Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 1 of 28 Page ID #:8
`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 1 of 28 Page ID #:8
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`EXHIBIT 1
`EXHIBIT 1
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`VENABLE LLP
`Alex M. Weingarten (SBN 204410)
` AMWeingarten@Venable.com
`Matthew M. Gurvitz (SBN 272895)
` MMGurvitz@Venable.com
`Matthew J. Busch (SBN 307396)
` MJBusch@Venable.com
`2049 Century Park East, Suite 2300
`Los Angeles, CA 90067
`Telephone:
`(310) 229-9900
`Facsimile:
`(310) 229-9901
`
`Attorneys for Plaintiff
`MEND HEALTH, INC.
`
`SUPERIOR COURT OF THE STATE OF CALIFORNIA
`FOR THE COUNTY OF LOS ANGELES – CENTRAL DISTRICT
`
`Plaintiff,
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`MEND HEALTH, INC., a California
`Corporation,
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`
`
`vs.
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`CARBON HEALTH TECHNOLOGIES, INC., a
`Delaware Corporation, SUJAL MANDAVIA, an
`individual, and DOES 1-20, inclusive,
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`
`
`
`
`Defendants.
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`
` CASE NO.
`
`Judge:
`Dept.:
`
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`COMPLAINT FOR:
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`(1) BREACH OF CONTRACT;
`(2) MISAPPROPRIATION OF
`TRADE SECRETS (CAL. CIV.
`CODE § 3426);
`(3) FRAUD;
`(4) NEGLIGENT
`MISREPRESENTATION;
`(5) BREACH OF IMPLIED
`COVENANT OF GOOD FAITH
`AND FAIR DEALINGS;
`(6) VIOLATION OF CALIFORNIA
`BUSINESS AND
`PROFESSIONS CODE §17200
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`DEMAND FOR JURY TRIAL
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` COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Electronically FILED by Superior Court of California, County of Los Angeles on 01/26/2021 11:13 AM Sherri R. Carter, Executive Officer/Clerk of Court, by H. Flores-Hernandez,Deputy Clerk
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`Assigned for all purposes to: Stanley Mosk Courthouse, Judicial Officer: Gregory Alarcon
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`21STCV03098
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 3 of 28 Page ID #:10
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`Plaintiff Mend Health, Inc. (“Mend”) hereby alleges against Defendants Carbon Health
`Technologies, Inc. (“Carbon”), Sujal Mandavia and Does 1 through 20, inclusive (collectively,
`“Defendants”) the following:
`
`NATURE OF ACTION
`This is a textbook case of trade secret theft, fraud, and unfair competition. It is
`1.
`also David versus Goliath, if Goliath had signed a nondisclosure agreement and then stolen the
`blueprints to David’s slingshot. Here a large conglomerate, Defendants, lured a small local
`competitor, Mend, into disclosing all of its confidential and proprietary information under the
`guise of an acquisition. Then, once Defendants had obtained every last ounce of secret sauce
`regarding Mend’s business, Defendants terminated negotiations and announced that – despite
`their express representations to the contrary - they had been planning on opening a competing
`venture less than a one-half mile away all along.
`Emergency Room Doctor Anthony Cardillo opened Mend in June 2015, which
`2.
`has since grown to three urgent care facilities in the San Fernando Valley (two in Sherman Oaks
`and one in Burbank). While Mend has a “mom and pop” feel, Mend’s urgent care facilities
`provide high quality medical services to patients and prides itself on being the neighborhood’s
`walk-in medical clinic. Mend’s successful launch and expansion is attributed to its
`understanding of the needs of the local market, its employment of leading technology, and its
`highly skilled emergency medicine and family medicine physicians.
`Carbon is one of the largest health care providers in the United States. In 2020,
`3.
`Carbon announced that, with the help of $100 million in venture capital funding, it intends to
`grow its clinic footprint to 1,500 locations across the U.S. by 2025. Prior to this influx of
`significant capital, Carbon had no active presence in the San Fernando Valley and had only
`recently expanded its operations into Southern California.
`In late August 2020, Defendants approached Dr. Cardillo about a potential
`4.
`acquisition opportunity, touting its interest in rapid acquisitions that could close in 45 days with
`expedited due diligence. Mend was weary about providing the blueprint for operating an
`effective and profitable urgent care facility in its market to a direct competitor and sought
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`

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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 4 of 28 Page ID #:11
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`adequate protections. In addition to a comprehensive nondisclosure agreement, Defendants’
`representatives affirmatively represented on at least three separate occasions that Defendants had
`no intention of opening its own facility in Mend’s market. Defendants stated, explicitly, that it
`would either acquire Mend or move on and would not open a competing facility in the same
`market.
`During the due diligence process initiated by Defendants’ clinic acquisition team,
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`Defendants requested access to all of Mend’s most confidential proprietary and financial
`information. Based on the nondisclosure agreement executed by the parties and the express
`misrepresentations made by Defendants, Mend agreed and provided everything requested. After
`extracting from Mend all of the information necessary to diligence, how to operate and succeed
`in the Sherman Oaks market, and how to bury the competition and Mend in the process,
`Defendants abruptly terminated acquisition discussions.
`After the fact, Defendants admitted that while it was conducting “due diligence”
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`to acquire Mend, it was concurrently negotiating and subsequently signed a lease to open its own
`clinic less than a half-mile from Mend’s facility. This, despite a nondisclosure agreement and
`myriad explicit representations to the contrary. Armed with all of Mend’s operating information,
`financial statements, payer contracts, and patient volume history, the opening of Carbon’s new
`clinic is imminent and poised to swallow the competition.
`Through this action, Mend seeks to recover its losses resulting from Defendants’
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`breach of the nondisclosure agreement and misappropriation of Mend’s trade secrets.
`Defendant’s dastardly machination to defraud Mend into disclosing all of its confidential and
`proprietary information under false pretenses cannot be countenanced. Mend is entitled to
`injunctive relief to arrest Defendant’s tortuous conduct. Moreover, Mend needs injunctive relief
`to survive.
`
`THE PARTIES
`Plaintiff Mend Health, Inc. is a California Corporation with its principal place of
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`business in the County of Los Angeles, State of California.
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 5 of 28 Page ID #:12
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`Plaintiff is informed and believes, and thereon alleges, Defendant Carbon Health
`9.
`Technologies, Inc. is a Delaware Corporation with its principal place of business in California.
`Carbon conducts business on a regular basis in Los Angeles County.
`Plaintiff is informed and believes, and thereon alleges, Defendant Sujal
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`Mandavia is an individual who resides in Los Angeles County, and conducted business in Los
`Angeles County at all times pertinent to this action.
`Plaintiff does not know the true names and capacities of the Defendants sued
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`herein as DOES 1 through 20, inclusive, and therefore sues these Defendants by their fictitious
`names pursuant to Section 474 of the Code of Civil Procedure. Plaintiff will seek leave to
`amend this Complaint to allege the true names and capacities of DOES 1 through 20, inclusive,
`when ascertained.
`Plaintiff is informed and believes, and thereon alleges, that each of the named
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`and fictitiously named Defendants, including DOES 1 through 20, inclusive, are in some
`manner of law or fact responsible for the wrongs, damages, and causes of action alleged herein,
`and that at all times referenced herein each was the joint venturer, co-venturer, co-conspirator,
`partner, agent or alter ego of the others, or was otherwise involved with the Defendants in the
`wrongdoing averred herein, and by virtue of such capacity is liable and responsible on the facts
`alleged for some or all of the damages sought herein.
`JURISDICTION AND VENUE
`Subject matter jurisdiction is proper in this Court as the amount in controversy
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`well exceeds $25,000.00.
`This Court has personal jurisdiction over Defendants because each of the
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`Defendants resides and/or conducts business in California.
`Venue is proper in this Court because the causes of action arose in the County of
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`Los Angeles and Defendants conduct business therein.
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`

`

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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 6 of 28 Page ID #:13
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`I.
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`GENERAL ALLEGATIONS
`Defendants Approach Mend About A Possible Acquisition
`Christopher McMullan – a member of Carbon’s clinic acquisitions team –
`16.
`contacted Dr. Anthony Cardillo, Mend’s Chief Executive Officer, on August 28, 2020 about a
`potential acquisition opportunity. Mr. McMullan explained that Carbon thought Mend “fit well”
`with Carbon’s geographic expansion strategy and was looking to acquire Mend’s urgent care
`facilities.
`17. Mend was aware of Carbon not only because they were competitors in the same
`industry, but also because Carbon had acquired an urgent care clinic owned by a friend and
`former colleague of Dr. Cardillo – Dr. Sujal Mandavia. Mend knew that following Carbon’s
`acquisition of Dr. Mandavia’s clinic in the Echo Park neighborhood of Los Angeles, Dr.
`Mandavia became Carbon’s Chief Medical Officer.
`Dr. Cardillo first became acquainted with Dr. Mandavia through Dr. Cardillo’s
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`professional mentor in medical school, Diku Mandavia – Defendant’s brother. When Dr.
`Mandavia initially opened his clinic in Echo Park, he sought advice and guidance on how to
`grow his flailing clinic from Dr. Cardillo, who had already opened Mend’s third location. Long
`before joining Carbon, Dr. Mandavia viewed Mend as the blueprint for success and Dr. Cardillo
`was generous to provide discrete insights to assist his friend, including providing Dr. Mandavia
`with advice on a suitable lab company to facilitate sample testing. Given Dr. Cardillo’s abiding
`respect for Dr. Mandavia’s brother and their congenial history, Dr. Cardillo entered acquisition
`discussions with the belief that his long-time professional colleague would operate in good faith.
`A belief that Defendants quickly sought to capitalize on.
`On September 16, 2020, Dr. Cardillo and William Van Noll (Mend) and Mr.
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`McMullan and Dr. Mandavia (Carbon) conducted a teleconference to discuss Carbon’s potential
`acquisition of Mend. On the call, Mr. McMullan and Dr. Mandavia mentioned that Carbon had
`positioned itself to conduct rapid acquisitions of clinics following a venture capital injection and
`Southern California was key to Carbon’s expansion strategy.
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 7 of 28 Page ID #:14
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`20. Mr. McMullan and Dr. Mandavia further touted that any deal with Mend could
`close in 45 days with expedited due diligence. Defendants’ representatives explained that it
`would decide whether to move forward with acquiring Mend upon review of Mend’s business
`information and financials. Defendants explained that its expansion plans hinged on acquiring
`existing clinics like Mend.
`Crucially, Defendants failed to mention on the call that it planned to build its own
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`facility in the San Fernando Valley, less than a mile away from a Mend location. To the
`contrary, Dr. Mandavia expressly represented that the only circumstance by which Defendants
`intended to operate in the Sherman Oaks area was through an acquisition of Mend – emphasizing
`that it had no other plans to open a facility in the area currently under consideration.
`The Parties Sign A Nondisclosure Agreement
`II.
`On September 16, 2020, immediately following the introductory phone call,
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`Defendants delivered to Mend an initial request for documents relating to the financial well-
`being of Mend and a draft nondisclosure agreement to facilitate the document transfer. The
`document request sought confidential and proprietary information regarding the operation and
`financial condition of Mend’s urgent care facilities including, inter alia: (1) clinic locations; (2)
`an employee roster with compensation information; (3) major payer contracts; (4) and two years
`of financial information including visit volume, net revenue, profit and loss statements, and
`balance sheets.
`On September 21, 2020, the parties signed a mutual nondisclosure agreement
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`(“NDA”) in order to preserve confidentiality of due diligence information shared by Mend. Ex.
`1. Mend would not have disclosed any information without the NDA and did not do so until
`after the NDA was executed.
`Under the NDA, Defendants are prohibited from disclosing Mend’s proprietary
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`information for any other purpose besides the parties’ “Purpose” – which was defined as
`“discussions, negotiations and dealings relating to a mutual business relationship.” Id. at ¶ 1.
`Importantly, because Defendants were Mend’s direct competitor, the NDA provided that
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 8 of 28 Page ID #:15
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`Defendants “shall not use any Proprietary Information for the benefit of itself or any third party
`or for any purpose other than the Purpose (emphasis added).”1 Id. at ¶ 2.
`Due to the highly confidential and proprietary information being provided to a
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`direct competitor, the NDA establishes that “the unauthorized disclosure or use” of Mend’s
`proprietary information “will cause irreparable harm and significant injury” to Mend. Id. ¶ 7.
`And in the event of any breach of the critical NDA, Mend is permitted to “seek an immediate
`injunction . . . enjoining any breach or threatened breach of this Agreement.” Id.
`III. Mend Discloses All Of Its Operating And Financial Information Upon Defendants’
`Express Assurance That It Would Not Open A Competing Business
`After signing the NDA, on September 29, 2020, Mend provided all of the
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`confidential and proprietary business information Defendants requested except for Mend’s
`financials (e.g., profit and loss statements and balance sheets). Even with the NDA, Mend
`remained hesitant about sharing its financial information with a direct competitor, who could
`easily use that information to open a competing clinic in Mend’s market. But Defendants were
`relentless in demanding this information in order to move forward with its potential acquisition
`and reassuring in its insistence that the information was safe to provide because Defendants
`would either acquire Mend or move on and would never seek to become a competitor in the
`same market.
`On October 8, 2020, Dr. Cardillo called Dr. Mandavia to seek assurances that
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`Defendants would not be using Mend’s data to compete with Mend. During that call, Dr.
`Cardillo made clear to Dr. Mandavia that Mend would not disclose financials or any other
`confidential business information to a competitor. In response, Dr. Mandavia represented to Dr.
`Cardillo that Defendants would not open a competing clinic in the Sherman Oaks market and
`Defendants would only operate in the area through this acquisition.
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`1 “Proprietary Information” is defined to include Mend’s confidential business information. Id.
`at p. 1.
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 9 of 28 Page ID #:16
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`On October 12, 2020, in reliance on this express assurance from Carbon’s Chief
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`Medical Officer, Mend released financial information including profit and loss statements and
`balance sheets for the purposes of continued due diligence. But, Defendants were not satisfied.
`On October 15, 2020, Defendants demanded additional financial information
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`regarding the financial health of each separate Mend clinic, as well as net revenue figures and
`patient volume for each of the three Mend clinics. By separating financial data across each
`clinic, Defendants would have privileged, direct insight into the individual performance and
`operations of each of Mend’s two clinics in the Sherman Oaks area. Relying on the NDA and
`Dr. Mandavia’s express and explicit representations that Defendants would not open a clinic in
`Sherman Oaks, Mend provided the additional financial information Defendants’ mergers and
`acquisitions team requested.
`IV. Defendants’ Deception Is Revealed Once It Terminates The Acquisition, Obtains A
`Lease For A Competing Clinic Down the Block, And Successfully Solicits Mend
`Employees
`After acquiring all of Mend’s confidential and proprietary information on how to
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`effectively and profitably operate an urgent care facility in the San Fernando Valley, on October
`21, 2020, Defendants terminated the negotiations and informed Mend that the deal was off.
`That same day, the parties held a conference call where Defendants revealed that
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`it could not move forward with the acquisition because it had already signed a lease to open a
`competing Carbon facility in Sherman Oaks.
`Defendants acknowledged it was “poor form” not to disclose that it was entering a
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`lease for its own competing facility in the same market while engaging Mend in acquisition
`discussions. Defendants blamed the lack of transparency on the fact that Defendants’ real estate
`team supposedly did not confer with its mergers and acquisitions team, or, in Defendants’ words:
`“the right hand did not know what its left hand was doing.” This claim is patently false as
`Defendants sent to Mend a specific request on October 19, 2020 from Defendants’ real estate
`team in which Defendants asked for, among other items, “Floor plan of clinic with square
`footage, # of Exam Rooms/# of seats at Hub/Waiting Area, Age of building, Site Plan of the
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 10 of 28 Page ID #:17
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`shopping center depicting the Demised Premises and closes Electrical closet of MPOE” of the
`Mend clinics.
`Additionally, the proffered explanation strains credulity. Query as to how
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`Defendants could have already signed a lease to open in a new market without notifying its Chief
`Medical Officer – the individual tasked with management of staffing and operating the facility.
`Moreover, the excuse is not a defense in any event. There is no “the left hand doesn’t know
`what the right hand is doing” clause in the NDA that would entitle Defendants to steal Mend’s
`confidential and proprietary information under false pretenses and then, in contravention of its
`express representations to the contrary, open a competing facility just down the road – mere
`blocks away.
`Aware of the deficiency in its fictitious pretext, on October 23, 2020, Defendants
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`shifted to offer an altered and novel explanation for cutting off acquisition negotiations. As a
`mendacious pretext, Defendants vaguely described Mend’s financial numbers as artificially
`inflated due to COVID-19 visits and represented that any deal would be subject to “a highly
`lengthy negotiation.”
`Showing just how far Defendants are willing to go to deceptively rip off Mend’s
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`hard work and success, Defendants’ website now prominently features Mend’s registered
`trademark – “Walk In. Feel Better.” Mend’s exclusive rights to utilize its catchphrase and
`benefit from its notoriety in the community have existed with the United States Patent and
`Trademark Office since 2016. Blatantly stealing Mend’s trademark for Defendants’ urgent care
`website, the Defendants appear disinterested in masking Defendants’ all-encompassing
`misappropriation scheme.
`To add insult to injury, one of Mend’s Sherman Oaks-based physician assistants
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`has recently given notice and revealed that she intends to take a position with Defendants in their
`new Sherman Oaks facility. After further inquiry following this resignation, Mend discovered
`that Defendants had not only signed a lease, but have already began construction and will occupy
`the shopping center at 4550 Van Nuys Blvd, just 0.4 miles and mere blocks down the street from
`Mend’s Sherman Oaks location at 4849 Van Nuys Blvd.
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 11 of 28 Page ID #:18
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`V.
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`Defendants’ Wrongful Acquisition Of Mend’s Confidential Business Records Will
`Enable It To Unfairly Compete Against Mend In Its Own Market And Cause Mend
`Substantial And Irreparable Harm
`The confidential business and financial data extracted by Defendants under the
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`pretenses of a supposed acquisition is the exact “playbook” for succeeding in the Sherman Oaks
`market, which took years of experience to compile, and will give Defendants an unfair
`competitive edge over Mend. Specifically, Defendants have unlawfully obtained the following
`categories of confidential and proprietary information:
`• Mend’s list of insurance or “payer” contracts and payment arrangements.
`Defendants fraudulently obtained the list of Mend’s “payers,” including Medicare
`and the insurance companies who service the local area and direct patients to
`Mend clinics along with the payers’ arrangements. It took Mend years to acquire
`the relationships with insurers and negotiate suitable reimbursement
`arrangements. A new entrant into a given market does not have this type of
`information at its disposal. This information is confidential and critical to the
`operation of a medical facility. Defendants’ unlawful acquisition of this
`information is a potential goldmine to a new competitor like Defendants who can
`use this information to forecast expected revenue and analyze how to target
`Mend’s payer contracts, approach additional payers to increase market share, re-
`negotiate reimbursement rates, and encourage insurance companies to direct
`patients to Defendants instead of Mend.
`• Mend’s patient volume data. Defendants improperly obtained access to Mend’s
`patient volume data broken down by Mend location and service type (e.g., urgent
`care, primary care, and specialty care). Access to Mend’s patient volume will
`enable a competitor like Defendants to analyze how to build upon patient traffic
`through targeted marketing efforts. Moreover, Mend’s patient volume data would
`be extremely valuable to evaluate whether Defendants should: (1) open a new
`location and steal some of Mend’s patient volume (which it ultimately decided to
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 12 of 28 Page ID #:19
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`do); (2) abandon expansion plans in Sherman Oaks altogether; or (3) acquire
`Mend based on Mend's existing market share.
`• Mend’s financials. Defendants dishonestly obtained access to Mend’s financial
`statements (e.g., balance sheets, payroll, expenses, and income statements)
`including revenue broken down by clinic. This enables a competitor, like
`Defendants, to evaluate how to allocate expenses to improve revenue. For
`example, Defendants can evaluate Mend’s financial statements to determine
`whether it can reduce payroll to increase revenue or if it is financially feasible to
`place greater emphasis on advertising in the Sherman Oaks market. And Mend
`suspects Defendants used this financial information to lure one of Mend’s
`employees away.
`• Mend’s staffing model. Defendants fraudulently obtained a list of employee
`types, roles, and how each clinic is staffed daily. The staffing model of any
`medical clinic is paramount to its operation and a secret methodology developed
`over years of trial and error. Armed with this data, Defendants know exactly
`where to add extra staff, managers, and other roles in an attempt to position itself
`and appear as the better-staffed option in the Sherman Oaks market in an attempt
`to poach away patients and employees.
`VI. Mend Notified Defendants of Its Improper Acquisition Under The NDA
`On January 25, 2021, Mend notified Defendants of its wrongful acquisition of
`38.
`Mend’s confidential business information pursuant to Paragraph 7 of the NDA.
`FIRST CAUSE OF ACTION
`(Breach of Contract - Against Carbon Health Technologies, Inc.)
`39. Mend realleges and incorporates by reference each and every allegation
`contained in Paragraphs 1 through 38 as though fully set forth herein (as well as any other
`Paragraphs pertinent to this cause of action).
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`

`

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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 13 of 28 Page ID #:20
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`40. Mend and Carbon entered into a mutual nondisclosure agreement on September
`21, 2020 in order to preserve confidentiality of the due diligence information shared by Mend.
`The agreement is attached as Exhibit 1 and is expressly incorporated herein by reference.
`Under the NDA, Carbon is prohibited from using “any Proprietary Information
`41.
`for the benefit of itself or any third party or for any purpose other than the Purpose.” Ex. 1 at ¶
`2. The Purpose of the agreement is “discussions, negotiations, and dealings relating to a mutual
`business relationship.” Ex. 1 at ¶ 1.
`42. Mend performed all of its obligations under the NDA by disclosing confidential
`and proprietary information to Carbon in furtherance of the shared goal to evaluate whether
`Carbon would acquire Mend.
`43. Mend’s performance of its obligations triggered Carbon’s obligations to maintain
`the confidentiality of that information and to not use it for an impermissible purpose.
`Carbon breached the NDA by utilizing Mend’s confidential proprietary
`44.
`information for the benefit of itself and for purposes outside of the “Purpose” of the agreement,
`including but not limited to, (1) utilizing Mend’s proprietary financial information, payer
`contracts and reimbursement rates, and patient volumes to evaluate whether Carbon should
`open its own clinic in the Sherman Oaks market; (2) exploiting Mend’s confidential data
`including its balance sheet, profits and losses statements, and lease information to negotiate a
`lease for a competing Carbon clinic under a mile from Mend’s facility; (3) constructing and
`operating a competing clinic by building off the foundation for how to operate a successful and
`profitable clinic in the Sherman Oaks market that exists in Mend’s proprietary data that was
`only to be used under the NDA for due diligence purposes; and (4) by using Mend’s employee
`roster and financial data to poach Mend employees to work at Carbon’s competing clinic.
`Carbon’s conduct alleged herein constitutes a material breach of the contract.
`As a direct and proximate result of Carbon’s material breach of the contract,
`45.
`Mend has suffered and will continue to suffer damages in an amount according to proof at trial,
`including, but not limited to, actual, compensatory, and consequential damages.
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
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`VENABLE LLP
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`

`

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`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 14 of 28 Page ID #:21
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`As a further direct and proximate result of Carbon’s material breach of the
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`contract, Mend is entitled to injunctive relief to enjoin the continued and threatened breach of
`the contract. See Ex. 1 at ¶ 7.
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`As a further direct and proximate result of Carbon’s material breach of the
`contract, Mend is entitled to attorneys’ fees and related costs. See Ex. 1 at ¶ 9.
`SECOND CAUSE OF ACTION
`(Misappropriation of Trade Secrets - Against All Defendants)
`48. Mend realleges and incorporates by reference each and every allegation
`contained in Paragraphs 1 through 38 as though fully set forth herein (as well as any other
`Paragraphs pertinent to this cause of action).
`At all relevant times, Mend owned the confidential and proprietary information
`49.
`that Defendants requested access to, including but not limited to:
`• Mend’s Balance Sheets from 2019 and 2020, which include monthly calculations
`of Mend’s assets, the value and types of Mend’s current and long-term liabilities,
`and the value of Mend’s equity;
`• Mend’s Monthly Income Statements from 2019 and 2020 that chart each of
`Mend’s operating expenses, revenues, and net profit;
`• Patient Volume History, broken down by day and by month for each individual
`clinic for the past 18 months;
`• Procedure Totals which detail exactly what medical procedures have been
`conducted in each clinic and how often they occurred each year;
`• Mend’s rental and lease information including the value of each of Mend’s clinic
`leases;
`• Entity Payer Report which details which insurance payers cover Sherman Oaks,
`which payers Mend has contracts with, and which have declined contracts,
`Mend’s contracted reimbursement type, percentage, and products involved for
`each payer, and the requirements that each individual payer designates for their
`medical providers;
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`COMPLAINT
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`310-229-9900
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`LOS ANGELES, CA 90067
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`2049 CENTURY PARK EAST, SUITE 2300
`
`VENABLE LLP
`
`

`

`
`
`Case 2:21-cv-06142 Document 1-2 Filed 07/29/21 Page 15 of 28 Page ID #:22
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`• Mend’s Payer Mix which details the revenue breakdown from each payer type
`per month, including HMO, Medicare, PPOP, Cash, Medi-Cal, and Workers
`Comp;
`• Mend’s staffing model for each clinic;
`• Mend’s employee roster which details each employee’s name, role, pay type,
`qualifications, licenses, and full-time or part type status;
`• Mend’s Payroll that details each employees’ hours worked, overtime, and sick
`leave.
`50. Mend’s confidential and proprietary information derives independent economic
`value from the fact that the information is not generally known to the public or to other persons
`and businesses who can obtain economic benefit from its disclosure or use.
`51. Mend makes reasonable efforts under the circumstances to maintain the
`confidentiality of its proprietary and financial information. Mend does not share any of this
`information with individuals outside of Mend and this information is not otherwise made
`publicly available. Mend not only required a signed NDA, that limits the use of its information
`to due diligence for acquisition, before sharing any of its information, Mend also confirmed
`with Dr. Mandavia and Mr. McMullan that the confidential data would not be used by
`Defendants to compete with Mend and waited an extra 22 days before finally providing the
`financial information for due diligence.
`Defe