Write memo to Mr. Leb outlining your comprehensive negotiation plan.

1. Your memo should assume Mr. Leb knows nothing about this case at all. All of the preparatory work has been done by LAW CLERK. This means you will have to provide a summary of the case at the beginning of your plan.

2. Mr. Leb realizes you are not an attorney. You will not be expected to provide legal advice or to analyze the elements of any potential legal claims.

3. Your negotiation strategy memo should discuss each of the six negotiation foundations as they apply to the facts in this case. In addition, you should identify and discuss your client's BATNA based on what you know.

4. Your negotiation plan should include an opening proposal and an explanation for why you are making that proposal and what you envision the other side's initial response to be.

5. You may not have all the information you need for some aspect of your negotiation plan. If that is the case, explain what information you need and why?

Please note a couple important facts LAW CLERK did not put in the materials she compiled:

1. In 2017, the Company reported gross revenue of $3,000. In 2018, the Company reported gross revenue of $500,000.

2. According to Schmo,1313 has made about $1,000,000 (gross revenue) through September 2019 but has net income of only $75,000.

3. John Doe left a phone message for LAW CLERK saying he has talked to some of his contacts in the venture capital industry who tell him companies like 1313 are "hot" and could fetch a 20X multiple of gross revenue from a motivated group of investors.

JOHN DOE POSITION John Doe is a young, highly successful entrepreneur. Mr. Doe received his bachelor's degree in Electrical and Computer Engineering from UCSB. Early in his career, he was recruited into a Research and Development group at Northrop Grumman where he developed unmanned collision avoidance systems for the Navy and Airforce. For over a decade, Mr. Doe has been focused on building communities, launching networks and developing products centered at the convergence of technology, media and entertainment. Joe Schmo is just a few years older than Mr. Doe, and for this reason they narrowly missed each other at their shared alma mater. A few years later, in approximately 2013, they ultimately met through mutual work and social connections and, as they worked in the same industry, periodically also encountered each other at industry conferences and the like. In approximately September 2015, while Mr. Schmo was working at WF, a dating app company with a focus on video style dating, Mr. Schmo reached out to Mr. Doe, seeking his advice on raising capital and growing that company. More than willing to help a colleague and fellow UCSB alumnus and expand his network in the process, Mr. Doe then used his connections and experience to introduce them to angel investors in 2016. Mr. Schmo reached out again, in late summer 2016, asking for help with recruiting engineers. Over the course of a number of years, the two were in regular communication and a friendship and trust grew between them. In summer 2017, while they were each still working at separate start-up companies, discussions evolved over a number of months from how Mr. Doe could help Mr. Schmo with his current endeavors to how the two of them might join forces to a new start-up. While Mr. Schmo was successful in his own right, his focus and role were typically operations-focused and his involvement with his more successful ventures started relatively far along into the ventures' pre-IPO lifecycle. Mr. Doe, who had taken several companies from inception through fundraising and acquisition, had key experience that Mr. Schmo lacked. Through this process, Mr. Doe had also developed relationships and connections that would be critical to getting their contemplated venture off the ground successfully. After many discussions, the parties entered into a partnership for the purpose of starting up a company ("Company") that would assist major retail clients with marketing and research campaigns involving providing their products to the company's subscribers in order to get product feedback and product endorsements. The parties agreed that Mr. Doe would be primarily responsible for sales and Mr. Schmo would be primarily responsible for operations. The parties specifically agreed that they would own the Company equally and would manage and run it together as equal partners in the business. Starting in September 2017, the two began working together in earnest under their verbal agreement. During this time, before the Company existed in any formal form, Mr. Doe began using 1313.com email address and began storing both company and personal documents on his "new G-Suite account at 1313.com," which, following the standard set up instructions, he was invited to password protect. On approximately October 11, 2017, Mr. Schmo informed Mr. Doe that he had created 1313, Inc. the previous evening using LegalZoom and "expedited it" so they would be "all set up" by the time any of Mr. Doe's leads closed. Mr. Schmo represented that Mr. Doe was listed as a co-founder and an officer. Mr. Doe asked Mr. Schmo to confirm (as they had already agreed) that the shares were assigned 50/50. Mr. Schmo responded that he issued the shares only to himself, in the interests of expediency, so that they could get an EIN number to set up a PayPal and similar accounts before the accounts Mr. Doe was bringing in paid them. He also claimed that LegalZoom did not handle voting rights and that they needed a "real attorney," not a website, to handle that part. He promised that once the EIN and official documentation were received, they would hold a board meeting to fix it, assigning the shares and voting rights to each of them, and opined that it would be "about two weeks." Mr. Doe and Mr. Schmo agreed to bring a law firm with experience in corporate to correct the LegalZoom documents for the two founders to be officially made directors and to adjust equity to 50/50, conforming to what they had already agreed, among other things The Company was initially run out of Mr. Doe's home and at coffee shops. Mr. Doe workedlong hours - with 80-100 hour weeks being typical - without compensation. During 2017 and 2018, Mr. Doe fronted approximately $30,000 in business expenses which remain unreimbursed to this day. During that time, in contrast, Mr. Schmo fronted a relatively small amount of costs. Throughout this time, Mr. Schmo and Mr. Doe also sought tax and accounting advice from the Company accountant, Dave Ray. Throughout these discussions, both parties expressed that Mr. Doe was a 50% owner and the earlier filing was openly acknowledged as something that had been unilaterally done and would be "fixed." Mr. Doe's title throughout this entire time frame was "Co-Founder + President" which, among other places, was reflected in his standard email signature block and was routinely reflected in both parties' internal and external communications. It was also listed the same way on well known, highly trafficked social media and industry sites, including, but not limited to, LinkedIn and Angellist, by both parties. Mr. Doe was instrumental in getting the Company off the ground without outside investment, enhancing the Company's value tremendously. Specifically, the Company was primarily funded via the money that came in from early sales - the overwhelming majority of which were the result of Mr. Doe's efforts - as well as via "sweat equity" from its two founders. Beginning in March 2018, Mr. Schmo and Mr. Doe agreed that they each would finally begin paying themselves and that their withdrawals would be equal, consistent with their co ownership. Despite this agreement, Mr. Doe believes that Mr. Schmo had started paying himself well before Mr. Doe began receiving payment from the Company. Mr. Schmo ultimately acknowledged this and, consistent with their agreement that they were 50/50 partners, promised to "true up" Mr. Doe during 2018. On or about September 12, 2018, with the assistance of the Company's accountant, the Company filed an election under Internal Revenue Code Section 362 with the IRS electing to be an S corporation retroactive to when the Company had been formed. The form, signed by Mr. Schmo and Mr. Doe, indicates that Mr. Schmo owned 4,500 shares of the Company and Mr. Doe owned 4,500 shares of the Company as of October of 2017, when the Company was formed. Mr. Schmo signed the form under penalty of perjury and affirmed that all facts set forth in the election are "true, correct and complete" and that the consent statement is "binding and may not be withdrawn after the corporation has made a valid election." Days later, Mr. Schmo began to lobby for a "side agreement" that, in the event of a sale, would give him a slightly larger, 55%, percentage of the sale proceeds. While Mr. Doe did not think this was fair, he was reluctantly open to it in the interests of moving forward quickly and productively and keeping peace with his partner. Mr. Doe was issued a K-1, not a W-2, for purpose of filing the corporate, and his individual, taxes for 2017. The same was true of Mr. Schmo. On August 7, 2019, Mr. Doe received an email while on vacation out of state from Mr. Schmo trying to push Mr. Doe out of the Company. Hours later, before he could even send a response, Mr. Schmo changed the passwords to Mr. Doe's two Google accounts and blocked his access to all corporate bank accounts and methods of communication. To date, Mr. Doe is still cut off from all meaningful access to the Company. Mr. Schmo's purported reason for cutting off access with no notice was that it was necessary to protect the company's interests because Mr. Doe had not yet signed a "PIIA" agreement, containing, among other things, at will, non-compete and confidentiality agreements. Mr. Doe and Mr. Schmo had been building the company for years without either of them signing any such agreements. The timing, manner and context in which Mr. Schmo made his unilateral (and one way) demand, as well as the fact that the documents, as proposed, contained stock terms that were inconsistent with the nature of Mr. Doe's true relationship to the Company and overreached (to the point of unlawful in Mr. Doe's view and in fact) was concerning to Mr. Doe. Mr. Doe was also cut off from his personal files stored in his folders, which he set up with his own password before the Company was even incorporated. These files contained (and still contain) highly sensitive personal content, as well as personal communications and accounts linked with his personal e-mail as well. At the time, the parties had not agreed to restrict the Company computer system to company business and, in the context of the highly fluid relationship between the partners' and the Company's assets (including but not limited to Mr. Doe's having fronted tens of thousands of dollars of expenses since the beginning, having worked for free for significant periods of time and having hosted the Company in his own home during the Company's infancy), it seemed that the east the Company could do would be to continue to host his private files (for which he did not have space on his personal cloud). When Mr. Doe attempted to get copies of their joint correspondence and files from the Company accountant, Mr. Schmo, through counsel, threatened him and instructed that Mr. Doe should not be given anything. These actions made clear that one of Mr. Schmo's goals in cutting off Mr. Doe's access to the Company files and communications was to deprive him of the communications between and among them that overwhelmingly showed that, contrary to the position he was now aggressively taking, Mr. Doe was in fact an a co-owner of the Company. On October 9, 2019, Mr. Schmo, purporting to speak on behalf of the Company, sent Mr. Doe a letter "terminating" Mr. Doe's "relationship" with the Company. Mr. Schmo had no legal authority to "terminate" Mr. Doe in this manner. In the letter, Mr. Schmo admitted violating Mr. Doe's privacy by scouring files in Mr. Doe's "company Google Drive personal folder" and took issue with (and, as to some them, mischaracterized) the content of those files. On information and belief, this included reviewing photos from Mr. Doe's personal camera role which he had backed up to his private folder on the company's computer system. It was patently obvious that these were photos, given the nature of their business and otherwise, and, for this and other reasons, they were obviously personal. The reasons provided were an obvious cover-up for Mr. Schmo already having wrongfully locked Mr. Doe out of the Company. Mr. Schmo's motives in choosing that moment in time to challenge Mr. Doe's ownership status could not possibly be more calculated or transparent. It had nothing to do with any true complaint about the content of Mr. Doe's personal files or his performance in his role for the Company. Instead, it had everything to do with Mr. Schmo's desire to retaliate against Mr. Doe for having asserted his rights and to keep the growing Company to himself after using Mr. Doe to develop the relationships with the Company's clients that, essentially, are the Company. Over the course of the life of the Company, Mr. Doe has brought in well over 75-80% of the revenue, leading sales and relationships, which has enabled the Company to scale self-funded from its original two to over fifteen full-time and part-time team members, and to become cash flow positive. JOE SCHMO POSITION STATEMENT Dear Attorney Leb: You have asked our firm to provide a brief response to the allegations in the complaint you've made on behalf of John Doe regarding 1313, Inc. In order to facilitate upcoming negotiations, we have complied with your request. Please be advised, however, that this summary does not purport to be complete and was prepared solely at your request for the purpose of making clear the position of our client, Joe Schmo, on the issues alleged. I. Background Facts Joe Schmo has been the creator of several hugely successful ambassador networks, networks that harvest the power of marketing to millennials through their social media accounts like Instagram. He has helped create a number of successful networks of social media users to market and promote products that these users use, promote and endorse. One such network focused on the music industry, with the end result being that Mr. Schmo became one of the youngest executives ever at Warner Music (as a Senior Director of Marketing). Mr. Schmo is publicly credited as being responsible for the social media and commercial success of bands like My Chemical Romance via growth hacking and innovative social media techniques. With two others, Mr. Schmo launched Warner Music's Heartbeat, which focused on millennial women and the brands who were trying to reach them. After leaving Warner Music, Mr. Schmo wanted to continue focusing on millennial women and marketing opportunities for that segment of the market, with a particular focus on that segment called nano-influencers, meaning the everyday millennial that regularly posts about their life and has a following of friends, family, coworkers, etc. but is not a celebrity or blogger. Mr. Schmo tapped into the idea that these nano-influencers could be more successful at promoting brands and products they actually like and use, because their reviews and posts were more authentic. As a result, he came up with the idea for the company 1313, Inc. and created a Delaware corporation in October. Around the time of its formation, Mr. Schmo and Mr. Doe began talking about their various business ventures, as the two knew each other from working in the same industry and because both had gone to the same alma mater- UC Santa Barbara. Mr. Schmo told Mr. Doe about the start-up he had created, called 1313, and the two discussed Mr. Doe's fledgling business SP as well, with Mr. Schmo offering to assist in growing that company and offering him a referral agreement for clients he brought to 1313. SP is a website that connects stylists with up and coming designers and assists the stylist in selecting clothing and accessories for their clients for use in photo shoots, etc. As both entrepreneurs began growing their respective businesses in the end of 2017, the two began speaking more frequently. As a result, Mr. Doe became increasingly interested in 1313. In January 2018, the two met in person at a co-working space where Mr. Schmo outlined his thoughts about where he saw 1313 going and what he wanted the company and the culture to be like. The two discussed their various roles at the company and what their intentions were for the company. Mr. Schmo was focusing on fundraising and company operations, whereas Mr. Doe focused on lead generation and revenues. Initially they started working from their respective homes and coffee shops, until they eventually got an office in or about August 2018. A website was created, and the process of creating a social network of women to promote products was initiated. Mr. Schmo reached out to brands he had worked with previously, or those he knew were interested in targeted social media campaigns and the process of building the business began, with Mr. Schmo and Mr. Doe each contributing to lead generation and development. During 2018 while focusing on growing the brand and increasing revenues, not much focus was paid to the corporate documents. Mr. Schmo had articles of incorporation and bylaws for 1313 but they were focusing on fundraising with the intention of soliciting outside investors. As a result, they began engaging in discussions with the law firm Granderson Denver to discuss structuring the company with outside investors. In the meantime, Mr. Doe appears to have spearheaded many of the discussions with 1313's accountant. Ultimately the decision was reached that outside investors were not needed for 1313, and because the company had not yet filed any tax returns and was running up against the October 15, 2018 extended tax filing deadline, Mr. Doe appears to have advised the accountant to file their return as an S Corporation, with both parties now having 4500 shares of the company. This was despite prior discussions wherein Mr. Schmo had indicated that Mr. Doe would have a far smaller ownership interest and the understanding that much of the compensation structure was focused on incentive payments, as is typical of a startup of this size. As a result, despite the language in the Articles of Incorporation and the Bylaws, Mr. Doe and the accountant advised Mr. Schmo to sign the S corporation election, which stated that both Mr. Schmo and Mr. Doe owned 4500 shares of the total 10,000 shares of the company. Attached hereto is the S corporation election form (Form 2553) prepared by the accountant, which was filed with the IRS. As the company continued to grow from 2018 into 2019, Mr. Schmo continued to experience frustration with Mr. Doe's failure to meet the goals reached for his role in sales for the company and with his overall lack of communication. As a result, in January 2019, Mr. Schmo again met with Mr. Doe to go over their agenda of action items that still needed to be addressed... Notably, numerous issues raised in January 2018 still had not been addressed andMr. Schmo indicated that they needed to be resolved in order for the company to continue togrow and for internal tracking and accountability. While Mr. Schmo continued to hope that Mr. Doe would step up and take responsibility for his duties at the company in order to further grow the business and its revenue streams (particularly once they both began receiving a salary and dividends), sadly this did not occur. Instead, beginning in April 2019 other employees at 1313 began complaining about Mr. Doe. Specifically, a female employee requested a meeting with Mr. Schmo to formally complain about conduct she felt was detrimental to the workplace. She indicated that she felt she had been targeted by Mr. Doe and that he had been extremely critical of her performance and had made personal attacks against her. The employee actually cried during this meeting and asked to be removed from the campaigns of any clients that Mr. Doe was working on, so that she no longer had to interact with him moving forward. Given the small size of the company (with only 4 other employees besides Mr. Doe and Mr. Schmo), Mr. Schmo became seriously concerned about Mr. Doe's treatment of other employees and the effect it was having on the work environment of their small office. He was also concerned about the potential for future employment claims should the complaint not be taken seriously. As a result, out of respect for the employee's request for confidentiality, Mr. Schmo did some investigation and questioned other employees, who confirmed the behavior the female employee had complained of. As a result, Mr. Schmo attempted to create some new rules and guidelines for the company and to limit Mr. Doe's one-on-one interactions with other employees to prevent any further complaints. While these new rules improved the situation, Mr. Schmo continued to receive comments from other employees about Mr. Doe's demands and his general disruption of other employees' work, primarily in taking time away from their tasks for the company to chase down issues solely of interest to Mr. Doe. Adding to Mr. Schmo's frustrations, beginning in about May 2019, Mr. Doe became increasingly less engaged in 1313. He stopped participating in most of the company initiatives and brainstorming sessions, only participating in strictly sales calls. He also stopped coming into the office every day and began coming in an average of 3 days per week. Other employees on the team began to joke about whether Mr. Doe still worked there and asked (jokingly) if they could use his office. Then Mr. Doe began taking a slew of vacations. In one instance in May, Mr. Doe gave only one day's notice that he was taking a 3-day vacation, prompting Mr. Schmo to remind him that, because they were a small company, he needed to request time off like every other employee. In June, Mr. Doe began searching for a new salesperson and then disclosed, only days before he left, that he was again taking time off, this time from approximately 3 weeks, from June 22 - July 8th. Mr. Doe then hastily trained the new salesperson before leaving on vacation, leaving the new hire with no real idea of what he needed to do in Mr. Doe's absence. This forced Mr. Schmo to put other tasks aside and work with the new salesperson. While Mr. Doe was on vacation, Mr. Schmo and the new salesperson ultimately set up a CRM and sales system, systems vital to tracking revenue and sales, and something Mr. Schmo had been asking Mr. Doe to do for over a year. Mr. Schmo was also forced to take over sales calls because of Mr. Doe's absence, which took up a large portion of his time and took time away from his other projects for the company. Adding further insult to injury, Mr. Doe then took yet another vacation (from approximately July 31- Aug 10th) without letting Mr. Schmo or the new salesperson know until just days before leaving. When Mr. Schmo was again forced to handle sales calls, he noticed that there was a very large decrease in the volume of calls scheduled. Upon further investigation as to the cause, Mr. Schmo learned that the person tasked with lead generation was leaving the company and had already given his notice to Mr. Doe. Despite the fact that this was of critical importance to the company's revenue stream, Mr. Doe failed to share with anyone else. Overall, Mr. Doe seemed checked out from the company and happy to let Mr. Schmo pick up the slack without explanation or apologies. Given all of these failures, Mr. Doe's increasing lack of commitment to the company and his overall lack of communication, Mr. Schmo decided it was time to take more formal action with respect to Mr. Doe's performance. Hoping to spark his attention and get him to understand the gravity of the situation, on August 6th Mr. Schmo sent Mr. Doe an email offering him two options, to continue working at 1313 with a slightly reduced role and new compensation structure, or a package to leave the company. While Mr. Doe repeatedly reviewed the email, he did not respond to Mr. Schmo. This was alarming to Mr. Schmo. Fearing sabotage, in light of Mr. Doe's failure to response and his increasingly inattentive and even damaging behavior, as a precaution Mr. Schmo cut off access to Mr. Doe's email and the company's server, in order to prevent any attempts by Mr. Doe to access or destroy sensitive company information until they had discussed the options outlined in the email and Mr. Doe finally signed the appropriate paperwork protecting the company's data. When 1313's website was created, Mr. Schmo also created a shared corporate cloud account and company email accounts using Google. The company had a cloud Google drive with company files and folders on it for use in the business. However, in connection with their demands for money and access to 1313's information, the attorneys also requested that Mr. Doe be provided with files stored on the company's corporate Google Drive, files which he claimed he needed for his records. When Mr. Schmo followed his attorney's instructions to locate this personal folder of Mr. Doe's, he learned for the first time of a folder called "Phone Calls" which contained over 230 recorded phone calls, 90 of which were calls between Mr. Doe and Mr. Schmo. These calls were recorded without Mr. Schmo's knowledge or consent, as presumably were all the other calls. Mr. Schmo saw names on the recorded call files of Mr. Doe's ex-girlfriend, as well as multiple current or potential clients. Even more shockingly, Mr. Schmo found dozens of nude photos of women, many of which appeared to be of women who were unaware they were being photographed. Upon discovering this information and learning of Mr. Doe's illegal activities, Mr. Schmo terminated Mr. Doe's employment effective September 19, 2019. Mr. Doe's actions subjected 1313 to potential claims from third parties and was specifically prohibited by the employee agreements signed by all other employees and which had been provided to Mr. Doe. From the outset, there are many fairly obvious problems with Mr. Doe's claims. There is no evidence whatsoever of an "oral partnership agreement," particularly as Mr. Doe is also claiming to be an owner of the Delaware corporation 1313 and has acknowledged that he received a K1 from the company in 2018. As such, one fails to see how he could possible prevail on the theory of an oral partnership, given that the company at all times operated as a corporation, and both Mr. Doe and Mr. Schmo received salaries and K1s from the entity in March 2018. Mr. Doe's invasion of privacy allegations are completely without merit because the alleged invasion of privacy is premised on Mr. Schmo's review of documents Doe's own counsel asked him to obtain and which were located on the company's server. California law is clear that an employee has no expectation of privacy to information kept on their company's computers, be it emails or files. See e.g. Holmes v. Petrovich Development Co., LLC, 191 Cal.App.4th 1047, 1068 (2011) (employees emails with her attorney were no longer privileged where she used her employer's email to communicate with attorney.); see also Ontario v. Quon, 560 U.S. 746 (2010) (search of messages on government issued equipment is reasonable); Konop v. Hawaiian Airlines, Inc., 236 F.3d 1035 (2001) (employee's private posting on bulletin board could be reviewed by employer without violating the Wiretapping Act.). Moreover, companies are entitled to review emails and other files on their servers to determine if an employee has engaged in unlawful acts. Additionally, Defendants' actions in seeking to restructure Mr. Doe's role at the company given his lack of involvement, culminating in his termination for illegal activities, was not unreasonable. To the contrary, 1313 took reasonable steps to protect itself once it discovered Mr. Doe's unlawful behavior. Mr. Schmo have very legitimate claims against Mr. Doe which they intend to pursue via cross complaint if this case does not resolve through our negotiation. Namely, Mr. Schmo has claims under the California Invasion of Privacy Act (CIPA) Penal Code 632 et seq. for Mr. Doe's unlawful recording of his phone calls with Mr. Schmo. The entity also has claims for CIPA violations for calls Mr. Doe recorded of company business. In addition, 1313 has claims for breach of fiduciary duty and negligence against Mr. Doe for his deliberate storing on illegal materials on the servers of 1313, without its knowledge or permission. Although we will certainly negotiation with you in good faith with the goal of avoiding costly litigation, we are confident that Mr. Schmo has strong claims against your client and that Mr. Doe does not have, and never has had, the ownership interest he claims in 1313. Very truly yours, Marshall Newcome, Esq. The Newcome Firm.