InnoGrit Corp. Breach of Contract Suit

Case Name: Yuhui Chen v. Innogrit Corporation, et al.

Filed in: Santa Clara (CA) Superior Court

Case No.: 18CV337042

On October 31, 2018, Sanford Heisler Sharp McKnight 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 alleged breach of contract, promissory fraud, retaliation, wrongful termination, and shareholder direct and derivative claims.

Chen was represented by a Sanford Heisler Sharp McKnight team led by the Co-Chair of the firm’s Co-Vice Chairman Kevin Sharp and Qiaojing Ella Zheng, Managing Partner of the Palo Alto and San Francisco offices and Chair of Sanford Heisler Sharp McKnight‘s Asian American Litigation and Finance Practice Group. Nashville Managing Partner Leigh Anne St. Charles and Washington, DC-based Rob Van Someren Greve were also on the team.

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 chronicled 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.

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 asserted 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 sought 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.

The matter ultimately went to arbitration. On May 17, 2021, the Arbitrator awarded Mr. Chen more than $8.3 million in damages for breach of contract and fraud.