Preview
oe YN DH HF WwW HY
NN NY NY KN NY NY HN YD ee Re ee
oI aa F UNH =F SO we AIA DA FF WN KH DO
Le
SEP 30 2029
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
SunPower Corporation, Case No, 19CV349042
Plaintiff,
vs. ORDER RE: DEMURRER
Martin DeBono, ef al.,
Defendants.
The demurrer by plaintiff and cross-defendant SunPower Corporation (“SunPower”) to
the cross-complaint of defendant and cross-complainant Standard Industries Inc. (“Standard”)
came on for hearing on September 1, 2020, in Department 21, before Judge Thang Nguyen
Barrett. The tentative ruling having not been contested, the following tentative ruling became
the order of the Court:
Factual and Procedural Background
SunPower brought this action against defendant Martin DeBono (“DeBono”), Standard,
and defendant GAF Energy LLC (“GAF Energy”) for misappropriation of proprietary
information and trade secrets.
Case No. 19CV349042
OrderOo Oo DN DAH FF WN Ye
NM NY YN NY NY NY NY Yew ee ea a
oN AA BF BY BF SOMA IA A FR WH | SG
On March 30, 2020, Standard filed a cross-complaint against SunPower, alleging a single
cause of action for unfair competition in violation of Business and Professions Code section
17200. According to the allegations of the cross-complaint, SunPower included unlawful and
unenforceable non-solicitation and non-disclosure provisions in its employment agreements and
separation agreements with DeBono and other similarly situated former SunPower employees in
violation of Business and Professions Code section 16600. (Cross-Complaint, {J 1, 10-15, &
29.) SunPower’s acts allegedly constitute unlawful business acts or practices, and caused
injuries to Standard. (/d. at J] 2, 18-21, & 30-32.) Standard seeks injunctive relief enjoining
SunPower from including in its contracts unlawful non-solicitation provisions and provisions
that purport to bar solicitation using information that does not rise to the level of a trade secret.
Ud. at 33 & Prayer for Relief.)
On June 1, 2020, SunPower filed the instant demurrer to the cross-complaint. Standard
filed papers in opposition to the demurrer on August 19, 2020. On August 25, 2020, SunPower
filed reply papers. ,
Discussion
SunPower demurs to the cross-complaint on the grounds of uncertainty and failure to
allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subds. (e)
&®)
I. Requests for Judicial Notice
A. SunPower’s Request
In connection with its moving papers, SunPower asks the Court to take judicial notice of:
(1) portions of the declaration of Elizabeth Hioe (“Hioe”) filed on July 18, 2019, in connection
with Standard and GAF Energy’s response to an order to show cause; and (2) a spreadsheet,
Case No. 19CV349042
Orderwo em N DA FF WN =|
YN YN NY NN NY DY Be Be Be Be Be ee eB ee
on A A RF ODNH fF SO wM AY AHA BR DWN SF
Proprietary Interest Protection and Non-Compete Agreements, GAF Energy’s Code of Conduct
Policy Supplement, DeBono’s acknowledgment of the policy supplement, and an email, which
are attached as exhibits to Hioe’s declaration. SunPower contends the Court should take judicial
notice of these documents Evidence Code section 452, subdivisions (d) and (h) because Hioe’s
declaration is a court record and the attachments thereto demonstrate that Standard has unclean
hands. In connection with its reply, SunPower asks the Court to take judicial notice of an order
entered in an arbitration proceeding, SunPower Corporation v. Gabriela Bunea (American
Arbitration Association Employment Arbitration Tribunal, Case No. 01-19-0003-9663).
SunPower asserts the Court should take judicial notice of this order under Evidence Code section|
452, subdivision (h) because the order shows SunPower never threatened enforcement of a non-
solicitation provision against another Standard/GAF employee, Gabriela Bunea,
SunPower’s request for judicial notice of Hioe’s declaration is not well-taken. Although
Hice’s declaration is a court record, the Court may only take judicial notice of such a declaration
if it contains statements of Standard that are inconsistent with the allegations of the cross-
complaint. (See Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593,
604-605 (Del E. Webb) [“The court will take judicial notice of records such as admissions,
answers to interrogatories, affidavits, and the like, when considering a demurrer, only where they,
contain statements of the plaintiff or his agent which are inconsistent with the allegations of the
pleading before the court.”].) SunPower does not contend Hioe’s declaration contains statements|
that directly contradict the allegations of the cross-complaint. Instead, SunPower seeks judicial
notice of the declaration to support its affirmative defense of unclean hands. Thus, the
declaration is not a proper subject of judicial notice.
Case No. 19CV349042
OrderoO IY DH PR YW NY
RP NH NY YN NN NF SE ee Be es ew me ew
oN DHF VND |= So PHI DAA FF YW NY |= OD
Furthermore, although the Court may properly take judicial notice of existence of the
documents attached to Hioe’s declaration and the order in the arbitration proceeding, the Court
cannot take judicial notice of the truth of their contents. (See People v. Woodell (1998) 17
Cal.4th 448, 455 [the trial court may “take judicial notice of the existence of judicial opinions
and court documents, along with the truth of the results reached—in the documents such as
orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the
truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony,
or statements of fact”].)
Accordingly, SunPower’s request for judicial notice is GRANTED IN PART and
DENIED IN PART. SunPower’s request is GRANTED as to the existence of the documents
attached to Hioe’s declaration and the order in the arbitration proceeding. SunPower’s request is
DENIED in all other respects.
B. Standard’s Request
In connection with its opposition, Standard asks the Court to take judicial notice of: (1)
SunPower’s complaint and first amended complaint (“FAC”); (2) reply papers submitted by
SunPower in connection with an arbitration proceeding, SunPower Corporation v. Gabriela
Bunea (American Arbitration Association Employment Arbitration Tribunal, Case No. 01-19-
0003-9663); and (3) SunPower’s responses to Standard and GAF Energy’s special
interrogatories, set one (“SI”).
Standard’s request for judicial notice of SunPower’s responses to the SI is not well-taken.
The Court may only take judicial notice of such discovery responses if they contain statements
that are inconsistent with the allegations of the cross-complaint. (See Del E. Webb, supra, 123
Cal.App.3d at pp. 604-605 [“The court will take judicial notice of records such as admissions,
Case No. 19CV349042
OrderScD we RH BP WN
YN NY NN NY NR DN NY Be Se Se Be Be ew Se Be eB
oT AHA FON FH SO we NA A BDH |
answers to interrogatories, affidavits, and the like, when considering a demurrer, only where they
contain statements of the plaintiff or his agent which are inconsistent with the allegations of the
pleading before the court.”].) Standard does not contend the discovery responses contain
statements that directly contradict the allegations of the cross-complaint. Instead, Standard seeks
judicial notice of the discovery responses to support its contention that SunPower has not
allowed discovery on a particular topic. Thus, the discovery responses are not proper subjects of,
judicial notice.
Next, although the Court may properly take judicial notice of existence of the complaint,
the FAC, and the papers filed in the arbitration proceeding, the Court cannot take judicial notice
of the truth of their contents. (See People v. Woodell (1998) 17 Cal4th 448, 455 [the trial court
may “take judicial notice of the existence of judicial opinions and court documents, along with
the truth of the results reached—in the documents such as orders, statements of decision, and
judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in
decisions or court files, including pleadings, affidavits, testimony, or statements of fact”].)
Accordingly, Standard’s request for judicial notice is GRANTED IN PART and DENIED)
IN PART. Standard’s request is GRANTED as to the existence of the complaint, the FAC, and
the papers filed in the arbitration proceeding. Standard’s request is DENIED in all other
respects.
IL. Legal Standard
The function of a demurrer is to test the legal sufficiency ofa pleading. (7rs. Of Capital
Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617,
621.) Consequently, “ ‘[a] demurrer reaches only to the contents of the pleading and such
matters as may be considered under the doctrine of judicial notice’ [citation].” (Hilltop
Case No. 19CV349042
Orderoe HW BF WN |
NY N NN NN NY ND NY BRR Be mB Be ee
Se YW A A BF YN F SF Cwe IT AH FB NH BH SG
Properties, Inc. v. State (1965) 233 Cal.App.2d 349, 353; Code Civ. Proc., § 430.30, subd.
(a).) “ ‘It is not the ordinary function of a demurrer to test the truth of the ... allegations [in the
challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s
conduct. ....” [Citation.] Thus, ... ‘the facts alleged in the pleading are deemed to be true,
however improbable they may be. [Citation.]’ [Citations.]” (Align Technology, Inc. v. Tran
(2009) 179 Cal.App.4th 949, 958.)
Ill. Uncertainty
SunPower demurs to the cross-complaint on the ground of uncertainty.
However, SunPower’s argument regarding uncertainty addresses Standard’s purported
failure to allege sufficient facts to state a claim. It appears that SunPower misunderstands the
nature of uncertainty as a ground for demurrer. The law is settled that
“[a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient
facts in the pleading but is directed at the uncertainty existing in the allegations already
made.” (Butler v. Sequiera (1950) 100 Cal.App.2d 143, 145-146.) Thus, SunPower’s demurrer
on the ground of uncertainty is not well-taken.
Accordingly, SunPower’s demurrer to the cross-complaint on the ground of uncertainty is|
OVERRULED.
IV. Failure to Allege Sufficient Facts to Constitute a Cause of Action
SunPower initial argues Standard’s claim for unfair competition in violation of Business
and Professions Code section 17200 fails because it is barred by the doctrine of unclean hands.
SunPower contends the judicially noticeable materials shows that Standard also entered into
contracts with its employees that contained similar non-solicitation provisions.
Case No. 19CV349042
OrderCo mn A UH RF WY
RY NM YN YN NY YD HE Be ewe ewe ese ee eR ee
eat AH PF WH = DD w&e NY AHA PB wWwN | S
Unclean hands is an affirmative defense in actions seeking equitable relief. (Wilson v.
S.L. Rey, Inc. (1993) 17 Cal.App.4th 234, 244 (Wilson).) “Since the doctrine of unclean hands is
heavily fact dependent, it is a uniquely poor candidate to support a demurrer.” (CrossTalk
Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 641 (Crosstalk); see Insurance Co. of
North America v. Liberty Mutual Ins. Co. (1982) 128 Cal.App.3d 297, 306 [As a general rule,
the application of the doctrine of unclean hands is primarily a question of fact.”].) A “ ‘demurrer
based on an affirmative defense cannot properly be sustained where the action might be barred
by the defense, but is not necessarily barred.” [Citation.] Accordingly, [a challenge based on the
doctrine of unclean hands] fails unless it is conclusively demonstrated by the facts pleaded in the
complaints or subject to judicial notice. [Citations.]” (People v. Super. Ct. (J.C. Penney Corp.,
Inc.) (2019) 34 Cal.App.5th 376, 399.)
The doctrine of unclean hands calls for the denial of relief to a plaintiff guilty of improper
conduct only if the inequitable conduct occurred in a transaction directly related to the matter
before the court and affects the equitable relationship between the litigants. (Wilson, supra, 17
Cal.App.4th at p. 244.) “ ‘[W]hether there is a bar depends upon the analogous case law, the
nature of the misconduct, and the relationship of the misconduct to the claimed injuries.”
[Citation.]” (CrossTalk, supra, 65 Cal.App.4th at p. 641.) (Blain, supra, 222 Cal.App.3d at p.
1060.) Courts refer to this three prong analysis as “the Blain test.” (Ibid.)
Here, SunPower fails to establish that the doctrine of unclean hands conclusively applies
in this case. With respect to the first prong of the Blain test, i.c., analogous case law, SunPower
has cited no authority finding unclean hands generally to be a defense to claims for unfair
competition under similar circumstances. (See CrossTalk, supra, 65 Cal.App.4th at p. 642.)
Additionally, the final prong of the Blain test, which requires examination of the relationship
Case Na. 19CV349042
Orderom I DH BY NY
YN YY YN NRK NY eH Be eB Be ewe ewe ew es
e232 KA PF YH KF Soe wea ADA FB wD NH SE
between Standard’s purported misconduct and its claimed injuries, does not support an unclean
hands defense because Standard’s purported misconduct was not the cause of its alleged injuries.
(Cf. Blain v. Doctor's Co. (1990) 222 Cal.App.3d 1048, 1058-1063 [“Blain’s emotional distress,
if any, is attributable to his own knowing misbehavior. Even the most naive must know that lying
under oath is illegal .... [T]he relationship of misconduct to harm in this case is direct and not
incidental. The misconduct was, so it is alleged, the instrumentality of harm.”]; see CrossTalk,
supra, 65 Cal.App.4th at pp. 642-643 [“A fair inference could be drawn that the underlying
cause of the damage to plaintiffs was defendant’s extortionate demands. The allegations here are|
unlike the situation in Blain.”].) Therefore, SunPower’s argument based on the doctrine of
unclean hands is not well-taken.
Next, SunPower asserts Standard is not entitled to injunctive relief for its alleged
violation of Business and Professions Code section 17200 because its non-solicitation covenants
were lawful at the time they were drafted, the case of AMN Healthcare, Inc. v. Aya Healthcare
Services, Inc. (2018) 28 Cal.App.Sth 923 (AMN) altered settled law establishing the legality of
such covenants, and therefore it would violate due process to apply AMN retroactively to hold it
liable for using such covenants.
Even assuming for the sake of argument that SunPower’s position had merit, it fails to
dispose of Standard’s claim for unfair competition. As Standard persuasively argues, it is not
seeking restitution, or any other form of damages, for SunPower’s past
conduct. Rather, Standard alleges SunPower regularly includes impermissible non-solicitation
provisions in contracts with its high-level employees and terms that purport to bar solicitation of
current SunPower employees by former employees using non-trade secret information, and
Standard seeks injunctive relief to stop SunPower from using non-solicitation covenants to stifle
Case No. 19CV349042
OrderOo ON DH FF BN
BN NN YN NY DY DY ee we we Be Be eR ewe eH
oe AR A FY YH =F SFO we AN AA BBN ES
employee mobility in the future. (Cross-Complaint, [§ 13-15 & 33, & Prayer for Relief.) Thus,
it cannot be said that Standard is seeking relief for conduct that entirely predates AMN.
SunPower also contends that Standard’s claim fails to the extent it is predicated on its
contracts with other, unidentified employees because Standard does not identify with
particularity the other employees, the specific contracts to which it refers, or the provisions in
those contracts that violate Business and Professions Code section 16600.
However, specificity is not required when pleading a claim under the UCL. Courts
historically applied the ordinary fact-pleading standard to UCL claims. (See Committee On
Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 209-212, superseded
by statute on another ground as stated in Branick v. Downey Savings & Loan Assn. (2006) 39
Cal.4th 235, 242.) And, although courts have stated “[a] plaintiff alleging unfair business
practices under [Section 17200] must state with reasonable particularity the facts supporting the
statutory elements of the violation” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th
612, 619), reasonable particularity “is a more lenient pleading standard than is applied to
common law fraud claims” (Gutierrez vy. Carmax Auto Superstores California (2018) 19
Cal.App.Sth 1234, 1261). Thus, to the extent SunPower seeks to have the Court impose a higher
pleading standard, its argument is not well-taken. Furthermore, Standard alleges sufficient facts
regarding the nature of the unlawful covenants allegedly set forth in SunPower’s contracts with
other employees for SunPower to identify the terms and provisions at issue. (See Cross-
Complaint, {{] 1 & 10-15.) For these reasons, SunPower’s argument regarding particularity lacks
merit.
Case No. 19CV349042
OrderoO we NIN DH FF BN
RPM YN WN NNN — ee Be Be we ew eB eB Re
SQW KAA BF YN KF Deo we IAD HH BF wYW YF SG
Additionally, SunPower argues Standard lacks standing to pursue claims based on its
agreements with other employees because it does not identify any economic injury caused by its
contracts with those employees.
“(N]Jo private party has standing to prosecute a UCL action unless he or she ‘has suffered
injury in fact and has lost money or property as a result of the unfair competition.’ [Citations.]”
(Law Offices of Mathew Higbee v. Expungement Assistance Services (2013) 214 Cal.App.4th
544, 555-556; Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 788.) “There are innumerable
ways in which economic injury from unfair competition may be shown. A plaintiff may (1)
surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would
have; (2) have a present or future property interest diminished; (3) be deprived of money or
property to which he or she has a cognizable claim; or (4) be required to enter into a transaction,
costing money or property, that would otherwise have been unnecessary.” (Kwikset Corp. v.
Super. Ct. (2011) 51 Cal.4th 310, 323.)
Here, Standard alleges “SunPower’s unlawful non-solicitation provisions have resulted in|
increased recruiting costs for [it] and GAF Energy, forced [it] and GAF Energy to lose out on
qualified SunPower candidates [who] would have otherwise been interested in coming to
Standard/GAF Energy had DeBono and other executives been allowed to recruit, and otherwise
hindered Standard’s and GAF Energy’s lawful efforts to build out their solar team.” (Cross-
Complaint, 121.) These allegations are sufficient to establish standing.
Finally, SunPower asserts Standard fails to demonstrate that it is entitled to injunctive
relief because injunctive relief seeks to prevent future harm and Standard has not shown there is
a threat of future harm or a continuing violation.
10
Case No. 19CV349042
OrderOo ON DH BF WN
RN NYY HN NN DY BS Be Be Se Be we Be eB se
CN DRA FF YN K=F DB owe NI AH BRB wBwN SE DS
This assertion is not well-taken. Standard alleges SunPower regularly includes
impermissible non-solicitation provisions in contracts with its high-level employees and terms
that purport to bar solicitation of current SunPower employees by former employees using non-
trade secret information. (Cross-Complaint, f§ 13-15 & 33.) This allegation permits the
inference that the alleged unlawful conduct is ongoing. Moreover, whether SunPower will
continue its alleged unlawful conduct is a question of fact not suitable for resolution on
demurrer. (See Prof’! Fire Fighters, Inc. v. City of Los Angeles, (1963) 60 Cal. 2d 276, 286
(“Whether or not there is reasonable probability that defendant will continue its ... activities in
the future is question of fact”].)
Accordingly, SunPower’s demurrer to the cross-complaint on the ground of failure to
allege facts sufficient to constitute a cause of action is OVERRULED.
IT IS SO ORDERED.
Dated: F.279, OVW
Thang N. Barrett
Judge of the Superior Court
11
Case No. 19CV349042
OrderSUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
DOWNTOWN COURTHOUSE A i. iE
191 NORTH First STREET
SAN JOSE, CALIFORNIA 95113 cep 4
CIVIL DIVISION SEP 30 2020
RE: SUNPOWER CORPORATION vs MARTIN DEBONO et al
Case Number: 19CV349042
PROOF OF SERVICE
ORDER RE: DEMURRER was delivered to the parties listed below the above entitled case as set forth in the
sworn declaration below.
If you, @ party represented by you, or a witness to be called on behalf of that party nead an accommodation under the American with
Disabilities Act, please contact the Court Administrator's office at (408) 882-2700, or use the Court's TDD line (408) 882-2690 or the
Veice/TDD California Relay Service (800) 735-2922.
DECLARATION OF SERVICE BY MAIL: | declare that served this notice by enclosing a true copy in a sealed envelope, addressed to
each person whose name is shown below, and by depositing the envelope with postage fully prepaid, In the United States Mail at San Jose,
CA on September 30, 2020. CLERK OF THE COURT, by Donna O'Hara, Deputy.
ec: Stephen Holbrook Sutro Duane Morris LLP One Market Plaza Spear Tower #2200 San Francisco CA 94105
Jonathan Alan Patchen Baker Botts LLP 101 California St Suite 3600 San Francisco CA 94111
John McMakin Neukom Skadden Arps Slate Meagher & Flom LLP 525 University Ave Suite 1400 Palo Alto CA
94301
CW-9027 REV 12/08/16 PROOF OF SERVICE
Preview
oe YN DH HF WwW HY NN NY NY KN NY NY HN YD ee Re ee oI aa F UNH =F SO we AIA DA FF WN KH DO Le SEP 30 2029 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA SunPower Corporation, Case No, 19CV349042 Plaintiff, vs. ORDER RE: DEMURRER Martin DeBono, ef al., Defendants. The demurrer by plaintiff and cross-defendant SunPower Corporation (“SunPower”) to the cross-complaint of defendant and cross-complainant Standard Industries Inc. (“Standard”) came on for hearing on September 1, 2020, in Department 21, before Judge Thang Nguyen Barrett. The tentative ruling having not been contested, the following tentative ruling became the order of the Court: Factual and Procedural Background SunPower brought this action against defendant Martin DeBono (“DeBono”), Standard, and defendant GAF Energy LLC (“GAF Energy”) for misappropriation of proprietary information and trade secrets. Case No. 19CV349042 OrderOo Oo DN DAH FF WN Ye NM NY YN NY NY NY NY Yew ee ea a oN AA BF BY BF SOMA IA A FR WH | SG On March 30, 2020, Standard filed a cross-complaint against SunPower, alleging a single cause of action for unfair competition in violation of Business and Professions Code section 17200. According to the allegations of the cross-complaint, SunPower included unlawful and unenforceable non-solicitation and non-disclosure provisions in its employment agreements and separation agreements with DeBono and other similarly situated former SunPower employees in violation of Business and Professions Code section 16600. (Cross-Complaint, {J 1, 10-15, & 29.) SunPower’s acts allegedly constitute unlawful business acts or practices, and caused injuries to Standard. (/d. at J] 2, 18-21, & 30-32.) Standard seeks injunctive relief enjoining SunPower from including in its contracts unlawful non-solicitation provisions and provisions that purport to bar solicitation using information that does not rise to the level of a trade secret. Ud. at 33 & Prayer for Relief.) On June 1, 2020, SunPower filed the instant demurrer to the cross-complaint. Standard filed papers in opposition to the demurrer on August 19, 2020. On August 25, 2020, SunPower filed reply papers. , Discussion SunPower demurs to the cross-complaint on the grounds of uncertainty and failure to allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subds. (e) &®) I. Requests for Judicial Notice A. SunPower’s Request In connection with its moving papers, SunPower asks the Court to take judicial notice of: (1) portions of the declaration of Elizabeth Hioe (“Hioe”) filed on July 18, 2019, in connection with Standard and GAF Energy’s response to an order to show cause; and (2) a spreadsheet, Case No. 19CV349042 Orderwo em N DA FF WN =| YN YN NY NN NY DY Be Be Be Be Be ee eB ee on A A RF ODNH fF SO wM AY AHA BR DWN SF Proprietary Interest Protection and Non-Compete Agreements, GAF Energy’s Code of Conduct Policy Supplement, DeBono’s acknowledgment of the policy supplement, and an email, which are attached as exhibits to Hioe’s declaration. SunPower contends the Court should take judicial notice of these documents Evidence Code section 452, subdivisions (d) and (h) because Hioe’s declaration is a court record and the attachments thereto demonstrate that Standard has unclean hands. In connection with its reply, SunPower asks the Court to take judicial notice of an order entered in an arbitration proceeding, SunPower Corporation v. Gabriela Bunea (American Arbitration Association Employment Arbitration Tribunal, Case No. 01-19-0003-9663). SunPower asserts the Court should take judicial notice of this order under Evidence Code section| 452, subdivision (h) because the order shows SunPower never threatened enforcement of a non- solicitation provision against another Standard/GAF employee, Gabriela Bunea, SunPower’s request for judicial notice of Hioe’s declaration is not well-taken. Although Hice’s declaration is a court record, the Court may only take judicial notice of such a declaration if it contains statements of Standard that are inconsistent with the allegations of the cross- complaint. (See Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604-605 (Del E. Webb) [“The court will take judicial notice of records such as admissions, answers to interrogatories, affidavits, and the like, when considering a demurrer, only where they, contain statements of the plaintiff or his agent which are inconsistent with the allegations of the pleading before the court.”].) SunPower does not contend Hioe’s declaration contains statements| that directly contradict the allegations of the cross-complaint. Instead, SunPower seeks judicial notice of the declaration to support its affirmative defense of unclean hands. Thus, the declaration is not a proper subject of judicial notice. Case No. 19CV349042 OrderoO IY DH PR YW NY RP NH NY YN NN NF SE ee Be es ew me ew oN DHF VND |= So PHI DAA FF YW NY |= OD Furthermore, although the Court may properly take judicial notice of existence of the documents attached to Hioe’s declaration and the order in the arbitration proceeding, the Court cannot take judicial notice of the truth of their contents. (See People v. Woodell (1998) 17 Cal.4th 448, 455 [the trial court may “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact”].) Accordingly, SunPower’s request for judicial notice is GRANTED IN PART and DENIED IN PART. SunPower’s request is GRANTED as to the existence of the documents attached to Hioe’s declaration and the order in the arbitration proceeding. SunPower’s request is DENIED in all other respects. B. Standard’s Request In connection with its opposition, Standard asks the Court to take judicial notice of: (1) SunPower’s complaint and first amended complaint (“FAC”); (2) reply papers submitted by SunPower in connection with an arbitration proceeding, SunPower Corporation v. Gabriela Bunea (American Arbitration Association Employment Arbitration Tribunal, Case No. 01-19- 0003-9663); and (3) SunPower’s responses to Standard and GAF Energy’s special interrogatories, set one (“SI”). Standard’s request for judicial notice of SunPower’s responses to the SI is not well-taken. The Court may only take judicial notice of such discovery responses if they contain statements that are inconsistent with the allegations of the cross-complaint. (See Del E. Webb, supra, 123 Cal.App.3d at pp. 604-605 [“The court will take judicial notice of records such as admissions, Case No. 19CV349042 OrderScD we RH BP WN YN NY NN NY NR DN NY Be Se Se Be Be ew Se Be eB oT AHA FON FH SO we NA A BDH | answers to interrogatories, affidavits, and the like, when considering a demurrer, only where they contain statements of the plaintiff or his agent which are inconsistent with the allegations of the pleading before the court.”].) Standard does not contend the discovery responses contain statements that directly contradict the allegations of the cross-complaint. Instead, Standard seeks judicial notice of the discovery responses to support its contention that SunPower has not allowed discovery on a particular topic. Thus, the discovery responses are not proper subjects of, judicial notice. Next, although the Court may properly take judicial notice of existence of the complaint, the FAC, and the papers filed in the arbitration proceeding, the Court cannot take judicial notice of the truth of their contents. (See People v. Woodell (1998) 17 Cal4th 448, 455 [the trial court may “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact”].) Accordingly, Standard’s request for judicial notice is GRANTED IN PART and DENIED) IN PART. Standard’s request is GRANTED as to the existence of the complaint, the FAC, and the papers filed in the arbitration proceeding. Standard’s request is DENIED in all other respects. IL. Legal Standard The function of a demurrer is to test the legal sufficiency ofa pleading. (7rs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, “ ‘[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice’ [citation].” (Hilltop Case No. 19CV349042 Orderoe HW BF WN | NY N NN NN NY ND NY BRR Be mB Be ee Se YW A A BF YN F SF Cwe IT AH FB NH BH SG Properties, Inc. v. State (1965) 233 Cal.App.2d 349, 353; Code Civ. Proc., § 430.30, subd. (a).) “ ‘It is not the ordinary function of a demurrer to test the truth of the ... allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s conduct. ....” [Citation.] Thus, ... ‘the facts alleged in the pleading are deemed to be true, however improbable they may be. [Citation.]’ [Citations.]” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958.) Ill. Uncertainty SunPower demurs to the cross-complaint on the ground of uncertainty. However, SunPower’s argument regarding uncertainty addresses Standard’s purported failure to allege sufficient facts to state a claim. It appears that SunPower misunderstands the nature of uncertainty as a ground for demurrer. The law is settled that “[a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading but is directed at the uncertainty existing in the allegations already made.” (Butler v. Sequiera (1950) 100 Cal.App.2d 143, 145-146.) Thus, SunPower’s demurrer on the ground of uncertainty is not well-taken. Accordingly, SunPower’s demurrer to the cross-complaint on the ground of uncertainty is| OVERRULED. IV. Failure to Allege Sufficient Facts to Constitute a Cause of Action SunPower initial argues Standard’s claim for unfair competition in violation of Business and Professions Code section 17200 fails because it is barred by the doctrine of unclean hands. SunPower contends the judicially noticeable materials shows that Standard also entered into contracts with its employees that contained similar non-solicitation provisions. Case No. 19CV349042 OrderCo mn A UH RF WY RY NM YN YN NY YD HE Be ewe ewe ese ee eR ee eat AH PF WH = DD w&e NY AHA PB wWwN | S Unclean hands is an affirmative defense in actions seeking equitable relief. (Wilson v. S.L. Rey, Inc. (1993) 17 Cal.App.4th 234, 244 (Wilson).) “Since the doctrine of unclean hands is heavily fact dependent, it is a uniquely poor candidate to support a demurrer.” (CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 641 (Crosstalk); see Insurance Co. of North America v. Liberty Mutual Ins. Co. (1982) 128 Cal.App.3d 297, 306 [As a general rule, the application of the doctrine of unclean hands is primarily a question of fact.”].) A “ ‘demurrer based on an affirmative defense cannot properly be sustained where the action might be barred by the defense, but is not necessarily barred.” [Citation.] Accordingly, [a challenge based on the doctrine of unclean hands] fails unless it is conclusively demonstrated by the facts pleaded in the complaints or subject to judicial notice. [Citations.]” (People v. Super. Ct. (J.C. Penney Corp., Inc.) (2019) 34 Cal.App.5th 376, 399.) The doctrine of unclean hands calls for the denial of relief to a plaintiff guilty of improper conduct only if the inequitable conduct occurred in a transaction directly related to the matter before the court and affects the equitable relationship between the litigants. (Wilson, supra, 17 Cal.App.4th at p. 244.) “ ‘[W]hether there is a bar depends upon the analogous case law, the nature of the misconduct, and the relationship of the misconduct to the claimed injuries.” [Citation.]” (CrossTalk, supra, 65 Cal.App.4th at p. 641.) (Blain, supra, 222 Cal.App.3d at p. 1060.) Courts refer to this three prong analysis as “the Blain test.” (Ibid.) Here, SunPower fails to establish that the doctrine of unclean hands conclusively applies in this case. With respect to the first prong of the Blain test, i.c., analogous case law, SunPower has cited no authority finding unclean hands generally to be a defense to claims for unfair competition under similar circumstances. (See CrossTalk, supra, 65 Cal.App.4th at p. 642.) Additionally, the final prong of the Blain test, which requires examination of the relationship Case Na. 19CV349042 Orderom I DH BY NY YN YY YN NRK NY eH Be eB Be ewe ewe ew es e232 KA PF YH KF Soe wea ADA FB wD NH SE between Standard’s purported misconduct and its claimed injuries, does not support an unclean hands defense because Standard’s purported misconduct was not the cause of its alleged injuries. (Cf. Blain v. Doctor's Co. (1990) 222 Cal.App.3d 1048, 1058-1063 [“Blain’s emotional distress, if any, is attributable to his own knowing misbehavior. Even the most naive must know that lying under oath is illegal .... [T]he relationship of misconduct to harm in this case is direct and not incidental. The misconduct was, so it is alleged, the instrumentality of harm.”]; see CrossTalk, supra, 65 Cal.App.4th at pp. 642-643 [“A fair inference could be drawn that the underlying cause of the damage to plaintiffs was defendant’s extortionate demands. The allegations here are| unlike the situation in Blain.”].) Therefore, SunPower’s argument based on the doctrine of unclean hands is not well-taken. Next, SunPower asserts Standard is not entitled to injunctive relief for its alleged violation of Business and Professions Code section 17200 because its non-solicitation covenants were lawful at the time they were drafted, the case of AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.Sth 923 (AMN) altered settled law establishing the legality of such covenants, and therefore it would violate due process to apply AMN retroactively to hold it liable for using such covenants. Even assuming for the sake of argument that SunPower’s position had merit, it fails to dispose of Standard’s claim for unfair competition. As Standard persuasively argues, it is not seeking restitution, or any other form of damages, for SunPower’s past conduct. Rather, Standard alleges SunPower regularly includes impermissible non-solicitation provisions in contracts with its high-level employees and terms that purport to bar solicitation of current SunPower employees by former employees using non-trade secret information, and Standard seeks injunctive relief to stop SunPower from using non-solicitation covenants to stifle Case No. 19CV349042 OrderOo ON DH FF BN BN NN YN NY DY DY ee we we Be Be eR ewe eH oe AR A FY YH =F SFO we AN AA BBN ES employee mobility in the future. (Cross-Complaint, [§ 13-15 & 33, & Prayer for Relief.) Thus, it cannot be said that Standard is seeking relief for conduct that entirely predates AMN. SunPower also contends that Standard’s claim fails to the extent it is predicated on its contracts with other, unidentified employees because Standard does not identify with particularity the other employees, the specific contracts to which it refers, or the provisions in those contracts that violate Business and Professions Code section 16600. However, specificity is not required when pleading a claim under the UCL. Courts historically applied the ordinary fact-pleading standard to UCL claims. (See Committee On Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 209-212, superseded by statute on another ground as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.) And, although courts have stated “[a] plaintiff alleging unfair business practices under [Section 17200] must state with reasonable particularity the facts supporting the statutory elements of the violation” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619), reasonable particularity “is a more lenient pleading standard than is applied to common law fraud claims” (Gutierrez vy. Carmax Auto Superstores California (2018) 19 Cal.App.Sth 1234, 1261). Thus, to the extent SunPower seeks to have the Court impose a higher pleading standard, its argument is not well-taken. Furthermore, Standard alleges sufficient facts regarding the nature of the unlawful covenants allegedly set forth in SunPower’s contracts with other employees for SunPower to identify the terms and provisions at issue. (See Cross- Complaint, {{] 1 & 10-15.) For these reasons, SunPower’s argument regarding particularity lacks merit. Case No. 19CV349042 OrderoO we NIN DH FF BN RPM YN WN NNN — ee Be Be we ew eB eB Re SQW KAA BF YN KF Deo we IAD HH BF wYW YF SG Additionally, SunPower argues Standard lacks standing to pursue claims based on its agreements with other employees because it does not identify any economic injury caused by its contracts with those employees. “(N]Jo private party has standing to prosecute a UCL action unless he or she ‘has suffered injury in fact and has lost money or property as a result of the unfair competition.’ [Citations.]” (Law Offices of Mathew Higbee v. Expungement Assistance Services (2013) 214 Cal.App.4th 544, 555-556; Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 788.) “There are innumerable ways in which economic injury from unfair competition may be shown. A plaintiff may (1) surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would have; (2) have a present or future property interest diminished; (3) be deprived of money or property to which he or she has a cognizable claim; or (4) be required to enter into a transaction, costing money or property, that would otherwise have been unnecessary.” (Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310, 323.) Here, Standard alleges “SunPower’s unlawful non-solicitation provisions have resulted in| increased recruiting costs for [it] and GAF Energy, forced [it] and GAF Energy to lose out on qualified SunPower candidates [who] would have otherwise been interested in coming to Standard/GAF Energy had DeBono and other executives been allowed to recruit, and otherwise hindered Standard’s and GAF Energy’s lawful efforts to build out their solar team.” (Cross- Complaint, 121.) These allegations are sufficient to establish standing. Finally, SunPower asserts Standard fails to demonstrate that it is entitled to injunctive relief because injunctive relief seeks to prevent future harm and Standard has not shown there is a threat of future harm or a continuing violation. 10 Case No. 19CV349042 OrderOo ON DH BF WN RN NYY HN NN DY BS Be Be Se Be we Be eB se CN DRA FF YN K=F DB owe NI AH BRB wBwN SE DS This assertion is not well-taken. Standard alleges SunPower regularly includes impermissible non-solicitation provisions in contracts with its high-level employees and terms that purport to bar solicitation of current SunPower employees by former employees using non- trade secret information. (Cross-Complaint, f§ 13-15 & 33.) This allegation permits the inference that the alleged unlawful conduct is ongoing. Moreover, whether SunPower will continue its alleged unlawful conduct is a question of fact not suitable for resolution on demurrer. (See Prof’! Fire Fighters, Inc. v. City of Los Angeles, (1963) 60 Cal. 2d 276, 286 (“Whether or not there is reasonable probability that defendant will continue its ... activities in the future is question of fact”].) Accordingly, SunPower’s demurrer to the cross-complaint on the ground of failure to allege facts sufficient to constitute a cause of action is OVERRULED. IT IS SO ORDERED. Dated: F.279, OVW Thang N. Barrett Judge of the Superior Court 11 Case No. 19CV349042 OrderSUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA DOWNTOWN COURTHOUSE A i. iE 191 NORTH First STREET SAN JOSE, CALIFORNIA 95113 cep 4 CIVIL DIVISION SEP 30 2020 RE: SUNPOWER CORPORATION vs MARTIN DEBONO et al Case Number: 19CV349042 PROOF OF SERVICE ORDER RE: DEMURRER was delivered to the parties listed below the above entitled case as set forth in the sworn declaration below. If you, @ party represented by you, or a witness to be called on behalf of that party nead an accommodation under the American with Disabilities Act, please contact the Court Administrator's office at (408) 882-2700, or use the Court's TDD line (408) 882-2690 or the Veice/TDD California Relay Service (800) 735-2922. DECLARATION OF SERVICE BY MAIL: | declare that served this notice by enclosing a true copy in a sealed envelope, addressed to each person whose name is shown below, and by depositing the envelope with postage fully prepaid, In the United States Mail at San Jose, CA on September 30, 2020. CLERK OF THE COURT, by Donna O'Hara, Deputy. ec: Stephen Holbrook Sutro Duane Morris LLP One Market Plaza Spear Tower #2200 San Francisco CA 94105 Jonathan Alan Patchen Baker Botts LLP 101 California St Suite 3600 San Francisco CA 94111 John McMakin Neukom Skadden Arps Slate Meagher & Flom LLP 525 University Ave Suite 1400 Palo Alto CA 94301 CW-9027 REV 12/08/16 PROOF OF SERVICE