EFiled: May 12 2015 10:32AM EDT

Transaction ID 57224092
Case No. 11011-

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

COMPUTER SCIENCES
CORPORATION, a Nevada corporation,
and SERVICEMESH INC., a Delaware
corporation,
Plaintiffs,
v.
ERIC PULIER,
Defendant.

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VERIFIED COMPLAINT
Plaintiffs Computer Sciences Corporation (CSC) and ServiceMesh Inc.
(ServiceMesh, and collectively with CSC, Plaintiffs) file their Complaint
against Defendant Eric Pulier (Pulier).
NATURE OF THE ACTION
1.

In 2013, CSC acquired ServiceMesh, a company founded by Pulier,

for over $260 million.

Under the Equity Purchase Agreement, CSC paid

ServiceMesh equityholders an initial cash payment of $93 million and an earnout

payment of $98 million. Pulierthe founder, Chairman, Chief Executive Officer,
and one of the largest equityholders of ServiceMeshreceived more than $9
million of the initial cash payment and more than $25 million of the earnout

payment. He also received a transaction bonus of over $13 million, restricted stock
units of CSC with a fair market value of almost $26 million, and other incentives.
2.

The earnout payment was based on certain revenue generated by

ServiceMesh from January 1, 2013 through January 31, 2014.

A significant

amount of that revenue came from contracts between ServiceMesh and

Commonwealth Bank of Australia Ltd. (CBA). In fact, but for that revenue,
ServiceMesh equityholdersincluding Pulierwould have received no earnout
payment at all.
3.

In 2014after receiving his $9 million initial cash payment, $13

million employee bonus, $25 million earnout payment, and $26 million worth of
restricted stock units, and while employed by CSCPulier transferred more than
$2 million to the personal bank accounts of two senior information technology
executives at CBA, both of whom have since been arrested in Australia on charges
of commercial bribery.

Pulier made the transfers principally through an

intermediary company he had recently formed called Ace, Inc. (Ace). These
large payments breached the Equity Purchase Agreement and violated numerous
CSC rules and policies that Pulier agreed to when he signed a Retention
Agreement with CSC. Pulier did not advise or seek approval from CSC before the
payments, and CSC did not learn about the payments until long after Pulier made
them.
2

4.

Puliers wrongful conduct caused CSC to pay over $98 million in

earnout payments that it otherwise would not have paid and resulted in a
significant criminal law enforcement investigation in Australia that has caused
CSC to incur significant legal and investigative costs. By this action, CSC and
ServiceMesh seek to recover from Pulier the substantial damages caused by his
intentional misconduct, fraud, fraud by omission, breach of the Equity Purchase
Agreement and Retention Agreement, breach of the implied covenant of good faith
and fair dealing, and breach of the fiduciary duties, including the duty of loyalty,
he owed to CSC and ServiceMesh.
PARTIES AND JURISDICTION
5.

CSC is a publicly held Nevada corporation that provides information

technology and professional services. Its principal place of business is in Falls

Church, Virginia.
6.

ServiceMesh is a Delaware corporation and a wholly owned

subsidiary of CSC. Its principal place of business is in Santa Monica, California.

7.

Pulier is a resident and citizen of California. He resides at 12366

Ridge Circle, Los Angeles, California, 90049, and may be served at that address.
8.

This Court has subject-matter jurisdiction pursuant to 8 Del. C.

111(a)(2) as this matter involves the interpretation of the Equity Purchase

Agreement, which is an instrument by which CSC purchased all of the equity

securities of ServiceMesh, a Delaware corporation. This Court also has subjectmatter jurisdiction pursuant to 10 Del. C. 341.
9.

This Court has personal jurisdiction over Pulier pursuant to Section

11.18 of the Equity Purchase Agreement wherein he agreed to submit to the

jurisdiction of a state court located in the State of Delaware for any action
relating to or arising under that agreement. All claims asserted by Plaintiffs
relate to or arise under the Equity Purchase Agreement and/or the Related
Agreements as that term is defined in the Equity Purchase Agreement.
FACTUAL BACKGROUND
A.

CSCs Acquisition of ServiceMesh

10.

In 2008, Pulier founded ServiceMesh as a privately held business.

ServiceMesh provides an enterprise cloud management platform to automate the

deployment and management of enterprise applications and platforms across
private, public, and hybrid cloud environments. ServiceMesh counts among its
customers some of the worlds largest enterprises in financial services, including
CBA.
11.

In late 2013, CSC, ServiceMesh, the equityholders of ServiceMesh,

and the equityholders representative entered into an Equity Purchase Agreement.

Pursuant to that agreement, CSC purchased all of ServiceMeshs equity securities.

Following the transaction, ServiceMesh became a wholly owned subsidiary of

CSC.
12.

To acquire ServiceMesh, CSC paid over $260 million. CSC paid

$93,105,171 to ServiceMesh equityholders at the closing on November 15, 2013.

It later paid $98,034,058 to ServiceMesh equityholders as an earnout on March 14,
2014. The remainder of the purchase price was used to repay ServiceMesh debt,
fund an indemnification escrow, pay the fee of the equityholders representative,
pay for a post-closing working capital adjustment, and pay transaction expenses,
including transaction bonus payments made by ServiceMesh to certain
ServiceMesh employees, including Pulier.
13.

Pulier received over $9 million of the initial cash payment, over $25

million of the earnout payment, a transaction bonus of over $13 million, and other
consideration.
14.

ServiceMeshs already existing relationship with CBA was one of the

reasons CSC acquired ServiceMesh, and that relationship formed part of the basis
for the agreed acquisition price.
B.

Puliers and ServiceMeshs Representations and Warranties in the

Equity Purchase Agreement
15.

As an equityholder of ServiceMesh and a party to the Equity Purchase

Agreement, Pulier made various representations and warranties to CSC. He agreed

that the agreement constituted a valid and binding obligation that was enforceable
5

against him, and that his obligations under the agreement would continue beyond
the closing of the acquisition and until those obligations were fully performed. He
represented that his execution of the agreement, his performance of his obligations
thereunder, and the consummation of the transactions contemplated thereby would
not violate any law applicable to him or violate, conflict with, result in a breach of,
or constitute a default under any provision of any other contract to which he was a
party. He further represented that he would not take any action to cause the
representations and warranties made in the agreement to be untrue in any material
respect.
16.

Attached as Exhibit B to the Equity Purchase Agreement was a Form

of Letter of Transmittal to be executed by ServiceMeshs equityholders. In the

Letter of Transmittal executed by Pulier, Pulier acknowledged that he had
reviewed the terms of the Equity Purchase Agreement, and that he approved and
agreed to be bound by those terms. In his capacity as the Chief Executive Officer
and a significant shareholder of ServiceMesh, Pulier was heavily involved in the
negotiation of the terms of the transaction, including the detailed terms included in
the Equity Purchase Agreement and the related agreements contemplated by that
agreement.
17.

ServiceMeshled by Pulieralso made various representations and

warranties to CSC in the Equity Purchase Agreement. It represented that, except

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as otherwise noted, its financial statements had been prepared in accordance with
generally accepted accounting principles and accurately and fairly presented, in all
material respects, its financial position and assets and liabilities. It represented that
it had not incurred any liabilities or obligations that would be required in
accordance with generally accepted accounting principles to be disclosed on its
balance sheet that were not otherwise disclosed to CSC. It represented that a
schedule attached to the agreement contained a true, correct, and complete list of
each contract between it and its top customers, including CBA, and that true,
correct, and complete copies of each material contract, including all amendments,
waivers, and modifications thereto, had been made available to CSC.

It

represented that it was operating its business in compliance in all material respects
with all applicable laws. It further agreed that its obligations under the agreement
would continue beyond the closing of the acquisition and until those obligations
were fully performed.
18.

Pulier signed the Equity Purchase Agreement on ServiceMeshs

behalf and agreed personally, as an equityholder of ServiceMesh, to indemnify and

hold CSC harmless from and against any and all losses arising out of or resulting
from any breach of or inaccuracy in any representation or warranty of ServiceMesh
contained in the agreement.

C.

CSCs Employment of Pulier and Grant of Restricted Stock Units to

Him
19.

Under the terms of the Equity Purchase Agreement, Pulier agreed to

remain employed by ServiceMesh after the transaction closed on November 15,

2013.

Following the transaction, Pulier became Vice President and General

Manager of CSCs cloud business unit, which was being operated through CSC as
well as through ServiceMesh, a new wholly owned subsidiary of CSC. Sometime
later, Pulier was named Head of Strategy for CSCs emerging business group.
Pulier was Vice President of CSC during the entire period of his employment.
20.

To provide incentives for Pulier to remain employed by ServiceMesh

following the transaction, CSC granted him restricted stock units of CSC with a
fair market value of $25,945,738 pursuant to the Retention Agreement signed by
Pulier and CSC.

These restricted stock units were governed by CSCs 2011

Omnibus Incentive Plan Service Based Restricted Stock Unit Award Agreement
(the RSU Agreement).
21.

As an employee of CSCand as a condition to his grant of restricted

stock unitsPulier agreed to abide by CSCs rules and policies, including its Code
of Business Conduct. He agreed that these rules and policies include provisions to
protect the business and goodwill of CSC; confirmed that he had read them; and
agreed to be bound by them as if they were specifically incorporated into his
Retention Agreement.
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D.

CSCs Earnout Payment to Pulier

22.

On March 14, 2014approximately four months after CSCs

acquisition of ServiceMesh closedCSC paid $98,034,058 to ServiceMesh

equityholders as an earnout under the Equity Purchase Agreement. Pulier received
$25,309,113 of this earnout payment.
23.

The earnout payment was based on revenue from stand-alone

ServiceMesh operations recognized from January 1, 2013 through January 31,

2014 (the Measurement Period) and derived from a specified business pipeline
(the Measurement Revenue).

Under the earnout terms, CSC agreed to pay

approximately $10.15 for every dollar of Measurement Revenue recognized in

excess of $20 million during the Measurement Period, up to $33.5 million.
24.

The final Measurement Revenue included almost $12 million of

revenue from contracts between ServiceMesh and CBA. More than $10 million of
that revenue came from ten contracts that ServiceMesh and CBA entered into
during the Measurement Period. One of those contracts resulted in $5,022,542 of
Measurement Revenue, and the others resulted in $5,404,084 of Measurement
Revenue. Without this revenue from CBA, the $20 million floor for the earnout
would not have been met, and ServiceMesh equityholdersincluding Pulier
would have received no earnout payment at all. With the CBA revenue, however,
the $20 million floor was exceeded by $9,659,265, resulting in an earnout payment
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of $98,034,058 to ServiceMesh equityholders as a whole, and $25,309,113 to

Pulier individually.
25.

The Measurement Period for the earnout ended on January 31, 2014.

Between that date and March 14, 2014, CSC engaged in an earnout verification
process. As part of that process, Pulier and a CBA executivewho would later
receive some of the payments from Pulierexecuted an audit confirmation letter.
In that letter, Pulier and the CBA executive confirmed that the written agreements
between ServiceMesh and CBA represented the entire agreement between the
companies. Pulier and the CBA executive were provided space to describe any
discrepancies, additional contract terms, side-letter arrangements, or oral
agreements outside the contracts that might alter the written contract provisions.
They listed nothing. As part of the earnout verification process, Pulier made
misrepresentations to CSC and its internal and external accountants concerning the
existence and terms of ServiceMeshs contracts with CBA, including new contracts
allegedly entered into during the waning days of the Measurement Period.
E.

Puliers Transfer of Money to Certain CBA Executives

26.

After Pulier received the $25 million earnout payment from CSC, he

founded Ace, which in turn transferred more than $2 million to two senior
information technology executives at CBA, both of whom had extensive
involvement in ServiceMesh projects and contracts.

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These individuals had

authority to execute, and did execute, significant contracts and related documents
with ServiceMesh and CSC on behalf of CBA, including during the Measurement
Period. Indeed, one of these individuals was the same CBA executive who had
executed the audit confirmation letter regarding the ServiceMesh-CBA contracts
that CSC required as part of its earnout verification process.
27.

Pulier funded these payments and directed that they be made through

Ace to the two CBA executives. There was no written agreement between Ace and
the CBA executives as to the purpose or terms of these payments.

Upon

information and belief, one of the CBA executives created and provided to CBA
false documents regarding the payments.
28.

Pulier did not advise or seek approval from CSC before making the

payments. Because Pulier withheld information about the payments, CSC was
unaware of them until long after Pulier made them.
29.

In March 2015, Australian authorities arrested the CBA employees on

charges of commercial bribery.

30.

These payments to executives of a CSC customer violated CSCs

rules and policies, which were expressly incorporated into Puliers Retention
Agreement. CSCs Code of Business Conduct provides that CSC employees must
act with integrity and transparency in all personal dealings that would or could
appear to conflict with the business interests of CSC. CSCs Personal Conflict of
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Interest Policy specifically requires CSC employees to avoid actual or potential

conflicts between the interests of CSC and the interests of the employee or a third
party. CSC employees are required to investigate their own affairs, be open about
conflicts as soon as they arise, and report any actual or potential conflicts to their
manager or Human Resources immediately.
F.

Puliers Failure to Cooperate with CSCs Investigation

31.

After learning of the arrest of the first CBA executive, CSC began its

own internal investigation into the allegations made by Australian authorities.

CSC representatives repeatedly directed Pulier to submit to a full interview
concerning the payments and asked him to produce all emails and other
information from his personal email accounts and personal devices that were sent
or received for work purposes.

Pulier did not provide timely or complete

responses to these requests. In addition, he refused to submit to a full interview by

CSC counsel unless CSC agreed that it would never divulge what he said to the
very authorities in Australia who were investigating his payments and who had
brought charges against the CBA executivesa condition to which CSC would not
agree.

Pulier never provided to CSC all communications and documents

concerning the payments in question.

32.

Puliers refusal to provide requested information and submit to a full

and unconditional interview violated CSCs rules and policies. CSCs Policy on
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Contacts and Interaction with Law Enforcement Agencies and Counsel for Others
and CSC Investigators requires each CSC employee to cooperate fully in company
investigations relating to the employees work in order to facilitate investigations
into potential irregularities and enable any corrective actions, as needed. When
CSC investigators contacted Pulier concerning the payments, Pulier was obligated
to cooperate by responding to all questions and requests for documents fully and
accurately.
G.

Puliers Threats Against CBA

33.

Pulier accused CBA of making false statements about him that caused

him substantial damages. In letters to CBAs outside counsel, Puliers counsel

raised the threat of legal action, stating that he wished to avoid litigation with
CBA, warning that CBA had exposed itself to significant liability under California
law, citing cases and discussing damages in defamation actions, and demanding
that CBA act immediately to correct the situation.
34.

Pulier did not advise or seek approval from CSC before threatening

CBA, which became a valued client of CSC as a result of the ServiceMesh

acquisition. Puliers threats against a CSC customer violated CSCs Code of
Business Conduct and Personal Conflict of Interest Policy.

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H.

CSCs Suspension of Pulier and Puliers Resignation From CSC

35.

On March 26, 2015, CSC notified Pulier of his termination for

cause, as that term is defined in the RSU Agreement. CSC also notified Pulier
that, for a 30-day period commencing on March 26, he was suspended, with full
pay and benefits, from all of his roles and responsibilities at CSC. To the extent
the RSU Agreements cure provision was applicable to Puliers conduct, CSC
afforded Pulier the opportunity to cure within 30 days of the notice.
36.

On April 22, Pulier resigned from CSC effective immediately. He

resigned without good reason, as that term is defined in the RSU Agreement.
COUNT I
(Breach Of The Equity Purchase Agreement)
37.

Plaintiffs incorporate and adopt by reference each and every

allegation in the preceding paragraphs.

38.

The Equity Purchase Agreement is a valid, legally enforceable

contract.
39.

Pulier was a party to the Equity Purchase Agreement and agreed to be

bound by its terms.

40.

Pulier materially breached the Equity Purchase Agreement by

(1) making the payments to two CBA executives; (2) failing to disclose to CSC
those payments and any agreements he or Ace had with those executives; and
(3) causing ServiceMesh to enter into ten contracts during the Measurement Period
14

with CBA, the company that employed the two individuals to whom Pulier
directed the payments.

These actions and omissions breached Puliers

representations and warranties in the Equity Purchase Agreement, as well as his

obligation to continue performing under the agreement beyond the closing of the
acquisition and until his obligations were fully performed.
41.

CSC has been damaged by Puliers material breaches of the Equity

Purchase Agreement.

ServiceMeshs relationship with CBA was one of the

reasons CSC acquired ServiceMesh, and that relationship formed part of the basis
for the agreed acquisition price. Had CSC known that Pulier would make the
payments to two CBA executives, CSC would have paid less than $260 million to
acquire ServiceMesh. In addition, it would not have paid Pulier a $9 million initial
cash payment, a $13 million employee bonus, or a $25 million earnout payment, or
granted him $26 million in restricted stock units.
42.

Additionally, as a result of Puliers material breaches of the Equity

Purchase Agreement, Plaintiffs have incurred and will continue to incur significant
legal and investigative costs. Plaintiffs have been required to retain legal counsel,
investigate the large payments to CBA executives, and coordinate with Australian
officials regarding the criminal investigation, among other things.

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COUNT II
(Breach Of The Implied Covenant Of Good Faith And Fair Dealing Under
The Equity Purchase Agreement)
43.

Plaintiffs incorporate and adopt by reference each and every

allegation in the preceding paragraphs.

44.

Under the Equity Purchase Agreement, Pulier had an implied

contractual obligation to deal fairly with CSC and not to engage in conduct that
would prevent CSC from receiving the benefits of the agreement. This obligation
required Pulier to act in good faith and in a manner consistent with the purpose and
spirit of the agreement.
45.

Pulier breached his implied covenant under the Equity Purchase

Agreement by (1) making the payments to two CBA executives; (2) failing to
disclose to CSC those payments and any agreements he or Ace had with those
executives; (3) causing ServiceMesh to enter into ten contracts during the
Measurement Period with CBA, the company that employed the two individuals to
whom Pulier directed the payments; and (4) misrepresenting in the audit
confirmation letter the full scope and nature of ServiceMeshs agreements with
CBA.

These actions and omissions were not taken in good faith and were

inconsistent with the spirit and purpose of the Equity Purchase Agreement, which
was to establish the terms for CSCs purchase of ServiceMeshs equity securities

16

based on the true value of ServiceMesh, including the true value of ServiceMeshs
relationship with CBA.
46.

Puliers material breaches of the implied covenant of good faith and

fair dealing deprived CSC of the benefits of the Equity Purchase Agreement and
caused CSC to suffer damages. Had CSC known that Pulier would make payments
to two CBA executives, CSC would have paid less than $260 million to acquire
ServiceMesh. In addition, it would not have paid Pulier a $9 million initial cash
payment, a $13 million employee bonus, or a $25 million earnout payment, or
granted him $26 million in restricted stock units.
47.

Additionally, as a result of Puliers material breaches of the implied

covenant of good faith and fair dealing, Plaintiffs have incurred and will continue
to incur significant legal and investigative costs as described above.
COUNT III
(Fraud)
48.

Plaintiffs incorporate and adopt by reference each and every

allegation in the preceding paragraphs.

49.

On February 11, 2014, Pulier provided CBA with a list of the

agreements CBA had entered into with ServiceMesh and asked CBA to confirm
(1) that the list represent[ed] the entire agreement between ServiceMesh and
CBA, and (2) that there were not any discrepancies, any additional contract terms,
or side letter arrangements or oral or written agreements outside of the contract
17

which may alter the written contract provisions. Pulier also instructed CBA to
reply directly to Tida Strey, a CSC employee, at 8484 Westpark Drive, McLean
VA, 22102, in the enclosed return envelope and email to InternalAudit@csc.com,
or fax to Tida Strey at 1.866.678.6457.
50.

Pulier intentionally did not list, in the audit confirmation letter, the

side agreement he had with the two CBA executives under which he paid them
over $2 million shortly after the ServiceMesh acquisition closed and Pulier
received his $25 million earnout payment.
51.

On February 21, 2014, a CBA executivewho was one of the two

that received the large payments coordinated by Pulierstated in writing that the
list of contracts Pulier provided agree[d] with [CBAs] records, and that there
were no agreements other than those Pulier had identified. The same day, the CBA
executive, acting in accordance with Puliers instructions, sent the letter to Tida
Strey at CSC.
52.

Pulier intentionally represented that the audit confirmation letter listed

all of the contracts CBA had with ServiceMesh even though he knew of his side
agreement with the two CBA executives. By instructing a CBA executive to send
the letter to CSC, Pulier intentionally communicated this false representation to
CSC with the intent that CSC rely on his misrepresentation and with the intent to
secure the earnout payment by exceeding the $20 million earnout floor.
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53.

CSC justifiably relied on Puliers misrepresentation in the audit

confirmation letter and suffered damages as a result of Puliers fraud. Because of

Puliers fraud, CSC made an earnout payment of approximately $98 million to
ServiceMesh equityholders, including an earnout payment of approximately $25
million to Pulier. CSC would not have made any earnout payment at all had it
known of Puliers side agreement with the two CBA executives.
54.

Additionally, as a result of Puliers fraud, Plaintiffs have incurred and

will continue to incur significant legal and investigative costs as described above.
COUNT IV
(Fraud By Omission)
55.

Plaintiffs incorporate and adopt by reference each and every

allegation in the preceding paragraphs.

56.

As a Vice President of CSC and as part of his obligations during the

earnout verification process, Pulier had a duty to disclose all agreements he was
aware of between or among ServiceMesh, CBA, and their respective employees,
including his side agreement with the two CBA executives regarding the large
payments. Pulier owed CSC a duty to disclose this agreement so that CSC was not
misled regarding ServiceMeshs relationship with CBA.
57.

Pulier intentionally failed to disclose his side agreement with the two

CBA executives regarding the large payments.

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58.

CSC justifiably relied on Puliers failure to disclose his side

agreement with the two CBA executives in the audit confirmation letter or
otherwise, and it suffered damages as a result. Had it known of Puliers fraud by
omission, CSC would not have made an earnout payment of approximately $98
million to ServiceMesh equityholders, including an earnout payment of
approximately $25 million to Pulier.
59.

Additionally, as a result of Puliers fraud by omission, Plaintiffs have

incurred and will continue to incur significant legal and investigative costs as
described above.
COUNT V
(Breach Of The Retention Agreement)
60.

The Retention Agreement entered into between CSC and Pulier is a

valid, legally enforceable contract.

61.

Pulier was a party to the Retention Agreement and agreed to be bound

by its terms.
62.

In the Retention Agreement, Pulier agreed to abide by CSCs rules

and policies, which were provided to him in connection with his execution of the
Retention Agreement.

Pulier also acknowledged that he read the rules and

policies.
63.

Pulier materially breached the Retention Agreement by failing to

comply with numerous CSC rules and policies.

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64.

First, Pulier materially breached the Retention Agreement by

(1) making payments to two senior information technology executives at CBA;

(2) failing to disclose to CSC those payments and any agreements he or Ace had
with those executives; and (3) causing ServiceMesh to enter into ten contracts
during the Measurement Period with CBA, the company that employed the two
individuals to whom Pulier directed the payments. These actions and omissions
violated CSCs Code of Business Conduct and Personal Conflict of Interest Policy,
which together require each CSC employee to act with integrity and transparency
in all personal dealings that would or could appear to conflict with the business
interests of CSC; avoid actual or potential conflicts between the interests of CSC
and the interests of the employee or a third party; investigate their own affairs; be
open about conflicts as soon as they arise; and report actual or potential conflicts to
their manager or Human Resources immediately. These actions and omissions
also violated CSCs Ethical and Legal Business Conduct Policy, which requires
CSC employees to observe and preserve CSCs core corporate values, make
decisions and choices that are consistent with those values, and comply with
applicable internal policies.
65.

Second, Pulier materially breached the Retention Agreement by

refusing, while a CSC employee, to cooperate fully with CSCs investigation

regarding the large payments to CBA executives. CSCs Policy on Contacts and
21

Interaction with Law Enforcement Agencies and Counsel for Others and CSC
Investigators required Pulier to cooperate fully in company investigations relating
to his work in order to facilitate investigations into potential irregularities and
enable any corrective actions, as needed. This required cooperation specifically
included providing CSC investigators and any external parties acting under CSCs
direction complete and truthful answers to all questions and volunteering any
material information that may be pertinent to CSCs investigation of the large
payments to CBA executives. Pulier violated this policy, and thereby breached the
Retention Agreement, by refusing to timely and fully disclose requested documents
and material information regarding the payments to CBA executives, and refusing
to submit to a complete interview to discuss the payments.
66.

Third, Pulier materially breached the Retention Agreement by

threatening CBA regarding comments CBA purportedly had made about Puliers
payments to CBA executives. In February 2015, counsel for Pulier wrote to
counsel for CBA, citing California defamation law and stating that CBA, by its
actions, had exposed itself to significant liability under California law.

By

threatening CBA, a CSC client, Pulier violated various CSC policies and
procedures, including its Code of Business Conduct and its Personal Conflict of
Interest Policy.

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67.

Puliers material breaches of the Retention Agreement have damaged

CSC. Had CSC known that Pulier would cause ServiceMesh to enter into ten
contracts with CBA during the Measurement Period, make payments to two CBA
executives, not disclose to CSC those payments and any agreements he or Ace had
with those executives, not cooperate fully with CSCs investigation of those
payments, and threaten CBA, CSC would not have granted Pulier $26 million
worth of restricted stock units or allowed any of those units to vest, and would not
have made any earnout payments to ServiceMesh equityholders.
68.

Additionally, as a result of Puliers breach of the Retention

Agreement, Plaintiffs have incurred and will continue to incur significant legal and
investigative costs as described above.
COUNT VI
(Breach Of The Implied Covenant Of Good Faith And Fair Dealing Under
The Retention Agreement)
69.

Under the Retention Agreement, Pulier had an implied contractual

obligation to deal fairly with CSC and not to engage in conduct that would prevent
CSC from receiving the benefits of the agreement. This obligation required Pulier
to act in good faith and in a manner consistent with the purpose and spirit of the
agreement.
70.

Pulier breached the implied covenant of good faith and fair dealing

under the Retention Agreement by (1) making payments to two CBA executives

23

that were not permitted under CSCs rules and policies; (2) failing to disclose to
CSC those payments and any agreements he or his foundation had with those
executives; (3) causing ServiceMesh to enter into ten contracts during the
Measurement Period with CBA, the company that employed the two individuals to
whom Pulier directed the payments; (4) misrepresenting in the audit confirmation
letter the full scope and nature of ServiceMeshs relationship with CBA;
(5) refusing to cooperate fully with CSC in its investigation of the payments to
CBA executives; and (6) threatening CBA, an important CSC client. These actions
and omissions were not taken in good faith and were inconsistent with the spirit
and purpose of the Retention Agreement, which was, in large part, to memorialize
the parties understanding with respect to the terms of Puliers new employment
with CSC.
71.

CSC has been damaged by Puliers breach of the implied covenant of

good faith and fair dealing. Had CSC known of Puliers actions and omissions, it
would not have granted him $26 million worth of restricted stock units or allowed
any of those units to vest, and would not have made any earnout payments to
ServiceMesh equityholders.
72.

Additionally, as a result of Puliers breach of the implied covenant of

good faith and fair dealing, Plaintiffs have incurred and will continue to incur
significant legal and investigative costs as described above.
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COUNT VII
(Breach Of Fiduciary Duty On Behalf Of Plaintiff ServiceMesh)
73.

ServiceMesh incorporates and adopts by reference each and every

allegation in the preceding paragraphs.

74.

Following CSCs acquisition of ServiceMesh and at least through the

end of the earnout period, CSCs cloud business was pursued through both CSC
and ServiceMesh, as a wholly owned subsidiary of CSC. As Chairman and CEO
of ServiceMesh before the acquisition, and Vice President of CSC appointed by
CSC to run the cloud business after the acquisition, Pulier owed fiduciary duties of
care, loyalty, good faith, and candor to ServiceMesh. This required Pulier to,
among other things, conduct the affairs of ServiceMesh with due care; not put selfinterests or any personal considerations ahead of the interests of ServiceMesh; act
in good faith (by, among other things, not violating any laws or consciously and
intentionally disregarding fiduciary duties); and communicate with ServiceMesh
with forthrightness and candor.
75.

Puliers decision to (1) make payments to two CBA executives;

(2) fail to disclose to CSC those payments and any agreements he or Ace had with
those executives; (3) cause ServiceMesh to enter into ten contracts during the
Measurement Period with CBA; and (4) misrepresent in the audit confirmation
letter the full scope and nature of ServiceMeshs relationship with CBA, violated
his fiduciary duties.
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76.

Pulier had a duty to disclose all agreements he was aware of between

or among ServiceMesh, CBA, and their respective employees, including his side
agreement with the two CBA executives regarding the large payments.
77.

Pulier breached his duties to ServiceMesh by engaging in the

fraudulent conduct described above, benefiting himself at ServiceMeshs expense,

and subordinating ServiceMeshs interests to his own personal interests.
78.

Additionally, as a result of Puliers breaches of his fiduciary duties,

Plaintiffs have incurred and will continue to incur significant legal and
investigative costs as described above.
COUNT VIII
(Breach Of Fiduciary Duty On Behalf Of Plaintiff CSC)
79.

CSC incorporates and adopts by reference each and every allegation

in the preceding paragraphs.

80.

Following CSCs acquisition of ServiceMesh, Pulier became Vice

President and General Manager of CSCs cloud business unit, and later Head of
Strategy for CSCs emerging business group. Pulier was a Vice President of CSC
from the time of his employment until termination of that employment. Following
CSCs acquisition of ServiceMesh and at least through the end of the earnout
period, CSCs cloud business was pursued through both CSC and ServiceMesh, as
a wholly owned subsidiary of CSC.

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81.

By virtue of his position as Vice President of CSC, Pulier owed CSC a

fiduciary duty under Nevada law. He owed CSC, among other things, a duty of
loyalty.
82.

Pulier breached his duty of loyalty to CSC by (1) making payments to

two CBA executives that were not permitted under CSCs rules and policies;
(2) failing to disclose to CSC those payments and any agreements he or Ace had
with those executives; (3) causing ServiceMesh to enter into ten contracts during
the Measurement Period with CBA, the company that employed the two
individuals to whom Pulier directed the payments; (4) misrepresenting in the audit
confirmation letter the full scope and nature of ServiceMeshs relationship with
CBA; (5) refusing to fully cooperate with CSC in its investigation of the large
payments to CBA executives; and (6) threatening CBA, an important CSC client.
83.

CSC has been damaged by Puliers breach of his duty of loyalty. Had

CSC known of Puliers actions and omissions, it would not have granted him $26
million worth of restricted stock units or allowed any of those units to vest, and
would not have made any earnout payments to ServiceMesh equityholders.
84.

Additionally, as a result of Puliers breach of his duty of loyalty, CSC

has incurred and will continue to incur significant legal and investigative costs as
described above.

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PRAYER FOR RELIEF

Plaintiffs request the following relief:
85.

All damages recoverable at law or in equity. This includes, but is not

limited to, payments made to Pulier under or in connection with the Equity
Purchase Agreement, the value of vested restricted stock units granted to Pulier
under his Retention Agreement, and the full amount of the earnout payment paid to
ServiceMesh equityholders under the Equity Purchase Agreement.
86.

Pre- and post-judgment interest as allowed by law.

87.

Attorneys fees, interest, and costs as provided for in the Equity

Purchase Agreement, the Retention Agreement, and as otherwise allowed by law.

88.

All other specific or general relief to which Plaintiffs may be entitled

which the Court shall deem to be just and equitable.

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Respectfully submitted,

POTTER ANDERSON & CORROON LLP

OF COUNSEL:
Bryant C. Boren Jr.
BAKER BOTTS L.L.P.
1001 Page Mill Road
Building One, Suite 200
Palo Alto, California 94304
T: 650-739-7500
Thomas E. OBrien
BAKER BOTTS L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
T: 214-953-6934

/s/ Peter J. Walsh, Jr.

Peter J. Walsh, Jr. (#2437)
Jacob R. Kirkham (#5768)
1313 North Market Street
P.O. Box 951
Wilmington, DE 19899
(302) 984-6000
Counsel for Plaintiffs Computer Sciences
Corporation and ServiceMesh Inc.

Dated: May 12, 2015

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