$1,550,000 California Whistleblower Retaliation Verdict

On Tuesday, December 10, 2024, in the case of Jessica Lee v. Kingsford Capital Management, LLC, Contra Costa County Superior Court Case No. CIVMSC18-00816, the jury returned a verdict of $1,550,000 for Plaintiff against defendant Kingsford Capital Management, LLC, on Plaintiff's claim for Whistleblower Retaliation under California Labor Code section 1102.5. Mr. Aune represents Ms. Lee and was the Trial Attorney. The Jury Trial took place at the Wakefield Taylor Courthouse in Martinez, California.

Plaintiff claimed she was retaliated against and terminated after she reported that she reasonably believed that (1) she was misclassified by defendant Kingsford Capital Management, LLC ("Kingsford") as an independent contractor from 2009 to 2015 in violation of federal law; (2) Kingsford was using soft dollars to pay employees misclassified as independent contractors in violation of Section 28(e) of the Securities Exchange Act of 1934; and (3) Kingsford requested that Plaintiff publish false information about securities and/or publish information about securities under an assumed name in violation of the Exchange Act, Rule 10b-5 of the Exchange Act, and the anti-fraud provisions of federal securities laws.

The jury voted was 11 to 1 for Plaintiff for the Labor Code section 1102.5 Whistleblower Retaliation claim. in addition, the jury voted 11 to 1 for Punitive Damages (First Phase), for Plaintiff. The jury deliberated for 9.5 hours over three (3) days, December 6, 9, and 10, before reaching the verdict.

At approximately 1:45 p.m. on December 10, 2024, the Court excused the jury and ordered the jurors to return at 10:00 a.m. on December 11, 2024, for the Punitive Damages Trial (Second Phase).

On Wednesday, December 11, 2024, the Jury Trial on Punitive Damages (Second Phase). The jury voted 10-2 to award $0 in punitive damages to Plaintiff. The jury deliberated for approximately 1.25 hours before reaching the punitive damages (Second Phase) verdict.

The 15-day Jury Trial took place over 4 weeks on November 12, 13, 15, 18, 19, 21, 22, and December 2, 3, 4, and 5, 2024. Jury deliberations were on December 6, 9, and 10. The Punitive Damages Trial (Second Phase) took place on December 11, 2024. Jury deliberations were also on December 11, 2024.

Plaintiff called ten (10) witnesses in her Case-in-Chief including seven (7) current and former Kingsford employees. Defendant Kingsford's counsel conducted cross-examination and direct examination of Plaintiff's witnesses during Plaintiff's Case-in-Chief. Defendant Kingsford called 2 witnesses in its Case-in-Chief or a total of 12 witnesses over the course of the trial.

Plaintiff's Expert Witnesses:
1. Michael Rosen. Economic damages.
2. Martin Dirks. Federal securities laws.

During the course of the Jury Trial approximately 96 Exhibits were entered into evidence. Plaintiff entered 64 exhibits into evidence.

For the Punitive Damages Trial, Plaintiff called two (2) witnesses, including Kingsford's Chief Financial Officer. Plaintiff entered one (1) exhibit into evidence, which was Kingsford's Schedule C from its 2023 federal tax filing. Defendant entered three (3) exhibits into evidence, which were Kingsford's Tax Forms for 2020, 2021, and 2022.

Mr. Aune made Plaintiff's Closing Argument in the Punitive Damages Trial. Defense Counsel made Kingsford's Closing Argument.

For the Jury Trial and the Punitive Damages Trial combined, 13 witnesses were called to testify, and 100 exhibits were entered into evidence.

Prior to trial Defendant Kingsford served a Code of Civil Procedure Section 998 Offer on Plaintiff offering to settle the case for $500,000.

Under California Labor Code section 1102.5, Mr. Aune has a right to file a Motion for Attorney's Fees. Specifically, California Labor Code Section 1102.5(j) mandates that "The court is authorized to award reasonable attorney's fees to a plaintiff who brings a successful action for a violation of these provisions."

Plaintiff worked at Kingsford Capital Management, LLC, a short seller hedge fund.

The lawsuit/Complaint in this matter was filed on or about November 17, 2017 in San Francisco County Superior Court under case number CGC-17-562567. On or about April 3, 2018, the case was transferred to Contra Costa County Superior Court under case number C18-00816. The First Amended Complaint was filed on November 19, 2020. The lawsuit is filed in Contra Costa Superior Court.

Case Name: Lee v. Wilkins, et al.
Courthouse: Wakefield Taylor Courthouse
725 Court Street
Martinez, CA 94553
Case No. CIVMSC18-00816
District Judge: Hon. Charles S. Treat
Department: 12

TRIAL SUMMARY

MINI OPENING STATEMENTS PRIOR TO JURY SELECTION
On November 12, 2024, the parties were allowed to have Mini Opening Statements prior to jury selection pursuant to Code of Civil Procedure (CCP) section 222.5, subdivision (d), which states that "[u]pon the request of a party, the trial judge shall allow a brief opening statement by counsel for each party prior to the commencement of the oral questioning phase of the voir dire process."
Mr. Aune made a Mini Opening to the jury prior to jury selection. Defense counsel completed Defendants' Mini Opening.

JURY SELECTION (VOIR DIRE)
On November 12 and 13, 2024 Mr. Aune completed Jury Selection for Plaintiff. A total of 40 prospective jurors were assigned to Dept. 12 for jury selection from the venire/jury pool. The jurors were questioned 18 at a time during the two-day jury selection.

There were approximately 2 "for cause" challenges granted for the Plaintiff. Plaintiff and the defense stipulated to approximately 4 "for cause" challenges of prospective jurors. The Court granted 5 hardship requests. Ms. Aune used all 6 of Plaintiff's peremptory challenges.

All 40 of the prospective jurors took part in jury selection. The last juror, juror number 40, was selected as one of the three alternates. Mr. Aune used one on his three (3) peremptory challenges in selecting the 3 alternate jurors.

OPENING STATEMENT
On Wednesday, November 13, 2024, Mr. Aune made Plaintiff's Opening Statement.

PLAINTIFF'S CASE-IN-CHEIF
Plaintiff's Case-in-Chief started on November 13 by calling Plaintiff's first witness, Plaintiff Jessica Lee. Ms. Lee testified for three days. Mr. Aune called witnesses on Plaintiff's Case-in-Chief on November 13, 15, 18, 19, 21, 22, and December 2 and 3, 2024. There were ten (10) witnesses called in Plaintiff's Case-in-Chief including seven (7) current and former Kingsford employees.

Kingsford's counsel conducted cross-examination and direct examination of Plaintiff's witnesses during Plaintiff's Case-in-Chief.

Plaintiff called the following six (6) witnesses on Friday, November 22, 2024.
1. Kelly Mazzucco, former Kingsford Chief Compliance Officer, and Chief Financial Officer.
2.Lisa Littrell, former Kingsford Office Manager.
3.Dorothy Melin, former Kingsford receptionist.
4.Dustin Espersen, form Kingsford quantitative analyst.
5.Brian Cooney, Kingsford's former Chief Administrative Officer.
6.Michael Rosen. Plaintiff's Expert Economist who testified regarding Plaintiff's lost wages and benefits.

Mr. Aune conducted direct examination of the witnesses. Then, Defense counsel conducted cross-examination and direct examination of the witnesses. Mr. Aune conducted re-direct examination of the witnesses.

Plaintiff called expert witness Michael Rosen, Ph.D. on Friday, November 22, 2024 and questioned him on direct examination. Dr. Rosen was Plaintiff Economist and testified regarding Plaintiff's lost wages.

NO TRIAL THE WEEK OF NOVEMBER 25-29, 2024 (THANKSGIVING WEEK)
There was a one (1) week break during the week of Thanksgiving, November 25-29, 2024.

On Monday, December 2, 2024, Defense Counsel performed cross-examination of Dr. Rosen. Mr. Aune completed re-direct of Dr. Rosen.

Plaintiff called Michael Wilkins, Kingsford's co-founder and Managing Partner, as a witness on December 2, 2024. Mr. Aune performed his direct examination of Mr. Wilkins. Defense completed his cross-examination and direct examination of Mr. Wilkins. Also on December 2, Mr. Aune started his re-direct examination of Mr. Wilkins.

On Tuesday, December 3, 2024, Mr. Aune performed his re-direct examination of Mr. Wilkins. Defense counsel completed re-cross examination of Mr. Wilkins. Mr. Aune then completed re-direct of Mr. Wilkins.

Plaintiff also called expert witness Martin Dirks, M.B.A., on Wednesday, December 3 and Mr. Aune questioned Mr. Dirks. Mr. Martin is an expert on federal securities laws, such as Section 28(e) of the Securities Exchange Act of 1934, and Rule 10b-5 of the Securities and Exchange Act of 1934.

PLAINITFF RESTS HER CASE-IN-CHIEF
On December 3, 2024, Mr. Aune advised the Court that Plaintiff rests her Case-in-Chief.

EXHIBITS FOR PLAINTIFF'S CASE-IN-CHIEF
Plaintiff entered 64 exhibits into evidence during her Case-in-Chief.

EXHIBITS ENTERED INTO EVIDENCE DURING TRIAL
During the course of the Jury Trial approximately 96 Exhibits were entered into evidence.

DEFENSE'S COUNSEL'S MOTION FOR NON-SUIT
At the end of the Plaintiff's Case-in-Chief, Mr. Aune advised the Court that Plaintiff rested her case. Defendants then made a Motion for Nonsuit with the jurors out of the courtroom. The Court heard oral argument regarding whether a California Labor Code § 1102.5 Whistleblower Retaliation claim can be brought against an individual employee. The Court dismissed the individual claims against Michael Wilkins and Kelly Mazzucco including that they were both named as defendants for Plaintiff's Labor Code § 1102.5 Whistleblower Retaliation claim. The Court also granted the Motion for Nonsuit as the Fifth and Sixth causes of action.

DEFENDANT KINGSFORD'S CASE-IN-CHIEF
On Tuesday, December 3, 2024, Defendant Kingsford presented its Case-in-Chief. Defendant Kingsford called two witnesses in its Case-in-Chief. Mr. Aune cross-examined the witnesses.

DEFENDANT KINGSFORD RESTS ITS CASE-IN-CHIEF
On Tuesday, December 3, 2024, Defendant Kingsford rested its Case-in-Chief.

JURY INSTRUCTIONS AND VERDICT FORM
On Wednesday, December 4, 2024, the jury had the day off and the Court and the attorneys had a Court Conference to determine what jury instructions and Verdict Form would be provided to the jury on Friday, December 6, 2024.

PLAINTIFF'S REBUTTAL CASE
On Thursday, December 5, 2024, Plaintiff made her Rebuttal to the Defendant's Case-in-Chief. Mr. Aune called Plaintiff to testify again. Mr. Aune questioned Plaintiff for Plaintiff's Rebuttal to the Defendant's case-in-chief. Plaintiff entered four (4) new exhibits into evidence for Plaintiff's Rebuttal Case.

COURT READS THE JURY INSTRUCTIONS TO THE JURY
On Thursday, December 5, 2024, following Plaintiff's Rebuttal Case, the Court read the jury the jury instructions.

CLOSING ARGUMENT
On Thursday, December 5, 2024, Mr. Aune made Plaintiffs' Closing Argument. Plaintiff's Closing Argument took approximately 90 minutes.

Defense counsel made Defendant's Closing Argument.

Mr. Aune made Plaintiff's Rebuttal Closing Argument.

CASE SENT TO THE JURY FOR DELIBERATIONS
On Friday, December 6, at approximately 10:18 a.m. the case went to the jury for deliberations.

JURY DELIBERATIONS
The jury deliberated on Friday, December 6, Monday, December 9, and Tuesday, December 10, 2024.

THE VERDICT
On Tuesday, December 10, after approximately 9.5 hours of deliberations on December, 6, 9, and 10, the jury returned its verdict and found in favor of Plaintiff for her cause of action of violation of Labor Code § 1102.5 Whistler Retaliation. The jury answered "Yes" to Special Verdict Form Question No. 1 which asks "Did Plaintiff Jessica Lee prove by a preponderance of the evidence that Defendant Kingsford Capital Management discharged her in retaliation for her complaining about or refusing to participate in an unlawful act?"

The jury awarded $1,550,000 in damages as follows:
1. Past Economic Damages: $700,000.
2. Future Economic Damages: $500,000.
3.Past Emotional Distress Damages and
and Future Emotional Distress Damages: $ 350,000
TOTAL DAMAGES: $1,550,000

The jury also found Defendant Kingsford liable for Punitive Damages. Specifically, the jury answered "Yes" to Special Verdict Form Question No. 7 which asks "Did Plaintiff Jessica Lee prove by clear and convincing evidence that Kingsford Capital Management acted with malice, fraud or oppression with regard to any of conduct upon which your finding of liability is based?

At approximately 1:45 p.m. on December 10, 2024, the Court excused the jury and ordered the jurors to return on December 11, 2024 for the Punitive Damages Trial.

THE PUNITIVE DAMAGES TRIAL
On December 11, 2024 the Punitive Damages Trial took place. Plaintiff called Michael Wilkins, and Kingsford Chief Financial Office Jack Amidon as witnesses. The questioning was limited to Kingsford's financial information. Mr. Aune questioned Mr. Wilkins about Kingsford's financial condition. Defense Counsel cross-examined Mr. Wilkins. Mr. conducted Re-Direct Examination of Mr. Wilkins.

Plaintiff then called Jack Amidon, Kingsford's Chief Financial Officer, as a witness. Mr. Aune questioned Mr. Amidon regarding Kingsford's financial condition. Defense counsel Cross-Examined Mr. Amidon. Mr. Aune conducted Re-Direct Examination of Mr. Amidon.

Mr. Aune made Plaintiff's Punitive Damages Closing Argument. Defense counsel made Kingsford's Closing Argument.

THE PUNITIVE DAMAGES TRIAL VERDICT
The jury returned a verdict of $0 for punitive damages. The jury deliberated for approximately 1.25 hours on December 11, 2024 before reaching its verdict.

Here is a link to the Special Verdict Form completed by the jury.