InnoGrit Corp. Breach of Contract Suit

Case Type: Breach of Contract/Wrongful Termination

Companies: InnoGrit Corporation, Shanghai Yingren Chuang Information Technology Co., LTD.

Attorneys from Sanford Heisler Sharp today filed suit against InnoGrit Corporation, its co-founder Zining Wu, its parent company Shanghai Yingren Chuang Information Technology Co., LTD., and 100 as yet unnamed other defendants in California Superior Court, Santa Clara County.

The Complaint on behalf of InnoGrit’s co-founder Yuhui (David) Chen alleges breach of contract, promissory fraud, retaliation, wrongful termination, and shareholder direct and derivative claims.

Chen is represented by a Sanford Heisler Sharp team led by the Co-Chair of the firm’s Public Interest Litigation Group and Co-Vice Chairman Kevin Sharp and the Managing Partner of the Palo Alto and San Francisco Offices Qiaojing Ella Zheng. Nashville Managing Partner Leigh Anne St. Charles and Washington, DC-based Rob Van Someren Greve are also on the team.

“Mr. Wu has utterly failed to perform his contractual obligations and duties under the binding agreement he reached with his co-founder David Chen,” said Qiaojing. “We believe Wu fraudulently induced David to leave his previous employment and lead InnoGrit based on false promises and intentional misrepresentations that interfered with David’s economic well-being and promising career opportunities.”

InnoGrit Corporation is a startup focused on developing and marketing data storage and data transport technology for artificial intelligence and other big data applications through integrated circuit and system solutions. InnoGrit Corporation’s headquarters and main office are in San Jose; Shanghai Yingren Chuang Information Technology Company is registered in Shanghai, China.

Prior to co-founding InnoGrit, Chen and Wu had a strong personal and professional relationship as colleagues at Marvell Technology Group, a global leader in storage, networking and connectivity semiconductor solutions headquartered in Santa Clara.

The Complaint chronicles the lengthy process by which Wu made numerous false representations and promises to Chen about a founding equity stake in InnoGrit, which prompted Chen to leave his highly compensated position at Marvell. Wu then made Chen a fraudulent offer of a 10% ownership stake in their new company – substantially below the 20% ownership position he had previously promised.

“Wu assured David that his initial stake in InnoGrit would be increased after David joined their new company,” said Sharp. “We believe Wu made these representations knowing they were false, and knowing their personal relationship would induce David to trust him and honor his word. Relying on misrepresentations about equity and responsibilities, Chen joined InnoGrit as its President in March 2017.”

Chen believed he would soon earn a larger ownership stake in InnoGrit based on his position and contributions to the company. He fully devoted his industrial knowledge, resources, connection and reputation to building the company. In return, Wu quickly reduced Chen’s duties and responsibilities, ultimately cutting him out of the company entirely.

The Complaint asserts Wu never intended to give Chen an equal or comparable ownership stake or make Chen a member of InnoGrit’s Board of Directors, although he had represented to Chen he would do so. When Chen sought legal representation to protect his rights, Wu terminated Chen’s employment with InnoGrit in April 2018, in violation of the California Labor Code’s prohibition of retaliatory termination.

Chen seeks economic, non-economic, special and punitive damages, civil penalties under California Labor Law, reasonable attorneys’ fees and legal costs, and permanent injunctive relief including an injunction restraining the defendants from continuing any policy or practice that discourages employees from making disclosures or complaints to their employers of government agencies regarding their working conditions.