FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 19CV344971 NYSCEF DOC. NO. 4 Santa Clara – Civil RECEIVED NYSCEF: 11/28/2022 Electronically Filed 1 BROWN RUDNICK LLP by Superior Court of CA, LEO J. PRESIADO, #166721 County of Santa Clara, 2 lpresiado@brownrudnick.com on 11/8/2021 4:40 PM ARJUN SIVAKUMAR, #297787 Reviewed By: R. Walker 3 asivakumar@brownrudnick.com Case #19CV344971 2211 Michelson Drive, 7th Floor 4 Irvine, California 92612 Envelope: 7627001 Telephone: (949) 752-7100 5 Facsimile: (949) 252-1514 6 BROWN RUDNICK LLP EDWARD J. NAUGHTON (Pro Hac Vice) 7 enaughton@brownrudnick.com JESSICA T. LU (Pro Hac Vice) 8 jlu@brownrudnick.com KYLE P. DORSO (Pro Hac Vice) 9 kdorso@brownrudnick.com One Financial Center 10 Boston, Massachusetts 02111 Telephone: (617) 856-8200 11 Facsimile: (617) 856-8201 12 Attorneys for Plaintiff and Cross-Defendant, ALORICA INC. 13 14 SUPERIOR COURT OF THE STATE OF CALIFORNIA 15 COUNTY OF SANTA CLARA 16 17 ALORICA INC., a Delaware corporation, CASE NO. 19CV344971 18 Plaintiff, SECOND AMENDED COMPLAINT FOR 19 vs. BREACH OF CONTRACT AND MISREPRESENTATION 20 FORTINET, INC., a Delaware corporation, and DOES 1 through 10, inclusive, 21 ACTION FILED: March 21, 2019 Defendant. TRIAL DATE: September 26, 2022 22 23 AND RELATED CROSS-ACTION. 24 25 26 27 28 1 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 BROWN RUDNICK LLP LEO J. PRESIADO, #166721 2 lpresiado@brownrudnick.com ARJUN SIVAKUMAR, #297787 3 asivakumar@brownrudnick.com 2211 Michelson Drive, 7th Floor 4 Irvine, California 92612 Telephone: (949) 752-7100 5 Facsimile: (949) 252-1514 6 BROWN RUDNICK LLP EDWARD J. NAUGHTON (Pro Hac Vice) 7 enaughton@brownrudnick.com JESSICA T. LU (Pro Hac Vice) 8 jlu@brownrudnick.com KYLE P. DORSO (Pro Hac Vice) 9 kdorso@brownrudnick.com One Financial Center 10 Boston, Massachusetts 02111 Telephone: (617) 856-8200 11 Facsimile: (617) 856-8201 12 Attorneys for Plaintiff and Cross-Defendant, ALORICA INC. 13 14 SUPERIOR COURT OF THE STATE OF CALIFORNIA 15 COUNTY OF SANTA CLARA 16 17 ALORICA INC., a Delaware corporation, CASE NO. 19CV344971 18 Plaintiff, SECOND AMENDED COMPLAINT FOR 19 vs. BREACH OF CONTRACT AND MISREPRESENTATION 20 FORTINET, INC., a Delaware corporation, and DOES 1 through 10, inclusive, 21 ACTION FILED: March 21, 2019 Defendant. TRIAL DATE: September 26, 2022 22 23 AND RELATED CROSS-ACTION. 24 25 26 27 28 1 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 Plaintiff Alorica Inc. (“Alorica”) alleges as follows: 2 PARTIES 3 1. Alorica is, and at all relevant times has been, a corporation organized and existing 4 under the laws of the State of Delaware, with a principal place of business located in Orange 5 County, California. 6 2. Upon information and belief, defendant Fortinet, Inc. (“Fortinet”) is a corporation 7 organized and existing under the laws of the State of Delaware, with its principal place of business 8 in Santa Clara County, State of California. 9 3. Plaintiff is ignorant of the true names and capacities of defendants sued herein as 10 Does 1 through 10, inclusive, and therefore sues said defendants by such fictitious names. Plaintiff 11 will amend this Complaint to allege the true names and capacities of said defendants when 12 ascertained. Plaintiff is informed and believes, and on that basis alleges, that Doe defendants 1 13 through 10, inclusive, are in some manner responsible for some or all the acts and/or omissions 14 alleged herein. 15 GENERAL ALLEGATIONS 16 Alorica Purchases Millions of Dollars Of Fortinet Equipment 17 To Enhance Its Mission-Critical Computer Networks 18 4. Alorica is one of the leading providers of outsourced communication solutions, 19 partnering with leading global brands to provide customer support solutions. Alorica averages over 20 600 million customer interactions per year. To provide these services, Alorica maintains over 100 21 contact centers in more than a dozen countries, staffed with over 100,000 professionals. 22 5. Fortinet is a multinational corporation that develops and markets hardware, 23 software, and services for secure computer networking, including firewalls, switches, and routers. 24 6. In 2017, Alorica determined that it needed to upgrade the computer network 25 equipment on the wide area network (WAN) and local area network (LAN) that connected 26 Alorica’s data centers and contact centers. 27 7. A stable and secure computer network is critically important to Alorica’s business. 28 Any network disruption or outage prevents Alorica from providing the high-quality customer 2 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 support services that it commits to deliver for its clients. The financial consequences of any failure 2 can be severe: Among other things, Alorica must continue to pay salaries and wages to its 3 employees who are rendered unproductive, Alorica is subject to penalties for failing to meet its 4 service level commitments to its customers, Alorica must expend time and effort to identify the 5 cause of an outage or network failure and effect a repair, and Alorica risks suffering loss or 6 reduction in business from frustrated customers. 7 8. Accordingly, one of Alorica’s paramount criteria in selecting a provider of 8 networking equipment is the reliability and high performance of the equipment. 9 9. In 2017, Alorica solicited bids from several computer network equipment 10 manufacturers. After considering proposals from several top-tier candidates and multiple rounds of 11 evaluation, Alorica narrowed the field of vendors to Fortinet and one other. 12 10. Alorica and Fortinet engaged in extensive discussions and negotiations about the 13 products and services that Alorica would purchase and Fortinet would provide. As part of that 14 process, Fortinet evaluated Alorica’s existing networking equipment and capacity requirements to 15 determine what Fortinet products would meet Alorica’s business requirements. 16 11. Alorica’s engineering team also spent considerable time meeting with Fortinet 17 personnel to identify requirements for a proof of concept to demonstrate features and functionality 18 that Alorica required and that Fortinet committed to deliver. 19 12. Among other requirements, Alorica required that the Fortinet system would provide 20 “a single pane of glass,” that is, that the Fortinet hardware and software would serve as a single 21 uniform console or control panel from which Alorica could manage its entire network. 22 13. Fortinet did not have the network and SD-WAN functionality needed for Alorica’s 23 large, fault-tolerant network in its then-current version of Fortinet operating system software 24 (called “FortiOS version 5.6”). Fortinet committed to developing those features for Alorica in a 25 custom version of FortiOS 5.6 and then merging those improvements into the next generally 26 available release of the software, which was slated to be FortiOS version 6.0. 27 14. In July 2017, Fortinet submitted its final “proposal” to Alorica. In its “proposal,” 28 Fortinet listed Alorica’s various sites identified by basic categories (e.g., small sites, medium sites, 3 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 large sites, mega sites, and data centers). From that categorization, Fortinet identified a general set 2 of Fortinet equipment for each site size. 3 15. Between September 2017 and September 2018, Alorica purchased thousands of 4 Fortinet products in an amount exceeding $10 million. These products included the Fortinet 5 FortiGate models FG-201E, FG-500E, FG-600D, FG-1500D, FG-3200D, and FG-3960E; Fortinet 6 FortiSwitch models FSW-248D, FSW-248D-FPOE, FSW-248E-FPOE, FSW-448D, FSW-448D- 7 FPOE, and FSW-1024D; and network management software including FortiManager, 8 FortiAnalyzer, and FortiAuthenticator. Because of its need for high availability and reliable 9 operation, Alorica network engineers specified that they wanted a fully redundant network, 10 virtually doubling the number of appliances that were required, and virtually doubling the number 11 of, e.g., circuits and gateways, used to interconnect the Fortinet equipment to the carrier networks. 12 16. To further ensure uninterrupted network operation, Alorica also purchased enhanced 13 support and extended services from Fortinet to ensure that any problems that arose would be 14 promptly resolved. 15 Fortinet’s Hardware and Software Proves To Be Defective And Unreliable 16 17. In January 2018, Alorica and Fortinet began deploying and implementing the 17 Fortinet products in Alorica’s facilities. 18 18. Soon after putting the Fortinet equipment into its live network, Alorica encountered 19 issues with the Fortinet software and hardware. It soon became clear that Fortinet oversold the 20 capabilities, functionality, and point of development of its software and hardware. 21 19. Fortinet’s switches (“FortiSwitches”) were defective in a number of respects. For 22 instance, and just by way of example, the FortiSwitches did not properly implement a networking 23 protocol known as “Spanning Tree Protocol,” or “STP,” which has been a basic component of the 24 Ethernet networking protocol for decades. 25 20. To design a network environment that is robust and fault-tolerant, it is generally 26 necessary to provide for redundancy. In other words, there are often multiple physical links 27 between various endpoints, such as multiple connections between two network switches, to ensure 28 connectivity for network traffic even if one of the links fails. The fundamental networking protocol 4 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 of STP is intended to prevent the situation where more than one physical path between two devices 2 results in traffic looping and cycling endlessly, consuming network resources and preventing traffic 3 communication across the switch. 4 21. Specifically, STP is used to create a logical network topology that avoids loops. In 5 simple terms, where there are redundant links between switches, STP sets up one link as the 6 preferred link and disables the other. If the preferred link fails, then one of the non-preferred 7 redundant links is enabled to keep network traffic flowing. 8 22. Due to persistent STP bugs in the FortiSwitches and FortiOS and/or FortiSwitchOS 9 operating system software, the FortiSwitches did not properly implement STP and consequently 10 Alorica experienced the looping condition that STP is intended to avoid. Fortinet struggled to 11 correct these bugs, releasing multiple software patches, but it never was able to do so reliably. 12 Therefore, to avoid these problems, Alorica was forced to take steps including without limitation 13 disabling redundancies in its network, which made the network less reliable and fault-tolerant, 14 increasing timer values which negatively affected network performance, and disabling certain 15 functionalities which in turn prevented detection and easy resolution of cabling issues. 16 23. In addition, FortiSwitches failed to operate correctly due to what Fortinet 17 determined to be inherent CPU, memory management, and multi-chassis link aggregation defects 18 internal to these devices. 19 24. The aforementioned FortiSwitch defects and failures damaged Alorica including 20 without limitation in the form of lost call traffic, idle agents, unhappy customers, and requirement 21 of additional incremental network equipment and labor expense. 22 25. Fortinet also supplied small form factor pluggable transceivers (“SFPs”) intended 23 for use in the FortiSwitches to Alorica, which SFPs were in fact incompatible with the 24 FortiSwitches. This forced Alorica to incur the delay and cost of ordering and installing SFPs from 25 another vendor to get Fortinet’s switches to function. 26 26. Fortinet gateways (“FortiGates”) were also defective. 27 / / / 28 / / / 5 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 27. For example, the FortiGates contained fundamental architectural defects in their 2 allocation of Central Processing Unit (“CPU”) usage, causing CPU spikes, bottlenecks, and failure 3 to implement multi-threading. 4 28. By way of further examples, the FortiGates contained fundamental defects in their 5 Network Processing Units (“NPUs”), which were deficient in handling loopbacks, exhibited 6 aberrant cross-chip behavior, caused memory leakages, and lacked activity counters, which caused 7 Alorica’s network significant latency, loss of data packets, and network outages. Each of these 8 effects were detrimental to Alorica including by hampering its ability to handle call traffic in a 9 timely and responsive manner, resulting in financial loss to Alorica. 10 29. These problems occurred because FortiGate NPUs had recurring problems with 11 offloading of traffic. Such devices ordinarily accept and direct data packets to the proper address 12 by having the central processing unit (CPU) read the control information in the header of the packet 13 and then routing the packet to the proper address. This processing often is resource intensive and 14 places a heavy load on the CPU. The load on the device can be reduced and network traffic can be 15 accelerated by “offloading” the traffic to an NPU. In simple terms, the CPU reads the control 16 information in the first packet of a session and specifies the path that the data will follow to its 17 destination. Subsequent data packets in the session are routed through the NPU, rather than the 18 CPU, to minimize the load on the CPU and maximize throughput of data. Alorica experienced 19 recurring defects in this NPU offloading, however, that caused system outages. 20 30. In order to alleviate the aforementioned NPU issues, Alorica was forced to disable 21 the NPU offloading, thereby significantly reducing the advertised capacity and effective throughput 22 of the FortiGates. 23 31. Alorica discovered other defects in Fortinet’s software and equipment as well. 24 a. The Fortinet equipment experienced repeated problems with border gateway 25 protocol (“BGP”), including without limitation suffering persistently from “route flapping,” in 26 which the device alternately identifies VPN tunnels as available, then unavailable, then available 27 again in rapid succession. Sometimes, the Fortinet equipment even created one VPN tunnel within 28 / / / 6 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 another tunnel, causing the connection to be recursive and to crash. Alorica had to implement 2 crude workarounds including “blackhole routing” to reduce the problem. 3 b. One of the primary reasons why Alorica purchased Fortinet’s products was 4 because Fortinet represented that its products offered functionality that would allow Alorica to set 5 up a software-defined wide area network (“SD-WAN”). In fact, Fortinet’s SD-WAN solution was 6 plagued with serious technical defects. For example, the Fortinet equipment often did not properly 7 balance the traffic between VPN tunnels, causing tremendous latency issues. Some applications 8 that Alorica’s agents used to handle customer inquiries took several minutes, rather than seconds, 9 to load. As another example, the Fortinet system did not failover when a carrier circuit went down. 10 Alorica had purchased redundant Fortinet equipment, at considerable additional expense, for the 11 sole purpose of preventing these types of failures. 12 c. In cases where the FortiGates and FortiSwitches attempted to provide 13 “failover” service, they did not perform the service that way they were supposed to, for reasons that 14 could not be identified, causing outages. By way of example, the Fortinet equipment experienced 15 problems completing High Availability (HA) failovers due to miscommunication between 16 redundant devices. These unexpected failovers occurred when the devices inexplicably stopped 17 transmitting / detecting a “keep-alive” heartbeat, and as a result of IPSec kernel panics, among 18 other things. 19 d. The Fortinet equipment did not properly implement SIP ALG and network 20 address translation. SIP (Session Initial Protocol) is the protocol that allows voice-over-IP (VoIP) 21 communication, which is essential to Alorica’s business. Network address translation (NAT) 22 translates the private Internet protocol (IP) addresses behind a network firewall into a public IP 23 address, which allows VoIP communication over the public internet. The SIP ALG and NAT 24 features in the Fortinet products did not work together properly, resulting in network outages or 25 causing packets and calls to be missed or dropped, often without even logging an error. Alorica 26 also experienced other related problems including SIP helper not being maintained by the Fortinet 27 equipment despite being necessary when SIP ALG only supported two ports. Because of these 28 / / / 7 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 defects, Alorica was required to perform an enormous amount of extra manual work to find and 2 correct errors. 3 e. The Fortinet equipment failed to properly implement Dynamic Host 4 Configuration Protocol (“DHCP”), another basic networking protocol, by which network addresses 5 are assigned to devices on the network such as phones and PCs. From time to time, without any 6 discernable explanation, the DHCP process simply stopping assigning IP addresses. 7 f. The Fortinet devices experienced extremely high memory utilization, which 8 significantly complicated the management of the devices, impaired the devices’ abilities to pass 9 traffic, and forced the devices into “memory conserve mode,” which drastically reduced 10 performance. 11 g. In early 2020, the COVID-19 pandemic caused Alorica’s employees 12 worldwide by and large to shift to working at home. This shift exposed further major failures in the 13 functionality of Fortinet equipment at Alorica. Despite being advertised to be able to handle many 14 times the VPN throughput that Alorica required, the Fortinet products were not up to the task. As a 15 result, Alorica experienced severe SSL VPN problems including latency and disconnections. As a 16 workaround, Fortinet recommended that Alorica switch to an IPSec VPN. This IPSec VPN 17 workaround suffered a new set of problems such as disconnects on port locking and CPU 18 constriction. 19 32. These are just a few examples of defects that Alorica encountered; there were many 20 more. Alorica brought these problems to Fortinet’s attention, but Fortinet never was able to 21 completely fix them. 22 33. Moreover, despite Fortinet’s representations, the Fortinet system did not function as 23 a single pane of glass. Alorica was unable to manage all the equipment in its networks through a 24 single control console. Instead, Alorica often was forced to connect locally to the specific device 25 with an issue, thereby increasing the time it took to identify and fix the problems with the Fortinet 26 equipment. Fortinet is aware that its products lack the capabilities that were represented to Alorica, 27 and several of its employees have confirmed the same. 28 / / / 8 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 34. When Alorica reported defects and bugs to Fortinet, Fortinet’s typical response was 2 to write a software patch that was intended to address the problem. In many cases Fortinet was not 3 able to deliver a reliable fix. When it was able to develop a fix, Fortinet promised to include these 4 fixes in FortiOS v.6.0, which was the next version of the FortiOS software to be released. 5 35. In fact, despite its representations, when Fortinet released FortiOS v.6.0 in March 6 2018, it did not include many of these fixes. Consequently, Alorica was unable to migrate to the 7 generally-available version of the FortiOS software and was stranded on its own heavily patched, 8 customized version of FortiOS v. 5.6. Fortinet’s support team was trained on the standard versions 9 and was largely unfamiliar with Alorica’s version. Consequently, Fortinet was very slow to 10 respond to and address the defects in the software and equipment that Alorica was using. Alorica 11 remains on a customized branch of code to this date, and thus it has never been able to utilize 12 FortiOS v. 6.0 or any other generally available FortiOS code. 13 36. And as Fortinet was well aware, Alorica’s main business function is providing call 14 center services and its core business relies heavily on Voice over IP. The products sold by Fortinet 15 to Alorica to replace Alorica’s existing networking equipment were falsely represented by Fortinet 16 as capable of reliably serving all of Alorica’s business, consisting of over 100 sites, 100,000 agents, 17 and multiple data centers. Among other things, Fortinet represented that its products would operate 18 without causing any outages or dropped voice over IP calls in the face of carrier or other circuit 19 failures in order to achieve high reliability and availability for Alorica’s operations. 20 37. Moreover, Fortinet represented that its products could be configured with full 21 redundancy to achieve the high availability service levels that Alorica required. In response, 22 Fortinet proposed and Alorica purchased Fortinet equipment in pairs and ordered redundant circuits 23 for all locations. 24 38. Fortinet further represented that its SD-WAN capability would operate at full 25 functionality and at the scale of Alorica’s network, and offer the advantages of reduction of cost, 26 efficiency, application-based routing, etc. that SD-WAN provides. Fortinet represented that its 27 products would support STP, BGP, VPN, SIP ALG/NAT, and other basic network features, and 28 that such capabilities would operate, and operate at the scale and volume of Alorica’s network 9 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 traffic. Fortinet represented that the product architectures internal to its FortiGates, FortiSwitches 2 and other products were designed with adequate processing power to support the Alorica network 3 and traffic. And Fortinet further represented that it would provide support to Alorica and standard 4 configurations which were never provided or validated. 5 39. Alorica made Fortinet aware of all the defects and bugs that it encountered, and 6 Fortinet had multiple opportunities to address and resolve them. Fortinet personnel spent weeks on 7 site at Alorica’s facilities, but many of the problems were never solved. 8 40. In view of Fortinet’s knowledge that its equipment would replace networking 9 equipment throughout the Alorica network, that Alorica’s network was designed for high 10 availability, resiliency, redundancy, that Alorica had zero tolerance for dropped calls, and that any 11 failures to even a single call could have negative financial impact to Alorica, Fortinet provided 12 equipment and equipment configuration that did not work reliably in the Alorica network. Alorica 13 is informed and believes that, despite Fortinet’s representations about its products, the Fortinet 14 technology deployed at Alorica had not been deployed previously in a large and complex end-to- 15 end network similar to Alorica’s environment. Alorica’s installation of the Fortinet equipment was 16 effectively a field laboratory for Fortinet. Fortinet never delivered the robust, reliable, and secure 17 end-to-end solution that it had promised to Alorica. Further, Fortinet failed to remedy the reported 18 problems consistently, so that Alorica could recover, in a reasonable time, to full network 19 operation. 20 41. Ultimately, the defects in Fortinet’s equipment, and Fortinet’s failure to address 21 them and deliver on its promises, forced Alorica to abandon the deployment and installation of 22 Fortinet’s equipment. 23 42. Alorica has demanded that Fortinet refund the amounts that Alorica paid for the 24 defective equipment, but Fortinet has refused. 25 43. Alorica has sustained and will continue to sustain significant damages from 26 Fortinet’s failures and breaches, including without limitation (1) the costs of and lost revenue from 27 the many network outages caused by Fortinet’s defective equipment; (2) financial penalties 28 incurred because, among other things, Alorica is subject to service level commitments that require 10 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 its agents to handle and resolve calls within a certain period of time; (3) lost revenues due to 2 customers having fully or partially stopped working with Alorica due to unreliable service 3 attributed to problems with the Fortinet equipment; (4) the amounts that it paid to Fortinet for its 4 defective hardware and software, less any amounts Fortinet refunded to Alorica; (5) cost due to 5 inability to deliver reduced carrier expense and costs associated with circuits rendered unusable; (6) 6 time spent and costs incurred in replacing the defective Fortinet hardware and software; and (7) 7 costs of incremental contract network labor and equipment required to make best efforts in 8 maintaining an operational network / maintaining regular business project activity while managing 9 the impacts from the Fortinet failures. 10 FIRST CAUSE OF ACTION 11 (For Breach of Warranty) 12 44. Alorica repeats and hereby incorporates by reference paragraphs 1 through 43 above 13 as though set forth in full. 14 45. Through Alorica’s purchase of Fortinet’s products, the parties entered into the 15 Fortinet End User License Agreement (the “Agreement”) on or about September 6, 2017. 16 The Agreement is a written Agreement. 17 46. As set forth in the Agreement, Fortinet warranted that all hardware purchased “will 18 be free from material defects in workmanship” for the warranty period of 365 days. 19 47. As set forth in the Agreement, Fortinet warranted that all software purchased “will 20 substantially conform to Fortinet’s then current functional specifications” for a period of 90 days. 21 48. Alorica offered Fortinet many opportunities to correct the defects in Fortinet’s 22 products, but Fortinet failed to do so. 23 49. Fortinet has breached the Agreement by failing to provide hardware free from 24 material defects in workmanship and failing to provide software that substantially conforms to its 25 functional specifications. 26 50. Alorica performed all obligations imposed on it by the Agreement, except those 27 from which it was excused from performing. 28 / / / 11 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 51. The Agreement provides that in the event of any dispute between the parties arising 2 from the Agreement, the parties submit to the jurisdiction of this Court, and venue. 3 52. Alorica has been substantially damaged by Fortinet’s failure to fulfill its obligations 4 in an amount to be proven at trial, but which likely exceeds $30 million. 5 SECOND CAUSE OF ACTION 6 (Negligent Misrepresentation) 7 53. Alorica repeats and hereby incorporates by reference paragraphs 1 through 52 above 8 as though set forth in full. 9 54. Fortinet made misrepresentations of material fact to Alorica in product 10 documentation, and orally and/or in writing through Lou Sacharske, Jessica Shannon, Jonathan 11 Torian, and others, each with authority to make the statements on behalf of Fortinet, to Alorica 12 employees including but not limited to Robert Dees, Michael Hagan, Jonathan Merrell, and Jason 13 Nickle, including without limitation the following: 14 a. that the Fortinet software and hardware would function as “a single pane of 15 glass” that would allow Alorica to manage its networks from a single control panel, such as (1) in 16 writing by Fortinet’s Jonathan Torian to Alorica’s Michael Hagan and Jason Nickle on or about 17 May 19, 2017 and by Fortinet’s Jessica Shannon to Mr. Nickle and Mr. Hagan, copying Mr. 18 Torian, on or about July 5, 2017; (2) orally by Mr. Torian and Ms. Shannon to Mr. Hagan, Mr. 19 Nickle, and Alorica engineers such as Robert Cater in or about Spring/Summer 2017, such as by 20 Mr. Torian to Alorica attendees at the parties’ May 2017 proof of concept meeting held in 21 Greenville, SC (“Greenville POC”); (3) by omission to state that no Fortinet product in fact 22 provides the ability to manage a network from a single control panel; 23 b. that Fortinet would merge the patches and fixes that it had created for 24 Alorica into the generally available FortiOS v.6, such as (1) orally by Mr. Torian to Mr. Nickle, 25 Mr. Hagan, and Alorica engineers such as Mr. Cater in or about Spring/Summer 2017; (2) in 26 writing by Mr. Torian to Mr. Nickle, copying Fortinet’s Rapatrick Murrell, on or about June 27, 27 2017; (3) by omission to state that Alorica would not be provided generally available FortiOS v.6 28 / / / 12 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 software but rather would be required to use a custom build. These misrepresentations were later 2 acknowledged by email authored by Fortinet’s Efren Huerta on or about August 18, 2018; 3 c. that Fortinet products would provide failover capabilities and continue to 4 operate reliably in the face of carrier or other circuit failures in order to achieve high reliability and 5 availability for Alorica’s operations, such as (1) orally and in writing by Fortinet’s Lou Sacharske 6 to Alorica’s Robert Dees on or about March 17, 2017, and April 4, 2017; (2) orally by Mr. Torian 7 to Alorica attendees at the Greenville POC; (3) in writing by Mr. Torian to Mr. Hagan and Mr. 8 Nickle on or about May 19, 2017; (4) by omission to state that Fortinet’s products had never been 9 deployed or tested in an environment akin to Alorica’s; 10 d. that Fortinet products could be configured with full redundancy to achieve 11 the high availability service levels that Alorica required, such as (1) in writing by Ms. Shannon to 12 Mr. Nickle and Mr. Hagan, copying Mr. Torian, on or about July 5, 2017; (2) orally by Ms. 13 Shannon and Mr. Torian to Mr. Nickle, Mr. Hagan, and Alorica engineers such as Mr. Cater in or 14 about Spring/Summer 2017, such as by Mr. Torian to Alorica attendees at the Greenville POC; (3) 15 in writing by Ms. Shannon’s proposed equipment purchase lists providing for Alorica to purchase 16 equipment in redundant pairs; and (4) by omission to state that Fortinet’s products had never been 17 deployed or tested in an environment akin to Alorica’s; 18 e. that Fortinet’s SD-WAN capability would operate at full functionality and at 19 the scale of Alorica’s network, and offer the advantages of reduction of cost, efficiency, 20 application-based routing, etc. that SD-WAN provides, such as (1) orally and in writing by Mr. 21 Sacharske to Mr. Dees on or about March 17, 2017, and April 4, 2017; (2) in writing by Ms. 22 Shannon to Mr. Nickle and Mr. Hagan, copying Mr. Torian, on or about July 5, 2017; (3) orally by 23 Ms. Shannon and Mr. Torian to Mr. Hagan, Mr. Nickle, and Alorica engineers such as Mr. Cater in 24 or about Spring/Summer 2017, such as by Mr. Torian to Alorica attendees at the Greenville POC; 25 (4) in writing by Mr. Torian to Mr. Hagan and Mr. Nickle on or about May 19, 2017; (5) by 26 omission to state that Fortinet’s SD-WAN product had never been deployed or tested in an 27 environment akin to Alorica’s; 28 / / / 13 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 f. that basic network features, such as support for Spanning Tree Protocol, 2 Border Gateway Protocol, Virtual Private Networks, SIP Application Layer Gateway, and other 3 capabilities would operate, including at the scale and volume of Alorica’s network traffic, such as 4 (1) orally and in writing by Mr. Sacharske to Mr. Dees on or about March 17, 2017, and April 4, 5 2017; (2) in writing by Ms. Shannon to Mr. Nickle and Mr. Hagan, copying Mr. Torian, on or 6 about July 5, 2017; (3) orally by Ms. Shannon and Mr. Torian to Mr. Nickle, Mr. Hagan, and 7 Alorica engineers such as Mr. Cater in or about Spring/Summer 2017, such as by Mr. Torian to 8 Alorica attendees at the Greenville POC; (4) in writing by Mr. Torian to Mr. Hagan and Mr. Nickle 9 on or about May 19, 2017; (5) by omission to state that these features had never been deployed or 10 tested in an environment akin to Alorica’s; 11 g. that Fortinet’s product architectures internal to its FortiGates, FortiSwitches 12 and other products were designed with adequate processing power to support the Alorica network 13 and traffic, such as (1) orally and in writing by Mr. Sacharske to Mr. Dees on or about March 17, 14 2017, and April 4, 2017; (2) in writing by Ms. Shannon to Mr. Nickle and Mr. Hagan, copying Mr. 15 Torian, on or about July 5, 2017; (3) orally by Ms. Shannon and Mr. Torian to Mr. Nickle, Mr. 16 Hagan, and Alorica engineers such as Mr. Cater in or about Spring/Summer 2017, such as by Mr. 17 Torian to Alorica attendees at the Greenville POC; (4) in writing by Mr. Torian to Mr. Hagan and 18 Mr. Nickle on or about May 19, 2017; (5) by omission to state that Fortinet’s products had never 19 been deployed or tested in an environment akin to Alorica’s; 20 h. that Fortinet would provide Alorica with validated standard configurations 21 for its products, such as (1) in writing by Ms. Shannon to Mr. Nickle and Mr. Hagan, copying Mr. 22 Torian, on or about July 5, 2017; (2) orally by Ms. Shannon and Mr. Torian to Mr. Nickle, Mr. 23 Hagan, and Alorica engineers such as Mr. Cater in or about Spring/Summer 2017; (3) by omission 24 to state that Fortinet did not possess and was unwilling to provide such standard configurations. 25 55. Fortinet did not have reasonable grounds to believe these representations to be true. 26 56. Fortinet made these representations with the intent to induce Alorica to rely on them 27 and to purchase and to continue to deploy Fortinet products and services. 28 / / / 14 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 57. Alorica did reasonably and justifiably rely on these representations, without 2 awareness or knowledge of their untruth, by (among other things) purchasing Fortinet products and 3 services and continuing to implement and deploy them. 4 58. Alorica has been substantially damaged by Fortinet’s misrepresentations, in an 5 amount to be proven at trial, but which likely exceeds $30 million. 6 THIRD CAUSE OF ACTION 7 (Intentional Misrepresentation) 8 59. Alorica repeats and hereby incorporates by reference paragraphs 1 through 58 above 9 as though set forth in full. 10 60. Fortinet made misrepresentations of material fact to Alorica in product 11 documentation, and orally and/or in writing through Lou Sacharske, Jessica Shannon, Jonathan 12 Torian, and others, each with authority to make the statements on behalf of Fortinet, to Alorica 13 employees including but not limited to Robert Dees, Michael Hagan, Jonathan Merrell, and Jason 14 Nickle, including without limitation the following: 15 a. that the Fortinet software and hardware would function as “a single pane of 16 glass” that would allow Alorica to manage its networks from a single control panel, such as (1) in 17 writing by Mr. Torian to Mr. Hagan and Mr. Nickle on or about May 19, 2017 and by Ms. Shannon 18 to Mr. Nickle and Mr. Hagan, copying Mr. Torian, on or about July 5, 2017; (2) orally by Mr. 19 Torian and Ms. Shannon to Mr. Hagan, Mr. Nickle, and Alorica engineers such as Mr. Cater in or 20 about Spring/Summer 2017, such as by Mr. Torian to Alorica attendees at the Greenville POC; (3) 21 by omission to state that no Fortinet product in fact provides the ability to manage a network from a 22 single control panel; 23 b. that Fortinet would merge the patches and fixes that it had created for 24 Alorica into the generally available FortiOS v.6, such as (1) orally by Mr. Torian to Mr. Nickle, 25 Mr. Hagan, and Alorica engineers such as Mr. Cater in or about Spring/Summer 2017; (2) in 26 writing by Mr. Torian to Mr. Nickle, copying Mr. Murrell, on or about June 27, 2017; (3) by 27 omission to state that Alorica would not be provided generally available FortiOS v.6 software but 28 / / / 15 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 rather would be required to use a custom build. These misrepresentations were later acknowledged 2 by email authored by Fortinet’s Efren Huerta on or about August 18, 2018; 3 c. that Fortinet products would provide failover capabilities and continue to 4 operate reliably in the face of carrier or other circuit failures in order to achieve high reliability and 5 availability for Alorica’s operations, such as (1) orally and in writing by Fortinet’s Lou Sacharske 6 to Alorica’s Robert Dees on or about March 17, 2017, and April 4, 2017; (2) orally by Mr. Torian 7 to Alorica attendees at the Greenville POC; (3) in writing by Mr. Torian to Mr. Hagan and Mr. 8 Nickle on or about May 19, 2017; (4) by omission to state that Fortinet’s products had never been 9 deployed or tested in an environment akin to Alorica’s; 10 d. that Fortinet products could be configured with full redundancy to achieve 11 the high availability service levels that Alorica required, such as (1) in writing by Ms. Shannon to 12 Mr. Nickle and Mr. Hagan, copying Mr. Torian, on or about July 5, 2017; (2) orally by Ms. 13 Shannon and Mr. Torian to Mr. Nickle, Mr. Hagan, and Alorica engineers such as Mr. Cater in or 14 about Spring/Summer 2017, such as by Mr. Torian to Alorica attendees at the Greenville POC; (3) 15 in writing by Ms. Shannon’s proposed equipment purchase lists providing for Alorica to purchase 16 equipment in redundant pairs; and (4) by omission to state that Fortinet’s products had never been 17 deployed or tested in an environment akin to Alorica’s; 18 e. that Fortinet’s SD-WAN capability would operate at full functionality and at 19 the scale of Alorica’s network, and offer the advantages of reduction of cost, efficiency, 20 application-based routing, etc. that SD-WAN provides, such as (1) orally and in writing by Mr. 21 Sacharske to Mr. Dees on or about March 17, 2017, and April 4, 2017; (2) in writing by Ms. 22 Shannon to Mr. Nickle and Mr. Hagan, copying Mr. Torian, on or about July 5, 2017; (3) orally by 23 Ms. Shannon and Mr. Torian to Mr. Hagan, Mr. Nickle, and Alorica engineers such as Mr. Cater in 24 or about Spring/Summer 2017, such as by Mr. Torian to Alorica attendees at the Greenville POC; 25 (4) in writing by Mr. Torian to Mr. Hagan and Mr. Nickle on or about May 19, 2017; (5) by 26 omission to state that Fortinet’s SD-WAN product had never been deployed or tested in an 27 environment akin to Alorica’s; 28 / / / 16 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 f. that basic network features, such as support for Spanning Tree Protocol, 2 Border Gateway Protocol, Virtual Private Networks, SIP Application Layer Gateway, and other 3 capabilities would operate, including at the scale and volume of Alorica’s network traffic, such as 4 (1) orally and in writing by Mr. Sacharske to Mr. Dees on or about March 17, 2017, and April 4, 5 2017; (2) in writing by Ms. Shannon to Mr. Nickle and Mr. Hagan, copying Mr. Torian, on or 6 about July 5, 2017; (3) orally by Ms. Shannon and Mr. Torian to Mr. Nickle, Mr. Hagan, and 7 Alorica engineers such as Mr. Cater in or about Spring/Summer 2017, such as by Mr. Torian to 8 Alorica attendees at the Greenville POC; (4) in writing by Mr. Torian to Mr. Hagan and Mr. Nickle 9 on or about May 19, 2017; (5) by omission to state that these features had never been deployed or 10 tested in an environment akin to Alorica’s; 11 g. that Fortinet’s product architectures internal to its FortiGates, FortiSwitches 12 and other products were designed with adequate processing power to support the Alorica network 13 and traffic, such as (1) orally and in writing by Mr. Sacharske to Mr. Dees on or about March 17, 14 2017, and April 4, 2017; (2) in writing by Ms. Shannon to Mr. Nickle and Mr. Hagan, copying Mr. 15 Torian, on or about July 5, 2017; (3) orally by Ms. Shannon and Mr. Torian to Mr. Nickle, Mr. 16 Hagan, and Alorica engineers such as Mr. Cater in or about Spring/Summer 2017, such as by Mr. 17 Torian to Alorica attendees at the Greenville POC; (4) in writing by Mr. Torian to Mr. Hagan and 18 Mr. Nickle on or about May 19, 2017; (5) by omission to state that Fortinet’s products had never 19 been deployed or tested in an environment akin to Alorica’s; 20 h. that Fortinet would provide Alorica with validated standard configurations 21 for its products, such as (1) in writing by Ms. Shannon to Mr. Nickle and Mr. Hagan, copying Mr. 22 Torian, on or about July 5, 2017; (2) orally by Ms. Shannon and Mr. Torian to Mr. Nickle, Mr. 23 Hagan, and Alorica engineers such as Mr. Cater in or about Spring/Summer 2017; (3) by omission 24 to state that Fortinet did not possess and was unwilling to provide such standard configurations. 25 61. Fortinet knew that the representations were false when they made the 26 representations or made the representations recklessly and without regard for their truth. 27 62. Fortinet made these representations with the intent to induce Alorica to rely on them 28 and to purchase and to continue to deploy Fortinet products and services. 17 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 63. Alorica did reasonably and justifiably rely on these representations, without 2 awareness or knowledge of their untruth, by (among other things) purchasing Fortinet products and 3 services and continuing to implement and deploy them. 4 64. Alorica has been substantially damaged by Fortinet’s misrepresentations, in an 5 amount to be proven at trial, but which likely exceeds $30 million. 6 65. Fortinet acted with oppression, fraud, and/or malice in the aforementioned conduct 7 and accordingly exemplary damages should be awarded to punish and make an example of 8 Fortinet. 9 PRAYER FOR RELIEF 10 WHEREFORE, Plaintiff prays for judgment against Defendant as follows: 11 ON THE FIRST CAUSE OF ACTION: 12 1. For damages, in an amount subject to proof, but which likely exceeds $30 million, 13 plus interest at the legal rate. 14 ON THE SECOND CAUSE OF ACTION: 15 2. For damages, in an amount subject to proof, but which likely exceeds $30 million, 16 plus interest at the legal rate. 17 ON THE THIRD CAUSE OF ACTION: 18 3. For damages, in an amount subject to proof, but which likely exceeds $30 million, 19 plus interest at the legal rate. 20 4. For exemplary damages. 21 / / / 22 / / / 23 / / / 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 18 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 1 ON ALL CAUSES OF ACTION: 2 5. For costs of suit; 3 6. For attorneys’ fees; and 4 7. For such other relief as the Court may deem just and proper. 5 DATED: November 8, 2021 Respectfully submitted, 6 BROWN RUDNICK LLP 7 8 By: LEO J. PRESIADO 9 Attorney for Plaintiff and Cross-Defendant, ALORICA INC. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 SECOND AMENDED COMPLAINT 1358327 v2-iManDB-035051/0001 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 11/28/2022 PROOF OF SERVICE 1 2 STATE OF CALIFORNIA, 3 COUNTY OF ORANGE 4 At the time of service, I was over 18 years of age and not a party to this action. I am employed in the County of Orange, State of California. My business address is 2211 Michelson 5 Drive, Seventh Floor, Irvine, CA 92612. 6 On November 8, 2021, I served true copies of the following document(s) described as SECOND AMENDED COMPLAINT FOR BREACH OF CONTRACT AND 7 MISREPRESENTATION as follows: 8 Charles K. Verhoeven, Esq. Sean Pak, Esq. Attorneys for Defendant and Cross- 9 Andrew M. Holmes, Esq. Lindsay Cooper, Esq. Complainant Fortinet, Inc. 10 Ognjen Zivojnovic, Esq. Charlie V. Stevens, Esq. 11 Nathan Sun, Esq. Quinn Emanuel Urquhart & Sullivan LLP 12 50 California Street, 22nd Floor San Francisco, CA 94111 13 Phone: (415) 875-6600 Fax: (415) 875-6700 14 E-mail: qe-alorica-fortinet@quinnemanuel.com 15 Suong Nguyen, Esq. Attorneys for Defendant and Cross- Quinn Emanuel Urquhart & Sullivan LLP 16 555 Twin Dolphin Drive, 5th Floor Complainant Fortinet, Inc. Redwood Shores, CA 94065. 17 Phone: (650) 801-5000 Fax: (650) 801-5100 18 E-mail: qe-alorica-fortinet@quinnemanuel.com 19 20 BY E-MAIL OR ELECTRONIC TRANSMISSION: I caused a copy of the document(s) to be sent from e-mail address jpels@brownrudnick.com to the persons at the e-mail 21 addresses listed above. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. 22 23 I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct and that I am employed in the office of a member of the bar of this 24 Court at whose direction the service was made. 25 Executed on November 8, 2021, at Orange, California. 26 27 JESSICA W. PELS 28 FILED: NEW YORK COUNTY CLERK 11/28/2022 11:02 PM INDEX NO. 160135/2022 NYSCEF DOC. 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