IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION FUNDSXPRESS FINANCIAL NETWORK, INC., Plaintiff, v. DIGITAL INSIGHT CORPORATION, ET AL., Defendants. ANSWER AND AFFIRMATIVE DEFENSES OF DEFENDANTS DIGITAL INSIGHT CORPORATION, JOHN DORMAN AND STEPHEN CRAIN TO PLAINTIFF'S THIRD AMENDED COMPLAINT Defendants Digital Insight Corporation ("Digital Insight"), John Dorman ("Dorman") and Stephen Crain ("Crain"), (collectively "Defendants") hereby set forth their Answer and Affirmative Defenses to the Plaintiff's Third Amended Complaint as follows: As set out in the following specific response to Plaintiff's pleading, Defendants did not engage in any activities designed or intended to harm Plaintiff, and caused no harm or damage to Plaintiff. Any financial problems Plaintiff may have were not caused by any wrongful conduct of Defendants. II. In response to Plaintiff's allegations, Defendants show the following: 1. Defendants admit the allegations of Paragraph 1. 2. Defendants admit the allegations of Paragraph 2. 3. Defendants admit the allegations of Paragraph 3. 4. Defendants admit that defendant Vincent Brennan ("Brennan") is a Senior Vice President of Sales of Defendant Digital Insight. Defendants deny the remaining allegations of Paragraph 4. 5. Defendants admit the allegations of Paragraph 5. 6. Defendants admit the allegations of Paragraph 6. 7. Defendants admit the allegations of Paragraph 7. 8. Defendants admit that, for now, this Court has subject matter jurisdiction over all of the causes of action asserted in Paragraph 8. 9. Defendants deny that a substantial part of the events and omissions giving rise to this claim occurred in this District, and that a substantial part of the property that is the subject of this action is situated in this District as alleged in Paragraph 9. 10. Defendants deny the allegations of Paragraph 10. 11. Defendants deny the allegations of Paragraph 11. 12. Defendants deny the allegations of Paragraph 12. 13. Defendants deny the allegations of Paragraph 13. 14. Defendants admit that FundsXpress and Digital Insight compete in providing internet banking services and that under certain measurements, as of the beginning of 2001, Digital Insight was the largest provider of such services. 15. Defendants deny the allegations of Paragraph 15. 16. Defendants admit that Brennan, Eric Edwards ("Edwards"), Ronald Goffman ("Goffman"), Crain and Gifford Dunn ("Dunn") previously worked at John Harland & Company; that Defendants Brennan and Edwards joined Digital Insight when nFront, Inc. was acquired by Digital Insight; and that Dunn, Goffman and Crain formerly worked for FundsXpress. Defendants deny the remaining allegations of Paragraph 16. 17. Defendants admit the Plaintiff FundsXpress, like Digital Insight, has developed various products and services which it provides to financial institutions to allow its customers to have internet banking products and services and that FundsXpress customers utilize FundsXpress' ASP services to obtain those products and services. As to the remainder of the allegations of Paragraph 17, Defendants are without sufficient knowledge or information upon which to form a belief. 18. Defendants admit the allegations of Paragraph 18. 19. Defendants admit that FundsXpress offers its customers a portal product and that the portal contains certain information about the financial institution as well as offering them access to other services. Defendants are without sufficient knowledge or information to form a belief as to the truth of the remaining allegations of Paragraph 19. 20. Defendants admit the allegations of Paragraph 20. 21. Defendant Digital Insight provides secure internet transactions for its customers through custom portals via a service bureau platform, and therefore denies that Plaintiff's purported ability to do the same gives Plaintiff any competitive advantage over Digital Insight. Defendants deny that Digital Insight does not offer a portal product; it has offered such a product since at least April 2000. Defendants are without sufficient knowledge or information to form a belief as to the truth of the remaining allegations of Paragraph 21. 22. Defendants are without sufficient knowledge or information upon which to form a belief as to truth of the allegations of Paragraph 22. 23. Defendants admit that Plaintiff maintains a database it calls "Goldmine" which contains certain information, including much publicly-available information about financial institutions. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 23. 24. Defendants deny that the "Pricing Suite" provides Plaintiff with "distinctive advantages over its competitors, including Digital Insight." Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 24. 25. Defendants deny that "the Goldmine database, the Pricing Suite" and the unidentified "FundsXpress proprietary marketing and sales strategies" constitute trade secrets. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 25. 26. Defendants are without sufficient knowledge or information upon which to form a belief as to the allegations of Paragraph 26, except that Defendants deny that FundsXpress uses "rigorous safeguards" to protect the purported confidential information and trade secrets described in the Third Amended Complaint. 27. Defendants admit the Plaintiff required former FundsXpress employees Crain, Goffman and Dunn to sign nondisclosure agreements and nondisclosure acknowledgements. Defendants are without sufficient knowledge or information to form a belief as to the truth of the remaining allegations of Paragraph 27. 28. Defendants deny the allegations in Paragraph 28, except that Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the allegation that only a limited number of Plaintiff's employees, who have all signed non-disclosure agreements, have access to the Pricing Suite. 29. Defendants admit that Plaintiff hired Dunn, that at some point he was a senior employee in charge of sales, and at certain times had access to certain information of Plaintiff. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 29. 30. Defendants admit that Dunn held a position of authority at FundsXpress and as such, at certain times would have had access to certain proprietary information and that Dunn signed a nondisclosure agreement with Plaintiff. Defendants are without sufficient knowledge or information to form a belief as to the truth of the remaining allegations of Paragraph 30. 31. Defendants admit that defendant Crain was hired by Plaintiff in October, 1999, as a sales executive responsible for the territory of South Carolina, Georgia, Florida and Alabama. Defendant Crain admits that, in the same capacity as any other sales executive, he had access to certain pricing and marketing and sales information of Plaintiff; the Goldmine database and other proprietary information of Plaintiff while he was employed there. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 31. 32. Defendants admit that defendant Goffman was hired by Plaintiff as a sales executive responsible for the states of Michigan and Wisconsin, that he reported to Dunn and that he had access to certain proprietary information of Plaintiff while employed there. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 32. 33. Defendant Crain admits that he knew he was required to keep Plaintiff's trade secrets and proprietary confidential information secret and that he signed a nondisclosure agreement with Plaintiff. Defendants admit that Crain and Goffman signed non-disclosure agreements with Plaintiff. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 33. 34. Defendants admit that Goffman was hired by defendant Digital Insight on or about June 2, 2001, and that he signed a nondisclosure acknowledgement at or about the time of his departure from FundsXpress. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 34. 35. Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations of Paragraph 35, except that Defendants deny that Digital Insight conspired with Goffman to convert the computer and information contained thereon and that it used any such information in the manner alleged by Plaintiff. Defendants admit that in May, 2001, defendant Goffman provided defendant Edwards with a document that purported to be a copy of Goffman's FundsXpress personal pipeline. 36. Defendants admit that defendant Goffman was hired by Digital Insight as a telephone salesperson and that his job was to conduct telemarketing and sales and produce sales leads by telephone for Defendant Digital Insight. Defendants deny the remaining allegations of Paragraph 36. 37. Defendants admit that Defendant Crain, along with several other sales executives, were fired by Plaintiff on or about July 2, 2001; that he signed a non-disclosure acknowledgment; and that he went to work at Digital Insight in September, 2001. Defendants deny that Crain violated Plaintiff's nondisclosure agreement or that Digital Insight used any such information as alleged, to compete with Plaintiff. Defendants admit that the quoted e-mail was sent by Crain, but deny that it evidences any actual or offered disclosure of Plaintiff's confidential information. Defendants further deny that the e-mail was intended by Crain to be forwarded to any potential customer, and deny that Crain instructed anyone to forward the message. Defendants further state that the entire e-mail message more clearly sets forth the context in which the message was sent. 38. Defendants deny that Crain had any discussions with Dunn about employment at Digital Insight on or before August, 2001. Defendants admit the remaining allegations of Paragraph 38. 39. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the allegations of Paragraph 39. 40. Defendants admit that Digital Insight hired Dunn to market and sell Digital Insight products and services that competed with Plaintiff's products and services. Defendants deny the remaining allegations of Paragraph 40. 41. Defendants deny the allegations of Paragraph 41. 42. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the allegations in Paragraph 42, except that Defendants deny that Dunn had anything to do with Capitol Bancorp Limited's decision to become a Digital Insight customer. 43. Defendants admit that on or about November 12,2001, an e-mail containing the message set forth in Paragraph 43 was sent by Dunn to defendant Edwards. Defendants deny that Dunn "systematically spied" for Digital Insight. 44. Defendants admit that on or about November 12,2001, an e-mail containing the message set forth in Paragraph 44 was sent by defendant Edwards to Dunn. Defendants deny the remaining allegations of Paragraph 44. 45. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the allegations set forth in Paragraph 45. 46. Defendants admit that on or about November 14,2001, an e-mail containing the message set forth in Paragraph 46 was sent by defendant Edwards to Dunn and that Dunn replied. Defendants deny the remaining allegations of Paragraph 46. 47. Defendants admit that on or about December 3,2001, an e-mail and attachment containing the message set forth in Paragraph 47 was sent by Dunn to defendant Edwards, and that an e-mail containing the message set forth in that same Paragraph was sent by Edwards to Dunn. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 47. 48. Defendants admit that on or about November 9, 2001, an e-mail partially containing the message set forth in paragraph 48 was sent to defendant Dorman; Digital Insight's then Chief Financial Officer, Kevin McDonnell; and its President, Dale Walker. Defendants deny that the email that is quoted is a complete and accurate version of what was communicated. Defendants deny the remaining allegations of Paragraph 48. 49. Defendants admit that defendant Edwards requested a Digital Insight employee to post the FundsXpress pricing information on Digital Insight's intranet. Defendants deny the remaining allegations of Paragraph 49. 50. Defendants admit that defendant Digital Insight had in its possession the items listed in Paragraph 50 (a)-(j) and (n). Defendants deny that those items are trade secrets and that the attributes and functions of those items are correctly described in the Third Amended Complaint. Defendants deny the remaining allegations of Paragraph 50. 51. Defendants admit that in January, 2002, Defendant Edwards' title was changed from Regional Sales Director to Vice-President and that all other Digital Insight Regional Sales Directors' titles were similarly changed. Defendants deny that such title change was a promotion and deny that it had anything to do with the purported trade secrets or with Edwards' sales during 2001. Defendants deny the remaining allegations of Paragraph 51. 52. Defendants admit the allegations of Paragraph 52. 53. Defendant Digital Insight denies that it ever received the letter referred to in Paragraph 53 and states that Plaintiff has not yet produced a copy of such letter. Defendants are without sufficient knowledge or information to admit or deny the truth of the remaining allegations of Paragraph 53. 54. Defendants deny the allegations of Paragraph 54. 55. Defendants deny the allegations of Paragraph 55. 56. Defendants admit that on or about February 20, 2001, Defendant Crain sent the e-mail message referred to in Paragraph 56. Defendants deny that the e-mail was intended to be forwarded to a potential customer of Plaintiff, as alleged, and deny that any of the statements made in the email were substantially false. 57. Defendants admit that in or about February or March,2001, defendant Goffman sent the email referred to in Paragraph 57, containing substantially the same information paraphrased in Paragraph 57. Defendants further admit that defendant Goffman made the inquiries alleged, and defendant Brennan gave the approval alleged in Paragraph 57. Defendants lack sufficient knowledge or information upon which to form a belief as to the remaining factual allegations of Paragraph 27, except to deny that any statements made as alleged in Paragraph 57 were false, or that they were intended to damage the Plaintiff. 58. Defendants admit that on or about May 29,2002, Defendant Dorman was interviewed by a reporter for a trade newsletter and that he gave a statement similar in substance to the one paraphrased and alleged in Paragraph 58. Defendants deny that this statement was designed to deflect any damages as alleged in Paragraph 58 or that the statement was false. 59. Defendants deny the allegations of Paragraph 59. 60. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations in Paragraph 60, except that Defendants deny that any of the statements attributed to Crain, Goffman or Dorman caused or contributed to leading potential customers away from Plaintiff. 61. Defendants deny that Plaintiff directly lost any contracts with financial institutions as a result of Defendants' activities as alleged in Paragraph 61. Defendants lack sufficient knowledge or information upon which to form a belief as to the truth of the remaining allegations of Paragraph 61. 62. Defendants deny the allegations of Paragraph 62. 63. Defendants deny the allegations of Paragraph 63, except that Defendants admit that it accurately quotes a portion of Comment F of Section 45 of the Restatement of Unfair Competition. 64. Defendants admit that between January 1, 2001 and December 31, 2001, Digital Insight added approximately 250 new financial institution customers and that its stock price was $7.52 on April 11, 2001, and $27.90 on April 16,2002, but deny that any or all of those financial institutions were added as a result of any allegations contained in the Third Amended Complaint, and deny that the difference in Digital Insight's stock price on April 11,2001 and April 16,2002, is an appropriate means to measure Plaintiff's alleged damages. 65. Defendants deny the allegations of Paragraph 65. 66. Defendants deny the allegations of Paragraph 66. 67. Defendants deny the allegations of Paragraph 67. 68. Defendants deny the allegations of Paragraph 68. 69. Defendants deny the allegations of Paragraph 69. 70. Defendants deny the allegations of Paragraph 70. 71. Defendants deny the allegations of Paragraph 71. 72. Defendants deny the allegations of Paragraph 72. 73. Defendants deny the allegations of Paragraph 73. 74. Defendants deny the allegations of Paragraph 74. 75. Defendants deny the allegations of Paragraph 75. 76. Defendants deny the allegations of Paragraph 76. 77. Defendants deny the allegations of Paragraph 77. 78. Defendants deny the allegations of Paragraph 78. 79. Defendants deny the allegations of Paragraph 79. 80. Defendants deny the allegations of Paragraph 80. 81. Defendants deny the allegations of Paragraph 81. 82. Defendants deny the allegations of Paragraph 82. 83. Defendants deny the allegations of Paragraph 83. 84. Defendants deny the allegations of Paragraph 84. 85. Defendants deny the allegations of Paragraph 85. 86. Defendants deny the allegations of Paragraph 86. 87. Defendants deny the allegations of Paragraph 87. 88. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations of Paragraph 88. 89. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations of Paragraph 89. 90. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations of Paragraph 90. 91. Defendants admit that on or about December 3, 2001, Dunn distributed a copy of the so-called "Tutorial" to Defendant Edwards via e-mail. Defendants deny the remaining allegations of Paragraph 91. 92. Defendants admit that in or about December, 2001, and at times thereafter, Plaintiff's so-called "Pricing Suite," or portions of it, was posted on Defendant Digital Insight's intranet and that several of its employees had access to such material and viewed or downloaded it from the intranet or e-mails. Defendants deny the remaining allegations of Paragraph 92. 93. Defendants deny that Plaintiff has been substantially damaged by the alleged infringement set forth in Paragraph 93. Defendants admit that Plaintiff notified Defendant Digital Insight of an alleged infringement and that Defendant Digital Insight represented as of February, 2002, that it was not infringing any of the alleged copyrights. 94. Defendants admit that Digital Insight requires its employees to sign nondisclosure agreements and that it is now aware that Plaintiff does likewise. Defendants deny the remaining allegations of Paragraph 94. 95. Defendants deny the allegations of Paragraph 95. 96. Defendants deny the allegations of Paragraph 96. 97. Defendants deny the allegations of Paragraph 97. 98. Defendants deny the allegations of Paragraph 98. 99. Defendants deny the allegations of Paragraph 99. 100. Defendants deny the allegations of Paragraph 100. 101. Defendants deny the allegations of Paragraph 101. 102. Defendants deny the allegations of Paragraph 102. 103. Defendants deny the allegations of Paragraph 103. 104. Defendants deny the allegations of Paragraph 104. 105. Defendants deny the allegations of Paragraph 105. 106. Defendants deny the allegations of Paragraph 106. 107. Defendants deny the allegations of Paragraph 107. 108. Defendants deny the allegations of Paragraph 108. 109. Defendants deny the allegations of Paragraph 109. 110. Defendants deny the allegations of Paragraph 110. 111. Defendants deny the allegations of Paragraph 111. 112. Defendants admit that on or about May 29, 2002, Dorman gave a statement similar in form and substance to that paraphrased in Paragraph 112 to the Credit Union Times. Defendant Dorman denies that he confirmed that Defendant Digital Insight "considered itself free to acquire and use ... stolen information" as alleged in Paragraph 112. Defendants deny all the remaining allegations of Paragraph 112. 113. Defendants deny the allegations of Paragraph 113 in their entirety as calling for a legal conclusion and therefore no further response is required. III. AFFIRMATIVE DEFENSES 1. One or more of the claims in Plaintiff's Third Amended Complaint fails to state a claim upon which relief can be granted. 2. One or more of Plaintiff's claims are barred by the equitable doctrines of waiver, estoppel, or unclean hands. 3. Any damages Plaintiff sustained occurred because of its own acts or omissions, and not because of any conduct by the Defendants. 4. One or more of Plaintiff's claims fail to state a claim upon which relief can be granted, because Plaintiff has failed to join Gifford Dunn as a Defendant, who is an indispensable party. 5. This Court does not have personal jurisdiction over Defendant Dorman. 6. This action should be dismissed for improper venue. 7. As to Plaintiff's defamation claims, the statements made by Defendants were true or substantially true. 8. As to Plaintiff's claims based upon California statutes, such claims do not state a cause of action in this forum, and Defendants did not commit acts in California in violation of such statutes. Respectfully submitted, CLARK, THOMAS & WINTERS, A Professional Corporation By: BARRY K. BISHOP State Bar No. 02346000 P. O. Box 1148 Austin, Texas 78767-1148 (512) 472-8800 (512) 474-1129 fax John W. Cotton Aaron C. Gundzik COTTON & GUNDZIK LLP 725 South Figueroa Street, 34th Floor Los Angeles, California 90017 (213) 312-1330 (213) 623-6699 fax ATTORNEYS FOR DEFENDANTS DIGITAL INSIGHT CORPORATION, JOHN DORMAN, AND STEPHEN CRAIN CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing Agreed Motion to Extend Time to Answer or Respond to Plaintiff's Third Amended Complaint has been served on below-listed counsel of record via ( ) hand-delivery, ( ) facsimile and/or (*) certified mail, return receipt requested, on this 6th day of September, 2002: R. James George, Jr. Peter Nolan Nanneska N. Hazel G. Stewart Whitehead George & Donaldson, L.L.P. Winstead Sechrest & Minick P.C. 114 West 7th Street, Suite 1100 100 Congress Ave., Suite 800 Austin, Texas 78701 Austin, Texas 78701 (512) 499-0094 fax (512) 370-2850 fax Martha Dickie A. Boone Almanza Jeffrey D. Miller Bo Blackburn Minton, Burton, Foster & Collins Akin & Almanza, L.L.P. A Professional Corporation 1717 West 6th Street, Suite 230 1100 Guadalupe Street Austin, Texas 78703 Austin, Texas 78701 (512) 478-7158 fax (512) 476-1315 fax Barry K. Bishop