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FIRST AMENDED COMPLAINT– 1
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CORR CRONIN LLP
1015 Second Ave, 10th
Floor
Seattle, Washington 98154
Tel (206) 625-8600
Fax (206) 625-0900
CORR CRONIN LLP
Blake Marks-Dias, OSB # 30327
Steven W. Fogg, (pro hac vice
application forthcoming)
Todd T. Williams, (pro hac vice
application forthcoming)
1015 Second Avenue, Floor 10
Seattle, WA 98154
Telephone: (206) 625-8600
Fax: (206) 625-0900
bmarksdias@corrcronin.com
sfogg@corrcronin.com
twilliams@corrcronin.com
Attorneys for Plaintiff
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
TRULY SOCIAL GAMES, LLC, an Oregon
limited liability company
Plaintiff,
v.
LEAF MOBILE, INC., a British Columbia
corporation, now doing business as EAST
SIDE GAMES GROUP, INC.,
Defendants.
No. 3:22-cv-01663-AR
FIRST AMENDED COMPLAINT
DEMAND FOR JURY TRIAL
I. PRELIMINARY STATEMENT
1. Defendant Leaf Mobile, Inc. (“Leaf”)1
promised to fund and provide support for
the development and marketing of four online games by developer Truly Social Games, LLC
1
Defendant Leaf is now doing business as East Side Games (“ESG”) following
acquisition of ESG in 2021.
Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 1 of 16
FIRST AMENDED COMPLAINT– 2
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CORR CRONIN LLP
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(“TSG”). Leaf also promised a series of lucrative payments to TSG based on various earnings
targets that should have been easily achievable according to projections generated by Leaf. In
exchange, TSG offered Leaf the opportunity to acquire TSG as a subsidiary. TSG also
committed to develop the coding and artwork for the four online games that Leaf was to fund.
2. Instead of supporting the development pursuant to the terms of the parties’
agreement, Leaf refused to provide the necessary financial, marketing, management, and
analytical backing for the online games, leaving the games developed by TSG in a state of
disrepair and neglect, and in the process causing financial damage to TSG in the form of lost
royalties and payments that were tied to the games’ performance. After failing to uphold its end
of the bargain and intentionally harming the financial performance of the four games developed
by TSG, Leaf now seeks to improperly terminate the contract with TSG, steal for itself the code
base and artwork created by TSG, and excuse itself from any further obligations. On
information and belief, Leaf’s actions are part of a concerted and deliberate business strategy
that Leaf has executed multiple times in an effort to take advantage of the skills and expertise of
online game developers for Leaf’s benefit while at the same time refusing to pay developers
what they are owed and cutting the developers out of future earnings related to the games.
3. TSG files this lawsuit to protect its rights under the parties’ agreement and to
secure compensation for the damage that Leaf has done.
II. PARTIES
4. Plaintiff Truly Social Games, LLC (“TSG”) is an Oregon limited liability
company with its principal place of business in Portland, Oregon.
5. Defendant Leaf Mobile, Inc. (“Leaf”) is a British Columbia corporation with its
principal place of business in Vancouver, British Columbia.
6. Defendant East Side Games Group, Inc. is the successor in interest to Leaf.
Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 2 of 16
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III. JURISDICTION AND VENUE
7. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a)(2)
because the amount in controversy, exclusive of interest and costs, exceeds $75,000. For
diversity purposes, TSG is a citizen of the State of Oregon and Leaf is a foreign citizen of
Canada.
8. The Court has personal jurisdiction over Leaf under the United States
Constitution because it has had and continues to have sufficient contacts with the forum state.
This includes, for example, entering into a contract for purchase of membership interest in TSG,
which is based in Oregon; by regularly communicating with TSG’s founders, senior executives,
and employees who reside in the forum state regarding the subject of the contract and the issues
in dispute in this lawsuit; by appointing a Leaf representative to the TSG board of directors, and
by regularly submitting payments to TSG in Oregon. Accordingly, this Court’s exercise of
personal jurisdiction over Leaf does not offend traditional notions of fair play and substantial
justice.
9. The Court may also exercise personal jurisdiction over Leaf pursuant to Oregon’s
Long-Arm Statute, Or. R. Civ. P. 4, which confers jurisdiction “to the extent permitted by due
process.” Gray & Co. v. Firstenberg Mach. Co., Inc., 913 F.2d 758, 760 (9th Cir. 1990). As
discussed above, this Court has personal jurisdiction over Leaf under the United States
Constitution, and as such, also has personal jurisdiction under Oregon’s Long-Arm Statute.
10. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(1),
because Leaf is not resident in the United States, and therefore pursuant to 28 U.S.C. §
1391(c)(3), Leaf “may be sued in any judicial district[.]” TSG’s headquarters and operations are
based in this judicial district, and much of the relevant witnesses and information are also
located here.
Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 3 of 16
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IV. FACTUAL ALLEGATIONS
A. TSG Develops World Class Online Games
11. TSG is a private company headquartered in Portland, Oregon. TSG designs and
develops engaging mobile games. TSG’s founders and executives work out of TSG’s offices in
Portland. TSG developers have created numerous successful online games since TSG’s
inception in 2015, including games such as Planet Gold Rush, Bomb Brawl, Idle Surfing,
Invincible Hero, Archer: Danger Phone as well as announced titles such as Budfarm: Bud
Master and Trailer Park Boys: Get Merged.
12. TSG specializes in the ability to develop online games that have a loyal and
persistent player following. The games developed by TSG have a particular ability to generate
substantial income from players based on design elements that encourage players to make in-
game purchases.
13. Leaf is a publicly traded mobile game platform and publishing company based in
Vancouver, British Columbia. Leaf, now known as East Side Games Group Inc., licenses and
publishes online games. In 2021 Leaf did not have the internal capabilities to develop and
design the volume of games that it sought to publish. Accordingly, Leaf sought to partner with
developers to generate the games that it sought to publish and monetize.
B. Leaf Contracts with TSG to Acquire Ownership in TSG and for TSG to
Develop Lucrative Games
14. In 2021, TSG, through its representatives based in Oregon, began discussions
with Leaf to develop multiple online games for brands that Leaf had licensed. Leaf did not have
the expertise or experience to successfully develop the games and was looking to TSG to
develop and help tune the games, once published, for maximum profitability. TSG was willing
to participate in the development of the games as long as Leaf, a publicly traded and well
financed company, funded the development costs and agreed to share in the royalties of the
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games once released. TSG made clear to Leaf that Leaf would be required to provide analytical
and collaborative support to maximize the profitability of the games. TSG was also willing to
offer Leaf ownership in TSG in the hopes of solidifying future partnerships.
15. On June 16, 2021, TSG and Leaf entered into a Membership Interest Purchase
Agreement (“Agreement”). A copy of the Agreement is attached here as Exhibit A. The
Agreement provided that TSG would issue to Leaf shares equivalent to a 20% ownership in
TSG in exchange for Leaf’s contribution of sufficient funds to develop four separate games
based on an agreed budget and up to a maximum amount of $3,000,000:
In consideration of the Initial Interest, LEAF shall subscribe for and contribute to
TSG LLC an amount (the “Initial Interest Consideration”) equal to the aggregate
amounts needed by the TSG Group to develop the Subject Titles only, and in
accordance with a development budget to be mutually agreed upon by LEAF and
TSG LLC, acting reasonably, to a maximum capital contribution of $3,000,000 in
the aggregate, to be advanced quarterly in the amounts described in
aforementioned development budget.
16. The four games to be developed by TSG and published and marketed by Leaf
were identified in the Agreement as Archer: Danger Phone, Roll for Adventure: Idle RPG, Bud
Master and a fourth title, to be determined (“Subject Titles”).
17. The Agreement also provided that concurrent with the issuance of shares, Leaf
would be granted a seat on the TSG board of directors:
Concurrent with the contribution by Leaf and the issuance to Leaf of the Initial
Interest, the Vendors and the manager of TSG, LLC, as applicable, shall adopt
and approve the Third Amended and Restated Operating Agreement of TSG LLC
to more particularly provide for their respective rights, powers, duties and
obligations as members, and the management, operations and activities of the
TSG LLC and each Vender and Leaf shall enter into and be bound by the terms
and conditions of such Third Amended and Restated Operating Agreement of
TSG LLC; and each TSG Entity, Vendors, members, managers, as applicable,
(each an “Approving Party” and together “Approving Parties”) shall cause a
nominee of LEAF to be appointed to its respective board of directors or board of
managers, as applicable, and each Approving Party, as applicable, shall continue
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to cause a nominee of LEAF to be appointed to its respective board of directors
or board of managers, as applicable so long as LEAF holds 20% or more of the
issued and outstanding voting securities of TSG LLC, calculated on a fully-
diluted basis. For greater clarity, in the event that this Agreement should conflict
with the Third Amended and Restated Operating Agreement, the terms of this
Agreement shall prevail.
18. Because the parties recognized that the games to be developed under the
Agreement had the potential to be very lucrative once published, the parties agreed that Leaf
could (and in certain cases was required to) purchase additional shares in TSG at certain revenue
milestones and the parties agreed that when certain other revenue milestones were reached, the
purchase price would be adjusted upward, effectively rewarding TSG for the performance of the
games it had developed.
19. Specifically, Section 2.2 of the Agreement provided Leaf the option to purchase
an additional 20% ownership in TSG. Section 2.2 also stated that Leaf was “required” to
purchase additional shares in TSG for $4,000,000 if the gross revenue with respect to the
Subject Titles was “at least $3,000,000…for a period of two (2) consecutive calendar months”
or if Leaf was required to pay TSG “at least $500,000 in aggregate net royalty payments with
respect to the Subject Titles per month, for a period of two (2) consecutive calendar months.”
20. Section 2.3 of the Agreement provided Leaf the option to purchase the remainder
of the outstanding shares in TSG. Section 2.3 also stated that Leaf was “required” to purchase
the remaining shares in TSG for $15,000,000 if the gross revenue with respect to the Subject
Titles was “at least $5,000,000…for a period of three (3) consecutive calendar months” or if
Leaf was required to pay TSG “at least $1,000,000 in aggregate net royalty payments with
respect to the Subject Titles per month, for a period of three (3) consecutive calendar months.”
21. In sum, the Agreement contemplated the eventual merger of TSG as a subsidiary
under the umbrella of Leaf. The Agreement also contemplated a partnership between Leaf and
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TSG wherein TSG stood to share in the benefits of the partnership through additional share
purchases and shared royalty payments on the Subject Titles.
22. In entering the Agreement, TSG’s leadership in Oregon relied on promises made
by Leaf executives, including Jason Bailey, Josh Nilson, and Derek Lew that Leaf would fund
the initial development of the Subject Titles for up to $3,000,000 and that Leaf would support
the development of its games with analytics and reasonable collaborative support so that the two
parties could maximize the profitability of the Subject Titles. TSG also relied on statements by
Jason Bailey, Josh Nilson, and Derek Lew made to TSG’s leadership in Oregon that Leaf
intended to pursue in good faith the acquisition of TSG and partnership with TSG contemplated
by the Agreement.
23. In entering the Agreement, TSG also relied on historical metrics for various
online games published by Leaf and projections provided by Leaf to TSG’s representatives in
Oregon that detailed the estimated revenue share for Archer: Danger Phone. These projections,
which were provided by Leaf in an attempt to induce TSG to enter the Agreement, demonstrated
that achieving the revenue milestones in Sections 2.2 and 2.3 of the Agreement (and thereby
receiving additional payments from Leaf) was a virtual certainty. For example, these
projections, provided by Jason Bailey, identified that Archer: Danger Phone was likely to
achieve, by itself, at least $2,000,000 in gross revenue per month.
24. In entering the Agreement, TSG also relied on representations made by Leaf to
TSG’s representatives in Oregon that the contents of a software development starter package,
termed an “IdleKit” by Leaf, would purportedly allow the development of at least one of the
Subject Titles to be expedited.
25. The Agreement permitted termination upon written notice by Leaf only if Leaf
“is not then in material breach of any provision” of the Agreement and TSG failed to perform
under the Agreement. See Agreement Section 8.1.
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26. Following execution of the Agreement, TSG issued to Leaf shares equivalent to a
20-percent ownership in TSG and the TSG operating agreement was amended to grant Leaf a
seat on the TSG board of directors. Pursuant to the TSG operating agreement, Leaf had the sole
authority to select and appoint the individual it wanted to serve as its Manager on the board of
directors. Leaf also had the sole authority to “remove[] or replace[]” its appointed manager “at
any time, with or without cause.” Leaf appointed Jim MacCallum to serve as Leaf’s
representative on the board of directors. Through MacCallum, Leaf exercised its fiduciary
obligations as a member of the TSG board of directors.
C. Leaf Fails to Fund Development of the Games, Fails to Support the Games’
Development, and Causes Damage to TSG
27. Beginning not long after the execution of the Agreement, it became clear that
Leaf did not intend to live up to its end of the bargain. Despite multiple efforts to reach
agreement on a budget necessary for the development of the identified games, Leaf refused to
agree on the necessary funding required to support the development of the games.
28. Instead, Leaf demanded, contrary to the Agreement, that TSG generate an invoice
every month outlining TSG expenditures and development costs for each project. These
invoices were then reviewed by Leaf and subject to multiple requests for justification until
partial payment was authorized. This process would often delay payments beyond the quarterly
payments contemplated by the Agreement and resulted in inadequate funds to accomplish the
development of the games contemplated by the Agreement. On multiple occasions, TSG had
challenges meeting payroll costs as a result of Leaf’s refusal to honor the Agreement. Often, the
payments requested by TSG under the Agreement were unreasonably rejected by Leaf
altogether, leaving TSG to cover development expenses on its own. Leaf also repeatedly
directed TSG to reduce the costs and resources that TSG was devoting to developing and
maintaining the Subject Titles as financially successful games. At the time Leaf purported to
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terminate the contract with TSG, Leaf had paid only approximately $2,100,000 of the
$3,000,000 that Leaf promised to pay to fund development of the Subject Titles.
29. In addition to refusing to fund the reasonable development of the Subject Titles,
TSG also discovered that the “IdleKit” which Leaf promoted as a way to efficiently build at
least one of the online games, was nothing more than a few spreadsheets that provided little to
no assistance in the necessary development steps. As a result, TSG was forced to spend
additional time and resources to build the software necessary to support the Subject Titles.
30. On October 12, 2022 Leaf demanded, without justification, that TSG use the
proceeds from a tax refund received from the Canadian Revenue Agency to fund its operations,
instead of relying on payment from Leaf. Leaf withheld payment from TSG under the
Agreement on account of this refund, effectively starving TSG of needed and promised
payments under the Agreement.
31. Further, Leaf failed to provide the requisite analytical support contemplated by
the parties to enable the games to succeed in the marketplace. As only one example, Leaf has
failed to provide statistics and metrics to TSG regarding all of the Subject Titles to allow TSG to
optimize the games in the marketplace and increase profitability. Additionally, Leaf has
repeatedly issued contradictory direction and changing specifications on game development,
leaving TSG guessing and without guidance on the ultimate deliverables sought by Leaf.
32. Contrary to Leaf’s obligations and commitments consistent with the Agreement,
Leaf has also failed to devote the necessary marketing resources to the Subject Titles. The
success of an online game in the marketplace is directly tied to the amount of marketing
resources devoted to promoting that game. After TSG completed development of the Subject
Titles, Leaf diverted marketing resources that were earmarked for the Subject Titles to other
projects that Leaf had underway. Leaf’s diversion of marketing resources away from the
Subject Titles has directly and negatively impacted the success of the Subject Titles.
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33. TSG has performed under the Agreement in the development of the contemplated
games. In fact, Leaf CEO Jason Bailey told TSG that TSG’s development of Bud Master was
one of the best developed games that he had seen. Notwithstanding TSG’s outstanding
performance, the games developed by TSG have failed to attract the users and revenue projected
by Leaf due to Leaf’s failure and refusal to provide reasonable funding under the Agreement for
the development of the games and analytical and marketing support essential to the success of
the Subject Titles.
34. As a result of Leaf’s failure to reasonably fund and support the development of
the games, the games have failed to attract and retain anticipated users in the marketplace and
TSG has been denied the benefits of further investment, royalties, and revenue sharing from the
games.
D. Executing a Planned Business Strategy, Leaf Attempts to Take Exclusive
Control of TSG’s Games After Purporting to Terminate TSG
35. In the months leading up to October 2022, Leaf, though its representatives, had
directed TSG not to perform any further work on Archer: Danger Phone projects that would
lead to increased traffic and revenue. On August 19, 2022, Leaf’s representative for Archer
development instructed TSG “not [to] move forward with any new approvals or asks” related to
driving users to the game. On October 12, 2022, Leaf directed TSG to shift the game Archer:
Danger Phone into “auto pilot” mode and to effectively cease support and user acquisition for
the game. Archer: Danger Phone was one of the more profitable games developed by TSG,
bringing in over $1M in revenue over a 40 day period. By directing TSG to cease support for
Archer: Danger Phone, Leaf caused revenue for Archer: Danger Phone to plummet, instead of
continuing to increase. On information and belief, Leaf took this step, without consultation with
TSG and in contravention of the parties’ expectations under the Agreement, in bad faith and in
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FIRST AMENDED COMPLAINT– 11
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an effort to prevent TSG from accruing the benefits of the expected royalties and additional
payments from Leaf under the parties’ Agreement.
36. On October 13, 2022, Leaf transmitted a letter to TSG purporting to terminate the
Agreement and the parties’ relationship thereunder. Leaf failed to cite any reason for
terminating the Agreement.
37. The day after sending the letter to TSG purporting to terminate the parties’
Agreement and shutting down Archer: Danger Phone, Leaf again enabled access to the Archer:
Danger Phone game, effectively re-starting revenues for a game that Leaf now purported to
claim for its own. Leaf has done the same thing with Bud Master.
38. Leaf has also attempted to surreptitiously acquire full control of the codebase for
the Subject Titles without TSG’s consent. Leaf, through its agents, has repeatedly requested that
TSG employees provide access to the codebase for the Subject Titles developed by TSG and
which allow further development of the games. Leaf’s actions in attempting to misappropriate
the codebase for the Subject Titles and cutting TSG out of any future revenue are contrary to the
Agreement and are done by Leaf in bad faith to frustrate the purpose of the Agreement and to
prevent TSG from achieving the benefit of the bargain under the Agreement.
39. On information and belief, Leaf’s attempt to appropriate the game that TSG
developed and cut TSG out of any further revenue sharing arrangement is a calculated business
strategy by Leaf designed to exploit developers for Leaf’s benefit. Investigation by TSG has
revealed multiple instances where Leaf has employed similar tactics to appropriate development
work performed by others and cut developers out of the promised revenue share for online
games. As only one example, Leaf employed a similar strategy with the original developer for
the game “Archer: Danger Phone”. After completing most of the development, Leaf terminated
its relationship with the previous developer and hired TSG. Leaf accomplished the
appropriation of the prior developer’s work by falsely promising the prior developer that Leaf
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would establish a remote U.S.-based studio for the prior developer’s employees in the Boston
area. After a few months, when Leaf had accumulated all of the necessary code and artwork
from the prior developer, Leaf closed its Boston studio and terminated its relationship with the
prior developers.
40. This calculated strategy of misrepresenting Leaf’s intentions in order to steal
games developed by others is consistent with statements made by Leaf’s CEO. Leaf CEO Jason
Bailey has made statements admitting that he intends to “rip off [] games” from others, that he
tries to “get [his] employees to stand up and give [him] their great ideas so that [he] can steal
them and own them and then they’ll be mine and make lots of money from [the games] and pay
them nothing because I am evil.” It is also consistent with statements from Jason Bailey that he
intends to “ruin” TSG.
41. On information and belief, Leaf intentionally misled TSG into believing that Leaf
intended to abide by the Agreement when its real intention was to use TSG to develop games,
refuse to pay TSG the amounts owing under the Agreement, and then steal the games that TSG
developed for Leaf’s own benefit. Leaf has taken additional steps in furtherance of this
unlawful strategy by continually attempting to get third parties under Leaf’s control to
appropriate the code base and artwork from TSG and by threatening to poach from TSG all of
its software developers.
V. CAUSES OF ACTION
COUNT 1
BREACH OF CONTRACT
42. TSG incorporates by reference the allegations in the preceding paragraph as if set
forth fully herein.
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43. At all times relevant to the allegations in this action, the Agreement was a valid,
binding, and enforceable written agreement between TSG and Leaf that was made for valid
consideration, intended to facilitate a mutually beneficial collaboration.
44. TSG fully performed its contractual duties under the Agreement or was otherwise
excused from performance.
45. By failing to reasonably fund and support the development of the Subject Titles
as contemplated by the Agreement, Leaf has breached, and continues to breach the Agreement.
46. By attempting to terminate the Agreement while Leaf was in breach of the
Agreement and while TSG was in full performance under the Agreement Leaf has breached, and
continues to breach the Agreement.
47. As a result of Leaf’s breaches, TSG has suffered damages in an amount to be
proven at trial.
COUNT 2
BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING
48. TSG incorporates by reference the allegations in the preceding paragraph as if set
forth fully herein.
49. At all times relevant to the allegations in this action, the Agreement was a valid,
binding, and enforceable written agreement between TSG and Leaf that was made for valid
consideration, intended to facilitate a mutually beneficial collaboration.
50. Leaf has and had a duty to perform its obligations under the contract in good faith
and so as not to deprive TSG of the benefits of the parties’ Agreement.
51. TSG fully performed its contractual duties under the Agreement or was otherwise
excused from performance.
52. By failing to reasonably fund and support the development of the Subject Titles
as contemplated by the Agreement, and by taking steps designed to harm the profitability of the
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Tel (206) 625-8600
Fax (206) 625-0900
Subject Titles, Leaf has breached, and continues to breach its duty of good faith and fair dealing
under the Agreement.
53. By attempting to terminate the Agreement while Leaf was in breach of the
Agreement and while TSG was in full performance under the Agreement Leaf has breached, and
continues to breach its duty of good faith and fair dealing under the Agreement.
54. As a result of Leaf’s breaches, TSG has suffered damages in an amount to be
proven at trial.
COUNT 3
UNJUST ENRICHMENT
55. TSG incorporates by reference the allegations in the preceding paragraph as if set
forth fully herein.
56. TSG conferred a substantial benefit upon Leaf, who has accepted, retained, and
enjoyed the benefits of the game development services it received from TSG.
57. The retention by Leaf of the benefits conferred on it by TSG would be unjust and
inequitable because such retention is based on Leaf’s unlawful performance under the
Agreement, including without limitation leaf’s failure to reasonably fund and support the
development of the subject online games.
58. Leaf has been unjustly enriched to the detriment and impoverishment of TSG, not
least by accumulating revenues and subscription fees that would have otherwise accrued to TSG
and TSG’s impoverishment is a direct result of Leaf’s unjust enrichment.
59. Leaf, in equity and good conscience, lacks any justification in retaining the
benefits conferred on it by TSG.
COUNT 4
BREACH OF FIDUCIARY DUTY
60. TSG incorporates by reference the allegations in the preceding paragraph as if set
forth fully herein.
Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 14 of 16
FIRST AMENDED COMPLAINT– 15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
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23
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CORR CRONIN LLP
1015 Second Ave, 10th
Floor
Seattle, Washington 98154
Tel (206) 625-8600
Fax (206) 625-0900
61. Leaf, as an owner of 20 percent of the shares of TSG and as a board member of
TSG, owes fiduciary duties of care, loyalty, and candor to TSG and its shareholders.
62. Leaf, in its failure and refusal to reasonably fund and support the development of
the online games, and in taking steps designed to harm the profitability of the Subject Titles, has
breached its duties of care, loyalty, and candor to TSG.
63. As a proximate result of Leaf’s breaches, TSG has suffered damages in an
amount to be proven at trial.
COUNT 5
FRAUDULENT INDUCEMENT
64. TSG incorporates by reference the allegations in the preceding paragraph as if set
forth fully herein.
65. Leaf, through its representatives, knowingly and intentionally misrepresented to
TSG that Leaf intended in good faith to pursue the acquisition of and partnership with TSG
contemplated by the Agreement, that development of the Subject Titles would generate revenues
commensurate with the targets in the Agreement, that Leaf would support the development of its
games with analytics and reasonable collaborative support so that the two parties could
maximize the profitability of the Subject Titles, and that the contents of a software development
starter package, termed an “IdleKit” by Leaf, would purportedly allow the development of at
least one of the Subject Titles to be expedited.
66. TSG justifiably relied on these representations in entering into the Agreement
with Leaf.
67. As a proximate result of Leaf’s fraudulent misrepresentations, TSG has suffered
damages in an amount to be proven at trial.
VI. JURY DEMAND
68. TSG demands a trial by jury as to all claims and issues that may be tried to a jury.
Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 15 of 16
FIRST AMENDED COMPLAINT– 16
1
2
3
4
5
6
7
8
9
10
11
12
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14
15
16
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20
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CORR CRONIN LLP
1015 Second Ave, 10th
Floor
Seattle, Washington 98154
Tel (206) 625-8600
Fax (206) 625-0900
VII. PRAYER FOR RELIEF
69. WHEREFORE, TSG respectfully requests that this Court:
1. Enter judgment in TSG’s favor on each Count set forth in this Complaint;
2. Award TSG damages in an amount to be proven at trial, caused by Leaf’s
unlawful conduct, or, in the alternative, restitution for unjust enrichment;
3. Award attorneys’ fees and costs, as permitted by applicable law;
4. Award any other relief, legal or equitable, this Court deems appropriate.
DATED this 29th day of November, 2022.
CORR CRONIN LLP
s/ Blake Marks-Dias
Blake Marks-Dias, OSB # 30327
Steven W. Fogg, (pro hac vice application
forthcoming)
Todd T. Williams, (pro hac vice application
forthcoming)
1015 Second Avenue, 10th Floor
Seattle, WA 98104-1001
Telephone: (206) 625-8600
Fax: (206) 625-0900
bmarksdias@corrcronin.com
sfogg@corrcronin.com
twilliams@corrcronin.com
Attorneys for Plaintiff
Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 16 of 16

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Eastside Games Group Lawsuit by Truly Social Games.pdf

  • 1. FIRST AMENDED COMPLAINT– 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 CORR CRONIN LLP Blake Marks-Dias, OSB # 30327 Steven W. Fogg, (pro hac vice application forthcoming) Todd T. Williams, (pro hac vice application forthcoming) 1015 Second Avenue, Floor 10 Seattle, WA 98154 Telephone: (206) 625-8600 Fax: (206) 625-0900 bmarksdias@corrcronin.com sfogg@corrcronin.com twilliams@corrcronin.com Attorneys for Plaintiff UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON TRULY SOCIAL GAMES, LLC, an Oregon limited liability company Plaintiff, v. LEAF MOBILE, INC., a British Columbia corporation, now doing business as EAST SIDE GAMES GROUP, INC., Defendants. No. 3:22-cv-01663-AR FIRST AMENDED COMPLAINT DEMAND FOR JURY TRIAL I. PRELIMINARY STATEMENT 1. Defendant Leaf Mobile, Inc. (“Leaf”)1 promised to fund and provide support for the development and marketing of four online games by developer Truly Social Games, LLC 1 Defendant Leaf is now doing business as East Side Games (“ESG”) following acquisition of ESG in 2021. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 1 of 16
  • 2. FIRST AMENDED COMPLAINT– 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 (“TSG”). Leaf also promised a series of lucrative payments to TSG based on various earnings targets that should have been easily achievable according to projections generated by Leaf. In exchange, TSG offered Leaf the opportunity to acquire TSG as a subsidiary. TSG also committed to develop the coding and artwork for the four online games that Leaf was to fund. 2. Instead of supporting the development pursuant to the terms of the parties’ agreement, Leaf refused to provide the necessary financial, marketing, management, and analytical backing for the online games, leaving the games developed by TSG in a state of disrepair and neglect, and in the process causing financial damage to TSG in the form of lost royalties and payments that were tied to the games’ performance. After failing to uphold its end of the bargain and intentionally harming the financial performance of the four games developed by TSG, Leaf now seeks to improperly terminate the contract with TSG, steal for itself the code base and artwork created by TSG, and excuse itself from any further obligations. On information and belief, Leaf’s actions are part of a concerted and deliberate business strategy that Leaf has executed multiple times in an effort to take advantage of the skills and expertise of online game developers for Leaf’s benefit while at the same time refusing to pay developers what they are owed and cutting the developers out of future earnings related to the games. 3. TSG files this lawsuit to protect its rights under the parties’ agreement and to secure compensation for the damage that Leaf has done. II. PARTIES 4. Plaintiff Truly Social Games, LLC (“TSG”) is an Oregon limited liability company with its principal place of business in Portland, Oregon. 5. Defendant Leaf Mobile, Inc. (“Leaf”) is a British Columbia corporation with its principal place of business in Vancouver, British Columbia. 6. Defendant East Side Games Group, Inc. is the successor in interest to Leaf. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 2 of 16
  • 3. FIRST AMENDED COMPLAINT– 3 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 III. JURISDICTION AND VENUE 7. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a)(2) because the amount in controversy, exclusive of interest and costs, exceeds $75,000. For diversity purposes, TSG is a citizen of the State of Oregon and Leaf is a foreign citizen of Canada. 8. The Court has personal jurisdiction over Leaf under the United States Constitution because it has had and continues to have sufficient contacts with the forum state. This includes, for example, entering into a contract for purchase of membership interest in TSG, which is based in Oregon; by regularly communicating with TSG’s founders, senior executives, and employees who reside in the forum state regarding the subject of the contract and the issues in dispute in this lawsuit; by appointing a Leaf representative to the TSG board of directors, and by regularly submitting payments to TSG in Oregon. Accordingly, this Court’s exercise of personal jurisdiction over Leaf does not offend traditional notions of fair play and substantial justice. 9. The Court may also exercise personal jurisdiction over Leaf pursuant to Oregon’s Long-Arm Statute, Or. R. Civ. P. 4, which confers jurisdiction “to the extent permitted by due process.” Gray & Co. v. Firstenberg Mach. Co., Inc., 913 F.2d 758, 760 (9th Cir. 1990). As discussed above, this Court has personal jurisdiction over Leaf under the United States Constitution, and as such, also has personal jurisdiction under Oregon’s Long-Arm Statute. 10. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(1), because Leaf is not resident in the United States, and therefore pursuant to 28 U.S.C. § 1391(c)(3), Leaf “may be sued in any judicial district[.]” TSG’s headquarters and operations are based in this judicial district, and much of the relevant witnesses and information are also located here. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 3 of 16
  • 4. FIRST AMENDED COMPLAINT– 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 IV. FACTUAL ALLEGATIONS A. TSG Develops World Class Online Games 11. TSG is a private company headquartered in Portland, Oregon. TSG designs and develops engaging mobile games. TSG’s founders and executives work out of TSG’s offices in Portland. TSG developers have created numerous successful online games since TSG’s inception in 2015, including games such as Planet Gold Rush, Bomb Brawl, Idle Surfing, Invincible Hero, Archer: Danger Phone as well as announced titles such as Budfarm: Bud Master and Trailer Park Boys: Get Merged. 12. TSG specializes in the ability to develop online games that have a loyal and persistent player following. The games developed by TSG have a particular ability to generate substantial income from players based on design elements that encourage players to make in- game purchases. 13. Leaf is a publicly traded mobile game platform and publishing company based in Vancouver, British Columbia. Leaf, now known as East Side Games Group Inc., licenses and publishes online games. In 2021 Leaf did not have the internal capabilities to develop and design the volume of games that it sought to publish. Accordingly, Leaf sought to partner with developers to generate the games that it sought to publish and monetize. B. Leaf Contracts with TSG to Acquire Ownership in TSG and for TSG to Develop Lucrative Games 14. In 2021, TSG, through its representatives based in Oregon, began discussions with Leaf to develop multiple online games for brands that Leaf had licensed. Leaf did not have the expertise or experience to successfully develop the games and was looking to TSG to develop and help tune the games, once published, for maximum profitability. TSG was willing to participate in the development of the games as long as Leaf, a publicly traded and well financed company, funded the development costs and agreed to share in the royalties of the Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 4 of 16
  • 5. FIRST AMENDED COMPLAINT– 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 games once released. TSG made clear to Leaf that Leaf would be required to provide analytical and collaborative support to maximize the profitability of the games. TSG was also willing to offer Leaf ownership in TSG in the hopes of solidifying future partnerships. 15. On June 16, 2021, TSG and Leaf entered into a Membership Interest Purchase Agreement (“Agreement”). A copy of the Agreement is attached here as Exhibit A. The Agreement provided that TSG would issue to Leaf shares equivalent to a 20% ownership in TSG in exchange for Leaf’s contribution of sufficient funds to develop four separate games based on an agreed budget and up to a maximum amount of $3,000,000: In consideration of the Initial Interest, LEAF shall subscribe for and contribute to TSG LLC an amount (the “Initial Interest Consideration”) equal to the aggregate amounts needed by the TSG Group to develop the Subject Titles only, and in accordance with a development budget to be mutually agreed upon by LEAF and TSG LLC, acting reasonably, to a maximum capital contribution of $3,000,000 in the aggregate, to be advanced quarterly in the amounts described in aforementioned development budget. 16. The four games to be developed by TSG and published and marketed by Leaf were identified in the Agreement as Archer: Danger Phone, Roll for Adventure: Idle RPG, Bud Master and a fourth title, to be determined (“Subject Titles”). 17. The Agreement also provided that concurrent with the issuance of shares, Leaf would be granted a seat on the TSG board of directors: Concurrent with the contribution by Leaf and the issuance to Leaf of the Initial Interest, the Vendors and the manager of TSG, LLC, as applicable, shall adopt and approve the Third Amended and Restated Operating Agreement of TSG LLC to more particularly provide for their respective rights, powers, duties and obligations as members, and the management, operations and activities of the TSG LLC and each Vender and Leaf shall enter into and be bound by the terms and conditions of such Third Amended and Restated Operating Agreement of TSG LLC; and each TSG Entity, Vendors, members, managers, as applicable, (each an “Approving Party” and together “Approving Parties”) shall cause a nominee of LEAF to be appointed to its respective board of directors or board of managers, as applicable, and each Approving Party, as applicable, shall continue Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 5 of 16
  • 6. FIRST AMENDED COMPLAINT– 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 to cause a nominee of LEAF to be appointed to its respective board of directors or board of managers, as applicable so long as LEAF holds 20% or more of the issued and outstanding voting securities of TSG LLC, calculated on a fully- diluted basis. For greater clarity, in the event that this Agreement should conflict with the Third Amended and Restated Operating Agreement, the terms of this Agreement shall prevail. 18. Because the parties recognized that the games to be developed under the Agreement had the potential to be very lucrative once published, the parties agreed that Leaf could (and in certain cases was required to) purchase additional shares in TSG at certain revenue milestones and the parties agreed that when certain other revenue milestones were reached, the purchase price would be adjusted upward, effectively rewarding TSG for the performance of the games it had developed. 19. Specifically, Section 2.2 of the Agreement provided Leaf the option to purchase an additional 20% ownership in TSG. Section 2.2 also stated that Leaf was “required” to purchase additional shares in TSG for $4,000,000 if the gross revenue with respect to the Subject Titles was “at least $3,000,000…for a period of two (2) consecutive calendar months” or if Leaf was required to pay TSG “at least $500,000 in aggregate net royalty payments with respect to the Subject Titles per month, for a period of two (2) consecutive calendar months.” 20. Section 2.3 of the Agreement provided Leaf the option to purchase the remainder of the outstanding shares in TSG. Section 2.3 also stated that Leaf was “required” to purchase the remaining shares in TSG for $15,000,000 if the gross revenue with respect to the Subject Titles was “at least $5,000,000…for a period of three (3) consecutive calendar months” or if Leaf was required to pay TSG “at least $1,000,000 in aggregate net royalty payments with respect to the Subject Titles per month, for a period of three (3) consecutive calendar months.” 21. In sum, the Agreement contemplated the eventual merger of TSG as a subsidiary under the umbrella of Leaf. The Agreement also contemplated a partnership between Leaf and Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 6 of 16
  • 7. FIRST AMENDED COMPLAINT– 7 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 TSG wherein TSG stood to share in the benefits of the partnership through additional share purchases and shared royalty payments on the Subject Titles. 22. In entering the Agreement, TSG’s leadership in Oregon relied on promises made by Leaf executives, including Jason Bailey, Josh Nilson, and Derek Lew that Leaf would fund the initial development of the Subject Titles for up to $3,000,000 and that Leaf would support the development of its games with analytics and reasonable collaborative support so that the two parties could maximize the profitability of the Subject Titles. TSG also relied on statements by Jason Bailey, Josh Nilson, and Derek Lew made to TSG’s leadership in Oregon that Leaf intended to pursue in good faith the acquisition of TSG and partnership with TSG contemplated by the Agreement. 23. In entering the Agreement, TSG also relied on historical metrics for various online games published by Leaf and projections provided by Leaf to TSG’s representatives in Oregon that detailed the estimated revenue share for Archer: Danger Phone. These projections, which were provided by Leaf in an attempt to induce TSG to enter the Agreement, demonstrated that achieving the revenue milestones in Sections 2.2 and 2.3 of the Agreement (and thereby receiving additional payments from Leaf) was a virtual certainty. For example, these projections, provided by Jason Bailey, identified that Archer: Danger Phone was likely to achieve, by itself, at least $2,000,000 in gross revenue per month. 24. In entering the Agreement, TSG also relied on representations made by Leaf to TSG’s representatives in Oregon that the contents of a software development starter package, termed an “IdleKit” by Leaf, would purportedly allow the development of at least one of the Subject Titles to be expedited. 25. The Agreement permitted termination upon written notice by Leaf only if Leaf “is not then in material breach of any provision” of the Agreement and TSG failed to perform under the Agreement. See Agreement Section 8.1. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 7 of 16
  • 8. FIRST AMENDED COMPLAINT– 8 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 26. Following execution of the Agreement, TSG issued to Leaf shares equivalent to a 20-percent ownership in TSG and the TSG operating agreement was amended to grant Leaf a seat on the TSG board of directors. Pursuant to the TSG operating agreement, Leaf had the sole authority to select and appoint the individual it wanted to serve as its Manager on the board of directors. Leaf also had the sole authority to “remove[] or replace[]” its appointed manager “at any time, with or without cause.” Leaf appointed Jim MacCallum to serve as Leaf’s representative on the board of directors. Through MacCallum, Leaf exercised its fiduciary obligations as a member of the TSG board of directors. C. Leaf Fails to Fund Development of the Games, Fails to Support the Games’ Development, and Causes Damage to TSG 27. Beginning not long after the execution of the Agreement, it became clear that Leaf did not intend to live up to its end of the bargain. Despite multiple efforts to reach agreement on a budget necessary for the development of the identified games, Leaf refused to agree on the necessary funding required to support the development of the games. 28. Instead, Leaf demanded, contrary to the Agreement, that TSG generate an invoice every month outlining TSG expenditures and development costs for each project. These invoices were then reviewed by Leaf and subject to multiple requests for justification until partial payment was authorized. This process would often delay payments beyond the quarterly payments contemplated by the Agreement and resulted in inadequate funds to accomplish the development of the games contemplated by the Agreement. On multiple occasions, TSG had challenges meeting payroll costs as a result of Leaf’s refusal to honor the Agreement. Often, the payments requested by TSG under the Agreement were unreasonably rejected by Leaf altogether, leaving TSG to cover development expenses on its own. Leaf also repeatedly directed TSG to reduce the costs and resources that TSG was devoting to developing and maintaining the Subject Titles as financially successful games. At the time Leaf purported to Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 8 of 16
  • 9. FIRST AMENDED COMPLAINT– 9 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 terminate the contract with TSG, Leaf had paid only approximately $2,100,000 of the $3,000,000 that Leaf promised to pay to fund development of the Subject Titles. 29. In addition to refusing to fund the reasonable development of the Subject Titles, TSG also discovered that the “IdleKit” which Leaf promoted as a way to efficiently build at least one of the online games, was nothing more than a few spreadsheets that provided little to no assistance in the necessary development steps. As a result, TSG was forced to spend additional time and resources to build the software necessary to support the Subject Titles. 30. On October 12, 2022 Leaf demanded, without justification, that TSG use the proceeds from a tax refund received from the Canadian Revenue Agency to fund its operations, instead of relying on payment from Leaf. Leaf withheld payment from TSG under the Agreement on account of this refund, effectively starving TSG of needed and promised payments under the Agreement. 31. Further, Leaf failed to provide the requisite analytical support contemplated by the parties to enable the games to succeed in the marketplace. As only one example, Leaf has failed to provide statistics and metrics to TSG regarding all of the Subject Titles to allow TSG to optimize the games in the marketplace and increase profitability. Additionally, Leaf has repeatedly issued contradictory direction and changing specifications on game development, leaving TSG guessing and without guidance on the ultimate deliverables sought by Leaf. 32. Contrary to Leaf’s obligations and commitments consistent with the Agreement, Leaf has also failed to devote the necessary marketing resources to the Subject Titles. The success of an online game in the marketplace is directly tied to the amount of marketing resources devoted to promoting that game. After TSG completed development of the Subject Titles, Leaf diverted marketing resources that were earmarked for the Subject Titles to other projects that Leaf had underway. Leaf’s diversion of marketing resources away from the Subject Titles has directly and negatively impacted the success of the Subject Titles. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 9 of 16
  • 10. FIRST AMENDED COMPLAINT– 10 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 33. TSG has performed under the Agreement in the development of the contemplated games. In fact, Leaf CEO Jason Bailey told TSG that TSG’s development of Bud Master was one of the best developed games that he had seen. Notwithstanding TSG’s outstanding performance, the games developed by TSG have failed to attract the users and revenue projected by Leaf due to Leaf’s failure and refusal to provide reasonable funding under the Agreement for the development of the games and analytical and marketing support essential to the success of the Subject Titles. 34. As a result of Leaf’s failure to reasonably fund and support the development of the games, the games have failed to attract and retain anticipated users in the marketplace and TSG has been denied the benefits of further investment, royalties, and revenue sharing from the games. D. Executing a Planned Business Strategy, Leaf Attempts to Take Exclusive Control of TSG’s Games After Purporting to Terminate TSG 35. In the months leading up to October 2022, Leaf, though its representatives, had directed TSG not to perform any further work on Archer: Danger Phone projects that would lead to increased traffic and revenue. On August 19, 2022, Leaf’s representative for Archer development instructed TSG “not [to] move forward with any new approvals or asks” related to driving users to the game. On October 12, 2022, Leaf directed TSG to shift the game Archer: Danger Phone into “auto pilot” mode and to effectively cease support and user acquisition for the game. Archer: Danger Phone was one of the more profitable games developed by TSG, bringing in over $1M in revenue over a 40 day period. By directing TSG to cease support for Archer: Danger Phone, Leaf caused revenue for Archer: Danger Phone to plummet, instead of continuing to increase. On information and belief, Leaf took this step, without consultation with TSG and in contravention of the parties’ expectations under the Agreement, in bad faith and in Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 10 of 16
  • 11. FIRST AMENDED COMPLAINT– 11 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 an effort to prevent TSG from accruing the benefits of the expected royalties and additional payments from Leaf under the parties’ Agreement. 36. On October 13, 2022, Leaf transmitted a letter to TSG purporting to terminate the Agreement and the parties’ relationship thereunder. Leaf failed to cite any reason for terminating the Agreement. 37. The day after sending the letter to TSG purporting to terminate the parties’ Agreement and shutting down Archer: Danger Phone, Leaf again enabled access to the Archer: Danger Phone game, effectively re-starting revenues for a game that Leaf now purported to claim for its own. Leaf has done the same thing with Bud Master. 38. Leaf has also attempted to surreptitiously acquire full control of the codebase for the Subject Titles without TSG’s consent. Leaf, through its agents, has repeatedly requested that TSG employees provide access to the codebase for the Subject Titles developed by TSG and which allow further development of the games. Leaf’s actions in attempting to misappropriate the codebase for the Subject Titles and cutting TSG out of any future revenue are contrary to the Agreement and are done by Leaf in bad faith to frustrate the purpose of the Agreement and to prevent TSG from achieving the benefit of the bargain under the Agreement. 39. On information and belief, Leaf’s attempt to appropriate the game that TSG developed and cut TSG out of any further revenue sharing arrangement is a calculated business strategy by Leaf designed to exploit developers for Leaf’s benefit. Investigation by TSG has revealed multiple instances where Leaf has employed similar tactics to appropriate development work performed by others and cut developers out of the promised revenue share for online games. As only one example, Leaf employed a similar strategy with the original developer for the game “Archer: Danger Phone”. After completing most of the development, Leaf terminated its relationship with the previous developer and hired TSG. Leaf accomplished the appropriation of the prior developer’s work by falsely promising the prior developer that Leaf Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 11 of 16
  • 12. FIRST AMENDED COMPLAINT– 12 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 would establish a remote U.S.-based studio for the prior developer’s employees in the Boston area. After a few months, when Leaf had accumulated all of the necessary code and artwork from the prior developer, Leaf closed its Boston studio and terminated its relationship with the prior developers. 40. This calculated strategy of misrepresenting Leaf’s intentions in order to steal games developed by others is consistent with statements made by Leaf’s CEO. Leaf CEO Jason Bailey has made statements admitting that he intends to “rip off [] games” from others, that he tries to “get [his] employees to stand up and give [him] their great ideas so that [he] can steal them and own them and then they’ll be mine and make lots of money from [the games] and pay them nothing because I am evil.” It is also consistent with statements from Jason Bailey that he intends to “ruin” TSG. 41. On information and belief, Leaf intentionally misled TSG into believing that Leaf intended to abide by the Agreement when its real intention was to use TSG to develop games, refuse to pay TSG the amounts owing under the Agreement, and then steal the games that TSG developed for Leaf’s own benefit. Leaf has taken additional steps in furtherance of this unlawful strategy by continually attempting to get third parties under Leaf’s control to appropriate the code base and artwork from TSG and by threatening to poach from TSG all of its software developers. V. CAUSES OF ACTION COUNT 1 BREACH OF CONTRACT 42. TSG incorporates by reference the allegations in the preceding paragraph as if set forth fully herein. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 12 of 16
  • 13. FIRST AMENDED COMPLAINT– 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 43. At all times relevant to the allegations in this action, the Agreement was a valid, binding, and enforceable written agreement between TSG and Leaf that was made for valid consideration, intended to facilitate a mutually beneficial collaboration. 44. TSG fully performed its contractual duties under the Agreement or was otherwise excused from performance. 45. By failing to reasonably fund and support the development of the Subject Titles as contemplated by the Agreement, Leaf has breached, and continues to breach the Agreement. 46. By attempting to terminate the Agreement while Leaf was in breach of the Agreement and while TSG was in full performance under the Agreement Leaf has breached, and continues to breach the Agreement. 47. As a result of Leaf’s breaches, TSG has suffered damages in an amount to be proven at trial. COUNT 2 BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING 48. TSG incorporates by reference the allegations in the preceding paragraph as if set forth fully herein. 49. At all times relevant to the allegations in this action, the Agreement was a valid, binding, and enforceable written agreement between TSG and Leaf that was made for valid consideration, intended to facilitate a mutually beneficial collaboration. 50. Leaf has and had a duty to perform its obligations under the contract in good faith and so as not to deprive TSG of the benefits of the parties’ Agreement. 51. TSG fully performed its contractual duties under the Agreement or was otherwise excused from performance. 52. By failing to reasonably fund and support the development of the Subject Titles as contemplated by the Agreement, and by taking steps designed to harm the profitability of the Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 13 of 16
  • 14. FIRST AMENDED COMPLAINT– 14 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 Subject Titles, Leaf has breached, and continues to breach its duty of good faith and fair dealing under the Agreement. 53. By attempting to terminate the Agreement while Leaf was in breach of the Agreement and while TSG was in full performance under the Agreement Leaf has breached, and continues to breach its duty of good faith and fair dealing under the Agreement. 54. As a result of Leaf’s breaches, TSG has suffered damages in an amount to be proven at trial. COUNT 3 UNJUST ENRICHMENT 55. TSG incorporates by reference the allegations in the preceding paragraph as if set forth fully herein. 56. TSG conferred a substantial benefit upon Leaf, who has accepted, retained, and enjoyed the benefits of the game development services it received from TSG. 57. The retention by Leaf of the benefits conferred on it by TSG would be unjust and inequitable because such retention is based on Leaf’s unlawful performance under the Agreement, including without limitation leaf’s failure to reasonably fund and support the development of the subject online games. 58. Leaf has been unjustly enriched to the detriment and impoverishment of TSG, not least by accumulating revenues and subscription fees that would have otherwise accrued to TSG and TSG’s impoverishment is a direct result of Leaf’s unjust enrichment. 59. Leaf, in equity and good conscience, lacks any justification in retaining the benefits conferred on it by TSG. COUNT 4 BREACH OF FIDUCIARY DUTY 60. TSG incorporates by reference the allegations in the preceding paragraph as if set forth fully herein. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 14 of 16
  • 15. FIRST AMENDED COMPLAINT– 15 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 61. Leaf, as an owner of 20 percent of the shares of TSG and as a board member of TSG, owes fiduciary duties of care, loyalty, and candor to TSG and its shareholders. 62. Leaf, in its failure and refusal to reasonably fund and support the development of the online games, and in taking steps designed to harm the profitability of the Subject Titles, has breached its duties of care, loyalty, and candor to TSG. 63. As a proximate result of Leaf’s breaches, TSG has suffered damages in an amount to be proven at trial. COUNT 5 FRAUDULENT INDUCEMENT 64. TSG incorporates by reference the allegations in the preceding paragraph as if set forth fully herein. 65. Leaf, through its representatives, knowingly and intentionally misrepresented to TSG that Leaf intended in good faith to pursue the acquisition of and partnership with TSG contemplated by the Agreement, that development of the Subject Titles would generate revenues commensurate with the targets in the Agreement, that Leaf would support the development of its games with analytics and reasonable collaborative support so that the two parties could maximize the profitability of the Subject Titles, and that the contents of a software development starter package, termed an “IdleKit” by Leaf, would purportedly allow the development of at least one of the Subject Titles to be expedited. 66. TSG justifiably relied on these representations in entering into the Agreement with Leaf. 67. As a proximate result of Leaf’s fraudulent misrepresentations, TSG has suffered damages in an amount to be proven at trial. VI. JURY DEMAND 68. TSG demands a trial by jury as to all claims and issues that may be tried to a jury. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 15 of 16
  • 16. FIRST AMENDED COMPLAINT– 16 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 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900 VII. PRAYER FOR RELIEF 69. WHEREFORE, TSG respectfully requests that this Court: 1. Enter judgment in TSG’s favor on each Count set forth in this Complaint; 2. Award TSG damages in an amount to be proven at trial, caused by Leaf’s unlawful conduct, or, in the alternative, restitution for unjust enrichment; 3. Award attorneys’ fees and costs, as permitted by applicable law; 4. Award any other relief, legal or equitable, this Court deems appropriate. DATED this 29th day of November, 2022. CORR CRONIN LLP s/ Blake Marks-Dias Blake Marks-Dias, OSB # 30327 Steven W. Fogg, (pro hac vice application forthcoming) Todd T. Williams, (pro hac vice application forthcoming) 1015 Second Avenue, 10th Floor Seattle, WA 98104-1001 Telephone: (206) 625-8600 Fax: (206) 625-0900 bmarksdias@corrcronin.com sfogg@corrcronin.com twilliams@corrcronin.com Attorneys for Plaintiff Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 16 of 16