Sep 19, 2014

TENTATIVE RULINGS

LAW & MOTION CALENDAR

Wednesday, September 17, 2014, 3:00 p.m.

Courtroom 16 – Judge Elliot Lee Daum

3035 Cleveland Avenue, Suite 200, Santa Rosa

 

 

CourtCall is available for all Law & Motion appearances, EXCEPT parties in small claims cases and motions for claims of exemption which are mandatory appearances.   Please contact CourtCall directly at (888) 882-6878.

 

The following tentative rulings will become the ruling of the Court unless a party desires to be heard.  If you desire to appear and present oral argument as to any motion, YOU MUST notify the Court by telephone at (707) 521-6547, and all other opposing parties of your intent to appear by 4:00 p.m. today, Tuesday, September 16, 2014.  Parties in small claims cases and motions for claims of exemption are exempt from this requirement

1. SCV-254684; GC Micro Corp v. Brown

 

**See bottom of page for footnotes**

 

Motion for Summary Judgment
The Defendants’ Motion for Summary Judgment, or in the alternative Summary Adjudication, is premised on two grounds.[1]  (A) The Defendants contend that the Plaintiff has failed to adequately identify the trade secrets in question under CCP § 2019.210.  The Defendants argue that the Plaintiff’s failure to specifically identify the trade secrets, and the Plaintiff’s alleged obstreperous approach to discovery, entitles the Defendants to summary judgment. (B) The Defendants contend that the Plaintiff’s Second Cause of Action for Breach of Contract is unenforceable, as its terms violate public policy.  In particular, the Defendants assert that the Agreements entered into by the individual Defendants include restrictions that are against California public policy, i.e. BP § 16600.  The Defendants contend that this illegality voids the Agreements in their entirety.

 

(A) Specification of Trade Secrets

The adequacy of the Plaintiff’s CCP § 2019.210 disclosure is a distinct question from whether there are material issues of fact in dispute with respect to the allegations that the Defendants misappropriated the Plaintiff’s trade secrets.  On this point, Brescia v. Angelin [(2009) 172 Cal.App.4th 133, 151, fn. 2] is instructive.  There, the court held that: “Whether a trade secret plaintiff has introduced sufficient evidence to create a triable issue in a summary judgment proceeding is a different question from whether the claimant has adequately identified the trade secret under section 2019.210 so as to be permitted to proceed with discovery.”

 

At this juncture “. . . The proponent of the alleged trade secret is not required, on pain of dismissal, to describe it with the greatest degree of particularity possible, or to reach such an exacting level of specificity that even its opponents are forced to agree the designation is adequate.  What is required is not absolute precision, but ‘reasonable particularity.’”

 

Advanced Modular, 132 Cal.App.4th at 835–36, 33 Cal.Rptr.3d 901.  Finally, a trade secret identification should be liberally construed and reasonable doubts about its sufficiency should be resolved in favor of allowing discovery to go forward.  (See Brescia v. Angelin (2009) 172 Cal.App.4th 133, 149.)

 

The Defendants citation to Pixion, Inc. v. PlaceWare, Inc. [(2005) 421 F.Supp.2d 1233] is not pursuasive.  The plaintiff in Pixion specifically “expressly represented to the Court and parties that its § 2019(d) statement was a complete statement of the secrets.” (Id. at 1242.)  Here, the Plaintiff has not made such a representation.  Moreover, despite the plaintiff in Pixion’s failure to include additional trade secrets in its disclosures, the court found that the defendant was not entitled to summary judgment on several of the claims.  So, Pixion does not categorically stand for the proposition that an inadequate CCP § 2019.210 disclosure entitled the Defendants to summary judgment.

 

The Defendants present no controlling legal authority for the proposition that a discovery dispute between the parties entitles one of the parties to summary judgment.  Indeed, the Defendants do not cite a single case that provides for such an outcome.  The court notes that the Defendants did not challenge the objections and responses through the remedies afforded them in the Discovery Act.  The burden on summary judgment is to demonstrate that there are no material issues of fact in dispute, and that the movant is entitled to judgment as a matter of law.  

 

Here, the Defendants are seeking what amounts to terminating sanctions for failure to produce adequate responses to discovery.  The Defendants cannot be entitled to summary judgment on these grounds, and their motion is therefor denied.

 

(B) Contract Claims

The gravamen of the Plaintiff’s contract claims is the misappropriation of trade secrets and the “anti-raiding” provision—specifically ¶¶ 1-3, and 5.  With this backdrop, the Defendants contend that the agreements entered into between the parties are void as they include provisions that violate California statute and stated public policy.  In particular, the Defendants contend that the covenant not to compete and the covenant not to solicit employees, located at ¶¶ 4 and 5 respectively, violate BP § 16600.[2]

 

The Defendants’ contentions with respect to ¶ 4 are inapposite.  First, the Plaintiff does not allege a violation of ¶ 4.  There is simply no reason to adjudicate whether the Plaintiff can allege a cause of action based on the breach of this particular provision.

 

The Defendants contend that the court must find the entire agreement to be void should it find any part of it void under BP § 16600.[3]  If the entire agreement, including provisions pertaining to confidentiality, non-solicitation, is unenforceable, the Defendants would be entitled to summary adjudication on the Second Cause of Action.  In support of their contention that the entire agreement is void, Defendants relies primarily upon Kolani v. Gluska [(1998) 64 Cal.App.4th 402].  In that case, the court held a broad covenant not to compete void under section 16600.  Plaintiffs-appellants urged the court to “save” the non-compete clause by construing it as merely barring misappropriation of confidential customer lists and trade secrets.  (Id. at 406.)  The language of the clause did not contain any reference to confidential customer lists or trade secrets but, rather, broadly prohibited the employee from “compet[ing] in any manner” with the employer within a 40 mile radius of Van Nuys, California. (Id. at 405.)  The court declined to “rewrite the broad covenant not to compete into a narrow bar on the theft of confidential information,” holding that doing so would undermine the policy of section 16600:

 

Employers could insert broad, facially illegal covenants not to compete in their employment contracts.  Many, perhaps most, employees would honor these clauses without consulting counsel or challenging the clause in court, thus directly undermining the statutory policy favoring competition.  Employers would have no disincentive to use the broad, illegal clauses if permitted to retreat to a narrow, lawful construction in the event of litigation.  Id. at 407, 75 Cal.Rptr.2d 257.

 

Defendants urge that the same rationale and result should apply to the instant case, arguing that this court should void the entire employment agreement.  This harsh remedy is inappropriate for several reasons.  Firstly, it contradicts BP §16600's plain language concerning the extent to which a contract is to be considered void: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”  (emphasis added).  Secondly, nowhere does the Kolani court even suggest that the entire agreement must be voided.  The Kolani court's analysis was focused only upon enforcement of section 6 of the agreement, the covenant not to compete.  (See 64 Cal.App.4th at 406–07.)  Thirdly, the clause at issue in Kolani did not contain language addressing confidential customer lists and trade secrets; plaintiffs-appellants were asking the court to completely rewrite the provision.  (See Kolani, 64 Cal.App.4th at 405, 407.)

 

The anti-raiding covenant is a closer question.  The court’s treatment in Loral Corp. v. Moyes [(1985) 174 Cal.App.3d 268] is instructive.  In Loral, the California Court of Appeal upheld the validity of a provision prohibiting a former employee from “raiding” the company's employees. Id. at 274, 279–80.

 

We need not and do not decide whether this noninterference contract would unreasonably and illegally restrain trade if applied to other conduct at another time.  We determine only that there is no statutory problem in applying it to Moyes' conduct within a year of its execution. This restriction only slightly affects Conic employees.  They are not hampered from seeking employment with Aydin nor from contacting Moyes.  All they lose is the option of being contacted by him first.  It does not restrain them from being employed by Aydin, contrary to defendant's argument.  Equity will not enjoin a former employee from receiving and considering applications from employees of his former employer, even though the circumstances be such that he should be enjoined from soliciting their applications.

 

Id. at 279–80 (citation omitted).

 

The Loral court appears to have considered the “no raiding” clause to be equivalent to a “no solicitation” clause rather than a “no hire” clause—and thus enforceable.  

 

Accordingly, the Motion for Summary Judgment/Adjudication is denied in its entirety.

 

Plaintiff’s Motion toCompel

The Plaintiff has filed a motion to compel discovery, specifically the Plaintiff seeks to compel responses to Document Requests Nos. 46, 53, and 54.  Additionally, the Plaintiff is seeking responses to certain deposition questions posed to Defendant Trivad’s CEO Jenna Lim.  The discovery in question relates directly to the finances of Defendant Trivad.  In particular, the discovery seeks, among other things, all of Trivad’s financial statements for the last five years, and information related to the proportion of private v. public entity revenues.  Further, the discovery seeks information realted to the top quarter of Trivad’s customers by revenue. The Plaintiff argues that it needs this discovery to demonstrate the benefit Defendant Trivad has gained from the alleged misappropriation of Plaintiff’s trade secrets.  In essence, the Plaintiff contends that the financial information may show that Trivad’s sales (and sales to particular customers) increased greatly, especially to Plaintiff’s customers.

 

Trivad opposes, arguing that the information sought by the discovery is protected by privacy rights, in that Trivad is a closely held corporation.  Further, Trivad argues that the information sought is, itself, trade secrets of Trivad.  Moreover, Trivad argues that the information sought is not relevant, and will not lead to admissible evidence.

 

The crux of this motion is whether Defendant Trivad may refuse to respond to the discovery on privacy grounds.  The Plaintiff contends that Trivad, as a corporation does not have a right to privacy.  (Citing Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770.)  

 

The right of privacy contained in the California Constitution (Art. 1, § 1) is limited to “people,” meaning natural persons: “(T)he constitutional provision simply does not apply to corporations.” (Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791, 796–797.)

 

Even so, some privacy protection exists for artificial business entities, apart from its members or shareholders: “(T)he nature and purposes of the corporate entity and the nature of the interest sought to be protected will determine the question whether under given facts the corporation per se has a protectible privacy interest . . . Two critical factors are the strength of the nexus between the artificial entity and human beings and the context in which the controversy arises.”  (Roberts v. Gulf Oil Corp., supra, 147 Cal.App.3d at 796–797 [emphasis added]; see also Ameri-Medical Corp. v. WCAB (1996) 42 Cal.App.4th 1260, 1286–1289 [professional medical corporation retained privacy interest in financial and employment information unrelated to preparation of medical reports sought by workers' compensation insurers].)

 

Assuming a business entity has a right of privacy, courts must determine whether it is outweighed by the relevance of the information sought to the subject matter in the pending action.  “(D)oubts as to relevance should generally be resolved in favor of permitting discovery.”  (Hecht, Solberg, Robinson, Goldberg & Bagley v. Sup.Ct. (Panther) (2006) 137 Cal.App.4th 579, 595 [internal quotes omitted].)

 

Defendant Trivad cannot protect the information with a blanket privacy objection.  Instead, it must show that any right to privacy outweighs the relevance of the information sought. Further, Trivad contends that its status as a single shareholder S Corp provides a sufficient nexus between the corporation and the shareholder to allow a blanket privacy objection—however, Trivad provides no case law in support of this contention.

 

The probative nature of the discovery sought outweighs the privacy concerns raised by Trivad.  Whether Trivad’s sales increased as a result of using the Plaintiff’s ex-employees would provide some evidence that the ex-employees may have been using protected trade secrets in advancing the sales.  The question then becomes whether the discovery requests are narrowly tailored to protect the privacy interests of Trivad.  Discovery request No. 46 is overly broad in that it seeks all financial reports for the last five years.  There is doubtless a  more targeted way to get to the point the Plaintiff is trying to prove.  The overbreedth of No. 46 precludes compulsion oat this time.

 

The court grants the motion to compel with respect to RPDs Nos. 53 and 54.  The court conditionally denies the motion as to RPD No. 46, to allow the parties to meet and confer in light of the court’s determination.

 

 

2. SCV-255478; Mazzaferri v. Mazzaferri

Demurrers are Sustained without leave to amend.  The first amended complaint fails to state facts sufficient to constitute a cause of action.

 

 

3. SCV-255536; Fkiaras v. Shiomoto

The petition for writ of mandate is denied.

 

The DMV hearing officer did not err in admitting or considering any evidence.  The fact that Officer Dineen’s DS-367 report contained observations by other officers did not make the report objectionable.  Hildebrand v. DMV (2007) 152 Cal.App.4th 1562; McNary v. DMV (1996) 45 Cal.App.4th 688.  The DS-367 report was fully admissible over any hearsay objection pursuant to Evid.C.Sec.1280.  Petitioner’s reliance on Imachi v. DMV (1992) 2 Cal.App.4th 809 is unpersuasive, as Imachi does not represent the current interpretation of Evid.C.Sec.1280.  The fact that a portion of the DS-367 report was completed after the officer signed the document under penalty of perjury does not make the document untrustworthy or inadmissible.  At most, this technical defect merely means that a portion of the DS-367 report (the portion stating the time of the blood draw) was not made under oath.  Both the sworn and unsworn portions of the DS-367 report were fully admissible under Evid.C.Sec.1280.  Furthermore, the separate unsworn reports by Officers Dineen and Matelli were fully admissible over any hearsay objection pursuant to Evid.C.Sec.1280 and corroborated the DS-367 report.  Contrary to petitioner’s claim, the hearing officer’s finding that the blood draw occurred at 12:45 a.m. was not in violation of Govt.C.Sec.11513(d).

 

The hearing officer’s findings were supported by the evidence.  Probable cause existed for the DUI arrest based on objective signs of intoxication and poor performance on field sobriety tests; the arrest was both constitutionally and statutorily authorized; and the Veh.C.Sec.23152(b) presumption demonstrated that petitioner’s BAC was 0.08% or greater at the time of driving.  Additionally, to the extent relevant, the initial traffic stop was supported by reasonable suspicion of Veh.C.Sec.21209(a) and 22400(a) violations. 

 

The petition for writ of mandate is denied.  

 





[1] The Defendants break their arguments into seven (7) “issues.” Issue 1 involves the inadequacy of the CCP § 2019.210 disclosure, Issue 2 relates to the alleged inadequacy of the Plaintiff’s discovery responses regarding the alleged trade secrets, Issues 3-7 relate to the alleged illegality of the agreements.

[2] As we discussed earlier in the week, ¶ 1 contains an provision that is void per Labor Code § 232—to wit, making salary and benefits trades secrets.

[3] This is debatable whether the Defendants really contend that the entire agreement is void. Their MPA on MSJ are equivocal on the point.

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