PennyMac Litigation
On November 5, 2019, Black Knight Servicing Technologies, LLC (“BKST”), an indirect, wholly-owned subsidiary of Black Knight, filed a Complaint and Demand for Jury Trial (the “Black Knight Complaint”) against PennyMac Loan Services, LLC (“PennyMac”) in the Circuit Court for the Fourth Judicial Circuit in and for Duval County, Florida. The Black Knight Complaint includes causes of action for breach of contract and misappropriation of MSP® System trade secrets in order to develop an imitation mortgage processing system intended to replace the MSP® System. The Black Knight Complaint seeks damages for breach of contract and misappropriation of trade secrets, injunctive relief under the Florida Uniform Trade Secrets Act and declaratory judgment that BKST owns all intellectual property and software developed by or on behalf of PennyMac as a result of its wrongful use of and access to the MSP® System and related trade secret and confidential information. PennyMac filed a motion to compel arbitration of the action, and the trial court granted the motion on April 6, 2020. The trial court’s order compelling arbitration was confirmed by the Florida First District Court of Appeal on January 6, 2021. On February 17, 2022, Black Knight filed an amended arbitration demand and PennyMac filed an answering statement on March 2, 2022.
Shortly after the filing of the Black Knight Complaint, on November 6, 2019, PennyMac filed an Antitrust Complaint (the “PennyMac Complaint”) against Black Knight in the United States District Court for the Central District of California. The PennyMac Complaint included causes of action for alleged monopolization and attempted monopolization under Section 2 of the Sherman Antitrust Act, violation of California’s Cartwright Act, violation of California’s Unfair Competition Law and common law unfair competition under California law. The PennyMac Complaint sought equitable remedies, damages and other monetary relief, including treble and punitive damages. Generally, PennyMac alleged that Black Knight relies on various anticompetitive, unfair and discriminatory practices to maintain and to enhance its dominance in the mortgage servicing platform market and in an attempt to monopolize the platform software applications market. Black Knight moved to dismiss the PennyMac Complaint or have the action transferred to Florida based upon a forum selection clause in the agreement with BKST. On February 13, 2020, the judge granted Black Knight's motion to transfer the case to Florida and denied as moot the motion to dismiss. On April 17, 2020, PennyMac filed a notice of dismissal of this action without prejudice and indicated that they intended to bring the claims raised in the dismissed PennyMac Complaint as defenses, third party claims and/or counterclaims in arbitration. On April 23, 2020, the court entered an order dismissing the action without prejudice and directing that the clerk close the case. On April 28, 2020, PennyMac submitted this matter to the American Arbitration Association ("AAA") for arbitration. The arbitrator was confirmed by the AAA on July 21, 2020. On February 17, 2022 PennyMac filed an amended arbitration demand and Black Knight filed an answering statement on March 2, 2022.
The arbitrator set Black Knight's trade secret case for a 10-day final hearing beginning on January 9, 2023 and set PennyMac's antitrust case for a 10-day final hearing beginning on January 23, 2023.
As these cases continue to evolve, it is not possible to reasonably estimate the probability that we will ultimately prevail on our lawsuit or be held liable for the violations alleged in the PennyMac Complaint, nor is it possible to reasonably estimate the ultimate gain or loss, if any, or range of gain or loss that could result from these cases.
ICE Transaction Litigation
Following the announcement of the ICE Transaction, five complaints (the “Complaints”) were filed by purported stockholders of Black Knight against Black Knight and the members of the Black Knight Board of Directors, captioned Ryan O’Dell v. Black Knight Inc., et al., Civil Action No. 1:22-cv-05715 (United States District Court for the Southern District of New York (“S.D.N.Y.”) July 5, 2022), Donald Konrad v. Anthony M. Jabbour et al., Civil Action No. 16-2022-CA-004961 (Circuit Court of the 4th Judicial Circuit in and for Duval County, Florida (“Fla. Cir. Ct.”) August 22, 2022), Robert Wilhelm v. Black Knight, Inc. et al., Civil Action 1:22-cv-01145 (United States District Court for the District of Delaware (“D. Del.”) August 31, 2022), Jacob Wheeler v. Black Knight, Inc. et al., Civil Action 1:22-cv-07448 (S.D.N.Y. August 31, 2022) and Christopher Taylor v. Black Knight, Inc. et al., Civil Action 1:22-cv-07528 (S.D.N.Y. September 2, 2022). In addition, Black Knight received demand letters from counsel representing purported individual stockholders of Black Knight (the “Demand Letters” and, together with the “Complaints,” the “Matters”). The Matters allege, among other things, that the defendants caused a materially incomplete and misleading proxy statement relating to the ICE Transaction to be filed with the SEC in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended, and/or in breach of their obligations under state law. The Matters sought an injunction barring the ICE Transaction, rescissory damages in the event the ICE Transaction had been consummated, other unspecified damages and payment of the plaintiff’s costs and disbursements, including attorneys’ fees and expenses. As of the date of this