Lisa A.

Marcy (#5311)
Aaron & Gianna, PLC
2150 South 1300 East, Ste. 500
Salt Lake City, UT 84106
Telephone: (801) 359-2501
Facsimile: (801) 990-4601
lmarcy@aarongianna.com

Attorneys for Level 7 Sports, LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

Level 7 Sports, LLC,
Plaintiff,
v.
Stat University of Utah; Dr. Chris Hill, Athletic
Director in his individual and official capacity;
Ann R. Argust, Associate Athletic Director in
her individual and official capacity; Gordon
Wilson, Associate Vice President, Auditing and
Risk Services in his individual and official
capacity; Brett Eden, Director, Licensing and
Marketing in his individual and official
capacity; Richard Fairchild, Licensing Manager
in his individual and official capacity; Arnie
Combe, Vice-President of Facilities, University
of Utah in his individual and official capacity;
Robert Payne, Associate General Counsel,
University of Utah in his individual and official
capacity,
Defendants.



Case No.:
Judge:

COMPLAINT AND JURY DEMAND


PRELIMINARY STATEMENT

This action results from damages arising from the Defendants misrepresentation, fraud,
detrimental reliance/promissory estoppel, negligence, specific performance, breach of contract,
breach of the covenant of good faith and fair dealing, unjust enrichment, conversion, quantum
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meruit, tortious interference with economic and business relations, accounting and retaliation for
whistleblowing under the federal False Claims Act, all arising from Defendants breach of
Plaintiffs contractual rights or obligations.
In the Summer/Fall of 2011, Level 7 Sports, LLC (Level 7) and Defendants began
discussing the possibility of Level 7 producing and selling clothing to the Utah bookstore. At
that time, Defendants were buying the majority of their goods from companies such as
Champion, Gear, and Under Armour. Level 7 proposed that by buying from Level 7, Defendants
could obtain the same or better quality goods at lower prices yet sell at the same retail cost,
thereby increasing the profits/gross margins of the bookstore and licensing. The University of
Utah Athletic Department would also benefit from the proposed increase in licensing fees (from
the previous ten percent to twenty-five percent). Level 7 relied upon input from the Athletic
Department and its counsel concerning how to proceed generally, and specifically, how to
structure the additional licensing fee arrangement. The Athletic Department and its counsel
advised Level 7 (and Level 7 followed) to donate Level 7s resulting profits to the Department
instead of the Department raising Level 7s licensing fee. Level 7 made the donation as
advised.
Level 7 also discussed with the Defendants a new business concept in which the
Defendants would not buy clothing branded by other companies but, instead, would develop
their own brand. Level 7 proposed calling the new lines Utah Athletic Apparel and cUte
(for women.) Level 7 was involved in all aspects of the brand, including brand name and design
approval. In exchange for developing and promoting those brands, Level 7 would get an
exclusive license to produce and sell goods under the brands to the University and other retail
outlets throughout Utah for five years with an automatic renewal of three years provided there
3

was no material breach. As a result, Defendants instructed Level 7 to begin manufacturing of the
clothing before the agreement was executed. Based on those assurances, Level 7 went forward.
Because of the immediate need for production and looming deadlines, at Defendants
request, and based on Defendants assurances, Level 7 began its performance under the
Agreement. Among other things, Level 7 invested in manufacturing capabilities, marketing
materials, tents, trailers, displays, etc. and retained designers. At Defendants request and with
their help, Level 7 sought and obtained the appropriate licenses for the use of the PAC 12 and U
logos on Utah Athletic Apparel and cUte clothing. While these activities continued forward,
Level 7 drafted a term sheet/letter of intent (LOI) that outlined the agreed-upon terms,
including the five-year period.
Level 7 performed all of its duties under the Agreement. It delivered the goods to
Defendants and paid the associated royalties. By everyones accounts, Level 7s products were
some of the best-selling items in the University bookstore and at the Red Zones stores. Despite
that performance, however, the relationship between Level 7 and the Defendants began to
deteriorate when Level 7 learned about and reported to various administrators certain deals
and relationships at the University that Level 7 deemed inappropriate. When these deals and
relationships were reported to Dr. Hill, he agreed that they were inappropriate and immediately
contacted Vice President Combe expressing his concern. The relationship further deteriorated
when Under Armour began to complain that its products were not selling as well in light of the
Utah Athletic Apparel and cUte brands. Despite Defendants constant interference with its
agreement with Level 7, Level 7 continued to perform under the terms. It designed new
clothing, promoted the Utah Athletic Apparel and cUte brands, and paid royalties at the agreed-
upon rates.
4

Defendants terminated the contract with Level 7 for pretextual reasons, including an
alleged desire to comply with public bidding requirements (which were, at the direction of
Defendants, avoided in the first instance) and a claim that they could make more money with
other suppliers. Not satisfied with only wrongfully terminating Level 7s exclusive license for
the Utah Athletic Apparel and cUte brands (which Level 7 created), Defendants also instructed
licensing companies not to renew Level 7s one-year licenses, thereby making it essentially
impossible for Level 7 to continue in its business, even if only to produce other properly
authorized clothing bearing approved designs to retail outlets across the State.
Level 7 has incurred significant damages as a result of Defendants individual and
collective conduct and actions, including lost profits and costs. Level 7 is seeking punitive
damages against the individual Defendants as well.
JURISDICTION AND VENUE
1. Jurisdiction of this Court is founded in 28 U.S.C. 2201 and 2202, 28 U.S.C. 1331 and
and 28 U.S.C. 1367.
2. Venue as to defendants is proper in the district of Utah, 28 U. S. C. 1391(b), (c), because
the claims arose in the District of Utah, the issues present a federal question, all the
defendants are sued in their individual and official capacities, and their official places of
business are all located within this District.
PARTIES
3. Plaintiff, Level 7 Sports, LLC, is a limited liability company licensed to do business in the
State of Utah.
4. The University of Utah is a state university established by the legislature in 1850. It
provides undergraduate and graduate education to students. It also provides additional
5

activities to these students as well as to the public, such as athletic competitions in the
Pacific Athletic Conference (PAC 12).
5. Dr. Chris Hill is the Athletic Director at the University of Utah and is responsible for all
activities undertaken by that department. He has knowledge of the facts and circumstances
of this case. He is sued in his individual and official capacity.
6. Ann R. Argust is the Associate Athletic Director at the University of Utah. She reports
directly to Dr. Hill and is responsible for all activities undertaken by the Athletic Department
at the University of Utah. She has knowledge of the facts and circumstances of this case. She
is sued in her individual and official capacity.
7. Gordon Wilson is the Associate Vice President of Auditing and Risk Services at the
University of Utah. He has knowledge of the facts and circumstances of this case. He is
responsible for all activities undertaken by the Auditing and Risk Services at the University
of Utah. He is sued in his individual and official capacity.
8. Brett Eden is the Director of Licensing and Marketing Department at the University of Utah.
He has knowledge of the facts and circumstances of this case. He is responsible for all
activities undertaken by the Licensing and Marketing Department at the University of Utah.
He is sued in his individual and official capacity.
9. Richard Fairchild is the Licensing Manager at the University of Utah. He is responsible for
all activities undertaken by the Licensing and Marketing Department at the University of
Utah. He has knowledge of the facts and circumstances of this case. He is sued in his
individual and official capacity.
6

10. Arnie Combe is the Vice-President of Facilities at the University of Utah. He is responsible
for all activities undertaken by the University of Utah. He has knowledge of the facts and
circumstances of this case. He is sued in his individual and official capacity;
11. Robert Payne is the Associate General Counsel of the University of Utah. He is responsible
for activities undertaken by the Legal Department at the University of Utah and also worked
alongside the other Defendants in their dealings with Level 7. He has knowledge of the facts
and circumstances of this case. He is sued in his individual and official capacity.
FACTUAL ALLEGATIONS
12. In the Summer/Fall of 2011, Level 7 Sports, LLC (Level 7) and Defendants began
discussing the possibility of Level 7 producing and selling clothing to the Utah bookstore.
13. At that time, Defendants were buying the majority of their goods from companies such as
Champion, Gear, and Under Armour.
14. Level 7 proposed that, by buying from Level 7, Defendants could obtain the same or better
quality goods at lower prices yet sell at the same retail cost, thereby increasing the
profits/gross margins of the bookstore and licensing. The University of Utah Athletic
Department would also benefit by the proposed increase in licensing fees from the previous
ten percent to twenty-five percent.
15. Level 7 relied upon input from the Athletic Department and its counsel, including Robert
Payne, concerning how to proceed and structure the additional licensing fee arrangement.
Level 7 followed this advice by giving a donation of the resulting profits to the Department
rather than raising the licensing fee.
16. Level 7 also discussed with the Defendants a new business concept in which the Defendants
would not buy clothing branded by other companies but, instead, would develop their own
7

brand. Level 7 proposed calling the new lines Utah Athletic Apparel and cUte (for
women) (sometimes referred to hereinafter, collectively as the Brands).
17. Level 7 was involved in all aspects of the Brands, including brand name and design approval.
18. Level 7 received approval of its brand designs and developments from Ann Argust on behalf
of the Athletic Department.
19. In exchange for developing and promoting those brands, Level 7 would get an exclusive
license to produce and sell goods under the brands to the University and other retail outlets
throughout Utah for five years with an automatic renewal of three years provided there was
no material breach.
20. As a result, Defendants instructed Level 7 to begin manufacturing of the clothing before the
agreement was executed.
21. Brett Eden, the Universitys Director of Licensing and Marketing, assured Level 7 that
Collegiate Licensing Corp. (CLC), the licensing company, worked for and/or was the
subcontractor for the University of Utah; therefore, Defendants controlled the entire licensing
process.
22. Eden stated, at a meeting with Level 7 also attended by Doug Knuth and Ann Lane (the
Bookstores lead buyer and merchandiser), that CLCs licensing process was a mere
formality. As a result, Eden instructed Level 7 to begin manufacturing of the clothing before
the agreement was executed.
23. Based upon those assurances, as well as others contained in emails from Doug Knuth, Ann
Argust, Earl Clegg (the Bookstore manager), and Ann Lane, Level 7 moved forward with
performing its obligations under the Agreement.
8

24. While Level 7 was not new to the clothing business, it was new to the supplier business for a
state agency. As a consequence, Level 7 relied upon the Defendants guidance for, among
other things, obtaining the necessary approvals and completing the required processes to
accomplish the parties goals under their Agreement.
25. Each time Level 7 asked Defendants, it was reassured that the Defendants would walk Level
7 through any necessary approvals.
26. At Defendants request and with their help, Level 7 sought and obtained the appropriate
licenses for the use of the PAC 12 and U logos on Utah Athletics Apparel and cUte clothing.
Defendants helped Level 7 get these licenses, but the agreements themselves were between
Level 7 and LRG or CLC, respectively.
27. While the duration of these licenses were for one year, renewable on an annual basis,
Defendants told Level 7 not to worry about any aspect of the licenses (including the term)
because according to Defendants, LRG and CLC work for us.
28. As part of Level 7s agreement, Defendants told CLC that Level 7 would pay a ten percent
(10%) royalty for the first six (6) months of the agreement with CLC and twelve percent
(12%) thereafter.
29. The percentages were established so that the majority of products sold to the University in
the first season of the Agreement between Level 7 and the University would be made at the
ten percent (10%) royalty rate.
30. Rather than insisting upon a larger royalty, and upon the advice of Defendant Robert Payne,
contained in an email, Defendants asked that Level 7 instead donate money to University
Athletics. Level 7s principal member, who was already a major contributor, complied,
9

making a $50,000.00 donation to the Athletics Department on behalf of Level 7 in the first
year.
31. While discussions continued forward, Level 7 drafted a term sheet/letter of intent (LOI)
that outlined the agreed-upon terms, including the five-year period.
32. All personnel in athletics, licensing and the bookstore agreed that the LOI reflected the terms
of the agreement. Indeed, at least one University representative, Doug Knuth, confirmed that
a minimum five-year contract with an option to extend for another three years was reasonable
in light of the significant investment that Level 7 would have to make in order to start and
grow the business for the benefit of Defendants.
33. Level 7 later learned that Robert Payne, Associate General Counsel of the University had
instructed the Assistant Athletic Director not to sign the LOI so that the arrangement of the
parties would remain confidential.
34. When Level 7 inquired about the instruction, Defendants again reassured Level 7 that it had a
deal with Defendants and that there was nothing to worry about.
35. Because of the immediate need for production and looming deadlines, at Defendants
request, and based on Defendants assurances, Level 7 began its performance under the
Agreement.
36. Among other things, Level 7 invested in manufacturing capabilities in China, marketing
materials, tents, trailers, displays, etc. and retained designers.
37. Level 7 would not have spent the time and money to develop these capabilities and to
promote the brands it created without being reassured by Defendants at every turn that it had
an agreement with Defendants. At each and every step in the process, Defendants told Level
7 how they wanted the company to operate in order to benefit Defendants.
10

38. Level 7 relied upon those assurances and representations in disclosing its ideas (such as the
Utah Athletics and cUte brand names and concepts) and in spending the time, money
and other resources necessary to make the venture a success for all.
39. Level 7 performed all of its duties under the Agreement. It delivered the goods to
Defendants and paid the associated royalties. By everyones accounts, Level 7s products
were some of the best-selling items in the University bookstore and at the Red Zones stores.
40. Despite that performance, however, the relationship between Level 7 and the Defendants
began to deteriorate when Level 7 learned about and reported to various administrators
certain deals and relationships at the University that Level 7 deemed inappropriate.
41. Level 7 twice reported these inappropriate activities to Dr. Chris Hill.
42. When these deals and relationships were reported to Dr. Hill, he agreed that they were
inappropriate and immediately contacted Vice President Combe.
43. Dr. Hill affirmed to Level 7 that he would take care of these matters, meaning that he
would notify Vice President Combe and instruct him to resolve the issue.
44. Dr. Hill failed to notify Combe.
45. When writing orders, Level 7 discovered from Ann Lane, that Utah Athletic Apparel and
cUte branded products could not be sold in the Red Zone store located in Sandy.
46. Upon inquiry, Level 7 learned that Brett Eden, in conjunction with the University of Utah
Bookstore, had given four other vendors three-year exclusive rights to sell products in the
Sandy Red Zone in exchange for providing limited funds for signage and without undergoing
the public Request for Proposal (RFP) process or getting approval from the Universitys
legal department (to determine whether it was legal to accept payment from and give three-
11

year exclusivity contracts to select vendors for approximately $15,000.00 when revenues at
the store exceeded $1.5 million in sales).
47. When Level 7 expressed concern to the University Athletics Department, Doug Knuth called
Robert Payne immediately who stated that he had never heard of such an agreement.
48. Level 7 then went to Dr. Hill who immediately contacted Arnie Combe to investigate the
matter.
49. The following day, Defendants instructed several bookstore managers and the Bookstores
buyer to contact the four vendors and get rid of the side deals. Within two weeks, all four
vendors agreed to walk away from the last remaining year of these side deals. The University
staff had been authorized to pay up to $25,000.00 to buy out these remaining years if
necessary. Earl Clegg was responsible for negotiating these buy-outs.
50. Managers advised each of the four vendors that their agreement was terminated. Several days
later, Level 7 was told the issue had been resolved.
51. Level 7 learned again of inappropriate relationships, this time within the bookstore, and went
to Dr. Hill with its concerns. Again, Dr. Hill contacted Mr. Combe and assured Level 7 that
the matter had been resolved when it had not.
52. The relationship between Level 7 and Defendants further deteriorated when Under Armour
began to complain to Defendants that its products were not selling as well in light of the Utah
Athletics and cUte brands.
53. At the request of Dr. Hill, Level 7 had designed and made an all-black, throwback jersey.
The design of the jersey was cleared through licensing (Brett Eden) and even through the
general counsels office (Robert Payne) to ensure that it would not violate any obligations the
University had to Under Armour. The jersey was approved by Dr. Hill.
12

54. Level 7 was told that Under Armour was particularly upset about black replica jerseys that
Level 7 made and sold. When the black jerseys appeared in the bookstore, Under Armour
complained to the University of Utah, claiming that the latter had breached its contract.
55. Defendants instructed Level 7 to make the jerseys, again reassuring Level 7 (falsely) that the
dispute was resolved.
56. Under Armour continued to protest, however, and Defendants relented.
57. Defendants informed Level 7 that even though Under Armour had no right to stop the
University from selling other jerseys, the University did not want to fight with Under Armour
and, therefore, Level 7 could not sell its black replica jerseys.
58. Defendants continued to placate Under Armour. One of the bookstores bestselling items is
the fan shirt created each year to celebrate the new football season.
59. In Level 7s first year, its fan shirts sold remarkably well even though the University football
team was not particularly strong.
60. Nevertheless, Ann Argust, the Associate Athletic Director, whose husband was (and is) a
coach on the Under Armour-sponsored football team and the Athletic Departments liaison to
Under Armour, bought shirts from Under Armour, instead of from Level 7, which cost more
money per shirt than Level 7s shirts.
61. The University of Utah paid approximately $12.00 per shirt, which was $4.50 more than
what Level 7 had charged the prior season, and bought about 6,000 shirts. In total, this
purchase cost the University of Utah, and consequently, taxpayers, more than $24.000.00.
62. Ann Argust, the Universitys liaison to Under Armour, made the decision to take the team
shirts and sell them directly through the Athletic Department to (a) cut out the bookstore, (b)
maximize profits, and (c) placate Under Armour with an estimated $75,000.00 purchase.
13

63. Level 7 asked Defendants whether an RFP was required for this type of expenditure. This
inquiry was immediately dismissed; Defendants told Level 7 that for Under Armour, we do
not need to.
64. Despite Defendants constant interference with its agreement with Level 7, Level 7 continued
to perform under the terms. It designed new clothing, promoted the Utah Athletics and cUte
brands, and paid royalties at the agreed-upon rates.
65. After only nine months in business, Level 7 received notice of an audit from an auditor
independent of the licensing companies and Defendants.
66. The requested audit was a departure from normal procedures. When Level 7 mentioned the
audit to personnel in the Athletics Department, they, too, acted surprised.
67. Specifically, upon being informed about the audit by Level 7, Dr. Hill replied via email,
This is B.S.
68. Level 7 complied with the audit despite its concerns, confident that it had paid all of the
royalties that were owed (and an additional $50,000 to Athletics).
69. During the audit, the auditor confirmed that the Utah Licensing Department had requested
the audit. He also stated that it was the first time in his lengthy experience that such a small
company, with such a short history serving only one school, had been audited by CLC.
70. At the conclusion of the audit, the auditor determined that Level 7 needed to pay $18,000.00
more in royalties.
71. Level 7 objected to the auditors findings, explaining that the order was placed and filled
within the 10% royalty window (not the 12% window that accounted for the additional
$18,000 allegedly due) but delivery was delayed, at the Universitys request, because,
14

according to Earl Clegg and Ann Lane, the Athletic Department and the University
Bookstore were fighting about revenue from stadium sales.
72. During the duration of this dispute, the merchandise Level 7 had produced pursuant to its
Agreement with the Defendants was stored in a bonded warehouse in Salt Lake City. The
merchandise was ready for delivery; however, the Bookstore contended it could not accept
the merchandise because an order of its size was too large for the Bookstore. These
circumstances required additional storage options to be secured and delayed the ultimate
delivery of the merchandise.
73. Shortly after receiving Level 7s written objection to the audit, Defendants terminated the
contract with Level 7 for pretextual reasons, including an alleged desire to comply with
public bidding requirements (which were, at the direction of Defendants, avoided in the first
instance) and a claim that they could make more money with other suppliers.
74. Significantly, the normal rate of return was twelve (12) percent and Level 7 had returned
twenty (20) to twenty-five (25) percent to the University when the $50,000 donation to
Athletics is included.
75. The termination letter was signed by both Dr.Hill, the Universitys Athletic Director, and
Arnie Combe, Vice President of Facilities.
76. When Level 7 inquired further about the termination letter with Dr. Hill, Dr. Hill indicated
that he was told just to sign the letter and was not given a meaningful opportunity to read
and review it.
77. Dr. Hill also apologized, stating that he was sorry that Level 7 had been improperly treated
for whistleblowing.
15

78. Not satisfied with only terminating Level 7s exclusive license for the Utah Athletic Apparel
and cUte brands (which Level 7 created), Defendants also instructed CLC and LRG not to
renew Level 7s one-year licenses, making it essentially impossible for Level 7 to continue in
this line of business, even if only to produce other properly authorized clothing bearing
approved designs for retail outlets across the state.
79. Several months after terminating the Level 7 agreement, Defendants purpose was revealed:
In the RFP, Defendants took the idea Level 7 brought to the Defendants two years earlier
and put part of it out to bid.
80. The RFP is for a three-year term, (the three remaining on Level 7s wrongfully terminated
agreement), renewable for two additional years absent breach, allowing the recipient to be
the exclusive supplier of Utah Athletics labeled products to the University and other
authorized outlets.
81. The RFP seeks an enhanced royalty (like the 20-25% effective rate that Level 7 had paid
during the time the Defendants honored their agreement with Level 7).
82. Defendants also removed the replica jerseys from the RFP (this was the highest selling
product in all previous years) and, apparently, gave that part of the business exclusively to
Under Armour without a public bidding process.
83. Defendant University also continues to use the infrastructure, signage, tents, and trailers for
which Level 7 paid.
84. Level 7 has incurred significant damages as a result of Defendants individual and collective
conduct and actions.
85. Lost profits from the inception of the contract through the remainder of the five-year period
amount to more than $1,000,000.
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86. The contractual three-year extension, which, given the inevitable success of the venture,
would have been executed, would have totaled $700,000.
87. Further, Level 7 expended significant costs which exceeded $400,000 to establish production
capabilities in China, to retain designers, to purchase and wrap with advertising, trailers,
tents and various point of sale displays.
88. Those damages amount to more than $2 million in damages for the theft of ideas, conversion
of goods and services, fraud, misrepresentation or, in the alternative, breach of contract.
89. Level 7 also seeks punitive damages against the individual Defendants.
COUNT I
Breach of Contract
(Against all Defendants)
90. The preceding paragraphs are incorporated as if fully stated herein.
91. An agreement existed between Level 7 and Defendants whereby in exchange for developing
and promoting the Utah Athletics and cUte (for women) brands (the Brands) for
Defendants, Level 7 would receive an exclusive license to produce and sell goods under the
Brands to the University and other retail outlets throughout Utah for five years with an
automatic renewal of three years provided there was no material breach.
92. Level 7 developed the goods, promoted the Brands, and paid the associated royalties to
Defendants thereby fulfilling its obligations under the agreement. By all accounts, Level 7s
products were some of the best-selling items in the University bookstore and at the Red
Zones stores.
93. Nevertheless, Defendants breached their agreement with Level 7. Specifically, Defendants
breached their agreement with Level 7 when they agreed to give four other vendors three-
year exclusive rights to sell products in the Sandy Red Zone in exchange for those vendors
17

provision of limited funds for signage. Additionally, Defendants breached their agreement
with Level 7 by terminated said agreement prior to conclusion of its term and without just
cause.
94. As a result of Defendants breach, Level 7 suffered damages as set forth more fully below.
COUNT II.
Fraud.
(Against all Defendants)
95. The preceding paragraphs are incorporated herein as if fully set forth herein.
96. Defendants made the following false statements to Level 7 while either knowing of their
falsity or recklessly and without regard to their truth:
a. Defendants falsely promised that, in exchange for developing and promoting the Utah
Athletic Apparel and cUte Brands, Level 7 would receive an exclusive license to produce
and sell goods under the Brands to the University and other retail outlets throughout Utah
for five years with an automatic renewal of three years provided there was no material
breach.
b. Brett Eden, the Universitys Director of Licensing and Marketing, assured Level 7 that
Collegiate Licensing Corp. (CLC), the licensing company, worked for and/or was the
subcontractor for the University of Utah and, therefore, that Defendants in effect
controlled the entire licensing process, thereby making the process a mere formality.
c. As a result of this relationship between the University and CLC, Eden instructed Level 7
to begin manufacturing of the clothing before the agreement was executed.
d. Each time Level 7 asked Defendants about any approvals required or processes to be
completed, Defendants falsely assured Level 7 that Defendants would walk Level 7
through any necessary approvals or processes.
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e. Defendants incorrectly and intentionally told Level 7 not to worry about any aspect of the
licenses with CLC, including the term (which was only for one-year and renewable on an
annual basis) because, according to Defendants, LRG and CLC work for us.
97. The aforementioned statements were made by Defendants concerning important facts and
with the intention that Level 7 would rely upon the statements.
98. Level 7 did, in fact, rely upon Defendants statements.
99. As a result of this reliance, Level 7 suffered the damages set forth below.

COUNT III.
Negligent Misrepresentation.
(Against all Defendants)
100. The preceding paragraphs are incorporated as if fully stated herein.
101. In addition to the false statements set forth in above, Defendants made the following
additional misrepresentations concerning facts that Defendants either knew were false or
made recklessly, knowing that they possessed insufficient knowledge upon which to base
such representations:
a. Level 7 drafted a term sheet/letter of intent (LOI) that outlined the agreed-upon terms
between Defendants and Level 7. All personnel in the Universitys Athletics and
Licensing Departments, and the Bookstore agreed that the LOI reflected the terms of the
parties Agreement. Indeed, at least one University representative, Doug Knuth,
confirmed that a minimum five-year contract with an option to extend for another three
years was reasonable in light of the significant investment that Level 7 would have to
make in order to start and grow the business for the benefit of Defendants. Level 7 later
learned that Robert Payne, Associate General Counsel of the University had instructed
the Assistant Athletic Director not to sign the LOI so that the arrangement between the
19

parties would remain confidential. When Level 7 inquired about the instruction Level 7
was falsely reassured that there was an Agreement between Defendants and Level 7 and
that there was nothing to worry about.
b. Defendants made the foregoing representations for the purpose of inducing Level 7 to act
upon those representations and perform pursuant to the parties Agreement.
102. Level 7 did, in fact, act upon those representations and perform pursuant to the parties
Agreement. Under the circumstances, Level 7 acted reasonably and in ignorance of the
representations falsity.
103. Defendants owed a duty to Level 7.
104. Defendants breached that duty to Level 7.
105. Level 7s injuries were a direct and proximate result of its reliance upon Defendants
misrepresentations.
106. Level 7s actions were induced to act by these misrepresentations.
107. As a result of Defendants conduct, Level 7 was induced to act, and Level 7 was injured
and suffered damages as set forth below.
COUNT IV.
Detrimental reliance/Promissory estoppel.
(Against all Defendants)

108. The preceding paragraphs are incorporated as if fully set forth herein.
109. Because of the immediate need for production and looming deadlines prior to the
execution of the parties written agreement, at Defendants request, Level 7 began its
performance under the Agreement prior to the formal execution of the parties written
agreement.
20

110. This performance included investments and expenditures undertaken by Level 7 pursuant
to the Agreement, including Level 7s investment in manufacturing capabilities in China,
marketing materials, tents, trailers, displays, etc. and retained designers.
111. Level 7 would not have spent the time and money to develop these capabilities and to
promote the Brands it created had it not been reassured repeatedly that an Agreement
existed between Level 7 and Defendants.
112. In further support of the belief that the Agreement existed, Defendants advised Level 7
how Defendants wanted Level 7 to operate in order to benefit Defendants.
113. Level 7 relied upon those assurances, promises, and representations made by Defendants
to its detriment. Specifically, Level 7 relied upon Defendants representations when it
disclosed its Brand ideas and concepts (such as the Utah Athletics and cUte names
and designs) and when it committed to and did spend its time, money and other resources
necessary to make the business venture between Level 7 and Defendants a success for all
parties.
114. Defendants made assurances, promises, and representations to Level 7 about the parties
Agreement and subsequent relationship as set forth above.
115. Defendants were aware of all material facts concerning the parties relationship and
should have reasonably expected that Level 7 would have relied upon those assurances,
promises, and representations and that said assurances, promises, and representations
would have induced Level 7s reliance and/or action.
116. Level 7 relied upon Defendants assurances, promises, and representations and acted
accordingly; Level 7 operated and performed pursuant to the terms of the parties
21

Agreement and engaged openly with Defendants as it concerned the Brand ideas and
concepts developed by Level 7 for use pursuant to the Agreement.
117. Level 7s reliance upon Defendants assurances, promises, and representations directly
resulted in the damages suffered by Level 7 as set forth below.

COUNT V.
Specific Performance.
(Against all Defendants)

118. The following paragraphs are incorporated herein by reference.
119. As set forth in the preceding paragraphs, Level 7 performed in full as per the terms of its
Agreement with Defendants. Defendants, on the other hand, failed to perform as
obligated under the Agreement.
120. Defendants failure to perform was in bad faith and without excuse.
121. Level 7 is entitled to specific performance under the terms of the Agreement.

COUNT VI.
Conversion.
(Against all Defendants)

122. The preceding paragraphs are incorporated as if fully set forth herein.
123. As per the terms of the Agreement between Defendants and Level 7, rather than accept an
increase in licensing fees, Defendants requested that Level 7 donate $50,000.00 to the
Athletic Department.
124. Level 7s principal owner did, in fact, donate $50,000.00 to the Athletic Department on
behalf of Level 7.
125. Level 7 also designed and purchased infrastructure, signage, tents, trailers and various
point of sale displays purchased and wrapped the same with Level 7 designed insignia.
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126. Defendants have not returned the property set forth in the preceding paragraph to Level 7
and continue to wilfully interfere with its return to Level 7. This interference has been
undertaken without lawful justification and has deprived Level 7 of the use and
possession of the money and property described above.
127. Through these acts, Defendants have converted Level 7s property and damaged Level 7
as a result.
128. The measure of damages for the conversion of property is the value of the property at the
time of the conversion, plus interest. Level 7 requests these damages in addition to any
damages requested below.
COUNT VII.
Quantum Meruit/Unjust Enrichment
(Against all Defendants)

129. The preceding paragraphs are incorporated as if fully set forth herein.
130. In the event the factfinder determines that no enforceable written or oral agreement exists
between Defendants and Level 7, then Defendants still have the quasi-contractual duty to
pay the value of the benefits it received from Level 7 so as to avoid Defendants unjust
enrichment.
131. Defendants received the following benefits, among others, from Level 7:
a. Level 7s $50,000.00 donation to the University.
b. The infrastructure, signage, tents, trailers and various point of sale displays
purchased by Level 7 and wrapped with Level 7 designed insignia.
Any and all intellectual property relating to Level 7s Utah Athletic Apparel and
cUte Brands.
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132. Defendants had the appreciation and knowledge of the benefits conferred upon them by
Level 7.
133. Defendants accepted the benefits conferred by Level 7 without compensating Level 7 for
these benefits. Under these circumstances, it would be inequitable for Defendants to
retain these benefits without payment for their value because this would result in
Defendants unjust enrichment.

COUNT VIII.
Constructive Trust.
(Against all Defendants)

134. The preceding paragraphs are incorporated as if fully set forth herein.
135. Defendants have been unjustly enriched through the acquisition of Level 7s material
property and ideas through the fraudulent and coercive conduct set forth above.
136. Accordingly, Level 7 is entitled to a constructive trust concerning that property
wrongfully in Defendants possession and rightfully belonging to Level 7, including,
without limitation, the trailers, tents and various point of sale displays that were
purchased and wrapped with Level 7 designed insignia, and any Level 7 produced
products remaining in Defendants possession.
COUNT IX.
Accounting.
(Against all Defendants)

137. The preceding paragraphs are incorporated as if fully set forth herein.
138. Defendants failed to pay money owed to Level 7 under the terms of the parties
agreement.
139. To this end, Defendants have unjustly retained funds to which they were not entitled.
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140. Defendants failed to disclose the accurate number of products sold to avoid paying Level
7 the full amount of money owed to it under the terms of the parties agreement.
141. Accordingly, Level 7 is entitled to an accounting from Defendants concerning the money
owed to it pursuant to the terms of the parties agreement.
COUNT X.
Tortious Interference with Economic and Business Relations.
(Against the individual Defendants)

142. The preceding paragraphs are incorporated as if fully set forth herein.
143. Defendants wrongfully terminated their exclusive licensing agreement with Level 7
concerning the Brands created by Level 7.
144. Thereafter, and with no legitimate purpose other than to injure Level 7, Defendants
instructed CLC and LRG not to renew Level 7s one-year licenses.
145. CLC and LRG adhered to Defendants instructions and refused to renew Level 7s
licenses.
146. Level 7s inability to renew its licenses made it impossible for Level 7 to conduct this
line of business, even if only to produce other properly authorized clothing bearing
approved designs to retail outlets across the state.
PRAYER FOR RELIEF.

WHEREFORE, Level 7 prays as follows for an award of damages for:
a. Lost profits from the inception of the contract through the remainder of the five-
year period amounting to more than $1,000,000.
b. The liquidated amount for the three-year contractual extension, which, given the
inevitable success of the venture, would have been executed, amounting to
$700,000.
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c. The amounts expended by Level 7 to establish production capabilities in China, to
retain designers, to purchase and wrap with advertising, trailers, tents and
various point of sale displays amounting to $400,000.
These damages amount to more than $2 million in damages for the theft of ideas, conversion of
goods and services, fraud, misrepresentation or, in the alternative, breach of contract.
d. punitive damages from the individual Defendants for their willful and wanton
conduct as alleged herein.

REQUEST FOR JURY.

Level 7 requests a trial by jury.

DATED this
16th
day of May, 2014.

AARON & GIANNA, PLC



/s/ Lisa A. Marcy___________
Lisa A. Marcy

Plaintiffs address:

c/o Aaron & Gianna, PLC