throbber
Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 1 of 27
`
`
`MARIO A. MOYA (State Bar No. 262059)
`REBECCA M. HOBERG (State Bar No. 224086)
`MOYA LAW FIRM
`1300 Clay Street, Suite 600
`Oakland, California 94612
`Tel: 510.926.6521
`Fax: 510.340.9055
`Email: mmoya@moyalawfirm.com
`
`rhoberg@moyalawfirm.com
`
`Attorneys for Plaintiff
`PONY.AI, INC.
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`PONY.AI, INC., a Delaware corporation,
`
`Plaintiff,
`
`v.
`
`DIGITAL REALTY TRUST INC., a Maryland
`corporation; DIGITAL REALTY TRUST,
`L.P., a Maryland limited partnership; TELX -
`SANTA CLARA, LLC, a Delaware limited
`liability company; and DOES 1–20, inclusive,
`
`
`
`
`Defendants.
`
` Case No.:
`
`
`COMPLAINT FOR:
`
`
`(1) DECLARATORY RELIEF
`(2) UNJUST ENRICHMENT
`(3) RESCISSION
`(4) BREACH OF COVENANT OF
`GOOD FAITH AND FAIR
`DEALING
`(5) CONVERSION
`(6) COMMON COUNT - MONEY
`HAD AND RECEIVED
`(7) PROMISSORY ESTOPPEL
`(8) BREACH OF CONTRACT -
`ACCORD & SATISFACTION
`(9) UNFAIR/UNLAWFUL
`BUSINESS PRACTICES
` [B.P.C. §§ 17200 et seq.]
`
`
`
` JURY TRIAL DEMANDED
`
`[REDACTED PUBLIC VERSION]
`
`
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 2 of 27
`
`
`Plaintiff PONY.AI, INC. (“Plaintiff” or “Pony.ai”) brings this action against Defendants
`
`DIGITAL REALTY TRUST INC; DIGITAL REALTY TRUST, L.P.; TELX - SANTA
`CLARA, LLC; and DOES 1-20 (collectively “Defendants” or “Digital Realty”) for breach of
`contract, declaratory relief, and related claims.
`INTRODUCTION
`1.
`In January 2020, the world changed irreversibly in a manner that no one
`(including the parties to this dispute) anticipated or foresaw when a novel and highly-pathogenic
`severe acute respiratory syndrome coronavirus (SARS-CoV-2) began spreading worldwide,
`triggering the global COVID-19 pandemic. To date, the pandemic has claimed the lives of over
`6.3 million people, including over one million in the U.S. alone.
`2.
`For almost every person and every business worldwide, all best laid plans went
`awry in early 2020, as worldwide economic activity came to an abrupt halt when governments
`and society took immediate public-health measures to stop the spread of the virus. Among the
`many things put on hold during this time were Pony.ai’s prior plans to expand its leased server
`capacity at a data center colocation facility in Santa Clara that was owned, leased, and operated
`by Digital Realty and its related entities.
`3.
`While Pony.ai — an autonomous vehicle company — had signed a service order
`for this additional space, power, and equipment in late 2019 (which was to be delivered in
`phased deliveries to begin April 1, 2020), it was more than obvious to everyone involved by
`early 2020 that the space and leased power and equipment would not be needed. When Pony.ai
`communicated that it wished to rescind the expansion order and enter a smaller service order for
`late 2020 or early 2021, Digital Realty gave repeated assurances to Pony.ai’s representatives that
`the request would be processed, approved, and that a superseding service order would be
`forthcoming. But Digital Realty instead started to bill Pony.ai for the space and services they
`agreed would be canceled. Pony.ai made repeated inquiries about mounting invoices with added
`late fees that were supposed to be removed, but Digital Realty ducked and dodged the billing
`issue, and failed to respond. Eventually, Pony.ai sent a formal dispute notice in October 2020
`about these improper billings, but, again, Digital Realty did not respond. It was not until
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`1
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 3 of 27
`
`
`December 2020 when Digital Realty finally provided the superseding service order to Pony for a
`smaller expansion to begin in 2021.
`4.
`Throughout this time, Digital Realty knew that Pony.ai wished to cancel the 2019
`expansion service order and had assured Pony.ai that the service order would be cancelled and
`superseded and all outstanding billing issues would be resolved. But despite those assurances,
`Digital Realty’s authorized agents transmitted invoices for the full expansion order that had been
`canceled, with compounding assessments of improper late fees. And even after further
`discussions between the companies’ authorized representatives, Digital Realty attempted to hold
`Pony.ai to the original service order for the expanded space, even though it had previously
`agreed to rescind the order and knew that the purpose of the entire order — a large expansion of
`Pony.ai’s computing capacity and operation — had been frustrated by the COVID-19 pandemic
`and the unprecedented global slowdown in economic activity it caused.
`5.
`When Pony.ai refused to pay the amounts in dispute and further attempted to
`resolve the issue, Digital Realty went nuclear and resorted to drastic measures by threatening to
`power-down Pony.ai’s servers unless all disputed amounts were paid on a very short timeline.
`To avoid irreparable damage to its business and operations, and to avoid a shutdown of the
`company’s autonomous vehicle (“AV”) operations, Pony.ai was forced to pay the amount under
`duress and under protest, reserving all rights. The damage to the parties’ relationship was
`irreparable. Because Pony.ai no longer believed Digital Realty to be a reliable business partner,
`Pony.ai properly terminated the Master Agreement (including all remaining service orders) in
`early 2022. To this day, Digital Realty continues to improperly invoice Pony.ai for amounts it
`claims are owed under the cancelled and superseded service order. Accordingly, Pony.ai now
`seeks to recover the amounts previously paid and a declaration that no further amounts are due
`and owing to Digital Realty, in addition to other damages shown below.
`THE PARTIES
`6.
`Plaintiff PONY.AI, INC. is a Delaware corporation with its principal place of
`business in Fremont, California. Plaintiff Pony.ai is an autonomous vehicle technology company
`with co-located corporate offices in Beijing, China and Guangzhou, China.
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`2
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 4 of 27
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`7.
`Defendant DIGITAL REALTY TRUST, INC. (“DRT INC.”) is a Maryland
`corporation with its principal place of business in Austin, Texas. Defendant DRT INC. is a
`public real estate investment trust that owns, acquires, develops and manages technology-related
`real estate worldwide. Defendant DRT INC. owns a controlling interest in defendant Digital
`Realty Trust, L.P. and various subsidiaries. Through its controlling interests in these entities,
`defendant DRT INC. provides data center, colocation and interconnection solutions for
`customers across a variety of industry verticals.
`8.
`Defendant DIGITAL REALTY TRUST, L.P. (“DRT L.P.”), is a Maryland
`limited partnership with its principal place of business in Austin, Texas. It is the entity through
`which defendant DRT INC. conducts its business of owning, acquiring, developing and
`operating data centers. Defendant DRT INC. has the full, exclusive and complete responsibility
`for DRT L.P.’s day-to-day management and control.
`9.
`Defendant TELX - SANTA CLARA, LLC is a Delaware limited liability
`company with its principal place of business in New York, New York. Defendant telx - Santa
`Clara, LLC is a subsidiary of defendant DRT INC.
`10.
`Plaintiff is unaware of the true names and capacities, whether individual, entity,
`or otherwise, of the Defendants sued herein as DOES 1 to 20, inclusive, and therefore sues said
`Defendants by such fictitious names. Plaintiff is informed and believes, and thereon alleges, that
`each of these fictitiously named Defendants is in some manner responsible for the injuries and
`damages to Plaintiff alleged in this complaint, either through the Defendants’ own conduct or
`through the conduct of its agents or employees, or in some manner, and that Plaintiff’s injuries
`alleged herein were proximately caused by each of the Defendants. All references in this
`complaint to “Defendant” or “Defendants” include all Defendants sued herein as DOES. Plaintiff
`will move for leave to amend this complaint, if necessary, to state the true names, capacities and
`liabilities of the DOE Defendants after they are ascertained.
`Agents, Co-Conspirators, Aiders & Abettors
`11.
`At all times relevant to this Complaint, Defendants, including the fictitiously-
`named Defendants, and each of them, were acting as each other’s agents, and were acting within
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`3
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 5 of 27
`
`
`the course and scope of their agency with the full knowledge, consent, permission, authorization
`and ratification, either express or implied, of each of the other Defendants in performing the acts
`alleged in this Complaint.
`12.
`As members of the conspiracy alleged herein, each of the Defendants knowingly
`and willingly participated and acted with or in furtherance of said conspiracy, or aided or assisted
`in carrying out the purposes of the conspiracy, and have performed acts and made statements in
`furtherance of the conspiracy and other violations of law.
`13.
`Each of the Defendants acted both individually and in alignment with other
`Defendants with full knowledge of their respective wrongful conduct. As such, the Defendants
`conspired together, building upon each other’s wrongdoing, to accomplish the acts alleged
`herein.
`
`14.
`Defendants are sued herein individually and as principals, participants, and aiders
`and abettors in the wrongful conduct complained of and the liability of each arises from the fact
`that each has engaged in all or part of the improper acts, plans, conspiracies, or transactions
`complained of herein. The acts alleged to have been done by Defendants were authorized,
`ordered or done by them and their agents or representatives while actively engaged in the
`management of each of the Defendants’ affairs.
`JURISDICTION AND VENUE
`15.
`This court has subject matter jurisdiction of the claims asserted herein pursuant to
`28 U.S.C. §1332(a)(1), as there is complete diversity of citizenship between the parties and the
`amount in controversy exceeds $75,000.
`16.
`Venue in this District is proper under 28 U.S.C. § 1391 because a substantial part
`of the events giving rise to the complaint occurred in this District. Moreover, assignment to the
`San Francisco or Oakland Division is appropriate under Civil Local Rule 3-2(d) because a
`substantial part of the events giving rise to the claims occurred in Alameda County, California,
`where Pony.ai maintains its principal place of business.
`17.
`Pursuant to the choice of law provision in the parties’ Agreement, California law
`governs the parties’ rights and obligations in this matter.
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`4
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 6 of 27
`
`
`
`FACTUAL ALLEGATIONS
`
`A.
`
`To Operate Safely and Effectively, Pony.ai and the Entire AV Industry
`Require Significant Computational and Data Processing Infrastructure.
`
`18.
`Autonomous vehicles (AV) offer the promise of a revolutionary mode of transport
`that will make roadways safer, alleviate traffic congestion, and reduce harmful emissions. In
`their most visionary form, AVs of the future will enable drivers and daily commuters the ability
`to recover lost driving time on safer, more-navigable roadways, and will dramatically reduce the
`number of accidents and collisions attributable to human error and carelessness.
`19.
`To achieve this vision, AVs require significant computational resources, both on-
`board and via remote computing. The mere feat of building and operating an AV requires vast
`amounts of data to be stored, analyzed, and processed. While an AV’s on-board computer
`collects and analyzes environmental and sensory data obtained during operation and processes it
`via proprietary on-board computational algorithms, the vehicle also remains in constant
`communication with company operators and monitors for other important functionality,
`including additional safety precautions in the event of an emergency. In addition, certain data
`collected during operations is frequently transferred to external storage for review, processing
`and further analysis offline, including for further testing, development, and refinement of
`driverless proprietary algorithms. This data is vital in helping AV companies continually
`improve vehicle safety and performance.
`
`B.
`
`Digital Realty Offers Data Center Infrastructure and Colocation Services To
`Its Customers With High Levels of Guaranteed SLA Uptime.
`
`20.
`According to its most recent Form 10-K, Digital Realty “is a leading global
`provider of data center (including colocation and interconnection) solutions for customers across
`a variety of industry verticals ranging from cloud and information technology services, social
`networking and communications to financial services, manufacturing, energy, healthcare, and
`consumer products.”
`21.
`Data-center colocation providers like Digital Realty allow data-intensive
`businesses to avoid the considerable costs, risks, and delays associated with building and
`
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`5
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 7 of 27
`
`
`maintaining their own on-premise data centers, thereby allowing businesses to focus on their
`core business. Rather than needing to design and build a data center from scratch and dealing
`with the related complexities of constructing an on-premises data center, its power and cooling
`needs, and its networking and interconnection infrastructure (including the requisition of
`physical space, networking hardware, personnel, on-site security, permits, and utilities),
`businesses worldwide increasingly rely upon leasing opportunities at data-center colocation
`facilities like those offered by Digital Realty. A colocation provider like Digital Realty offers
`physical, secure space for companies like Pony.ai to locate and house their core information
`technology (IT) hardware, infrastructure, and dedicated IT personnel. A colocation arrangement
`with a company like Digital Realty is often a preferable option for most businesses because it
`helps mitigate the costs and risks inherent to establishing and maintaining an on-premises data
`center (e.g., security, power, cooling, fire-suppression, facility maintenance, etc.) while ensuring
`continuous access to its equipment and full control over the company’s own computing and
`networking hardware.
`22.
`Under the typical colocation arrangement offered by Digital Realty, the physical
`data center is run by another party — typically, a subsidiary like Telx-Santa Clara — who either
`owns or leases the building in which the physical data center is housed. These data centers are
`available at various locations nationwide to allow customers the opportunity to lease dedicated
`physical server space at nearby locations, which minimizes network latency and ensure seamless
`communications with company servers and computational infrastructure, just as if the customer’s
`physical IT infrastructure were located on-premises.
`23.
`Digital Realty generates most of its revenue by leasing these operating
`properties/data centers to customers under long-term lease agreements, which typically provide
`24/7 controlled access to allotted rentable space where its customers’ physical IT infrastructure
`can be placed, powered, networked, and maintained in an optimal climate-controlled, secured
`environment. Typically, this infrastructure is installed in physical server racks, cabinets, and/or
`cages that are sold or leased by Digital Realty to house their clients’ equipment.
`
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`6
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 8 of 27
`
`1
`
`2
`
`24.
`
`In addition to leasing this server space and related circuiby, Digital Realty also
`
`leases dedicated allotments of power under the same long-term lease agreements with its
`
`3 customers, along with assmances of the availability of the services provided at all times,
`
`4
`
`including the provision of redundant power and redundant cooling for the installed equipment.
`
`5 The provision of power and network services by Digital Realty is usually governed by a Service
`
`6 Level Agreement ("SLA") that contractually guarantees an amount of available time ("uptime")
`
`7
`
`8
`
`9
`
`10
`
`that a customer's machines can expect to be available and online on a yearly basis.
`
`C.
`
`In March 2019, Pony.ai Entered into a Master Services Agreement with
`Digital Realty to Host the Company's Computing Hardware.
`
`25.
`
`In Mar·ch 2019, Plaintiff Pony.ai and Defendants entered into a Master Terms and
`
`11 Conditions Agreement (the "Master Agreement") and related service orders for the leasing of
`
`12 physical space and power to service Pony.ai's servers at Digital Realty's Santa Clara facility,
`
`13 which was owned by defendant Telx-Santa Clara, a Digital Realty subsidiary. Among other
`
`14
`
`things, the Master Agreement contemplated that,
`
`15
`
`16
`
`18 certain monthly recmTing char·ges and non-recuning char·ges.
`
`19
`
`20
`
`21
`
`26.
`
`Under the original service order in March 2019, Pony.ai
`
`. For several months, the parties' relationship was relatively unremar·kable. After
`
`22
`
`its equipment was installed, Plaintiff focused on its core business of AV development and testing
`
`23
`
`and timely paid its monthly invoices for leasing server space at the Santa Clara facility.
`
`24
`
`25
`
`26
`
`27
`
`28
`
`D.
`
`In Late 2019. Plaintiff Executed an Expansion Service Order for Additional
`Server Space To Come Online Starting on April 1, 2020.
`
`27.
`
`In late-2019, representatives of Pony.ai and Digital Realty began discussions to
`
`expand Pony.ai's service capacity by an additionall new cabinets during the second quarter of
`
`2020.
`
`PLAINTIFF'S COMPLAINT FOR DAMAGES
`7
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 9 of 27
`
`1
`
`2
`
`3
`
`4
`
`28.
`
`On December 13, 2019, Digital Realty issued a service order to expand Plaintiff's
`
`service capacity by an additional I cabinets via
`
`executed by the patties on December 30, 2019. Upon info1mation and belief, at this time, Digital
`
`. The service order (the "Expansion Service Order") was
`
`5 Realty knew and understood that the principal purpose of this agreement was to serve Plaintiff's
`
`6 expanded business operations.
`
`7
`
`8
`
`9
`
`10
`
`29.
`
`The Expansion Service Order contemplated that
`
`30.
`
`The Expansion Service Order also contemplated that the additional cabinet
`
`11 capacity purchased would be made available for power and service
`
`. The
`
`under the Expansion Service Order,
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`-
`
`-
`
`31.
`
`-
`-
`-
`
`-
`-
`-
`
`-
`-
`-
`
`Pursuant to this Expansion Service Order, Digital Realty would
`
`PLAINTIFF'S COMPLAINT FOR DAMAGES
`8
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 10 of 27
`
`1
`
`2
`
`3
`
`4
`
`5
`
`E.
`
`The COVID-19 Pandemic in Early 2020 Changed Everything, and Caused
`Pony.ai To Rescind the Expansion Order Before First Delivery.
`
`32.
`
`Due to escalating concern that COVID-19 was spreading worldwide and resulting
`
`6 government lockdowns and trnvel restrictions, it was necessaiy for Pony.ai to cancel the planned
`
`7
`
`8
`
`expansion order forl new cabinets because of global economic conditions, for the health and
`
`safety of its employees, and because of the unce1iain impact the pandemic would have on future
`
`9 operations.
`
`33.
`
`On Febmaiy 24, 2020, an authorized representative of Pony.ai provided
`
`11
`
`reasonable notice to Digital Realty that, due to the economic unce1iainty resulting from COVID-
`
`12 19, the company needed to make changes to its prior order. The representative info1med
`
`13 Defendants that Pony.ai would not be moving fo1wai·d with the space expansion set to occur on
`
`14 April 1, 2020. Digital Realty acknowledged Pony.ai's request to cancel and renegotiate a lesser
`
`15
`
`scope of its original expansion order and escalated the request to a company Sales Director for
`
`16 processmg.
`
`17
`
`34.
`
`In late Mai·ch 2020, a senior engineer at Pony.ai was info1med that Digital Realty
`
`18 was in the process of continuing work on the expansion and had begun installation services to
`
`19
`
`implement the cabinet expansion despite its prior acknowledgment of the cancellation request.
`
`20 The engineer immediately contacted Digital Realty representatives by phone and email to remind
`
`21
`
`them of the prior cancellation request resulting from the COVID-19 pandemic and, again,
`
`22 unambiguously info1med them that Pony.ai was canceling the expansion order. She info1med
`
`23
`
`them that Pony.ai would not be installing any new servers in any new expansion space, that the
`
`24
`
`expansion project had been postponed indefinitely, and that Digital Realty should stop all work
`
`25 on the expansion project. Again, Digital Realty acknowledged their understanding that the
`
`26
`
`expansion was not going fo1wai·d and advised that they would be in touch regai·ding next steps.
`
`27
`
`35.
`
`Despite having acknowledged Pony.ai's request to cancel the cunent expansion
`
`28 order, Pony.ai received an invoice from Digital Realty for costs of services relating to the
`
`PLAINTIFF'S COMPLAINT FOR DAMAGES
`9
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 11 of 27
`
`1 postponed expansion. Pony.ai contacted Digital Realty immediately to dispute the invoice. In
`
`2
`
`response, Digital Realty assmed Pony.ai that the issue would be taken care of and told them they
`
`3 had "put in place ... a process to address any customer business issues related to COVID19."
`
`4
`
`5
`
`6
`
`36.
`
`For months, Digital Realty repeatedly promised and assmed Pony.ai on multiple
`
`separate occasions that the billing issue would be resolved imminently, and that the cancellation
`
`request was being, and would be, processed by Digital Realty. For example, in response to a
`
`7 May 15, 2020 inquiry by Pony.ai asking for the updated contract, Digital Realty provided firm
`
`8 assurances that the cancellation request from Febrna1y 2020 was forihcoming, stating: "[s]ony
`
`9
`
`for the delay on this one. We've had several of these requests working through om system. That
`
`10 being said, I should have a change order in your hands by Monday." (Emphasis added.)
`
`11 Fmiher assurances were given on May 19 and May 20, 2020, when Digital Realty told Pony.ai
`
`12
`
`that "[t]he documents are moving through our internal systems today and I expect to have them
`
`13
`
`tomonow, it's basically the same SO [service order] that was signed at the end of last year with
`
`14 new dates and language that supersedes the previous SO." (Emphasis added.) On May 21,
`
`15 2020, Digital Realty's representative apologized for the delay and again reassured Pony.ai by
`
`16 email that "[i]t looks like I will finally have the revised SO to you tomonow."
`
`17
`
`37.
`
`At no time did these representatives of Digital Realty - who were the same
`
`18 persons who had negotiated and signed the expansion order -
`
`inform Pony.ai that its
`
`19 cancellation notice was improper, that the request needed to be sent via alternate challllels, or
`
`20
`
`that the work would be performed anyway and the request would not be honored. In fact, Digital
`
`21 Realty communicated on multiple occasions that the request was being processed and that a new
`
`22
`
`service order would be generated that would supersede the prior expansion order.
`
`23
`
`38.
`
`At all times, Pony.ai relied on those promises and assmances in good faith and
`
`24 continued to discuss a revised scope of cabinet expansion services with Digital Realty, later
`
`25
`
`settling on Febrnaiy 2021 as the new expansion services commencement date and revised scope
`
`26 of-
`
`cabinets, instead of __
`
`In a conference call on August 25, 2020, Pony.ai and
`
`27 Digital Realty were in agreement that (i) the expansion services from the December 2019
`
`28 Expansion SO were not completed by Digital Realty and were not available for use by Pony.ai at
`
`PLAINTIFF'S COMPLAINT FOR DAMAGES
`10
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 12 of 27
`
`1
`
`that time, and (ii) that Digital Realty would finally process Pony.ai's cancellation of the
`
`2 December 2019 Expansion SO. Despite these fmther promises and assurances, Digital Realty
`
`3 continued to improperly bill Pony.ai for the expansion services that were canceled by Pony.ai,
`
`4 and never delivered by Digital Realty, and failed to resolve the issue.
`
`5
`
`39.
`
`In the months that followed, Pony.ai and Digital Realty exchanged dozens of
`
`6 emails in which Pony.ai again continuously pressed Digital Realty to process the Febrnaiy 2020
`
`7 cancellation request ai1d resolve the billing issue. Even though the amount in dispute was now
`
`8 climbing at an alaiming rate -
`
`approximately ~ each month the issue remained
`
`9 unresolved- Digital Realty did not appeai· to express much urgency in resolving its customer's
`
`10
`
`requests. On October 8, 2020, Pony.ai sent a formal Dispute Notice pursuant to the Master
`
`11 Agreement. Although the Master Agreement provides
`
`12
`
`13
`
`, Digital Realty never responded to the Dispute Notice.
`
`40.
`
`The service order for the modified expansion services was eventually generated
`
`14 and executed in December 2020. Beginning in Febrnaiy 2021, Digital Realty completed the ■
`
`15 ■ cabinet expansion installation, supplied power to the-
`
`additional cabinets, ai1d
`
`16 Pony.ai begai1 using the-
`
`additional cabinets.
`
`F. When Pony.ai Refused to Pay The Disputed Amounts, Digital Realty
`Threatened to Shut Off Service, Which Raised Immediate Operational
`Concerns and Forced Pony.ai to Pay Under Protest and Under Duress.
`
`41.
`
`On July 19, 2021, representatives of Pony.ai sent conespondence to Digital
`
`Realty's authorized representatives setting forth a history of the paities' dispute and demanding
`
`that the Expansion Service Order be canceled as was originally the paities' intention in early
`
`2020.
`
`42.
`
`On August 7, 2021, Digital Realty sent conespondence to Pony.ai that escalated
`
`the dispute and, among other things, stated that Digital Realty's position was that Pony.ai had no
`
`present ability to cancel the Expansion Service Order. After receiving the August 7, 2021
`
`conespondence from Digital Realty, Pony.ai continued communications in ai1 attempt to see if
`
`the paities could reach a resolution of the dispute.
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`PLAINTIFF'S COMPLAINT FOR DAMAGES
`11
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 13 of 27
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`43.
`On October 13, 2021, the parties arrived at impasse, and Digital Realty served
`Plaintiff with a notice of breach under the Master Agreement and communicated to Plaintiff that
`payment was immediately due on the full amount claimed by Digital Realty, and that Ponly.ai’s
`failure to pay this amount would result in action taken against Pony.ai’s servers and other
`property located in its leased space, including a disruption to available power supply and
`removal of equipment. The letter clearly stated that Plaintiff’s failure to pay would result in
`“suspension of services (including suspension of power to the Licensed Area), restricting Pony’s
`access to the Licensed Area, restricting Pony’s right to remove equipment from the Licensed
`Area, and termination of the agreement.”
`44.
`This correspondence threatened to immediately shut down Pony.ai’s business on
`an abrupt timeframe that provided no opportunity for the company to make suitable alternate
`arrangements for its hosted equipment and computing resources, or any meaningful chance for
`the company to mitigate any harm that would have resulted in the event of an abrupt shutdown.
`Because Pony.ai’s U.S. operation relied upon the computing and IT-infrastructure located in the
`Santa Clara data center, the practical implications of an abrupt shutdown would have been
`disastrous. Digital Realty’s threat to power-down Pony.ai’s servers and take them offline was a
`clear threat to cause immediate and irreparable business disruption to Pony.ai. The company
`would have been unable to conduct its business, in the ordinary course of business, without
`access to its networked computing resources located at Defendants’ facilities. More importantly,
`an uncontrolled and unexpected power-down event could have created a shutdown event in the
`company’s AV operations.
`45.
`At this point, it became clear to Pony.ai that Digital Realty was not a reliable
`business partner and could not be trusted to act in its customers’ best interests. Because Digital
`Realty, a publicly-traded data colocation company, was so quick to escalate a simple billing
`dispute into threats of irreparable reputational and financial harm to a reputable customer like
`Pony.ai, executives at Pony.ai quickly concluded that Digital Realty would stop at nothing to use
`any leverage it had over the company to inflict maximum financial harm on Pony.ai until the
`disputed amounts were paid. For this reason, litigation was not a practicable option at that time
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`12
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 14 of 27
`
`
`since Pony.ai’s operations were still located and housed on premises that were owned, operated,
`and ultimately controlled by Digital Realty, and the risks of sabotage or other operational
`interruptions were too significant to ignore.
`46.
`Pony.ai was left with no choice but to pay this money in order to protect its
`business interests and its ongoing operations. It was impossible to safely migrate the company’s
`servers and IT-infrastructure to a new colocation provider before the deadline for payment
`demanded in Digital Realty’s October 13 letter, and Pony.ai was left with no choice but to pay
`the disputed amounts under duress with a reservation of rights.
`47.
`On November 3, 2021, Pony.ai tendered the amount immediately demanded by
`Digital Realty with correspondence indicating that the payment was being delivered in protest
`and under the threat of severe economic duress. Attached hereto as Exhibit A is a true and
`correct copy of the correspondence that Pony.ai sent to Digital Realty with payment of the
`disputed amounts under protest.
`48.
`In early 2022, Pony.ai properly terminated the Master Agreement (and all
`remaining service orders) and removed its property from Digital Realty’s premises. Digital
`Realty continues to demand payment from Pony.ai for amounts it claims are owed, including late
`fees and penalties.
`
`FIRST CAUSE OF ACTION
`Declaratory Relief
`(Against All Defendants)
`49.
`Plaintiff realleges and incorporates by reference the allegations contained in
`Paragraphs 1 through 48 as though fully set forth herein.
`50.
`An actual, present, and justiciable controversy has arisen between Plaintiff and
`Defendants concerning their respective rights under their contractual agreements, including but
`not limited to the Master Agreement and all subsequent Service Orders, including the Expansion
`Service Order executed in December 2019.
`51.
`Under Civil Code § 1689(a), Commercial Code § 10208, and other applicable
`law, Plaintiff is entitled to a declaration that the Expansion Service Order was properly rescinded
`
`PLAINTIFF’S COMPLAINT FOR DAMAGES
`13
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 15 of 27
`
`1 by mut

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket