`
`
`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.
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`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
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 2 of 27
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`Plaintiff PONY.AI, INC. (“Plaintiff” or “Pony.ai”) brings this action against Defendants
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`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
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 3 of 27
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`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
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 4 of 27
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`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
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 5 of 27
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`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
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 6 of 27
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`FACTUAL ALLEGATIONS
`
`A.
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`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.
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`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
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`PLAINTIFF’S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 7 of 27
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`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.
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`PLAINTIFF’S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 8 of 27
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`24.
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`In addition to leasing this server space and related circuiby, Digital Realty also
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`leases dedicated allotments of power under the same long-term lease agreements with its
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`3 customers, along with assmances of the availability of the services provided at all times,
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`including the provision of redundant power and redundant cooling for the installed equipment.
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`5 The provision of power and network services by Digital Realty is usually governed by a Service
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`6 Level Agreement ("SLA") that contractually guarantees an amount of available time ("uptime")
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`that a customer's machines can expect to be available and online on a yearly basis.
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`C.
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`In March 2019, Pony.ai Entered into a Master Services Agreement with
`Digital Realty to Host the Company's Computing Hardware.
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`25.
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`In Mar·ch 2019, Plaintiff Pony.ai and Defendants entered into a Master Terms and
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`11 Conditions Agreement (the "Master Agreement") and related service orders for the leasing of
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`12 physical space and power to service Pony.ai's servers at Digital Realty's Santa Clara facility,
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`13 which was owned by defendant Telx-Santa Clara, a Digital Realty subsidiary. Among other
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`things, the Master Agreement contemplated that,
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`18 certain monthly recmTing char·ges and non-recuning char·ges.
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`Under the original service order in March 2019, Pony.ai
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`. For several months, the parties' relationship was relatively unremar·kable. After
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`its equipment was installed, Plaintiff focused on its core business of AV development and testing
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`and timely paid its monthly invoices for leasing server space at the Santa Clara facility.
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`D.
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`In Late 2019. Plaintiff Executed an Expansion Service Order for Additional
`Server Space To Come Online Starting on April 1, 2020.
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`27.
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`In late-2019, representatives of Pony.ai and Digital Realty began discussions to
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`expand Pony.ai's service capacity by an additionall new cabinets during the second quarter of
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`2020.
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`PLAINTIFF'S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 9 of 27
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`28.
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`On December 13, 2019, Digital Realty issued a service order to expand Plaintiff's
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`service capacity by an additional I cabinets via
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`executed by the patties on December 30, 2019. Upon info1mation and belief, at this time, Digital
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`. The service order (the "Expansion Service Order") was
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`5 Realty knew and understood that the principal purpose of this agreement was to serve Plaintiff's
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`6 expanded business operations.
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`29.
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`The Expansion Service Order contemplated that
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`30.
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`The Expansion Service Order also contemplated that the additional cabinet
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`11 capacity purchased would be made available for power and service
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`. The
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`under the Expansion Service Order,
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`Pursuant to this Expansion Service Order, Digital Realty would
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`PLAINTIFF'S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 10 of 27
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`E.
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`The COVID-19 Pandemic in Early 2020 Changed Everything, and Caused
`Pony.ai To Rescind the Expansion Order Before First Delivery.
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`32.
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`Due to escalating concern that COVID-19 was spreading worldwide and resulting
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`6 government lockdowns and trnvel restrictions, it was necessaiy for Pony.ai to cancel the planned
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`7
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`8
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`expansion order forl new cabinets because of global economic conditions, for the health and
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`safety of its employees, and because of the unce1iain impact the pandemic would have on future
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`9 operations.
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`33.
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`On Febmaiy 24, 2020, an authorized representative of Pony.ai provided
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`11
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`reasonable notice to Digital Realty that, due to the economic unce1iainty resulting from COVID-
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`12 19, the company needed to make changes to its prior order. The representative info1med
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`13 Defendants that Pony.ai would not be moving fo1wai·d with the space expansion set to occur on
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`14 April 1, 2020. Digital Realty acknowledged Pony.ai's request to cancel and renegotiate a lesser
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`scope of its original expansion order and escalated the request to a company Sales Director for
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`16 processmg.
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`17
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`34.
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`In late Mai·ch 2020, a senior engineer at Pony.ai was info1med that Digital Realty
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`18 was in the process of continuing work on the expansion and had begun installation services to
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`19
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`implement the cabinet expansion despite its prior acknowledgment of the cancellation request.
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`20 The engineer immediately contacted Digital Realty representatives by phone and email to remind
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`21
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`them of the prior cancellation request resulting from the COVID-19 pandemic and, again,
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`22 unambiguously info1med them that Pony.ai was canceling the expansion order. She info1med
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`them that Pony.ai would not be installing any new servers in any new expansion space, that the
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`expansion project had been postponed indefinitely, and that Digital Realty should stop all work
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`25 on the expansion project. Again, Digital Realty acknowledged their understanding that the
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`expansion was not going fo1wai·d and advised that they would be in touch regai·ding next steps.
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`35.
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`Despite having acknowledged Pony.ai's request to cancel the cunent expansion
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`28 order, Pony.ai received an invoice from Digital Realty for costs of services relating to the
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`PLAINTIFF'S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 11 of 27
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`1 postponed expansion. Pony.ai contacted Digital Realty immediately to dispute the invoice. In
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`2
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`response, Digital Realty assmed Pony.ai that the issue would be taken care of and told them they
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`3 had "put in place ... a process to address any customer business issues related to COVID19."
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`4
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`5
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`36.
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`For months, Digital Realty repeatedly promised and assmed Pony.ai on multiple
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`separate occasions that the billing issue would be resolved imminently, and that the cancellation
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`request was being, and would be, processed by Digital Realty. For example, in response to a
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`7 May 15, 2020 inquiry by Pony.ai asking for the updated contract, Digital Realty provided firm
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`8 assurances that the cancellation request from Febrna1y 2020 was forihcoming, stating: "[s]ony
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`9
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`for the delay on this one. We've had several of these requests working through om system. That
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`10 being said, I should have a change order in your hands by Monday." (Emphasis added.)
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`11 Fmiher assurances were given on May 19 and May 20, 2020, when Digital Realty told Pony.ai
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`that "[t]he documents are moving through our internal systems today and I expect to have them
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`13
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`tomonow, it's basically the same SO [service order] that was signed at the end of last year with
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`14 new dates and language that supersedes the previous SO." (Emphasis added.) On May 21,
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`15 2020, Digital Realty's representative apologized for the delay and again reassured Pony.ai by
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`16 email that "[i]t looks like I will finally have the revised SO to you tomonow."
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`17
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`37.
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`At no time did these representatives of Digital Realty - who were the same
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`18 persons who had negotiated and signed the expansion order -
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`inform Pony.ai that its
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`19 cancellation notice was improper, that the request needed to be sent via alternate challllels, or
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`that the work would be performed anyway and the request would not be honored. In fact, Digital
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`21 Realty communicated on multiple occasions that the request was being processed and that a new
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`service order would be generated that would supersede the prior expansion order.
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`38.
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`At all times, Pony.ai relied on those promises and assmances in good faith and
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`24 continued to discuss a revised scope of cabinet expansion services with Digital Realty, later
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`settling on Febrnaiy 2021 as the new expansion services commencement date and revised scope
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`26 of-
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`cabinets, instead of __
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`In a conference call on August 25, 2020, Pony.ai and
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`27 Digital Realty were in agreement that (i) the expansion services from the December 2019
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`28 Expansion SO were not completed by Digital Realty and were not available for use by Pony.ai at
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`PLAINTIFF'S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 12 of 27
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`that time, and (ii) that Digital Realty would finally process Pony.ai's cancellation of the
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`2 December 2019 Expansion SO. Despite these fmther promises and assurances, Digital Realty
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`3 continued to improperly bill Pony.ai for the expansion services that were canceled by Pony.ai,
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`4 and never delivered by Digital Realty, and failed to resolve the issue.
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`39.
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`In the months that followed, Pony.ai and Digital Realty exchanged dozens of
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`6 emails in which Pony.ai again continuously pressed Digital Realty to process the Febrnaiy 2020
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`7 cancellation request ai1d resolve the billing issue. Even though the amount in dispute was now
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`8 climbing at an alaiming rate -
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`approximately ~ each month the issue remained
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`9 unresolved- Digital Realty did not appeai· to express much urgency in resolving its customer's
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`requests. On October 8, 2020, Pony.ai sent a formal Dispute Notice pursuant to the Master
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`11 Agreement. Although the Master Agreement provides
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`40.
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`The service order for the modified expansion services was eventually generated
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`14 and executed in December 2020. Beginning in Febrnaiy 2021, Digital Realty completed the ■
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`15 ■ cabinet expansion installation, supplied power to the-
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`additional cabinets, ai1d
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`16 Pony.ai begai1 using the-
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`additional cabinets.
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`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.
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`41.
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`On July 19, 2021, representatives of Pony.ai sent conespondence to Digital
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`Realty's authorized representatives setting forth a history of the paities' dispute and demanding
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`that the Expansion Service Order be canceled as was originally the paities' intention in early
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`2020.
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`42.
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`On August 7, 2021, Digital Realty sent conespondence to Pony.ai that escalated
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`the dispute and, among other things, stated that Digital Realty's position was that Pony.ai had no
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`present ability to cancel the Expansion Service Order. After receiving the August 7, 2021
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`conespondence from Digital Realty, Pony.ai continued communications in ai1 attempt to see if
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`the paities could reach a resolution of the dispute.
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`PLAINTIFF'S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 13 of 27
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`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
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 14 of 27
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`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.
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`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
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`PLAINTIFF’S COMPLAINT FOR DAMAGES
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`Case 4:22-cv-05428-DMR Document 1 Filed 09/22/22 Page 15 of 27
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