SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -----------------------------------------------------------------X RIMYLAN ENTERPRISES, LLC, PROJECT Index No. APPLECART, LLC, TORMIMA, LLC, and MININO PRODUCTIONS, LLC, COMPLAINT Plaintiffs, -against- NO LABELS, INC., FORWARD NOT BACK, INC., UNITED FOR PROGRESS, INC., UNITED TOGETHER, INC., CITIZENS FOR A STRONG AMERICA, INC., GOVERN OR GO HOME, INC., AMERICANS COMMITTED FOR PROGRESS, INC., CITIZENS FOR AMERICA, INC., PROGRESS TOGETHER, INC., PATRIOTIC AMERICANS PAC, INC., NO LABELS ACTION, INC., PROGRESS TOMORROW, INC., and NANCY JACOBSON, Defendants. -----------------------------------------------------------------X Rimylan Enterprises, LLC (“Rimylan”), Project Applecart, LLC (“PAL”), Tormima, LLC (“Tormima”), and Minino Productions, LLC (“Minino”) by their undersigned counsel, as and for their Complaint against Defendants No Labels, Inc. (“No Labels”), Forward Not Back, Inc. (“Forward Not Back”), United For Progress, Inc. (“United For Progress”), United Together, Inc. (“United Together”), Citizens For A Strong America, Inc. (“Citizens For A Strong America”), Govern or Go Home, Inc. (“Govern or Go Home”), Americans Committed For Progress, Inc. (“Americans Committed For Progress”), Citizens for America, Inc. (“Citizens for America”), Progress Together, Inc. (“Progress Together”), Patriotic Americans PAC, Inc. (“Patriotic Americans”), No Labels Action, Inc. (“No Labels Action”), Progress Tomorrow, Inc. (“Progress Tomorrow”), and Nancy Jacobson (“Jacobson”), allege as follows: 1 PRELIMINARY STATEMENT No Labels owes Rimylan $3,708,214.26. Under a Binding Term Sheet, effective as of December 3, 2016, Rimylan agreed to provide political data and analytic services exclusively to No Labels in connection with the 2018 congressional primary elections. In exchange No Labels agreed to order and pay for $5 million in services from Rimylan during the 2018 election cycle – that is, before November 6, 2018. On June 19, 2018, No Labels unequivocally repudiated the Binding Term Sheet. It did so after causing certain of its affiliates – a group of political action committees (“PACs”) and 501(c)(4) organizations formed to promote No Labels’ favored candidates – to order and pay for just $1,291,785.74 of services. After Rimylan informed No Labels that it intended to sue for breach of contract, No Labels caused the PACs to gratuitously transfer substantially all of their assets – more than $4 million – to other entities that No Labels controls, thereby rendering the PACs judgment proof. By their Complaint, Plaintiffs seek damages in the amount of $3,708,214.26 for breach of the Binding Term Sheet as against No Labels and as against each of the PACs as alter egos of No Labels. Plaintiffs also seek an order nullifying as actually and constructively fraudulent the transfers by which No Labels stripped the PACs of assets with which to satisfy a judgment. In addition, Plaintiffs seek $958,450 as damages in quantum meruit for uncompensated extra- contractual services requested and accepted by Defendants. Plaintiffs further seek, in the alternative, approximately $3.7 million in damages against No Labels’ President, Nancy Jacobson, for fraudulent inducement on the ground that she omitted to tell Rimylan that No Labels did not intend to be bound by the Binding Term Sheet while repeatedly referring to that agreement prior to its execution as constituting a “guaranty” and a “commitment” of No Labels. 2 PARTIES 1. Plaintiffs Rimylan, PAL, Tormima, and Minino are affiliated Delaware limited liability companies doing business under the tradename “Applecart”. Applecart is a technology company that provides political data and analytic services. 2. No Labels is a 501(c)(4) organization incorporated in Washington D.C. It describes itself as a “nonpartisan political organization whose mission is to combat partisan dysfunction in politics.” 3. Forward Not Back, United For Progress, United Together, Citizens For A Strong America, Govern or Go Home, Patriotic Americans, No Labels Action, and Progress Tomorrow are political action committees (“PACs”) affiliated with No Labels. Each is a Delaware corporation. 4. Americans Committed For Progress, Citizens for America, and Progress Together are 501(c)(4) organizations affiliated with No Labels. Each is a Delaware Corporation. 5. Jacobson is a founder and the President of No Labels. JURISDICTION AND VENUE 6. This Court has jurisdiction over Defendants pursuant to Sections 302(a)(1), 302(a)(2), and 302(a)(3) of the CPLR because each of them transacts business within the State of New York or transacted such business throughout the relevant time period, each of them committed tortious acts within the State of New York, and each of them committed acts which caused injury within the State of New York. 7. Venue is proper in New York County pursuant to Sections 503(c) because Plaintiffs’ principal office is located in New York County. 3 FACTUAL BACKGROUND 8. Applecart is a technology company that provides political data and analytic services. It uses publicly available social data and technology to motivate people to vote and to persuade people to vote for less uncompromisingly partisan, more solutions-oriented politicians. 9. In 2013, Applecart was founded by Matthew Kalmans (“Kalmans”) and Sacha Samotin (“Samotin”). Applecart’s founding mission was to develop political data and analytic services designed to help moderate and centrist candidates get elected to state and federal offices. Applecart is Introduced to No Labels 10. In mid-2013, Applecart was introduced to No Labels’ President, Nancy Jacobson (“Jacobson”) by former Utah Governor Jon Huntsman, then one of No Labels’ “Honorary Co- Chairs”. Huntsman had previously employed Samotin on his 2012 campaign for the Republican nomination for President of the United States. The purpose of the introduction was to see if No Labels might be interested in funding a pilot of Applecart’s technology. 11. Jacobson met with Samotin and Kalmans on September 20, 2013. Shortly after the meeting, Kalmans wrote to Jacobson that Applecart was “very excited about the synergy between our goals and those of No Labels and the impact that we can have together”. 12. Jacobson proceeded to introduce Samotin and Kalmans to a number of then- current and prospective financial supporters of No Labels over the following months, including donor Andrew Bursky (“Bursky”), then and now a member of No Labels’ Board of Directors. 13. No Labels entered into a non-disclosure agreement with Applecart on November 7, 2013 for the purpose of performing due diligence on Applecart’s technology. 14. A “deep dive” was conducted by representatives of No Labels, in No Labels’ Washington, DC offices, on November 13, 2013, and over e-mail over the preceding and subsequent week. 4 15. On November 19, 2013, No Labels provided Applecart with a draft, non-binding “terms sheet”, requiring, among other things, that any agreement with Applecart contractually guarantee that “Applecart will not provide it’s services in primary elections without No Labels permission for until 2019”. 16. Applecart and No Labels’ representatives including Jacobson and Bursky exchanged several proposed revisions of the term sheet, including a revision from No Labels on December 1, 2013, which provided that “neither PA [Applecart] nor any of the Founders would provide, or begin negotiations with any third party to provide, the PA Strategy or any related services for any primary election in any even numbered year without the prior written consent of NL [No Labels]…”. 17. No Labels’ December 1, 2013 draft term sheet also insisted that “PA would grant to NL a perpetual, non-exclusive, fully paid, royalty-free, non-assignable (except to a related organization) license to use the PA Strategy (including any updates, improvements, extensions and new technologies) and any PA deliverables in connection with any Campaign, whether or not subject to any Project Supplement. The license would include the rights to (a) sublicense NL’s related organizations, (b) utilize outside vendors, consultants and other third parties, as well as in-house resources, for implementation of the PA Strategy, and (c) reproduce, modify, make derivative works based upon, distribute and otherwise deal with any PA deliverables as reasonably required in connection with the use of the PA Strategy by NL and its related organizations. For purposes of the foregoing, any organization that controls, is controlled by or is under common control with NL would be deemed to be a related organization.” 5 18. On December 5, 2013 Samotin spoke to Jacobson over the phone and let her know that Applecart was not interested in proceeding with a relationship with No Labels due to concerns about the restrictive nature of No Labels’ exclusivity requirements. Applecart Finds Other Sources Of Funding And Is Reintroduced To No Labels 19. In early 2014, Kalmans and Samotin pitched Applecart’s services to a representative of the Republican Governors Association (“RGA”). An affiliate of the RGA funded a study to test the effectiveness of Applecart’s techniques. 20. Later that year, Applecart was hired by an affiliate of the RGA to help with two gubernatorial general election campaigns. Both candidates won their elections by very narrow margins, with unexpectedly high turnout. 21. That same year, Applecart was hired by an organization supporting the senatorial campaign of Dan Sullivan in Alaska. Sullivan also won his election by a narrow margin. 22. Applecart’s