Professional Documents
Culture Documents
2021-03-25 - Complaint (File Stamped)
2021-03-25 - Complaint (File Stamped)
2021-03-25 - Complaint (File Stamped)
16 Defendants.
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4 • Struck Capital Management LLC (“SCM”), Struck Capital Fund GP LLC (“Fund I”),
5 and Struck Capital Fund II GP LLC (“Fund II”) (collectively, SCM, Fund I, and Fund
8 Currency GP LLC (“DDC GP”) (collectively, DDC and DDC LP shall be referred to
10 • Struck Capital Special Situations Management LLC (“SCSS”) and Struck Capital
11 Special Situations GP LLC (“SCSS GP”) (collectively, SCSS and SCSS GP shall be
14 • Struck Scratch LLC, Struck Scratch Series B LLC, Struck Scratch Series A LLC, Ignis
15 SPV LLC, Ignis Series B LLC, Probitas SPV LLC, Vectio SPV LLC, Zero SPV LLC,
16 Serico SPV LLC, Struck PF Special Opportunity LLC, Struck OTI Special
17 Opportunity LLC, SC Tectus SPV LLC, Struck Hoco LLC, Struck A43 LLC, Struck
18 AHC Special Opportunity LLC and Zero Series B SPV LLC (collectively, these
21 INTRODUCTION
22 1. In 2014, Mr. Gao and Mr. Struck formed a partnership focused on structuring
23 special purpose vehicles (“SPVs”) to invest in technology companies. They soon found success,
24 and their relationship quickly developed into growing a venture capital enterprise with an
26 2. Although their investment vehicles were generally managed under SCM, which
27 1
Collectively, the SCM Entities, DDC Entities, SCSS Entities, SCSA Entities, and SPV Entities
28 shall be referred as the “Partnership Entities.”
4 banker at Morgan Stanley, experience as a consultant at McKinsey, and venture capital investor
5 experience with one of the largest venture capital firms in the world (New Enterprise Associates,
6 or “NEA”), Mr. Gao provided the knowledge, connections, and experience in the world of
7 venture capital.
8 4. As a former associate at Kirkland & Ellis working in mergers and acquisitions and
9 private equity, Mr. Struck provided the legal experience to help with structuring deals and
12 marginalize Mr. Gao’s equity in their joint ventures by falsely placing organizational documents
14 6. Mr. Gao, on the other hand, so trusted his partner that he left his MBA program at
15 Stanford University, moved to Los Angeles to build their presence in the Southern California
16 market, introduced Mr. Struck as his partner to numerous investors, and almost singlehandedly
19 7. Starting in 2019, and continuing through 2020, the relationship between Mr. Gao
21 8. For the first time, Mr. Struck began claiming that they were not, in fact, 50/50
22 partners and attempted to direct Mr. Gao away from participating in some of their joint funds.
24 9. When Mr. Gao attempted to confirm their status as equal partners, rather than
25 acknowledge that Mr. Gao is an equal 50/50 partner who helped bring their businesses success,
26 Mr. Struck instead belittled Mr. Gao’s contributions to their businesses, forced Mr. Gao out of
27 their companies by claiming to have “terminated” him “for cause,” and besmirched Mr. Gao’s
2 and principal drafter of incorporation and other operating documents to position himself as the
3 sole principal of all of the defendant companies.2 In this way, Mr. Struck has attempted to create
4 the legal fiction that no partnership between himself and Mr. Gao ever existed.
5 11. As a direct result of Mr. Struck’s actions, the Partnership Entities continue to deny
6 Mr. Gao his rightful position as 50/50 owner of said entities, including denying him his right to
7 50% of the equity in the aforementioned defendant entities and 50% of the management fees,
9 12. As a direct result of Defendants’ actions, Mr. Gao has been damaged as of today’s
10 date in the amount of, at least, $126,539.29 in out-of-pocket costs, expenses, and contributions,
11 $1,901,018.32 in management fees, and $1,293,139.89 in carried interest, plus costs and interest.
12 Given the nature of their business, Mr. Gao’s management fees and carried interest in the
13 Partnership Entities are likely to grow considerably over the next five-to-ten years. By denying
14 Mr. Gao his 50% ownership interests in the Partnership Entities, Mr. Gao is being deprived of
15 those future revenues and distributions, including an estimated $12,022,366 in management fees
16 and $30,302,490 in carried interest. As a result, and in addition to being awarded damages, Mr.
17 Gao seeks a declaration from this Court confirming the existence of his partnership with Mr.
18 Struck and a determination by the Court that this partnership entitles him to 50% ownership of all
20 THE PARTIES
21 13. Plaintiff Yida Gao is a California resident living in Los Angeles, California. Mr.
22 Gao was a technology investor at New Enterprise Associates (NEA), one of the world’s largest
23 venture capital funds, where he led diligence and/or sourced over 20 investments. Mr. Gao was
24 also a deal team member of Morgan Stanley’s Mergers & Acquisitions Investment Banking
25 Group in their New York City headquarters where he helped execute over $15 billion in aggregate
26 deal volume. He also held research and programming positions at MIT’s Sloan School of
28 2
Although Mr. Gao is listed as a principal of DDC, Mr. Struck is attempting to unilaterally divest
Mr. Gao of his ownership interest in DDC as well.
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1 14. Plaintiff Sand Hill Advisors LLC is a limited liability company incorporated in
2 Delaware with its principal place of business in Los Angeles, California. It is wholly owned by
3 Plaintiff Yida Gao, and it is the main vehicle through which Mr. Gao accepted payment of
5 15. Defendant Adam Struck is a California resident living in Los Angeles, California.
6 He is a former corporate mergers and acquisitions associate attorney at the law firm of Kirkland
9 company incorporated in the state of Delaware with its principal place of business at 2908
10 Colorado Avenue, Santa Monica, California 90404. It is the main entity through which Mr. Gao
11 and Mr. Struck organized their numerous businesses for purposes of collecting and distributing to
12 the partners the management fees paid by the various investment funds and carried interest
14 17. Defendant Struck Capital Fund GP LLC (“Fund I”) is a limited lability company
15 incorporated in the state of Delaware with its principal place of business at 2908 Colorado
16 Avenue, Santa Monica, California 90404. It is a subsidiary of SCM and was the first venture
17 capital fund that Mr. Gao and Mr. Struck used to collect venture capital investments that were
19 18. Defendant Struck Capital Fund II GP LLC (“Fund II”) is a limited lability
20 company incorporated in the state of Delaware with its principal place of business at 2908
21 Colorado Avenue, Santa Monica, California 90404. It is a subsidiary of SCM and was the second
22 fund that Mr. Gao and Mr. Struck used to collect venture capital investments that were then
25 liability company incorporated in the state of Delaware with its principal place of business at
26 2908 Colorado Avenue, Santa Monica, California 90404. It is the entity through which Mr. Gao
27 and Mr. Struck managed their investment vehicles focused on the cryptocurrency and blockchain
28 industries.
2 incorporated in the state of Delaware with its principal place of business at 2908 Colorado
3 Avenue, Santa Monica, California 90404. It is a subsidiary of DDC and acts as the general partner
4 to Divergence Digital Currency LP, the entity the partnership used to collect investment funds
7 limited liability company incorporated in the state of Delaware with its principal place of business
8 at 2908 Colorado Avenue, Santa Monica, California 90404. It is the management company used
9 by Mr. Gao and Mr. Struck to manage investments in later stage deals, many of which would be
10 sourced via Mr. Gao’s network being at NEA and in Silicon Valley.
11 22. Defendant Struck Capital Special Situations GP LLC (“SCSS GP”) is a limited
12 liability company incorporated in the state of Delaware with its principal place of business at
13 2908 Colorado Avenue, Santa Monica, California 90404. It is a subsidiary of SCSS and is used
14 by Mr. Gao and Mr. Struck to act as the general partner to Struck Capital Special Situations LP,
15 the entity the partnership used to collect investment funds that are invested in later stage deals,
16 many of which were sourced via Mr. Gao’s network being at NEA and in Silicon Valley.
17 23. Defendant Struck Capital Stage Agnostic GP LLC (“SCSA GP”) is a limited
18 liability company incorporated in the state of Delaware with its principal place of business at
19 2908 Colorado Avenue, Santa Monica, California 90404. It is another entity Mr. Gao and Mr.
20 Struck used to act as the general partner to Struck Capital Stage Agnostic LP, the entity the
21 partnership used to collect investment funds that are invested in later stage deals, many of which
22 would be sourced via Mr. Gao’s network being at NEA and in Silicon Valley.
23 24. Defendants Struck Scratch LLC, Struck Scratch Series B LLC, Struck Scratch
24 Series A LLC, Ignis SPV LLC, Ignis Series B LLC, Probitas SPV LLC, Vectio SPV LLC, Zero
25 SPV LLC, Serico SPV LLC, Struck PF Special Opportunity LLC, Struck OTI Special
26 Opportunity LLC, SC Tectus SPV LLC, Struck Hoco LLC, Struck A43 LLC, Struck AHC
27 Special Opportunity LLC and Zero Series B SPV LLC (collectively, the “SPV Entities”) are all
28 limited liability companies incorporated in the state of Delaware, each with their principal places
4 otherwise, of Defendants Does 1-50 inclusive, and each of them are unknown to Mr. Gao at this
5 time. Mr. Gao therefore sues such Defendants by such fictitious names. Mr. Gao will amend the
6 Complaint to reflect the true names and capacities of said Defendants when that information has
7 been ascertained.
9 26. Jurisdiction is proper because Mr. Gao and Mr. Struck are both residents of Los
10 Angeles County, and because all of the entity Defendants’ principal places of business are in
11 Santa Monica, California, an incorporated city located in the County of Los Angeles.
12 27. Venue is proper because the Defendants’ principal place of business is in Santa
13 Monica, California and a substantial portion of the events or omissions giving rise to the claims
14 alleged herein occurred within Santa Monica, Los Angeles, and/or the County of Los Angeles.
15 FACTUAL ALLEGATIONS
17 28. Mr. Gao and Mr. Struck first met in 2014. The two found kindred entrepreneurial
18 spirits in one another and decided to leverage their individual skills to form a partnership focused
20 29. Although the partnership was never distilled into a written document, it was a
21 straightforward 50/50 split. Each retained the right to share equally in the profits, each shared
22 equally in the partnership’s management, each shared equally in the partnership’s expenses, and
24 30. Each also brought different but complimentary skills and resources to the
25 3
Mr. Gao owns 50% of each of the SPV Entities except for four: Zero SPV LLC, Serico SPV
26 LLC, and Probitas SPV LLC, all have three partners with an equal equity split, and thus Mr.
Gao holds 33.3% of the equity in those three companies. As for Ignis SPV LLC, Mr. Gao only
27 holds 18% of the equity in that company, with Mr. Struck and the third partner owning the rest.
For ease of reference and due to the sheer volume of entities, throughout this Complaint Mr.
28 Gao will refer to his 50% ownership in the SPV Entities, but he acknowledges that his
ownership share in these four specific companies is as provided in this footnote.
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1 partnership. Mr. Gao provided his knowledge, connections, and experience with the world of
2 technology and venture capital (particularly in Silicon Valley) earned over the years as a
3 computer science graduate of MIT, mergers and acquisitions banker at Morgan Stanley, and
4 consultant at McKinsey to seek up-and-coming technology companies. Mr. Gao also provided
5 access to investment capital from investors in Asia and the United States.
6 31. As a former corporate M&A attorney, Mr. Struck provided the partnership with the
7 legal knowledge needed to incorporate the SPVs and draft the legal documents investors would
9 32. Given his legal skills and training, and the fact that Mr. Gao was providing the
10 knowledge, connections and ability/connections to raise capital to help grow the SPVs, Mr. Gao
11 trusted that Mr. Struck was properly documenting the legal formalities of their relationship.
12 33. Throughout 2014 to 2018, Mr. Gao and Mr. Struck formed sixteen SPVs, each of
13 which was incorporated into its own LLC (the SPV Entities) by Mr. Struck.4
14 34. The SPVs began accumulating investors and soon became successful enterprises in
16 35. True to the nature of their 50/50 partnership, Mr. Gao and Mr. Struck split the
17 operating costs for the SPVs 50/50. Mr. Gao was also issued K-1 tax filing documents for each of
20 36. Between 2015 and 2017, while working with Mr. Struck, Mr. Gao simultaneously
21 continued to sharpen his skills and connections to the world of Silicon Valley venture capital by
22 working as a venture capital investor with NEA in San Francisco and Menlo Park.
23 37. While at NEA, Mr. Gao painstakingly built connections throughout the venture
24 capital industry while learning the intricacies, risks, and rewards of investing in early-stage
25 companies.
26 38. Mr. Struck was fully aware of this arrangement and even encouraged Mr. Gao to
27 continue working at NEA because it not only increased their partners’ knowledge and connection
28 4
In addition to the 16 SPVs named in this Complaint, Mr. Gao and Mr. Struck had also together
formed seven other such entities that were later dissolved.
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LIT IGA TIO N BOU TIQ UE COMPLAINT AND DEMAND FOR JURY TRIAL
1 base, but also lent them a considerable amount of credibility when pitching potential investors.
2 39. Mr. Gao’s hard work paid off: during the time he was at NEA, he developed deep
3 knowledge and an extensive network in the world of venture capital, including with individuals
4 who would go on to invest in Mr. Gao’s and Mr. Struck’s businesses and to provide key
6 40. In around 2014 or 2015, Mr. Struck quit his job at Kirkland & Ellis LLP and
7 moved from New York to Los Angeles to work full-time as a venture capitalist.
8 41. In January of 2016, Mr. Struck began the process of bringing legal structure to
10 42. SCM was intended to act as the main investment management company for the
11 partnership’s various enterprises.
12 43. The two partners reconvened shortly thereafter and agreed that Mr. Gao’s venture
13 capital knowledge and connections to the venture capital world would allow them to begin
15 44. To cement their relationship, they orally agreed to the same terms as applied to
16 their previous work on the SPV Entities: they would be 50/50 partners in their first fund, with
17 each taking 50% of any profits (including the management fees earned for managing the fund)
18 and each shouldering 50% of the costs associated with running and managing the fund.
19 45. The partners further agreed that SCM would act as the management company for
20 their funds. Trusting in Mr. Struck’s legal acumen, Mr. Gao agreed to using SCM rather than
23 Mr. Struck would equally manage together. This single investor – whom Mr. Gao brought to the
24 Partnership – provided the capital that directly led to the formation of the first venture capital
25 fund between Mr. Gao and Mr. Struck in March of 2016 (Fund I).
26 47. To further structure the investments and hedge against risks, Mr. Struck
27 recommended that the funds be set up with a subsidiary general partnership limited liability
28 company (defendant Fund I) responsible for acting as the manager of investment funds managed
2 partners and members. Mr. Struck then incorporated Fund I in March of 2016.
3 48. Relying on Mr. Struck’s legal advice, Mr. Gao also agreed for the two of them to
4 establish a limited partnership limited liability company in which investors – including the initial
5 investor Mr. Gao brought to the partnership – would contribute funds. Mr. Struck incorporated
7 49. Mr. Gao did not sign anything formal with Mr. Struck for Fund I because he
8 trusted him fully and because he was still working for NEA at the time.
9 50. Mr. Struck and Mr. Gao agreed that Mr. Gao would remain at NEA for 1-2 years
10 to sharpen his knowledge and skills in the venture capital world and, to avoid any potential
11 conflict with NEA’s policies, further agreed that Mr. Gao would be given 1099 tax forms. To
12 make up for the time he would be focused on his work at NEA (and to offset the fact that Mr.
13 Struck had no other income), Mr. Gao generously agreed to temporarily reduce his percentage of
14 the management fees so that Mr. Gao would take 25% of the fees, and Mr. Struck would take
15 75%. This concession was limited to just the time while Mr. Gao remained an employee of NEA
16 and did not include any of the other income earned by funds (including the carried interest) which
18 51. True to the plan, Mr. Gao remained at NEA until 2017, when he left to publicly
20 52. Yet even while working at NEA, Mr. Gao continued to work with Mr. Struck on
21 Fund I. The two both understood that while they were using the companies incorporated by Mr.
22 Struck as the legal vehicles for their investment portfolio, their business enterprise was an equal
24 53. Consistent with this understanding, Mr. Gao and Mr. Struck held themselves out to
25 the public as equal partners in their endeavors. Each were listed on marketing materials as
26 managers in the fund, and they each contributed to finding additional investors for Fund I. Mr.
27 Gao trusted his partner to handle the legal side of the business and so he had little to no input or
3 55. Both Mr. Gao and Mr. Struck paid for the costs for Fund I, including fund
4 formation and operation costs, financial transaction costs, and taxes. In addition, both Mr. Gao
5 and Mr. Struck were paid 50% of the management fees paid to SCM as generated by Fund I once
7 56. While Fund I successfully attracted numerous investors, the initial investor Mr.
8 Gao introduced to Fund I’s limited partnership ultimately contributed between 80% and 90% of
9 its capital.
10 57. The success of Fund I led Mr. Gao and Mr. Struck to begin exploring new
11 investment opportunities and industries through three new sets of entities: the SCSS Entities,
13 The Partnership Continues to Grow Through Establishing the SCSS Entities, SCSA GP,
15 58. The SCSS Entities and SCSA GP were incorporated by Mr. Struck in early 2017.
16 They both focused on late-stage deals that would largely be sourced and financed through the
17 network Mr. Gao developed while living in Silicon Valley and working at NEA. The only
18 investor in the SCSS Entities and SCSA GP was the same major investor Mr. Gao brought to
19 Fund I.
20 59. Trusting Mr. Struck to handle the legal side of the business, Mr. Gao once again
21 had little to no input or insight into the corporate formalities of these entities.
22 60. However, by mutual oral agreement, the two partners once again structured their
23 business approach to both the SCSS Entities and SCSA GP as they had done before by extending
24 their usual partnership terms to the SCSS Entities and SCSA GP: 50/50 ownership, with Mr.
25 Struck handling the legal paperwork and incorporating the companies, and evenly splitting all
27 61. Consistent with this agreement, Mr. Gao was issued a K-1 showing 50%
3 63. Unlike their other business endeavors, the DDC Entities started out as a three-
4 person partnership: Mr. Struck, Mr. Gao, and a third individual (one of Mr. Gao’s close friends).
5 64. In fact, the entire idea of investing in the cryptocurrency industry was one that Mr.
6 Gao’s close friend had conceived with Mr. Gao, who then included Mr. Struck.
7 65. The DDC Entities’ investment documents – including its Private Placement
8 Memorandum and Limited Partnership Agreement – listed the three individuals as Principles and
10 66. Mr. Gao and Mr. Struck were to have a co-equal ownership interest (37.5% each),
11 with Mr. Gao’s friend holding a smaller minority share. These shares were reflected in the DDC
12 Entities’ Operating Agreement, which also stated that both Mr. Gao and Mr. Struck were
14 67. Unfortunately, disagreement arose between the three partners, and Mr. Gao’s
15 friend eventually exited the partnership, leaving just Mr. Gao and Mr. Struck.
16 68. Shortly after his friend exited, Mr. Gao discussed apportioning his friend’s share
17 with Mr. Struck. Mr. Gao and Mr. Struck orally agreed to reassign the now departed friend’s
18 share equally between them, once again leaving them as 50/50 partners in DDC.
19 69. As usual, Mr. Gao relied on and trusted Mr. Struck to memorialize the legal
21 70. In the meantime, Mr. Gao and Mr. Struck operated the DDC Entities just as they
22 had with all of their other joint endeavors pursuant to their longstanding partnership agreement:
23 they agreed to split the operating costs of the DDC Entities 50/50, agreed to equally split the
24 management fee (after expenses), held themselves out as equals in their marketing materials and
25 in communicating with potential and current investors, and Mr. Gao was issued K-1 tax
27 71. However, and unbeknownst to Mr. Gao at the time, rather than equally reassign the
28 departed partner’s shares, Mr. Struck instead updated the operating documents to apportion them
2 listing the individual member’s ownership share was deemed “confidential,” Mr. Gao did not get
3 written confirmation that Mr. Struck had maneuvered the legal paperwork to give himself a
5 72. Although Mr. Gao and Mr. Struck were equal partners, the practical reality of how
6 Mr. Struck structured the legal entities meant that he alone controlled finances, management, and
7 distribution of the management fees, as well as the financial accounts the partners used to cover
10 73. As the partnership continued to find success in 2017 and 2018, Mr. Gao and Mr.
11 Struck began laying the groundwork needed to establish a second venture capital fund (Fund II).
12 74. In 2018, and in order to further the value he added to the partnership, Mr. Gao
13 began attending the prestigious Stanford Graduate School of Business. At Mr. Struck’s
14 insistence, Mr. Gao again agreed to reduce his share of the Fund I management fees to 25% for
15 the duration of his time at Stanford. All other aspects of Fund I, including all other income,
17 75. Shortly after Mr. Gao began his studies at Stanford, Mr. Struck began a campaign
18 to convince him to quit to work full-time on the partnership. As part of this campaign, Mr. Struck
19 threatened to reevaluate their partnership if Mr. Gao did not agree to devote himself to it entirely.
20 76. While Mr. Gao wished to remain in the Bay Area, he appreciated that his partner
21 needed his help. Relying on Mr. Struck’s entreaties, Mr. Gao left Stanford at the start of 2018 to
22 work full-time on the partnership.
23 77. At Mr. Struck’s urging, Mr. Gao then left his Bay Area home and moved to Los
24 Angeles in early 2019 specifically to work on the launch of Fund II. This was done under the
25 explicit agreement and understanding that Mr. Struck and Mr. Gao would remain 50/50 partners
27 78. By March of 2019, Mr. Gao was living permanently in Los Angeles and was
28 working tirelessly to get Fund II in order by partaking in every aspect of the fund’s investment
2 building the limited investor deck, to successfully recruiting four of the fund’s seven advisors.
3 79. Consistent with their 50/50 arrangement, the partners were presented together in
4 marketing materials to investors as co-equal managers (Mr. Gao was referred to as Managing
5 General Partner), they were listed as managers of Fund II in the limited partnership agreement
6 and the company website, and Mr. Gao’s background and contacts in Silicon Valley were
7 prominently used to solicit investors. Both Mr. Gao and Mr. Struck’s management fees from
8 Fund I were used to fund the setup and initial operating costs of Fund II, including paying for
9 office space and advertising materials. Other expenses, including translating of the investor
10 presentations to Mandarin in order to solicit Mr. Gao's Asian investors, were also split 50/50.
11 80. As was the case with their other endeavors, Mr. Gao trusted Mr. Struck to handle
12 the legal aspects of Fund II and not to abuse his position as legal counsel to the partnership. Once
13 again, Mr. Struck drafted the operating agreements and other fund-related paperwork without Mr.
14 Gao’s involvement.
16 81. Despite Mr. Gao’s and Mr. Struck’s best efforts, Fund II struggled to attract
17 investors throughout a majority of 2019, and Mr. Struck began to assert he had authority beyond
19 82. For example, in July 2019, Mr. Struck told Mr. Gao he would not discuss splitting
20 equity in Fund I (which had started to mature) until the Fund I portfolio companies had
21 completely exited the fund and he saw more “chips on the table” from Mr. Gao, implying that Mr.
22 Gao needed to bring more capital/deals/other value to their partnership.
23 83. Mr. Gao expressed surprise at this position, noting that he was entitled to a 50/50
25 84. Mr. Struck also used his control of SCM to cease paying Fund I management fees
26 to Mr. Gao.
27 85. At the same time, Mr. Struck effectively marginalized Mr. Gao from Fund II:
28 despite continuing to highlight Mr. Gao’s involvement and credentials to investors, Mr. Struck
2 demoted him from “Managing General Partner” to “Partner” on marketing materials. Meanwhile,
3 Mr. Gao never received any of the management fees owed to him for Fund II.
4 86. Had Mr. Gao known he would have been marginalized from Fund II, he would
5 never have given up his seat at Stanford’s business school and would not have moved from the
7 87. Despite these personal attacks, throughout 2019, Mr. Gao continued to push the
9 Mr. Gao Realizes He Is Being Forced Out, and the Partnership Comes Apart
10 88. As the partnership conducted its business throughout 2020, it became clear to Mr.
11 Gao that Mr. Struck had no intention of honoring the partnership the two men had built over the
13 89. Instead, Mr. Struck seemed committed to using the leverage he built for himself by
14 acting as the partnership’s in-house legal counsel to deny that Mr. Gao had any ownership
15 interests in any of their enterprises beyond the 37.5% ownership share in the DDC Entities –
16 which had never been updated by Mr. Struck to reflect Mr. Gao’s true 50% ownership.
17 90. Starting in August 2020, in a series of oral discussions and communications via
18 email and text message, Mr. Struck falsely claimed that Mr. Gao was not a partner and that no
19 partnership even existed. Instead, he belligerently implied that Mr. Gao was merely a contractor
21 91. Mr. Struck then essentially shut Mr. Gao out from continuing to work on any of
22 their portfolios beyond the DDC Entities.
23 92. When withholding Mr. Gao’s payments proved insufficient, Mr. Struck began
25 93. In early February 2021, Mr. Gao attempted to set up a wire transfer—which Mr.
26 Gao believed required Mr. Struck’s approval—so as to pay himself the 2020 DDC Entities
27 management fees that should have been paid to him in 2020. Due to an error, this transfer was
28 not successful.
2 Gao “for cause.” Mr. Struck then immediately revoked Mr. Gao’s access to joint bank accounts,
3 removed him from the website, removed his email access, and began telling employees and third-
4 party investors not to communicate with Mr. Gao because he had been terminated “for cause.” In
5 total, Mr. Struck finished the job of freezing Mr. Gao out of the very companies he founded.
6 95. Nothing about Mr. Gao’s actions were improper. Mr. Struck would regularly and
7 unilaterally transfer monies owed to himself from the DDC Entities’ accounts. For example, the
8 same week as when Mr. Gao attempted to make this transfer, Mr. Struck unilaterally transferred
9 to himself funds from the DDC Entities’ account, both funds that were actually owed to him and
12 because both Mr. Gao and Mr. Struck were listed as the entities’ managers.
13 97. Mr. Struck’s purported “termination” of Mr. Gao, on the other hand, was made
14 without cause and, more importantly, without any authority. The DDC Entities’ Operating
15 Agreements name both Mr. Struck and Mr. Gao as Managers and required unanimity/consent for
16 a Manager to be removed “for Cause.” Since Mr. Gao has not consented to his own removal, Mr.
18 98. Having frozen Mr. Gao out of his own companies, Mr. Struck then began
19 attempting to rewrite history by notifying employees, investors, and advisors that Mr. Gao had
20 been removed for cause, that he had embezzled company funds, that he had not been working on
21 the funds for years, and that he had been a consultant all along. All of these allegations are false.
22 99. All told, Mr. Gao has spent over $126,539.29 of his own money by way of
23 investments in the partnership’s companies, costs paid on the company’s behalf for which he has
24 not been reimbursed, and tax payments on behalf of the company for which he has not been
25 reimbursed.
26 100. Moreover, Mr. Struck has withheld certain of Mr. Gao’s payments that are owed
27 on the management fees collected by the SCM Entities, SCM Entities, DDC Entities, SPV
28 Entities, SCSS Entities, and SCSA GP, in an amount totaling, at least, $1,901,018.32.
2 damaged as of today’s date in the amount of, at least, $126,539.29 in out-of-pocket costs,
4 interest, plus costs and interest. Additionally, given the nature of their business, Mr. Gao’s
5 management fees and carried interest in the SCM Entities, DDC Entities, SCSS Entities, SCSA
6 GP, and SVP Entities will grow over the next five-to-ten years to be worth an estimated
8 102. Moreover, Mr. Gao is entitled to and thus seeks a declaratory judgment from the
9 Court declaring that (1) the partnership existed, and (2) under said partnership, he is the rightful
10 owner of 50% of Defendants SCM Entities, SCM Entities, DDC Entities, SPV Entities, SCSS
11 Entities, and SCSA GP.
12 CAUSES OF ACTION
14 Declaratory Relief
16 103. Plaintiffs incorporate and allege by reference each and every allegation contained
18 104. An actual controversy has arisen and now exists between Mr. Gao and the
19 Defendants: Mr. Gao is owed 50% ownership in the SCM Entities, DDC Entities, SPV Entities,
21 105. A partnership was formed between Mr. Gao and Mr. Struck wherein they each
22 retained the right to receive profits and losses, each shared equally in the management of the
23 Partnership Entities, each equally paid the Partnership Entities’ expenses, and both held
25 106. Mr. Gao and Mr. Struck orally agreed that they would be 50/50 partners in their
26 partnership’s endeavors, which included the SCM Entities, DDC Entities, SPV Entities, SCSS
28 107. As 50/50 partners, Mr. Gao and Mr. Struck were each entitled to half ownership of
2 108. Mr. Struck has refused to acknowledge and honor: (1) the existence of the
3 partnership, (2) that Mr. Gao is his 50/50 partner, and (3) that Mr. Gao is entitled to half
5 109. A judicial determination is necessary and appropriate at this time because there
6 exists an actual and present controversy regarding the existence and effect of the partnership.
7 110. A judicial determination is also necessary and appropriate at this time because
8 there exists an actual and present controversy regarding Mr. Gao’s percentage ownership of each
9 of the Partnership Entities Gao and thus a judicial determination of these issues and of the
10 respective duties of Mr. Gao and Mr. Struck is necessary and appropriate at this time.
11 SECOND CAUSE OF ACTION
14 111. Plaintiffs incorporate and allege by reference each and every allegation contained
16 112. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
17 around 2015.
18 113. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
19 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
20 including splitting all business revenues, costs, and expenses, an equal right to management of the
21 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
22 partners to the investment community.
23 114. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
24 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
26 115. Mr. Gao has fulfilled all his obligations under the partnership, including spending
27 years working to build up the partnership; leaving gainful employment to focus full time on the
28 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
2 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
4 116. Mr. Struck has failed to perform his required obligations under the partnership
5 agreement in numerous ways, including but not limited to failing to provide Mr. Gao with equal
6 possession, access, and control over the Partnership Entities; failing to pay Mr. Gao 50% of the
7 management fees collected by the Partnership Entities; and failing to provide Mr. Gao 50% of the
9 117. Mr. Struck has further harmed Mr. Gao by unilaterally, and without authority or
10 factual basis, claiming to have “terminated” Mr. Gao from his association with the Partnership
11 Entities; removing Mr. Gao’s access to the Partnership Entities, including bank access and his
12 own email account; removing Mr. Gao from the Partnership Entities’ public-facing documents
13 (such as its website, LinkedIn page, and other marketing materials); and falsely claiming to
14 investors, portfolio company founders, advisors, employees, contractors, and the public at large
15 that Mr. Gao has never been a partner in the Partnership Entities, that Mr. Gao has been
16 terminated “for cause”, that Mr. Gao is guilty of embezzlement, and that Mr. Gao has not been
18 118. Mr. Struck has improperly withheld distributions and payments owed by Mr. Gao
19 based on the fees and revenues earned by the Partnership Entities, in an amount of at least
20 $1,901,018.32 in management fees and $1,293,139.89 in carried interest, plus costs and interest.
21 119. At the same time, Mr. Struck has required Mr. Gao to pay 50% of the Partnership
22 Entities’ expenses, costs, and tax liabilities. These payments amount to approximately
23 $126,539.29.
25 be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
27 interest.
28
2 of an order confirming his 50% ownership interests in each of the Partnership Entities and a
3 further order granting him access to the Partnership Entities’ accounts and properties.
7 122. Plaintiffs incorporate and allege by reference each and every allegation contained
9 123. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
10 around 2015.
11 124. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
12 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
13 including splitting all business revenues, costs, and expenses, an equal right to management of the
14 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
16 125. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
17 partnership in creating each new entity, including each of the SCM Entities, DDC Entities, SPV
20 127. Mr. Gao has fulfilled all his obligations under the partnership, including spending
21 years working to build up the partnership; leaving gainful employment to focus full time on the
22 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
23 name and experience to be used in marketing the partnership’s endeavors; introducing and
24 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
26 128. Mr. Gao has acted in good faith by always working to the benefit of the
27 partnership and never putting his personal gain above that of the partnership or his partner (Mr.
28 Struck).
2 section 16404 and consist of the duties of loyalty and care set forth in subdivisions (b) and (c),
3 respectively.
4 130. The duty of loyalty includes: (i) to account to the partnership and hold as trustee
5 for it any property, profit, or benefit derived by the partner in the conduct and winding up of the
6 partnership business or derived from a use by the partner of partnership property or information,
7 including the appropriation of a partnership opportunity; (ii) to refrain from dealing with the
9 having an interest adverse to the partnership; and (iii) to refrain from competing with the
10 partnership in the conduct of the partnership business before the dissolution of the partnership.
11 131. The duty of care in the conduct and winding up of the partnership business
14 132. Section 16404(d) also provides that a partner shall discharge the duties to the
15 partnership and the other partners under the Corporations Code or under the partnership
16 agreement and exercise any rights consistently with the obligation of good faith and fair dealing.
17 133. Mr. Struck has failed to perform his required obligations under the partnership
18 agreement in numerous ways, including but not limited to failing to provide Mr. Gao with equal
19 possession, access, and control over the Partnership Entities; failing to pay Mr. Gao 50% of the
20 management fees collected by the Partnership Entities; and failing to provide Mr. Gao 50% of the
23 based on the fees and revenues earned by the Partnership Entities, in an amount of at least
25 135. At the same time, Mr. Struck has required Mr. Gao to pay 50% of the Partnership
26 Entities’ expenses, costs, and tax liabilities. These payments amount to approximately
28
2 authority or factual basis, claiming to have “terminated” Mr. Gao from his association with the
3 Partnership Entities; removing Mr. Gao’s access to the Partnership Entities, including bank access
4 and his own email account; removing Mr. Gao from the Partnership Entities’ public-facing
5 documents (such as its website, LinkedIn page, and other marketing materials); and falsely
6 claiming to investors, portfolio company founders, advisors, employees, contractors, and the
7 public at large that Mr. Gao has never been a partner in the Partnership Entities, that Mr. Gao has
8 been terminated “for cause”, that Mr. Gao is guilty of embezzlement, and that Mr. Gao has not
10 137. Mr. Struck’s actions of preventing Mr. Gao from continuing to perform his duties
11 has harmed the partnership, its investors, its portfolio companies, its employees, and has damaged
12 the overall Partnership Entities—and by extension, Mr. Gao’s interest in those businesses has
13 been injured.
14 138. As an attorney, Mr. Struck also owed a fiduciary duty of loyalty and care above
15 and beyond that of a lay person. Mr. Struck affirmatively took on the legal aspects of the
16 partnership and then used his legal expertise to benefit himself to Mr. Gao’s disadvantage. At no
17 time did Mr. Struck recommend that Mr. Gao seek independent legal counsel to secure his own
18 interests. Instead, Mr. Struck consistently represented that he would take care of all legal
19 formalities in a way that would protect Mr. Gao and his interests.
20 139. Mr. Struck’s actions were purposefully done with the knowledge that they were
21 wrong and unlawful, or at the very least, grossly negligent or reckless constituting intentional
22 misconduct.
23 140. As a result of Mr. Struck’s breach of his fiduciary duties, Mr. Gao has sustained
27 141. Additionally, as a result of Mr. Struck’s breach of his fiduciary duties, Mr. Gao has
2 Breach of the Covenant of Good Faith and Fair Dealing (Cal. Corp. Code § 16404(d))
4 142. Plaintiffs incorporate and allege by reference each and every allegation contained
6 143. The California Uniform Partnership Act provides that a partner has an obligation
7 of good faith and fair dealing in the discharge of his or her duties—as well as in the exercise of
8 any rights—under the Act and under the partnership agreement. Cal. Corp. Code § 16404(d).
9 144. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
10 around 2015.
11 145. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
12 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
13 including splitting all business revenues, costs, and expenses, an equal right to management of the
14 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
16 146. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
17 partnership in creating each new entity, including each of the SCM Entities, DDC Entities, SPV
19 147. Mr. Gao has fulfilled all his obligations under the partnership, including spending
20 years working to build up the partnership; leaving gainful employment to focus full time on the
21 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
22 name and experience to be used in marketing the partnership’s endeavors; introducing and
23 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
25 148. Mr. Gao has acted in good faith by always working to the benefit of the
26 partnership and never putting his personal gain above that of the partnership or his partner (Mr.
27 Struck).
28
2 and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct of
3 the partnership's business or derived from a use by the partner of partnership property or
4 information, including the appropriation of a partnership opportunity; (ii) failing to refrain from
5 dealing with the partnership in the conduct or winding up of the partnership business as though he
6 were a party having an interest adverse to the partnership; and (iii) failing to refrain from
7 competing with the partnership in the conduct of the partnership business before the dissolution of
8 the partnership.
9 150. Mr. Struck has further breached the covenant of good faith and fair dealing to Mr.
10 Gao by unilaterally, and without authority or factual basis, claiming to have “terminated” Mr. Gao
11 from his association with the Partnership Entities; removing Mr. Gao's access to the Partnership
12 Entities, including bank access and his own email account; removing Mr. Gao from the
13 Partnership Entities' public-facing documents (such as its website, LinkedIn page, and other
14 marketing materials); and falsely claiming to investors, portfolio company founders, advisors,
15 employees, contractors, and the public at large that Mr. Gao has never been a partner in the
16 Partnership Entities, that Mr. Gao has been terminated “for cause”, that Mr. Gao is guilty of
17 embezzlement, and that Mr. Gao has not been contributing to the Partnership Entities for several
18 years.
19 151. Mr. Struck has improperly withheld distributions and payments owed by Mr. Gao
20 based on the fees and revenues earned by the Partnership Entities, in an amount of at least
21 $1,901,018.32 in management fees and $1,293,139.89 in carried interest, plus costs and interest.
22 152. At the same time, Mr. Struck has required Mr. Gao to pay 50% of the Partnership
23 Entities’ expenses, costs, and tax liabilities. These payments amount to approximately
24 $126,539.29.
25 153. Due to his wrongful acts, Mr. Struck has profited and has been unjustly enriched at
26 Mr. Gao’s expense and has effectively and illegally seizing complete control of the Partnership
27 Entities.
28 154. Alternatively, due to his wrongful acts, Mr. Struck has profited by using at least
3 155. As a result of Mr. Struck’s breach of the covenant of good faith and fair dealing,
4 Mr. Gao now seeks restitution from Mr. Struck and seeks an order disgorging all profits, benefits,
5 and other compensation obtained by Mr. Struck, in an amount to be determined at trial, but no
7 management fees, and $1,293,139.89 in carried interest, plus costs and interest, plus interest.
8 156. Additionally, as a result of Mr. Struck’s breach, Mr. Gao has been denied his 50%
13 157. Plaintiffs incorporate and allege by reference each and every allegation contained
15 158. The California Uniform Partnership Act provides that a partner has an obligation
16 of good faith and fair dealing in the discharge of his or her duties—as well as in the exercise of
17 any rights—under the Act and under the partnership agreement. Cal. Corp. Code § 16404(d).
18 159. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
19 around 2015.
20 160. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
21 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
22 including splitting all business revenues, costs, and expenses, an equal right to management of the
23 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
25 161. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
26 partnership in creating each new entity, including each of the SCM Entities, DDC Entities, SPV
28
2 years working to build up the partnership; leaving gainful employment to focus full time on the
3 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
4 name and experience to be used in marketing the partnership’s endeavors; introducing and
5 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
7 163. Mr. Gao has acted in good faith by always working to the benefit of the
8 partnership and never putting his personal gain above that of the partnership or his partner (Mr.
9 Struck).
10 164. Mr. Struck violated his fiduciary duty by (i) failing to account to the partnership
11 and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct of
12 the partnership's business or derived from a use by the partner of partnership property or
13 information, including the appropriation of a partnership opportunity; (ii) failing to refrain from
14 dealing with the partnership in the conduct or winding up of the partnership business as though he
15 were a party having an interest adverse to the partnership; and (iii) failing to refrain from
16 competing with the partnership in the conduct of the partnership business before the dissolution of
17 the partnership.
18 165. Mr. Struck has further breached the covenant of good faith and fair dealing to Mr.
19 Gao by unilaterally, and without authority or factual basis, claiming to have “terminated” Mr. Gao
20 from his association with the Partnership Entities; removing Mr. Gao's access to the Partnership
21 Entities, including bank access and his own email account; removing Mr. Gao from the
22 Partnership Entities' public-facing documents (such as its website, LinkedIn page, and other
23 marketing materials); and falsely claiming to investors, portfolio company founders, advisors,
24 employees, contractors, and the public at large that Mr. Gao has never been a partner in the
25 Partnership Entities, that Mr. Gao has been terminated “for cause”, that Mr. Gao is guilty of
26 embezzlement, and that Mr. Gao has not been contributing to the Partnership Entities for several
27 years.
28
2 based on the fees and revenues earned by the Partnership Entities, in an amount of at least
3 $1,901,018.32 in management fees, and $1,293,139.89 in carried interest, plus costs and interest.
4 167. At the same time, Mr. Struck has required Mr. Gao to pay 50% of the Partnership
5 Entities’ expenses, costs, and tax liabilities. These payments amount to approximately
7 168. Due to his wrongful acts, Mr. Struck has profited and has been unjustly enriched at
8 Mr. Gao’s expense and has effectively and illegally seizing complete control of the Partnership
9 Entities.
10 169. Alternatively, due to his wrongful acts, Mr. Struck has profited by using at least
11 $126,539.29 of Mr. Gao’s own money to pay for the Partnership Entities costs, expenses, and tax
13 170. As a result of Mr. Struck’s breach of the covenant of good faith and fair dealing,
14 Mr. Gao now seeks restitution from Mr. Struck and seeks an order disgorging all profits, benefits,
15 and other compensation obtained by Mr. Struck, in an amount to be determined at trial, but no
18 171. Additionally, Mr. Gao seeks judicial confirmation of his partnership rights by way
19 of an order confirming his 50% ownership interests in each of the Partnership Entities.
23 172. Plaintiffs incorporate and allege by reference each and every allegation contained
25 173. Mr. Gao is a current partner and 50/50 owner of the Partnership Entities.
26 174. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
27 around 2015.
28
2 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
3 including splitting all business revenues, costs, and expenses, an equal right to management of the
4 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
6 176. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
7 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
9 177. Mr. Struck and the Partnership Entities are withholding equity and profits from
10 Mr. Gao and are refusing to provide Mr. Gao access to the Partnership Entities’ books and
11 records.
12 178. Pursuant to California Corporations Code § 16403, demand is hereby made for an
13 accounting of the partnership’s books and records, including but not limited to an accounting of
14 the capital contributions, profits, losses, expenses, and equity in the partnership’s companies,
19 179. Plaintiffs incorporate and allege by reference each and every allegation contained
21 180. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
22 around 2015.
23 181. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
24 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
25 including splitting all business revenues, costs, and expenses, an equal right to management of the
26 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
28
2 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
4 183. Specifically, each and every time Mr. Gao and Mr. Struck formed a new
5 business—starting in 2015 with the SPV Entities, continuing into early 2016 with the SCM
6 Entities for Fund I, continuing into early 2017 with the SCSS Entities and SCSA GP, continuing
7 into late 2017 with the DDC Entities, and ending in 2019 with the SCM Entities for Fund II—Mr.
8 Struck told Mr. Gao that the terms of their partnership remained intact: they were 50/50 partners
9 in their business endeavors and 50/50 owners of the partnership, including splitting all business
12 would handle all legal formalities necessary to memorialize their 50/50 partnership and that each
13 of them would be equally protected in case of any dispute. Mr. Struck never advised Mr. Gao to
14 seek independent counsel to represent his interests, but instead assured Mr. Gao that Mr. Struck
16 185. These representations were false. Mr. Struck never intended on honoring their
17 50/50 partnership and rather than drawing up the necessary legal documents to memorialize their
18 partnership, Mr. Struck purposely structured each of the businesses to his own advantage. He did
19 this by avoiding drafting partnership agreements that would, in writing, memorialize his and Mr.
20 Gao’s verbal agreements. To the extent corporate documents were filed, Mr. Struck would
21 consistently name himself as the only owner without even mentioning Mr. Gao’s involvement.
22 For the only document to actually acknowledge Mr. Gao, the DDC Operating Agreements, Mr.
23 Struck still took advantage of his position as the attorney and sole drafter by granting himself all
25 186. At the same time, Mr. Struck continued to claim to Mr. Gao that they were 50/50
26 partners; held Mr. Gao out as an equal partner to employees, investors, advisers, and the general
27 public; required Mr. Gao to pay 50% of the Partnership Entities’ costs, expenses, and tax
28
2 issued Mr. Gao K-1 tax documents indicating that Mr. Gao was a 50% partner.
3 187. Mr. Struck made these misrepresentations specifically to induce Mr. Gao to
4 contribute his name, experience, connections, time, and hard work towards the partnership. These
5 misrepresentations were also intended to induce Mr. Gao into pay for 50% of all the Partnership
7 188. Mr. Gao justifiably and reasonably relied on the statements from Mr. Struck that
8 the two were 50/50 partners and had no reason to believe that Mr. Struck was lying to him, let
9 alone that he was drawing up the corporate paperwork to exclude him as an owner.
10 189. As a result of Mr. Struck’s misrepresentations, Mr. Gao spent years working on
11 behalf of the partnership and gave up numerous other opportunities, including leaving a lucrative
12 and prestigious job, leaving Stanford business school, and moving from the Bay Area to Los
13 Angeles all in reliance on Mr. Struck’s false claims of partnership. Mr. Gao also paid 50% of the
14 Partnership Entities’ expenses, costs, and tax liabilities. These payments amount to
15 approximately $126,539.29.
16 190. As a result of his justifiable reliance on Mr. Struck’s misrepresentations, Mr. Gao
17 has effectively been denied his 50% equity share in each of the Partnership Entities and incurred
21 191. In committing these wrongful acts, Mr. Struck acted intentionally, with malice and
22 in conscious disregard of Mr. Gao’s rights and resulting damages. As a result, Mr. Gao is entitled
25 Negligent Misrepresentation
27 192. Plaintiffs incorporate and allege by reference each and every allegation contained
2 around 2015.
3 194. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
4 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
5 including splitting all business revenues, costs, and expenses, an equal right to management of the
6 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
8 195. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
9 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
12 business—starting in 2015 with the SPV Entities, continuing into early 2016 with the SCM
13 Entities for Fund I, continuing into early 2017 with the SCSS Entities and SCSA GP, continuing
14 into late 2017 with the DDC Entities, and ending in 2018 with the SCM Entities for Fund II—Mr.
15 Struck told Mr. Gao that the terms of their partnership remained intact: they were 50/50 partners
16 in their business endeavors and 50/50 owners of the partnership, including splitting all business
18 197. Taking on the legal aspects of the partnership, Mr. Struck assured Mr. Gao that he
19 would handle all legal formalities necessary to memorialize their 50/50 partnership and that each
20 of them would be equally protected in case of any dispute. Mr. Struck never advised Mr. Gao to
21 seek independent counsel to represent his interests, but instead assured Mr. Gao that Mr. Struck
22 could be trusted to represent both of their interests.
23 198. These representations were false. Mr. Struck never intended on honoring their
24 50/50 partnership and rather than drawing up the necessary legal documents to memorialize their
25 partnership, Mr. Struck purposely structured each of the businesses to his own advantage. He did
26 this by avoiding drafting partnership agreements that would, in writing, memorialize his and Mr.
27 Gao’s verbal agreements. To the extent corporate documents were filed, Mr. Struck would
28 consistently name himself as the only owner without even mentioning Mr. Gao’s involvement.
2 Struck still took advantage of his position as the attorney and sole drafter by granting himself all
4 199. At the same time, Mr. Struck continued to claim to Mr. Gao that they were 50/50
5 partners; held Mr. Gao out as an equal partner to employees, investors, advisers, and the general
6 public; required Mr. Gao to pay 50% of the Partnership Entities’ costs, expenses, and tax
7 liabilities; issued Mr. Gao distributions amounting to 50% of the Partnership Entities’ profits; and
8 issued Mr. Gao K-1 tax documents indicating that Mr. Gao was a 50% partner.
9 200. Mr. Struck made these misrepresentations specifically to induce Mr. Gao to
10 contribute his name, experience, connections, time, and hard work towards the partnership. These
11 misrepresentations were also intended to induce Mr. Gao into pay for 50% of all the Partnership
13 201. Mr. Gao justifiably and reasonably relied on the statements from Mr. Struck that
14 the two were 50/50 partners and had no reason to believe that Mr. Struck was lying to him, let
15 alone that he was drawing up the corporate paperwork to exclude him as an owner.
16 202. As a result of Mr. Struck’s misrepresentations, Mr. Gao spent years working on
17 behalf of the partnership and gave up numerous other opportunities, including leaving a lucrative
18 and prestigious job, leaving Stanford business school, and moving from the Bay Area to Los
19 Angeles all in reliance on Mr. Struck’s false claims of partnership. Mr. Gao also paid 50% of the
20 Partnership Entities’ expenses, costs, and tax liabilities. These payments amount to
23 has effectively been denied his 50% equity share in each of the Partnership Entities and incurred
27
28
2 in conscious disregard of Mr. Gao’s rights and resulting damages. As a result, Mr. Gao is entitled
5 Defamation
7 205. Plaintiffs incorporate and allege by reference each and every allegation contained
9 206. Throughout the months of February and March 2021, in an attempt to rewrite
10 history and to fabricate a justification for his attempted coup, Mr. Struck made numerous
11 statements to the Partnership Entities’ employees, portfolio company founders, investors, and
12 advisors—as well as other within the investment community—that Mr. Gao had been terminated
13 “for cause,” that he had embezzled company funds, that he had not been working on the funds for
15 207. On information and belief, these communications were made both verbally and in
16 writing.
17 208. Mr. Struck made these communications knowing them to be false and misleading.
18 209. Mr. Gao has not embezzled or attempted to embezzle any company funds. Mr.
19 Struck has no authority to terminate Mr. Gao or remove him from any of the Partnership Entities.
20 As a 50/50 partner, Mr. Gao has continuously worked towards the benefit of the partnership and
23 Gao, impairing his reputation, and of undermining Mr. Gao’s legitimate claims to his equity stake
25 211. These communications did defame Mr. Gao with his own employees, his own
26 investors, his own portfolio company founders, his own advisors, and in the venture capital
27 community.
28
2 investors, portfolio company founders, colleagues, advisers and the investment community and
3 has become subject to public speculation as to his competence as well as public ridicule.
5 214. In committing these wrongful acts, Mr. Struck acted intentionally, with malice and
6 in conscious disregard of Mr. Gao’s rights and resulting damages. As a result, Mr. Gao is entitled
9 216. Mr. Struck should be enjoined from: (1) continuing to claim the authority to
10 “terminate” Mr. Gao; (2) continuing to claim that Mr. Gao has been “terminated”; (3) continuing
11 to claim that such “termination” was “for cause”; (4) continuing to claim that Mr. Gao embezzled
12 company funds; and (5) continuing to make disparaging statements against Mr. Gao.
14 Libel Per Se
16 217. Plaintiffs incorporate and allege by reference each and every allegation contained
18 218. Throughout the months of February and March 2021, in an attempt to rewrite
19 history and to fabricate a justification for his attempted coup, Mr. Struck made numerous
20 statements to the Partnership Entities’ employees, investors, portfolio company founders, and
21 advisors—as well as other within the investment community—that Mr. Gao had been terminated
22 “for cause,” that he had embezzled company funds, that he had not been working on the funds for
24 219. On information and belief, these communications were made both verbally and in
25 writing.
26 220. Mr. Struck made these communications knowing them to be false and misleading.
27 221. Mr. Gao has not embezzled or attempted to embezzle any company funds. Mr.
28 Struck has no authority to terminate Mr. Gao or remove him from any of the Partnership Entities.
3 222. Mr. Struck made these communications with the specific intent of harming Mr.
4 Gao, impairing his reputation, and of undermining Mr. Gao’s legitimate claims to his equity stake
6 223. These communications did defame Mr. Gao with his own employees, his own
7 investors, his portfolio company founders, his own advisors, and in the venture capital
8 community.
9 224. As a result of these false statements, Mr. Gao has lost the trust of his employees,
10 investors, colleagues, advisers and the investment community and has become subject to public
11 speculation as to his competence as well as public ridicule.
13 226. In committing these wrongful acts, Mr. Struck acted intentionally, with malice and
14 in conscious disregard of Mr. Gao’s rights and resulting damages. As a result, Mr. Gao is entitled
17 228. Mr. Struck should be enjoined from: (1) continuing to claim the authority to
18 “terminate” Mr. Gao; (2) continuing to claim that Mr. Gao has been “terminated”; (3) continuing
19 to claim that such “termination” was “for cause”; (4) continuing to claim that Mr. Gao embezzled
20 company funds; and (5) continuing to make disparaging statements against Mr. Gao.
24 229. Plaintiffs incorporate and allege by reference each and every allegation contained
26 230. Throughout the months of February and March 2021, in an attempt to rewrite
27 history and to fabricate a justification for his attempted coup, Mr. Struck made numerous
28 statements to the Partnership Entities’ employees, investors, portfolio company founders and
2 “for cause,” that he had embezzled company funds, that he had not been working on the funds for
4 231. On information and belief, these communications were made both verbally and in
5 writing.
6 232. Mr. Struck made these communications knowing them to be false and misleading.
7 233. Mr. Gao has not embezzled or attempted to embezzle any company funds. Mr.
8 Struck has no authority to terminate Mr. Gao or remove him from any of the Partnership Entities.
9 As a 50/50 partner, Mr. Gao has continuously worked towards the benefit of the partnership and
12 Gao, impairing his reputation, and of undermining Mr. Gao’s legitimate claims to his equity stake
14 235. These communications did defame Mr. Gao with his own employees, his own
15 investors, his portfolio company founders, his own advisors, and in the venture capital
16 community.
17 236. As a result of these false statements, Mr. Gao has lost the trust of his employees,
18 investors, colleagues, portfolio company founders, advisers and the investment community and
19 has become subject to public speculation as to his competence as well as public ridicule.
21 238. In committing these wrongful acts, Mr. Struck acted intentionally, with malice and
22 in conscious disregard of Mr. Gao’s rights and resulting damages. As a result, Mr. Gao is entitled
25 240. Mr. Struck should be enjoined from: (1) continuing to claim the authority to
26 “terminate” Mr. Gao; (2) continuing to claim that Mr. Gao has been “terminated”; (3) continuing
27 to claim that such “termination” was “for cause”; (4) continuing to claim that Mr. Gao embezzled
28 company funds; and (5) continuing to make disparaging statements against Mr. Gao.
2 Conversion
4 241. Plaintiffs incorporate and allege by reference each and every allegation contained
6 242. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
7 around 2015.
8 243. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
9 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
10 including splitting all business revenues, costs, and expenses, an equal right to management of the
11 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
13 244. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
14 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
16 245. Mr. Gao has fulfilled all his obligations under the partnership, including spending
17 years working to build up the partnership; leaving gainful employment to focus full time on the
18 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
19 name and experience to be used in marketing the partnership’s endeavors; introducing and
20 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
23 Entities by knowingly and intentionally preventing Mr. Gao from accessing, possessing or
24 controlling the Partnership Entities and taking possession and withholding payments owed to Mr.
25 Gao amounting to 50% of the Partnership Entities’ management fees and other profits.
26 247. Mr. Struck acted intentionally and without Mr. Gao’s consent. Mr. Gao’s demands
27 to regain access and to be paid his fair portion of the Partnership Entities fees and profits have all
28 been ignored.
2 to be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
4 interest.
5 249. In committing these wrongful acts, Mr. Struck acted intentionally, with malice and
6 in conscious disregard of Mr. Gao’s rights and resulting damages. As a result, Mr. Gao is entitled
8 250. Additionally, Mr. Gao seeks judicial confirmation of his partnership rights by way
9 of an order confirming his 50% ownership interests in each of the Partnership Entities and a
10 further order granting him access to the Partnership Entities’ accounts and properties.
11 THIRTEENTH CAUSE OF ACTION
14 251. Plaintiffs incorporate and allege by reference each and every allegation contained
16 252. Mr. Gao and Mr. Struck entered into an oral contract to form a partnership in or
17 around 2015.
18 253. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
19 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
20 including splitting all business revenues, costs, and expenses, an equal right to management of the
21 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
22 partners to the investment community.
23 254. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
24 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
26 255. Specifically, each and every time Mr. Gao and Mr. Struck formed a new
27 business—starting in 2015 with the SPV Entities, continuing into early 2016 with the SCM
28 Entities for Fund I, continuing into early 2017 with the SCSS Entities and SCSA GP, continuing
2 Struck told Mr. Gao that the terms of their partnership remained intact: they were 50/50 partners
3 in their business endeavors and 50/50 owners of the partnership, including splitting all business
5 256. Taking on the legal aspects of the partnership, Mr. Struck assured Mr. Gao that he
6 would handle all legal formalities necessary to memorialize their 50/50 partnership and that each
7 of them would be equally protected in case of any dispute. Mr. Struck never advised Mr. Gao to
8 seek independent counsel to represent his interests, but instead assured Mr. Gao that Mr. Struck
10 257. Mr. Struck also insisted that he maintain primary control over the Partnership
11 Entities’ bank accounts.
12 258. These representations were false. Mr. Struck never intended on honoring their
13 50/50 partnership and rather than drawing up the necessary legal documents to memorialize their
14 partnership, Mr. Struck purposely structured each of the businesses to his own advantage. He did
15 this by avoiding drafting partnership agreements that would, in writing, memorialize his and Mr.
16 Gao’s verbal agreements. To the extent corporate documents were filed, Mr. Struck would
17 consistently name himself as the only owner without even mentioning Mr. Gao’s involvement.
18 For the only document to actually acknowledge Mr. Gao, the DDC Operating Agreements, Mr.
19 Struck still took advantage of his position as the attorney and sole drafter by granting himself all
21 259. At the same time, Mr. Struck continued to claim to Mr. Gao that they were 50/50
22 partners; held Mr. Gao out as an equal partner to employees, investors, advisers, and the general
23 public; required Mr. Gao to pay 50% of the Partnership Entities’ costs, expenses, and tax
24 liabilities; issued Mr. Gao distributions amounting to 50% of the Partnership Entities’ profits; and
25 issued Mr. Gao K-1 tax documents indicating that Mr. Gao was a 50% partner.
26 260. Relying on these deceptions, Mr. Gao has spent years working to build up the
27 partnership; left gainful employment to focus full time on the partnership; left a prestigious
28 university to focus full time on the partnership; allowed his name and experience to be used in
2 partnership; and shouldered 50% the costs, expenses, and tax liabilities for the Partnership
3 Entities.
4 261. Mr. Struck made these representations specifically so that he could benefit from
5 Mr. Gao’s efforts, contacts, reputation and money, while simultaneously withholding Mr. Gao’s
6 true equity interest and withholding the monies owed to Mr. Gao based on his 50% ownership of
8 262. Using these deceptions, Mr. Struck has substantially interfered with Mr. Gao’s
9 equity rights to the Partnership Entities by knowingly and intentionally preventing Mr. Gao from
10 accessing, possessing or controlling the Partnership Entities and has illegally withheld payments
11 owed to Mr. Gao amounting to 50% of the Partnership Entities’ management fees and other
12 profits.
13 263. Mr. Struck acted intentionally and without Mr. Gao’s consent. Mr. Gao’s demands
14 to regain access and to be paid his fair portion of the Partnership Entities fees and profits have all
15 been ignored.
16 264. As a result of Mr. Struck’s actions, Mr. Gao has sustained damages in an amount
17 to be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
19 interest.
20 265. In committing these wrongful acts, Mr. Struck acted intentionally and criminally.
21 As a result, Mr. Gao is entitled to statutory treble damages, plus costs and attorneys’ fees.
22 FOURTEENTH CAUSE OF ACTION
25 266. Plaintiffs incorporate and allege by reference each and every allegation contained
27 267. In the alternative, in the event the Court finds that no partnership agreement exists,
28 Mr. Gao separately alleges the preceding and incorporated facts alleged create a legal
2 Partnership Entities pursuant to California law as set forth in Martinez v. Combs, 49 Cal. 4th 35
3 (2010), and that within such employment relationship, there existed an implied-in-fact contract
5 268. Based on the relationship between Mr. Gao on the one hand and Mr. Struck and
6 the Partnership Entities on the other hand, the longevity of that relationship, including spending
7 years working to build up the partnership; leaving gainful employment to focus full time on the
8 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
9 name and experience to be used in marketing the partnership’s endeavors; introducing and
10 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
11 tax liabilities for the Partnership Entities, among other factors, created an implied-in-fact contract
12 that Mr. Gao’s employment would not be terminated unless good cause existed.
13 269. Mr. Gao has fulfilled all his obligations under the employment agreement by
14 performing services for and/or on behalf of Mr. Struck and the Partnership Entities.
15 270. Mr. Struck and the defendant entities improperly terminated Mr. Gao from the
16 Partnership Entities. They did not have good cause to terminate Mr. Gao’s employment. Rather,
17 the termination was made purely based on Mr. Gao’s attempt to receive back wages owed to him,
18 which does not constitute good cause, and in fact, constitutes an illegal and wrongful termination.
20 be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
24 Breach of Implied Covenant of Good Faith and Fair Dealing (Implied-In-Fact Contract Not
27 272. Plaintiffs incorporate and allege by reference each and every allegation contained
2 Mr. Gao separately alleges that the preceding and incorporated facts alleged create a legal
3 employment relationship under California law between Mr. Gao and with Mr. Struck and the
4 Partnership Entities pursuant to California law as set forth in Martinez v. Combs, 49 Cal. 4th 35
5 (2010), and that within such employment relationship, there existed an implied-in-fact contract
7 274. In every contract, there is an implied covenant of good faith and fair dealing that
8 the parties will do nothing to unfairly deprive the parties of the benefits of the contract, and, that
9 the parties will exercise diligence, good faith, and fidelity in safeguarding the parties’ interests,
12 fact employment consistent with implied covenant of good faith and fair dealing.
13 276. Mr. Struck and the Partnership Entities breached their obligations by unreasonably
14 and wrongfully withhold funds owed to Mr. Gao; requiring Mr. Gao to pay half of the Partnership
15 Entities’ costs, expenses and tax burdens; unilaterally changing the terms of the relationship and
16 refusing to put the terms in writing; and improperly terminating Mr. Gao from the Partnership
17 Entities without good cause purely based on Mr. Gao’s attempt to receive back wages owed to
18 him, which does not constitute good cause, and in fact, constitutes an illegal and wrongful
19 termination
20 277. As a result of Mr. Struck’s misrepresentations, Mr. Gao spent years working on
21 behalf of the partnership and gave up numerous other opportunities, including leaving a lucrative
22 and prestigious job, leaving Stanford business school, and moving from the Bay Area to Los
23 Angeles all in reliance on Mr. Struck’s false claims of partnership. Mr. Gao also paid 50% of the
24 Partnership Entities’ expenses, costs, and tax liabilities. These payments amount to
26 278. Mr. Struck and the Partnership entities have been unjustly enriched at Mr. Gao’s
27 expense.
28
2 dealing, Mr. Gao now seeks restitution from Mr. Struck and the Partnership Entities and seeks an
3 order disgorging all profits, benefits, and other compensation obtained by them, in an amount to
4 be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
6 interest.
10 280. Plaintiffs incorporate and allege by reference each and every allegation contained
11 in the preceding paragraphs.
12 281. In the alternative, in the event the Court finds that no partnership agreement exists,
13 Mr. Gao separately alleges that Mr. Gao entered into an oral employment agreement with Mr.
15 282. Mr. Gao and Mr. Struck entered into an oral contract in or around 2015.
16 283. Mr. Struck and the Partnership Entities breached their obligations by unreasonably
17 and wrongfully withhold funds owed to Mr. Gao; requiring Mr. Gao to pay half of the Partnership
18 Entities’ costs, expenses and tax burdens; unilaterally changing the terms of the relationship and
19 refusing to put the terms in writing; and failing to reimburse Mr. Gao for these expenditures.
20 284. As a result of Mr. Struck’s misrepresentations, Mr. Gao spent years working on
21 behalf of the partnership and gave up numerous other opportunities, including leaving a lucrative
22 and prestigious job, leaving Stanford business school, and moving from the Bay Area to Los
23 Angeles all in reliance on Mr. Struck’s false claims of partnership. Mr. Gao also paid 50% of the
24 Partnership Entities’ expenses, costs, and tax liabilities. These payments amount to
26 285. By unlawfully deducting wages, requiring Mr. Gao to cover costs, and requiring
27 Mr. Gao to cover tax liabilities and payments that an employee should not be expected to cover,
28 and improperly withholding distributions and payments owed by Mr. Gao based on the fees and
2 statutory obligations under Labor Code §§ 221 (prohibiting employers from collecting, receiving,
5 286. As a result, Mr. Struck has unlawfully withheld distributions and payments owed
6 by Mr. Gao based on the fees and revenues earned by the Partnership Entities, in an amount of at
7 least $1,901,018.32 in management fees, and $1,293,139.89 in carried interest, plus costs and
8 interest.
9 287. At the same time, Mr. Struck has unlawfully required Mr. Gao to pay 50% of the
10 Partnership Entities’ expenses, costs, and tax liabilities. These payments amount to
11 approximately $126,539.29 in out-of-pocket costs, expenses, and contributions.
13 be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
15 interest.
16 289. Furthermore, under Labor Code §§ 221 and 2802, Mr. Gao is further entitled to
17 statutory damages and reasonable attorneys’ fees and costs (including expert costs) in an amount
18 according to proof.
24 291. In the alternative, in the event the Court finds that no partnership agreement exists,
25 Mr. Gao separately alleges that the preceding and incorporated facts alleged create a legal
26 employment relationship under California law between Mr. Gao and with Mr. Struck and the
27 Partnership Entities pursuant to California law as set forth in Martinez v. Combs, 49 Cal.4th 35
28 (2010). Defendants knowingly and intentionally failed to furnish Plaintiff Gao with complete and
2 earned, all rates of pay, and total net wages earned, in violation of Labor Code § 226 et seq.
3 292. Defendants’ failures to furnishing Plaintiff with complete and accurate itemized
4 wage statements resulted in actual injury. Defendants’ failures create an entitlement to recovery
5 by Plaintiff in a civil action for all damages and/or penalties pursuant to Labor Code § 226 et seq.,
6 including statutory penalties, civil penalties, reasonable attorneys’ fees, and costs of suits
13 294. In the alternative, in the event the Court finds that no partnership agreement exists,
14 Mr. Gao separately alleges that the preceding and incorporated facts alleged create a legal
15 employment relationship under California law between Mr. Gao and with Mr. Struck and the
16 Partnership Entities pursuant to California law as set forth in Martinez v. Combs, 49 Cal.4th 35
17 (2010).
18 295. This cause of action is brought under Labor Code §§ 201-203, which require an
19 employer to pay all wages earned immediately at the time of termination of employment in the
20 event the employer discharges the employee or the employee provides at least 72 hours of the
21 employee’s intent or notice to quit. If the employee provides less than 72 hours, the employee’s
22 final wages become due within 72 hours of the last time the employee worked.
23 296. Defendants failed to timely pay Plaintiff all final wages due at the time of his
24 separation of “employment” with Defendants, and such failure was willful within the meaning of
26 297. Defendants’ willful failure to timely pay Mr. Gao his earned wages upon
27 separation from “employment” results in continued payment of wages up to thirty (30) days from
28 the time the wages were due. Therefore, Mr. Gao is entitled to penalties under Labor Code § 203,
5 298. Plaintiffs incorporate and allege by reference each and every allegation contained
7 299. In the alternative to the breach of contract claims asserted above, and in the event
8 that any contract between the parties is found to be unenforceable, or in the event the trier of fact
9 finds that there were no contracts, Mr. Gao asserts a claim for relief for promissory estoppel.
10 300. The Parties entered into an oral contract to form a partnership in or around 2015.
11 301. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
12 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
13 including splitting all business revenues, costs, and expenses, an equal right to management of the
14 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
16 302. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
17 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
19 303. Mr. Gao has fulfilled all his obligations under the partnership, including spending
20 years working to build up the partnership; leaving gainful employment to focus full time on the
21 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
22 name and experience to be used in marketing the partnership’s endeavors; introducing and
23 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
25 304. Mr. Struck and the Partnership Entities have failed to perform their required
26 obligations, including but not limited to failing to provide Mr. Gao with equal possession, access,
27 and control over the Partnership Entities; failing to pay Mr. Gao 50% of the management fees
28
3 305. Mr. Struck has improperly withheld distributions and payments owed by Mr. Gao
4 based on the fees and revenues earned by the Partnership Entities, in an amount of at least
5 $1,901,018.32 in management fees, and $1,293,139.89 in carried interest, plus costs and interest.
6 306. At the same time, Mr. Struck has required Mr. Gao to pay 50% of the Partnership
7 Entities’ expenses, costs, and tax liabilities. These payments amount to approximately
9 307. Mr. Struck and the Partnership Entities have unjustly profited from Mr. Gao’s
13 be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
15 interest.
16 309. Additionally, Mr. Gao seeks judicial confirmation of his partnership rights by way
17 of an order confirming his 50% ownership interests in each of the Partnership Entities and a
18 further order granting him access to the Partnership Entities’ accounts and properties.
20 Promissory Estoppel
24 311. In the alternative to the breach of contract claims asserted above, and in the event
25 that any contract between the parties is found to be unenforceable, or in the event the trier of
26 fact finds that there were no contracts, Mr. Gao asserts a claim for relief for promissory estoppel.
27 312. The Parties entered into an oral contract to form a partnership in or around 2015.
28
2 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
3 including splitting all business revenues, costs, and expenses, an equal right to management of the
4 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
6 314. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
7 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
9 315. Specifically, each and every time Mr. Gao and Mr. Struck formed a new
10 business—starting in 2015 with the SPV Entities, continuing into early 2016 with the SCM
11 Entities for Fund I, continuing into early 2017 with the SCSS Entities and SCSA GP, continuing
12 into late 2017 with the DDC Entities, and ending in 2019 with the SCM Entities for Fund II—Mr.
13 Struck told Mr. Gao that the terms of their partnership remained intact: they were 50/50 partners
14 in their business endeavors and 50/50 owners of the partnership, including splitting all business
16 316. Taking on the legal aspects of the partnership, Mr. Struck assured Mr. Gao that he
17 would handle all legal formalities necessary to memorialize their 50/50 partnership and that each
18 of them would be equally protected in case of any dispute. Mr. Struck never advised Mr. Gao to
19 seek independent counsel to represent his interests, but instead assured Mr. Gao that Mr. Struck
21 317. These representations were false. Mr. Struck never intended on honoring their
22 50/50 partnership and rather than drawing up the necessary legal documents to memorialize their
23 partnership, Mr. Struck purposely structured each of the businesses to his own advantage. He did
24 this by avoiding drafting partnership agreements that would, in writing, memorialize his and Mr.
25 Gao’s verbal agreements. To the extent corporate documents were filed, Mr. Struck would
26 consistently name himself as the only owner without even mentioning Mr. Gao’s involvement.
27 For the only document to actually acknowledge Mr. Gao, the DDC Operating Agreements, Mr.
28 Struck still took advantage of his position as the attorney and sole drafter by granting himself all
2 318. At the same time, Mr. Struck continued to claim to Mr. Gao that they were 50/50
3 partners; held Mr. Gao out as an equal partner to employees, investors, advisers, and the general
4 public; required Mr. Gao to pay 50% of the Partnership Entities’ costs, expenses, and tax
5 liabilities; issued Mr. Gao distributions amounting to 50% of the Partnership Entities’ profits; and
6 issued Mr. Gao K-1 tax documents indicating that Mr. Gao was a 50% partner.
7 319. Mr. Struck made these misrepresentations specifically to induce Mr. Gao to
8 contribute his name, experience, connections, time, and hard work towards the partnership. These
9 misrepresentations were also intended to induce Mr. Gao into pay for 50% of all the Partnership
12 the two were 50/50 partners and had no reason to believe that Mr. Struck was lying to him, let
13 alone that he was drawing up the corporate paperwork to exclude him as an owner.
14 321. As a result of Mr. Struck’s misrepresentations, Mr. Gao spent years working on
15 behalf of the partnership and gave up numerous other opportunities, including leaving a lucrative
16 and prestigious job, leaving Stanford business school, and moving from the Bay Area to Los
17 Angeles all in reliance on Mr. Struck’s false claims of partnership. Mr. Gao also paid 50% of the
18 Partnership Entities’ expenses, costs, and tax liabilities. These payments amount to
20 322. As a result of his justifiable reliance on Mr. Struck’s misrepresentations, Mr. Gao
21 has effectively been denied his 50% equity share in each of the Partnership Entities and incurred
22 damages in an amount to be determined at trial, but no less than $126,539.29 in out-of-pocket
25 323. Due to their wrongful acts, the Defendants have been unjustly enriched at Mr.
26 Gao’s expense.
27 324. Mr. Gao now seeks restitution from the Defendants and seeks an order disgorging
3 interest.
5 Common Count
7 325. Plaintiffs incorporate and allege by reference each and every allegation contained
9 326. The Parties entered into an oral contract to form a partnership in or around 2015.
10 327. Under their partnership agreement, Mr. Gao and Mr. Struck agreed to be 50/50
11 partners in their business endeavors and 50/50 owners of the partnership and Partnership Entities,
12 including splitting all business revenues, costs, and expenses, an equal right to management of the
13 partnership and Partnership Entities, and an agreement to hold both of themselves out as co-equal
15 328. Mr. Gao and Mr. Struck re-confirmed their agreement to an equal 50/50
16 partnership when creating each new entity, including each of the SCM Entities, DDC Entities,
18 329. Mr. Gao has fulfilled all his obligations under the partnership, including spending
19 years working to build up the partnership; leaving gainful employment to focus full time on the
20 partnership; leaving a prestigious university to focus full time on the partnership; allowing his
21 name and experience to be used in marketing the partnership’s endeavors; introducing and
22 recruiting investors and advisers to the partnership; and shouldering half the costs, expenses, and
24 330. Mr. Struck has failed to perform his required obligations under the partnership
25 agreement in numerous ways, including but not limited to failing to provide Mr. Gao with equal
26 possession, access, and control over the Partnership Entities; failing to pay Mr. Gao 50% of the
27 management fees collected by the Partnership Entities; and failing to provide Mr. Gao 50% of the
2 factual basis, claiming to have “terminated” Mr. Gao from his association with the Partnership
3 Entities; removing Mr. Gao’s access to the Partnership Entities, including bank access and his
4 own email account; removing Mr. Gao from the Partnership Entities’ public-facing documents
5 (such as its website, LinkedIn page, and other marketing materials); and falsely claiming to
6 investors, advisors, employees, portfolio company founders, contractors, and the public at large
7 that Mr. Gao has never been a partner in the Partnership Entities, that Mr. Gao has been
8 terminated “for cause”, that Mr. Gao is guilty of embezzlement, and that Mr. Gao has not been
10 332. Mr. Struck has improperly withheld distributions and payments owed by Mr. Gao
11 based on the fees and revenues earned by the Partnership Entities, in an amount of at least
14 333. At the same time, Mr. Struck has required Mr. Gao to pay 50% of the Partnership
15 Entities’ expenses, costs, and tax liabilities. These payments amount to approximately
18 to be determined at trial, but no less than $126,539.29 in out-of-pocket costs, expenses, and
20 interest.
23 1. Declaratory relief by way of a declaration and order of this Court determining that
25 2. Declaratory relief by way of a declaration and order of this Court determining that
26 the partnership agreement between Mr. Gao and Mr. Struck entitles Mr. Gao to 50/50 ownership
27
28
3 3. Declaratory relief by way of a declaration and order of this Court determining that
4 the partnership agreement between Mr. Gao and Mr. Struck entitles Mr. Gao to half of all
5 management fees, income or any other profits collected from the SCM Entities, SCM Entities,
7 4. A temporary and permanent injunction prohibiting Mr. Struck from: (1) continuing
8 to claim the authority to “terminate” Mr. Gao; (2) continuing to claim that Mr. Gao has been
9 “terminated”; (3) continuing to claim that such “termination” was “for cause”; (4) continuing to
10 claim that Mr. Gao embezzled company funds; and (5) continuing to make disparaging statements
11 against Mr. Gao;
14 interest, plus costs and interest, or such other amount as may be determined at trial, including for
15 emotional distress;
16 6. For statutory penalties pursuant to Labor Code §§ 201-203, 226, and 226.3;
17 7. For any other statutory awards and penalties as permitted by the California Labor
18 Code and any other applicable statute, law, wage order, and/or ordinance;
20 Defendants from their wrongful conduct and restitution of those profits to the Plaintiffs;
24
25
5
With the exception of Zero SPV LLC, Serico SPV LLC, and Probitas SPV LLC, in which Mr.
26
Gao seeks his 33.3% share of the equity in those three companies, and Ignis SPV LLC, in which
27 Mr. seeks his 18% share of the equity. See Footnote 3, supra.
6
With the exception of Zero SPV LLC, Serico SPV LLC, and Probitas SPV LLC, in which Mr.
28 Gao seeks his 33.3% share of the equity in those three companies, and Ignis SPV LLC, in which
Mr. seeks his 18% share of the equity. See Footnote 3, supra.
ORSUS GATE LLP
A CA LI FORN IA
52
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LIT IGA TIO N BOU TIQ UE COMPLAINT AND DEMAND FOR JURY TRIAL
1 12. Pre- and post-judgment interest, as required by contract or law, whichever is
2 greater;
4 14. Such other relief as the Court may deem just and proper.
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2 Plaintiff demands a trial by jury on each of its claims that are triable before a jury.
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By:
9 Denis Shmidt
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