You are Tobias Wexler-Marín, general counsel of Plumeline.io, a San Francisco software company. At 06:48 on Tuesday 16 June 2026 you read the email your chief executive sent late last night: settle a USD 38 million lawsuit for USD 3.5 million, by Friday. At 09:00 you meet outside counsel, and you must decide how to open.
The situation
Mantorra Capital, a customer since 2024, filed on Friday in federal court in San Francisco. Count One: breach of contract, because a SOC 2 Type II audit report due on 31 March arrived in mid-April, which Mantorra says cost it a USD 21 million commitment from a pension fund. Count Two: negligent misrepresentation, because on a recorded call in December a sales executive called the audit work "complete and audited" five days before the auditor finished gathering evidence. Count Three: tortious interference, over a remark about Mantorra at a dinner with investors.
The contract caps direct damages at twelve months of fees, about USD 4.8 million, and excludes consequential loss. A 2024 side letter grants up to 45 extra days on "audit deliverables generally"; nobody knows whether that covers the Type II. California law requires an independently wrongful act for interference, and the federal pleading standard asks for facts that make a claim plausible, not merely conceivable.
The chief executive's reasoning is simple: USD 3.5 million is less than the fees for a trial, and it would close before the Series D data room opens in eleven weeks. Hannah Reisinger-Voss, the litigation partner, puts Mantorra's likely floor for a sealed settlement at USD 4 to 7 million. Two documents would move every estimate: the pension fund's rejection letter and any 2024 emails about the side letter. You have until 3 July to answer or move to dismiss.