.

7 8. In December 2010, after the wrongdoing herein occurred, a limited liability company

8 named Jesta Group, LLC was formed. On information and belief, this entity, Jesta Group, LLC, was

9 created after-the-fact in order to evade the legal liability herein.

10 9. The Non-Circumvention Agreement was entered into in December 2009. Thereafter,

Ii Plaintiffs worked on the Fox Mobile purchase extensively for over a year. Using his expertise in the

12 industry, and through an extensive period of due diligence, Foley developed a business plan to make

13 the company profitable. He managed the due diligence process. He communicated with Fox

14 Mobile. He developed relationships with the News CoI investment bankers responsible for

15 managing the sale he worked with Defendants to structure the purchase

16 10. Foley saw the Fox Mobile purchase as a once-in-a-lifetime opportunity. He poured

17 his energy, resources and time into the project.

18 11. After working with Plaintiffs for about a year, in late 2010 Defendants went dark and

19 stopped communicating with Foley; and shortly thereafter they acquired Fox Mobile on their own.

20 In doing so, they repudiated and breached the Non-Circumvention Agreement.

21 12. Defendants also committed fraud. Throughout 2010, as set forth in detail below,

22 Defendants represented, numerous times, that that they would purchase Fox Mobile with Plaintiffs.

23 Defendants represented to Plaintiffs that they would provide the financing for the purchase. And

24 Defendants told Foley that after the purchase, he would become Chief Executive Officer (CEO) of

25 the company.

26 13. These representations were false. Defendants planned to acquire Fox Mobile on their

27 own, but they needed Plaintiffs’ expertise and contacts to land the deal. For a year, they strung

28 Plaintiffs along, extracting what they needed from Plaintiffs so they could take the deal for

2COMPLAINT

149023.1

1 themselves. Defendants waited until the Non-Circumvention Agreement expired to spring their trap,

2 thinking this would somehow insulate them from liability (it does not).

3 THE PARTIES

4 14. Plaintiff Double Eagle is, and at all times relevant to this Complaint was, a

5 corporation organized and operating under the laws of the State of California, with its principal place

6 of business located in Los Angeles, California.

7 15. Plaintiff Foley is, and at all times relevant to this Complaint was, a resident of Los

8 Angeles County. Foley is the founder and owner of Double Eagle.

9 16. Plaintiffs are informed and believe, and on that basis allege, that Defendant Jesta

10 Digital is, and at all times relevant to this Complaint was, a Delaware limited liability company with

11 its principal place of business located in New York, New York.

12 17. Plaintiffs are infonried and believe, and on that basis allege, that Defendant Elliot

13 Aintabi is, and at all times relevant to this Complaint was, a resident of the State of New York.

14 18 Plaintiffs are informed and believe, and on that basis allege, that Defendant Jason

15 Arntabi is, and at all times relevant to this Complaint was, a resident of the State of New York.

16 19. Plaintiffs are infonued and believe, and on that basis allege, that Defendants Does I

17 through 10, inclusive, are individually and/or jointly liable to Plaintiffs for the wrongs alleged

18 herein. The true names and capacities, whether individual, corporate, associate or otherwise, of

19 Defendants Does 1 through 10, inclusive, are unknown to Plaintiffs at this time. Accordingly,

20 Plaintiffs sue Defendants Does 1 through 10, inclusive, by fictitious names and will amend this

21 Complaint to allege their true names and capacities after they are ascertained.

22 20. Plaintiffs allege that each of the Defendants is, and at all times relevant to this

23 Complaint was, the employee, agent, employer, partner, joint venturer, alter ego, affiliate, principal,

24 and/or co-conspirator of the other Defendants and, in doing the acts alleged herein, was acting within

25 the course and scope of such positions at the direction of, and/or with the permission, knowledge,

26 consent and/or ratification of the other Defendants. As such, each Defendant, through its acts and

27 omissions, is responsible for the wrongdoing alleged herein and for the damages suffered by

28 Plaintiffs.

3COMPLAINT

149023.1

1 JURISDICTION AND VENUE

2 21. The Court has personal jurisdiction over each and every Defendant because the “Non

3 Circumvention Agreement” provides, inter a/ia, that “[t]he parties hereby irrevocably consent to the

4 jurisdiction of the state and federal courts located in Los Angeles, California in any action arising

5 out of or relating to this Agreement, and waive any other venue to which either party may be entitled

6 by domicile or otherwise.” (Non-Circumvention Agreement, ¶ 14.) The Non-Circumvention

7 Agreement is attached hereto as Exhibit A.

8 22. Plaintiffs initially filed this action in the Central District of California based on

9 diversity of citizenship: Aiden Foley, an individual; AF Double Eagle, Inc., a California

10 corporation vs. Elliot Aintabi, an individual; Jason Aintabi, an individual. Jesta Digital, LLC, a

11 Delaware limited liability company; and Does 1 through JO, inclusive, USDC Case No. CV-13-

12 02592-DSF (SSx). Judge Dale Fischer dismissed the case without prejudice because Plaintiffs did

13 not allege the citizenship of the members of Defendant Jesta Digital, LLC. Despite reviewing the

14 corporate records, Plaintiffs have been unable to ascertain the citizenship of the members of Jesta

2 5 Digital, the members do not appear to be listed therein As a result, Plaintiffs hae filed this case in

<16 California State Court.

17 FACTUAL ALLEGATIONS

18 A. The Deal

19 23. In October 2009, Foley was contacted by personnel at Fox Mobile Group about its

20 potential sale. Fox Mobile provides ring tones, video and other content to its customers’ mobile

21 devices on a subscription basis. At the time, News Corp. owned Fox Mobile and wanted to sell it.

22 The sale of Fox Mobile was confidential.

23 24. Fox Mobile put Foley in touch with News Corp. After discussing the opportunity,

24 Foley decided to pursue it. News Corp. required Foley to enter into a non-disclosure agreement (the

25 Fox NDA). Foley, on behalf of Double Eagle, executed the Fox NDA and thereafter began looking

26 for potential investors to raise the capital necessary to purchase Fox Mobile.

27 25. In December 2009, Foley was introduced to Jason Aintabi. They discussed the Fox

28 Mobile sale and the possibility of Defendants providing the capital for the parties to buy the

4

149023.1COMPLAINT

company. Defendants thereafier agreed, and represented to Plaintiffs, that they would provide the

capital for the acquisition of Fox Mobile. Defendants had no contacts at Fox Mobile; they learned of

3 the sale of Fox Mobile from Foley.

4 26. On December 17, 2009, Defendants and Double Eagle entered into the Non-

5 Circumvention Agreement. The agreement provides, in part, as follows:

6 “WHEREAS, Recipient [Jesta] requires certain information fromDiscloser [Double Eagle] in connection with consideration of a possible

7 transaction or relationship between Recipient and Discloser relating to abusiness acquisition target and/or opportunity as described in Schedule A, the

8 nature and parties to which are of a confidential nature (the ‘Transaction’).”(Non-Circumvention Agreement, p. 1.)

9

“The term of this Agreement shall be for a period of one year10 beginning on the Effective Date of this Agreement (the ‘Term’).” (Id., ¶ 3.)

11 “Confidential Information’ shall include all information or materialthat has or could have commercial value or other utility in the business or

12 prospective businesses of Discloser; all information and know-how, whetheror not in tangible form, that is disclosed by one party (Discloser) to the other

13 (Recipient)... By example and without limitation, Confidential Informationincludes, but is not limited to, the proposal materials, project, and Transaction

14 information of Discloser.” (Id., ¶ 1.)Z

2 15 “Recipient agrees not to circumvent or attempt to circumvent thisAgreement in an effort to gain for it, or deny to Discloser, any potential

16 development, investment, acquisition, profits, fees, commissions,remuneration or considerations to the benefit of Discloser which would

17 otherwise be owed to Discloser. It is the intent of both Parties thatRecipient shall not, independent of Discloser, use or take advantage of the

18 Confidential Information, Discloser contacts, Discloser partners,Discloser know-how or expertise developed or disclosed by Discloser to

19 Recipient during the Terms of this Agreement.” (Id., ¶ 4 [bold inoriginal].)

20

“Recipient shall apprise Discloser of all communications,21 developments, facts, proposals, offers, and other matters material to the

Transaction, unless and until Discloser elects to disassociate from the22 Transaction.” (Id.,J4.)

23 “Recipient and its Representatives shall use the ConfidentialInformation solely for the purpose of evaluating a possible Transaction or

24 relationship with Discloser and shall not in any way use the ConfidentialInformation to the detriment of Discloser.” (Id., ¶ 7.)

25

26

27

28

5

149023.1COMPLAINT

1 B. Plaintiffs Put the Deal To2ether

2 27. Plaintiffs worked tirelessly, and without compensation, for a year putting together the

3 purchase of Fox Mobile. This entailed a great deal of work and occurred in phases; in each phase, it

4 was Plaintiffs’ efforts that kept the transaction moving forward.

5 28. Plaintiffs put together a due diligence team, including accountants, bankers and

6 industry experts, to review and analyze Fox Mobile’s financials, corporate structure, and employees

7 and their contracts. Plaintiffs and this team identified areas where they could make the company

8 more efficient. They analyzed the market in which Fox Mobile competes, developed models and

9 forecasts, and put together a business plan for strategic opportunities and growth.

10 29. Plaintiffs identified key executives and other employees they would need after the

11 purchase of Fox Mobile and also identified structural changes that could be made to improve

12 profitability.

13 30. Plaintiffs put together a legal team to review Fox Mobile’s tax structure and

14 contracts—employment and business—and to analyze Fox Mobile’s legal exposure, including how

15 the purchase would impact that exposure.

16 31. Plaintiffs prepared to complete the transaction; and to that end, Plaintiffs entered into

17 agreements with, among others, investment bankers Siemer & Associates. Over the course of the

18 year-long process, Plaintiffs continually adapted to keep the transaction moving forward.

19 32. Defendants did not perform the due diligence and did not assemble the teams to

20 review the viability of Fox Mobile as an acquisition target. Defendants did not even know the

21 company was for sale before Plaintiffs disclosed it to them. Plaintiffs did this work.

22 33. During the bidding phase, Plaintiffs developed information on the other parties

23 bidding for Fox Mobile, including the number and identities of the competing bidders and the

24 structure of their bids.

25 34. As a result of Plaintiffs’ efforts and diligence, Plaintiffs secured an exclusive

26 negotiating period with News Corp. Plaintiffs’ contacts and expertise were crucial in getting the

27 exclusive period and ultimately the deal.

28

6COMPLAINT

149023.1

1 35. During the exclusive negotiating period, Plaintiffs dug deep into Fox Mobile’s

2 business. Plaintiffs traveled to Fox Mobile’s offices in Berlin, Germany and met with financial and

3 industry experts to gather information; and they met with executives at Fox Mobile and News Corp.

4 as well as News Corp’s bankers. Plaintiffs refined their models, forecasts and market strategy in

5 light of this information.

6 36. Plaintiffs were in constant communication with Fox Mobile personnel and its

7 investment bankers handling the deal. Plaintiffs negotiated the terms of the transaction, including its

8 structure and price. Plaintiffs succeeded in lowering the purchase price and structuring the

9 transaction on more favorable terms.

10 37. At the same time, Plaintiffs negotiated with other investors to provide additional

11 funds, if necessary, for Plaintiffs to purchase Fox Mobile. Defendants initially told Plaintiffs that

12 they were not willing to finance the entire deal and that they only wanted to finance the debt portion

13 of the purchase.

14 38. By early November 2010, Plaintiffs had succeeded in substantially reducing the sale

1 price of the company As a result, Defendants asked Plaintiffs it they could provide all the capital

16 necessary for the parties’ joint purchase. Plaintiffs agreed. In November 2010, Plaintiffs began

17 preparing to close the purchase.

18 39. Plaintiffs performed due diligence for closing the transaction. Plaintiffs were in

19 communication with Fox Mobile and Defendants. Plaintiffs’ due diligence team worked to close the

20 transaction before the end of the year.

21 40. However, in or about December 2010, Defendants stopped communicating with

22 Plaintiffs. Prior to that time, Plaintiffs had disclosed to Defendants critical and confidential

23 information necessary for closing the transaction. Plaintiffs shared with Defendants all the

24 confidential information that was developed from Plaintiffs’ contacts and efforts.

25 41. When Plaintiffs had nothing left to give, Defendants stopped responding to Plaintiffs’

26 ernails and stopped communicating with Plaintiffs. Having obtained what they needed, Defendants

27 discarded Plaintiffs and bought the company on their own.

28

7COMPLAINT

149023.1

1 42. Defendants closed the purchase of Fox Mobile in or about late December 2010. On

2 information and belief, the business of Fox Mobile is now owned by Defendant Jesta Digital.

3 C. Defendants’ Fraud

4 43. Elliot Aintabi and Jason Aintabi are father and son. Together, father and son, conduct

5 business through the name “Jesta Group.” Each Defendant acts by and through the others. The son

6 acts for, and at the direction of the father, and vice versa; and both father and son act on behalf of

7 the “Jesta Group.” The misrepresentations of one Defendant are attributable to all Defendants. Each

8 Defendant acts by and through the others. The son acts for, and at the direction of the father; and

9 vice versa. The misrepresentations of one Defendant are attributable to all Defendants.

10 44. Defendants represented to Plaintiffs on multiple occasions that they would provide

11 the capital for the parties’ acquisition of Fox Mobile. In April 2010, Foley met Jason Aintabi in

12 New York. At this meeting, Jason Aintabi told Foley that Defendants would provide the capital for

13 the parties’ acquisition of Fox Mobile. Jason Aintabi also told Foley at this meeting that Foley

14 would be Chief Executive Officer (CEO) of Fox Mobile and would run the business after the

15 purchase

< 16 45. On May 5, 2010, July 6, 2010 and August 23, 2010, Jason Aintabi represented to

17 Foley that (1) Foley would be CEO of Fox Mobile and run the business after the purchase;

18 (2) Defendants were committed to the bid for Fox Mobile; and (3) Defendants would provide the

19 capital for the parties’ acquisition of the company.

20 46. Defendants also represented that they would provide the capital for the acquisition of

21 Fox Mobile in meetings with Plaintiffs and third parties. Specifically, on or about November 17,

22 2010, at a meeting in Defendants’ offices, Elliot Aintabi told Foley, and third parties, that the final

23 bid for Fox Mobile should be submitted to Allen & Company jointly from Defendants and Double

24 Eagle to reflect the parties’ joint role in the acquisition.

25 47. On that same day, Plaintiffs and Defendants met at Allen & Company’s offices with

26 News Corp., Fox Mobile and Allen & Company persoimel regarding the acquisition of Fox Mobile.

27 Elliot Aintabi again reiterated to everyone at the meeting that Defendants were providing the capital

28 for the parties’ acquisition of the company.

8COMPLAINT

149023.1

1 48. Defendants lied to Foley about making him CEO of the business while they schemed

2 to buy Fox Mobile on their own. Defendants strung Plaintiffs along for months to buy time for them

3 to collect the confidential information they needed—e.g., the due diligence, the business plan and the

4 contacts—to close the deal without Plaintiffs.

5 49. On November 29, 2010, Andrew Berkowitz, a senior executive at Jesta, sent Foley an

6 email asking for more information about Fox Mobile. The email asked: “Can you answer these

7 questions: 1. Most current balance sheet; 2. Most current AIR and A/P detail possible; 3. Percentage

8 of true ‘subscribers’ vs. ‘customers’ across the system; 4. Are there any major carrier or content

9 license agreements at risk of not being assigned in this transaction?; 5. Re Chum: we are trying [to]

10 determine how long customers currently stay on the J/J and other platforms and how that has

11 changed from past years (i.e., the ‘stickiness’).”

12 50. Foley believed that Defendants needed this information as part of their due diligence.

13 He trusted and relied on Defendants’ representation that they were providing the money for the

14 parties to acquire Fox Mobile. Defendants sought this information under false pretenses.z t

15 51. In December 2010, Jason Aintabi told Plaintiffs that the Aintabis contacted Fox

< 16 Mobile directly to help Plaintiffs with closing the acquisition. Foley believed Jason Aintabi, trusted

17 Defendants and relied on this, and their other, representation(s). As a result, Foley allowed

18 Defendants to directly contact Fox Mobile and News Corp. on the condition that they keep him

19 apprised as provided in the Non-Circumvention Agreement.

20 52. Defendants lied to Foley about their true intent for engaging Fox Mobile in direct

21 talks. They told Foley that the ability to directly communicate with Fox Mobile would facilitate

22 closing the acquisition of the company. In truth, Defendants wanted direct contact with Fox Mobile

23 so they could purchase Fox Mobile on their own and without Plaintiffs.

24 53. In December 2010, Plaintiffs began to suspect that Defendants’ direct

25 communications with Fox Mobile were not in Plaintiffs’ best interests and withdrew their consent

26 for Defendants to communicate directly with Fox Mobile, as permitted by the terms of the parties’

27 Non-Circumvention Agreement.

28

9COMPLAINT

149023.1

1

3

4

5

6

7

8

9

10

11

12

[3

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

C

7

—

Z

C

54. This lawsuit is for breach of contract and for fraud. It seeks recovery of the damages

provided by law—including disgorgement/restitution, lost profits, out-of-pocket losses and unjust

enrichment—and punitive damages.

FIRST CASUE OF ACTION

(Breach of Contract — AF Double Eagle against All Defendants)

55. Plaintiffs hereby repeat, reallege and incorporate each and every allegation above as

if fully set forth herein, and further allege as follows:

56. On about December 17, 2009, Defendants entered into the i’.Jon-Circumvention

Agreement with Double Eagle, a valid and binding written agreement.

57. Double Eagle has performed all conditions, covenants and promises required on its

part to be performed under the terms of the Non-Circumvention Agreement, except as excused by

Defendants’ wrongful conduct.

58. Defendants materially breached the Non-Circumvention Agreement by usurping

Double Eagle’s right to acquire Fox Mobile. The purpose and effect of the Non-Circumvention

Agreement was to preserve and protect Plaintiffs’ right to purchase Fox Mobile.

59. Defendants had neither the right nor the ability to purchase the company; the Non-

Circumvention Agreement expressly prohibited it. Defendants’ acts negated Plaintiffs’ right and

ability to acquire Fox Mobile.

60. Defendants further materially breached the Non-Circumvention Agreement by the

following wrongful acts:

a. Defendants misused the confidential information Plaintiffs provided them

pursuant to the Non-Circumvention Agreement to acquire Fox Mobile without

Plaintiffs’ participation;

b. Defendants engaged in direct, secret communications with Fox Mobile but did

not disclose those communications to Double Eagle; and

c. Defendants continued to engage in direct communication with Fox Mobile in

disregard of Double Eagle withdrawing its consent to such communications.

10COMPLAINT

149023.1

1 61. As a proximate result of Defendants’ material breaches of the Non-Circumvention

2 Agreement, Double Eagle has been damaged in an amount in excess of $100,000,000, or according

3 to proof at trial.

4 62. In the alternative, Double Eagle seeks the equitable remedy of disgorgernent.

5 Defendants were unjustly enriched in at least the following ways and in an amount in excess of

6 $100,000,000, or according to proof at trial: (1) Defendants acquired Fox Mobile on their own and

7 have retained all the profit for themselves; and (2) Defendants obtained all of Plaintiffs’ confidential

8 information—e.g., including the due diligence, the business plan and the personal contacts—at no

9 cost to Defendants.

10 63. Defendants would not have been able to acquire Fox Mobile on their own and would

ii not have received Plaintiffs’ confidential information but for the Non-Circumvention Agreement and

12 Double Eagle’s performance thereunder.

13 64. Plaintiffs are informed and believe, and on that basis allege, that Defendants plan to

14 sell Fox Mobile (now called Jesta Digital). The sale of the company will result in Defendantsz

15 obtaining all the profit from the acquisition of Fox Mobile, thereby unjustly enriching Defendants

, <16 65. Double Eagle accordingly seeks the remedy of a constructive trust being placed on

17 the proceeds from any sale of this business.

18 SECOND CAUSE OF ACTION

19 (Promissory Fraud against all Defendants)

20 66. Plaintiffs hereby repeat, reallege and incorporate each and every allegation above as

21 if fully set forth herein, and further allege as follows:

22 67. Defendants made the following misrepresentations to Plaintiffs:

23 a. In an April 2010 meeting with Foley, and verbally on or about May 5, 2010,

24 July 6, 2010 and August 23, 2010, Jason Aintabi told Foley that (1) Foley

25 would be CEO of Fox Mobile and run the business after the purchase;

26 (2) Defendants were committed to the bid for Fox Mobile; and (3) Defendants

27 would provide the capital for the parties’ acquisition of the company.

28

11COMPLAINT

149023.1

b. On November 17, 2010, in a meeting at Defendants’ offices in New York,

2 Elliot Aintabi told Foley and others that Defendants would provide the capital

3 for the purchase of Fox Mobile and said that any bid for the company should

4 come from both Defendants and Double Eagle to reflect the parties’ joint role

5 in the acquisition.

6 c. Also on November 17, 2010, at a separate meeting at Allen & Company’s

7 offices with representatives from News Corp., Fox Mobile, Allen & Company

8 and Foley, Elliot Aintabi reiterated Defendants’ commitment to finance the

9 parties’ acquisition of Fox Mobile.

10 68. Defendants made these representations knowing them to be false and with the intent

11 to deceive Plaintiffs. Defendants knew that they were planning to acquire Fox Mobile on their own

12 and that they were not going to make Foley CEO of the business. Defendants engaged in this

13 fraudulent scheme because they needed Plaintiffs’ expertise and contacts to keep the deal moving

14 forward and get it done.

15 69 Defendants intended for Plaintiffs to rely on their misrepresentations and induced

16 Plaintiffs to act in reliance on them. Specifically, Defendants intended their misrepresentations to

E Z 17 induce Plaintiffs to: (1) choose Defendants as their capital investor; (2) perform the due diligence

18 necessary to close the deal; (3) disclose Plaintiffs’ confidential information to Defendants; and

19 (4) allow Defendants to engage in direct talks with Fox Mobile, News Corp. and Allen & Company.

20 70. Plaintiffs justifiably relied on these misrepresentations to their detriment. Indeed,

21 every known written and oral representation made by Defendants to Plaintiffs and third parties,

22 including Fox Mobile, News Corp. and Allen & Company, supported Plaintiffs’ belief.

23 71. Defendants failed to perform as represented. Instead of providing the capital in

24 support of the parties’ bid for the company, Defendants acquired the company for themselves,

25 ousting Plaintiffs from the transaction.

26 72. Plaintiffs changed their position and relied on Defendants’ false representations

27 described herein. Had Plaintiffs known Defendants’ true intent, Plaintiffs would not have chosen

28 them as the capital investor for the parties’ acquisition of Fox Mobile.

12

149023.1COMPLAINT

1 73. Plaintiffs also would not have disclosed their confidential information — the due

2 diligence, the business plan and the contacts — to Defendants. And Plaintiffs would not have allowed

3 Defendants to engage Fox Mobile, News Corp. or Allen & Company in direct talks.

4 74. As a direct and proximate result of Defendants’ false representations, they acquired

5 Fox Mobile on their own and ousted Plaintiffs from the purchase, damaging Plaintiffs in an amount

6 in excess of$ 100,000,000, or according to proof at trial, as follows:

7 a. Loss of profits;

8 b. Disgorgement/restitution for unjust enrichment; and

9 c. Transaction costs.


11 sell Fox Mobile (now called Jesta Digital). The sale of the company will result in Defendants

12 obtaining all the profit from the acquisition of Fox Mobile that they fraudulently acquired, unjustly

13 enriching Defendants.

14 76. Defendant Jesta Digital aided and abetted the fraudulent scheme. Jesta Digital isz

15 owned and controlled by the Aintabis. As such, it was necessarily aware of the Aintabis’

16 misrepresentations to Plaintiffs. Jesta Digital provided substantial assistance to the fraudulent

17 scheme: on information and belief, the Aintabis used it as the entity to acquire Fox Mobile for

18 themselves; and Jesta Digital now owns Fox Mobile so it obtained the benefits of the fraud.

19 77. Plaintiffs accordingly seek the remedy of a constructive trust being placed on the

20 operating profits and proceeds from any sale of this business.

21 78. Defendants’ conduct was committed with the intent of depriving Plaintiffs of their

22 rights and causing Plaintiffs other injuries. Defendants’ conduct was despicable and subjected

23 Plaintiffs to unjust hardship. Defendants’ conduct was malicious, fraudulent and oppressive, and

24 was committed with a conscious disregard for Plaintiffs’ rights. Accordingly, Plaintiffs are entitled

25 to an award of punitive or exemplary damages in an amount sufficient to punish Defendants and to

26 make an example of them.

27

28

13COMPLAINT

149023.1

1 THIRD CASUE OF ACTION

2 (Concealment against All Defendants)

3 79. Plaintiffs hereby repeat, reallege and incorporates each and every allegation above as

4 if fully set forth herein, and further allege as follows.

5 80. Defendants concealed material information and made material misrepresentations to

6 Plaintiffs, causing them to, among other things: (1) choose Defendants as their capital investor; (2)

7 perform the due diligence on Fox Mobile necessary to close the deal; (3) disclose Plaintiffs’

8 confidential information to Defendants; and (4) allow Defendants to engage in direct talks with Fox

9 Mobile, News Corp. and Allen & Company.

10 81. Specitically, Defendants concealed the fact that they were planning to acquire Fox

11 Mobile on their own and oust Plaintiffs from the transaction. Defendants also concealed the fact that

12 they never intended to make Foley CEO of the business after the purchase. By making these

13 representations, Defendants undertook a duty to speak honestly and completely.Un C

14 82. Defendants had a duty to disclose that they were not willing to provide the capital forz tC

15 the parties’ acquisition of Fox Mobile and were instead going to acquire it for themselves, without

< 16 Plaintiffs. And Defendants had a duty to disclose that they did not intend to make Foley CEO of the

17 business after the purchase.

18 83. These representations and promises created a relationship of trust and confidence

19 between the parties. Defendants’ promises to Plaintiffs, which were not in the Non-Circumvention

20 Agreement, independently created a relationship of trust and confidence between the parties.

21 84. Defendants concealed the fact that they were not planning to provide the capital for

22 the parties’ acquisition of Fox Mobile, as they had promised. Instead, they intended to squeeze as

23 much information out of Plaintiffs as they could before acquiring the company on their own.

24 85. Plaintiffs were completely unaware of Defendants’ true intentions. If Plaintiffs had

25 known, they would have chosen a different capital investor. They would not have disclosed their

26 confidential information—the due diligence, the business plan and the contacts—to Defendants.

27 And they would not have allowed Defendants to engage Fox Mobile, News Corp. or Allen &

28 Company in direct talks.

14COMPLAINT

149023, I

1 86. Plaintiffs changed their position and relied to their detriment on Defendants’

2 concealments and misrepresentations described herein. As a direct and proximate result of this

3 conduct, Defendants acquired Fox Mobile for themselves and ousted Plaintiffs from the purchase,

4 damaging Plaintiffs in an amount in excess of $100,000,000, or according to proof at trial.





9 88. As alleged herein, the Aintabis used Jesta Digital to accomplish their fraudulent

10 scheme. Plaintiffs accordingly seek the remedy of a constructive trust being placed on the operating

11 profits and proceeds from any sale of this business.




2 15 was committed with a conscious disregard for Plaintiffs’ rights. Accordingly, Plaintiffs are entitled



18 FOURTH CASUE OF ACTION

19 (Intentional Misrepresentation against All Defendants)



22 91. As described above, Defendants represented multiple times to Plaintiffs that they

23 were committed to Plaintiffs’ bid for Fox Mobile, that Defendants would provide the capital for the

24 purchase of Fox Mobile and that Foley would be CEO of the business. Defendants lied to Plaintiffs

25 in these representations.

26 92. In addition, Defendants misrepresented to Foley the purposes for which they sought

27 infonnation from Plaintiffs and sought direct contact with Fox Mobile:

28

COMPLAINT149023.1

1 a. In or about December 2010, Jason Aintabi contacted Fox Mobile directly and

2 told Plaintiffs that direct contact would facilitate the closing of the deal to

3 jointly acquire Fox Mobile.

4 b. On November 29, 2010, Andrew Berkowitz, a senior executive at Jesta, sent

5 Foley an email requesting detailed information about Fox N obile’s financials,

6 its customer base and its customers’ habits under the pretense that the

7 information was necessary to close the deal for the parties to acquire Fox

8 Mobile.

9 93. Defendants made these misrepresentations knowing them to be false and with the

10 intent to deceive Plaintiffs. Defendants knew that they planned to acquire Fox Mobile for

11 themselves. Defendants engaged in this fraudulent scheme because they needed Plaintiffs’ expertise

12 and contacts to keep the deal moving forward and get it done.

13 94. Defendants intended for Plaintiffs to rely on their misrepresentations and induced

14 Plaintiffs to act in reliance on them. Specifically, Defendants intended their misrepresentations to

2 15 induce Plaintiffs to: (1) choose Defendants as their capital investor; (2) perform the due diligence on

16 Fox Mobile necessary to close the deal; (3) disclose Plaintiffs’ confidential information to

17 Defendants; and (4) allow Defendants to engage in direct talks with Fox Mobile, News Corp. and

18 Allen & Company.

19 95. Plaintiffs justifiably relied on these misrepresentations to their detriment. Instead of

20 providing the capital in support of the parties’ bid for the company, Defendants acquired the

21 company for themselves, ousting Plaintiffs from the transaction.

22 96. Plaintiffs changed their position and relied on Defendants’ false representations

23 described herein. Had Plaintiffs known Defendants’ true intent, Plaintiffs would not have chosen

24 Defendants as the capital investor for the parties’ acquisition of Fox Mobile. Plaintiffs would not

25 have disclosed their confidential information—the due diligence, the business plan and the

26 contacts—to Defendants. And Plaintiffs would not have allowed Defendants to engage Fox Mobile,

27 News Corp. or Allen & Company in direct talks.

28

16COMPLAINT

149023.1

1 97. As a direct and proximate result of Defendants’ false representations, they acquired

2 Fox Mobile on their own and ousted Plaintiffs from the purchase, damaging Plaintiffs in an amount

3 in excess of $100,000,000, or according to proof at trial, as described above.












P 15 to an award of punitive or exemplary damages in an amount sufficient to punish Defendants and to


17 FIFTH CASUE OF ACTION

18 (Constructive Fraud against All Defendants)



21 102. The Non-Circumvention Agreement, and the promises made therein, created a

22 confidential relationship between the Parties. Defendants’ additional promises to Plaintiffs that they

23 would provide the capital for the parties’ acquisition of company and make Foley the CEO of the

24 business—which were not in the Non-Circumvention Agreement—independently created a

25 relationship of trust and confidence between the parties.

26 103. Defendants assured Plaintiffs that they were working together to submit a joint bid for

27 Fox Mobile and that Foley would be CEO of the Fox Mobile business after the acquisition. And

28

17COMPLAINT

149023.1

1 Plaintiffs shared confidences with Defendants regarding diligence, negotiation of the purchase price

2 and strategy to complete the deal.

3 104. Plaintiffs trusted and relied on Defendants because of the promises in the Non-

4 Circumvention Agreement and the promises Defendants made to Plaintiffs after they executed that

5 agreement, as described above. As a result, Plaintiffs: (1) chose Defendants as the capital investor;

6 (2) perfonried the due diligence necessary to close the acquisition of Fox Mobile; (3) disclosed their

7 confidential information—the due diligence, the business plan and the contacts—to Defendants; and

8 (4) allowed Defendants to engage Fox Mobile, News Corp. or Allen & Company in direct talks.

9 105. Despite this confidential and special relationship, Defendants concealed the fact that

10 they were planning to acquire Fox Mobile on their own and oust Plaintifis from the transaction.

11 They concealed that they intended to squeeze as much information out of Plaintiffs as they could

12 before acquiring the company without Plaintiffs. They also misrepresented to Plaintiffs that Foley

13 would be CEO of the business and that they would provide the capital for the parties’ acquisition of

14 the company

15 106 Given the facts alleged herein, in addition to the parties’ confidential and special

, <16 relationship, Plaintiffs justifiably relied on Defendants’ concealments and misrepresentations.

17 107. Plaintiffs changed their position and relied to their detriment on Defendants’

18 concealments and misrepresentations described herein. As a direct and proximate result of this

19 conduct, Defendants acquired Fox Mobile and ousted Plaintiffs from the purchase, damaging

20 Plaintiffs in an amount in excess of$ 100,000,000, or according to proof at trial.








28

18COMPLAINT

149023.1







7 SIXTH CAUSE OF ACTION

8 (Aiding and Abetting Fraud against Jesta Digital)



11 112. Jesta Digital is owned and controlled by Elliot Aintabi and Jason Aintabi, and the

12 Aintabis acted by and through Jesta Digital. As such, Jesta Digital is charged with knowledge of the

13 fraudulent scheme to acquire Fox Mobile without Plaintiffs’ participation. Jesta Digital is also

14 charged with the misrepresentations and concealments alleged herein.

15 113. Jesta Digital actively participated in the fraud and substantially assisted it.

<. 16 Specifically, on information and belief Jesta Digital is the company that bought Fox Mobile from

17 News Corp. at the direction of the Aintabis. As such, Jesta Digital was essential for completing the

18 fraudulent scheme alleged herein.

19 114. As a direct and proximate result of this conduct, Defendants (including Jesta Digital)

20 acquired Fox Mobile and ousted Plaintiffs from the purchase, damaging Plaintiffs in an amount in

21 excess of S 100,000,000, or according to proof at trial.





26 116. Plaintiffs accordingly seek the remedy of a constructive trust being placed on the

27 operating profits and proceeds from any sale of this business.

28

19COMPLAINT

149023.1

1 117. Jesta Digital’s conduct was committed with the intent of depriving Plaintiffs of their

2 rights and causing Plaintiffs other injuries. Jesta Digital’s conduct was despicable and subjected

3 Plaintiffs to unjust hardship. Jesta Digital’s conduct was malicious, fraudulent and oppressive, and


5 to an award of punitive or exemplary damages in an amount sufficient to punish Jesta Digital and to


7 PRAYER FOR RELIEF

8 WHEREFORE, Plaintiffs respectfully pray for judgment against Defendants, as follows:

9 1. compensatory damages in excess of $100,000,000, or according to proof at trial;

10 2. punitive damages;

11 3. restitution/disgorgement of operating profits and proceeds from any sale of the

12 business;

r 13 4. constructive trust;

14 5. attorneys’ fees;

15 6 pre- and post-judgment interest

< 16 7. costs of this suit; and

17 8. for such other and further relief as the Court may deem just and proper.

18

19 DATED: April 22, 2013 MILLER BARONDESS, LLP

By:________________________________L IS R. MILLER

22 . . -Attorneys for Plaintiffs Aidan Foley and

23 AF Double Eagle, Inc.

24

25

26

27

28

20COMPLAINT

I 49023.1

z

- -

3

DEMAND FOR JURY TRIAL

Plaintiffs Aidan Foley and AF Double Eagle, Inc. hereby demand a jury trial.

1

DATED: April 22, 2013 MILLER

LOl R. MILLER

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

23

24

25

26

27

28

Attorneys for Plaintiffs Aidan Foley andAF Double Eagle, Inc.

21

11Qfl7 1

COMPLAINT

EXHIBIT A

CONFIDENTIALITY AND NON.CIRCUMVENTION AGREEMENT

This CONFIDENTIALITY AND NON-CIRCUMVENTION AGREEMENT (theAgreement) is entered into on December —, 2009 (“Effective Date”) by and betweenc’q. (“Company” or “Recipient”) located at.S Aa-i../4’i- &,, t.54 (oc z , and AF Double Eagle, Inc. (“Double Eagle”or “Discloser”) located at 10900 Wilshire Boulevard, Suite 400, Los Angeles, CA 90024,(each a “Party” and collectively the “Parties,” including any of their respective current orfuture subsidiaries, affiliates, partners, or related entities. Double Eagle will disclose andotherwise provide Recipient with certain Confidential Information as defined herein

WHEREAS, Recipient requires certain information from Discloser in connection withconsideration of a possible transaction or relationship between Recipient and Discloserrelating to a business acquisition target and/or opportunity as described in Schedule A, thenature and parties to which are of a confidential nature (the ‘Transaction”);

WHEREAS, in the course of consideration of the Transaction, Discloser may discloseto Recipient confidential, important, and/or proprietary trade secret information concerningDiscloser, its business activities, opportunities, relationships, contacts, partners, clients, etc.;

THEREFORE, the Pai-ries agree to enter into a confidential relationship with respect tothe disclosure by Discloser to Recipient of certain information.

1. Definitions. For purposes of this Agreement, “Confidential Information” shallinclude all information or material that has or could have commercial value or other utility nthe business or prnspective businesses of Discloser; all information and know-how, whether ornot in tangible form, that is disclosed by one party (Discloser) to the other (Recipient) and isrelated to the business, technical, or financial affairs of the disclosing party or its parent,subsidiaries, or affiliates. Confidential Information may include, without limitation, anyinvention (whether patentable or not), projects, developments, real estate, vendor information,suppliers, products, formulas, methods, techniques, customer/client/investor information (inparticular, identities, names, activities, arid transactions), trade secrets, processes, research,reports, financial data, technical data, software code, software documentation, hardwaredesign, technology, marketing or business plans, forecasts, financial statements, budgets,licenses, prices, cost or personnel data. Failure to mark or designate any ProprietaryInformation as confidential or proprietary shall not affect its status as Proprietary Informationunder this Agreement. Notwithstanding any of the foregoing, nothing will be deemedconfidential unless it relates specifically to the opportunity described on Schedule A. Byexample and without limitation, Confidential Information includes, but is not limited to, theproposal materials, project, and Transaction information of Discloser.

For purposes of this Agreement, the term “Representative’ shall include Recipient’sdirectors, officers, employees, agents, partners, atTiliates, and financial, legal, and otheradvisors.

AF Doubic Ea Inc.(0900 Wiklrc Sivd.Suic 400Los AnecIcs, CA 90024www. A FDbIcEagic.c’o’c

2. Exclusions. Confidential Information does not include information thatRecipient can demonstrate: (a) was in Recipient’s possession prior to its being furnished toRecipient under the terms of this Agreement, provided the source of that information was notknown by Recipient to be bound by a confidentiality agreement with or other continual, legalor fiduciary obligation of confidentiality to Discloser; (b) is now, or hereafter becomes,through no act or failure to act on the part of Recipient, generally known to the public; (c) isrightfully obtained by Recipient from a third party, without breach of any obligation toDiscloser; or (d) is independently developed by Recipient without use of or reference to theConfidential Information.

3. Confidentiality. Recipient, Discloser and their Representatives shall notdisclose any of the Confidentiaj rnformation in any manner whatsoever, except as provided inparagraphs 4 and 5 of this Agreement, and shall hold and maintain the ConfidentialInformation in strictest confidence. The term of this Agreement shall be for a period of oneyear beginning on the Effective Date of this Agreement (the “Term”). Recipient herebyagrees to indemnify Discloser against any and all losses (including, but not limited to, directlosses and those that are consequential and reasonably foreseeable), damages, claims,expenses, and attorneys fees incurred or suffered by Discloser as a result of a breach of thisAgreement by Recipient or any of its Representatives.

Without the prior written consent of the Discloser, Recipient will not, and Recipientwill direct its Representatives not to, disclose to any person (a) that the ConfidentialInformation has been made available to Recipient or its Representatives, (b) that discussionsare taking place concerning a Transaction, or (c) any terms or other facts with respect to theTransaction, including the status thereof

4. Non-Circumvention. Recipient hereby agrees to abstain from circumventing theintent and terms of this Agreement by means or use of affiliates, subsidiaries, individuals, orany other entities or Representatives to which the benefits may run to Recipient indirectly,whether by direct payment, payments In kind, agreements, or any other type of beneficialtreatment or consideration. Recipient agrees not to circumvent or attempt to circumventthis Agreement in an effort to gain for It, or deny to Discloaer, any potentialdevelopment, investment, acquisition, profits, fees, commissions, remuneration orconsiderations to the benefit or Discloser which would otherwise be owed to Discloser. Itis the intent of both Parties that Recipient shall not., independent of Discloser, use or takeadvantage of the Confidential Information, Discloser contacts, Discloser partners,Discloser know-bow or expertise developed or disclosed by DIscloser to Recipient duringthe Term of this Agreement.

Upon Discloser’s written consent, Recipient may initiate direct communication withthe acquisition target(s) subject to the Transaction. Discloser reserves the right to withdrawsuch consent at any time in the event Discloser determines Recipient’s communication withthe target company or any other party to the Transaction is not in Discloser’s best interests.Recipient shalt apprise Discloser of all communications, developments, facts, proposals,offers, and other matters material to the Transaction, unless and until Discloser elects todisassociate from the Transaction.

2

5. Permitted Disclosures. Recipient may disclose Confidential Information toRecipient’s responsible Representatives with a bona tide need to know such ConfidentialInformation, bat only to the extent necessary to evaluate or carry Out a proposed transaction orrelationship with Discloser and only if such employees are advised of the confidential natureof such Confidential Information and the terms of this Agreement and are bound bya writtenagreement or by a legally enforceable code of professional responsibility to preserve andprotect the confidentiality of such Confidential Information.

6. Repuird Disclosures, Recipient may disclose Confidential Information if aridto the extent that such disclosure is required by an order issued by a federal or state court ofcompetent jurisdiction, provided that Recipient provides Discloser a reasonable opportunity toreview the disclosure before it is made and to interpose its own objection to the disclosure.

7. L. Recipient and its Representatives shall use the Confidential Informationsolely for the purpose of evaluating a possiblc Transaction or relationsbip with Discloser andshall not in any way use the Confidential information to the detriment of Discloser. Nothingin this Agreement shall be construed as granting any rights or other legally cognizablcproprietary interest to Recipient, by license or otherwise, to any of Discloser’s ConfidentialInformation.

8. Return of Documcnts. [f Recipient does not proceed with the possibletransaction with Discloser, Recipient shall, if the Discloser requests in its sole discretion,return to Discloser any and all records, notes, and other written, electronic, printed or othertangible materials in its possession pertaining to the Confidential Information. Such return ofmaterials shall not relieve Recipient and its. Representatives from their respectLve obligationsto comply with the other terms and conditions of this Agreement.

9. No Additional Agreements. Neither the holding of discussions nor theexchange of materials or information shall be construed as an obligation of Discloser to enterinto any other agrcement with Recipient or prohibit Discloser from providing the same orsimilar information to other parties and entering into agreements with other parties. Discloserreserves the right, in its sole discretion, to reject any and all proposals made by Recipient orany of its Representatives with regard to a ti-ansaclion between Recipient and Discloser and toterminate discussions and negotiations with Recipient or any of its Representatives at any timeand for any reason. Any additional agreement between the parties, if any, shall be executed inwriting and signed by Discloser and Recipient.

10. Irreparable Harm. Recipient understands and acknowledges that any disclosureor misappropriation by it or any of its Representatives of any of the Confidential Informationin violation of this Agreement may cause Discloser irreparable harm, the amount of whichmay be difficult to ascertain, and therefore agrees that Discloser shall have the right to applyto a court of competent jurisdiction for specific performance andJor an order restraining andenjoining any such further disclosure or breach and for such other relief as Discloser shalldeem appropriate. Such right of Discloser is to be in addition to the remedies otherwise

I’ c 3

available to Discloser at law or in equity. Recipient and its Representatives hereby expresslywaive the defense or assertion that a remedy in damages ‘vill be adequate.

II. Representations and Warranties. Double Eagle has not and shall not bedeemed to have made anv representations or warranties as to the accuracy or completeness ofthe Confidential Information. Only those representations or warranties which are made by thepertinent party in a final definitive agreement regarding a Transaction, when, as and if executed, and subject to such limitations and restrictions as may be specified therein, will haveany legal effect.

1 2. Survival. This Agreement shall continue in full force and effect for one yearfrom execution by both panics. If one or more provisions of this Agreement should bedeemed to be unenforceable by a court of competent jurisdiction, it is the intention of theparties that the remainder of the Agreement be enforced to the maximum extent that suchenforcement is allowable under California law.

13. Successors and Assigns. This Agreement and each party’s obligationshereunder shall be binding on the representatives, assigns, and successors of such party andshall inure to the benefit of the assigns and successors of such party; provided, however, thatthe rights, duties and obligations of Recipient and Discloser hereunder are not assignable.14. Governing Law. This Agreement shall be governed by and construed inaccordance with the laws of the State of California, without regard to conflict of lawprinciples. The parties hereby irrevocably consent to the jurisdiction of the state and federalcourts located in Los Angeles, California in any action arising out of or relating to thisAgreement, and waive any other venue to which either party may be entitled by domicile-orotherwise.

IS. Attorney’s Fees. If any action at law or in equity is brought to enforce orinterpret the provisions of this Agreement, the prevailing party in such action shall be awardedits reasonable attorneys fees and costs incurred,

16. Counterparts and Jg This Agreement may be signed in counterparts, whichtogether shall constitute one agreement. The person signing on behalf of Recipient representsthat he or she has the right and power to execute this Agreement.

I 7. Leg& Effect. This agreement binds the Parties only with respect to the mattersexpressly set forth herein. As such, unless and until a subsequent definitive written agreementregarding a Transaction has been executed, (a) Recipient will be under no legal obligation ofany kind whatsoever to negotiate or consummate a Transaction, and (b) Recipient shall haveno claim whatsoever against Double Eagle or any of its directors, officers, owners, affiliates orrepresentatives arising out ofor relating to any Transaction or Confidential Information.IS. Entire Agreement, This Agreement expresses the full and completeunderstanding of the parties with respect to the subject matter hereof and supersedes all prioror contemporaneous proposals agreements, representations and understandings, whetherwritten or oral, with respect to the subject matter hereof. This Agreement is not to beconstrued, however, to limit any rights that Discloser may have under trade secret, copyright,

l’n, 4

patent or other laws that may be available to Discloser. This Agreement may not be amendedor modi fled except in writing signed by each of the parties hereto. The headings hereof aredescriptive only and not to be construed in interpreting the provisions hereof.

Date: December_, 2009

ACKNOWLEDGED, UNDERSTOOD & AGREED:

AF DOUBLE EAGLE, ENC.

By:.-.

.

Aidan Foley, CEO

“RECIPfENT’: 1/

By.____

Name: ik’L. t’1

Its:_____________

P , e 3

fox mobile

Documents