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Dawn M. Coulson, Esq. (SBN 154085) Casandra P. Secord, Esq. (SBN 237395) EPPS YONG & COULSON LLP 333 S. Hope Street. 35th

Los Angeles, California 90071 Floor

Telephone: (213) 613-2340 Facsimile: (213) 613-2344 Attorneys for OTX CORPORATION, a Delaware Corporation

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

OTX CORPORATION, a Delaware Corporation,, Plaintiff, vs. RACHEL PARNESS, an individual; CHRISTINE V. PERAKIS, an individual; SCREEN ENGINE, LLC, a California limited liability company; KEVIN GOETZ, an individual; and DOES 1 through 50, inclusive, Defendants,

Case No.:BC COMPLAINT FOR: (1) Misappropriation of Trade Secrets (Violation of Civil Code Section 3426, et seq.); (2) Breach of Contract; (3) Breach of the Implied Covenant of Good Faith and Fair Dealing; (4) Breach of Fiduciary Duty; (5) Breach of Duty of Loyalty; (6) Violation of Labor Code § 2860; (7) Intentional Interference with Contractual Relations; (8) Intentional Interference with Prospective Economic Advantage; (9) Negligent Interference with Prospective Economic Advantage; (10) Conversion; (11) Unfair Business Practices (Business and Professions Code §17200, et seq.); (12) Violation of Penal Code §§ 496 and 499c (13) Conspiracy (14) Unjust Enrichment (15) Preliminary and Permanent Injunction

Plaintiff OTX CORPORATION (“OTX”), a Delaware Corporation, alleges as follows:

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1. OTX is a Delaware Corporation duly licensed and operating under the laws of the

State of California with its principal place of business located at 10567 Jefferson Boulevard,

Culver City, California 90232.

PARTIES

2. OTX alleges, upon information and belief, that defendant RACHEL PARNESS

(“PARNESS”) is and, at all times herein mentioned herein, was a resident of the State of

California, County of Los Angeles.

3. OTX alleges, upon information and belief, that defendant CHRISTINE PERAKIS

(“PERAKIS”) is and, at all times herein mentioned herein, was a resident of the State of

California, County of Los Angeles. OTX alleges, upon information and belief, that PERAKIS is

owner and managing member of SCREEN ENGINE, LLC (“SCREEN ENGINE”)

4. OTX alleges, upon information and belief, that defendant SCREEN ENGINE is a

California Limited Liability Company with its principal place of business located at 2118 Wilshire

Boulevard, Suite 480, Beverly Hills, California.

5. OTX alleges, upon information and belief, that defendant KEVIN GOETZ

(“GOETZ”) is and, at all times herein mentioned herein, was a resident of the State of California,

County of Los Angeles and is owner and member of SCREEN ENGINE.

6. OTX is ignorant of the true names and capacities of defendants, sued herein as

DOES 1 through 50, inclusive, and therefore sues these defendants by these fictitious names.

OTX will seek leave of this Court to amend its Complaint to allege their true names, identities and

capacities when ascertained. OTX is informed, believes and therefore alleges that each of the

fictitiously named defendants are responsible in some manner for the unlawful conduct alleged

and its effect and that their acts, conduct and omissions directly caused injuries to OTX.

7. At all times herein mentioned, OTX alleges, based upon information and belief,

that each of the defendants, in addition to acting for himself, herself, or itself and on his, her, or its

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own behalf individually, is and was acting as the agent, servant, employee and representative of,

and with the knowledge, consent and permission of, and in conspiracy with, each and all of the

defendants and within the course, scope and authority of that agency, service, employment,

representation, and conspiracy. OTX further alleges on information and belief that the acts of

each of the defendants were fully ratified by each and all of the defendants. Specifically, and

without limitation, OTX alleges on information and belief that the actions, failures to act,

breaches, and conspiracies alleged herein and attributed to one or more of the specific defendants

were approved, ratified, and done with the cooperation and knowledge of each and all of the

defendants.

GENERAL ALLEGATIONS

8. OTX is a leading consumer research and consulting firm specializing in research

products and analysis in the fields of marketing, entertainment and advertising. One integral

portion of OTX’s business caters to the motion picture industry. The consumer research and

consulting business for the motion picture industry is extremely competitive. Each year various

companies attempt to enter into this industry, but are unable to obtain a significant market share

because there are several obstacles to overcome. In order to succeed in this industry, a company

must have close connections in the motion picture industry, a deep understanding of the movie

industry and a history of research in the industry. The research history provides historical

averages (“norms”), a basis against which to compare the current research about a movie. Without

historical research (“norms”), a research screening company like OTX and Screen Engine, would

not be able to provide the information requested by the client (i.e. a comparison of the current

research results against similar movies). A company must also employ individuals who are

knowledgeable, experienced and accepted by members of the movie industry, which are very few

and far between.

OTX

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9. OTX’s Motion Picture Group specifically caters to the film industry. The Motion

Picture Group is organized into three (3) divisions: (1) Creative Ad Testing; (2) Screenings and

Qualitative; and (3) Worldwide Tracking. The Screenings and Qualitative primarily conducts

screenings of movies, exit polls, and research analysis for the motion picture industry. Screening

events and exit polls allow OTX to collect valuable information, which is ultimately used by

OTX’s clients to, amongst other things, gauge audience reaction, develop marketing strategies and

generate publicity for a movie.

10. GOETZ was the President of the Motion Picture Group prior to his resignation on

February 25, 2010. Goetz was primarily responsible for business development, revenue

generation and the overall profit of the Motion Picture Group. Goetz initiated and maintained

client relationships for screenings and qualitative work, and moderated screenings and focus

groups. Goetz was also in charge of and made final decisions regarding product development.

Kathleen Pielow Nash (“Nash”) was Goetz’ Executive Assistant.

11. Vincent Bruzzese (“Bruzzese”) is the Executive Vice-President of the Motion

Picture Group. Bruzzese is in charge of the day to day operations of the Motion Picture Group,

including all issues pertaining to structure, operations, employee complaints and training.

Bruzzese reported directly to GOETZ and, since GOETZ’ resignation, assumed all of GOETZ’s

former duties and responsibilities.

12. PARNESS headed the Screenings and Qualitative division of the Motion Picture

Group as Vice President. PARNESS reported directly to Bruzzese, although in reality, PARNESS

and GOETZ worked directly together on most matters related to screenings and qualitative.

13. As Vice-President of Screenings and Qualitative, PARNESS managed this

division’s finances and was primarily responsible for this division’s profit and loss. PARNESS

coordinated all internal resources in this division and had full access to all confidential and

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proprietary information and trade secrets used by the screenings division. OTX alleges, upon

information and belief, that PARNESS maintained an electronic screenings folder that only

PARNESS could access that contained confidential and proprietary information and trade secrets,

such as clients list, contracts, agreements, and pricing information. The qualitative research team

also reported directly to PARNESS, although OTX alleges, upon information and belief, that

PARNESS did not have a working knowledge of research or the appropriate research

methodologies to use for a particular project.

14. PARNESS was also the primary point of contact for all incoming

screenings/qualitative projects. PARNESS was solely responsible for inputting new screenings

projects, and modifications to existing screenings projects, into OTX’s screenings status grid. The

screenings status grid is an excel spreadsheet that OTX uses to track all prior and upcoming

screenings projects. The screenings status grid is critical. If PARNESS failed to input a screening

event into the screenings status grid, OTX’s staff would not know that they needed to work up this

screening event. If this were to occur, OTX could lose the screening, lose future business from

this client, and suffer damage to its reputations as a whole in an already competitive industry.

15. There were several key senior level staff members that reported directly to

PARNESS, including: (1) Alok Mishra (“Mishra”); (2) Robert Siegel (“Siegel”); (3) Paul

Cathcart (“Cathcart”); (4) Phillip Montgomery (“Montgomery”); and (5) Elizabeth Wallan

(“Wallan”). Neolani Durfee (“Durfee”) and Natalie Baack (“Baack”) reported directly to Cathcart

and, as such, were also under PARNESS’ supervision and control. Each of these employees

performs an important function and is integral to the success of OTX’s screenings business.

16. Mishra was the Senior Manager of Audience Recruitment. As the Senior Manager

of Audience Recruitment, Mishra was responsible for filling screening events with audience

members that satisfied specific demographic criteria requested by OTX’s clients. Mishra is a

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valuable OTX employee due to his experience, skill and knowledge of the industry. Mishra has

also developed a close relationship with OTX’s recruiting staff over the years because Mishra is

the main point of contact for OTX’s recruiters. Mishra is also well-known in the screenings

business, and is one (1) of two (2) individuals trusted in the industry to successfully manage

recruiting efforts for screening events.

17. Siegel was the Senior Manager of Screenings Events. As the Senior Manager of

Screenings events, Siegel was responsible for overall event management and supervision at

screenings. Over the years, Siegel has also developed a close relationship with most of OTX’s

screenings clients. OTX’s clients know that a screening event will run seamlessly if Siegel is

present. Siegel is one (1) of two (2) people in the industry that can provide this level assurance.

18. Durfee is a Senior Research Manager who is in charge of the night research team.

Durfee is responsible for processing data collected from screenings, which is ultimately used by a

team of analysts to prepare research analysis reports. The night research team is integral to OTX’s

success in the screenings business because it allows OTX to immediately process all of the data

collected at screening events and prepare research analysis reports for delivery to their clients by

the following morning. By processing data in-house, OTX is able to provide this service to its

clients. Durfee is extremely valuable to OTX because she is knowledgeable, experienced, and

talented at her position. Durfee produces high quality work, meets sensitive deadlines, and

effectively manages her team of freelance employees with little turnover.

19. Paul Cathcart (“Cathcart”) is a Senior Research Manager at OTX. Cathcart is in

charge of the research team and the overall quality of client deliverables, including data collected

from screenings and the final research report. Cathcart also develops the questionnaire for

screenings, answers client questions about research, builds the norms database, oversees special

research for screenings division, and updates the research methodology. Cathcart is very valuable

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to OTX’s screenings’ division because it is difficult to locate an individual who is sufficiently

proficient in market research and client service to perform all of the duties required of this

position. Even if OTX were to locate an individual with Cathcart’s skill set, it would take OTX

several months to train another employee to perform Cathcart’s duties.

20. Elizabeth Wallan (“Wallan”) is the Screenings Operations Manager. Wallan is

responsible for maintaining the screenings database, which contains all of the contact information

for audience members who have attended OTX’s screenings events. Wallan also built and

designed OTX’s call blast system, which allows OTX to send out a screenings invitation to all

individuals in OTX’s screenings database. Wallan is also in charge of all production materials for

screening events.

21. Josh Kash (“Kash”) and Terry Cavanaugh (“Cavanaugh”) are Focus Group

Moderators. Focus Group Moderators lead focus group discussions and are traditionally the main

point of client contact at screening events. Kash and Cavanaugh are two (2) of six (6) Focus

Group Moderators that are accepted by the major film studios. As such, Kash and Cavanaugh are

extremely valuable to OTX’s screenings team.

22. Blaine Vedros (“Vedros”) is one (1) of two (2) screenings supervisors at OTX, the

other being Siegel. Vedros is very charismatic and competent. As such, Vedros has developed

close relationships with OTX’s clients and OTX’s screenings and recruiting staff. Vedros is also

in training to become a focus group moderator.

23. Each of the employees mentioned herein are integral to the screenings division

because they have the skills, knowledge, experience and the relationships necessary to handle a

specific aspect of the screenings and qualitative research business. If OTX were to lose any of

these key employees, it would take several months, or in some cases years, to train another

individual to assume these key positions with the same degree of effectiveness. If all of these keys

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employees left at once, OTX’s screenings business would not survive. Even if OTX were able to

hire and train replacements, the mass exodus of OTX’s key personal would signal trouble to

OTX’s clients and staff, and damage OTX’s reputation. The disruption alone would also have

caused OTX to permanently lose many of its clients.

24. To compete with other consumer research and consulting firms, OTX devotes

substantial time and financial resources to the development of confidential and proprietary

information and trade secrets, including but not limited to online research and marketing data,

other analytic data based upon or derived from such online research and marketing data and

information concerning the financial condition, proprietary technology and research products,

customer lists and pricing, prospective business clients, business development plans and strategy,

financial records, vendor/supplier lists, employment manuals, training materials, screenings

attendee database, call blast system, employee and freelance contact lists, norms data, and various

screenings production materials.

25. In order to maintain its competitive edge in the consumer market research industry,

it is imperative for OTX to protect the secrecy of its confidential and proprietary information and

trade secrets, and to prevent the use and disclosure thereof by or to the public and its competitors.

Therefore, OTX expends substantial time and financial resources to maintain the secrecy of its

confidential and proprietary information and trade secrets. OTX does not disclose its confidential

and proprietary information and trade secrets to the public or its competitors, and did not do so at

any time relevant to this action.

26. OTX also implemented and enforces strict policies and procedures to prevent the

use and disclosure of its confidential and proprietary information and trade secrets by instituting,

among other measures, the signing of employment and/or Proprietary and Inventions Agreements

(“PII Agreement”) and the implementation of policies and procedures in OTX’s employment

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handbook. The employment agreements, PII Agreements and employee handbooks not only

notify OTX’s employees of OTX’s rights related to its confidential and proprietary information

and trade secrets, but also obtain written assurances from its employees that they will not

disseminate OTX’s confidential and proprietary information and trade secrets to the public, or use

or disclose OTX’s confidential and proprietary information and trade secrets to indirectly or

directly benefit themselves or any of OTX’s competitors.

27. On or about January 8, 2004, GOETZ and OTX executed an employment

agreement wherein GOETZ agreed to serve as OTX’s Executive Vice President of Entertainment

Research – Screenings and Qualitative from January 8, 2004 through December 31, 2006, subject

to the terms and conditions contained therein (the “2004 Employment Agreement”). The 2004

Employment Agreement is attached hereto as Exhibit “A.”

GEOTZ’ 2004 Employment Agreement

28. GOETZ’ duties and responsibilities as OTX’s Executive Vice President of

Entertainment Research – Screenings and Qualitative included, but were not limited to, (i)

implementation and supervision of OTX’s business plan for screenings, (ii) assistance with the

preparation and execution of OTX’s quarterly and annual budgets, (iii) management of screenings’

personnel, (iv) leadership of screenings business development, (v) management of relationships

with screenings clients, (vi) responsibility for driving screenings revenues, (vii) management of

screenings vendors and (viii) use of best efforts to seek innovations for screenings. See 2004

Employment Agreement Section 1.1(c) attached hereto as Exhibit “A.”

29. In order to prevent loss of its confidential and proprietary information and avoid an

employee later unfairly competing with OTX, Section 1.7 of the 2004 Employment Agreement

contains several restrictive covenants through which GOETZ recognized and acknowledged that

he had access to OTX’s confidential and proprietary information and trade secrets in order to carry

out duties owed to OTX. GOETZ agreed that he would protect the secrecy of OTX’s confidential

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and proprietary information and trade secrets, and that he would refrain from the use, disclosure

and misappropriation OTX’s confidential and proprietary information and trade secrets for his

own benefit or for the benefit of another person, business or legal entity.

30. GOETZ and OTX further agreed that the restrictive covenants contained in the

2004 Employment Agreement shall survive the termination of GOETZ’s employment with OTX.

See Section 1.7(j) of the 2004 Employment Agreement. In executing the 2004 Employment

Agreement, GOETZ and OTX recognized and agreed that the terms and conditions set forth in the

2004 Employment Agreement, “including the restrictive covenants set forth in Section 1.7,” were

“critical to the operations of the [OTX’s] business.” See Recitals in the 2004 Employment

Agreement attached hereto as Exhibit “A.”

31. Sections 1.6(j) and 1.7(f) of the 2004 Employment Agreement provide also for the

return of OTX’s property, including, but not limited to, all books, records, accounts, documents,

effects, money, securities, credit cards, and other property belonging to OTX upon termination of

GOETZ’s employment with OTX.

32. Section 2.2 of the 2004 Employment Agreement provides for the award of

reasonable attorneys’ fees and costs to the prevailing party in the event that an action or

proceeding is brought relating to, or to enforce any provisions contained in, the 2004 Employment

Agreement.

33. On or about January 1, 2007, GOETZ and OTX executed another employment

agreement whereby GOETZ agreed to serve as President of OTX’s Motion Picture Group (“MPG”

or “Screenings Division”) from January 1, 2007 to June 30, 2009, subject to the terms and

conditions set forth therein (the “2007 Employment Agreement”). The 2007 Employment

Agreement is attached hereto as Exhibit “B.”

GOETZ 2007 Employment Agreement

34. As President of OTX’s Screenings Division, GOETZ was uniquely responsible for

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the success, operations, customer relationships, and business strategy of OTX’s Screenings

Division. GOETZ’s duties and responsibilities included, but were not limited to, (i) development,

implementation and supervision of OTX’s business plan for the Screenings Division, (ii)

assistance with the preparation and execution of OTX’s quarterly and annual budgets, (iii)

management of Screenings Division personnel, (iv) leadership of the business development of the

Screenings Division, (v) management of relationships with Screenings Division clients, (vi)

responsibility for driving Screening Divisions revenues, (vii) management of Screenings Division

vendors, and (viii) use of best efforts to seek innovations for the Screenings Division.

35. By virtue of GOETZ’s position as President of OTX’s Motion Picture Group,

GOETZ had access to highly confidential and proprietary information and trade secrets belonging

to OTX, including, but not limited to, online research and marketing data, other analytic data

based upon or derived from such online research and marketing data and information concerning

the financial condition, proprietary technology and research products, customer lists and pricing,

prospective business, business development plans and strategy, financial records, vendor/supplier

lists, employment manuals, training materials, screenings attendee database, employee contact

lists, employee payroll information, research reports, norms data, and screenings production

materials.

36. In executing the 2007 Employment Agreement, GOETZ and OTX recognized and

agreed that the terms and conditions set forth in the 2007 Employment Agreement, “including the

restrictive covenants set forth in Section 1.7,” were “critical to the operations of [OTX’s]

business.” See Recitals in the 2007 Employment Agreement attached hereto as Exhibit “B.”

37. Furthermore, GOETZ agreed to the following restrictive covenants contained in

Section 1.7 of the 2007 Employment Agreement, which prohibits GOETZ from unlawfully

competing with OTX, using or disclosing OTX’s confidential and proprietary information and

trade secrets, and unlawfully soliciting OTX’s employees and customers:

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“(a) Non-competition. The Employee recognizes and acknowledges

that his services to the Company are of a special, unique and extraordinary

nature that cannot easily be duplicated. Further, the Company has and will

expend substantial resources to promotes such services and develop MPG.

Accordingly, in order to protect the Company unfair competition and to

protect the Company’s proprietary information, the Employee agrees that, at

all times during the Restricted Period, the Employee shall not, directly or

indirectly (i) perform or provide managerial or employee services on behalf

of any Person which is engaged in, or plans to engage in, any business that

directly or indirectly competes with the Company’s Business within the

United States and Canada; or (ii) have any interest in any business that

competes with the Company’s Business….

“(b) Confidential Information1. The Employee recognizes and

acknowledges that he has access to Proprietary Information2

1 “Confidential Information” shall mean any information belonging to or licensed to the Company, regardless of form, other than Trade Secrets, which is valuable to the Company and not generally known to competitors of the Company, including, without limitation, all online research and marketing data, other analytic data based upon or derived from such online research and marketing data and information concerning the financial condition, proprietary technology and research products, customer lists and pricing, business prospects and strategic plans of the Company, MPG and the Company’s Entertainment Divisions.” Section 1.8 of the 2007 Employment Agreement.

, which is a

valuable, special and unique asset of the of the Company’s business. In

order to obtain and/or maintain access to the Proprietary Information, which

Employee acknowledges is essential to the performance of his duties under

2 Proprietary Information” shall mean the Trade Secrets, the Confidential Information and all physical embodiments thereof, as they may exist from time to time. “Trade Secrets” means information belonging to or licensed to the Company, regardless of form, including, but not limited to, any technical or non-technical data, formula, pattern, compilation, program, device, method, technique, drawing, financial, marketing or other business plan, lists of actual or potential customers or suppliers, or any other information similar to any of the foregoing, which derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable or discoverable by proper means by, other persons who can derive economic value from its disclosure or use. Section 1.8 of the 2007 Employment Agreement.

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this Agreement, the Employee agrees that, except with respect to those

duties assigned to him by Company, the Employee: (i) shall hold in

confidence all Proprietary Information; (ii) shall not reproduce, use,

distribute, disclose, or otherwise misappropriate any Proprietary

Information, in whole or in part; (iii) shall take no action causing, or fail to

take any action necessary to prevent causing, any Proprietary Information to

lose its character as Proprietary Information; and (iv) shall not make use of

any such Proprietary Information for the Employee’s own purposes or for

the benefit of any person, business or legal entity (except the Company)

under any circumstances…3

(c) Nonsolicitation of Employees and Customers. At all times during the

Restricted Period, the Employee shall not, directly or indirectly, for himself

or for any other person: (i) employ, solicit, recruit or attempt to employ,

solicit, or recruit any employee of the Company to leave the Company’s

employment; or (ii) solicit or attempt to solicit any of the actual or targeted

prospective customers or clients of the Company with whom the Employee

had personal contact or about whom the Employee learned Confidential

Information on behalf of any person in connection with any business that

competes with the Company’s Business.”

“(d) Ownership of Developments. All Work Product4

3 Section 1.7(b) of the 2007 Employment Agreement.

shall belong

exclusively to the Company and shall, to the extent possible, be considered

a work made by the Employee for hire for the Company within the meaning

4 “Work Product” means all copy rights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed, modified or created by the Employee during the course of performing work for the Company or its clients.” Section 1.8 of the 2007 Employment Agreement.

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of Title 17 of the United States Code. To the extent the Work Product may

not be considered work made by the Employee for hire for the Company,

the Employee agrees to assign, and automatically assign at the time of

creation of the Work Product, without any requirement of further

consideration, any right, title, or interest the Employee may have in such

work product. Upon request of the Company, the Employee shall take such

further actions, including execution and delivery of instruments of

conveyance, as may be appropriate to give full and proper effect to such

assignment.”5

38. According to Section 1.7(j), the restrictive covenants contained in the 2007

Employment Agreement shall survive the termination of this Agreement.

39. Section 2.2 of the 2007 Employment Agreement further provides for the recovery

of reasonable attorneys’ fees and costs if any action or proceeding relating to this Agreement or

the enforcement of any provision of this Agreement is brought against any party.

40. Section 2.8 of the 2007 Employment Agreement further provides:

“Remedies Cumulative; Specific Performance. The rights and remedies of

the parties hereto shall be cumulative (and not alternative). The parties to

this Agreement agree that, in the event of any breach by any party to this

Agreement of any covenant, obligation or other provision set forth in this

Agreement for the benefit of any other party to this Agreement, such other

party shall be entitled (in addition to any other remedy that may be available

to it) to seek (a) a decree or order of specific performance or mandamus to

enforce the observance and performance of such covenant, obligation or

other provision, and (b) an injunction restraining such breach or threatened

breach.”

41. On or about July 1, 2009, GOETZ and OTX executed an amendment to the 2007

GOETZ’ 2009 Amendment

5 Section 1.7(d) of the 2007 Employment Agreement.

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Employment Agreement (the “2009 Amendment”). A true and correct copy of the 2009

Amendment is attached hereto as Exhibit “C.”

42. The 2009 Amendment extended the termination date of the 2007 Employment

Agreement from June 30, 2009 to December 31, 2009. According to the 2009 Amendment, all

terms used therein shall have the same meaning as the 2007 Employment Agreement.

Additionally, all terms provided in the 2007 Employment Agreement shall continue in full force

and effect, subject to the following terms:

“…Employee shall have the right to engage, nonexclusively, in any

business activities, provided that such activities are outside of the

entertainment market research areas which Employee currently engages in

on behalf of OTX, and provided further that such non-exclusive business

activities (i) do not interfere with the performance of Employee’s

responsibilities under the Agreement or (ii) conflict or compete with the

Company’s business as currently conducted. It is hereby expressly

understood and acknowledged between the parties that provided that there

is no use of the Company’s proprietary property or technology, the

ownership, results and proceeds of any such outside business activities shall

be the exclusive property of Employee, and Company shall have no right,

title or interest therein…”

43. From December 31, 2009 until GOETZ’ resignation on February 25, 2010,

GOETZ and OTX were operating under the 2007 Agreement pending the sale of OTX to Ipsos

(the “OTX-Ipsos deal”) and pending GOETZ’ negotiations regarding the terms of his future

employment with OTX and/or Ipsos.

44. PARNESS was employed as the Vice President of OTX’s Screenings and

Qualitative division from June 1, 2008 to February 28, 2010, at which time PARNESS resigned

from OTX. Prior to this time, PARNESS served as OTX’s Executive Director of Screenings

PARNES’ Employment With OTX

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from January 1, 2007 until June 1, 2008. PARNESS served as OTX’s Director of Operations in

the Screenings and Qualitative division from January 1, 2006 through January 1, 2007.

45. OTX alleges, upon information and belief, that by virtue of her employment with

OTX, PARNESS had access to and assisted in the development of OTX’s confidential and

proprietary information and trade secrets, including, but not limited, online research and

marketing data, other analytic data based upon or derived from such online research and

marketing data and information concerning the financial condition, proprietary technology and

research products, customer lists and pricing, prospective business, business development plans

and strategy, financial records, vendor/supplier lists, employment manuals, training materials,

screenings attendee database, employee contact lists, employee payroll information, research

reports, norms data, and screenings production materials.

46. On or about January 12, 2002, PARNESS executed a PII Agreement, a true and

correct copy of which is attached hereto as Exhibit “D.”

47. Under Section 1 of the PII Agreement, PARNESS agreed to hold OTX’s

confidential and proprietary information in the strictest confidence and to refrain from

disclosing, using, lecturing upon, or publishing any of OTX’s confidential and proprietary

information.

48. Under Section 2.5 of the PII Agreement, PARNESS agreed to assign to OTX all

rights, title and interest in and to any and all inventions and all proprietary rights with respect

thereto.

49. Under Section 5 of the PII Agreement, PARNESS agreed to return all documents

and other property belonging to OTX, including all originals and copies, upon termination of her

employment with OTX.

50. Under Section 6 of the PII Agreement, OTX shall have the right to enforce the PII

Agreement and any of its provisions by injunction, specific performance or other equitable relief.

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51. On or about July 19, 2004, PARNESS received OTX’s employment handbook

and acknowledge receipt of and acceptance of the terms contained in OTX’s employment

handbook. OTX’s employment handbook contains specific provision prohibiting unlawful

solicitation and the use and disclosure of OTX’s confidential and proprietary information and

trade secrets. A true and correct copy of the OTX’s employment handbook and PARNESS’

acknowledgement of receipt of the OTX’s employment handbook is attached hereto as Exhibit

“E.”

52. OTX alleges, upon information and belief, that on or about February 25, 2010 at

approximately 11:23 a.m., GOETZ abruptly and without any forewarning submitted his

resignation from OTX. A few minutes thereafter, GOETZ walked into the Human Resources

Department and handed in his corporate credit card and building access card. GOETZ

immediately walked out of OTX’s office and refused to stay to discuss his resignation, despite

OTX’s requests. As a result of GOETZ’ abrupt departure from OTX, OTX did not have an

opportunity to conduct an exit interview or collect company property from GOETZ.

GOETZ’ Resignation from OTX and Screen Engine

53. OTX alleges, upon information and belief, that GOETZ’ resignation was designed

to maximize the disruption and chaos to OTX’s business and internal operations. GOETZ

submitted his resignation on a day when a majority of OTX’s executives were outside the state of

California on pre-planned vacations, meetings and conferences, including OTX’s Chief

Executive Officer, Shelly Zalis (“Zalis”), Chief Financial Officer, Jeffrey Dean (“Dean”), and

GOETZ’ boss, Bruce Friend (“Friend”). GOETZ did not provide OTX an opportunity to make

any transitions, as is typically done when an employee resigns, because GOETZ abruptly left

OTX within minutes of submitting his resignation and refused to discuss his resignation with

anyone.

54. Shortly after GOETZ’ departure from OTX, Bruzzese received a press release

that announced GOETZ’ resignation from OTX to start a new company called SCREEN

ENGINE. According to the press release, SCREEN ENGINE would provide custom research

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and marketing products, and conduct screening research, exit polling and qualitative analysis for

the motion picture industry in direct competition of OTX’s Screenings and Qualitative Division.

55. OTX alleges, upon information and belief, that within minutes of leaving OTX,

GOETZ began to contact and solicit key employees within OTX’s screenings division for

SCREEN ENGINE, including, but not limited to, including Mishra, Siegel, Kash and Wallan. At

the time, PARNESS, Mishra, Siegel and Kash were in, or in route to, New York City and

Chicago to supervise screening events for OTX. OTX alleges, upon information and belief, that

GOETZ purposely announced his resignation on a day when these key employees were outside

of the state of California, and even directed Mishra to attend a press junket screening in New

York, so that GOETZ could freely solicit key employees.

56. OTX alleges, upon information and belief, that in each case, GOETZ initiated

discussions regarding employment opportunities at SCREEN ENGINE. GOETZ told these key

employees that he was starting a new screenings and research business named SCREEN

ENGINE. In order to create anxiety about their job security at OTX, GOETZ told these key

employees that SCREEN ENGINE would inevitably take all of OTX’s screenings and research

business due to GOETZ’ connections in the industry. GOETZ referred these key employees to a

website called Entertainmentcareers.net to locate positions available at SCREEN ENGINE and

encouraged them to submit an application. In many cases, the jobs that SCREEN ENGINE

posted did not match the positions that these key employees held at OTX; other postings were

designed to specifically describe an OTX key employee’s job. In other cases, it was unusual to

advertise the position to the general public (i.e. Focus Group Moderator) because the position is

traditionally filled by someone who is already well known and accepted by the industry. In an

attempt to claim he was not soliciting employees. GOETZ also asked these key employees to

submit resumes, even though GOETZ supervised and worked closely with these key employees

for several years and was fully aware of their relevant experience and skills.

57. OTX alleges, upon information and belief, that defendants publically advertised

the positions at SCREEN ENGINE and asked OTX’s employees to submit employment

applications and resumes in order to create the illusion that it was these key employees who

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solicited GOETZ for employment, as opposed to GOETZ soliciting these key employees to work

for SCREEN ENGINE.

58. OTX alleges, upon information and belief, GOETZ quickly set up “interviews”

with Kash, Siegel and Mishra the weekend after he resigned from OTX. Both GOETZ and

PERAKIS, GOETZ’s business partner, attorney and friend, met with Mishra, Kash and Siegel at

GOETZ’ home in Studio City. During these meetings, GOETZ and PERAKIS offered Mishra,

Kash, and Siegel the same positions that they held at OTX, at a base salaries, plus ‘equity’

interest that was projected to approximate what these employees made at OTX. OTX alleges,

upon information and belief, that GOETZ used OTX’s confidential and proprietary information

to learn Mishra, Kash and Siegel’s base salaries at OTX, and offered Mishra, Kash and Siegel

compensation packages, and other incentives, to induce them to work for SCREEN ENGINE.

59. OTX alleges, upon information and belief, that GOETZ and PERAKIS pressured

Mishra, Siegel and Kash to make a decision and submit their resignations to OTX as soon as

possible, preferably by Monday, March 1, 2010.

60. OTX alleges, upon information and belief, that GOETZ and PERAKIS pressured

Mishra, Siegel and Kash to submit their resignations because GOETZ and PERAKIS knew that

the success of SCREEN ENGINE (and downfall of OTX) depended upon their ability to secure

these key employees. GOETZ and PERAKIS did not want to provide OTX an opportunity to

talk with these key employees to stay at OTX. GOETZ and PERAKIS were also aware that, if

SCREEN ENGINE were able to secure Mishra and Siegel, the rest of OTX’s screenings staff and

clients would follow as Mishra and Siegel’s departure would have signaled trouble in OTX’s

screenings business.

61. On Sunday, February 28, 2010 at approximately 10:00 p.m., PARNESS abruptly

and without notice resigned from OTX. OTX alleges, upon information and belief, that

PARNESS resigned from OTX to join GOETZ and PERAKIS at SCREEN ENGINE under a

predetermined plan.

PARNESS’ Resignation from OTX

62. OTX alleges, upon information and belief, that PARNESS entered OTX’s

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building the night that she resigned to take confidential and proprietary information from OTX

and to destroy information and files.

63. Due to PARNESS’ weekend late night departure from OTX, OTX did not have an

opportunity to conduct an exit interview or retrieve any company property from PARNESS, as is

typically done with employees when they decide to leave OTX. OTX alleges, upon information

and belief, that PARNESS’ abrupt, weekend night departure was intentionally designed to cause,

and in fact did cause, disruption to OTX’s business. PARNESS was the head of OTX’s

Screenings and Qualitative division, and PARNESS’ abrupt departure and immediate resignation

denied OTX an opportunity to transition her duties in an organized manner.

64. OTX alleges, upon information and belief, that shortly after PARNESS’

resignation, PARNESS and GOETZ used OTX’s confidential employee contact list to call

Cathcart’s private home telephone number late Sunday evening and offer him employment at

SCREEN ENGINE. Cathcart would have been particularly useful to SCREEN ENGINE as

PARNESS does not have working knowledge of research and heavily relied upon Cathcart while

she was employed at OTX to prepare accurate research reports and field questions from the

client.

65. OTX alleges, upon information and belief, that in order to make it appear that

they were not soliciting OTX’s employees, PARNESS and GOETZ referred Cathcart to the

EntertainmentCareers.Net website and encouraged Cathcart to apply for the Research Manager

position. PARNESS and GOETZ also used fear and intimidation to convince Cathcart to apply

for the position at SCREEN ENGINE. PARNES and GOETZ told Cathcart that several key

screenings employees were leaving OTX to work for SCREEN ENGINE and that OTX’s

business would soon follow. PARNESS and GOETZ also used OTX’s confidential information

to offer Cathcart a salary that was slightly higher than OTX to further entice him to accept the

position at SCREEN ENGINE.

66. OTX alleges, upon information and belief, that Cathcart ultimately submitted a

resume to SCREEN ENGINE out of fear that he would lose his job at OTX.

67. OTX alleges, upon information and belief, that PARNESS and GOETZ also used

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OTX’s confidential and proprietary information to contact Durfee and Vedros, other key

employees of OTX, to discuss employment opportunities at SCREEN ENGINE. GOETZ and/or

PARNESS informed Durfee and Vedros that there were positions available at SCREEN

ENGINE and encouraged them to visit the EntertainmentCareers.Net website. GOETZ and/or

PARNESS also asked Durfee and Vedros to submit an application and resume, despite the fact

that both GOETZ and PARNESS were Durfee and Vedros’ supervisors at OTX, and GOETZ

and PARNESS were fully aware of Durfee and Vedros’ employment history and experience.

68. OTX alleges, upon information and belief, that GOETZ has repeatedly contacted,

and continues to aggressively pursue, Durfee since he initially contacted Durfee.

Defendants’ Conspiracy/Scheme and Use Of OTX Confidential Information to Raid

OTX’s Workforce and Take OTX’s Business

69. OTX alleges, upon information and belief, that defendants made efforts to start

SCREEN ENGINE several months before GOETZ and PARNESS resigned from OTX. In the

meantime, defendants plotted and schemed to unlawfully steal OTX’s confidential and

proprietary information and trade secrets, unlawfully compete with OTX, unlawfully raid OTX’s

employees, and unlawfully divert OTX’s business opportunities to SCREEN ENGINE. OTX

further alleges, upon information and belief, that defendants plotted and schemed to maximize

the disruption to OTX’s business operations and destroy OTX’s reputation in the industry in

order to benefit SCREEN ENGINE and ultimately themselves.

70. OTX alleges, upon information and belief, that in the months leading up to

GOETZ and PARNESS’ resignation from OTX, PARNESS made several unusual requests for

OTX’s confidential and proprietary information and trade secrets, including but not limited to

following:

• In approximately the middle of January 2010, PARNESS asked Montgomery to

update OTX’s Active Freelance Database for her. PARNESS also asked

Montgomery to include OTX’s senior staff, focus group moderators, and analysts.

The Active Freelance Database contains confidential information regarding

OTX’s screenings staff, recruiting staff, office staff, night staff, and New York

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staff, including their names, telephone numbers, email addresses, date of birth,

position/title, salary, and year to date earnings. The Active Freelance Database

had not been updated since December 2008. Montgomery made PARNESS’

revisions and renamed the document “Screenings Employee Database” as it now

included information regarding every employee in OTX’s screenings staff as

opposed to just the freelance employees. Although Montgomery emailed the

Screenings Employee Database document and location where to find it on the

OTX network server, PARNESS asked Montgomery to hand her a printed copy.

Pursuant to PARNESS’ request, Montgomery printed a hard copy of the

“Screenings Employee Database” and delivered it to her.

• In middle of January 2010, PARNESS asked the senior level employees of

screenings staff to create a master vendor list that included all pertinent

information regarding vendors that are used by the screenings division, including

their names, addresses, telephones numbers and pricing information.

• In middle of January 2010, at her request, OTX’s Human Resources Department

provided PARNESS 2009 salary information for OTX’s freelance staff.

• In middle of January 2010, PARNESS asked Mishra to provide her a hardcopy of

OTX’s recruiting manual.

• In late January 2010, PARNESS asked Mishra to update and provide her a copy

of the Movie Release Schedule for 2010 and 2011. PARNESS asked Mishra to

indicate which screenings were already taken by OTX/NRG and which screenings

were still available.

• On or about January 26, 2010, PARNESS asked Siegel to provide her a list of

issues to discuss with a screenings team before a screenings event.

• During the first week of February 2010, Parness asked Wallan to provide her

specific research reports for various screenings that occurred within the last four

(4) months, including, but not limited to, family screenings, focus group

screenings, normal screenings and critics screenings. Approximately two (2)

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weeks later, and shortly before PARNESS’ resignation, PARNES requested

additional research reports, including a copy of an unusual research report

prepared in PowerPoint.

• On or about February 11, 2010, PARNESS requested Wallan to provide her an

electronic copy of a screenings invitation template.

• Approximately two (2) weeks before PARNESS resigned from OTX, PARNESS

asked Mishra to print out a hardcopy of the active recruiter list, which includes

the names, telephone numbers, email addresses, and addresses of active recruiters.

• On or about February 18, 2010, PARNESS asked Wallan to provide her a copy of

an exit poll manual and banned list. The exit poll manual was created by OTX

and provides detailed procedures regarding exit polls for training and reference

purposes. The banned list contains a list of individuals who have been banned

from OTX screenings events over the years. The banned list would be very

helpful for a new screenings business to avoid admitting trouble makers and

unqualified audience members at screening events.

• At their request, Cathcart provided PARNESS and GOETZ OTX’s proprietary

normative data, including new kids normative data and updated normative data.

Cathcart also provide GOETZ materials for his presentation at FOX shortly

before GOETZ’ departure from OTX.

71. OTX alleges, upon information and belief, that since their resignation from OTX,

defendants have used OTX’s confidential and proprietary information and trade secrets and

insider information to unlawfully solicit and raid not only OTX’s key screening staff members as

fully described above, but also its freelance staff. As a result of defendants’ actions, OTX was

forced to substantially increase salaries and offer retention bonuses in order to persuade these

key employees to remain at OTX. OTX anticipates that it will have to continue offering raises

and bonuses to keep other employees if defendants continue to unlawfully solicit OTX’s

employees.

72. OTX alleges, upon information and belief, that defendants have also used

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employee contact lists to systematically solicit most, if not all, of OTX’s screening and recruiting

staff. OTX alleges, upon information and belief, that defendants contacted OTX’s screening and

recruiting staff at their private home and cellular telephone numbers, which only could have been

obtained through unauthorized access to OTX private and confidential employee contact list.

73. In order to convince OTX’s screenings and recruiting staff to work for SCREEN

ENGINE instead of OTX, OTX is informed and believes and on that basis alleges that

defendants have made disparaging and threatening remarks regarding the future viability OTX’s

screenings business and their overall job security at OTX. Defendants have also used OTX’s

confidential payroll information to further entice OTX’s screenings and recruiting staff to work

for SCREEN ENGINE by offering slightly higher compensation packages than OTX or promises

of a certain number of screenings. Defendants have successfully convinced many of OTX’s

screenings and recruiting staff to work for SCREEN ENGINE. If defendants are not enjoined

from continuing to solicit OTX’s screenings and recruiting staff, OTX anticipates that it will be

unable to work the screenings that is has and it will have to continue increasing pay to keep these

employees, whom GOETZ, PARNESS and PERAKIS would not know or be able to contact

but/for defendants having used OTX’s confidential information to contact the employees.

74. OTX alleges, upon information and belief, that defendants have also used OTX’s

confidential and proprietary information and trade secrets to attempt to hire OTX’s prospective

employees for SCREEN ENGINE, including George Zavier (“Zavier”). Although Zavier

interviewed and filled out hiring paperwork at OTX (which is not done unless a hiring decision is

made), PARNESS and GOETZ intentionally delayed the hiring of Zavier until they resigned

from OTX, at which point they used OTX’s confidential and proprietary information and trade

secrets to contact Zavier and offer him employment at SCREEN ENGINE instead.

75. OTX alleges, upon information and belief, that defendants used OTX’s

confidential and proprietary information and trade secrets to unlawfully and unfairly solicit

OTX’s clients, during and after their employment with OTX, including, but not limited to, FOX

and Universal.

76. OTX alleges, upon information and belief, that defendants took OTX’s confidential

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and proprietary information and trade secrets for the use and benefit of SCREEN ENGINE and in

order to negotiate comparable deals with OTX’s vendors, thus, allowing OTX to lose its

competitive edge. Moreover, shortly before GOETZ and PARNESS resigned from OTX, OTX

learned of vendors that could provide alternative ways to quickly and more cost effectively recruit

audience members to fill screening events. OTX negotiated pricing and other terms with these

vendors prior to GOETZ and PARNESS’ departure, which pricing GOETZ and PARNESS knew.

Immediately after GOETZ and PARNESS resigned from OTX, defendants used this confidential

and proprietary information to negotiate similar contracts for SCREEN ENGINE, as a brand new

company, with these vendors at rates that OTX, as an established business. OTX is informed and

believes that SCREEN ENGINE is now using these vendors to recruit audience members for

SCREEN ENGINE’s screening events.

77. OTX alleges, upon information and belief, that defendants plotted and schemed to

use OTX’s confidential and proprietary information and trade secrets to quickly and inexpensively

set up SCREEN ENGINE’s infrastructure, including, but not limited to, OTX’s employee contacts

lists, OTX’s vendor lists, OTX’s pricing models, OTX’s screenings production materials, OTX’s

screening database, OTX’s research reports, OTX’s product offerings, and OTX’s normative data.

78. OTX alleges, upon information and belief, that defendants plotted and schemed to

unlawfully seize screening events that were originally booked with OTX and divert OTX’s

business opportunities to SCREEN ENGINE, including screenings for the movies “Morning

Glory,” “The Bounty Hunter,” “Life As We Know It,” “Despicable Me,” “Repo Man,” “Waiting

for Forever,” “The Runaways,” “The Ex-Terminators,” “13” and others. PARNESS

uncharacteristically failed to input these screenings into OTX’s screenings status grid or

otherwise did not follow up on these screenings and, therefore, OTX was not aware of these

screenings until after defendants resigned from OTX. Prior to PARNESS’ resignation, however,

PARNESS used OTX’s resources to begin the work to produce these screening events, including

26 COMPLAINT

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using OTX’s staff to prepare movie concepts and “movie seen” lists for audience recruitment,

select appropriate theatre locations, and prepare specification letters. OTX is informed and

believes that SCREEN ENGINE stole screening events from OTX and held screening events

shortly after GOETZ and PARNESS resigned from OTX.

79. OTX alleges, upon information and belief, that while still employed by OTX,

defendants plotted and schemed to conceal business opportunities available to OTX in attempt to

divert business from OTX, interfere with OTX’s business relationships, and injure OTX’s

reputation in the industry. OTX is further informed and believes that shortly before her

resignation from OTX, PARNESS intentionally neglected several screenings requests by failing

to enter these screening requests into OTX’s screenings status grid, including screening requests

for “Morning Glory,” “The Bounty Hunter,” and “Life as We Know It.” In many instances

where this occurred, OTX’s clients decided to cancel these screening events as they had lost

confidence in OTX’s ability to run these screening events. OTX is informed and believes that

defendants’ actions were intentional and part of their overall scheme to divert business

opportunities from OTX and to cause further damage to OTX’s reputation in the film

community.

80. OTX alleges, upon information and belief, that defendants intentionally interfered

with OTX’s prospective business by concealing business opportunities available to other

divisions in OTX.

81. OTX alleges, upon information and belief, that PARNESS, GOETZ and Nash

failed to return OTX property, including OTX’s confidential and proprietary information and

trade secrets, including, but not limited to, the Active Freelance Database, Screenings Employee

Database, employee contact lists, vendor list, research reports, templates, training manuals (exit

poll, recruiting and screenings manuals), banned list, screenings database, screenings database on

250 gig external hard drive/discs, salary/payroll information, active recruiter list, updated movie

release schedule, normative data, presentation materials, client lists and pricing information,

specification letters, agreements, online research and marketing data, other analytic data based

upon or derived from such online research and marketing data and information concerning the

27 COMPLAINT

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financial condition, proprietary technology and research products, business development plans,

screenings production materials, and other documents related to OTX’s screenings and

qualitative business.

82. OTX alleges, upon information and belief, that PARNESS deleted and destroyed

documents critical to OTX’s screenings business (some of which only PARNESS could access)

before she resigned from OTX to cause further disruption to OTX’s business and injury to

OTX’s reputation in the industry. OTX is further informed and believes that PARNESS and

GOETZ wiped their company computers in order to attempt to conceal their activities and

disrupt and hurt OTX’s business.

[Misappropriation of Trade Secrets (Violation of Civil Code Section

FIRST CAUSE OF ACTION

3426, et seq.) Against All Defendants]

83. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 82,

inclusive.

84. OTX’s confidential information, described more fully above, includes and

constitutes trade secrets under Civil Code §3426, et seq. because it consists of compilations which

derive independent economic value from their disclosure or use, and are subject to efforts that are

reasonable under the circumstances to maintain their secrecy.

85. OTX alleges, upon information and belief, that defendants had access to OTX’s

confidential and proprietary information and trade secrets by virtue of their employment with

OTX.

86. OTX alleges, upon information and belief, that defendants misappropriated OTX’s

trade secrets by disclosing and using defendant OTX’s confidential and proprietary information

and trade secrets to solicit and divert business from OTX for the benefit of defendants, to solicit

OTX screenings and recruiting staff, and to obtain the benefits of OTX’s longstanding and

28 COMPLAINT

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profitable relationships with its clients and vendors as more fully described above.

87. As a direct and proximate result of defendants’ misappropriation of OTX’s

confidential and proprietary information and trade secrets, OTX has been damaged and defendants

have been unjustly enriched. Such damages include without limitation, loss of past, present and

future income, the diminution in the value of OTX business, and the increased value of

defendants’ business due to their misappropriation of OTX’s confidential and proprietary

information and trade secrets in an amount according to proof.

88. Defendants’ conduct as described herein was and continues to be intentional,

willful and malicious, with a conscious disregard for OTX’s rights. In misappropriating OTX’s

confidential and proprietary information and trade secrets, defendants acted and continue to act

oppressively with an intent to destroy OTX’s business, and to injure OTX’s reputation and good

will with its clients in the film industry. Therefore, defendants conduct, as described fully herein,

warrants an award of punitive damages and attorneys’ fees and costs.

89. Unless restrained and enjoined, defendants will continue to misappropriate all or

part of OTX’s trade secrets and other confidential and proprietary information and cause

irreparable harm to OTX.

[Breach of Contract Against Defendants GOETZ and PARNESS

SECOND CAUSE OF ACTION

and DOES 1 through 50 inclusive]

90. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 89,

inclusive.

91. On January 8, 2004 and January 1, 2007, GOETZ executed written employment

agreements with OTX. A true and correct copy of the 2004 and 2007 Employment Agreements,

and amendments thereto, is attached as Exhibits “A,” “B” and “C.”

92. On or about January 12, 2002, PARNESS executed OTX’s PII Agreement. On or

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about July 19, 2004, PARNESS received OTX’s employment handbook and acknowledged receipt

of and agreed to the terms contained in OTX’s employment handbook. A true and correct copy of

the PII Agreement and OTX’s employment handbook is attached hereto as Exhibits “D” and “E.”

93. OTX performed all conditions, covenants, and promises required on its part to be

performed in accordance to the terms and conditions of the 2004 and 2007 Employment

Agreements and amendments thereto, the PII Agreement, and OTX’s employment handbook.

94. The 2004 and 2007 Employment Agreements, and amendments thereto, the PII

Agreement and OTX’s employment handbook specifically prohibited GOETZ and PARNESS

from disclosing and using OTX’s confidential and proprietary information and trade secrets,

unlawfully and unfairly competing with OTX’s business, unlawfully and unfairly soliciting OTX’s

clients, and unlawfully and unfairly soliciting OTX’s employees.

95. The 2004 and 2007 Employment Agreements, and amendments thereto, the PII

Agreement and OTX’s employment handbook further provide that GOETZ and PARNESS shall

immediately return all property belonging to OTX, including OTX’s confidential and proprietary

information and trade secrets, upon termination of their employment.

96. OTX alleges, upon information and belief, that GOETZ and PARNESS breached

their obligations under these agreements by using and disclosing OTX’s confidential and

proprietary information and trade secrets for the benefit of defendants, unlawfully and unfairly

competing with OTX’s business, unlawfully and unfairly soliciting OTX’s clients, unlawfully and

unfairly soliciting OTX’s employees, and failing to return OTX’s property as fully described

above.

97. As a result of GOETZ and PARNESS’ failure and refusal to abide by the

obligations set forth in the 2004 and 2007 Employment Agreement, and amendments thereto, the

PII Agreement, and OTX’s employment handbook, OTX has been directly damaged resulting in a

loss of clients, goodwill and profits in an amount according to proof at the time of trial. OTX is

30 COMPLAINT

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also entitled to an award of attorneys’ fees and costs under these agreements as the prevailing

party.

98. An award of monetary damages will not adequately compensate OTX for the

damages it has incurred, and will continue to incur, by reason of GOETZ and PARNESS’

breaches. Unless the terms of these agreements are specifically enforced, GOETZ and PARNESS

will continue to breach these agreements, causing irreparable harm to OTX.

[Breach of the Implied Covenant of Good Faith and Fair Dealing Against

THIRD CAUSE OF ACTION

Defendants PARNESS and GOETZ and Does 1 through 50, inclusive]

99. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 98,

inclusive.

100. California law implies a covenant of good faith and fair dealing in all contracts

between parties entered into in the State of California.

101.

102. On or about January 12, 2002, PARNESS executed OTX’s PII Agreement. On or

about July 19, 2004, PARNESS received OTX’s employment handbook and acknowledged receipt

of and agreed to the terms contained in OTX’s employment handbook. A true and correct copy of

the PII Agreement and OTX’s employment handbook is attached hereto as Exhibits “D” and “E.”

On January 8, 2004 and January 1, 2007, GOETZ executed written employment

agreements with OTX. A true and correct copy of the 2004 and 2007 Employment Agreements,

and amendments thereto, are attached as Exhibits “A,” “B” and “C.”

103. OTX performed all conditions, covenants, and promises required on its part to be

performed in accordance to the terms and conditions of the 2004 and 2007 Employment

Agreements and amendments thereto, the PII Agreement, and OTX’s employment handbook.

104. The 2004 and 2007 Employment Agreements, and amendments thereto, the PII

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Agreement and OTX’s employment handbook specifically prohibit GOETZ and PARNESS from

disclosing and using OTX’s confidential and proprietary information and trade secrets, unlawfully

and unfairly competing with OTX’s business, unlawfully and unfairly soliciting OTX’s clients,

and unlawfully and unfairly soliciting OTX’s employees.

105. OTX alleges, upon information and belief, that GOETZ and PARNESS failed to

honor the terms of these agreements, for the reasons set forth hereinabove, and thereby violated

the implied covenant of good faith and fair dealing as against OTX and unfairly prevented OTX

from receiving the benefits of these agreements.

106. The actions of GOETZ and PARNESS as hereinbefore described in violation of

said implied covenant of good faith and fair dealing has caused OTX to suffer damages in an

amount according to proof at the time of trial.

107. An award of monetary damages will not adequately compensate OTX for the

damages it has incurred, and will continue to incur, by reason of GOETZ and PARNESS’

breaches. Unless the terms of these agreements are specifically enforced, GOETZ and PARNESS

will continue to breach these agreements, causing irreparable harm to OTX.

[Breach of Fiduciary Duty Against PARNESS and GOETZ

FOURTH CAUSE OF ACTION

and Does 1 through 50, inclusive]

108. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 107,

inclusive.

109. From January 2004 through February 25, 2010, GOETZ acted as OTX’s Executive

Vice President of Entertainment Research and President of OTX’s Motion Picture Group.

110. PARNESS was employed as the Vice President of OTX’s Screenings and

Qualitative division from June 1, 2008 to February 28, 2010, at which time PARNESS resigned

from OTX. Prior to this time, PARNESS served as OTX’s Executive Director of Screenings from

32 COMPLAINT

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January 1, 2007 until June 1, 2008. PARNESS served as OTX’s Director of Operations in the

Screenings and Qualitative division from January 1, 2006 through January 1, 2007.

111. As officers and managers of OTX, GOETZ and PARNESS owed a fiduciary duty

to OTX and OTX’s shareholders, meaning that GOETZ and PARNESS owed a duty to protect the

interests of OTX and to refrain from any activities that would injure OTX or deprive OTX of any

business opportunities.

112. OTX alleges, upon information and belief, that defendants breached their fiduciary

duties by committing the acts complained of herein, including, but not limited to, planning to and

then misappropriating OTX’s confidential and proprietary information and trade secrets to benefit

themselves and SCREEN ENGINE, by unlawfully competing against OTX, by unlawfully raiding

OTX’s key screenings employees, by unlawfully soliciting OTX’s screenings and recruiting staff,

by interfering with OTX’s business relationships with its clients, by concealing and diverting

business opportunities from OTX, by seizing business opportunities/screenings belonging to OTX

for SCREEN ENGINE, and by failing to return OTX’s property.

113. As a proximate result of GOETZ and PARNESS’ actions, OTX suffered and will

continue to suffer damages in an amount according to proof at the time of trial.

114. In doing the acts alleged herein, GOETZ and PARNESS acted with intent to vex,

injure, and annoy OTX and acted in conscious disregard of OTX’s rights. GOETZ and PARNESS

are, therefore, guilty of malice, fraud and oppression so as to entitle OTX to an award of

exemplary damages.

[Breach of Duty of Loyalty and Duty of Care Against PARNESS

FIFTH CAUSE OF ACTION

and GOETZ and Does 1 through 50, inclusive]

115. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 114,

inclusive.

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116. As an agents, employees, officers, and managers of OTX, and by virtue of OTX

having placed confidence in the fidelity and integrity of GOETZ and PARNESS, GOETZ and

PARNES owed OTX a duty of loyalty and utmost due care.

117. OTX alleges, upon information and belief, that OTX breached his duty of loyalty

and due care by committing the acts complained of herein, including, but not limited to, planning

to and then stealing and using OTX’s confidential and proprietary information and trade secrets to

benefit themselves and SCREEN ENGINE, by unlawfully competing against OTX, by unlawfully

raiding OTX’s key screenings employees, by unlawfully soliciting OTX’s screenings and

recruiting staff, by interfering with OTX’s business relationships with its clients, by concealing

and diverting business opportunities from OTX, by seizing business opportunities/screenings

belonging to OTX for SCREEN ENGINE, and by failing to return OTX’s property.

118. As a direct and proximate result of GOETZ and PARNESS’ breach of their duty of

loyalty and duty of care, OTX suffered and will continue to suffer damages in an amount

according to proof at the time of trial.

119. In doing the acts alleged herein, GOETZ and PARNESS acted with intent to vex,

injure, and annoy OTX, and acted in conscious disregard of OTX’s rights. GOETZ and

PARNESS are, therefore, guilty of malice, fraud and oppression so as to entitle OTX to an award

of exemplary damages.

[Violation of Labor Code §2860 Against PARNESS and GOETZ

SIXTH CAUSE OF ACTION

and Does 1 through 50, inclusive]

120. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 119,

inclusive.

121. Labor Code §2860 provides that everything that an employee acquired by virtue of

his/her employment, except the compensation due him/her, belongs to the employer, whether

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acquired lawfully or unlawfully or during or after his/her employment.

122. OTX alleges, upon information and belief, that GOETZ and PARNESS planned

and then took, misappropriated, and failed to return property belonging to OTX in violation of the

requirements and obligations imposed on GOETZ and PARNESS under Labor Code §2860,

including online research and marketing data, other analytic data based upon or derived from such

online research and marketing data and information concerning the financial condition, proprietary

technology and research products, customer lists and pricing, prospective business clients,

business development plans and strategy, financial records, vendor/supplier lists, employment

manuals, training materials, screenings attendee database, employee and freelance contact lists,

norms data, computer files, external hard drives, documents, agreements, and other screenings

materials.

123. As a result of GOETZ and PARNESS’ violation of the duties and obligations

imposed on them by Labor Code §2860, OTX has and will in the future suffer damages in an

amount according to proof at the time of trial.

124. In doing the acts alleged herein, GOETZ and PARNESS acted with intent to vex,

injure, and annoy OTX, and acted in conscious disregard of OTX’s rights. GOETZ and

PARNESS are, therefore, guilty of malice, fraud and oppression so as to entitle OTX to an award

of exemplary damages.

[Intentional Interference with Contractual Relations Against All Defendants

SEVENTH CAUSE OF ACTION

and Does 1 through 50, inclusive]

125. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 123,

inclusive.

126. By virtue of GOETZ and PARNESS’ executive and management positions with

OTX, defendants knew of OTX contracts with various clients and vendors in the screenings and

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qualitative business.

127. OTX alleges, upon information and belief, that defendants misappropriated OTX’s

confidential and proprietary information and trade secrets, made disparaging remarks about the

future viability of OTX’s screenings and qualitative business, made false statements regarding the

circumstances of GOETZ’ departure from OTX and a purported “strategic alliance” between

SCREEN ENGINE and OTX to interfere with OTX’s contracts with its vendors and clients, steal

screening events that originated at OTX, and divert business opportunities to SCREEN ENGINE

as fully described above.

128. As a result of defendants’ actions, OTX alleges, upon information and belief, that

defendants thereby induced OTX’s clients to breach their contracts with OTX thereby used

confidential and proprietary information stolen from OTX to intentionally interfere with OTX's

contracts with its clients.

129. As a direct result of defendants' actions, as more fully described above, OTX has

been damaged in an amount according to proof at the time of trial.

130. In doing the acts alleged herein, defendants acted with intent to vex, injure, and

annoy OTX, and acted in conscious disregard of OTX’s rights. Defendants are, therefore, guilty

of malice, fraud and oppression so as to entitle OTX to an award of exemplary damages.

[Intentional Interference with Prospective Economic Advantage Against All Defendants

EIGHTH CAUSE OF ACTION

and Does 1 through 50, inclusive]

131. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 130,

inclusive.

132. By virtue of GOETZ and PARNESS’ executive and management positions with

OTX, defendants knew of OTX's ongoing and prospective business relationships.

133. OTX alleges, upon information and belief, that defendants intentionally interfered

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with OTX's prospective economic advantage by using their positions and access to OTX’s

confidential and proprietary information to induce OTX’s vendors to provide services and clients

to use the services of SCREEN ENGINE and otherwise divert business opportunities from OTX,

by stealing screening events that originated at OTX, and by devising a plan (e.g. abrupt

resignations, immediate solicitation of OTX’s employees, vendors and clients, failure to input

screenings into OTX’s screenings status grid) to maximize the disruption to OTX’s screenings

business and to discredit and destroy confidence in OTX’s screenings business as more fully

described above.

134. As a result of defendants’ actions, OTX is informed and believes that several

clients have terminated their business relationship with OTX and/or cancelled screening events

with OTX, including, but not limited to, screening events for “The Bounty Hunter,” “Life as We

Know it,” “The Runaways,” “Waiting for Forever,” “The Ex-Terminators,” and “13.”

135. As a direct result of defendants' actions and omissions, OTX has been damaged in

an amount according to proof at the time of trial.

136. Defendants’ actions were undertaken with fraud, malice or oppression, or with a

conscious disregard of the rights of OTX, and, therefore, OTX is entitled to an award of

exemplary and punitive damages against Defendants, and each of them, in an amount according to

proof at the time of trial.

[Negligent Interference with Prospective Economic Advantage Against All Defendants

NINTH CAUSE OF ACTION

and Does 1 through 50, inclusive]

137. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 136,

inclusive.

138. By virtue of GOETZ and PARNESS’ executive and management positions with

OTX, defendants knew of OTX's ongoing and prospective business relationships.

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139. OTX is informed and believes that defendants negligently interfered with OTX's

prospective economic advantage by using their positions and access to OTX’s confidential and

proprietary information to induce OTX’s clients to use the services of SCREEN ENGINE and

otherwise divert business opportunities from OTX, by stealing screening events that originated at

OTX, and by devising a plan (e.g. abrupt resignations, immediate solicitation of OTX’s employees

and clients, failure to input screenings into OTX’s screenings status grid, destruction and deletions

of information) to maximize the disruption to OTX’s screenings business and to discredit and

destroy confidence in OTX’s screenings business as more fully described above.

140. As a result of defendants’ actions, OTX is informed and believes that several

clients have terminated their business relationship with OTX and/or cancelled screening events

with OTX, including, but not limited to, screening events for “The Bounty Hunter,” “Life as We

Know it,” “The Runaways,” “Waiting for Forever,” “The Ex-Terminators,” and “13.”

141. As a direct result of defendants' actions and omissions, OTX has been damaged in

an amount according to proof at the time of trial.

142. Defendants’ actions were undertaken with fraud, malice or oppression, or with a

conscious disregard of the rights of OTX, and, therefore, OTX is entitled to an award of

exemplary and punitive damages against Defendants, and each of them, in an amount according to

proof at the time of trial.

[Conversion Against All Defendants and Does 1 through 50, inclusive]

TENTH CAUSE OF ACTION

143. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 142,

inclusive.

144. OTX alleges, upon information and belief, that defendants took property from OTX

as identified herein, including, but not limited to, OTX’s confidential and proprietary information

and trade secrets. OTX is further informed and believes that defendant stole screening events that

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originated at and belonged to OTX, including, but not limited to, “The Runaways,” “Waiting for

Forever,” “The Ex-Terminators,” and “13.”

145. OTX is informed and believes that defendants converted OTX’s property for their

own use and benefit and with the intention of depriving OTX of the use and benefit of said

property as fully described above.

146. OTX did not consent to defendants’ use of OTX’s property.

147. As a proximate result of the conversion by defendants, OTX has suffered injuries

which are the natural, reasonable and proximate result of conversion, in an amount to be proven at

the time of trial.

148. In doing the acts herein alleged, defendants acted with oppression, fraud, malice,

and in conscious disregard of the rights of OTX, and OTX is therefore entitled to punitive

damages according to proof at the time of trial.

[Unfair Business Practices (Business and Professions Code §17200, et seq.) Against All

Defendants and Does 1 through 50, inclusive]

ELEVENTH CAUSE OF ACTION

149. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 148,

inclusive.

150. OTX alleges, upon information and belief, that defendants’ actions constitute unfair

business practices under Business & Professions Code §17200, et seq. In particular and without

limitation the following actions constitute unfair business practices: (a) defendants’

misappropriation of confidential and proprietary information and trade secrets to divert business to

defendants and/or defendants’ employers and businesses and unfairly compete with OTX; (b)

defendants misappropriation of OTX’s employee lists and payroll information to unlawfully solicit

OTX’s screenings, employees and recruiting staff; (c) defendants’ unlawful attempts to raid

personnel that are integral to OTX’s screenings business and/or have established relationships

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with OTX’s clients and screenings staff to divert business and resources to SCREEN ENGINE;

(d) defendants’ unlawful solicitation of OTX’s clients; (e) defendants’ unlawful concealment of

OTX’s business opportunities and screening events; (f) defendants’ unlawful seizure of screenings

business that originated at OTX; (g) defendants’ misappropriation of confidential and proprietary

information and trade secrets to quickly build an infrastructure at no or minimal time and expense

to SCREEN ENGINE; (h) defendants’ disparaging remarks regarding the future viability of

OTX’s screenings business and false statements regarding a strategic alliance between OTX and

SCREEN ENGINE to divert business and employees from OTX; (i) defendants’ scheme to

maximize disruption to OTX’s business in order to discredit OTX, harm OTX’s reputation, and

cause OTX’s clients to lose confidence in OTX’s screenings and qualitative business; (j)

defendants destruction of important screenings documents and materials prior to their resignation

from OTX; and (i) defendants’ failure to return property belonging to OTX and continuing to use

and disclose OTX’s confidential and proprietary information and trade secrets to further SCREEN

ENGINE’s business.

151. As a direct result of defendants’ unfair business practices, OTX has been damaged

and defendants have been unjustly enriched in an amount according to proof at the time of trial.

152. In unfairly competing with OTX, defendants acted and continue to act oppressively

with an intent to destroy OTX’s business, and to injure OTX’s relationship and good will with its

customers and employees.

153. In doing the acts herein alleged, defendants acted with oppression, fraud, malice,

and in conscious disregard of the rights of OTX, and OTX is therefore entitled to punitive

damages according to proof at the time of trial.

154. Unless restrained and enjoined, defendants will continue to unfairly compete and

OTX will be irreparably harmed.

155. OTX is entitled to recover its attorneys’ fees it has and will continue to incur to

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prosecute defendants to stop their unfair, unlawful and fraudulent business practices.

[Violation of Penal Code §§ 496 and 499c Against All Defendants

TWELFTH CAUSE OF ACTION

and Does 1 through 50, inclusive]

155. OTX incorporates by reference as if fully set forth herein paragraphs 1 through 154,

inclusive.

156. Section 496 of the California Penal Code provides, in pertinent part, that every

person who buys or receives any property that has been obtained in any manner constituting theft,

knowing the property to be so obtained, or who sells, or aids in the selling of such property, is

subject to imprisonment in a state prison, or in a county jail for not more than one year. “Theft” is

defined in §499c(b) of the California Penal Code to include taking or using a trade secret without

authorization, with the intent to deprive or withhold the control of a trade secret from its owner, or

with an intent to appropriate a trade secret to his own use or to the use of another.

157. OTX alleges, upon information and belief, that defendants have bought, received,

sold or aided in obtaining OTX’s trade secrets and other confidential and proprietary information

within the meaning of such terms as set forth in Penal Code §§496 and 499c(d) and with

knowledge that such property had been obtained in a manner constituting theft, all in an attempt to

unfairly compete with OTX

158. Pursuant to Penal Code §496, OTX is entitled to an award equal to three times the

amount of its actual damages and to recovery of reasonable attorney’s fees incurred in prosecuting

its claim against defendants.

[Conspiracy Against All Defendants and Does 1 through 50, inclusive]

THIRTEEN CAUSE OF ACTION

159. OTX incorporates the foregoing paragraphs by reference as though set forth fully

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herein paragraphs 1 through 158, inclusive.

160. OTX alleges, upon information and belief, that defendants were aware of and

agreed to participate in a scheme to steal OTX’s confidential and proprietary information and trade

secrets, misappropriate OTX’s confidential and proprietary information and trade secrets to divert

business to SCREEN ENGINE and away from OTX, misappropriate OTX’s confidential and

proprietary information and trade secrets to raid OTX’s employees and screenings’ staff,

misappropriate OTX’s confidential and proprietary information and trade secrets to unlawfully

solicit OTX’s clients and steal OTX’s business, misappropriate OTX’s confidential and

proprietary information and trade secrets to build SCREEN ENGINE’s infrastructure at little to no

cost to defendants, unlawfully conceal OTX’s business opportunities and screening events, and

disrupt OTX’s business and cause damage OTX’s reputation.

161. OTX alleges, upon information and belief, that defendants in fact profited and

received other benefits from the conspiracy scheme.

162. As a proximate result of the wrongful acts herein alleged, OTX has been damaged

and defendants have been unjustly enriched in an amount according to proof at the time of trial.

163. In doing the acts herein alleged, defendants acted with oppression, fraud, malice,

and in conscious disregard of the rights of OTX, and OTX is therefore entitled to punitive

damages according to proof at the time of trial.

[Unjust Enrichment Against All Defendants and Does 1 through 50, inclusive]

FOURTEENTH CAUSE OF ACTION

164. OTX incorporates the foregoing paragraphs by reference as though set forth fully

herein paragraphs 1 through 163, inclusive.

165. In doing to acts and things referred to herein, defendants, and each them, were

unjustly enriched at the expense of OTX, and OTX is entitled to disgorgement of all amounts by

which defendants, and each of them, have been unjustly enriched (i.e. all income, profits, or other

gain earned or received) by virtue of the wrongful conduct perpetrated upon OTX by defendants,

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and each of them, as alleged above.

[For Preliminary and Permanent Injunction Against All Defendants

FIFTEENTH CAUSE OF ACTION

and Does 1 through 50, inclusive]

166. OTX incorporates the foregoing paragraphs by reference as though set forth fully

herein paragraphs 1 through 165, inclusive.

167. Defendants, and each of them, threaten to, and unless restrained will, continue to

unfairly and unlawfully, misappropriate and use OTX’s confidential and trade secret information,

interfere with OTX’s business relationships, solicit and raid OTX’s employees, divert business

away from OTX and unfairly compete with OTX for the benefit of defendants.

168. OTX has sustained and will continue to sustain substantial and irreparable injury

and harm, is without as an adequate remedy at law to stop or be compensated for such wrongful

conduct, and OTX would be required to maintain a multiplicity of actions. Unless and until

defendants are enjoined and restrained by order of this Court, such wrongful and illegal conduct of

defendants, and each of them, will cause and continue to cause great and irreparable injury.

WHEREFORE, OTX prays for judgment as follows:

1. For a preliminary and permanent injunction, restraining and enjoining

Defendants from misappropriating Cross-Complainant OTX’s trade secrets and other confidential

and proprietary information, and requiring Defendants to return the trade secrets and other

confidential and proprietary information to OTX;

2. For a preliminary and permanent injunction, restraining and enjoining

defendants GOETZ AND PARNESS from breaching the terms of the Employment Agreements

and Proprietary and Inventions Agreement signed by them;

3. For a preliminary and permanent injunction, restraining and enjoining

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defendants from interfering with OTX’s contractual relations and prospective economic relations;

4. For a preliminary and permanent injunction, restraining and enjoining

Defendants PARNESS and GOETZ from breaching of their fiduciary duties to OTX;

5. For a preliminary and permanent injunction, restraining and enjoining

Defendants, and each of them, from continuing the acts that constitute unfair business practices;

6. For a preliminary and permanent injunction, restraining and enjoining

Defendants PARNESS and GOETZ from continuing the acts that constitute violations of Labor

Code §2860;

7. For a preliminary and permanent injunction, restraining and enjoining

Defendants from any further misappropriation of OTX’s trade secrets and other confidential and

proprietary information and requiring Defendants to return the trade secrets and other confidential

and proprietary information to OTX;

8. For an award of general damages to be proven at trial;

9. For an award of attorney’s fees and costs and all other relief provided for by

Civil Code §§ 1717 and 3426, et seq.

10. For restitution in an amount to be proven at trial;

11. For disgorgement of profits;

12. For all relief provided for under Business and Professions Code §17200, et

seq.;

13. For all relief provided for by Penal Code §496, including treble damages and

an award for attorney’s fees and costs;

14. For punitive and exemplary damages;

15. For costs of suit; and

///

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16. For such further or other relief as the Court sees fit.

DATED: 3/22/2010 EPPS YONG & COULSON, LLP

By: Dawn M. Coulson Casandra P. Secord

Attorneys for OTX CORPORATION