Aureus Holdings, LLC v. Kubient, Inc.

CourtSuperior Court of Delaware
DecidedAugust 6, 2021
DocketN20C-07-061 EMD CCLD
StatusPublished

This text of Aureus Holdings, LLC v. Kubient, Inc. (Aureus Holdings, LLC v. Kubient, Inc.) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aureus Holdings, LLC v. Kubient, Inc., (Del. Ct. App. 2021).

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

AUREUS HOLDINGS, LLC d/b/a ) LO70s, ) ) Plaintiff and Counterclaim ) Defendant, ) C.A. No. N20C-07-061 EMD CCLD ) v. ) ) KUBIENT, INC., ) ) Defendant and Counterclaim ) Plaintiff,

Submitted: May 24, 20211 Decided: August 6, 2021

Upon Consideration of Defendant’s Partial Motion to Dismiss the Amended Complaint Pursuant to Rule 12(b)(6) DENIED

Larry R. Wood, Jr, Esquire, Brandon W. McCune, Esquire, Blank Rome LLP, Wilmington, Delaware. Attorneys for Aureus Holdings, LLC d/b/a Lo70s.

Rudolf Koch, Esquire, Travis S. Hunter, Esquire, Nicole K. Pedi, Esquire, Valerie A. Caras, Esquire, Richards, Layton & Finger, P.A., Wilmington, Delaware. Attorneys for Kubient, Inc.

DAVIS, J.

I. INTRODUCTION

This is a civil action assigned to the Complex Commercial Litigation Division of the

Court and involves claims regarding the failure to enter into an asset purchase agreement (the

“APA”). Plaintiff Aureus Holdings d/b/a Lo70s (“Lo70s”) alleges that Defendant Kubient Inc.

(“Kubient”) breached a Binding Letter of Intent (“LOI”) by failing to move towards executing

1 D.I. No. 36 the APA and failing to negotiate in good faith. Lo70s also alleges that Kubient unjustly enriched

themselves and tortiously interfered with Lo70s business relations.

Lo70s filed its initial complaint on July 7, 2020.2 Kubient filed its answer, affirmative

defenses and counterclaims on August 31, 2020.3 Lo70s filed the Amended Complaint on

November 6, 2020 seeking recovery for (i) breach of the LOI, (ii) breach of the duty to negotiate

in good faith, (iii) unjust enrichment and (iv) tortious interference with business relations.4 On

December 9, 2020, Kubient filed a partial motion to dismiss (the “Motion”) Lo70s’ unjust

enrichment and tortious interference with business relations claims.5 The Court held a hearing

on April 28, 2021. After the hearing, the Court took the Motion under advisement.

For the reasons set forth below, the Court DENIES the Motion.

I. BACKGROUND6 A. PARTIES

Lo70s is a Nevada LLC headquartered in Nevada.7 Lo70s specializes in advertising data

and lead generation.8 Lo70s offers first look access to video ad placements.9 Lo70s participates

in advertising arbitrage, or the business of buying and selling advertisement space and

opportunities.10 Lo70s depended on no single customer, platform or source of revenue in a given

2 D.I. No. 1. 3 D.I. No. 5. 4 D.I. No. 16. 5 D.I. No. 22. 6 Unless otherwise indicated, the following facts are as alleged in the Amended Complaint. For purposes of the Motion, the Court must view all well-pled facts alleged in the Amended Complaint as true and in a light most favorable to Lo70s. See, e.g., Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 536 (Del. 2011). 7 Amend. Compl. ¶ 4. 8 Id. 9 Id. ¶ 13. 10 Id. ¶ 15.

2 year.11 Lo70s pled that it has a strong reputation and a strong network of connections that

allowed Lo70s to keep up with the market.12

Kubient is a Delaware corporation headquartered in New York.13 Kubient is also

involved in the advertising technology industry.14

B. THE PARTIES ENTER THE LOI.

Kubient became interested in acquiring Lo70s’ sales infrastructure—and goodwill—to

improve Kubient’s position for an initial public offering (the “IPO”).15 On March 1, 2019,

Kubient and Lo70s entered into the LOI.16 Kubient and Lo70s also agreed to create the APA

under which Kubient would acquire substantially all of Lo70s’ assets.17

In the LOI, the parties agreed to prepare the APA:

Proposed Agreement. As soon as reasonably practicable after the execution of this [LOI], the Parties shall commence to draft the [APA] (and related ancillary documents thereto) relating to [Kubient’s] acquisition of all of the Assets, to be drafted by [Kubient’s] counsel.18

The LOI’s term, referred to as the “Exclusivity Period,” ran from March 1, 2019 to

December 31, 2019.19 The parties expressly agreed that the LOI “shall constitute a legally

binding and enforceable agreement between [Kubient] and [Lo70s].”20

11 Id. ¶ 18. 12 Id. 13 Id. ¶ 5. 14 Id. 15 Id. ¶ 23. 16 Id. ¶ 26. 17 Id. ¶ 26. 18 Id. Ex. A (the “LOI”) § 1(b). 19 Amend. Compl. ¶ 27. 20 Id. ¶ 28; see also LOI at 1.

3 C. KUBIENT DIRECTS LO70S TO SHIFT BUSINESS TO KUBIENT AND TO ACT FOR KUBIENT’S BENEFIT.

After executing the LOI, Lo70s helped Kubient integrate Lo70s’ assets into Kubient.21

Lo70s assisted Kubient with the integration at Kubient’s request.22 Lo70s also aided Kubient

with developing its market participation and client base.23 Lo70s purportedly identified

opportunities for market penetration, explained Kubient’s new role and services to Lo70s’

customers, and integrate human resources-related data.24 For example, Kubient specifically

requested that Lo70s focus on accounts related to Fidelity Media, which was newly acquired by

Kubient.25 Lo70s abandoned its own customers and arbitrage business in order to comply with

Kubient’s request.26 Kubient kept all revenue generated by Lo70s’ efforts related to Fidelity

Media.27

Kubient also requested that Lo70s shift its entire sales effort to Kubient’s new, not-yet

launched “Digital Out of Home” or “DOOH” product in September 2019.28 Lo70s’ business

development team also worked solely on pursuing and generating leads for DOOH and then

turned those over to Kubient, preventing Lo70s from working on any Lo70s-centered

opportunities.29 Kubient directed Lo70s employees to develop Kubient relationships.30 For

example, Kubient directed Lo70s employee Maxwell Bollinger to develop business with Beasley

Media for Kubient’s sole benefit.31

21 Amend. Compl. ¶ 33. 22 Id. 23 Id. ¶ 34. 24 Id. 25 Id. ¶ 35. 26 Id. 27 Id. 28 Id. ¶ 36. 29 Id. 30 Id. ¶ 37. 31 Id.

4 Throughout the Exclusivity Period, Lo70s worked toward adapting to Kubient’s

projected combined business strategy, to the detriment of its own revenue-generation and

corporate financial well-being.32 By November 2019, Lo70s completely abandoned its arbitrage

business, turned over its customers to Kubient and began exclusively using Kubient’s systems

and platforms.33 In sum, Kubient compelled Lo70s to only pursue business opportunities for

Kubient’s benefit, to shift its entire sales infrastructure to Kubient’s desired systems and remade

its business model to focus on either Fidelity Media or DOOH–depending on Kubient’s

preference at the time.34

D. THE PARTIES INTEGRATE THEIR BUSINESSES.

Kubient and Lo70s otherwise integrated their businesses after signing the LOI. As set

out in the Amended Complaint, Kubient:

a. Asked Lo70s’ employees to include client calls and updates in Kubient’s customer google sheets

b. Directed Kubient representatives to train Lo70s’ employees on what Kubient offers to direct Lo70s’ messaging about Kubient to potential clients

c. Emphasized the importance of Kubient and Lo70s working together on joint positioning in the market

d. Demanded that Lo70s turn over all new accounts to Kubient

e. Requested and obtained Lo70s’ HR-related information

f. Urged the joint discussion of pipeline opportunities, or future possible sales, including requests by Kubient for a deeper level of clarity on Lo70s’ pipelined opportunities

g. Created a combined organization chart; and

32 Id. ¶ 38.

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