IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION FUNDSXPRESS FINANCIAL NETWORK, INC., Plaintiff, v. DIGITAL INSIGHT CORPORATION, ET AL., Defendants. FIRST AMENDED ANSWER AND AFFIRMATIVE DEFENSES OF DEFENDANTS DIGITAL INSIGHT CORPORATION, JOHN DORMAN AND STEPHEN CRAIN TO PLAINTIFF'S FOURTH AMENDED COMPLAINT Defendants Digital Insight Corporation ("Digital Insight"), John Dorman ("Dorman") and Stephen Crain ("Crain"), (collectively "Defendants") hereby set forth their First Amended Answer and Affirmative Defenses to the Plaintiff's Fourth Amended Complaint, showing the Court as follows: I. In response to Plaintiff's "Brief Overview," Defendants will show the Court that it did not engage in misbehavior or activities that resulted in harm to Plaintiff. Plaintiff's suit is no more than an effort to create a scapegoat for the financial distress in which Plaintiff found itself as a consequence of its own mismanagement. Plaintiff was unable to confirm in a pre-suit investigation with its sales staff that Digital Insight was to blame for FundsXpress's lack of sales and found nothing so suggesting. In fact, FundsXpress's sales staff consistently told management throughout 2001 that FundsXpress was losing sales for reasons of its own making. Nevertheless, Plaintiff filed this suit anyway in the hope that a prompt settlement would provide a source of funding for its severe financial problems. The facts will show that Plaintiff's extreme financial problems began before any of the alleged wrongful conduct took place. By the first part of 2001, FundsXpress was literally on its financial deathbed. It exacerbated its own revenue problems by laying-off over two-thirds of its staff, including most of its sales force, and significantly raising prices for its products and services in January 2001. Predictably, these actions produced an immediate and dramatic decrease in sales and revenues, notwithstanding that the alleged wrongful conduct by Digital Insight had yet to take place. This decline continued as Plaintiff's financial problems became known in the marketplace and regulatory authorities became wary of Plaintiff's financial condition. Digital Insight did not hire former FundsXpress employees for the purpose of targeting FundsXpress. Instead, FundsXpress's massive lay-offs and uninspiring sales created a pool of former employees with experience in the industry. While these employees did bring with them certain knowledge about Plaintiff, much of this information was available through proper channels. For example, both FundsXpress and Digital Insight quoted prices to prospective customers from which competitors' prices could be, and were, learned. Indeed, the facts show that FundsXpress had knowledge of Digital Insight's pricing information before Digital Insight had knowledge of FundsXpress's pricing information. FundsXpress used this pricing information to target Digital Insight in what FundsXpress itself termed "guerilla" warfare designed to "hit the enemy and take their (sic) business." In short, this lawsuit involves two competitors in a highly competitive marketplace, one of which has been successful, and the other unsuccessful because of insufficient capitalization, mismanagement and an inferior product mix. The facts will show that the alleged misconduct by Digital Insight did not cause Plaintiff s problems or the losses it alleges. 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 the 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 16. 16. Defendants deny the allegations of Paragraph 16. 17. Defendants deny the allegations of Paragraph 17. 18. 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 18. 19. Defendants admit that 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 19, Defendants are without sufficient knowledge or information upon which to form a belief. 20. Defendants admit the allegations of Paragraph 20. 21. 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 21. 22. Defendants admit the allegations of Paragraph 22. 23. 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 23. 24. Defendants are without sufficient knowledge or information upon which to form a belief as to truth of the allegations of Paragraph 24. 25. 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 25. 26. 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 26. 27. 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 27. 28. Defendants are without sufficient knowledge or information upon which to form a belief as to the allegations of Paragraph 28, except that Defendants deny that FundsXpress uses "rigorous safeguards" to protect the purported confidential information and trade secrets described in the Fourth Amended Complaint. 29. 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 29. 30. Defendants deny the allegations in Paragraph 30, 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 nondisclosure agreements have access to the Pricing Suite. 31. 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 31. 32. 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 32. 33. 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 33. 34. 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 34. 35. 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 nondisclosure 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 35. 36. 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 36. 37. Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations of Paragraph 37, 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. 38. 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 38. 39. Defendants admit that Defendant Crain, along with several other sales executives, was fired by Plaintiff on or about July 2, 2001; that he signed a nondisclosure 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 email 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. 40. 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 40. 41. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the allegations of Paragraph 41. 42. 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 42. 43. Defendants deny the allegations of Paragraph 43. 44. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the allegations in Paragraph 44, except that Defendants deny that Dunn had anything to do with Capitol Bancorp Limited's decision to become a Digital Insight customer. 45. Defendants admit that on or about November 12, 2001, an e-mail containing the message set forth in Paragraph 45 was sent by Dunn to Defendant Edwards. Defendants deny that Dunn "systematically spied" for Digital Insight. 46. Defendants admit that on or about November 12, 2001, an e-mail containing the message set forth in Paragraph 46 was sent by Defendant Edwards to Dunn. Defendants deny the remaining allegations of Paragraph 46. 47. Defendants are without sufficient knowledge or information upon which to form a belief as to the truth of the allegations set forth in Paragraph 47. 48. Defendants admit that on or about November 14, 2001, an e-mail containing the message set forth in Paragraph 48 was sent by Defendant Edwards to Dunn and that Dunn replied. Defendants deny the remaining allegations of Paragraph 48. 49. Defendants admit that on or about December 3, 2001, an e-mail and attachment containing the message set forth in Paragraph 49 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 49. 50. Defendants admit that on or about November 9, 2001, an e-mail partially containing the message set forth in paragraph 50 was sent to Defendant Dorman; Digital Insight's then Chief Financial Officer, Kevin McDonnell; and its then President, Dale Walker. Defendants deny that the e-mail that is quoted is a complete and accurate version of what was communicated. Defendants deny the remaining allegations of Paragraph 50. 51. 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 51. 52. Defendants admit that Defendant Digital Insight had in its possession the items listed in Paragraph 52 (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 Fourth Amended Complaint. Defendants deny the remaining allegations of Paragraph 52. 53. 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 53. 54. Defendants admit the allegations of Paragraph 54. 55. Defendant Digital Insight denies that it ever received the letter referred to in Paragraph 55 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 55. 56. Defendants deny the allegations of Paragraph 56. 57. Defendants deny that Digital Insight instructed its sales staff to defame FundsXpress. Moreover, the alleged statements in Paragraph 57 of the Fourth Amended Complaint are true and/or substantially true. FundsXpress did lease a corporate airplane despite its weak financial position and inability to survive financially without substantial additional financing. FundsXpress was burning cash at a rate that assured its imminent demise and inability to service its customers. 58. Defendants will show that the statements alleged in Paragraph 58 were true and/or substantially true. FundsXpress laid off approximately 200 employees, was virtually out of cash, and was for sale. 59. Defendants will show that the statements alleged in Paragraph 59 were substantially true. FundsXpress was under intense regulatory scrutiny and faced with a regulatory cease and desist order that would prevent it from doing business unless it secured additional financing and submitted a satisfactory business plan. 60. Defendants will show that the statements alleged in Paragraph 60 were true and publicly known. FundsXpress did lay off most of its sales staff and raised prices at the same time. Defendants deny the allegations of Paragraph 60. 61. Defendants deny the allegations of Paragraph 61. 62. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations in Paragraph 62, 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. Defendants deny the allegations of Paragraph 62. 63. Defendants deny that Plaintiff directly lost any contracts with financial institutions as a result of Defendants' activities as alleged in Paragraph 63. Defendants lack sufficient knowledge or information upon which to form a belief as to the truth of +he remaining allegations of Paragraph 63. 64. Defendants deny the allegations of Paragraph 64. 65. Defendants deny the allegations of Paragraph 65, except that Defendants admit that it accurately quotes a portion of Comment F of Section 45 of the Restatement of Unfair Competition. 66. Defendants admit that between January l, 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 Fourth 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. 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 8Q. 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 deny the allegations of Paragraph 89. 90. Defendants admit that Defendant Dunn became an employee of Digital Insight on or about November 1, 2002, and deny the allegations of Paragraph 90. 91. Defendants admit that Defendant Dunn e-mailed certain information to Digital Insight, and deny the allegations of Paragraph 91. 92. Defendants deny the allegations of Paragraph 92. 93. Defendants deny the allegations of Paragraph 93. 94. Defendants deny the allegations of Paragraph 94. 95. Defendants deny the allegations of Paragraph 95. 96. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations of Paragraph 96. 97. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations of Paragraph 97. 98. Defendants are without sufficient information or knowledge to form a belief as to the truth of the allegations of Paragraph 98. 99. 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 99. 100. 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 100. 101. Defendants deny that Plaintiff has been substantially damaged by the alleged infringement set forth in Paragraph 101. 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. 102. 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 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 deny the allegations of Paragraph 112. 113. Defendants deny the allegations of Paragraph 113. 114. Defendants deny the allegations of Paragraph 114. 115. Defendants deny the allegations of Paragraph 115. 116. Defendants deny the allegations of Paragraph 116. 117. Defendants deny the allegations of Paragraph 117. 118. Defendants deny the allegations of Paragraph 118. 119. Defendants admit that on or about May 29, 2002, Dorman gave a statement 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 119. Defendants deny all the remaining allegations of Paragraph 119. 120. Defendants deny the allegations of Paragraph 120 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 Fourth 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. FundsXpress engaged in the same conduct while competing with Digital Insight that FundsXpress complains of in the Fourth Amended Complaint. FundsXpress should be barred from any recovery in its claims against Digital Insight and the individual Defendants, as it engaged in the very conduct of which it accuses the Defendants. FundsXpress salespeople, like all salespeople in the internet banking industry, sought out and obtained pricing and other competitive information from any source available and, when they obtained such information, used it. Moreover, unlike Digital Insight, which eschewed the use of "negative selling" and which did not at any time tell any financial institution that FundsXpress was financially unstable, FundsXpress, in September 2001 and at other times, made up false statements of Digital Insight's financial instability and tried to interfere with existing clients of Digital Insight. Such negative selling was approved and done by FundsXpress's present National Sales Director, Jay Carrigan. Such "negative selling" by FundsXpress salesmen also included scare tactics which were designed to draw attention to Digital Insight's location in California, where electrical "brown outs" were occurring, suggesting to prospective customers that their internet banking with Digital Insight was likely to be interrupted. 3. Unknown to Digital Insight, in February 2001, FundsXpress salesmen obtained a proprietary piece of Digital Insight's software, called a "ROI Calculator" or return on investment calculator, which Digital Insight gave to its potential customers to use to calculate the profitability of internet banking. Immediately upon obtaining this piece of software, FundsXpress's head of operations, Chris Miller, forwarded the ROI calculator to Marcus Winfree, the head of FundsXpress's intranet, whereby competitive sales information, like that obtained by Miller, could be posted for all FundsXpress personnel. Miller described the ROI calculator as "the Holy Grail" of Digital Insight's entire pricing system. This was not the only time competitor information was posted on FundsXpress's intranet, as in January 2002, as well as at other times, FundsXpress posted information about other competitors, including Netzee and Certegy, which it obtained from financial institutions, just as it had with the ROI calculator. 4. In order to give FundsXpress an appearance of more financial stability than it actually had at year end 1999, it requested and received an independent auditor's report as at January 1, 2000 and as at December 31, 1998, in order to avoid showing its precarious year end 1999 financial position. By obtaining this unusual "day one" audited financial report, FundsXpress was able to include the large cash investment from a private placement in its first full audited report, which artificially created the appearance of a strong balance sheet, and avoided revealing the poor results at year end 1999. This was done for the express purpose of misleading potential customers. For all the reasons set forth above, FundsXpress should be denied any recovery on the basis of unclean hands. 5. Any damages Plaintiff sustained occurred because of its own acts or omissions, and not because of any conduct by the Defendants. FundsXpress knew before filing its complaint, and before the acts of which it now complains, that the cause for its lack of sales and failure to meet sales projections in 2001 was, among other reasons, its severe sales staff reductions, its lack of competitive product mix, its lack of sufficient "core processor" relationships and prospective customer and regulatory concerns over its financial strength. FundsXpress knew that the direct and substantial cause for its inability to meet its sales and revenue projections were these reasons, not anything said or done by Defendants. In fact, in 1999, well before any allegedly wrongful actions by Digital Insight and the other Defendants herein, FundsXpress was on the brink of complete financial failure. Only its ability to secure private financing in early 2000 enabled it to meet payroll. FundsXpress went through its private financing remarkably quickly; having spent prolifically on, among other things, a private plane, software upgrades and new "e-commerce" ventures such as the purchase of an on-line securities brokerage firm, all of which were wholly unsuccessful and later written off as having no value. It also substantially increased its sales force in 2000 in the hope of meeting unrealistic sales projections. These efforts only burned through capital and increased losses at an alarming rate. Management and the board of directors analyzed the financial problems in depth, blaming the absence of key products, lack of core processor interfaces, and inability to reduce costs and increase revenues. To add to these problems, the continuing losses and capitalization problems led to regulatory issues by early 2001. Regulatory authorities were concerned that, due to its lack of capital and continuing losses, FundsXpress would be unable to continue business and thereby harm the financial institutions who were its customers. In response, FundsXpress increased its prices and substantially reduced its sales force, thereby virtually guaranteeing that its revenues would decrease substantially. Again, these financial problems all occurred before the alleged misconduct of Digital Insight. The restructuring efforts, to some extent, reduced expenses and kept FundsXpress in business, although the regulatory problems continued and revenues continued to decrease as public knowledge of FundsXpress's financial problems became common knowledge. Throughout this process, FundsXpress's management analyzed the reasons for its problems, without any suggestion whatsoever that wrongful conduct by Digital Insight played any role in the process. In December 2001, FundsXpress learned that one of its former employees, Gifford Dunn, had shared FundsXpress information with Digital Insight, in apparent violation of Dunn's confidentiality obligation. Digital Insight cooperated with FundsXpress in investigating the matter, providing FundsXpress with copies of internal Digital Insight e-mails concerning the sharing of the confidential information, and limiting circulation of the material. Nevertheless, FundsXpress seized upon the issue as an excuse for its own poor performance in the marketplace and as a possible vehicle for providing badly-needed capital through threat of a lawsuit. Yet, FundsXpress's own internal investigation, in early 2002, found no connection between losses in revenue and FundsXpress's financial problems and the alleged misconduct of Digital Insight. Moreover, while Digital Insight was cooperating with FundsXpress, unknown to Digital Insight, FundsXpress was instructing its own employees to destroy "unneeded" customer correspondence and e-mails, business planning documents and customer contract documents, relevant to its damage claim and, more importantly, Digital Insight's defense against the same immediately before it filed suit against Digital Insight. Accordingly, Defendant's alleged misconduct was not the proximate cause of the damages claimed by Plaintiff, and Plaintiff knew it. Alternatively, the alleged damages were caused in substantial part, if not solely, by FundsXpress's own mismanagement, undercapitalization, and poor business decisions. The comparative responsibility of FundsXpress is an issue for the trier of fact and a bar to Plaintiff's recovery herein. 6. 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. 7. This Court does not have personal jurisdiction over Defendant Dorman. 8. This action should be dismissed for improper venue. 9. As to Plaintiff's defamation claims, the statements made by Defendants were true or substantially true. 10. 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 BISHOP State Bar No. 02346000 P.O. Box 1148 Austin, Texas 78767-1148 (512) 472-8800 (512) 474-1129 fax And 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 First Amended Answer and Affirmative Defenses of Defendants Digital Insight Corporation, John Dorman and Stephen Crain to Plaintiff's Fourth Amended Complaint has been served on below-listed counsel of record via (*)hand-delivery, ( )facsimile and/or (*)certified mail, return receipt requested, on this 13th day of January, 2003: R. James George, Jr. (hand-delivered) 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