KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

AS UNTIMELY, OR IN THE ALTERNATIVE, MOTION TO COMPEL ARBITRATION

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United States District Court

WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

GIDDY HOLDINGS, INC.

Plaintiff/Counter Defendant,

v.

ERNEST KIM,

Defendant/Counter-Plaintiff.

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CIVIL ACTION NO. 1:20-cv-00434

DEFENDANT/COUNTER-PLAINTIFF’S RESPONSE TO COUNTER-DEFENDANT 

BRETT JACOBSON’S MOTION TO STRIKE SECOND AMENDED 

COUNTERCLAIM, OR IN THE ALTERNATIVE MOTION TO COMPEL 

ARBITRATION

TO THE HONORABLE JUDGE OF SAID COURT:

Defendant/Counter-Plaintiff ERNEST KIM (“Kim”) files this his Response to CounterDefendant Brett Jacobson’s (“Jacobson”) Motion to Strike Kim’s Second Amended Counterclaim, 

or in the alternative, Motion to Compel Arbitration for the fraud counterclaims made against 

Jacobson [Doc. 67]. Counter-Plaintiff alleges the following: 

II.

BACKGROUND

1. On July 2, 2021, this Court entered an Order Modifying In Part But Otherwise Adopting 

Report and Recommendation (“Order”). [Doc 61]. For the purposes of Jacobson’s Motion to Strike 

and this Response, in pertinent part, the Order responded to Kim’s Objections to the Report and 

Recommendation stemming from this Court’s consideration of Jacobson’s Motion to Dismiss 

Kim’s Counterclaims for Fraud [Docs. 60, 53, and 56].

2. The Order granted Kim leave to amend his fraud counterclaim against Jacobson on or 

before July 23, 2021. [Doc. 61, p. 7]. In accordance with the Order, Kim timely filed his Second 

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KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

AS UNTIMELY, OR IN THE ALTERNATIVE, MOTION TO COMPEL ARBITRATION

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Amended Counterclaims Against Brett Jacobson on July 23, 2021. [Doc. 65]. Kim acknowledges 

the Court allowed Kim to amend his fraud counterclaim against Jacobson to the extent it relates to 

“”the details of [his] termination’” because the defects were “salvageable.” [Doc. 61, p. 14].

3. Jacobson has not filed an Answer in this case. Jacobson proceeded to file this his Motion 

to Strike Kim’s Second Amended Counterclaims, or in the alternative, Motion to Compel 

Arbitration.

4. No arbitration agreement has been entered into by Jacobson and Kim. Although the Order 

from the Court does state that any counterclaims Kim asserted against Giddy, including for fraud, 

would be subject to arbitration, the Court specifically distinguishes Giddy from Jacobson by name 

when discussing application of the arbitration agreement before the Court and that Jacobson was 

not automatically included because he had made no such request for arbitration at that time.

III.

ARGUMENTS AND AUTHORITIES

A. Rule 12(f) Motion to Strike is Improper Vehicle to Challenge Counterclaims

5. Jacobson does not state the grounds on which he brings his Motion to Strike. Kim can only 

assume, by title and on its face, since Jacobson did not timely file an answer to Kim’s 

counterclaims, it is pursuant to Rule 12(f). Kim asserts Rule 12(f) allows the court to strike from 

any pleading (1) an “insufficient defense” or (2) “any redundant, immaterial, impertinent of 

scandalous matter.” Fed. R. Civ. P. 12(f)(2). Neither of those two situations apply to the 

counterclaims at issue before this Court. Yet, Jacobson confusingly, through a Motion to Strike, 

seeks to strike all of Kim’s Counterclaims as untimely even though all fraud claims were allowed 

to be repleaded with respect to the details of Kim’s termination through previously granted leave. 

6. Should Jacobson take issue with the sufficiency of the claims pleaded, a Motion to Strike 

is the improper vehicle. Federal courts have widely stated that “even a properly made motion to 

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KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

AS UNTIMELY, OR IN THE ALTERNATIVE, MOTION TO COMPEL ARBITRATION

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strike is a drastic remedy which is disfavored by the courts and infrequently granted.” Conn v. 

United States, 823 F. Supp. 2d 441, 442 (S.D. Miss. 2011); NexBank, SSB v. Bank Midwest, N.A., 

2012 U.S. Dist. LEXIS 135350, *1 (N.D. Tex. 2012)(plaintiff failed to show any portion of 

defendant’s answer or counterclaims contained an insufficient defense or otherwise). Moreover, 

these motions should not be granted “absent a showing of prejudice.” Id. Here, Jacobson has failed 

to identify or show how the counterclaims should be dismissed in connection with Rule 12(f) and

what prejudice, if any, would be suffered from counterclaims filed pursuant to court Order.

B. Kim’s Second Amended Counterclaim for Fraud Against Jacobson Complies with 

the Order

7. Jacobson argues that Kim’s Second Amended Counterclaims for fraud should be stricken 

in their entirety because allegedly some factual statements made are believed to be outside the 

limitations of the Order from the Court and that none of the allegations relate to details of Kim’s 

termination. Jacobson further argues some of the allegations contain representations purportedly 

made by Giddy’s general counsel, Christopher Clark, not Jacobson himself. This is simply not the 

case, and Jacobsen generally takes issue with the counterclaims themselves without specificity.

8. The Order specifically addresses what representations made by Jacobson were connected 

to the details of Kim’s termination by incorporation of a paragraph from Kim’s Objections [Doc. 

61, p. 13]. The paragraph in question contains representations regarding the nature of three things 

(1) Jacobson’s racially discriminatory statements to Kim related to COVID-19, (2) Kim’s 

objection to Giddy Holding’s misrepresentations related to payroll numbers and the federal 

government, and (3) Jacobson’s representations/falsities related to Kim’s employment history. 

[Doc 61, p. 13].

9. Jacobson attempts to strike the counterclaim by mischaracterizing and a narrowing 

“interpretation” [Doc. 67, ¶41] the nature of the Second Amended Counterclaims. First, Kim’s 

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KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

AS UNTIMELY, OR IN THE ALTERNATIVE, MOTION TO COMPEL ARBITRATION

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allegation regarding his pre-employment communications with Jacobson go directly to the details 

of his termination because those statements were continued misrepresentations throughout Kim’s 

employment and, in part, directly relate to the details of Kim’s termination. Kim complied with 

the Order to particularly and specifically establish the extent of fraudulent representations made 

by Jacobson, and that necessarily must include pre-employment statements that were made to Kim 

which were false. 

10. Second, Jacobson attempts to strike the counterclaim in its entirety by asserting that one 

paragraph, paragraph 29, in Kim’s Second Amended Counterclaims were actually made by Giddy 

Holding’s general counsel, Christopher Clark, not Jacobson. Kim would point out that paragraph 

29 is included in the Statement of Facts portion of the pleading, not the actual cause of action for 

fraud. Moreover, as the pleading shows, Kim asserts Jacobson is responsible for Christopher 

Clark’s letter detailing falsities about Kim’s prior employment history. The details of the letter 

from Clark do not automatically exclude Jacobson as the one who originally made the fraudulent 

statements. In fact, earlier in the pleading, Kim establishes where the details of the letter came 

from. Paragraph 19 clearly states “Jacobson would make outlandish and belligerent accusations 

that Kim lied on his resume...” [Doc 65, p. 5]. The fact that Clark wrote the letter detailing 

Jacobson’s representations, not Clark’s, does not absolve Jacobson of wrongdoing, nor is it 

grounds to strike the counterclaim in its entirety since it fully complies with the Order and directly 

relates to the details of Kim’s termination.

11. Third, Jacobson attempts to strike Kim’s counterclaim in its entirety apparently due to 

paragraphs 22-27 of Kim’s Second Amended Counterclaims because they relate to the “PPP loan 

issue again.” [Doc. 67, ¶41]. Again, Kim would point out that paragraphs 22-27 are included in 

the Statement of Facts portion of the pleading, not the actual cause of action for fraud. However, 

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KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

AS UNTIMELY, OR IN THE ALTERNATIVE, MOTION TO COMPEL ARBITRATION

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Kim asserts it was necessary to provide the specific and particular factual background to describe 

the nature of the PPP loan misrepresentations to show that the objection made by Kim was 

reasonable and to further show the full nature of why Kim’s objection led to, in part, his 

termination. The factual background is necessary for Kim to meet the standard required from the 

Court in its Order. The Order explicitly identified Kim’s objection to the payroll records 

misrepresentations with respect to PPP loan funding as tied to the “details of [his] employment.” 

[Doc 61, p. 13]. Providing all information known, pursuant to the rules and this Court’s instruction 

was compliance with the Order.

12. Kim complied with this Court’s Order, and all causes of action pleaded are related to the 

details of his termination. Therefore, no portion of the Second Amended Counterclaims should be 

stricken, and Kim respectfully requests that this Court deny Jacobson’s Motion to Strike.

C. Kim Made Timely Amended Counterclaims Against Jacobson Pursuant to the Order 

Which Does Not Require Compliance with Fed. R. Civ. P. 15(a)

13. Indeed Fed. R. Civ. P. requires leave of court to amend should the pleading not be made 

as a matter of course. Fed. R. Civ. P. 15(a)(1)(2). However, the Court’s Order explicitly granted 

Kim leave to amend his counterclaim of fraud against Jacobson by July 23, 2021. 

14. The Court’s Order relieves Kim from seeking leave of court as to the counterclaims 

because the pleading full complies with the Order. Jacobson does not identify any paragraph within 

in a cause of action in Kim’s Second Amended Counterclaims that does not comply with this 

Court’s Order. Therefore, the Motion to Strike Kim’s Second Amended Counterclaims as 

Untimely is improper and should be denied in its entirety. 

D. Arbitration Cannot Be Transferred to Jacobson Through Corporate Veil Theory

Because Causes of Action are Brought Against the Individual.

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KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

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15. The Order from the Court details the two-step process for analyzing whether certain 

counterclaims in this lawsuit should be subject to arbitration. [Doc 61, p. 15-17]. Though Kim 

acknowledges the Court, in that particular instance, was analyzing the arbitration agreement Kim 

had with Giddy Holdings, Kim does not agree the Court’s determination that arbitration would be 

applicable to Kim’s counterclaims of fraud against Giddy Holding’s would, by implication, extend 

to Jacobson. Kim understood any fraud claim against Giddy would be covered by their arbitration 

agreement as the type of claim eligible for arbitration. Kim does not agree its counterclaim for 

fraud against Jacobson is subject to any analysis of the type of claim to be arbitrated because no 

agreement exists to allow engagement of such analysis. 

16. Jacobson posits that arbitration is imputed onto Jacobson because Kim alleges Jacobson 

(1) engaged in misconduct related to the contract or (2) should Kim pierce the corporate veil, then 

Jacobson was acting as the alter ego of Giddy at all times. [Doc. 67, p. 4]. However, not all the 

claims for fraud against Jacobson relate to the contract of employment. These claims are wholly 

made against Jacobson, the individual. Despite this, Jacobson believes this is enough to compel 

arbitration as to Jacobson and Kim.

17. First, as the Order states, the first step is to determine whether the parties agreed to arbitrate. 

Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996). There is no agreement to arbitrate 

between Kim and Jacobson, as the Court acknowledges the only arbitration agreement is between 

Giddy and Kim. [Doc. 61]. Jacobson does not provide any agreement in its Motion to Compel 

Arbitration because there is not one. Further the Court made clear that only an amended 

counterclaim against Giddy would be subject to mandatory arbitration. [Doc. 61, p. 17]. Therefore, 

the motion to compel must be denied because Jacobson cannot get past the first step of legal 

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KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

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analysis for claims against him, the individual, and cites to no relevant authority that would allow 

Jacobson to substitute himself into the arbitration agreement between Giddy and Kim.

18. Second, Jacobson argues that because Kim alleges a veil piercing theory, the non-signatory 

to an arbitration agreement can compel arbitration when parties relied on the contract terms. 

Jacobson cites Kramer v. Toyota, wherein the 9th Circuit Court of Appeals determined, in applying 

California state law, that “where a non-signatory [Jacobson] seeks to enforce an arbitration clause, 

the doctrine of equitable estoppel applies in two circumstances (1) when a signatory must rely on 

the terms of the written agreement in asserting its claims against the nonsignatory or the claims 

are "intimately founded in and intertwined with" the underlying contract, Goldman v. KPMG LLP, 

173 Cal. App. 4th 209, 221, 92 Cal. Rptr. 3d 534 (2009) (quoting Metalclad Corp. v. Ventana

Environmental Organizational Partnership, 109 Cal. App. 4th 1705, 1713, 1 Cal. Rptr. 3d 328 

(2003)), [**16] and (2) [*1129] when the signatory alleges substantially interdependent and 

concerted misconduct by the nonsignatory and another signatory and "the allegations of 

interdependent misconduct [are] founded in or intimately connected with the obligations of the 

underlying agreement." Kramer v. Toyota Motor Corp., LEXIS 2090, (9th Cir. 2013). The Court 

states simply referencing an arbitration agreement without explaining connectedness of claims or 

reliance on the contract is “not enough.” Id. Jacobson cites to no cases regarding Texas law or on 

point 5th Circuit cases.

19. Here, Jacobson does not address the fact that Kim seeks to, in part, utilize the corporate 

veil theory to rid Jacobson of hiding behind the protections of the corporate entity and allow him 

to be held responsible for the individual, personal fraudulent misrepresentations he made in his 

own capacity, separate from Giddy. Jacobson merely references the arbitration agreement without 

more, and that is not enough to compel arbitration with a non-signatory to an agreement. Jacobson 

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also ignores the causes of action brought against Jacobson for fraudulent actions/representations 

he made in his individual capacity that were not in reliance on the terms of any contract as specified 

in Kim’s Counterclaims and were not the actions of Giddy itself. Without further proof from 

Jacobson, there is no evidence that Jacobson should be bound by the arbitration clause as an alterego on all fraud counterclaims. Andres Holding Corp. v. Villaje Del Rio, Ltd., LEXIS 63686, *9-

10, (W.D. Tex. 2009); also see In re Trammel, 246 S.W.3d 815, 820 (Tex. App.--Dallas 2008, no 

pet.) ("[A] corporate relationship is generally not enough to bind a nonsignatory to

an arbitration agreement.").”Id. Kim does not seek by his fraud claim to derive a direct benefit

from the contract for employment itself. Id.

20. The 5th Circuit states a party seeking to compel arbitration “must first show that a valid 

arbitration agreement exists between the parties” whereby “the parties intent controls even when 

a non-signatory to the arbitration agreement seeks to enforce it.” Halliburton Energy Servs. v. 

Ironshore Specialty Ins. Co., 921 F.3d 522, 527 (5th Cir. 2019). Jacobson has done no such thing.

IV. 

CONCLUSION AND PRAYER

WHEREFORE, Defendant/Counter Plaintiff Ernest Kim respectfully requests that upon 

hearing, the Court (1) deny Jacobson’s Motion to Strike and (2) deny Jacobson’s Motion to 

Compel Arbitration and (3) grant Defendant all other relief, at law or in equity, to which it is justly 

entitled. 

Respectfully submitted,

COWLES & THOMPSON, PC

By: 

Casey S. Erick

Texas Bar No. 24028564 

Email: cerick@cowlesthompson.com 

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KIM’S RESPONSE TO JACOBSON’S MOTION TO STRIKE SECOND AMENDED COUNTERCLAIMS 

AS UNTIMELY, OR IN THE ALTERNATIVE, MOTION TO COMPEL ARBITRATION

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901 Main Street 

Suite 3900 

Dallas, Texas 75202 

Tel. (214) 672-2138 

Fax. (214) 672-2338 

ATTORNEY FOR DEFENDANT ERNEST KIM

CERTIFICATE OF SERVICE

I hereby certify that on August 27, 2021, a copy of the foregoing was filed electronically 

using the Court’s CM/ECF system and served in accordance with the Federal Rules of Civil 

Procedure. Notice of this filing will be sent by e-mail to all parties by operation of the Court’s 

electronic filing system or by mail to anyone unable to accept the electronic filing. 

 By: 

Casey Erick

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