1 THE HONORABLE JOHN C.

COUGHENOUR

9
UNITED STATES DISTRICT COURT
10 FOR THE WESTERN DISTRICT OF WASHINGTON, AT SEATTLE
11 RICHARD J. KLEIN, ) Case No. 2:09-CV-1342 JCC
)
12 Plaintiff, )
)
13
v. )
14 )
GREGORY DEMOPULOS, an individual, ) DEFENDANT OMEROS’ AMENDED
15 RAY ASPIRI, an individual, THOMAS ) ANSWER AND AFFIRMATIVE
CABLE, an individual, PETER DEMOPULOS, ) DEFENSES TO COMPLAINT FOR
16 an individual, LEROY HOOD, an individual, ) DAMAGES AND COUNTERCLAIMS
17 DAVID MANN, an individual, JEAN- )
PHILIPPE TRIPET, an individual, and )
18 OMEROS CORPORATION, a Washington )
Corporation, )
19 )
Defendants. )
20

21 Defendant Omeros Corporation answers Richard J. Klein’s (“plaintiff”) Complaint for

22 Damages as follows. Except as expressly admitted, Defendant Omeros denies the allegations of

23 the Complaint for Damages.

24 I. ANSWER TO ALLEGATIONS REGARDING “PARTIES”

25 1. Answering paragraph 1, Defendant Omeros admits the allegations in this

26 paragraph on information and belief.

27

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 1 2. Answering paragraph 2, Defendant Omeros admits the allegations in this

2 paragraph.

3 3. Answering paragraph 3, Defendant Omeros admits the allegations in this

4 paragraph.

5 4. Answering paragraph 4, Defendant Omeros admits the allegations in this

6 paragraph.

7 5. Answering paragraph 5, Defendant Omeros admits the allegations in this

8 paragraph.

9 II. ANSWER TO ALLEGATIONS REGARDING “JURISDICTION AND VENUE”

10 6. Answering paragraph 6, this paragraph is a statement of plaintiff’s legal position

11 and does not require a response. If a response is required, Defendant Omeros does not contest

12 the jurisdiction of this Court. Defendant Omeros denies that plaintiff has any meritorious claims

13 under the Federal False Claims Act or that the plaintiff is entitled to any relief whatsoever in this

14 action.

15 7. Answering paragraph 7, this paragraph is a statement of plaintiff’s legal position

16 and does not require a response. If a response is required, Defendant Omeros does not contest

17 the supplemental jurisdiction of the Court. Defendant Omeros denies that plaintiff has any

18 meritorious supplemental claims or that the plaintiff is entitled to any relief whatsoever in this

19 action.

20 8. Answering paragraph 8, this paragraph is a statement of plaintiff’s legal position

21 and does not require a response. If a response is required, Defendant Omeros does not contest

22 venue.

23 III. ANSWER TO ALLEGATIONS REGARDING “FACTUAL BACKGROUND”

24 9. Answering paragraph 9, Defendant Omeros admits the allegations in this

25 paragraph.

26 10. Answering paragraph 10, Defendant Omeros admits the allegations in this
27 paragraph, although they are incomplete and out of context. Defendant Omeros states that the

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 1 Indemnification Agreement did not provide a right of indemnity in “any action, suit, claim or

2 proceeding instituted by or at the direction of Indemnitee” unless “such action, suit, claim or

3 proceeding is or was authorized by the Company’s Board of Directors.” Defendant Omeros

4 states that no such authorization was ever provided to plaintiff by the Omeros Board of

5 Directors.

6 11. Answering paragraph 11, Defendant declines to speculate as to the meaning of the

7 phrase “problems and issues,” and therefore, denies the allegations in this paragraph.

8 Defendant Omeros specifically denies any implication that Omeros’ business, financial and

9 accounting practices and procedures were unlawful or improper. Defendant Omeros states that,

10 as Chief Financial Officer, plaintiff was responsible to manage, test and improve Omeros’

11 business, financial and accounting practices and procedures.

12 12. Answering paragraph 12, Defendant Omeros denies the allegations in this

13 paragraph.

14 13. Answering paragraph 13, Defendant Omeros denies the allegations in this

15 paragraph. Defendant Omeros specifically denies any implication that Dr. Demopulos

16 unlawfully failed to report taxable income or attempted to engage in any improper practice

17 concerning the tax reporting of his exercise of stock options or payment of taxes from a bonus

18 award, or that plaintiff discovered or remedied any such attempt. Defendant Omeros states that

19 Dr. Demopulos affirmatively asked plaintiff to determine whether the taxes for the exercise of

20 Dr. Demopulos’ stock options should be reported on an IRS Form W-2 or an IRS Form 1099.

21 Defendant Omeros also states that because plaintiff did not know how to handle the taxation

22 associated with Dr, Demopulos’ stock option exercise, and he needed to obtain the answer from

23 Ernst & Young, Omeros’ auditors.

24 14. Answering paragraph 14, Defendant Omeros denies the allegations in this

25 paragraph.

26 15. Answering paragraph 15, Defendant Omeros denies the allegations in this
27 paragraph.

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 1 16. Answering paragraph 16, Defendant Omeros denies the allegations in this

2 paragraph. Defendant Omeros states that Omeros gave Klein the choice to wait to exercise his

3 options until the Board determined a current fair market value, but Klein chose to exercise his

4 stock options when there was not a current Board-determined value, which required Omeros to

5 estimate the fair market value of the stock. Defendant Omeros states that Omeros provided a

6 range in which Omeros thought the fair value might lie and plaintiff determined that the fair

7 market value of the stock at the time of plaintiff’s exercise was $1.75. Defendant Omeros

8 specifically denies any attempted implication that Omeros or Dr. Demopulos retaliated against

9 plaintiff.

10 17. Answering paragraph 17, Defendant Omeros admits that Omeros’ Director of

11 Finance and Controller, an employee who reported directly to plaintiff, untimely submitted an

12 expense report in November 2008. Defendant Omeros denies the remaining allegations in this

13 paragraph. Defendant Omeros specifically denies any attempted implication that Omeros’

14 practices and procedures were unlawful or improper and denies that any amounts properly due to

15 the State of Washington were not paid. Defendant Omeros affirmatively states that plaintiff’s

16 failure to propose an appropriate signature policy and plaintiff’s repeated refusal to accept an

17 appropriate signature policy caused the delay in implementation of the signature policy, not any

18 inaction on the part of other officers of Omeros.

19 18. Answering paragraph 18, Defendant Omeros admits that plaintiff met with the

20 Chair of the Audit Committee regarding the signature policy in November 2008. Defendant

21 Omeros denies the remaining allegations in this paragraph. Defendant Omeros specifically

22 denies any attempted implication that Omeros’ practices and procedures were unlawful or

23 improper. Defendant Omeros specifically denies that the reports prior to December 2, 2008,

24 invoked or constituted a complaint or report under the company’s Whistleblower Policy.

25 19. Answering paragraph 19, Defendant Omeros admits that Dr. Demopulos and

26 plaintiff met to discuss financial matters related to Omeros, including the signature policy, after
27 plaintiff’s meeting with the Audit Committee. Defendant denies that plaintiff raised the issue of

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 1 “Defendant Gregory Demopulos’ anger about [plaintiff’s] reports to the Audit Committee.”

2 Defendant Omeros denies the remaining allegations in this paragraph. Defendant Omeros states

3 that plaintiff and Dr. Gregory Demopulos met on December 2, 2008, and after they discussed

4 company financial issues, the meeting turned into a verbal evaluation of plaintiff’s performance,

5 and Dr. Demopulos identified specific areas for improvement in plaintiff’s performance,

6 including, but not limited to, plaintiff’s excessive delegation of substantive work and plaintiff’s

7 distracting behavior during meetings with others, as well as other issues.

8 20. Answering paragraph 20, Defendant Omeros admits that plaintiff requested a

9 formal performance review and admits that in a company meeting Dr. Demopulos recognized the

10 efforts of the entire transaction team, including plaintiff, for their efforts in securing debt

11 financing in an attempt to make plaintiff feel like part of the team and in an attempt to build

12 plaintiff’s credibility within the company, given negative impressions of plaintiff held by other

13 Omeros employees. Defendant Omeros specifically denies that plaintiff was primarily

14 responsible for closing a $20 million debt financing deal and denies all other allegations in this

15 paragraph.

16 21. Answering paragraph 21, Defendant Omeros admits the allegations in this

17 paragraph, and that, relevant to this action, Omeros is the successor-in-interest to certain grants

18 awarded by the National Institute of Health (“NIH”).

19 22. Answering paragraph 22, Defendant Omeros denies that Defendant

20 Gregory Demopulos instructed scientists to falsely record their time. Defendant Omeros admits

21 that Dr. Gaitanaris provided instructions on time keeping practices based on Dr. Gaitanaris’

22 belief that recording effort in keeping with these practices would result in total time allocations

23 to the grant that were less than the overall time actually spent on the grant by Omeros’ personnel.

24 Defendant Omeros states that these practices, which were later corrected by Defendant Omeros,

25 did not result in any overbilling to the NIH grant, and rather the federal government was charged

26 for less than all time spent on the grant. Defendant Omeros states that in a letter to the Director
27 of the Division of Grants Compliance and Oversight for the NIH dated May 14, 2009, Omeros

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 1 voluntarily reported the erroneous timekeeping by certain timekeepers. A true and correct copy

2 of this letter dated May 14, 2009, from Marcia Kelbon, Omeros’ Vice President and General

3 Counsel, is attached to this Amended Answer as Exhibit 1. Defendant Omeros states that the
4 letter provided background surrounding the incident, provided specific details about Omeros’

5 investigation into the timekeeping, and specifically stated that Omeros had actually billed the

6 government for less time than was spent on the grant due to an internal control policy initiated by

7 Omeros’ Director of Finance and Controller, who was plaintiff’s direct subordinate. See

8 Exhibit 1. Defendant Omeros states that on June 29, 2009, Kathy R. Hancock, the Assistant
9 Grants Compliance Officer for the Division of Grants Compliance and Oversight for NIH,

10 emailed Marcia Kelbon, and “confirm[ed] NIH’s review of the report and [their] acceptance of

11 the corrective actions taken by Omeros Corporation to address the timekeeping errors that were

12 made in regard to the” grant in question. A true and correct copy of this email dated June 29,

13 2009, is attached to this Amended Answer as Exhibit 2. Defendant Omeros states that the email
14 also stated that NIH “appreciate[d] [Omeros] calling this error to [their] attention” and

15 “commend[ed] [Omeros] for its actions taken to address this issue and to ensure compliance with

16 Federal requirements.” See Exhibit 2. Defendant Omeros denies the remaining allegations in
17 this paragraph.

18 23. Answering paragraph 23, Defendant Omeros denies that Defendant

19 Gregory Demopulos instructed scientists to falsely record their time. Defendant Omeros admits

20 that Dr. Gaitanaris provided instructions on time keeping practices based on Dr. Gaitanaris’

21 belief that recording effort in keeping with these practices would result in total time allocations

22 to the grant that were less than the overall time actually spent on the grant by Omeros’ personnel.

23 Defendant Omeros states that these practices, which were later corrected by Defendant Omeros,

24 did not result in any overbilling to the NIH grant, and rather the federal government was charged

25 for less than all time spent on the grant. Defendant Omeros states that in a letter to NIH dated

26 May 14, 2009, it voluntarily reported the erroneous timekeeping practices, provided a detailed
27 report of its investigation, and reported that the results of the investigation was that Omeros

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 1 actually billed the federal government for less time than it spent on the grant due to an internal

2 control policy initiated by Omeros’ Director of Finance and Controller, who was plaintiff’s direct

3 subordinate. See Exhibit 1. Defendant Omeros states that in an email dated June 29, 2009, NIH
4 confirmed its review of Omeros’ letter, accepted Omeros’ “corrective actions”, and

5 “commend[ed] [Omeros] for its actions taken to address this issue and to ensure compliance with

6 Federal requirements.” See Exhibit 2. Defendant Omeros denies the remaining allegations in
7 this paragraph.

8 24. Answering paragraph 24, Defendant Omeros admits that plaintiff reported a

9 concern regarding timekeeping practices on an NIH grant project to the Audit Committee.

10 Defendant Omeros states that the timekeeping practices did not result in any overbilling to the

11 NIH grant. Defendant Omeros states that in a letter to NIH dated May 14, 2009, it voluntarily

12 reported the erroneous timekeeping practices, provided a detailed report of its investigation, and

13 reported that the results of the investigation was that Omeros actually billed the federal

14 government for less time than it spent on the grant due to an internal control policy initiated by

15 Omeros’ Director of Finance and Controller, who was plaintiff’s direct subordinate. See

16 Exhibit 1. Defendant Omeros states that in an email dated June 29, 2009, NIH confirmed its
17 review of Omeros’ letter, accepted Omeros’ “corrective actions”, and “commend[ed] [Omeros]

18 for its actions taken to address this issue and to ensure compliance with Federal requirements.”

19 See Exhibit 2. Defendant Omeros denies the remaining allegations in this paragraph.
20 25. Answering paragraph 25, Defendant Omeros admits that Ms. Kelbon and

21 Dr. Demopulos met with plaintiff regarding his complaint. Defendant Omeros states that

22 Ms. Kelbon and Dr. Demopulos assured plaintiff that they were taking the complaint seriously

23 and that Ms. Kelbon asked plaintiff if plaintiff would like to report anything else about plaintiff’s

24 concerns to her. Defendant Omeros denies the remaining allegations in this paragraph.

25 Defendant Omeros specifically denies that Dr. Demopulos or Ms. Kelbon retaliated against

26 plaintiff in any way.

27

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 1 26. Answering paragraph 26, Defendant Omeros admits that Dr. Demopulos

2 requested Ms. Kelbon’s presence at a meeting with plaintiff. Defendant Omeros denies the

3 remaining allegations in this paragraph. Defendant Omeros specifically denies that

4 Dr. Demopulos or Ms. Kelbon retaliated against plaintiff in any way.

5 27. Answering paragraph 27, Defendant Omeros denies any implication that plaintiff

6 discovered “fraudulent timekeeping.” Defendant Omeros states that it launched an immediate

7 investigation into plaintiff’s complaint. Defendant Omeros states that the investigation revealed

8 that the timekeeping practices did not result in any overbilling to the NIH grant. Defendant

9 Omeros states that in a letter to NIH dated May 14, 2009, it voluntarily reported the erroneous

10 timekeeping practices, provided a detailed report of its investigation, and reported that the results

11 of the investigation was that Omeros actually billed the federal government for less time than it

12 spent on the grant due to an internal control policy initiated by Omeros’ Director of Finance and

13 Controller, who was plaintiff’s direct subordinate. See Exhibit 1. Defendant Omeros states that
14 in an email dated June 29, 2009, NIH confirmed its review of Omeros’ letter, accepted Omeros’

15 “corrective actions”, and “commend[ed] [Omeros] for its actions taken to address this issue and

16 to ensure compliance with Federal requirements.” See Exhibit 2. Defendant Omeros admits the
17 remaining allegations in this paragraph.

18 28. Answering paragraph 28, Defendant Omeros admits that plaintiff incurred

19 personal legal fees, but specifically denies that these fees were incurred as the result of plaintiff’s

20 involvement in the Audit Committee’s investigation. Defendant Omeros denies the remaining

21 allegations in this paragraph. Defendant Omeros states that plaintiff later presented billings from

22 his attorneys for a period of time that extended well beyond the completion by the Audit

23 Committee of its investigation and that consisted primarily of billings for services of an

24 employment law attorney, who apparently provided plaintiff advice on his own employment with

25 Omeros, and unrelated to matters, for which plaintiff could properly claim indemnification from

26 Omeros.
27

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 1 29. Answering paragraph 29, Defendant Omeros admits that the Audit Committee

2 investigation concluded that some of the scientists had recorded in the company’s timekeeping

3 system more hours than they individually had actually worked during the relevant time period,

4 while others recorded actual hours worked or less than actual hours worked, during that specific

5 reporting period. Defendant Omeros states that those reports did not result in any false billing of

6 the government because of internal controls placed by Omeros’ Director of Finance and

7 Controller, which a reasonably diligent or even cursory investigation by plaintiff would have

8 revealed, if conducted prior to the time that plaintiff made the whistleblower report to the Audit

9 Committee. Defendant Omeros states that plaintiff was directly responsible for grant

10 management with the NIH, including all billings submitted to the NIH. Defendant Omeros

11 specifically denies any implication it billed the government more hours than the scientists

12 actually worked. Defendant Omeros states that in a letter to NIH dated May 14, 2009, it

13 voluntarily reported the erroneous timekeeping practices, provided a detailed report of its

14 investigation, and reported that the results of the investigation was that Omeros actually billed

15 the federal government for less time than it spent on the grant due to an internal control policy

16 initiated by Omeros’ Director of Finance and Controller, who was plaintiff’s direct subordinate.

17 See Exhibit 1. Defendant Omeros states that in an email dated June 29, 2009, NIH confirmed its
18 review of Omeros’ letter, accepted Omeros’ “corrective actions”, and “commend[ed] [Omeros]

19 for its actions taken to address this issue and to ensure compliance with Federal requirements.”

20 See Exhibit 2.
21 30. Answering paragraph 30, Defendant Omeros admits that plaintiff requested a

22 formal performance review with Dr. Demopulos to discuss his performance. Throughout the

23 tenure of plaintiff’s employment, Dr. Demopulos and plaintiff had frequent discussions about

24 plaintiff’s job performance in which Dr. Demopulos advised plaintiff about concerns with

25 plaintiff’s performance and suggested improvements. Defendant Omeros states that plaintiff’s

26 performance reviews were handled in the same informal manner as with other executives of
27 Omeros. Defendant Omeros denies the remaining allegations in this paragraph.

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 1 31. Answering paragraph 31, Defendant Omeros admits that Dr. Demopulos

2 discussed plaintiff’s performance in a meeting on January 6, 2009, and that Dr. Demopulos

3 informed plaintiff that plaintiff’s employment was at-will. Defendant Omeros denies the

4 remaining allegations in this paragraph. Defendant Omeros specifically denies any attempted

5 implication that Dr. Demopulos or Omeros unlawfully retaliated against plaintiff.

6 32. Answering paragraph 32, Defendant Omeros admits the allegations in this

7 paragraph.

8 33. Answering paragraph 33, Defendant Omeros admits that plaintiff was placed on

9 administrative leave on January 13, 2009, and was eventually terminated. Defendant Omeros

10 denies the remaining allegations in this paragraph. Defendant Omeros specifically denies any

11 attempted implication that Omeros unlawfully retaliated against plaintiff.

12 34. Answering paragraph 34, Defendant Omeros admits the allegations in this

13 paragraph.

14 35. Answering paragraph 35, Defendant Omeros admits that David Mann, Chair of

15 the Audit Committee, resigned in March of 2009.

16 36. Answering paragraph 36, Defendant Omeros admits that it filed its S-1

17 Registration Statement and Preliminary Prospectus with the SEC and that the S-1 is accessible by

18 the public. Defendant Omeros denies the remaining allegations in this paragraph, and the bold

19 captioned phrase that precedes it.

20 37. Answering paragraph 37, Defendant Omeros admits that plaintiff reported that he

21 believed that employees were improperly recording their time to the NIH grant. Defendant

22 Omeros admits that plaintiff claimed that Dr. Demopolus and Dr. Gaitanaris had acted

23 improperly with regard to the time-recording matters alleged by plaintiff. Defendant Omeros

24 states that only the allegation regarding scientists incorrectly reporting certain hours worked on a

25 particular grant were sustained by the Audit Committee, and states that no improper billing to the

26 federal government resulted due to internal controls of the company, and that rather the federal
27 government was charged for less than all time spent on the grant. Defendant Omeros denies that

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 1 any allegation against Defendant Dr. Gregory Demopulos was sustained by the Audit Committee

2 and, rather, that the Audit Committee affirmatively stated that Dr. Demopulos had committed no

3 wrongdoing. Defendant Omeros admits that Dr. Gaitanaris provided instructions on time

4 keeping practices based on Dr. Gaitanaris’ belief that recording effort in keeping with these

5 practices would result in total time allocations to the grant that were less than the overall time

6 actually spent on the grant by Omeros’ personnel. Defendant Omeros states that these practices,

7 which were later corrected by Defendant Omeros, did not result in any overbilling to the NIH

8 grant, and rather the federal government was charged for less than all time spent on the grant.

9 Defendant Omeros states that in a letter to NIH dated May 14, 2009, it voluntarily reported the

10 erroneous timekeeping practices, provided a detailed report of its investigation, and reported that

11 the results of the investigation was that Omeros actually billed the federal government for less

12 time than it spent on the grant due to an internal control policy initiated by Omeros’ Director of

13 Finance and Controller, who was plaintiff’s direct subordinate. See Exhibit 1. Defendant
14 Omeros states that in an email dated June 29, 2009, NIH confirmed its review of Omeros’ letter,

15 accepted Omeros’ “corrective actions”, and “commend[ed] [Omeros] for its actions taken to

16 address this issue and to ensure compliance with Federal requirements.” See Exhibit 2.
17 Defendant Omeros denies the remaining allegations or implication in this paragraph.

18 38. Answering paragraph 38, Defendant Omeros admits that its S-1 states that

19 plaintiff Klein reported to the Audit Committee that “the Company had submitted grant

20 reimbursement claims to the NIH for work that the company had not performed” and that the

21 Audit Committee with the assistance of special outside counsel concluded that “the Company

22 had not submitted claims to the NIH for work the Company had not performed.” Defendant

23 Omeros states that the investigation revealed that the timekeeping practices did not result in any

24 overbilling to the NIH grant. Defendant Omeros states that in a letter to NIH dated May 14,

25 2009, it voluntarily reported the erroneous timekeeping practices, provided a detailed report of

26 its investigation, and reported that the results of the investigation was that Omeros actually billed
27 the federal government for less time than it spent on the grant due to an internal control policy

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 1 initiated by Omeros’ Director of Finance and Controller, who was plaintiff’s direct subordinate.

2 See Exhibit 1. Defendant Omeros states that in an email dated June 29, 2009, NIH confirmed its
3 review of Omeros’ letter, accepted Omeros’ “corrective actions”, and “commend[ed] [Omeros]

4 for its actions taken to address this issue and to ensure compliance with Federal requirements.”

5 See Exhibit 2. Defendant Omeros denies the remaining allegations in this paragraph, and
6 specifically denies that any of the statements in its S-1 were false or misleading.

7 39. Answering paragraph 39, Defendant Omeros admits that its S-1 states that “the

8 Company terminated Mr. Klein’s employment for reasons other than this incident.” Defendant

9 Omeros denies the remaining allegations in this paragraph, and specifically denies that any of the

10 statements in its S-1 were false or misleading. Defendant Omeros specifically denies the

11 allegation that its disclosure implied that Mr. Klein’s conduct was unlawful.

12 40. Answering paragraph 40, Defendant Omeros specifically denies that its S-1 does

13 not contain any disclosure about Mr. Mann, and also denies that the allegations in this paragraph

14 have any bearing upon the matters alleged in this suit.

15 41. Answering paragraph 41, Defendant Omeros denies the allegations in this

16 paragraph.

17 IV. ANSWER TO PLAINTIFF’S “CLAIMS”

18 A. Answer to Plaintiff’s Claim Regarding “Violation of the Federal False
Claims Act”
19
42. Answering paragraph 42, Defendant Omeros fully incorporates the admissions
20
and denials in paragraphs 1-41 above.
21
43. Answering paragraph 43, Defendant Omeros denies that Omeros billed the NIH
22
for hours that were not performed in support of the grant project. Defendant Omeros states that
23
the investigation revealed that the timekeeping practices did not result in any overbilling to the
24
NIH grant. Defendant Omeros states that in a letter to NIH dated May 14, 2009, it voluntarily
25
reported the erroneous timekeeping practices, provided a detailed report of its investigation, and
26
reported that the results of the investigation was that Omeros actually billed the federal
27

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 1 government for less time than it spent on the grant due to an internal control policy initiated by

2 Omeros’ Director of Finance and Controller, who was plaintiff’s direct subordinate. See

3 Exhibit 1. Defendant Omeros states that in an email dated June 29, 2009, NIH confirmed its
4 review of Omeros’ letter, accepted Omeros’ “corrective actions”, and “commend[ed] [Omeros]

5 for its actions taken to address this issue and to ensure compliance with Federal requirements.”

6 See Exhibit 2. The remainder of this paragraph is a statement of plaintiff’s legal position, which
7 requires no answer, and Defendant Omeros therefore denies the same.

8 44. Answering paragraph 44, Defendant Omeros denies that Omeros billed the NIH

9 for hours that were not performed in support of the grant project. Defendant Omeros states that

10 the investigation revealed that the timekeeping practices did not result in any overbilling to the

11 NIH grant. Defendant Omeros states that in a letter to NIH dated May 14, 2009, it voluntarily

12 reported the erroneous timekeeping practices, provided a detailed report of its investigation, and

13 reported that the results of the investigation was that Omeros actually billed the federal

14 government for less time than it spent on the grant due to an internal control policy initiated by

15 Omeros’ Director of Finance and Controller, who was plaintiff’s direct subordinate. See

16 Exhibit 1. Defendant Omeros states that in an email dated June 29, 2009, NIH confirmed its
17 review of Omeros’ letter, accepted Omeros’ “corrective actions”, and “commend[ed] [Omeros]

18 for its actions taken to address this issue and to ensure compliance with Federal requirements.”

19 See Exhibit 2. The remainder of this paragraph is a statement of plaintiff’s legal position, which
20 requires no answer, and Defendant Omeros therefore denies the same.

21 45. Answering paragraph 45, Defendant Omeros denies that Omeros billed the NIH

22 for hours that were not performed in support of the grant project. Defendant Omeros states that

23 in a letter to NIH dated May 14, 2009, it voluntarily reported the erroneous timekeeping

24 practices, provided a detailed report of its investigation, and reported that the results of the

25 investigation was that Omeros actually billed the federal government for less time than it spent

26 on the grant due to an internal control policy initiated by Omeros’ Director of Finance and
27 Controller, who was plaintiff’s direct subordinate. See Exhibit 1. Defendant Omeros states that
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 1 in an email dated June 29, 2009, NIH confirmed its review of Omeros’ letter, accepted Omeros’

2 “corrective actions”, and “commend[ed] [Omeros] for its actions taken to address this issue and

3 to ensure compliance with Federal requirements.” See Exhibit 2. The remainder of this
4 paragraph is a statement of plaintiff’s legal position, which requires no answer, and Defendant

5 Omeros therefore denies the same.

6 46. Answering paragraph 46, Defendant Omeros admits that plaintiff “blew the

7 whistle” on what he said he believed were problems with reports related to hours worked on the

8 NIH grant. Defendant Omeros cannot determine what plaintiff actually did or did not know

9 about the truth or falsity of these allegations and therefore denies that plaintiff became aware of

10 anything. Defendant Omeros states that plaintiff was directly responsible for grant management

11 with the NIH, including all billings submitted to the NIH. Defendant Omeros denies that

12 Omeros billed the NIH for hours that were not performed. Defendant Omeros states that in a

13 letter to NIH dated May 14, 2009, it voluntarily reported the erroneous timekeeping practices,

14 provided a detailed report of its investigation, and reported that the results of the investigation

15 was that Omeros actually billed the federal government for less time than it spent on the grant

16 due to an internal control policy initiated by Omeros’ Director of Finance and Controller, who

17 was plaintiff’s direct subordinate. See Exhibit 1. Defendant Omeros states that in an email
18 dated June 29, 2009, NIH confirmed its review of Omeros’ letter, accepted Omeros’ “corrective

19 actions”, and “commend[ed] [Omeros] for its actions taken to address this issue and to ensure

20 compliance with Federal requirements.” See Exhibit 2. The remainder of this paragraph is a
21 statement of plaintiff’s legal position, which requires no answer, and Defendant Omeros

22 therefore denies the same. The remainder of this paragraph is a statement of plaintiff’s legal

23 position, which requires no answer, and Defendant Omeros therefore denies the same.

24 47. Answering paragraph 47, Defendant Omeros denies the allegations in this

25 paragraph.

26 48. Answering paragraph 48, this paragraph is a statement of plaintiff’s legal position,
27 which requires no answer, and Defendant Omeros therefore denies the same.

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 14
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 B. Answer to Plaintiff’s Claim Regarding “Wrongful Discharge in Violation of
Public Policy”
2
49. Answering paragraph 49, Defendant Omeros fully incorporates the admissions
3
and denials in paragraphs 1-48 above.
4
50. Answering paragraph 50, this paragraph is a statement of plaintiff’s legal position,
5
which requires no answer, and Defendant Omeros therefore denies the same.
6
51. Answering paragraph 51, this paragraph is a statement of plaintiff’s legal position,
7
which requires no answer, and Defendant Omeros therefore denies the same.
8
52. Answering paragraph 52, this paragraph is a statement of plaintiff’s legal position,
9
which requires no answer, and Defendant Omeros therefore denies the same.
10
53. Answering paragraph 53, Defendant Omeros admits the allegations in this
11
paragraph.
12
54. Answering paragraph 54, this paragraph is a statement of plaintiff’s legal position,
13
which requires no answer, and Defendant Omeros therefore denies the same.
14
55. Answering paragraph 55, this paragraph is a statement of plaintiff’s legal position,
15
which requires no answer, and Defendant Omeros therefore denies the same.
16
56. Answering paragraph 56, this paragraph is a statement of plaintiff’s legal position,
17
which requires no answer, and Defendant Omeros therefore denies the same.
18
57. Answering paragraph 57, this paragraph is a statement of plaintiff’s legal position,
19
which requires no answer, and Defendant Omeros therefore denies the same.
20
58. Answering paragraph 58, Defendant Omeros denies the allegations of this
21
paragraph.
22
C. Answer to Plaintiff’s Claim Regarding “Breach of Promise of Specific
23 Treatment in a Specific Situation or Promissory Estoppel”
24
59. Answering paragraph 59, Defendant Omeros fully incorporates the admissions
25
and denials in paragraphs 1-58 above.
26
60. Answering paragraph 60, Defendant Omeros admits the allegations in this
27
paragraph.
28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 15
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 61. Answering paragraph 61, Defendant Omeros admits the allegations in this

2 paragraph.

3 62. Answering paragraph 62, Defendant Omeros admits the allegations in this

4 paragraph. Defendant Omeros affirmatively states that, as Chief Financial Officer, plaintiff’s job

5 duties required that he both investigate matters with a reasonable level of diligence before

6 reporting under the policy, and that his job duties required that he have bottom line responsibility

7 for certain financial reporting and billing matters within the company, including accounting for

8 and financial management of federal grant programs.

9 63. Answering paragraph 63, Defendant Omeros denies the allegations of this

10 paragraph. Defendant Omeros states that plaintiff made the whistleblower report to “mitigate”

11 his perception of a lack of job security, and did not present the complaint in good faith.

12 64. Answering paragraph 64, Defendant Omeros admits the allegations in this

13 paragraph.

14 65. Answering paragraph 65, this paragraph is a statement of plaintiff’s legal position,

15 which requires no answer, and Defendant Omeros therefore denies the same.

16 66. Answering paragraph 66, this paragraph is a statement of plaintiff’s legal position,

17 which requires no answer, and Defendant Omeros therefore denies the same.

18 67. Answering paragraph 67, this paragraph is a statement of plaintiff’s legal position,

19 which requires no answer, and Defendant Omeros therefore denies the same.

20 68. Answering paragraph 68, this paragraph is a statement of plaintiff’s legal position,

21 which requires no answer, and Defendant Omeros therefore denies the same.

22 D. Answer to Plaintiff’s Claim Regarding “Wrongful Withholding of Wages”

23 69. Answering paragraph 69, Defendant Omeros fully incorporates the admissions
24 and denials in paragraphs 1-68 above.
25 70. Answering paragraph 70, Defendant Omeros denies the allegations of this
26 paragraph.
27

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 16
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 71. Answering paragraph 71, Defendant admits that it stopped paying plaintiff after

2 he was terminated. The remainder of this paragraph is a statement of plaintiff’s legal position,

3 which requires no answer, and Defendant Omeros therefore denies the same.

4 72. Answering paragraph 72, this paragraph is a statement of plaintiff’s legal position,

5 which requires no answer, and Defendant Omeros therefore denies the same.

6 73. Answering paragraph 73, this paragraph is a statement of plaintiff’s legal position,

7 which requires no answer, and Defendant Omeros therefore denies the same.

8 74. Answering paragraph 74, this paragraph is a statement of plaintiff’s legal position,

9 which requires no answer, and Defendant Omeros therefore denies the same.

10 75. Answering paragraph 75, this paragraph is a statement of plaintiff’s legal position,

11 which requires no answer, and Defendant Omeros therefore denies the same.

12 E. Answer to Plaintiff’s Claim Regarding “Breach of Indemnification

Agreement”
13
76. Answering paragraph 76, Defendant Omeros fully incorporates the admissions
14
and denials in paragraphs 1-75 above.
15
77. Answering paragraph 77, Defendant Omeros admits the allegations in this
16
paragraph.
17
78. Answering paragraph 78, Defendant Omeros admits that the Indemnification
18
Agreement stated that Omeros would reimburse plaintiff for fees he incurred according to the
19
terms and definitions in the agreement, but specifically denies that the characterization of these
20
terms and definitions set forth in paragraph 78 is complete. Defendant Omeros specifically
21
denies that the Indemnification Agreement requires Omeros to pay for any fees associated with
22
plaintiff obtaining independent counsel related to the status of his employment with the company
23
or those presented to the company for indemnity prior to the filing of this action.
24
79. Answering paragraph 79, this paragraph is a statement of plaintiff’s legal position,
25
which requires no answer, and Defendant Omeros therefore denies the same.
26
27

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 17
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 80. Answering paragraph 80, Defendant Omeros denies the allegations in this

2 paragraph on information and belief.

3 81. Answering paragraph 81, Defendant Omeros admits that it has refused to pay

4 legal fees associated with the status of plaintiff’s employment with the company and personal

5 legal fees incurred by plaintiff independent of the Audit Committee’s investigation.

6 82. Answering paragraph 82, this paragraph is a statement of plaintiff’s legal position,

7 which requires no answer, and Defendant Omeros therefore denies the same.

8 F. Defamation
9 83. Answering paragraph 83, Defendant Omeros fully incorporates the admissions

10 and denials in paragraphs 1-82 above.

11 84. Answering paragraph 84, Defendant Omeros denies that any statements in its S-1

12 were false or misleading. The remaining allegations in this paragraph are a statement of

13 plaintiff’s legal position, which requires no answer, and Defendant Omeros therefore denies the

14 same.

15 85. Answering paragraph 85, this paragraph is a statement of plaintiff’s legal position,

16 which requires no answer, and Defendant Omeros therefore denies the same.

17 AFFIRMATIVE DEFENSES
18 Having fully answered the Complaint for Damages served by plaintiff, Defendant

19 Omeros pleads the following defenses or affirmative defenses, without waiving any arguments

20 that it may be entitled to assert concerning the burden of proof, legal presumptions or other legal

21 characterizations:

22 1. Pending discovery, plaintiff’s Complaint for Damages in several parts fails to

23 state a claim upon which relief may be granted.

24 2. Some or all of plaintiff’s claims fail because he unreasonably failed to avoid

25 harm.

26 3. Some or all of plaintiff’s claims fail because of the doctrine of unclean hands.
27

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 18
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 4. Some or all of plaintiff’s claims fail because of the doctrine of after acquired

2 evidence.

3 5. Plaintiff’s damages, if any, were proximately caused by or contributed to by acts,

4 omissions, breaches of contract and/or other legal duties of the plaintiff.

5 6. The acts and alleged injuries, if any, were proximately caused by or contributed to

6 by the acts, omissions, breaches of contract and/or other legal duties of third parties over whom

7 Defendant Omeros had no control.

8 7. Plaintiff’s assumed the risk of some of the harms about which he now complains.

9 8. Plaintiff has failed to mitigate the alleged damages, if any.

10 9. Without assuming any burden of proof not otherwise imposed by law, Defendant

11 Omeros’ actions with regard to the response to plaintiff’s whistleblower complaint and with regard

12 to discharge of plaintiff from employment were reasonable and undertaken in good faith.

13 10. To the extent that a jury finds that Defendant Omeros was obligated to pay

14 plaintiff wages beyond his termination date, there was a bona fide dispute regarding the

15 compensation and the failure to pay such compensation was not willful.

16 11. Without assuming any burden of proof not otherwise imposed by law, with regard

17 to refusal to pay wages after termination of plaintiff’s employment, Defendant Omeros’ conduct

18 with regard to the allegations in plaintiff’s Complaint was reasonable, in good faith, and not

19 willful.

20 12. Without assuming any burden of proof or production not otherwise imposed by

21 law, plaintiff’s employment was at-will.

22 13. Pending further discovery, some or all of plaintiff’s claims may be barred by

23 estoppel, laches, or other defenses set forth in FRCP 8(c).

24 14. Pending further discovery, plaintiff’s claims may be subject to the defenses set forth

25 in FRCP 12(b).

26 15. Defendant Omeros did not take any act alleged in the Complaint with the intent to

27 defraud the federal government, and (without assuming any burden of proof not otherwise
28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 19
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 imposed by law) did not, in fact, defraud the government or draw down any grant funds to which

2 Defendant Omeros was not entitled by the work performed on the grant in question.
3
16. To the extent that a jury concludes that any improper, retaliatory motive
4
contributed to or caused the decision to terminate the plaintiff’s employment, which is
5
specifically denied by Defendant Omeros, Defendant Omeros would have made the same
6
decision in the absence of retaliatory factors.
7

8 17. Without assuming any burden of proof or production not otherwise imposed by

9 law, the statements made by Defendant Omeros concerning plaintiff in its S-1 registration were
10 substantially true.
11
18. Defendant Omeros enjoyed a qualified or conditional privilege with respect to the
12
statements made to the Securities and Exchange Commission with respect to plaintiff.
13
Defendant Omeros reserves the right to assert by supplemental pleading any affirmative
14
defense or counterclaim which matures or is acquired after this answer is filed and served, or
15
which comes to light through discovery in this action.
16
V. JURY TRIAL DEMAND
17
Defendant Omeros demands a jury trial.
18
VI. ANSWER TO PLAINTIFF’S REQUEST FOR “DAMAGES”
19
Answering plaintiff’s request for damages, these paragraphs are statements of plaintiff’s
20
legal position, which require no answer. Notwithstanding the foregoing, Defendant Omeros
21
denies that plaintiff has any claims or causes of action against Defendant under the statutes or
22
legal theories that he attempts to invoke. Furthermore, Defendant Omeros denies that the
23
plaintiff is entitled to any form of relief against Defendant.
24

25

26
27

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 20
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 DEFENDANT OMEROS’ COUNTERCLAIMS
2 A. PARTIES
3 1. Defendant Omeros Corporation (“Omeros”) is a Washington corporation doing

4 business in Seattle, Washington.

5 2. On information and belief, plaintiff Richard Klein is a resident of Seattle,

6 Washington.

7 B. JURISDICTION AND VENUE

8 3. This Court has jurisdiction over Defendant Omeros’ counterclaims because the

9 action was instituted in this Court, and the Court has supplemental jurisdiction to hear related claims

10 under 28 U.S.C. § 1367.

11 4. Venue in the Western District is proper pursuant to 28 U.S.C. § 1391 because all of

12 the acts alleged occurred in Seattle, Washington.

13 C. FACTS RELEVANT TO COUNTERCLAIMS

14 5. Defendant Omeros hired plaintiff on May 14, 2007.

15 6. Plaintiff signed an Employee Proprietary Information and Inventions Agreement

16 (“PIIA”) on May 14, 2007. The agreement prohibited plaintiff from disclosing or using any

17 proprietary information, except as authorized by the company, and specifically required that

18 plaintiff return to Omeros all proprietary information and other “documents, apparatus,

19 equipment and other physical property in any form, whether or not pertaining to Proprietary

20 Information” to Omeros upon termination of plaintiff’s employment.

21 7. Defendant Omeros obtained a grant from the National Institute of Health (“NIH”)

22 as a successor in interest to another company that it had acquired.

23 8. The responsibilities of plaintiff’s position assumed by plaintiff in May 2007

24 included management of Omeros’ NIH grants, and Gregory Demopulos, M.D., Chief Executive

25 Officer of Omeros, specifically underscored plaintiff’s responsibility for personal supervision of

26 the NIH grants in a series of emails in July 2008. Plaintiff was responsible for, among other
27 things, monitoring the number of hours that Omeros’ scientists worked on the project.

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 21
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 9. On December 2, 2008, Dr. Demopulos met with plaintiff regarding various

2 company issues. The meeting evolved into a verbal performance review of plaintiff’s work.

3 Dr. Demopulos identified specific problems and issues regarding plaintiff’s performance.

4 Plaintiff asked Dr. Demopulos if plaintiff would remain employed with Omeros for a period of

5 three years. Dr. Demopulos answered that, in view of plaintiff’s performance problems, Dr.

6 Demopulos could not guarantee that plaintiff would remain employed by Omeros.

7 10. On December 3, 2008, plaintiff telephoned David Mann, the Chair of Omeros’

8 Audit Committee. Plaintiff informed Mr. Mann that plaintiff thought something was wrong with

9 “things” around the company. Mr. Mann asked plaintiff if he was making an official complaint,

10 or questioning the integrity of the financial statements of Omeros, and plaintiff said that he was

11 not. Plaintiff informed Mr. Mann that he needed to investigate his concerns before proceeding

12 further.

13 11. On December 5, 2008, Omeros’ Human Resources Manager circulated Omeros’

14 recently adopted Whistleblower Policy to all company employees including plaintiff.

15 12. On December 5, 2008, plaintiff called several of the scientists who worked on the

16 NIH program. On information and belief, in response to questions from plaintiff, the scientists

17 told plaintiff that they were reporting more hours than they worked on the project. Plaintiff did

18 not review the hours that were reported or the hours that were charged to NIH.

19 13. On December 8, 2008, plaintiff told Mr. Mann his complaint about hours being

20 reported improperly on a single NIH grant. Plaintiff specifically informed Mr. Mann that he was

21 complaining pursuant to Omeros’ Whistleblower Policy and, when offered other avenues of

22 addressing the concerns by Mr. Mann, plaintiff specifically reiterated his desire to invoke the

23 Whistleblower Policy and that he did not want to address the complaint through a management

24 investigation.

25 14. Plaintiff held himself out as a sophisticated individual with substantial experience

26 in corporate finance, and was also familiar with Omeros’ Audit Committee Charter, which
27 authorized the Audit Committee to engage advisors and consultants, at Omeros’ expense, in the

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 22
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 course of its duties. Plaintiff knew or should have known that as a consequence of his requesting

2 whistleblower treatment of his concern, the company would be required to engage outside

3 investigators to assist the Audit Committee.

4 15. Omeros’ Audit Committee immediately initiated an investigation into plaintiff’s

5 complaint. The Audit Committee engaged special counsel to investigate plaintiff’s complaint.

6 16. The Audit Committee determined that the scientists were recording in Omeros’

7 internal timekeeping system more hours than they worked on the project during the relevant time

8 period. But, the Audit Committee discovered that Omeros’ Director of Finance and Controller

9 (an Omeros’ employee who reported directly to plaintiff) had initiated internal controls to limit

10 the number of hours that Omeros charged to NIH. The Audit Committee determined that NIH

11 was never charged more hours than worked on the project.

12 17. Defendant Omeros voluntarily reported the results of its investigation and the

13 erroneous timekeeping by certain timekeepers to the NIH in a letter to the Director of the

14 Division of Grants Compliance and Oversight for the NIH dated May 14, 2009. A true and

15 correct copy of this letter dated May 14, 2009, from Marcia Kelbon, Defendant Omeros’ Vice

16 President and General Counsel, is attached as Exhibit 1. Defendant Omeros states that the letter
17 provided background surrounding the incident, provided specific details about Omeros’

18 investigation into the timekeeping, and specifically stated that Omeros had actually billed the

19 government for less time than was spent on the grant due to internal control policy initiated by

20 Omeros’ Director of Finance and Controller, who was plaintiff’s direct subordinate. See

21 Exhibit 1.
22 18. On June 29, 2009, Kathy R. Hancock, the Assistant Grants Compliance Officer

23 for the Division of Grants Compliance and Oversight for NIH, emailed Marcia Kelbon, and

24 “confirm[ed] NIH’s review of the report and [their] acceptance of the corrective actions taken by

25 Omeros Corporation to address the timekeeping errors that were made in regard to the” grant in

26 question. A true and correct copy of this email dated June 29, 2009, is attached as Exhibit 2.
27 The representative of the NIH stated that NIH “appreciate[d] [Omeros] calling this error to

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 23
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 [their] attention” and “commend[ed] [Omeros] for its actions taken to address this issue and to

2 ensure compliance with Federal requirements.” See Exhibit 2.

3 19. During the period of approximately December 22, 2008, through the first week in

4 January 2009, plaintiff brought his personal laptop computer into Omeros’ offices. During this

5 time, plaintiff worked on his personal computer, side-by-side with his Omeros-supplied laptop

6 computer. Sometime during December 2008, plaintiff contacted Omeros’ IT department and

7 asked how to connect his personal laptop within Omeros’ offices to Omeros’ network via virtual

8 private network software (“VPN”).

9 20. During the period of approximately December 22, 2008, through the first week in

10 January 2009, plaintiff shielded the screen of his personal computer from the view of Omeros’

11 Director of Finance and Controller.

12 21. After using his personal computer in his office for one and a half weeks,

13 Ms. Kelbon, Omeros’ Vice President and General Counsel, confronted plaintiff regarding his use

14 of his personal laptop and reminded plaintiff about his obligations under the proprietary

15 information agreement. Plaintiff persisted in the behavior for an additional week after being

16 requested by Ms. Kelbon to stop.

17 22. After the Audit Committee completed its investigation, Omeros asked plaintiff on

18 December 19, 2009, to proceed with completion and execution of a regular monthly certification

19 to Omeros’ venture debt lender concerning the accuracy of Omeros’ financial statements for the

20 month prior. Between December 19, 2008, and December 30, 2008, plaintiff repeatedly refused

21 to execute this certification unless he first received from the Company personal assurances and

22 authorizations to conduct his own investigation of unspecified concerns. These assurances and

23 investigation, if provided and authorized, would not have changed the accuracy and veracity of

24 the financial statements to which he was willing to certify with such assurances and

25 authorization. The financial statements plaintiff sought to have investigated had been prepared

26 by him or under his supervision in the first place.

27

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 24
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 23. During the period of December 19, 2008, through January 13, 2009, plaintiff

2 diverted company resources, including finance department’s staff time, away from departmental

3 priorities to assist him in conducting an unauthorized personal investigation. During this time,

4 plaintiff bullied and berated the finance department staff, resulting in half of the department’s

5 staff tendering or threatening their resignations.

6 24. Plaintiff was terminated from employment on January 29, 2009.

7 25. Plaintiff refused to return his company-purchased BlackBerry™ portable data

8 device to Omeros.

9 26. Due to plaintiff’s secretive behavior and peculiar use of his personal computer,

10 Omeros hired an electronic discovery firm to conduct a forensic analysis of the hard drive from

11 the company-supplied laptop computer that was used by plaintiff.

12 27. On April 22, 2009, the electronic discovery firm reported that the forensic

13 examination of plaintiff’s hard drive revealed that plaintiff copied Omeros’ documents to

14 removable storage devices and emailed Omeros’ documents to his personal email address. The

15 electronic discovery firm also reported that plaintiff’s hard drive showed plaintiff had made

16 extensive use of Omeros’ computer for personal internet activity. Omeros also discovered from

17 a review of archived data that plaintiff created a document titled “Transition Plan” on

18 November 26, 2008. The document states that plaintiff felt “extremely vulnerable with regards

19 to job security” and wanted to “explore the options for mitigating this vulnerability.”

20 D. COUNTERCLAIMS
21 a. Breach of Contract
22 28. Omeros re-alleges and incorporates by reference the allegations contained in

23 counterclaim paragraphs 1-25 above.

24 29. Plaintiff entered into the PIIA in exchange for valid consideration as his

25 employment with Omeros began.

26
27

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 25
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 30. The PIIA prohibits plaintiff from disclosing or using any of Omeros’ proprietary

2 information, except as authorized by the company, and required that plaintiff return Omeros’

3 documents and property to Omeros upon the termination of plaintiff’s employment.

4 31. Plaintiff has breached the PIIA by removing proprietary information and

5 documents from Omeros’ system, removing and not returning Omeros’ documents, and not

6 returning a BlackBerry™ owned by Omeros and containing Omeros’ proprietary information

7 after his termination.

8 32. Omeros cannot place a precise dollar amount on the damages incurred by

9 plaintiff’s conduct, the protection that its PIIA provides, nor the harm it will continue to suffer if

10 plaintiff is permitted to evade that protection.

11 33. In addition to that identified above, the irreparable harm to Omeros consists of,

12 but is not necessarily limited to, the possession of its proprietary and non-public information and

13 the potential use of the same or misappropriation of the same by a third party to this action, to the

14 damage of Omeros’ business interests, or its use for purposes competitive to Omeros or to harm

15 Omeros’ business plans, products, anticipated products or otherwise. Plaintiff has no right to

16 possess Omeros’ proprietary information and his mere possession of it damages Omeros’

17 continued interest in enforcing its PIIA.

18 34. Omeros has no adequate remedy at law against plaintiff.

19 35. Plaintiff should be ordered to return any documents and/or company information

20 taken from Omeros to Omeros to prevent further breaches of contract and further harm to

21 Omeros.

22 b. Misappropriation of Trade Secrets (Chapter 19.108 RCW)

23 36. Defendant re-alleges and incorporates by reference the allegations contained in

24 counterclaim paragraphs 1-33 above.

25 37. Omeros has expended substantial time, money and effort in the development of its

26 confidential, proprietary and trade secret information.

27

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 26
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 38. Some of the confidential, proprietary and trade secret information of Omeros

2 derives independent economic value (actual or potential) from not being generally known to, and

3 not being readily ascertainable by proper means by, other persons who can obtain economic

4 value from the disclosure or use of this information.

5 39. This confidential, proprietary and trade secret information is the subject of efforts

6 by Omeros that are reasonable under the circumstances to maintain the secrecy of the

7 information.

8 40. Such confidential, proprietary and trade secret information constitutes protectable

9 trade secrets of Omeros.

10 41. Omeros’ trade secret information gives Omeros a competitive advantage in the

11 marketplace.

12 42. Plaintiff has a statutory duty to keep secret, and not to disclose or use, the trade

13 secrets of Omeros.

14 43. Plaintiff removed proprietary and trade secret information from Omeros. Plaintiff

15 does not have the right to possess any of Omeros’ proprietary and trade secret information. On

16 information and belief, plaintiff intends to disclose or improperly use Omeros’ trade secrets.

17 44. On information and belief, plaintiff’s inevitable disclosure or use of Omeros’

18 trade secrets is proximately causing or will proximately cause injury to Omeros in violation of

19 Washington’s Uniform Trade Secrets Act, Chapter 19.108 RCW.

20 45. If plaintiff is not enjoined from misappropriating or threatening to misappropriate

21 the trade secrets of Omeros, his conduct will proximately cause further injury to Omeros in

22 violation of Washington’s Uniform Trade Secrets Act, Chapter 19.108 RCW.

23 46. If plaintiff’s actual and/or threatened misappropriation of trade secrets is not

24 enjoined, Omeros will suffer irreparable harm for which they have no adequate remedy at law.

25 c. Breach of Fiduciary Duty and Duty of Good Faith (RCW 23B.08.420)

26 47. Defendant re-alleges and incorporates by reference the allegations contained in
27 counterclaim paragraphs 1-44 above.

28
DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 27
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 48. As the Chief Financial Officer of Omeros, plaintiff was a fiduciary and an officer

2 of Omeros and owed Omeros a duty of loyalty and good faith.

3 49. Plaintiff breached his duty of loyalty and good faith to Omeros by failing to

4 conduct a reasonable investigation into his complaint regarding the NIH grant management

5 issues raised in his whistleblower complaint prior to blowing the whistle. Plaintiff failed to

6 review the hours reported or assess Omeros’ internal controls, even though the controls were

7 initiated by plaintiff’s subordinate and plaintiff had been assigned personal responsibility for the

8 financial management of the NIH grant. Plaintiff’s complaint was made in bad faith and was an

9 attempt at self-preservation, not concern for or about Omeros or its billings to the federal

10 government.

11 50. As a result of plaintiff’s breach of his duty of loyalty and good faith, Omeros

12 incurred significant and unnecessary outside costs to the Audit Committee and inside staffing

13 costs and distraction from business to conduct the investigation into plaintiff’s complaint, in an

14 amount to be proven at trial.

15 51. As a result of plaintiff’s breach of his duty of loyalty and good faith, Omeros has

16 been damaged in an amount to be proven at trial.

17 DEFENDANT’S PRAYER FOR RELIEF

18 WHEREFORE, having fully answered plaintiff’s Complaint, Defendant Omeros prays:

19 1. That plaintiff take nothing by the Complaint for Damages and that it be dismissed

20 with prejudice and without any award of attorneys’ fees, costs or expenses to plaintiff;

21 2. That Defendant Omeros be awarded its attorneys’ fees, costs and expenses

22 incurred in defending this action;

23 3. That Defendant Omeros be granted preliminary and permanent injunctive relief

24 requiring the return of all Omeros devices, confidential information and any other company

25 property possessed by plaintiff, without bond.

26 4. That Defendant be granted leave to conform its pleadings to the proofs;

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DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 28
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 5. That the Court enter judgment for Defendant on its Counterclaims in this action in

2 an amount to be determined at trial; and

3 6. For such other and further relief as the Court deems just and equitable.

4 DATED this 4th day of October, 2009.

5 JACKSON LEWIS LLP

6

7
By: __s/ Barry Alan Johnsrud_______________
8 Barry Alan Johnsrud, WSBA #21952
Gina D. Wolverton, WSBA #35738
9 600 University Street, Suite 2900
Seattle, WA 98101
10
Telephone: (206) 405-0404
11 Facsimile: (206) 405-4450
Attorneys for Defendant Omeros
12 Corporation
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DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 29
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404
 1 DECLARATION OF SERVICE
2 The undersigned declares under penalty of perjury under the laws of the United States of

3 America and hereby certifies that on this day, a true and accurate copy of the document to which

4 this declaration is affixed was filed with the Clerk of the Court using the CM/ECF System,

5 which will send notification of such filing to the following:

6 Thomas A. Lemly, WSBA #5433

Davis Wright Tremaine LLP
7 1201 Third Avenue, Suite 2200
Seattle, WA 98101-3045
8
Telephone: (206) 757-8085
9 Facsimile: (208) 757-7085
E-Mail: [email protected]
10
DATED this 4th day of October, 2009.
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____s/ Gina D. Wolverton___________________
14 Gina D. Wolverton

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DEFENDANT OMEROS’ AMENDED ANSWER AND Jackson Lewis LLP
AFFIRMATIVE DEFENSES TO COMPLAINT FOR DAMAGES One Union Square
600 University Street, Suite 2900
AND COUNTERCLAIMS - 30
Seattle, Washington 98101
(Case No. 2:09-CV-1342 JCC) (206) 405-0404