MINNIE SARWAL VS. NEPHROSANT, INC.

On or about August 26, 2020, Dr. Sarwal also executed an Executive Employment Agreement with the NephroSant, by which Dr. Sarwal would continue to serve as the company’s Chief Executive Officer (“CEO”) and President. At the time, Dr. Sarwal represented that her employer, UCSF, is not competitive with the company, and that her role with UCSF would not conflict with, or restrict her ability to perform, her obligations to the company. The Executive Employment Agreement reiterated Dr. Sarwal’s confidentiality obligations and obligated Dr.

Sarwal to, among other things, (i) perform her duties faithfully and to the best of her ability; (ii) not actively engage in any other competing employment, occupation, or consulting activity for any direct or indirect remuneration without providing notice to the company’s Board (with the exception of her ongoing professorship and associated duties at UCSF); (iii) immediately notify the company of any conflict or potential conflict with her services or duties to the company or the company’s business interests that may arise in her role as a professor and/or faculty member at UCSF; and (iv) not conduct any services for UCSF while on the company worksite or use any company equipment to conduct any work for UCSF unless such work relates to ongoing collaborations or grants between the Company and UCSF. (SACC, ¶ 6.)

In October 2020, NephroSant raised $16 million in Series funding round. (SACC, ¶ 8.) On October 29, 2020, in connection with the Series funding, Dr. Sarwal and NephroSant executed an Indemnification Agreement requiring NephroSant to indemnify Dr. Sarwal in certain situations, including if she is party in "Proceeding” – provided she acted in good faith with regard to any underlying actions – and if Dr. Sarwal is witness to a proceeding to which she is not a party. (O’Brien Decl., Ex. A, Plaintiff’s Delaware Complaint, ¶ 7, Ex. A.)

In January 2022, there was discussion between the NephroSant Board of Directors and Dr. Sarwal regarding whether Dr. Sarwal would step down as CEO of NephroSant, become NephroSant's Chief Science Office, and become CEO of new entity that would focus on different products. (SACC, ¶ 10.)

On March 11, 2022, Dr. Sarwal and NephroSant executed "Transition Agreement." (SACC, ¶ 12.) Dr. Sarwal alleged she was forced to sign the Transition Agreement. (O’Brien Decl., Ex. A, ¶ 12.) The Transition Agreement provide for severance benefits for Dr. Sarwal depending on the circumstances of the her termination and subject to fulfillment of certain terms and conditions. (SACC, ¶ 15.) The Transition Agreement provided if NephroSant terminates Dr. Sarwal other than for cause, or if Dr. Sarwal resigns for good reason, NephroSant will make specific payment to Dr. Sarwal and extend of her "Option." (SACC, ¶ 16.)

The Confidentiality Agreement, Executive Employment Agreement, and Transition Agreement are governed by California law. (SACC, ¶ 19.)

In April 2022, NephroSant's new CEO, Mr. Capone, reported to the NephroSant Board he had received complaints from unnamed employees about concerns relating to clinical validations of the QSant Test – specially to the manner in which Dr. Sarwal had, unbeknownst to the Board and senior management, modified the procedure for performing the QSant Test that was represented to regulators and to physicians who purchased the QSant Test. (SACC, ¶ 21) The Board formed Special Committee to conduct an investigation. (SACC, ¶¶ 22-23.) The Special Committee began its investigation, asked Dr. Sarwal questions and requesting that Dr. Sarwal produce documents related to its investigation. (SACC, ¶ 24.)

May 8, 2026 Law and Motion Calendar PAGE 10 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ Defendant alleges that, in response, Dr. Sarwal “began a mass and wholly unauthorized download of tens of thousands of NephroSant’s files, many of which, on information and belief, contained the Company’s proprietary and confidential data” and “then ‘double-deleted’ approximately 15,000 company documents by first deleting them and then emptying the ‘trash bin’ such that the Company could not access them permanently.” (SACC, ¶¶ 25, 26.)

On April 26, 2022, NephroSant placed Dr. Sarwal on administrative leave. (SACC, ¶ 33.) NephroSant alleges that it placed Dr. Sarwal on leave after it discovered that Dr. Sarwal had downloaded, deleted, and refused to return NephroSant's data and documents in response to the investigation. (SACC, ¶¶ 32-33.)

On February 21, 2023, Plaintiff brought two actions against Nephrosant. One action was filed in arbitration in California and arose out of Plaintiff’s alleged entitlement to severance following her resignation from employment (the “California Severance Action”). On the same day, Plaintiff filed an action in Delaware seeking indemnification for attorneys’ fees she incurred in connection with the investigation that was conducted into her misconduct while serving as Chief Executive Officer of Nephrosant (the “Delaware Indemnification Action”).

PROCEDURAL BACKGROUND

Delaware Action

Dr. Sarwal’s Delaware lawsuit set forth a claim for indemnification and advancement for the fees and expenses that Dr. Sarwal incurred in connection with the Special Committee’s investigation. (O’Brien Decl., Ex. A., Plaintiff’s Delaware Amended Complaint.)

In response, NephroSant filed counterclaims in the Delaware Case. (Decl. at Ex. B, Defendant’s Delaware Answer and Counterclaims). The counterclaims expanded the scope of the Delaware dispute by seeking claims for (i) breach of fiduciary duty (Id., Ex. B, Count 3, ¶¶ 66-69) and (ii) a declaration that any indemnification payment owed to Dr. Sarwal should be offset against a debt that Dr. Sarwal supposedly owes the Company under a partial recourse note. (Id., Ex. B, Count 2, ¶¶ 60-65.)

The Delaware action is presently set for trial on May 26-27, 2026. (Caplan Decl., ¶ 3.)

California Action

The arbitration action was moved to this Court on September 16, 2024, when Dr. Sarwal filed her complaint for claims for breach of contract and unpaid wages under California’s labor code.

Defendant NephroSant filed crossclaims for: 1) Declaratory Relief (including right set offs); 2) Breach of Contract; 3) Misappropriation of Trade Secrets; 4) Unauthorized Computer Access and Fraud; 5) Computer Fraud and Abuse Act; 6) Conversion; 7) Breach of Fiduciary Duties; 8) Unfair Competition; 9) Tortious Interference with Prospective Economic Advantage. (See Defendant’s Second Amended Cross- Complaint (“SACC”).)

LEGAL STANDARD

"When an action is brought in a court of this state involving the same parties and the same subject matter as an action already pending in a court of another jurisdiction, a stay of the California proceedings is not a matter of right, but within the sound discretion of the trial court" (Farmland Irr. Co. v. Dopplmaier (1957)

May 8, 2026 Law and Motion Calendar PAGE 11 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ 48 Cal.2d 208, 215; See also Code Civ. Proc., § 418.10, subd. (a).) The determination of whether to stay the case must be raised by motion and should take into consideration matters outside the pleadings (Leadford v. Leadford (1992) 6 Cal.App.4th 571, 575.) The assumption underlying most California authorities supporting issuance of a stay is that "the two related lawsuits are between the same or substantially identical parties" and involve substantially identical issues (Gregg v. Superior Court (1987) 194 Cal.App.3d 134, 137.)

In exercising its discretion to grant a stay where issues in two actions are substantially identical, the Court may consider the importance of discouraging duplicative litigation, avoiding conflicts with other state courts, preserving judicial and party resources, and the stage of proceedings in the other state court, among other factors. (St. Paul Fire & Marine Ins. Co. v. AmerisourceBergen Corp. (2022) 80 Cal.App.5th 1, 13-14.)

ANALYSIS

The Delaware and California Actions Are Between Substantially Similar Parties and Involve Substantially Similar Issues

Plaintiffs allege that Defendant’s counterclaims in the Delaware action rely on five core factual theories:

(1) Dr. Sarwal took and refused to return thousands of Nephrosant’s confidential files;

(2) Dr. Sarwal misrepresented the nature of the Nephrosant QSant test to the board and investors;

(3) Dr. Sarwal attempted to thwart a Special Committee’s investigation into her conduct;

(4) Dr. Sarwal frustrated Nephrosant’s ability to study the data and revalidate the QSant test; and

(5) Dr. Sarwal owned Nephrosant funds under a Partial Recourse Note that would entitle Nephrosant to an “offset” even if she prevails with her own claim;

(MPA, p. 1.) Indeed, Defendant’s crossclaims and trial brief in the Delaware action demonstrate Defendant’s reliance on those five core issues. (O’Brien Decl., Ex. B, Defendant’s Delaware Answer and Crossclaims, ¶¶ 61-65, 68; O’Brien Decl., Ex. C, Defendant’s Delaware Pretrial Brief, pp. 1-2, 9-13.)

Plaintiffs further allege that Defendant raises the same exact breach of fiduciary duty cross claim in the Delaware and California actions, and that D relies on the same core factual theories for all nine of its California cross claims. (MPA, p. 1.) Indeed, in this action, Defendant accuses Dr. Sarwal of:

(1) a “mass and wholly unauthorized download of tens of thousands of Nephrosant’s files, many of which, on information and belief, contained the Company’s proprietary and confidential data.” (SACC at ¶ 25-36 [see COA 1-9].);

(2) “misrepresenting the nature of the QSant test...to the Board, to investors” and others. (SACC, ¶ 85 [see COA 1-2, 6-7, 9].)

(3) “repeatedly interfer[ing] with the Investigation” (SACC, ¶ 41 [see CA COA 1-2, 7- 9].);

May 8, 2026 Law and Motion Calendar PAGE 12 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ (4) “repeatedly interfer[ing]” with “the Company’s efforts to revalidate the QSant test.” (SACC, ¶ 41 [see CA COA 1-3, 6, 7-9[.); and

(5) owing Nephrosant funds for a “set off” under a Partial Recourse Note if Dr. Sarwal establishes her offensive claim. (SACC, ¶ 51 [see CA COA 1].)

Defendant does not dispute reliance on the five factual theories identified by Plaintiffs. Rather, Defendant alleges that its counterclaims in this action rely on at least ten (10) other factual issues that are “not pursued” to the Delaware action. (Oppo., p. 9:21-22.) Defendant alleges, among other things, that Dr. Sarwal had employment obligations to Nephrosant that she breached and that impact her ability to collect a severance, including that Dr. Sarwal:

• was performing work for UCSF while using Nephrosant’s personnel and equipment; • did not secure a leave of absence from UCSF as required • induced Nephrosant employees to breach their obligations to Nephrosant; • hindered fundraising efforts to potential investors; • used Nephrosant’s assets and proprietary information to solicit investors for other ventures while employed by Nephrosant; and • diverted funding from Nephrosant.

(Oppo., p. 9:21-10:1.)

Defendant assert that these breaches are “not central” to the Delaware action. Plaintiffs dispute that assertion and counter that Nephrosant alleges in Delaware that “Dr. Sarwal knowingly violated [her employment] agreements” and that these breaches “negate[] her entitlement to indemnification[.]” (Reply, 3:11-17; O’Brien Decl., Ex. C, Defendant’s Delaware Pretrial Brief, pp. 21-22.) Regardless, many of these other factual issues are issues that appear likely to be presented in trial in the Delaware action.

The Court finds that the five core factual theories relevant to the Delaware case (listed above) are, together, central to Defendants counterclaims in this action. Thus, the Court finds that Defendants counterclaims here involve substantially identical issues as Defendants counterclaims in the Delaware action.

Similarly, the Court finds that the two actions involves substantially similar parties and claims. Defendant’s counterclaims are primarily against Dr. Sarwal. Her son, Rueben Sarwal – named as Cross- Defendant here but not in the Delaware action –is simply alleged to have assisted Dr. Sarwal in copying, taking, deleting, and destroying data from a Nephrosant computer and improperly copying, using, and otherwise misappropriating Nephrosant’s trade secrets. (See SACC, ¶ 59-72 [COA 3 and 4].)

A Stay in This Action Is Appropriate

California courts explicitly consider "the stage to which the proceedings in the other court have already advanced" when deciding whether to grant a stay of California proceedings in favor of litigation pending in another jurisdiction. (Farmland, supra, 48 Cal.2d at 215.)

Here, the Delaware trial is scheduled to commence in the very near future, on or about May 26-27, 2026, after having been recently continued from December of 2025. That is less than three weeks away. While Defendants crossclaims here may involve some additional issues, the significant overlap core issues that

May 8, 2026 Law and Motion Calendar PAGE 13 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ will likely be decided on following the Delaware trial, supports a stay in this action. The determination of those issues will narrow the issues and claims in this action and allow the parties, and the Court, identify what undetermined issues remain and whether those issues are precluded from moving forward in this action. Defendant argues that Nephrosant will be harmed by a stay. Defendant explains that:

The absence of [materials improperly taken and altered or destroyed by Defendants] has had a direct impact on Nephrosant’s operations. Without access to the missing data, Nephrosant has been unable to operate its business. (Colucci Dec., ¶ 6.) Cross-Defendants’ misconduct has imposed substantial burdens on the company, including delays in development and the need to recreate work that had already been completed at substantial cost, and the loss of significant time, to the Company. (Colucci Dec., ¶ 7.)

Nephrosant’s inability to access its data continues to affect its ability to operate and move its business forward. (Colucci Dec., ¶ 8.) Ongoing litigation also prevents Nephrosant from obtaining investment as investors are scared off by the pending litigation and related costs, and can be concerned with Cross-Defendants’ misappropriation of Nephrosant’s trade secrets and proprietary information. (Colucci Dec., ¶ 9.) (Oppo., p. 6:14-22.)

Defendants argument concerning harm focuses primarily on harm caused by Plaintiffs’ actions giving rise to this litigation, not harm that would be incurred as the result of a stay here. Defendant argues that investors are scared off by the pending litigation and related costs. However, given the substantially identical issues in the Delaware case, a stay in this action would curb litigation costs for the time being and may significantly narrow the issues and claims to be decided in this action.

Defendant has not established that a stay here would cause undue harm, much less undue harm that outweighs the compelling interests conserving judicial resources, avoiding conflicts with courts of other states, and discouraging duplicative litigation by staying this case where a case in another state with substantially identical parties and issues is set for trial in less than three weeks. (St. Paul Fire, supra, 80 Cal.App.5th at 13-14.)

Accordingly, Plaintiff’s Motion to Stay is GRANTED until the Delaware case reaches a final Judgment, or further Order of this Court.

As a result, the Court is vacating the hearings on both the Defendant’s Motion to Compel Production of Documents from non-party UCSF and the related Motion to Quash subpoena to non-party UCSF, without prejudice to said motions being re-noticed once the stay is lifted. The Case Management Conference scheduled for June 8, 2026 is also continued for a status update to November 9, 2026 at 9:00 a.m. still in Dept. 20, Courtroom L in the Northern Branch.

Any party who contests a tentative ruling must email Dept20@sanmateocourt.org with a copy to all other parties by 4:00 p.m. stating, without argument, the portion(s) of the tentative ruling that the party contests.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, Counsel for the prevailing party shall prepare for the Court’s signature a written order consistent with the Court’s ruling pursuant to CRC Rule 3.1312 and provide written notice of the ruling to all parties who have appeared in the action, as required by law and by the CRC. Please note that Local Rule 3.403(b)(iv) states in part “prevailing party on a tentative ruling is required to prepare a proposed order REPEATING VERBATIM the tentative ruling” (emphasis added). The order should be filed or e-filed only, do not email or mail a hard copy to the Court.