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John A. Anderson (#4464) [email protected] Timothy K. Conde (#10118) [email protected] STOEL RIVES LLP 201 South Main Street, Suite 1100 Salt Lake City, UT 84111-4904 Telephone: (801) 328-3131 Facsimile: (801) 578-6999 John DeQuedville Briggs (admitted pro hac vice) [email protected] Rachel J. Adcox (admitted pro hac vice) [email protected] AXINN VELTROP & HARKRIDER LLP 950 F street NW Washington, DC 20004 Telephone: (202) 912-4700 Facsimile: (202) 912-4701 Attorneys for Defendant Yardi Systems, Inc.
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
PROPERTY SOLUTIONS INTERNATIONAL, INC., a ANSWER TO FIRST Delaware corporation, AMENDED COMPLAINT
Plaintiff, Jury Trial Demanded
vs. Civil Action No. 2:15-cv-00102-CW-PMW
YARDI SYSTEMS, INC., a Judge Clark Waddoups California corporation,
Magistrate Judge Paul M. Warner Defendant.
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Defendant Yardi Systems, Inc. (“Yardi”) hereby answers the First Amended Complaint
(“Complaint”) filed by plaintiff Entrata, Inc. (formerly known as Property Solutions
International, Inc.) (“Entrata”), as follows:
I. THE PARTIES
1. Yardi admits Entrata’s allegations in Paragraph 1.
2. Yardi admits Entrata’s allegations in Paragraph 2.
II. JURISDICTION AND VENUE
3. Paragraph 3 consists of legal conclusions to which no response is required. To
the extent a response is required, Yardi admits that Entrata purports to bring claims under the
Lanham Act, 15 U.S.C. § 1051 et seq., and the Sherman Act, 15 U.S.C. § 1 et seq., and Utah
statutory and common law, but denies that Entrata is entitled to any relief. Yardi admits that the
Court has jurisdiction pursuant to 28 U.S.C. § 1331. Yardi admits that Entrata purports to bring
claims under Section 16 of the Clayton Act, 15 U.S.C. § 26, but denies that Entrata is entitled to
any relief. Yardi admits that the Court has supplemental jurisdiction over any Utah state-law
claims for relief enumerated in this Complaint, pursuant to 28 U.S.C. § 1367. Yardi admits that
the court has jurisdiction over the subject matter of each of the claims for relief asserted by
Entrata pursuant to 28 U.S.C. § 1332. Yardi admits that there is complete diversity of
citizenship. Yardi admits that Entrata purports to claim that the amount placed in controversy by
each of Entrata’s first through ninth claims for relief exceeds $75,000, exclusive of interest,
costs, and attorneys’ fees. Yardi admits that Entrata purports to claim that the value of the non-
monetary relief sought by Entrata’s claims for relief exceeds $75,000, exclusive of interest, costs
and attorneys’ fees. Yardi denies Entrata’s remaining allegations in Paragraph 3.
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4. Paragraph 4 consists of legal conclusions to which no response is required. To
the extent a response is required, Yardi admits that this Court may exercise personal jurisdiction
over Yardi, for purposes of this action only. Yardi denies Entrata’s remaining allegations in
Paragraph 4.
5. Paragraph 5 consists of legal conclusions to which no response is required. To
the extent a response is required, Yardi admits that venue within the State of Utah and in this
judicial district is proper, for purposes of this action only. Yardi denies Entrata’s remaining
allegations in Paragraph 5.
III. FACTUAL BACKGROUND
6. Yardi admits that it provides a wide variety of high-performance software
solutions and ancillary products and services related to property management and property
investment management, and that its products and solutions speak for themselves. Yardi denies
as incomplete Entrata’s purported characterizations of Yardi’s software and services, denies
Entrata’s purported descriptions of the nature of property-management software, and denies any
remaining allegations in Paragraph 6.
7. Yardi denies Entrata’s allegations in Paragraph 7.
A. Entrata and Its Products
8. Yardi lacks knowledge or information sufficient to form a belief about the truth
of the allegations in Paragraph 8, and, on that basis, denies them.
Entrata’s Platform Products
9. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 9, and, on that basis, denies them.
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10. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 10, and, on that basis, denies them.
11. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 11, and, on that basis, denies them.
12. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 12, and, on that basis, denies them.
13. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 13, and, on that basis, denies them.
14. Yardi denies that Entrata was marketed in 2003. Yardi lacks knowledge or
information sufficient to form a belief about the truth of the remaining allegations in Paragraph
14, and, on that basis, denies them.
Entrata’s Point Solution Products
15. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 15, and, on that basis, denies them.
16. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 16, and, on that basis, denies them.
17. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 17, and, on that basis, denies them.
B. Yardi and Its Products
18. Yardi denies that it is a “dominant” provider of core accounting database software
for use in the multi-family housing industry in the United States. Yardi admits that more than
eight million residential units are managed using Yardi software, and more than 1,650 property
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management customers are using Yardi Voyager 7S, Yardi’s most advanced property
management and accounting platform. Yardi denies any remaining allegations in Paragraph 18.
19. Yardi admits that it licenses a range of property management software solutions
for the management of multifamily property portfolios. Yardi denies any remaining allegations
in Paragraph 19.
20. Yardi denies Entrata’s allegations in Paragraph 20.
21. Yardi denies Entrata’s allegations in Paragraph 21.
22. Yardi denies Entrata’s allegations in Paragraph 22.
23. Yardi denies Entrata’s allegations in Paragraph 23.
Voyager’s Market Dominance
24. Yardi denies Entrata’s allegations in Paragraph 24.
25. Yardi admits that historically it allowed several different hosting options for its
software and databases. Yardi denies any remaining allegations in Paragraph 25.
C. Entrata’s and Yardi’s Initial “Friendly” Collaborations
26. Yardi admits that it executed the first Non-Disclosure Agreement with Entrata on
or about September 28, 2004, which speaks for itself. Yardi denies the remaining allegations in
Paragraph 26, expressly including Entrata’s false allegations that Yardi permitted Entrata to
possess and access the Voyager software, which are at the heart of Yardi’s lawsuit against
Entrata in the United States District Court for the Central District of California for, among other
things, misappropriation and copyright infringement.
27. Yardi denies Entrata’s allegations in Paragraph 27.
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28. Yardi admits that it executed a Non-Disclosure Agreement with Entrata on or
about February 24, 2006, which speaks for itself. Yardi refers to that agreement for its contents,
denies Entrata’s mischaracterizations and purported characterizations thereof, and denies any
remaining allegations in Paragraph 28.
29. Yardi admits that it markets and sells portal products in competition with many
other companies, including Entrata. Yardi admits that Entrata contacted Yardi, proposing that
Entrata become a third-party integrator, whereby Entrata would develop and Yardi would host a
custom interface, which would interface with a customer’s Voyager database and enable Entrata
to provide some of its services to Yardi customers. Yardi further admits that Entrata and Yardi
exchanged e-mails, which speak for themselves. Yardi refers to those emails for their contents
and denies Entrata’s mischaracterizations and purported characterizations thereof. Yardi denies
that it assisted Entrata in developing Entrata’s products or that Yardi’s own products were
developed to compete with Entrata. Yardi lacks knowledge or information sufficient to form a
belief about the truth of the remaining allegations in Paragraph 29, and, on that basis, denies
them.
30. Yardi admits that, once its standard interface partnership program (SIPP) was in
place, it encouraged third-party providers to communicate with Yardi’s database through Yardi-
designed standard interfaces in order to ensure client data integrity and security. Yardi further
admits that Entrata designed its own custom interface. Yardi either denies as
mischaracterizations or lacks knowledge or information sufficient to form a belief about the truth
of the remaining allegations in Paragraph 30, and, on that basis, denies them.
31. Yardi denies Entrata’s allegations in Paragraph 31.
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32. Yardi denies Entrata’s allegations in Paragraph 32.
33. Yardi admits that Entrata sent a copy of the source code used in an Entrata
interface utility to Yardi. Yardi admits that it reviewed Entrata’s source code, with Entrata’s
express permission, actual knowledge and enthusiastic support, in order to detect any security or
compatibility concerns. Yardi denies Entrata’s mischaracterizations and purported
characterizations that comprise the remaining allegations in Paragraph 33.
34. Yardi denies Entrata’s allegations in Paragraph 34.
35. Yardi admits that it charged some customers to host third-party custom interfaces
on Yardi’s servers. Yardi denies Entrata’s remaining allegations in Paragraph 35.
36. Yardi lacks knowledge or information sufficient to form a belief about the truth of
whether Entrata referred customers to Yardi and recommended that they use Yardi’s property-
management software, and, on that basis, denies that allegation. Yardi denies Entrata’s
remaining allegations in Paragraph 36.
37. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 37, and, on that basis, denies them.
38. Yardi admits that, in December 2008, it sent communications to third-party
providers, which speak for themselves. Yardi refers to those communications for their contents
and denies Entrata’s mischaracterizations and purported characterizations thereof. Yardi further
admits that SAS70 (now known as SSAE 16) is an auditing standard used to verify that service
providers have adequate controls and safeguards in place when they host or process data
belonging to their customers and that Yardi communicated this information to clients when
needed. Yardi admits that Entrata executed a letter agreement dated January 8, 2009, which
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speaks for itself. Yardi refers to that agreement for its contents and denies Entrata’s
mischaracterizations and purported characterizations thereof. Yardi denies the remaining
allegations contained in Paragraph 38.
39. Yardi admits that it obtained from Entrata source code for an Entrata custom
interface utility. Yardi further admits that it decompiled and reviewed Entrata’s custom interface
utility source code. Yardi expressly denies that the decompilation violated the 2006 NDA or any
other agreement between the parties, a claim that Entrata knows is false and yet has wrongfully
communicated to third parties. Rather, Yardi admits that it expressly and clearly informed
Entrata at the outset of its business relationship that all of Entrata’s applications hosted on Yardi
servers would be subject to review by Yardi at the code level. Yardi further admits that Entrata
knowingly and willingly provided the source code for its custom interface in order for Yardi to
conduct a security review of the interface, as alleged in paragraph 33 of Entrata’s First Amended
Complaint. Yardi admits to conducting such security reviews as part of its effort to protect client
data and the Yardi network from legitimate and well-documented data security concerns. On
information and belief, the last sentence in Paragraph 39 refers to a deposition response, made
subject to the express objection of counsel, which is currently contested in the California
litigation and which otherwise speaks for itself. Yardi denies Entrata’s mischaracterizations and
purported characterizations of said deposition response. Yardi denies Entrata’s remaining
allegations in paragraph 39.
40. Yardi again expressly denies Entrata’s allegations that the 2006 NDA was
breached, and denies Entrata’s allegation that it has been harmed and continues to be harmed as a
result. Yardi denies any remaining allegations in Paragraph 40.
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D. Yardi’s Unlawful Efforts to Stifle Competition
41. Yardi denies Entrata’s allegations in Paragraph 41.
False Messages to Customers and Yardi’s Suit Against Another Software Company
42. Yardi denies Entrata’s allegations in Paragraph 42.
43. Yardi denies Entrata’s allegations in Paragraph 43.
44. Yardi admits that, on January 24, 2011—after successfully avoiding litigation for
the first 29 years of its history—Yardi filed a lawsuit against RealPage, another provider of
property management software and associated plug-ins, in which Yardi asserted a claim for
copyright infringement, among other claims. Yardi also admits that, after the lawsuit was filed,
Yardi held a conference call with third-party providers, including Entrata. Yardi expressly
denies that the lawsuit against RealPage was part of a “systematic attack,” which is a false
allegation propagated by Entrata following Yardi’s lawsuit against Entrata for alleged trade
secret misappropriation, copyright violations, and other serious wrongdoing. Yardi admits that it
continues to do business with RealPage, which Entrata alleges to be a significant provider of
property management software. Yardi denies Entrata’s remaining allegations in Paragraph 44.
45. Yardi admits that it has entered into a variety of agreements with customers,
which speak for themselves. Yardi refers to those agreements for their terms, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies Entrata’s remaining
allegations in Paragraph 45.
46. Yardi lacks knowledge or information sufficient to form a belief about the truth of
whether Entrata announced its launch of Entrata Core in the summer of 2012, and, on that basis,
denies that allegation. Yardi denies Entrata’s remaining allegations in Paragraph 46.
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47. Yardi admits it sent emails to customers dated March 3, 2015, and May 15, 2015,
which speak for themselves. Yardi refers to those emails for their contents, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 47.
48. Yardi denies Entrata’s allegations in Paragraph 48.
49. Yardi admits that, in 2012, Yardi began communicating that it would start
charging vendors including Entrata $25,000 to use each of seven Yardi standard interfaces.
Yardi denies Entrata’s remaining allegations in Paragraph 49.
50. Yardi admits that it executed a Non-Disclosure Agreement with Entrata in 2012,
which speaks for itself. Yardi refers to that agreement for its terms, and denies Entrata’s
mischaracterizations and purported characterizations thereof. Yardi lacks knowledge or
information sufficient to form a belief about Entrata’s motivations with respect to the 2012 NDA
and, on that basis, denies such allegations. Yardi denies Entrata’s remaining allegations in
Paragraph 50.
51. Yardi admits that it has attempted in good faith to come to terms with Entrata on a
Data Exchange Agreement and that Entrata provided Yardi with “gap” analyses, which speak for
themselves. Yardi refers to that agreement and the analyses that were provided for their terms
and content, and denies Entrata’s mischaracterizations and purported characterizations thereof.
Yardi expressly denies that it unilaterally terminated negotiations on the Data Exchange
Agreement and denies Entrata’s remaining allegations in Paragraph 51.
52. Yardi admits that Entrata informally requested specifications for Yardi’s standard
interfaces at various times, including in 2015, and Yardi further admits that Entrata refused to
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sign the mutually negotiated Data Exchange Agreement that would have facilitated such an
exchange. Yardi denies Entrata’s remaining allegations in Paragraph 52.
Yardi’s Lawsuit against Entrata
53. Yardi admits that, on October 21, 2013, Yardi commenced a lawsuit against
Entrata in the United States District Court for the Central District of California, which asserts,
among other claims, copyright infringement and trade secret misappropriation. Yardi admits that
it maintains a website at http://www.yardi.com/news/yardi-lawsuit-against-property-solutions-
international/ that contains information related to Yardi’s lawsuit in the Central District of
California. Yardi expressly denies that the lawsuit was commenced to impair Entrata’s ability to
fairly compete with Yardi; the lawsuit was instead commenced in response to, among other
serious misconduct, Entrata’s copyright infringement and trade secret misappropriation. Yardi
denies Entrata’s remaining allegations in Paragraph 53.
54. Yardi admits that it notified existing and potential customers about its lawsuit
against Entrata, Yardi’s need to protect its intellectual property, and Yardi’s desire to continue to
support mutual customers despite the lawsuit. These notifications speak for themselves. Yardi
denies Entrata’s mischaracterizations and purported characterizations of any client notices and
denies Entrata’s remaining allegations in Paragraph 54.
55. Yardi denies Entrata’s allegations in Paragraph 55, and again expressly denies
Entrata’s allegation that Yardi’s lawsuit against Entrata, filed in the Central District of
California, was “strategically commenced.”
56. Yardi denies Entrata’s allegations in Paragraph 56.
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Yardi’s Further False Assertions and Acts Aimed at Stifling Competition from Entrata
57. Yardi denies that it rendered Entrata’s custom interface utility inaccessible. Yardi
admits that it quarantined a “diagnostics.asmx” file due to a security vulnerability. Yardi
expressly denies that Yardi violated either the 2006 NDA or the 2012 NDA in so doing. Yardi
lacks knowledge or information sufficient to form a belief about the truth of the remaining
allegations in Paragraph 57, and, on that basis, denies them.
58. Yardi admits that Entrata purports that it is informed of and believes the
allegations in Paragraph 58, but Yardi denies Entrata’s allegations in Paragraph 58.
59. Yardi denies Entrata’s allegations in Paragraph 59.
60. Yardi admits that it quarantined a “diagnostics.asmx” file due to a security
vulnerability on January 14, 2015 and then notified Entrata and mutual customers of that security
step. Yardi denies Entrata’s remaining allegations in Paragraph 60.
61. Yardi admits that it sent emails to Entrata and mutual customers on January 14,
2015, which speak for themselves. Yardi refers to those emails for their contents and denies
Entrata’s mischaracterizations and purported characterizations thereof. Yardi denies Entrata’s
remaining allegations in Paragraph 61.
62. Yardi admits that Yardi’s Vice President and General Counsel, Arnold Brier, sent
an email on January 14, 2015, which speaks for itself. Yardi refers to that email for its contents,
denies Entrata’s mischaracterizations and purported characterizations thereof, and denies
Entrata’s remaining allegations in Paragraph 62.
63. Yardi admits that Arnold Brier sent an email to Entrata’s Chief Legal Counsel,
Jared Hunsaker, on January 14, 2015, which speaks for itself. Yardi refers to that email for its
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contents and denies Entrata’s mischaracterizations and purported characterizations thereof.
Yardi denies Entrata’s remaining allegations in Paragraph 63.
64. Yardi denies the first and last sentences of Paragraph 64. Yardi lacks knowledge
or information sufficient to form a belief about the truth of the remaining allegations in
Paragraph 64, and, on that basis, denies them.
65. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in the second sentence in Paragraph 65, and, on that basis, denies them. Yardi
denies the allegations in the first and third sentences of Paragraph 65.
66. Yardi denies the first sentence of Paragraph 66. Yardi admits that Entrata
purports to characterize a communication from a customer, which speaks for itself. Yardi refers
to that communication for its contents and denies Entrata’s mischaracterizations and purported
characterizations thereof, and denies the remaining allegations in Paragraph 66.
67. Yardi admits that Jared Hunsaker sent a letter to Arnold Brier on January 15,
2015, which speaks for itself. Yardi refers to that letter for its contents, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies the remaining
allegations in Paragraph 67.
Yardi’s Acts of Coercion against Entrata
68. Yardi expressly denies that its conduct with respect to Entrata’s custom interface
stood to cause substantial damage to Yardi’s competitors, and notes that the allegations of harm
contained in the section entitled “Yardi’s Acts of Coercion against Entrata” (Paragraphs 68-91 of
the First Amended Complaint) refer only to interactions between Yardi and Entrata. Yardi
admits that Entrata is solely and exclusively responsible for writing and maintaining its custom
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interface and other products and thus Entrata is responsible for any functionality issues with its
products. Yardi denies Entrata’s mischaracterizations and purported characterizations of Yardi’s
actions and denies all other allegations in Paragraph 68.
69. Yardi lacks knowledge or information sufficient to form a belief about the truth of
the allegations in Paragraph 69, and, on that basis, denies them.
70. Yardi denies the first sentence of Paragraph 70. Yardi admits that its CEO, Anant
Yardi sent an email to Entrata’s CEO, Dave Bateman, on January 15, 2015, which speaks for
itself. Yardi refers to that email for its contents, denies Entrata’s mischaracterizations and
purported characterizations thereof, and denies the remaining allegations in Paragraph 70.
71. Yardi denies Entrata’s allegations in Paragraph 71.
72. Yardi denies Entrata’s allegations in Paragraph 72.
73. Yardi expressly denies Entrata’s allegation that the purported market for the sale
of integration products is less competitive because of any conduct by Yardi, particularly in light
of Entrata’s own allegations in its original Complaint that Entrata “received notice from several
of its customers that other purveyors of software designed to interface with Yardi’s property
management software had been in contact with them, advising of rumors that [Entrata] would no
longer be a viable choice, and offering their competing services to fill the upcoming void.”
Yardi further denies any other allegations in Paragraph 73.
74. Yardi lacks knowledge or information sufficient to form a belief about the truth of
Entrata’s allegations in Paragraph 74, and, on that basis, denies them.
75. Yardi admits that on or about February 12, 2015, Yardi sent an email to Entrata,
which speaks for itself. Yardi refers to that email for its contents, denies Entrata’s
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mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 75.
76. Yardi admits that the parties exchanged communications related to pending
installations and updates, which speak for themselves. Yardi denies that Entrata provided the
information Yardi requested and denies the remaining allegations in Paragraph 76.
77. Yardi denies Entrata’s allegations in Paragraph 77.
78. Yardi admits that Entrata submitted and continues to submit information to Yardi
related to the installation and update of Entrata’s custom interface utilities in the Yardi cloud.
The submissions speak for themselves. Yardi refers to the submissions for their contents, denies
Entrata’s mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 78.
79. Yardi admits that it sent letters to clients on or about April 28, 2015, which speak
for themselves. Yardi refers to those letters for their contents, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 79.
80. Yardi admits that it sent letters to clients on or about April 28, 2015, which speak
for themselves. Yardi refers to those letters for their contents, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 80.
81. Yardi admits that it sent letters to clients on or about April 28, 2015, which speak
for themselves. Yardi refers to those letters for their contents, denies Entrata’s
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mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 81.
82. Yardi admits that it attempted to reach agreement with Entrata on a mutually
acceptable acknowledgement. Yardi denies Entrata’s mischaracterizations and purported
characterizations of those communications and denies any remaining allegations in Paragraph 82.
83. Yardi admits that as part of its processes, Yardi gathers information before Yardi
will update or install third-party software that is or is to be hosted in the Yardi cloud, and that
any forms used to solicit this information speak for themselves. Yardi refers to any such forms
for their content, denies Entrata’s mischaracterizations and purported characterizations of any
such forms, and denies any remaining allegations in Paragraph 83.
84. Yardi admits that it limits the hosting in the Yardi cloud of certain third-party
software for various legitimate reasons. Yardi denies Entrata’s remaining allegations in
Paragraph 84.
85. Yardi admits that it sent customers a letter in November 2015, which speaks for
itself. Yardi refers to that letter for its contents, denies Entrata’s mischaracterizations and
purported characterizations thereof, and denies any remaining allegations in Paragraph 85.
86. Yardi admits that Arnold Brier emailed Jared Hunsaker on December 1, 2015,
which speaks for itself. Yardi refers to that email for its contents, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 86.
87. Yardi admits that for various legitimate reasons, including data-security concerns,
certain third-party software will be removed from the Yardi cloud after August 31, 2018. Yardi
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denies the remaining allegations in Paragraph 87, including but not limited to the false allegation
that Yardi is discontinuing the Standard Interface Partnership Program (SIPP), which currently
has dozens of members, including direct competitors. Yardi of course reserves the right to
decide which, if any, third-party vendors may join the SIPP.
88. Yardi denies Entrata’s allegations in Paragraph 88.
89. Yardi denies Entrata’s allegations in Paragraph 89.
90. Yardi denies Entrata’s allegations in Paragraph 90.
91. Yardi denies Entrata’s allegations in Paragraph 91.
Yardi’s Continued Acts Aimed at Injuring Entrata and other Third-Party Integrators
92. Yardi admits that it sent an email to mutual customers on March 3, 2015, which
speaks for itself. Yardi refers to that email for its contents, denies Entrata’s mischaracterizations
and purported characterizations thereof, and denies any remaining allegations in Paragraph 92.
93. Yardi admits that Jared Hunsaker sent an email and a letter to Arnold Brier on
March 24, 2015, which speak for themselves. Yardi further admits that Jared Hunsaker sent an
email and letter to Arnold Brier on April 2, 2015, which speak for themselves. Yardi refers to
those emails and letters for their contents, denies Entrata’s mischaracterizations and purported
characterizations thereof, and denies any remaining allegations in Paragraph 93.
94. Yardi admits that it communicated certain information to Entrata, all of which
speaks for itself. Yardi refers to its communications for their contents, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 94.
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95. Yardi admits that it has sent communications to customers about Yardi’s plans
with respect to hosting third-party software in the Yardi cloud, which speak for themselves.
Yardi refers to those communications for their contents and denies Entrata’s mischaracterizations
and purported characterizations thereof. Yardi lacks knowledge or information sufficient to form
a belief about the truth of the last sentence in Paragraph 95, and, on that basis, denies those
allegations. Yardi further denies any remaining allegations in Paragraph 95.
E. Relevant Markets and Yardi’s Market Power
96. Yardi denies Entrata’s allegations in Paragraph 96.
97. Yardi denies Entrata’s allegations in Paragraph 97.
98. Yardi denies Entrata’s allegations in Paragraph 98.
99. Yardi denies Entrata’s allegations in Paragraph 99.
100. Yardi denies Entrata’s allegations in Paragraph 100.
101. Yardi denies Entrata’s allegations in Paragraph 101.
102. Yardi denies Entrata’s allegations in Paragraph 102.
103. Yardi denies Entrata’s allegations in Paragraph 103.
104. Yardi denies Entrata’s allegations in Paragraph 104.
105. Yardi denies Entrata’s allegations in Paragraph 105.
106. Yardi denies Entrata’s allegations in Paragraph 106.
107. Yardi denies Entrata’s allegations in Paragraph 107.
108. Yardi denies Entrata’s allegations in Paragraph 108.
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IV. CLAIMS FOR RELIEF
FIRST CLAIM (Injurious Falsehoods)
109. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
110. Yardi denies Entrata’s allegations in Paragraph 110.
111. Yardi denies Entrata’s allegations in Paragraph 111.
112. Yardi denies Entrata’s allegations in Paragraph 112.
113. Yardi denies Entrata’s allegations in Paragraph 113.
114. Yardi denies Entrata’s allegations in Paragraph 114.
115. Yardi denies Entrata’s allegations in Paragraph 115.
116. Yardi denies Entrata’s allegations in Paragraph 116.
SECOND CLAIM (False Advertising)
117. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
118. Yardi denies Entrata’s allegations in Paragraph 118.
119. The last sentence in Paragraph 119 consists of legal conclusions to which no
response is required. To the extent a response is deemed required, Yardi denies the allegations in
the last sentence of Paragraph 119. Yardi denies any remaining allegations in Paragraph 119.
120. Yardi denies Entrata’s allegations in Paragraph 120.
121. Yardi denies Entrata’s allegations in Paragraph 121.
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122. Paragraph 122 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 122.
123. Paragraph 123 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 123.
THIRD CLAIM (Violations of Utah Truth in Advertising Act)
124. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
125. Paragraph 125 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 125.
126. Paragraph 126 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 126.
127. Yardi admits that Entrata sent Yardi a letter on January 15, 2015, which speaks
for itself. Yardi refers to that letter for its contents, denies Entrata’s mischaracterizations and
purported characterizations, and denies any remaining allegations in Paragraph 127.
128. Yardi denies Entrata’s allegations in Paragraph 128, and Yardi denies that any
such correction notice was necessary or required.
129. Paragraph 129 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 129.
FOURTH CLAIM (Tortious Interference)
130. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
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131. Yardi denies Entrata’s allegations in Paragraph 131.
132. Yardi denies Entrata’s allegations in Paragraph 132.
133. Yardi denies Entrata’s allegations in Paragraph 133.
134. Yardi denies Entrata’s allegations in Paragraph 134.
135. Yardi denies Entrata’s allegations in Paragraph 135.
FIFTH CLAIM (Monopolization and Attempted Monopolization of the Accounting Product Market)
136. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
137. Yardi denies Entrata’s allegations in Paragraph 137.
138. Yardi denies Entrata’s allegations in Paragraph 138.
139. Yardi denies Entrata’s allegations in Paragraph 139.
140. Yardi denies Entrata’s allegations in Paragraph 140.
141. Yardi denies Entrata’s allegations in Paragraph 141.
142. Yardi denies Entrata’s allegations in Paragraph 142.
143. Paragraph 143 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 143.
144. Paragraph 144 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 144.
SIXTH CLAIM (Monopoly Leveraging and Attempted Monopolization of the Integration Product Market)
145. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
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146. Yardi denies Entrata’s allegations in Paragraph 146.
147. Yardi denies Entrata’s allegations in Paragraph 147.
148. Yardi denies Entrata’s allegations in Paragraph 148.
149. Yardi denies Entrata’s allegations in Paragraph 149.
150. Yardi denies Entrata’s allegations in Paragraph 150.
151. Paragraph 151 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 151.
152. Paragraph 152 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 152.
SEVENTH CLAIM (Unlawful Tying)
153. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
154. Yardi denies Entrata’s allegations in Paragraph 154.
155. Yardi denies Entrata’s allegations in Paragraph 155.
156. Yardi denies Entrata’s allegations in Paragraph 156.
157. Yardi denies Entrata’s allegations in Paragraph 157.
158. Yardi denies Entrata’s allegations in Paragraph 158.
159. Yardi denies Entrata’s allegations in Paragraph 159.
160. Paragraph 160 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 160.
161. Paragraph 161 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 161.
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162. Yardi denies Entrata’s allegations in Paragraph 162.
163. Yardi denies Entrata’s allegations in Paragraph 163.
164. Paragraph 164 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 164.
EIGHTH CLAIM (Breach of Contract – Third Party Beneficiary)
165. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
166. Yardi admits that it has entered into agreements with customers, which speak for
themselves. Yardi refers to those agreements for their contents, denies Entrata’s
mischaracterizations and purported characterizations thereof, and denies any remaining
allegations in Paragraph 166.
167. Paragraph 167 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 167.
168. Yardi denies Entrata’s allegations in Paragraph 168.
169. Yardi denies Entrata’s allegations in Paragraph 169.
170. Yardi denies Entrata’s allegations in Paragraph 170.
171. Yardi denies Entrata’s allegations in Paragraph 171.
NINTH CLAIM (Breach of Express Contract – 2006 NDA)
172. Yardi incorporates by reference each of its responses to the foregoing Paragraphs
as if fully restated herein.
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173. Paragraph 173 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 173.
174. Paragraph 174 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 174.
175. Yardi denies the allegations in Paragraph 175.
176. Yardi denies the allegations in Paragraph 176.
177. Yardi denies the allegations in Paragraph 177.
178. Paragraph 178 consists of legal conclusions to which no response is required. To
the extent a response is deemed required, Yardi denies the allegations in Paragraph 178.
V. PRAYER FOR RELIEF
Entrata’s prayer for relief contains no factual allegations and therefore requires no
response. To the extent a response is deemed required, Yardi denies that Entrata is entitled to
any relief.
VI. AFFIRMATIVE DEFENSES
Without conceding that it has the burden of proof on any issue, Yardi asserts the
following defenses and reserves the right to amend this Answer, as necessary, to assert additional
defenses that become apparent during the course of investigation and discovery.
First Affirmative Defense (Failure to State a Claim)
Entrata has failed to adequately state a claim on which relief can be granted.
Second Affirmative Defense (Statute of Limitations)
Entrata’s claims are barred by applicable statutes of limitations.
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Third Affirmative Defense (Laches)
Entrata’s claims are barred because of its unreasonable delay in bringing this action.
Fourth Affirmative Defense
(Waiver)
Entrata’s claims are barred because its conduct, including its ongoing business activities
with Yardi and its work with Yardi to close security vulnerabilities, has been inconsistent with its
assertion of the claims in the Complaint.
Fifth Affirmative Defense (Estoppel)
Entrata’s claims are barred because Yardi has relied on statements and conduct by the
Entrata that are inconsistent with the relief Entrata seeks in the Complaint, including Entrata’s
acquiescence in Yardi’s conduct.
Sixth Affirmative Defense (Ratification)
Entrata’s claims are barred because Entrata has ratified Yardi’s conduct, including
through Entrata’s ongoing business dealings with Yardi and work with Yardi to close security
vulnerabilities.
Seventh Affirmative Defense (Collateral Estoppel)
Entrata is estopped from relitigating issues already decided in prior litigation between the
parties.
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Eighth Affirmative Defense (Absolute Privilege)
Entrata’s claims are barred because they are based on Yardi’s statements and conduct in
connection with judicial proceedings.
Ninth Affirmative Defense (Qualified Privilege)
Entrata’s claims are barred because they are based on Yardi’s good-faith, fair comments
made to parties in a relationship with Yardi and with an interest in the subject matter of the
communications.
Tenth Affirmative Defense (Truth)
Entrata’s claims are barred because they are based on substantially or completely true
statements.
Eleventh Affirmative Defense (Opinion)
Entrata’s claims are barred because they are based on non-actionable, privileged
statements of opinion.
Twelfth Affirmative Defense (Absence of Malice)
Entrata’s claims are barred because Yardi has always acted in good faith.
Thirteenth Affirmative Defense (Justification)
Entrata’s claims are barred because Yardi’s conduct was justified by Yardi’s need to
protect its security and other interests as well as those of its customers.
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Fourteenth Affirmative Defense (First Amendment)
Entrata’s claims are barred because they are based on statements protected by the First
Amendment.
Fifteenth Affirmative Defense (Mitigating Circumstances)
Although Entrata is not entitled to any relief, all of Yardi’s statements and conduct that
may be the subject of the Complaint were made in good faith and with the honest belief in their
truth, warranting a reduction of any damages that may be awarded to Entrata.
Sixteenth Affirmative Defense (Failure to Identify Special Damages)
Entrata’s claims are barred because Entrata has failed to identify any specific injury
attributable to Yardi’s conduct.
Seventeenth Affirmative Defense (Fair Competition)
Entrata’s claims are barred because they are based on legal and proper conduct in
furtherance of Yardi’s economic interests.
Eighteenth Affirmative Defense (Noerr-Pennington Doctrine)
Entrata’s claims are barred because they are based on Yardi’s legitimate efforts to
enforce its interests and the law through the courts.
Nineteenth Affirmative Defense (Procompetitive Conduct)
Entrata’s claims are barred because they are based on procompetitive conduct.
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Twentieth Affirmative Defense (Defenses to Underlying Contracts)
Although Entrata has not identified the contracts under which it claims rights as a third-
party beneficiary, Yardi will assert against Entrata all available defenses to any alleged breach of
any contract that Entrata ultimately identifies.
Twenty-First Affirmative Defense (Unclean Hands)
Entrata’s claims are barred by unclean hands because Entrata has engaged in the same
conduct it accuses Yardi of engaging in.
Twenty-Second Affirmative Defense (Failure to Mitigate)
Entrata is not entitled to damages arising from its failure to mitigate its alleged injury.
Twenty-Third Affirmative Defense (Setoff)
Although Entrata is not entitled to any relief, any damages awarded to Entrata are subject
to setoff by amounts that Entrata owes or will owe to Yardi.
Twenty-Fourth Affirmative Defense (Reservation of Rights)
Yardi reserves its right to assert additional affirmative defenses and/or counterclaims. WHEREFORE, Yardi prays for judgment as follows: 1. That Entrata take nothing by way of the Complaint;
2. That Yardi be awarded judgment against Entrata and awarded its costs and
attorneys’ fees to the extent permitted by law; and
3. That Yardi be awarded other and further relief as this Court deems just and
proper.
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COUNTERCLAIMS
Introduction
1. Yardi’s claims stem from Entrata’s persistent, unlawful exploitation of mutual
customers in its efforts to damage Yardi in the marketplace. Entrata’s misconduct has caused
and will continue to cause harm to both Yardi and those customers.
2. Yardi has a long history of working collaboratively with other companies—
including competitors of Yardi’s—who develop their own ancillary products and services that
interface with Yardi’s flagship Voyager® software for the benefit of mutual clients. Yardi
successfully works with over 100 other ancillary providers that make hundreds of products and
services available to well over 1,000 mutual clients. In 2006, Entrata, then known as Property
Solutions International, Inc., became one such company.
3. Unfortunately, Yardi came to suspect that Entrata had improperly obtained and
was surreptitiously accessing Yardi’s Voyager software for the purpose of misappropriating
Yardi’s intellectual property. Yardi eventually confirmed its suspicions. Entrata accomplished
its purpose in part by misleading ancillary product customers about Entrata’s right to use and
access the Voyager software and convincing them to give Entrata access to Yardi’s software.
After Yardi’s attempt to address its serious concerns directly with Entrata failed Yardi had no
choice but to file suit against Entrata in the United States District Court for the Central District of
California in 2013 (Case No. 2:13-cv-07764) for, among other things, copyright infringement
and misappropriation of trade secrets (the “California case”).
4. After litigating the California case for a year and a half, during which indisputable
evidence of Entrata’s serious misconduct emerged, Entrata filed the present lawsuit in this Court,
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in an apparent but misguided attempt to create settlement leverage in the California case. In the
present suit, Entrata makes a variety of business tort and antitrust claims, the bulk of which assert
that Yardi is acting unlawfully by discontinuing the use of custom interfaces with Voyager and
by not allowing Entrata to integrate its ancillary products via a standard interface. Yardi denies
that it has engaged in any conduct that is illegal or improper, and it denies that Entrata is entitled
to any relief.
5. However, while asserting in this lawsuit that Yardi is discontinuing its business
relationship with Entrata, Entrata is simultaneously knowingly, falsely and maliciously telling
joint customers the opposite—that the business relationship will continue. By doing so, Entrata
is causing joint customers who wish to continue using Voyager to abstain from or delay selecting
an ancillary product provider other than Entrata—whether it is Yardi or one of many third
parties. Entrata is thereby increasing its short-term profits at the expense of Yardi and the
parties’ mutual customers.
6. At the same time, Entrata is also discouraging mutual customers from upgrading
to the latest version of Voyager 7S, Yardi’s most advanced Voyager software, by falsely
claiming that such upgrades may “break” Entrata’s interface with Voyager. In fact, numerous
mutual clients currently use both Voyager 7S—including all versions of the 7S plug-in—and
Entrata products that rely on Entrata’s custom interface utility. Entrata’s false and misleading
statements are designed to interfere with Yardi’s contractual relationships by disparaging Yardi’s
products and reputation, dissuade Yardi customers from adopting Yardi’s most up-to-date
software, and otherwise mislead customers about the stability and operation of Yardi’s Voyager
software platform.
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7. Since filing its own strategic lawsuit in this Court, Entrata has continued to use
mutual customers as pawns in its attempts to damage Yardi. Yardi brings these counterclaims to
stop Entrata from lying to and misleading mutual customers, both to the customers’ and to
Yardi’s detriment.
The Parties
8. Entrata, Inc., (formerly Property Solutions International, Inc.) (“Entrata”) is a
Delaware corporation with its principal place of business located at 2912 Executive Parkway,
Suite 100, Lehi, Utah 84043.
9. Yardi Systems, Inc., (“Yardi”) is a California corporation with its principal place
of business located at 430 South Fairview Avenue, Santa Barbara, California 93117.
Jurisdiction and Venue
10. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because
one of Yardi’s claims arises under the federal Lanham Act, 15 U.S.C. § 1051 et seq. This Court
also has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 because the matter in
controversy exceeds the sum or value of $75,000, exclusive of interest, costs, and attorneys’ fees,
and is between citizens of different states. Likewise, the value of the non-monetary relief sought
also exceeds the sum or value of $75,000, exclusive of interest, costs, and attorneys’ fees. This
Court has supplemental subject matter jurisdiction over Yardi’s state law claims pursuant to 28
U.S.C. § 1367 because those claims are so related to claims over which the court has original
jurisdiction so as to form part of the same case or controversy.
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Factual Background
Yardi’s Voyager Platform
12. Yardi is a provider of a wide variety of high-performance software solutions and
ancillary products and services related to property management and property investment
management. Yardi develops, markets, hosts and licenses its software to real estate, property
management and property investment clients in property and property investment management
industries.
13. Yardi was built from the ground up by founder and President Anant Yardi, who
used his computer programming background and business insights to build Yardi’s first property
management software product in 1984. Since then, Yardi has become a respected and successful
designer and developer of property management and real estate investment software for clients
around the world. Over the last 30 years, Yardi has grown to become a team of over 5,000
dedicated employees who have created unique and powerful solutions for accounting, marketing,
resident screening, payment processing, facilities management, budgeting and forecasting,
utilities billing, and investment management. At the same time, Yardi has built its reputation by
conducting its affairs in accordance with its unwavering commitment to customer service,
integrity, innovation and community service.
14. Yardi’s proprietary Voyager software is designed to help clients work more
efficiently and to eliminate the need for clients to transfer data among various systems. Voyager
software offers an operating platform that centralizes accounting and property management data
in a single system.
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15. Various third-party companies develop and market certain specialized ancillary
products and service modules that are intended to interface with the customers’ Voyager
databases. That is, Yardi customers may use the Voyager software as their operating platform
and may license software from third parties to perform specific additional desired functions.
Almost all providers of ancillary products use Yardi’s standard interfaces to faciliate a seamless
and secure transfer of data to and from the Voyager database. A few third-party providers,
however, still use their own custom interfaces, which is simply not sustainable. For example,
Yardi’s planned encryption of selected sensitive data in Voyager 7S databases is not compatible
with custom interface applications; certain custom interface applications are known to cause
errors, data corruption and other serious issues such as out-of-balance conditions in the general
ledger—which Yardi is then expected and frequently called upon to help analyze and correct.
Further, hosted third-party software that accesses the data in Voyager databases can present
serious potential risks unless thoroughly tested and validated, which Yardi cannot reasonably
ensure or control.
Yardi’s Relationship with Entrata
16. Entrata is one of the third-party companies that develop ancillary products and
service modules that interface with customers’ Voyager databases. Entrata’s ancillary products
link to the Voyager databases through a custom interface.
17. Entrata has also developed its own property management software product called
Entrata Core.
18. As described in Yardi’s complaint in the California case, Entrata has developed
its property management software product in part by illegally obtaining a copy of, and then
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exploiting its unauthorized access to, Yardi’s Voyager software. Entrata has never had any
license, or been otherwise authorized, to possess or use the Voyager software (as opposed to
having the ability, through the custom interface utility and with permission from mutual clients,
to exchange certain data with those customers’ Voyager databases).
19. Yardi confronted Entrata directly with its suspicion that Entrata illegally
possessed the Voyager software. Yardi also explained that its agreements with its customers
prohibited those customers from providing Entrata with copies of, or access to, the Voyager
software. Entrata denied ever possessing, accessing, using or copying the Voyager software or
the Voyager software user manuals—but Entrata’s denials were demonstrably false.
20. Given Entrata’s explicit and false denials that it had possessed or accessed the
Voyager software and user manuals, in October 2013 Yardi filed suit in the United States District
Court for the Central District of California.
21. Through discovery in the California case, Yardi has been able to show that that
Entrata illegally obtained a copy of the Yardi Voyager software, deceived mutual customers in
the course of asking them to disclose Yardi’s proprietary information, and that Entrata’s CEO
personally carried a server containing an illegal copy of Yardi’s Voyager software to his team of
software developers in India.
22. In retaliation against Yardi’s claims, and to create settlement leverage in the
California case, Entrata filed suit in this Court on February 12, 2015, claiming that Yardi’s
legitimate business activities were instead violations of antitrust and tort laws.
Entrata’s False Statements That It Will Join Yardi’s Standard Interface Partnership Program
23. By letter dated November 18, 2015, Yardi informed its customers that
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Yardi would no longer allow the use of custom interfaces for third-party applications with
respect to multifamily portfolios. Custom interfaces can cause serious technical problems for
mutual clients, and it is difficult for Yardi to reasonably ensure that custom interfaces are
adequately secure. Yardi gave customers until August 31, 2018, to transition to a Yardi ancillary
product, a third-party vendor’s ancillary product that uses Yardi’s standard interface, or a third-
party property management software product. Yardi chose the August 31, 2018, date in order to
allow mutual customers to make an orderly and seamless transition to the product of their choice.
24. Yardi has explicitly told Entrata that Yardi has no plans to allow Entrata to join
Yardi’s Standard Interface Partnership Program (“SIPP”).
25. In fact, Entrata alleges in this lawsuit that “[o]n December 1, 2015, [Yardi’s Vice
President and General Counsel] Mr. [Arnold] Brier emailed [Entrata’s Chief Legal Counsel] Mr.
[Jared] Hunsaker, notifying him that Yardi has no plans to allow Entrata to join the Yardi
Standard Interface Program.”
26. Nevertheless, on information and belief, Entrata has falsely and knowingly told
and continues to tell Yardi clients that Entrata will transition to Yardi’s standard interface.
27. In the same December 1, 2015 email cited by Entrata in its Complaint, Mr. Brier
informed Mr. Hunsaker that Yardi was aware of Entrata’s false statements to customers in this
regard:
PSI knows this is not true; PSI is not in the process of joining Yardi’s Standard Interface Partnership Program, and Yardi has no plans to enter into any new business relationships with PSI in the future. Making such false representations to clients is a troubling continuation of PSI’s well documented history of lies and deception, which—in addition to PSI’s blatant misappropriation and misuse of Yardi’s software—is why PSI and Yardi have been in agreement since June that their business relationship is irreparably damaged and that the parties will go their separate ways.
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28. Mr. Brier closed his email by asking Entrata to “ensure [Entrata] immediately
stops spreading false information to Yardi clients.”
29. But Entrata did not stop spreading false information to Yardi clients. Yardi thus
wrote to Entrata again on June 21, 2016:
In the last few days we have heard from several mutual clients that both Ben Zimmer and Chase Herrington independently are telling clients that PSI will transition to the Yardi standard interface and that PSI and Yardi are “close to working out their differences.”
PSI knows this is not true. PSI is not in the process of joining Yardi’s Standard Interface Partnership Program. The parties have no plans to enter into any new business relationships in the future and in fact agreed in June of 2015 that their business relationship is irreparably damaged. Further, as you well know we have had no substantive conversations of any kind for almost one year.
PSI’s false representations have not only continued, but are now coming from the highest levels of your company. These false representations further evidence PSI’s well-documented history of lies and deception—and also flatly contradict PSI’s own allegations made in Federal Court (see paragraph 86 of your most recently amended complaint).
PSI’s falsehoods now appear purposefully intended to interfere with Yardi’s ongoing business relationships and must stop immediately.
Thanks in advance for taking the necessary steps to resolve this right away.
30. Entrata’s false statements stand to cause Yardi’s customers significant harm.
Customers’ ability to make a timely and seamless transition to the products of their choice, and
thus to proceed without substantial business disruption, will be jeopardized if they delay
implementing a transition plan because they are falsely led to believe that no such transition
ultimately will be necessary. Entrata’s intent in making such false and misleading statements is
to confuse mutual customers, damage customers’ relationships with Yardi, and disrupt Yardi’s
business operations. Yardi is already expending significant resources working with customers to
clear up the confusion caused by Entrata’s false and misleading statements.
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Entrata’s False Statements That Upgrading to Voyager Will “Break” the Interface Between Ancillary Products and Voyager
31. Entrata is harming Yardi and its customers with other false statements as well.
On information and belief, Entrata has been discouraging customers from upgrading to Voyager
7S as recently as October 2016. Entrata has falsely told customers that the upgrade may “break”
the interface between Entrata’s ancillary products and Voyager because the upgrade changes
over 1,000 tables in the Yardi database and Entrata has no way of knowing what changes might
have been made.
32. Entrata’s statements disparaging Voyager 7S are false and misleading. Many
mutual customers currently use Entrata ancillary products with Voyager 7S. In addition,
upgrading to Voyager 7S from older versions of Voyager, or from an earlier release of Voyager
7S to a later release of Voyager 7S (such as from Core plug-in 7.2 to 7.3) does not necessarily
involve changing vast numbers of database tables. Further, although some tables may
necessarily change between versions, a great many of those tables (such as tables related to
public housing, for example) have nothing to do with the functionality of Entrata’s ancillary
products.
33. Entrata’s false and misleading statements thus are clearly only designed to
disparage Yardi’s products and reputation, mislead customers about the stability and operation of
Yardi’s platform, and dissuade Yardi’s customers from taking advantage of Yardi’s most
advanced products.
34. Entrata’s statements are harming Yardi and mutual customers by preventing Yardi
from offering product improvements and innovations to meet those customer’s needs. If Yardi
cannot offer its new technology as the industry develops, Yardi’s position in the marketplace
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suffers—as do its customers, who are not able to obtain the value offered by Voyager’s improved
functionality, stability and data security.
35. Yardi is already expending significant resources working with customers to clear
up the confusion caused by Entrata’s false and misleading statements.
Claims for Relief
FIRST CLAIM
Injurious Falsehood
36. Yardi repeats and realleges Paragraphs 1-35 of the Counterclaims and
incorporates them herein by reference.
37. Entrata’s statements that Yardi will allow Entrata to join its Standard Interface
Partnership Program and that upgrading to Voyager 7S will “break” the interface between
Entrata’s ancillary products and Voyager are false.
38. Each of these injurious falsehoods was calculated to, and does, disrupt, harm and
interfere with Yardi’s relationship with current and prospective customers—including users of
property management software and ancillary products as well as investors in real estate
markets—injuring both Yardi and its current and prospective customers. Entrata’s injurious
falsehoods are also designed to—and do—prevent mutual customers from making timely
business decisions that would improve the functionality of Voyager and avoid future business
disruption.
39. In making these false statements, Entrata knew and intended or should have
known that their publication would likely harm Yardi’s pecuniary interests. Entrata’s false
statements hamper, interfere with, delay and otherwise seek to prevent customers’ ability to
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transition to a non-custom interface ancillary product (or another property management software
product) within a reasonable time, harming Yardi’s relationship with those customers and
preventing Yardi from offering its own ancillary products to those customers. Entrata’s
statements further disparage Yardi’s upgraded Voyager product, harming Yardi’s reputation, its
ability to acquire new customers, and its relationship with current customers.
40. Significant amounts of Yardi’s resources have already been expended, and will
continue to be expended, responding to customers’ and potential customers’ concerns and
confusion arising from Entrata’s false and misleading representations.
41. Entrata has acted in bad faith and with malice in publishing the above-referenced
injurious falsehoods.
42. Entrata knew or should have known that each of these statements is false, or at
least that it has acted in reckless disregard of the falsity of its communications.
43. Yardi has suffered irreparable harm arising from Entrata’s publication and
dissemination of injurious falsehoods. Yardi will continue to suffer so unless and until Entrata is
enjoined from publishing and disseminating injurious falsehoods, including the above-referenced
false implications and representations.
SECOND CLAIM
False Advertising/Lanham Act
44. Yardi repeats and realleges Paragraphs 1-43 of the Counterclaims and
incorporates them herein by reference.
45. Entrata, in commercial promotion of its ancillary products and service modules
and in interstate commerce, has made materially false or misleading representations of fact,
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including that Entrata will join the Standard Interface Partnership Program and that upgrading to
Voyager 7S will “break” Entrata’s ancillary products’ interfaces with Voyager.
46. Entrata’s statements constitute commercial speech. Entrata made these statements
to multiple customers in connection with its offering of software products that compete with
those Yardi offers. Entrata had and has a pecuniary interest in selling its products and made
these statements to unfairly influence consumers to buy or continue using its products rather than
Yardi’s.
47. In making these false and misleading communications to customers and others
within the industry, Entrata knew that these statements were false or acted with reckless
disregard for their accuracy.
48. As a direct and proximate result of Entrata’s false and misleading statements,
Yardi has suffered injury and damages. Yardi will continue to suffer irreparable harm unless and
until Entrata is enjoined from stating or implying that Yardi will allow Entrata to join its
Standard Interface Partnership Program and that Yardi’s recent upgrade to Voyager will “break”
the interface between Entrata’s ancillary products and Voyager.
49. The foregoing statements constitute false advertising under 15 U.S.C.
§ 1125(a)(1)(B) (Section 43(a)(1)(B) of the Lanham Act). Yardi is therefore entitled to
injunctive and monetary relief, including treble damages and attorneys’ fees, pursuant to, at the
least, sections 34, 35, and 43 of the Lanham Act, 15 U.S.C. §§ 1116, 1117, and 1125.
THIRD CLAIM
Utah Truth in Advertising Act Violations
50. Yardi repeats and realleges Paragraphs 1-49 of the Counterclaims and
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incorporates them herein by reference.
51. By representing that Yardi will allow Entrata to join its Standard Interface
Partnership Program and that upgrading to Voyager 7S will “break” the interface between
Entrata’s ancillary products and Voyager, Entrata has engaged in deceptive trade practices in
violation of Utah Code § 13-11a-3(1), subdivision (e).
52. By representing that upgrading to Voyager 7S will “break” the interface between
Entrata’s ancillary products and Voyager, Entrata has disparaged Yardi’s business and services,
engaging in deceptive trade practices under Utah Code § 13-11a-3(1), subdivision (h).
53. Yardi has sent Entrata notice of the false nature of Entrata’s representations and
demanded that Entrata take steps to cure its false representations. Despite that notice, Entrata
failed to take action correcting its false statements.
54. By reason of the foregoing, Yardi is entitled to injunctive and monetary relief,
including attorney’s fees and an order requiring Yardi to promulgate corrective advertising,
pursuant to Utah Code § 13-11a-4.
FOURTH CLAIM
Tortious Interference
55. Yardi repeats and realleges Paragraphs 1-54 of the Counterclaims and
incorporates them herein by reference.
56. Entrata has intentionally interfered with Yardi’s existing and potential economic
relations by knowingly communicating the above-referenced falsehoods to Yardi’s Voyager
customers and others within the industry.
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57. To disrupt the relationship between Yardi and its customers and prevent new
customer relationships from forming, Entrata has used improper means—including but not
limited to intentionally, willfully, or recklessly making false representations that Yardi will allow
Entrata to join its Standard Interface Partnership Program and that upgrading to Voyager 7S will
“break” the interface between Entrata’s ancillary products and Voyager.
58. As a result of Entrata’s actions, Yardi has been injured and damaged and will
continue to be so injured and damaged, as significant amounts of Yardi’s resources have already
been and will continue to be expended responding to customers’ and potential customers’
confusion and concerns arising from Entrata’s accusations, falsehoods, and misleading
representations. Yardi’s reputation and goodwill with its customers has suffered as a result of
Entrata’s false and misleading statements. Yardi has also suffered in its ability to offer its
ancillary products to customers who would switch away from Entrata’s ancillary products but for
Entrata’s false statements that it will join the Standard Interface Partnership Program.
59. Yardi has suffered harm and injury and will continue to suffer harm and injury
unless and until Entrata is enjoined from tortuously interfering with Yardi’s economic and
business relations.
FIFTH CLAIM
Statutory Unfair Competition Under California Business and Professions Code § 17200
60. Yardi repeats and realleges Paragraphs 1-59 of the Counterclaims and
incorporates them herein by reference.
61. As discussed above, Entrata has made and continues to make misleading
statements to Entrata’s and Yardi’s mutual customers, including the statements that Yardi will
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allow Entrata to join its Standard Interface Partnership Program and that upgrading to Voyager
7S will “break” the interface between Entrata’s ancillary products and Voyager.
62. By the actions alleged in the Counterclaims, Entrata has engaged in unlawful and
unfair competition under the statutory law of the State of California, Cal. Bus. & Prof. Code
§ 17200, et seq. Entrata’s unlawful acts include those alleged herein, including violation of 15
U.S.C. 1125(a), Utah Code § 13-11a-3(1), subdivision (e), and common law. Entrata’s actions
are contrary to established public policy, immoral, unethical, oppressive and unscrupulous and
cause injuries that outweigh their benefits.
63. Each of these falsehoods was designed to, and does, disrupt, harm and interfere
with Yardi’s relationship with current and prospective customers—including users of property
management software and ancillary products as well as investors in real estate markets—injuring
both Yardi and its current and prospective customers. Entrata’s falsehoods are also designed
to—and do—prevent mutual customers from making timely business decisions that would
improve the functionality of Voyager and avoid future business disruption.
64. In making these false statements, Entrata knew and intended or should have
known that their publication would likely harm Yardi’s pecuniary interests. Entrata’s false
statements hamper, interfere with, delay and otherwise seek to prevent customers’ ability to
transition to a non-custom interface ancillary product (or another property management software
product) within a reasonable time, harming Yardi’s relationship with those customers and
preventing Yardi from offering its own ancillary products to those customers. Entrata’s
statements further disparage Yardi’s upgraded Voyager product, harming Yardi’s reputation, its
ability to acquire new customers, and its relationship with current customers.
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65. Significant amounts of Yardi’s resources have already been expended, and will
continue to be expended, responding to customers’ and potential customers’ concerns and
confusion arising from Entrata’s false and misleading representations.
66. Yardi has suffered irreparable harm arising from Entrata’s publication and
dissemination of falsehoods. Yardi will continue to suffer so unless and until Entrata is enjoined
from publishing and disseminating injurious falsehoods, including the above-referenced false
and misleading statements.
Prayer for Relief
WHEREFORE, Yardi prays that judgment be entered in its favor on each of the
foregoing claims for relief, and that:
A. Entrata be preliminarily and permanently enjoined from:
(1) Publishing or otherwise disseminating falsehoods concerning Yardi (e.g.,
that Entrata will join the Standard Interface Partnership Program and that
upgrading to the most recent version of Voyager will “break” Entrata’s
ancillary products’ interface with Voyager); and
(2) Tortiously interfering with Yardi’s existing and potential economic
relations;
B. Entrata be required to promulgate corrective advertising regarding its false and
misleading claims that Yardi will allow Entrata to join its Standard Interface
Partnership Program and that upgrading to Voyager 7S will “break” the interface
between Entrata’s ancillary products and Voyager;
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C. Award damages to Yardi (including Entrata’s profits) in an amount to be proven at
trial, trebled pursuant to 15 U.S.C. § 1117(a);
D. That Yardi be awarded damages in an amount sufficient to compensate it for the
damage caused by Entrata’s unlawful and unfair competition under Cal. Bus. & Prof.
Code § 17200, including exemplary damages provided by Cal. Bus. & Prof. Code §
17206.
D. Award Yardi its attorneys’ fees, pursuant to at least 15 U.S.C. § 1117(a), and Utah
Code § 13-11a-4(c);
E. Award Yardi its costs;
F. Award Yardi prejudgment interest, as applicable; and
G. Grant Yardi such other and further relief as is just.
JURY DEMAND
Yardi hereby demands TRIAL BY JURY of all claims and issues presented in this action
so triable.
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Dated: December 1, 2016 Respectfully submitted,
By: /s/ John DeQ. Briggs John DeQ. Briggs (admitted pro hac vice)
Rachel J. Adcox (admitted pro hac vice) AXINN, VELTROP & HARKRIDER LLP 950 F Street NW Washington, DC 20004 Telephone: (202) 912-4700 Facsimile: (202) 912-4701
By: /s/ Timothy K. Conde John A. Andersen Timothy K. Conde STOEL RIVES LLP 201 South Main Street, Suite 1100
Salt Lake City, UT 84111-4904 Telephone: (801) 328-3131 Facsimile: (801) 578-6999
Attorneys for Defendant Yardi Systems, Inc.
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