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brjXRP17

Ripple Labs v. R3 (actual court documents)

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1 hour ago, brjXRP17 said:

Hey guys,  

Everyone has read the latest news articles covering the court case(s) involving Ripple and R3. However, it appears no one has posted the actual court documents filed by both companies, so here they are. Three (3) documents posted below - complaint 1, complaint 2, option contract (everything is separated by the Ripple logo).

Over the next few weeks and months, answers to both complaints, along with other court documents and schedules, will be filed by both companies and the courts in both jurisdictions (California and New York). You can learn a lot from court filings (ha, never get divorced in the US; a lot of facts, including your financials, could become public record). Just to be clear, Ripple and R3 are a long ways away from a trial.

Ripple's complaint is more "colorful" and sheds a brighter light on what allegedly happened over the last year or so with this dispute. R3's complaint is straight to the point.

Lastly, in the interest of this group, I will monitor both dockets and report back when needed (monitoring the federal court filings involving Ripple Labs, Inc. as well). Later. 
 

1.) My notes on the Ripple Labs v. R3 complaint. Please keep in mind that this is Ripple Lab's version of the facts, and R3 will have a chance to respond (very important):

  • The Ripple Labs v. R3 complaint was filed in The Superior Court of San Francisco, California.
  • Ripple has demanded a trial with a jury.
  • Ripple and R3 created a multi-phase plan in 2016, and it started with "Project Xenon" (pg. 5 of complaint).
  • Project Xenon began in July 2016 with 12 banks being tasked with settling transactions with each other using XRP. (page 5 of complaint).
  • The Technology Partnership Agreement (TPA) was executed by both parties in August 2016 (pg. 6 of complaint).   
  • Under the TPA, R3 would receive 15% of the revenue received by Ripple from any participating bank (pg. 7 of complaint). 
  • R3 was given the option to purchase 5 billion XRP at an exercise price of $0.0085 per unit of XRP (pg. 7 of complaint).
  • R3 had the option for 5 billion XRP at $0.0085/unit AND 15% of the revenue from any participating bank (pg. 7 of complaint). 
  • R3 said they simply did not have the time to make efforts (for Ripple) on the Commercial Partnership in Nov. 2016 (pg. 8-9 of complaint).
  • 50+ member banks vs. 42 global banks (pg. 11 of complaint).
  • "Hey guys I have no idea what's going on with XRP..." (pg. 12 of complaint). 
  • Two co-founders of R3 allegedly admit that R3 had failed to perform under the TPA (pg. 13 of complaint). 
  • Ripple gives R3 notice of termination of TPA and Option agreements on June 13, 2017 (pg. 13 of complaint). 
  • R3 failed to cure (fix alleged breach) within the requisite 10-day period (pg. 13 of complaint). 
  • Six (6) "causes of action" in the complaint - fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory judgment 
  • Ripple wants the court to rule that the agreements are invalid and void, along with the defendant (R3) to pay punitive damages to be determined at trial (again, Ripple demanded a jury trial). Lastly, Ripple wants R3 to pay the legal fees. 
     

2.) My notes on the R3 v. Ripple Labs complaint. Please keep in mind that this is R3's version of the facts, and Ripple will have a chance to respond (very important):

  • The R3 v. Ripple Labs complaint was filed in The Supreme Court of the State of New York, County of New York (Manhattan).
  • R3 has not demanded a trial with a jury (at least not in their original paperwork. If not requested, the right to a jury trial could be waived and the trial would be a bench trial or a trial involving the judge only).
  • The Option Contract does not give Ripple the right to unilaterally terminate (pg. 6 of complaint). 
  • The Option Contract is governed by the laws of New York (pg. 6 of complaint). Not sure if the other agreements between these two parties are governed by NY law as well. 
  • "Ripple's exposure to banks and financial institutions, such as R3 and its member financial institutions, has led to the market's growing perception of potential future adoption of XRP by financial institutions..." (pg. 6 of complaint). 
  • The Option Contact clause relating to the disposition or sale limitations of XRP (clause 7 of option contract).  
  • The Option Contact has an assignment clause (clause 8) and an assignment form where R3 could assign or transfer the option, wholly or partially, to a third party or to third parties (persons or entities).  Any assignee would be bound by the sale limitation or Clause 7. This is big.
  • Two (2) causes of action in the complaint - breach of contract w/ request for specific performance, tortious interference with contract.
  • R3 wants the court to rule that the contract is still valid, forcing Ripple Labs to honor the option agreement until 2019.

 

Thank you. I'm a lawyer, and fir sure did your summary make things easier.

Let see what happens at summary judgment. Looks like there was some admissions of a failure to perform by R3. Judge may throw it out.

Good to know.

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Option contract says:

Quote

This Option is issued to R3 by RL in connection with that certain Technology Provider Agreement  regarding Project Xenon and Potential Commercial Venture

IANAL, but clearly this statement links this option with their agreement on this Xenon project. Would seem logical that they can not use this option because they did not deliver the goods associated with this Xenon project.

Edited by velmet

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The language of the Option Agreement seems pretty straightforward, and Ripple acknowledges the consideration received for giving this option to R3.  However, the option agreement does say that it is in connection with the "Technology Provider Agreement."  

I don't think we have seen the Technology Provider Agreement.  That will tell us what R3 was required to do under the agreement.  If Ripple can show R3 breached its obligations under the Technology Provider Agreement, then maybe the option part of Ripple's responsibilities under the contract can be voided.

On a side note, I don't think it would be the worst thing for xrp holders if Ripple had to give up (sell per the option agreement) some or all of the xrps at issue.  It would go to divestment of Ripple's 62mm hoard of xrps.  I think the sooner Ripple gets to owning less than 50% of the total xrps in existence, the better it will be for xrp holders in general.  Certainly, one negative perception of xrp is that the company owns more than a majority of all the xrps.  Once it's under 50%, then xrp becomes more like the people's digital currency.  Just my perception.  

Also, R3 would only get to sell a daily maximum of its xrps based on 50 basis points of the xrp ledger volume.  That's a de minimus amount that won't have even a remotely negative effect on the price, even if R3 decided to sell the maximum amount every day.  The only real negative is for our friends at Ripple, which would have to give up some of its xrps well below market value.     

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@brjXRP17 Excellent work!  Thanks for posting these and for the great summary.

To be clear, others have previously posted the court documents - but the threads have been removed.  I'm not sure why - these are documents that are part of the public record as I understand it. A previous poster also did not include the TPA (which may contain the crux of Ripple's complaint), but did include a short excerpt from it. Do you have the TPA also? Could you explain any legal rationale you or someone else may have for excluding it?

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45 minutes ago, Professor Hantzen said:

@brjXRP17 Excellent work!  Thanks for posting these and for the great summary.

To be clear, others have previously posted the court documents - but the threads have been removed.  I'm not sure why - these are documents that are part of the public record as I understand it. A previous poster also did not include the TPA (which may contain the crux of Ripple's complaint), but did include a short excerpt from it. Do you have the TPA also? Could you explain any legal rationale you or someone else may have for excluding it?

This is not correct, moderators have not removed any threads relating to these lawsuits. Members themselves have voluntarily withheld publishing documents to avoid the chance of being sued by R3.

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7 minutes ago, karlos said:

This is not correct, moderators have not removed any threads relating to these lawsuits. Members themselves have voluntarily withheld publishing documents to avoid the chance of being sued by R3.

Apologies - I couldn't find the thread when I searched (both the forum search and my activity stream), so assumed they'd be moderated out.  It's odd as I just had another look now, and it came straight up:

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My post from September after first hearing of lawsuit:

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Posted September 9

It always befuddled me to read that R3 was developing Corda, which appeared to me to be similar in function to the Ripple ledger. Now it seems to me that R3 never had Ripples interest in mind but had their own agenda realizing the enormous value that Ripple represented. It lends one to believe that there was the possibility of R3 infiltrating Ripple by virtue of this contract only to undermine them, make discovery of their processes and use them for themselves. Only speculation here, but ever since they made the supposed contract, I never felt any of the press releases concerning R3 and Ripple together benefited Ripple and only benefited R3. Did any of the consortium have any part in this as well? Did they enter this contract just to slow Ripple down to do their own thing, I don't know, but for Ripple to make their case, I would subpeona everyone, including Banks to get this all in the open, period, then we can make discovery of collusion or not, or just a plain failure of contract obligations by either of them.

I guess my intuition wasn't far off after reading Ripple's Lawsuit. Hopefully something good can come from all of this.... maybe this is why the man from Ethereum is speaking at our conference, just saying.....

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Also one big thing that sticks out big to me in Ripple's Lawsuit is on Page 14 of the First Cause of Action, #61 - fourth Bullet point down: "just as they had done the Ethereum"... shows past and repeated behavior... who knows, maybe they can join in the lawsuit as well and we can sue their collective asses together....

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  • 2016 October - R3 kills off Corda by sending it to open source purgatory - Linux Foundation as I recall
  • Ripple agreement with R3 is in this time frame
  • Ripple will settle... they will not want to go through discovery - Darn!
  • it would be intriguing to learn when SBI became majority member in R3

I am still betting R3 gets 50% of the goodies... and that these in part will be transferred to SBI.

--

@Alluvial probably has it right that getting Riplle below 50% is a good idea

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On 9/19/2017 at 1:49 PM, Professor Hantzen said:

@brjXRP17 Excellent work!  Thanks for posting these and for the great summary.

To be clear, others have previously posted the court documents - but the threads have been removed.  I'm not sure why - these are documents that are part of the public record as I understand it. A previous poster also did not include the TPA (which may contain the crux of Ripple's complaint), but did include a short excerpt from it. Do you have the TPA also? Could you explain any legal rationale you or someone else may have for excluding it?

Here is the Technology Provider Agreement or TPA, @Professor Hantzen. It was finally released to the public on 11/21/2017.

https://www.xrpchat.com/topic/12051-technology-provider-agreement-ripple-and-r3-actual-court-documents/

 

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