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