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The issue of national security has become an important element of the re-ordering of apex powers as they continue to decouple their economies and set up their own post-global imperiums. For example--even as the liberal democratic camp seeks to extend the reach of its normative projects respecting human rights and sustainability in the context of economic activity through the enactment of mandatory human rights due diligence laws (e.g., France, Germany and soon the E.U.) or more specifically targeted due diligence to reporting compliance regimes (e.g. Canada (forced and child labor); U.K. and Australia (modern slavery)), competitor imperiums have sought to invoke national security to make it much more difficult for such compliance regimes to penetrate territories or production chains they control. The impulse, however, extends as well to the operations of non-state sector market driven economic activity.
Information has, in effect, been transformed into a public asset--property that is either public or which can serve a public purpose. It follows that the generation, control, and use of such regulatory assets is now increasingly understood not only as state property (in Marxist-Leninist systems) but also as regulatory assets (in liberal democratic systems). In both senses, then, such assets can be understood as elements essential to the operation of compliance based governance systems increasingly at the core of state managerialim across political ideology. While one might speak about these assets in terms of ownership, one can also understand their emerging character as assets subject to control by public bodies (administrative organs and their officials)--through regimes of regulation, approvals, supervision, disclosure, and review.That impulse appears to serve as a point of convergence in the regulatory appetites of liberal democratic and Marxist Leninist states, though starting from quite different points and serving quire different ends. (Discussed at Due Diligence and Mandatory Human Rights Due Diligence Disjunctions: Liberal Democratic Markets-Compliance Based Legalities Versus Marxist-Leninist Constitution of Information as State Regulatory Property).
In China, for example, national regulation, including data protection and national secrets laws, have been used to investigate consulting companies and others in the business of supplying information. The recent raid of Capvision in Hong Kong (purveyors of industry intelligence; more here) provides a recent case in point. "The unusually public nature of the investigation reinforced a message from Beijing that has been growing in volume in recent months: Information about China is a valuable resource and a matter of national security, and revealing it to foreigners could land you in jail." (Dan Strumpf and Selina Cheng, "'Expert Networks' in China Face Scrutiny," Wall Street Journal 12 May 2023, p. B1). Reporting on recent investigation of Bain & Co.'s Shanghai offices, the rad on the Beijing offices of Mintz Group, cyber reviews of Micron Technology, Inc., and the detention of a Japanese employee of Astellas Pharma, Inc., suggests a broader purpose.
Business executives who have consulted with Chinese authorities said the government aims to limit the information collected by foreign companies such as auditors, management consultants, and law firms that could influence how the outside world views China. That has worried the Western business community, which relies on credible information and professional services to assess risks in China. (Lingling Wei, "China Ratchets Up Pressure Campaign on Foreign Firms," Wall Street Journal 28 April 2023, p. A1; A10).
That use of national security as a shield against the projection of foreign political authority into competitor host states has also been invoked by the liberal democratic camp against their Chinese counterparts. The greatest sensitivity has been focused on the tech sector. Starting almost a decade ago, there appeared to be a growing concern with hardware and software products that could be used as a source of spying or data gathering--including for example and perhaps most famously with Huawei products. "Most recently in the United States, a group of senators has urged the Biden administration to impose sanctions on Huawei Technology’s Cloud unit, Alibaba Cloud, and other Chinese cloud service providers." (Joe Panettieri, Huawei Banned and Permitted in Which Countries? (27 April 2023)).
Currently, the focus is on the sweeping of data from popular platforms--principally Tiktok (and its operating company Bytedance, Inc. (Delaware).
Lawmakers and regulators in the West have increasingly expressed concern that TikTok and its parent company, ByteDance, may put sensitive user data, like location information, into the hands of the Chinese government. They have pointed to laws that allow the Chinese government to secretly demand data from Chinese companies and citizens for intelligence-gathering operations. They are also worried that China could use TikTok’s content recommendations for misinformation. (Sapna Maheshwari and Amanda Holpuch , "Why Countries Are Trying to Ban TikTok," The New York Times (26 April 2023))
States have required that the App be deleted from government devices and legislation is being considered to ban the App within the United States (ibid.). Of course, the issue is not the App itself, but the transmission of data through it.
The impetus for further action may be significantly affected by a lawsuit filed by a former ByteDance employee, Yintao Yu, against his employer. The complaint has has a long history. The initial complaint was filed pro se by Mr. Yu on November 11, 2022 in the Superior Court for the County of San Francisco (CGC-22-603019); it was removed to the Federal Court for the Northern District of California by defendant Bytedance by Notice of Removal filed 16 February 2023 (Case No.: 3:23-cv-707). It was subsequently dismissed by the federal court without prejudice for failure to prosecute on 20 April 2023. On 1 May 2023, Mr. Yu, now represented by counsel, filed another complaint in the Superior Court for the County of San Francisco (CGC-23-606246), which roughly contained the same allegations in the earlier complaint. That 1 May 2023 Complaint alleged wrongful termination of the plaintiff, in the course of the explanation of the circumstance of which Mr, Yu alleged as follows:
10. Shortly after beginning his employment, Mr. Yu became aware that ByteDance had for years engaged in a worldwide scheme to steal and profit from the copyrighted works of others. The effort involved the use of software to strip intellectual property from competitor’s websites — chiefly, Instagram and Snapchat — and populate its own video services with these videos in an effort to make its own services appear more popular to end users. These actions were taken without the permission of the content creators and represented an unlawful effort to gain an edge against entrenched online video hosting websites.
11. Upon learning of this program, Mr. Yu was troubled by ByteDance’s efforts to skirt legal and ethical lines, not to mention the tremendous liability that intellectual property theft of this magnitude could create for the company. It was his understanding that taking material from competitors’ websites without the creator’s permission violated the law. Mr. Yu raised these concerns with Wenjia Zhu, formerly Senior VP of Engineering and current CEO of Toutiao, numerous times, as early as October 2017 and again in February and March 2018. Mr. Zhu reports directly to ByteDance’s CEO Yiming Zhang. When informed of Mr. Yu’s concerns with the program, Mr. Zhu was dismissive of them, and the intellectual property infringement continued unabated. (Yu v. Bytedance, Inc. (CGC-23-606246), supra, ¶¶ 10-11).
More interesting still, it was reported by the New York Times (and thereafter widely reported see, e.g., here, here) that another filing was made by Mr. Yu on 12 May 2023, with far more interesting allegation (Tom Fuller and Sapna Maheshwari, "Ex-ByteDance Executive Accuses Company of ‘Lawlessness’:The former executive sued ByteDance, which owns TikTok, for wrongful termination and accused the company of lifting content from rivals and “supreme access” by the Chinese Communist Party," New York Times (12 May 2023).
Among the most striking claims in Mr. Yu’s lawsuit is that ByteDance’s offices in Beijing had a special unit of Chinese Communist Party members sometimes referred to as the Committee, which monitored the company’s apps, “guided how the company advanced core Communist values” and possessed a “death switch” that could turn off the Chinese apps entirely. “The Committee maintained supreme access to all the company data, even data stored in the United States,” the complaint said. (Ibid.)
These allegations appear to be in addition to earlier claims of stealing content from Snapchat and Instagram. "Yu alleges the company was driven by a “culture of lawlessness” that focused on growth at all costs.“He was surprised by the brazenly unlawful conduct within the company, which was euphemistically excused as ‘entrepreneurship,’” according to the complaint." (Joel Rosenblatt and Bloomberg, "TikTok parent ByteDance sued by former California executive alleging China had ‘supreme access’ to all data", Fortune (13 May 2023). Mr. Yu also "claimed that the company was "responsive" to the CCP's requests to share information and to "elevate or remove" content at their request. For instance, Yu saw the company promote content that "expressed hatred for Japan," the suit says." (Sareen Habeshian, "Ex-ByteDance exec claims CCP "maintained" access to U.S. data," Axios (13 May 2023)). One has here all the elements of the central post-global contradiction--dual purpose informationas an economic commodity and a state asset; the role of information as both a regulatory means and a markets ends; the tensions between sovereign autonomy, borderless markets, and the use of markets as a means of projecting public power (or advancing state interests). In a sense, the only difference between the E.U., Canada, the U.K. and China are the ideological ends for which they seek and use information derived from the market activities.
The allegations, if proven (though to some extent it might be enough to have been made and with respect to which discovery may be anticipated), presents another instance of the citical turn in the public character of information. It also suggests the increasing difficulty of distinguishing between information as a market asset (subject to regulatory protections in markets) and information as state assets the (mis)use of which trigger blocking or retaliatory measures under the national security exception. What has become clear, though, is that the public character of information--(1) as vital to the operation of compliance based frameworks for managing the human rights and sustainability effects of economic activity; (2) as the foundation of regulatory action and (3) as inherently tinged with national security characteristics to the extent information could be used to protect foreign objectives into host states--will significantly complicate both the construction of compliance cultures in liberal democratic states, and accelerate the detachment of information based operations by foreign entities operating in China. The key unknown remains substantially unexplored--the effect of the embrace of either approach by states along the production chains managed or controlled by entities whose home states have embraced this regulatory character of information principle.
I will post the new complaint when it is made available through the courts.
YINTAO YU complains and alleges as follows:
I. NATURE OF THE CASE
1. This case arises out of Plaintiff Yintao “Roger” Yu’s termination of employment from Defendant BYTEDANCE, INC., after he had engaged in legally-protected whistleblowing activity, opposed disability discrimination, and shortly after his return from protected medical leave.
II. PARTIES
2. Plaintiff Yu was an employee of Defendant ByteDance, Inc. from approximately August 2017 until his termination in November 2018. He is a resident of California.
3. Upon information and belief, Defendant ByteDance, Inc. is a Delaware corporation, whose principal place of business is San Francisco County, California. The majority of the Company’s executive and administrative functions are performed in California.
4. Defendant Shuyi (Selene) Gao was the head of Human Resources for ByteDance, Inc. Gao lives in and is a citizen of California.
5. The true names and capacities of Defendants named herein as Does 1 through 20, whether individual, corporate, associate or otherwise, and the true involvement of Defendants sued herein as Does 1 through 20, are unknown to Plaintiff who therefore sues said Defendants by such fictitious names. Plaintiff will amend this Complaint to show the true names, capacities, and involvement of Does 1 through 20 when ascertained. Plaintiff is informed and believes and thereon alleges that each of the Defendants designated as a “Doe” is responsible in some manner for the events and happenings referred to herein, and that Plaintiff’s injuries and damages as hereinafter set forth were proximately caused by said Defendants.
6. Plaintiff is informed and believes and thereon alleges that each of the Defendants sued herein is or was the agent, employee, partner and/or representative of one or more of the remaining Defendants, and each of them was at all times acting within the purpose and scope of such agency and employment. Plaintiff is further informed and believes that each of the Defendants herein gave consent to, ratified and authorized the acts alleged herein to each of the remaining Defendants.
8. Plaintiff Yu was hired by Defendant ByteDance, Inc. (“ByteDance” or 9 “Defendant”) on or around June 7, 2017, and began working in August 2017. In addition to his base salary and the option to purchase 220,000 shares of ByteDance stock, Mr. Yu’s employment agreement also entitled him to $600,000, to be “paid within 30 days since the offer was signed,” for the IP from his company Tank Exchange.
9. Within the first 30 days of receiving the offer letter, Mr. Yu spoke with ByteDance’s hiring manager and in-house counsel. They told Mr. Yu that ByteDance had concerns about paying him the $600,000 purchase price for Tank Exchange’s intellectual property without assurances that he would remain with ByteDance for the long term. ByteDance’s representatives encouraged him to sign a multi-year term employment agreement to ensure his continued employment at ByteDance. Ultimately, the parties agreed upon a 2-year term agreement that was binding on both parties and which superseded the “at will” provision contained in his earlier agreement. On a visit to Beijing, Mr. Yu signed the employment contract. ByteDance’s representatives told him that he would receive a copy of this agreement, but it was never shared with him. Under the terms of the supplemental employment agreement, the employment relationship was set to last until August 2019, unless Mr. Yu was terminated “for cause.”
10. Shortly after beginning his employment, Mr. Yu became aware that ByteDance had for years engaged in a worldwide scheme to steal and profit from the copyrighted works of others. The effort involved the use of software to strip intellectual property from competitor’s websites — chiefly, Instagram and Snapchat — and populate its own video services with these videos in an effort to make its own services appear more popular to end users. These actions were taken without the permission of the content creators and represented an unlawful effort to gain an edge against entrenched online video hosting websites.
12. In addition, on or around December 2017, Mr. Yu learned of efforts to terminate a U.S. based employee, Witness A, who suffered from depression. Witness A, who had demonstrably strong performance, had recently requested time off to address her medical condition. Although Witness A’s direct manager, Peiyu “Peggie” Li, was satisfied with her performance and had recently given Witness A a score of “Meets Expectation” on her latest performance review, her skip level manager, Ying Zhi, was not as accommodating. Without Ms. Li’s knowledge, Ms. Zhi had Witness A’s performance score lowered to “Improvement Needed,” and had informed HR to fire Witness A upon the formal release of the ratings. Upon learning of this change, Mr. Yu confronted Ms. Zhi, who admitted that she had made the change because she did not like Witness A taking time off work to address her depression and that she viewed her as a “burden” she “wanted to get rid of.” Ms. Zhi told him that due to Witness A’s medical condition, her “cost of management was too high.” It is Mr. Yu’s understanding that terminating Witness A if she received a rating of “meets expectations” or above would violate ByteDance policy, which is why Ms. Zhi had intervened to lower her score. Mr. Yu was shocked by Ms. Zhi’s admission and requested that she reconsider. However, Ms. Zhi responded that she “won’t even consider keeping [Witness A]. Her cost of management is way too high.” Following this conversation, Mr. Yu complained to Wei “Ronnie” Hua, ByteDance’s Head of HR, about the legality of Ms. Zhi’s actions. On information and belief Defendant Shuyi (Selene) Gao jointly developed the strategy to mask the illegal motivation for terminating Witness A’s employment.
13. Ultimately, following Mr. Yu’s reporting of the incident to HR, the company decided not to terminate Witness A. However, Ms. Zhi’s manager, Nan Zhang, was unhappy with Mr. Yu’s decision to intercede on Witness A’s behalf, particularly given the fact he did not even work in her department. Mr. Yu was later informed that several of Ms. Zhang’s direct reports viewed his actions as a challenge to Ms. Zhang’s leadership and authority. Ms. Zhang later became the general manager of ByteDance’s entire video - “IES” division — the department in which Mr. Yu worked — and was in a position to retaliate against Mr. Yu for his actions.
1 Mr. Yu never received either the written or electronic versions of these notices because the company sent them to old home addresses. The termination letter was sent to Mr. Yu’s former address in Seattle, even though his paystubs listed his current address in Palo Alto. Similarly, instead of using his current e-mail address, the company sent the termination notice to old e-mail accounts he no longer used. There is no record of the company attempting to call Mr. Yu to notify him of his termination.
15. In October 2018, Mr. Yu was finally cleared to return to work by his doctor. However, upon returning to the office for the first time, he was told he did not “need to come to work now” and that the company “will contact you later.” Mr. Yu remained on ByteDance payroll through November 2018 and the first tranche of equity under his stock option award from the company should have vested on August 30, 2017, though ByteDance never vested these shares. In November 2018, Mr. Yu was terminated.
V. PROCEDURAL HISTORY
16. On July 25, 2019, Plaintiff filed a complaint of discrimination with California’s Department of Fair Employment and Housing (DFEH), pursuant to the California Fair Employment and Housing Act (“FEHA”), Cal. Gov’t Code §12900 et seq.
17. Pursuant to the Emergency Rules Related to COVID-19, Emergency Rule 9(a), the statute of limitations on Plaintiff’s claims was tolled an additional 178 days, until January 19, 2021.
18. The Parties have entered into a series of Tolling Agreements, whereby the statute of limitations for Plaintiff’s claims was tolled through and including November 17, 2022.
VI. CLAIMS
FIRST CAUSE OF ACTION (Retaliation in Violation of Labor Code § 1102.5) (Against All Defendants)
19. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
20. At all times relevant to this Complaint, Defendants have been subject to the requirements of Cal. Lab. Code § 1102.5, which applied to Plaintiff as an employee of Defendants.
21. Defendants violated Cal. Lab. Code § 1102.5 by abruptly terminating Plaintiff’s employment in retaliation for his reporting and refusals to participate in activity that violated laws, rules, and regulations against intellectual property misappropriation, anti-discrimination, anti-retaliation, among others.
22. In addition, at all times herein mentioned, FEHA, Cal. Gov’t Code § 12940 et seq., was in full force and effect and was fully binding upon Defendant. Cal. Gov’t Code § 12940(a) prohibits an employer from discharging or discriminating against an employee because of a disability or because they are regarded as having a disability. Defendant violated Section 1102.5 by abruptly terminating Plaintiff’s employment due to his taking medical leave and for reporting and objecting to Defendant’s discrimination against Witness A on the basis of her medical condition. Further, Defendant retaliated against Plaintiff for disclosing information that he had reasonable cause to believe constituted a violation of California’s FEHA to a person with authority over him, or another employee who had the authority to investigate, discover, or correct the violation or noncompliance.
23. As a direct, foreseeable, and proximate result of Defendant’s unlawful actions, Plaintiff has suffered and continues to suffer substantial losses in earnings and other employment benefits and has incurred other economic losses, along with attorney’s fees and litigation costs.
SECOND CAUSE OF ACTION
(Disability Discrimination: Violation of Cal. Gov’t Code § 12940(a)) (Against All Defendants)
26. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
27. At all times herein mentioned, California’s Fair Employment and Housing Act, 24 Cal. Gov’t Code § 12900, et seq., was in full force and effect and was fully binding upon Defendants. Cal. Gov’t Code § 12940(a) prohibits an employer from discharging an employee because of a physical or mental disability or because he is regarded as having a physical or mental disability.
28. Plaintiff was a qualified individual with a disability, able to perform the essential job duties of his position, with reasonable accommodation. ByteDance’s termination of Plaintiff’s employment because of his taking medical leave and need for treatment, violated Cal. Gov’t Code § 12940(a).
29. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered and continues to suffer substantial losses in earnings and other employment benefits, and has incurred other economic losses.
30. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered emotional distress, humiliation, shame, anxiety, and embarrassment, all to Plaintiff’s damage in an amount to be proven at the time of trial.
31. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention of injuring Plaintiff, from an improper and evil motive amounting to malice, and in conscious disregard of the rights and safety of Plaintiff and others. Plaintiff is thus entitled to recover punitive damages from Defendants in an amount according to proof.
THIRD CAUSE OF ACTION
(Failure to Prevent Discrimination: Violation of Cal. Gov’t Code § 12940(k)) (Against All Defendants)
32. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
33. At all times herein mentioned, FEHA, Gov. Code, § 12940, et seq., was in full force and effect and fully binding upon Defendants. Plaintiff was a member of a group protected by that statute in that he was an employee with a known medical condition and/or physical disability who made a request for a reasonable accommodation to treat his medical condition and/or disability.
34. Defendants violated Cal. Gov’t Code § 12940(k) because Defendants failed to take all reasonable steps necessary to prevent discrimination from occurring. Among other things, Defendants failed to train and adequately supervise its employees in order to ensure that these employees were not violating FEHA in their treatment of other employees.
35. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered and continues to suffer substantial losses in earnings and other employment benefits, and has incurred other economic losses.
36. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered emotional distress, humiliation, shame, anxiety, and embarrassment, all to Plaintiff’s damage in an amount to be proven at the time of trial.
37. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention of injuring Plaintiff, from an improper and evil motive amounting to malice, and in conscious disregard of the rights and safety of Plaintiff and others. Plaintiff is thus entitled to recover punitive damages from Defendants in an amount according to proof.
FOURTH CAUSE OF ACTION
(Retaliation in Violation of Cal. Gov’t Code § 12940(h)) (Against All Defendants)
38. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
39. Cal. Gov’t Code§ 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, including discrimination on the basis of a disability.
40. Plaintiff opposed and protested ByteDance’s and Gao’s discrimination against Witness A and attempts to eliminate her position. He made these complaints to HR and Witness A’s managers.
41. In response to his complaints, ByteDance and Gao terminated his employment.
42. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered and continues to suffer substantial losses in earnings and other employment benefits, and has incurred other economic losses.
43. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered emotional distress, humiliation, shame, anxiety, and embarrassment, all to Plaintiff’s damage in an amount to be proven at the time of trial.
44. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention of injuring Plaintiff, from an improper and evil motive amounting to malice, and in conscious disregard of the rights and safety of Plaintiff and others. Plaintiff is thus entitled to recover punitive damages from Defendants in an amount according to proof.
FIFTH CAUSE OF ACTION
(Interference with CFRA Rights: Violation of Cal. Gov’t Code § 12945.2(t)) (Against All Defendants)
45. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
46. Defendant was subject to the provisions of Cal. Gov’t Code § 12945.2(t), the CFRA, because Defendant ByteDance, Inc. employed at least 50 part-time or full-time employees. Plaintiff was entitled to the benefits of the CFRA because he worked more than twelve months for Defendant and had at least 1250 hours of service in the year preceding his CFRA leave. Defendant employed at least 50 employees within 75 miles of San Francisco during the relevant time period.
47. The CFRA requires an employer to grant leave to an employee to care for the employee’s own serious health condition. The CFRA also requires the employer to reinstate the employee to the same or a comparable job upon completion of the leave.
48. Defendants violated Cal. Gov’t Code § 12945.2(t) by failing to reinstate the employee to the same or a comparable job upon completion of the leave.
49. Defendants further violated Section 12945.2(t) by terminating Plaintiff following his return from medical leave.
50. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered and continues to suffer substantial losses in earnings and other employment benefits and has incurred other economic losses.
51. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered emotional distress, humiliation, shame, anxiety, and embarrassment, all to Plaintiff’s damage in an amount to be proven at the time of trial.
52. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention of injuring Plaintiff, from an improper and evil motive amounting to malice, and in conscious disregard of the rights and safety of Plaintiff and others. Plaintiff is thus entitled to recover punitive damages from Defendant in an amount according to proof.
SIXTH CAUSE OF ACTION
(Retaliation in violation of the CFRA: Violation of Cal. Gov’t Code § 12945.2(l)) (Against All Defendants)
53. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
54. The CFRA requires employers to grant leave to employees to care for the employee’s own serious health condition. The CFRA also requires the employer to reinstate the employee to the same or a comparable job upon completion of the leave.
55. Defendants violated Cal. Gov’t Code § 12945.2(l) by failing to reinstate Plaintiff to the same or a comparable job upon completion of the leave.
56. Defendants violated Cal. Gov’t Code § 12945.2(l) by terminating Plaintiff following his return from medical leave.
57. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered and continues to suffer substantial losses in earnings and other employment benefits and has incurred other economic losses.
58. As a direct, foreseeable, and proximate result of Defendants’ unlawful actions, Plaintiff has suffered emotional distress, humiliation, shame, anxiety, and embarrassment, all to Plaintiff’s damage in an amount to be proven at the time of trial.
59. Defendants committed the acts herein despicably, maliciously, fraudulently, and oppressively, with the wrongful intention of injuring Plaintiff, from an improper and evil motive amounting to malice, and in conscious disregard of the rights and safety of Plaintiff and others. Plaintiff is thus entitled to recover punitive damages from Defendant in an amount according to proof.
SEVENTH CAUSE OF ACTION
(Breach of Contract) (Against Defendant ByteDance, Inc.)
60. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
61. On or around September 30, 2017, Plaintiff and Defendant ByteDance, Inc. entered into a written stock incentive plan, whereby Plaintiff was awarded 220,000 shares in Defendant vesting over a four-year period. Shortly thereafter, the Parties signed a two-year term supplemental employment agreement in order to ensure Plaintiff’s continued employment at Defendant. The supplemental employment agreement lasted until August 2019, unless Mr. Yu was terminated “for cause.”
62. Plaintiff completed all conditions necessary to satisfy his obligations under his operative employment agreement by continuing to work for Defendant until he was terminated without cause.
63. The first and second tranches of options under the incentive plan were set to vest on August 30, 2017 and 2018, respectively, though ByteDance never vested these shares. Defendant breached the contract by failing to award Plaintiff the options owed to him under the incentive plan.
64. Accordingly, Plaintiff is entitled to the compensation owed under the incentive plan, including the shares already vested at the time of his termination.
EIGHTH CAUSE OF ACTION
(Breach of the Covenant of Good Faith and Fair Dealing) (Against Defendant ByteDance, Inc.)
65. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
66. Plaintiff’s employment agreement and stock incentive plan contained an implied- in-law covenant of good faith and fair dealing that neither party would do anything to injure the right of the other party to enjoy the actual benefits of those contracts.
67. Plaintiff performed all of the duties and obligations required of him by Defendant during his employment, including those duties and obligations that would entitle Plaintiff to receive the compensation described in the employment agreement and stock incentive plan.
68. Defendant breached the implied covenant when it took actions to prevent Plaintiff from earning their full compensation owed under these agreements.
69. Defendant’s termination of Plaintiff was done in bad faith.
70. As a result of Defendant’s bad faith and unfair dealing in performing the terms of the employment agreement and stock incentive plan, Defendant is liable for breaching the covenant of good faith and fair dealing inherent in those agreements.
71. Accordingly, Plaintiff is entitled to the compensation owed under the employment agreement and stock incentive plan, included continued stock option vesting for the term of the agreements, and the compensation he lost because Defendant unlawfully terminated these contracts.
NINTH CAUSE OF ACTION
(Wrongful Termination in Violation of Public Policy) (Against All Defendants)
72. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
73. Plaintiff’s employment was terminated by Defendant in violation of fundamental public policies of the State of California, including without limitation, the right to refrain from participating in unlawful conduct (or conduct reasonably believed to be unlawful).
74. The conduct detailed herein was wrongful and in violation of fundamental public policies of the State of California as reflected in laws that include, without limitation, the California Labor Code and California Business & Professions Code § 17200, and the California Penal Code.
75. Defendants’ actions were willful and malicious and were committed with the wrongful intent to injure Plaintiff and in reckless disregard of Plaintiff’s rights.
76. As a proximate result of Defendants’ actions, Plaintiff has suffered and will continue to suffer damages that include his unvested stock options, loss of salary, bonuses, and other losses along with attorney’s fees and litigation costs.
TENTH CAUSE OF ACTION
(Unfair Business Practices – Cal. Bus. & Prof. Code §17200) (Against All Defendants)
77. Plaintiff re-alleges and incorporates herein by reference each and every allegation of the preceding paragraphs as though fully set forth herein, and alleges as follows:
78. Cal. Bus. & Prof. Code § 17200 prohibits any unlawful, unfair or fraudulent business practices. By promising Plaintiff valuable equity and then firing him for an unlawful reason and taking back his unvested options, Defendants engaged in unlawful, unfair, and fraudulent business practices. Plaintiff is entitled to restitution of the ByteDance stock options that rightfully belong to him, but which Defendants deprived him of possessing.
PRAYER FOR RELIEF
WHEREFORE, Mr. Yu prays for judgment against Defendants as follows:
2. Liquidated damages as allowed by law;
DEMAND FOR TRIAL BY JURY
Plaintiff hereby demands a trial by jury on all causes of action so triable.
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