IN THE FRANKLIN COUNTY, OHIO COURT OF COMt\10N PLEAS
EDWARD DETWILER; THE GORDON FAMILY TRUST; BENJAMIN ZACKS; ZACKS LAW GROUP, LLC; ADAM STEIGER; MARCUS D. DUNN; and ERIC WITTENBERG, Plaintiffs, vs. LEADER TECHNOLOGIES, INC.; MICHAEL McKIBBEN; JAMES E. SOBWICK; TIM W. FATHBRUCKNER; STEVEN M. NESTER; EDWARD CROCKETT; PAUL L. PETRONELLI; MAYNARD ANDERSON; WILLIAM DEGENARO; DOUGLAS CLAY; JOHN MOTT; RIAD YAMMINE; RICHARD FULLERTON; and JOHN DOES (1-10), Defendants.
Case No. 09CV-05-6857 ANSWER TO FIRST AMENDED COMPLAINT ON BEHALF OF DEFENDANTS LEADER TECHNOLOGIES INCORPORATED; MICHAEL McKIBBEN; JAMES E. SOBWICK; TIM W. FATHBRUCKNER; STEVEN M. NESTER; EDWARD CROCKETT; PAUL L. PETRONELLI; MAYNARD ANDERSON; WILLIAM DEGENARO; DOUGLAS CLAY; JOHN MOTT; RIAD Y AMMINE; AND RICHARD FULLERTON Judge: Hon. Laurel Beatty
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Defendants Leader Technologies Incorporated ("Leader"); Michael McKibben; James E. Sobwick; Tim W. Fathbruckner; Steven M. Nester; Edward Crockett; Paul L. Petronelli; Maynard Anderson; William DeGenaro; Douglas Clay; John Mott; Riad Yammine; and Richard Fullerton (collectively "defendants"), by and through their attorneys, hereby answer plaintiffs' First Amended Complaint as follows:
Preliminary Statement
After being frustrated by failing to successfully mount a minority shareholder takeover of Leader in 2002-2003, Leader's former general counsel and his cronies have engaged in a nonstop, bad faith campaign of harassment, disparagement, interference and abuse of the legal process. This action represents the latest in a series of frivolous lawsuits they have filed against
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Leader. Here, they sue an indiscriminate list of defendants, including not only Leader, but also all of its officers and directors, and even ex-employees and former consultants. In essence, plaintiffs complain that their prior bad faith conduct was exposed for what it was. Like all their prior claims, none of their claims here have merit. First Defense
1. Defendants admit the allegations in paragraph 3,10 and 12-15, 17-21,28 of plaintiffs'
First Amended Complaint. 2. Defendants specifically deny each and every allegation of paragraphs 1, 16,22,31,36, 39-42,44-48,50-54,56-61,63-65,67-70,72-75,77-79 and 81-83 of plaintiffs' First Amended Complaint. 3. With regard to the allegations in paragraph 5 of plaintiffs' First Amended Complaint, defendants admit only that plaintiff Steiger loaned funds to Leader when it was a limited liability company, a loan that was repaid, and is one of the larger shareholders other than McKibben. Defendants specifically deny that plaintiff Steiger was a "founding member of the company" or "the first substantial cash investor in the company." Defendants allege that they are without knowledge or information sufficient to form a belief as to the truth of the other assertions in paragraph 5. 4. With regard to the allegations in paragraph 6 of plaintiffs' First Amended Complaint, defendants admit only that plaintiff Zacks was involved in the company and expressed his commitment to support defendant McKibben's technology vision and leadership as a prerequisite for his involvement, that he participated in various activities of the company and that he was awarded membership interests. Defendants specifically deny that plaintiff Zacks declined an offer to provide legal services paid in equity and deny that 2
Leader paid plaintiff Zacks in equity only for "non-legal services." Defendants also specifically deny that Zacks was a founding member of Leader and deny that he contributed money to the company since he was paid over $275,000 in net outflows for legal fees. Defendants also specifically deny that plaintiff Zacks ceased association with the Defendants in Jnly 2002 and deny that defendant McKibben gave plaintiff Zacks the title "Chief Legal Officer." Defendants allege that they are without knowledge or information sufficient to form a belief as to the truth of the other allegations contained in paragraph 6 of plaintiffs' First Amended Complaint. 5. Defendants allege that they are without knowledge or information sufficient to form a belief as to the truth of the allegations contained in paragraphs 2, 4, 5, 7, 8 and 23 of plaintiffs' First Amended Complaint. 6. With regard to the allegations in paragraph 9 of plaintiffs' First Amended Complaint, defendants admit only that plaintiff Dunn was given a de minimis amount of membership interests by his law partner plaintiff Zacks, provided legal services to Leader on several occasions, and invested with his spouse, Sally Zacks Dunn, plaintiff Zacks' sister, and is a shareholder. Defendants allege that they are without knowledge or information sufficient to form a belief as to the truth of the other assertions in paragraph 9. 7. With regard to the allegations in paragraph 11 of plaintiffs' First Amended Complaint, defendants admit only that defendant McKibben is a resident of Franklin County, Ohio and is the controlling shareholder, chairman, founder, and website designer of Leader. Defendants specifically deny that defendant McKibben is the website moderator, website administrator, legal or factual alter ego of Leader.
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8. With regard to the allegations in paragraph 24 of plaintiffs' First Amended Complaint, defendants admit only that Leader has been involved in some lawsuits since 2002. Nearly all of the lawsuits in which Leader has been involved were the result of plaintiffs' improper actions. 9. Defendants allege that the allegations in paragraph 25 of plaintiffs' First Amended Complaint are incomprehensible, and therefore defendants are without knowledge or information sufficient to form a belief as to the truth of the allegations contained in paragraph 25 of plaintiffs' First Amended Complaint. 10. With regard to the allegations in paragraph 26 of plaintiffs' First Amended Complaint, defendants admit only that some ofthem have published comments about some plaintiffs. Defendants specifically deny that any statements they published were or were known to be false, libelous or defamatory. 11. With regard to the allegations in paragraph 27 of plaintiffs' First Amended Complaint, defendants admit only that defendant McKibben sent a letter to Governor Ted Strickland on or about May 27,2008, the contents of which speak for themselves, and that Nancy McKibben sent a letter to President Barack Obama on or about February 9,2009. Defendants specifically deny that any statements contained in either letter were or were known to be false, libelous or defamatory, and specifically deny that any defendants directed that Nancy McKibben, an accomplished author, writer and educator, send the February 9, 2009 letter. 12. With regard to the allegations in paragraph 28 of plaintiffs' First Amended Complaint, defendants admit only that one or more defendants maintain a website and certain blog
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pages, but specifically deny each and every other allegation of paragraph 28 of plaintiffs' First Amended Complaint. 13. With regard to the allegations in paragraph 29 of plaintiffs' First Amended Complaint, defendants admit only that one or more defendants created a blog post containing opinions and factually true statements concerning activities of plaintiff Edward Detwiler. The contents of such blog(s) have been modified and/or removed over time. Defendants specifically deny that any Detwiler blog carried the URL http://www.leaderdialog.comlblogs. and specifically deny each and every other allegation of paragraph 29 of plaintiffs' First Amended Complaint. 14. With regard to the allegations in paragraph 30 of plaintiffs' First Amended Complaint, defendants admit only that blog posts are available to the public as is the general nature of web logs. Defendants admit promoting the company's services, including its blogs and encouraging people to visit its sites, including the Detwiler Blog. Defendants admit contacting certain shareholders and public figures concerned with lawsuit abuse and encouraging them to read the Detwiler Blog and assist in stopping the interference by Zacks and the other plaintiffs in the business of the company. Defendants specifically deny that defendant McKibben continues to send emails urging anyone to read the "Detwiler Blog" since it was de-published at plaintiffs' request, and specifically deny that extraordinary references were added to the "Detwiler Blog" that did or were intended to affect the results of a Google search. Defendants allege that they are without knowledge or information sufficient to form a belief as to the truth ofthe remainder of the allegations contained in paragraph 30 of plaintiffs' First Amended Complaint.
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15. With regard to the allegations in paragraph 32,33,34,35,37,38 of plaintiffs' First Amended Complaint, defendants admit only that one or more of them have made blog posts and/or written letters andlor emails concerning some plaintiffs and their activities. The contents of one or more of the blog(s) have been modified and/or removed over time. Defendants specifically deny that any such communications were or were known to be false, libelous or defamatory. 16. With regard to the allegations in paragraphs 43,49,55,62,66,71,76 and 80 of plaintiffs' First Amended Complaint, defendants incorporate their responses to the referenced paragraphs of plaintiffs' First Amended Complaint as if set forth fully herein.
Further Defenses
Defendants set forth the following additional and/or affirmative defenses. In asserting these defenses, defendants do not concede that they bear the burden to establish any fact or proposition where that burden is properly imposed on plaintiffs.
Second Defense
Defendants Paul Petronelli, Maynard Anderson and William DeGenaro allege that the Court lacks jurisdiction over their persons for the reason that they are not residents of Ohio and are not subject to jurisdiction in Ohio.
Third Defense
Defendants allege that service of process upon one or more of them was insufficient.
Fourth Defense
Defendants allege that the complaint fails to state a claim upon which relief can be granted.
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Fifth Defense
Defendants allege that plaintiffs unreasonably and disingenuously failed to mitigate any damages they suffered.
Sb:th Defense
The statements in the First Amended Complaint about which plaintiffs complain were published or further published by plaintiffs themselves following defendants' de-publishing of the allegedly defamatory statements at plaintiffs' request.
Seventh Defense
The statements in the First Amended Complaint about which plaintiffs complain are opinion and were clearly labeled as such.
Eighth Defense
The statements in the First Amended Complaint about which plaintiffs complain are true.
Ninth Defense
Defendants have published a reasonable written contradiction by the plaintiffs of the statements in the First Amended Complaint about which plaintiffs complain.
Tenth Defense
One or more of plaintiffs' claims are barred by applicable statutes oflimitation.
Eleventh Defense
Plaintiffs' claims are barred because any publication of the statements about which plaintiffs complain in the First Amended Complaint were protected by the litigation privilege or other privilege.
Twelfth Defense
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The statements about which plaintiffs complain in the First Amended Complaint were protected by the First Amendment. Thirteenth Defense Defendants did not act with malice and reasonably believed to be true any statements they made about plaintiffs. Fourteenth Defense The statements about which plaintiffs complain in the First Amended Complaint were protected by the qualified privilege a corporation has in disseminating relevant information to its employees and stockholders. Fifteenth Defense Defendants de-published and retracted any allegedly defamatory statements upon notice from plaintiffs. Sixteenth Defense The statements in the First Amended Complaint about which plaintiffs complain are protected by the privilege to report court proceedings. Seventeenth Defense Plaintiffs' causes of action are barred by the doctrine of unclean hands. Eighteenth Defense The statements in the First Amended Complaint about which plaintiffs complain are not actionable because plaintiffs are public figures or limited public figures. Nineteenth Defense The statements in the First Amended Complaint about which plaintiffs complain are not actionable because they concern matters of public concern. Twentieth Defense Defendants' conduct is protected by section 230 of the Communications Decency Act. S
Twenty-First Defense The statements in the First Amended Complaint about which plaintiffs complain are not actionable because they constitute fair co=ent by defendants. Twenty-Second Defense Defendants' statements and actions are conditionally privileged because defendants acted in good faith, sought to protect a public interest, their statements were limited in scope to that purpose, and were published if at all in a proper manner and to proper parties only. Twenty-Third Defense Defendants' statements and actions are conditionally privileged because defendants acted in good faith. Twenty-Fourth Defense Defendants deny that plaintiffs have suffered any injury or damage whatsoever, and further deny that they are liable to plaintiffs for any of the injury or damage claimed or for any injury or damage whatsoever. Twenty-Fifth Defense To the extent plaintiffs suffered injury or damage, which defendants deny, such injury or damage was not proximately caused by any conduct or inaction of defendants, or was not foreseeable, or both. Twenty-Sixth Defense The alleged causes of action are barred because defendants employed lawful, proper and justified means to accomplish legitimate business objectives in the exercise of their reasonable business judgment.
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Twenty-Seventh Defense
Defendants hereby gives notice that they intend to rely on any other defense or defenses that may become available or apparent as a result of the development of additional information, through discovery in this action or otherwise, and hereby reserves the right to amend their answer and to assert any such defense.
Dated: August 24, 2009 By: =-~~~~~~~~__~~ Robert Sto ey (Ohio Bar No. 0 Q t ~~ I,) rstorey@meadeandassociates.com • • '• .,."U'4l'1Jli 0lllitlfWj 737 Enterprise Drive Westerville, Ohio 43081 Telephone: (614) 885-2066 Attorneys for Defendants Leader Technologies Incorporated; Michael McKibben; James E. Sobwick; Tim W. Fathbruckner; Steven M. Nester; Edward Crockett; Paul L. Petronelli; Maynard Anderson; William DeGenaro; Douglas Clay; John Mott; Riad Yarnmine; and Richard Fullerton Dated: August 24, 2009 By:
~~~~~______________
Douglas W. Colt dcolt@coltwallerstein.com Thomas E. Wallerstein twallerstein@coltwallerstein.com COLT / WALLERSTEIN LLP Three Lagoon Drive, Suite 260 Redwood Shores, California 94065 Telephone: (650) 453-1980 Facsimile: (650) 472-8078
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Attorneys for Defendants Leader Technologies Incorporated; Michael McKibben; James E. Sobwick; Tim W. Fathbruckner; Steven M. Nester; Edward Crockett; Paul L. Petronelli; Maynard Anderson; William DeGenaro; Douglas Clay; John Mott; Riad Yammine; and Richard Fullerton
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Twenty-Seventh Defense
Defendants hereby gives notice that they intend to rely on any other defense or defenses that may become available or apparent as a result of the development of additional information, through discovery in this action or otherwise, and hereby reserves the right to amend their answer and to assert any such defense. Dated: August 24, 2009 By: __________________~------Robert Storey (Ohio Bar No. ) rstorey@meadeandassociates.com MEADE AND ASSOCIATES 737 Enterprise Drive Westerville, Ohio 43081 Telephone: (614) 885-2066 Attorneys for Defendants Leader Technologies Incorporated; Michael McKibben; James E. Sobwick; Tim W. Fathbruckner; Steven M. Nester; Edward Crockett; Paul L. Petronelli; Maynard Anderson; William DeGenaro; Douglas Clay; John Mott; Riad Yammine; and Richard Dated: August 24,2009 By:
~uglas W. Colt
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Attorneys for Defendants Leader Technologies Incorporated; Michael McKibben; James E. Sobwick; Tim W. Fathbruckner; Steven M. N ester; Edward Crockett; Paul L. Petronelli; Maynard Anderson; William DeGenaro; Douglas Clay; John Mott; Riad Yammine; and Richard Fullerton
dco1t@coltwallerstein.com Thomas E. Wallerstein twallerstein@coltwallerstein.com COLT / WALLERSTEIN LLP Three Lagoon Drive, Suite 260 Redwood Shores, California 94065 Telephone: (650) 453-1980 Facsimile: (650) 472-8078
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PROOF OF SERVICE
Defendants served the foregoing Answer on Larry H. James of Crabbe, Brown & James, attorney for plaintiffs Edward B. Detwiler, The Gordon Family Trust, Benjamin S. Zacks, Zacks Law Group LLC, Adam J. Steiger, Marcus D. Dunn, and Eric J. Wittenberg, by delivering on August 24,2009, a copy of the
~5:X.l[}fe*~rier
to the office of Crabbe, Brown &
James at 500 South Front Street, Suite 1200, Col Dated: August 24, 2009
s, Ohio 43215.
By: ~~~____-=~~ Robert Storey 0 c) 1.$'1,..1 "t.. 1IM1'1fi:'''.~ 737 Enterprise Drive Westerville, Ohio 43081 (614) 885-2066 Attorneys for Defendants Leader Technologies Incorporated; Michael McKibben; James E. Sobwick; Tim W. Fathbruckner; Steven M. Nester; Edward Crockett; Paul L. Petronelli; Maynard Anderson; William DeGenaro; Douglas Clay; John Mott; Riad Yammine; and Richard Fullerton
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