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1 AYSE KENT (SBN 251114)
ayse@aklaw.co
2 AK EMPLOYMENT LAW OFFICE
ELECTRONICALLY
3 100 Pine Street, Suite 1250
San Francisco, CA 94111 F I L E D
Superior Court of California,
4 Tel: (415) 638-9471 County of San Francisco
04/28/2020
5 Attorneys for Plaintiff Clerk of the Court
BY: ERNALYN BURA
6 Deputy Clerk
7
SUPERIOR COURT OF THE STATE OF CALIFORNIA
8
9 COUNTY OF SAN FRANCISCO
10
TALKDESK, INC., a Delaware corporation, Case No. CGC-19-580458
11
PLAINTIFF’S MEMORANDUM
12 Plaintiff, OF POINTS AND
vs. AUTHORITIES IN OPPOSITION
13 TO DEFENDANTS’ DEMURRER
JANICE RAPP, an individual; PATRICK TO FIRST AMENDED
14 RUSSELL, an individual; SARAH ERVIN, an COMPLAINT
individual; MARINA MITCHELL, an individual;
15
JEFFREY CHANDLER GALT, an individual; and
Date: May 11, 2020
16 DOES 1-10, inclusive.
Time: 9:30 a.m.
Dept: 302
17 Defendants.
18 Action filed: November 1, 2019
Trial date: None Set
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PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’
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1 TABLE OF CONTENTS
2 I. INTRODUCTION ............................................................................................................... 1
3 II. ARGUMENT ....................................................................................................................... 2
4
A. TALKDESK STATES A CLAIM FOR MISAPPROPRIATION OF TRADE
5 SECRETS....................................................................................................................... 2
6 1. Talkdesk Alleges a Protectable Trade Secret ........................................................... 3
7 2. Talkdesk Alleges that Defendants Improperly Acquired a Trade Secret ................. 5
8 B. TALKDESK ADEQUATELY PLEAD A CAUSE OF ACTION FOR
INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS ............. 6
9
1. CUTSA Does Not Preempt the Claim for Intentional Interference with Contractual
10
Relations................................................................................................................... 7
11
a. The Intentional Interference Claim Should Survive Demurrer Because CUTSA
12 Has a Preemptive Effect Only to the Extent it Applies...................................... 7
13 b. The Intentional Interference Claim Does Not Depend Upon the
Misappropriation of Trade Secrets ..................................................................... 7
14
c. The Preemption Analysis is Premature .............................................................. 8
15
16 2. Talkdesk Alleges Interference of a Contract with a Third-Party ............................. 9
17 C. TALKDESK ADEQUATELY PLEADS A CLAIM FOR BREACH OF
CONTRACT ................................................................................................................ 10
18
1. Defendants Breached Their Confidentiality Obligations ....................................... 10
19
2. Defendant Rapp Breached the Non-Solicitation Provision.................................... 10
20
a. The Non-Solicitation Provision is Valid and Not Void ................................... 11
21
b. Talkdesk Alleges that Defendant Rapp Solicited Talkdesk’s Employees ....... 11
22
23 D. THE FAC SHOULD NOT BE DISMISSED ON THE BASIS OF UNCERTAINTY 12
24 E. IF THE COURT SUSTAINS THE DEMURRER, TALKDESK SHOULD BE GIVEN
LEAVE TO AMEND................................................................................................... 13
25
III. CONCLUSION .................................................................................................................. 13
26
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1 TABLE OF AUTHORITIES
2
CASES
3
ABBA Rubber Co. v. Seaquist, 235 Cal. App. 3d 1 (1991) ........................................................... 5
4
Adams v. Paul, 11 Cal. 4th 583 (1995) ......................................................................................... 8
5
Advanced Modular Sputtering, Inc. v. Superior Court, 132 Cal. App. 4th 826
6
(2005) .................................................................................................................................. 3, 4
7
American Paper & Packaging Products, Inc. v. Kirgan, 183 Cal. App. 3d 1318
8 (1986) ...................................................................................................................................... 4
9 Angelica Textile Services, Inc. v. Park, 220 Cal. App. 4th 495 (2013) ........................................ 8
10 Angie M. Superior Court (Hiemstra), 37 Cal. App. 4th 1217 (1995) ........................................... 2
11 Boughton v. Socony Mobil Oil Co., 231 Cal. App. 2d 188 (1984) ............................................. 11
12 Brescia v. Angelin, 172 Cal. App. 4th 133 (2009) .................................................................... 3, 4
13
C.A. v. William S. Hart Union High Sch. Dist., 53 Cal. 4th 861 (2012) ....................................... 2
14
Centex Homes v. St. Paul Fire & Marine Ins. Co., 237 Cal. App. 4th 23 (2015) ...................... 13
15
Clauson v. Super. Ct. (Pedus Services, Inc.), 67 Cal. App. 4th 1253 (1998) ............................... 8
16
Courtesy Temporary Service, Inc. v. Camacho, 222 Cal. App. 3d 1278 (1990) ...................... 5, 8
17
Della Penna v. Toyota Motor Sales, 11 Cal. App. 4th 376 (1995) ............................................... 9
18
Duncan v. Stuetzle, 76 F.3d 1480 (9th Cir. 1996) ......................................................................... 4
19
20 General Commercial Packaging, Inc. v. TPS Package Engineering, Inc., 114 F.3d
888 (9th Cir. 1996) ................................................................................................................ 11
21
Gervase v. Superior Court, 31 Cal. App. 4th 1218 (1995) ........................................................... 2
22
In re Sotera Wireless, Inc., 591 B.R. 453 (2018) .......................................................................... 6
23
Javo Beverage, Inc. v. California Extraction Ventures, Inc., 2019 WL 6467802
24 (S.D. Cal. Dec. 2, 2019) .......................................................................................................... 7
25 Jensen v. Home Depot, Inc., 24 Cal. App. 5th 92 (2018) ........................................................... 13
26
K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc., 171 Cal.
27 App. 4th 939 (2009) ............................................................................................................ 7, 8
28 Khoury v. Maly’s of Cal., Inc., 14 Cal. App. 4th 612 (1993)................................................ 12, 13
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1 Loral Corp. v. Moyes, 174 Cal. App. 3d 268 (1985) .................................................................. 11
2 Merlino v. West Coast Macaroni Mfg. Co., 90 Cal. App. 2d 106 (1949) ................................... 12
3 Morlife, Inc. v. Perry, 56 Cal. App. 4th 1514 (1997) ................................................................... 5
4
O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc., 420 F. Supp. 2d 1070 (N.D.
5 Cal. 2006) ................................................................................................................................ 5
6 PMC, Inc. v. Kadisha, 78 Cal. App. 4th 1368 (2000) ................................................................... 6
7 Quelimane Co. v. Stewart Title, 19 Cal. 4th 26 (1998) ................................................................. 9
8 Radar v. Stone, 178 Cal. App. 3d 10 (1986 .................................................................................. 8
9 ReadyLink Healthcare v. Cotton, 126 Cal. App. 4th 1006 (2005) ................................................ 6
10 Reeves v. Hanlon, 33 Cal. 4th 1140 (2004) .................................................................................. 9
11
Rodas v. Spiegel, 87 Cal. App. 4th 513 (2001) ....................................................................... 2, 12
12
Smith v. Golden Eagle Ins. Co., 69 Cal. App. 4th 1371 (1999) .................................................... 8
13
United States v. Nosal, 844 F.3d 1024 (9th Cir. 2016) ................................................................. 5
14
Vacco Indus., Inc. v. Van Den Berg, 5 Cal. 4th 34 (1992) ............................................................ 5
15
Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443, 1456 (2002)............................................... 4
16
Youngman v. Nevada Irrigation Dist., 70 Cal.2d 240 (1969) ..................................................... 13
17
18 STATUTES
19 Cal. Civ. Code § 1712 ................................................................................................................... 6
20 Cal. Civ. Code § 1713 ................................................................................................................... 6
21 Cal. Civ. Code § 3426 ................................................................................................................... 5
22
Cal. Civ. Code § 3426.1(a) ........................................................................................................... 5
23
OTHER AUTHORITIES
24
1 Weil & Brown, Civil Procedure Before Trial (1990) § 7:85 ................................................... 13
25
26 5 Witkin, Cal. Proc. (3d ed. 1985) Pleading, § 927 .................................................................... 13
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1 I. INTRODUCTION
2 Defendants Janice Rapp, Patrick Russell, Sarah Ervin, Marina Mitchell, and Jeffrey
3 Chandler Galt (“Defendants”) used to work in the marketing department at Plaintiff Talkdesk,
4 Inc. (“Talkdesk”). As part of their employment, they signed a number of agreements that
5 contained confidentiality clauses, including the Proprietary Information and Inventions
6 Agreement (PIIA), Privacy and Security Policy, and Separation Letter and/or Separation
7 Agreement (collectively, the “Confidentiality Agreements”). The Confidentiality Agreements
8 specifically prohibited the disclosure or use of Talkdesk’s trade secrets and other proprietary or
9 confidential information. The PIIA also contained a non-solicitation provision that prohibited
10 each Defendant from soliciting employees of Talkdesk for one year after termination of their
11 employment.
12 As set forth in Plaintiff’s First Amended Complaint (“FAC”), on May 14, 2019,
13 Defendant Rapp left Talkdesk to work for Talkdesk’s direct competitor, 8x8, Inc. (“8x8”).
14 Defendant Rapp then solicited and encouraged the other Defendants to leave Talkdesk and join
15 her at 8x8. Within days to months, each of the Defendants left Talkdesk to work at 8x8. During
16 the last few days of their employment with Talkdesk, each of the Defendants accessed large
17 amounts of confidential and proprietary data belonging to Talkdesk and downloaded or e-mailed
18 such data to their personal e-mail accounts. This data was not only confidential but contained
19 Talkdesk’s trade secrets. The Defendants then disclosed this information to 8x8 and other of
20 Talkdesk’s competitors.
21 The FAC asserts three causes of action. The first cause of action for breach of contract
22 alleges that all Defendants breached the Confidentiality Agreements and that Defendant Rapp
23 breached the non-solicitation provision in the PIIA. The second cause of action for intentional
24 interference with contractual relations alleges that Defendants, in the course of their employment
25 with 8x8, disrupted Talkdesk’s economic relationship with its clients. The third cause of action
26 for misappropriation of trade secrets under the California Uniform Trade Secrets Act (“CUTSA”)
27 alleges, in part, that Defendants improperly acquired and used Talkdesk’s trade secrets by
28 downloading confidential files prior to leaving Talkdesk and beginning work at 8x8.
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1 Defendants’ Demurrer seeks dismissal of the entire FAC based on misapplications of the
2 law and contradictions in their own legal arguments, and therefore, should be overruled as to each
3 cause of action. Specifically, Defendants argue that Plaintiff has failed to allege sufficient facts
4 for each cause of action and, in explaining what is “lacking,” they demand more factual
5 specification than is legally required by California law. Although Defendants claim that the FAC
6 “generate[s] more questions than they answer,” (see Dem. at 6), Defendants will have the
7 opportunity to obtain more detailed information through discovery.
8 II. ARGUMENT
9 “A demurrer tests the sufficiency of the pleadings, the allegations of which must be
10 accepted as true by the court for purposes of review.” Angie M. Superior Court (Hiemstra), 37
11 Cal. App. 4th 1217, 1224 (1995). “A demurrer is not concerned with the likelihood that the
12 plaintiffs will prevail, nor even whether they have evidence to support their allegations.” Gervase
13 v. Superior Court, 31 Cal. App. 4th 1218, 1224 (1995) (internal citations omitted). Therefore,
14 “the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact
15 that might eventually form part of the plaintiff’s proof need not be alleged.” C.A. v. William S.
16 Hart Union High Sch. Dist., 53 Cal. 4th 861, 872 (2012). “[A]ll material facts pleaded in the
17 complaint and those that arise by reasonable implication, but not conclusions of fact or law, are
18 deemed admitted by the demurring party. The complaint must be construed liberally by drawing
19 reasonable inferences from the facts pleaded.” Rodas v. Spiegel, 87 Cal. App. 4th 513, 517 (2001)
20 (citations omitted).
21 A. Talkdesk States a Claim for Misappropriation of Trade Secrets
22 Defendants argue that “[b]ecause Talkdesk has failed to adequately allege facts
23 demonstrating a protectable trade secret and that the trade secret was acquired through improper
24 means, its trade secret misappropriation claim fails.” (Dem. at 10.) In doing so, Defendants apply
25 a heightened pleading standard of “sufficient particularity.” (See id. at 11 [“The Amended
26 Complaint fails to allege the subject matter of Talkdesk’s alleged trade secrets with sufficient
27 particularity to survive a demurrer.”].) As set forth above, California law liberally construes
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1 complaints and for most causes of action only requires pleading facts sufficient to state a cause of
2 action. Even though Plaintiff’s FAC does allege facts with sufficient particularity, the standard for
3 misappropriation of trade secret claims is the more flexible “reasonable particularity.”
4 The Advanced Modular court emphasized the flexibility of the statutory standard:
‘Reasonable particularity’ mandated by [CUTSA] does not mean that the party
5 alleging misappropriation has to define every minute detail of its claimed trade
secret at the outset of litigation. Nor does it require a discovery referee or trial court
6 to conduct a miniature trial on the merits of a misappropriation claim before
discovery may commence. Rather, it means that the plaintiff must make some
7 showing that is reasonable, i.e.,fair, proper, just and rational, under all of the
circumstances to identify its alleged trade secret in a manner that will allow the trial
8 court to control the scope of subsequent discovery, protect all parties’ proprietary
information, and allow them a fair opportunity to prepare and present their best case
9 or defense at a trial on the merits. The degree of ‘particularity’ that is ‘reasonable’
will differ, depending on the alleged trade secrets at issue in each case. . . . But it
10 remains true that, at this preliminary stage of the litigation, the proponent of the
alleged trade secret is not required, on pain of dismissal, to describe it with the
11 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.
12
Brescia v. Angelin, 172 Cal. App. 4th 133, 145 (2009) (emphasis in original) (citing Advanced
13
Modular Sputtering, Inc. v. Superior Court, 132 Cal. App. 4th 826, 835-36 (2005)).
14
Because of the sensitive nature of misappropriation of trade secret claims, the more liberal
15
standard of “reasonable particularity” is applied. Defendants failed to mention the appropriate
16
legal standard. Additionally, Defendants’ assertion that Plaintiff failed to allege sufficient facts to
17
support the first two elements of a trade secret misappropriation claim is without merit.
18
The FAC sufficiently identifies the trade secrets at issue, including by naming specific
19
documents that contain trade secrets. Talkdesk also alleges exactly how such trade secrets were
20
misappropriated; Defendants downloaded documents containing Talkdesk’s trade secrets and
21
forwarded them to personal e-mail accounts in the last few days of their employment. This level
22
of detail is sufficient to allow the court to control discovery, where further facts will be
23
uncovered.
24
1. Talkdesk Alleges a Protectable Trade Secret
25
Defendants also claim that Talkdesk fails to allege a trade secret because the FAC does
26
not plead facts showing the existence of a subject matter which is capable of protection as a trade
27
secret. (Dem. at 11.) Specifically, Defendants claim that Talkdesk’s “‘proprietary business,
28
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1 marketing and customer information’ which may or may not include information concerning
2 ‘research and development, marketing, strategy, customer contacts, allocation of resources,
3 pricing, margins, profitability, customer initiatives, leadership and talent initiatives and other
4 confidential information’” are “conclusory allegations” or “broad categories of business
5 information.” (Id. at 11 [quoting FAC ¶¶ 34, 66].) Defendants are incorrect.
6 First, Defendants completely ignore that the FAC lists specific documents that include or
7 constitute trade secrets: “Talkdesk Boost Datasheet, Opentalk 2019, Talkdesk’s FY20 Events,
8 Marketing for Field Sales, 2019 Customer Newsletter Template, Boost Campaign Messaging,
9 Future Vision – Emerging Growth, Aligned Meets Agile, Programs of the Year – Customer
10 Engagement, Sirius Foundations – Customer Engagement, CRO Plan – FY20, Digital Marketing
11 Reports/Stats.” (FAC ¶ 39.) Talkdesk need not describe the content of these documents under a
12 standard of reasonable particularity. See Advanced Modular, 132 Cal. App. 4th at 835
13 (“‘Reasonable particularity’ mandated by [CUTSA] does not mean that the party alleging
14 misappropriation has to define every minute detail of its claimed trade secret at the outset of
15 litigation.”); see also Brescia, 172 Cal. App. 4th at 149 (“The designation [of the trade secret]
16 should be liberally construed, and reasonable doubts about its sufficiency resolved in favor of
17 allowing discovery to go forward.”).
18 The FAC also describes Talkdesk’s trade secrets with reasonable particularity. (See FAC
19 ¶¶ 34, 39, 43, 66 [Talkdesk’s trade secrets include “product planning, technology, strategic
20 business planning, resource allocation, products under development, customer initiatives,
21 customer relationships, pricing, margins and marketing strategies”].)
22 Alleging categories of trade secrets protectable under California law, including marketing
23 strategy, customer lists, and product development plans, is sufficient under a standard of
24 reasonable particularity. See, e.g., Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443, 1456
25 (2002) (marketing plan is a protectable trade secret); Duncan v. Stuetzle, 76 F.3d 1480, 1488 n.1
26 (9th Cir. 1996) (same); American Paper & Packaging Products, Inc. v. Kirgan, 183 Cal. App. 3d
27 1318, 1323-24 (1986) (“A customer list is one of the types of information which can qualify as
28 a trade secret.”); ABBA Rubber Co. v. Seaquist, 235 Cal. App. 3d 1, 18, 18-20 (1991) (same);
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1 Courtesy Temporary Service, Inc. v. Camacho, 222 Cal. App. 3d 1278, 1288 (1990) (same);
2 Morlife, Inc. v. Perry, 56 Cal. App. 4th 1514, 1521-22 (1997) (same); Vacco Indus., Inc. v. Van
3 Den Berg, 5 Cal. 4th 34, 50 (1992) (“Plans and designs for an employer's products, which it
4 treated as secrets and took reasonable steps to protect, were trade secrets both at common law and
5 under the UTSA.”).
6 Defendants are also incorrect that the FAC does not allege facts separating its trade secrets
7 from matters of general knowledge. (See Dem. at 11.) Defendants fail to recognize that
8 protectable trade secrets may contain public information. See O2 Micro Int’l Ltd. v. Monolithic
9 Power Sys., Inc., 420 F. Supp. 2d 1070, 1089-90 (N.D. Cal. 2006). In fact, “[i]t does not matter if
10 a portion of the trade secret is generally known or even that every individual portion of the trade
11 secret is generally known, as long as some combination of all such information is not generally
12 known.” Id.; see also United States v. Nosal, 844 F.3d 1024, 1042 (9th Cir. 2016) (“The thrust of
13 [defendant’s] argument is that the source lists are composed largely, if not entirely, of public
14 information and therefore couldn't possibly be trade secrets. But he overlooks the principle that
15 a trade secret may consist of a compilation of data, public sources or a combination of proprietary
16 and public sources.”).
17 2. Talkdesk Alleges that Defendants Improperly Acquired a Trade Secret
18 Defendants argue that Talkdesk failed to allege misappropriation because “Talkdesk does
19 not plead any facts indicating that any of the items that the Defendants allegedly acquired
20 reflected or constituted Talkdesk’s trade secrets.” (Dem. at 12-13.) However, as discussed above,
21 the FAC adequately alleges the existence of trade secrets. Tellingly, Defendants do not argue that
22 their acquisition of the “items” constituting trade secrets was not misappropriation.
23 As noted by Defendants, to plead a cause of action for trade secret misappropriation under
24 CUTSA, a plaintiff must allege that the defendant acquired, disclosed, or used the trade secret
25 through improper means. Cal. Civ. Code § 3426. “Improper means” includes theft, bribery,
26 misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage
27 through electronic or other means. Cal. Civ. Code § 3426.1(a). Actual or threatened
28 misappropriation or use of trade secrets may be inferred from both direct and circumstantial
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1 evidence. See PMC, Inc. v. Kadisha, 78 Cal. App. 4th 1368, 1388-89 (2000).
2 Here, Talkdesk alleges that Defendants acquired the trade secrets through improper
3 means. Specifically, the FAC states that “within the last few days of their employment with
4 Talkdesk, each and every one of the Defendants accessed large amounts of confidential and
5 proprietary data belonging to Talkdesk that they had no reason or right to access, and downloaded
6 and/or e-mailed Talkdesk’s confidential data to their personal e-mail accounts.” (FAC ¶ 38.)
7 Defendants knew they were taking information that would be valuable to them in their
8 employment at 8x8 and that such taking was wrongful because they were bound by the
9 Confidentiality Agreements. See ReadyLink Healthcare v. Cotton, 126 Cal. App. 4th 1006, 1023
10 (2005) (former employee stealing documents prior to separation of employment is
11 misappropriation); In re Sotera Wireless, Inc., 591 B.R. 453 (2018) (when defendant downloaded
12 his prior employer’s files, he misappropriated the employer’s trade secrets within the meaning of
13 CUTSA). Again, it is telling that Defendants do not argue that the downloading and/or e-mailing
14 of Talkdesk’s documents does not constitute improper means, only that the information
15 downloaded did not contain trade secrets.
16 Further, the facts pled indicate that Defendants took Talkdesk’s files and records for their
17 new business dealings at 8x8. (See FAC ¶ 40 [Defendants’ disclosing of confidential and
18 proprietary information to third parties, including 8x8 and other competitors of Talkdesk also
19 constitutes “improper means”].) Defendants had no lawful right to use and possess Talkdesk’s
20 property, and certainly no lawful right to exploit Talkdesk’s confidential information and trade
21 secrets for their—or their new employer’s—benefit. See Cal. Civ. Code § 1712, 1713.
22 Therefore, Talkdesk adequately alleges a cause of action for trade secret misappropriation.
23 B. Talkdesk Adequately Plead a Cause of Action for Intentional Interference
with Contractual Relations
24
Defendants argue that Talkdesk’s second cause of action for intentional interference with
25
contractual relations fails for two reasons: (1) because the cause of action is preempted by
26
CUTSA and (2) because Talkdesk fails to allege breach of a contract with a third-party. Dem at
27
13, 14. Both arguments are without merit.
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1
1. CUTSA Does Not Preempt the Claim for Intentional Interference with
2 Contractual Relations
3
CUTSA does not preempt Talkdesk’s claim for intentional interference with contractual
4
relations for three reasons. First, CUTSA can only preempt the intentional interference claim if
5
CUTSA applies, and Defendants argue that the FAC does not state a claim under CUTSA.
6
Second, the intentional interference claim does not depend on the misappropriation of trade
7
secrets. Third, the preemption analysis is premature.
8
a. The Intentional Interference Claim Should Survive Demurrer
9 Because CUTSA Has a Preemptive Effect Only to the Extent it
Applies
10
CUTSA can only preempt other causes of action if it applies. Therefore, if this Court
11
agrees with Defendants’ argument that Talkdesk’s allegations cannot state a claim under CUTSA
12
because there is no protectable trade secret or misappropriation, CUTSA would be inapplicable.
13
Moreover, CUTSA has no preemptive effect on the non-CUTSA claims in the FAC.
14
b. The Intentional Interference Claim Does Not Depend Upon the
15 Misappropriation of Trade Secrets
16 In support of their preemption argument, Defendants rely solely on K.C. Multimedia, Inc.
17 v. Bank of America Technology & Operations, Inc., 171 Cal. App. 4th 939, 959 (2009), which
18 held that the plaintiff’s common law claims were preempted because “[i]n this case, the complaint
19 as a whole rests on factual allegations of trade secret misappropriation.” There, “each and every
20 cause of action hinge[d] upon the factual allegation that [defendants] misappropriated
21 [appellant’s] trade secrets.” Id. (alternations in original). K.C. Multimedia does not address the
22 scope of preemption where the other causes of action do not “depend upon the misappropriation
23 of trade secrets.” Thus, K.C. Multimedia does not stand for the broad proposition that CUTSA
24 bars all claims that simply share factual allegations. California courts, instead, hold that CUTSA
25 preempts only those claims “based upon the misappropriation of trade secrets.” See Javo
26 Beverage, Inc. v. California Extraction Ventures, Inc., 2019 WL 6467802, at *4 (S.D. Cal. Dec.
27 2, 2019) (held that CUTSA does not preempt contractual interference claim based solely on
28 confidential (but not trade secret) information.
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1 Here, unlike in K.C. Multimedia, the FAC alleges non-misappropriation related conduct
2 supporting the intentional interference claim. For example, the FAC alleges that Defendants
3 intentionally acted to deprive Talkdesk of its existing customer and contractual relationships by
4 conduct other than misappropriation of a trade secret. See FAC ¶ 61. Further, the trade secret
5 misappropriation claim is not based on the disclosure of trade secrets to Talkdesk’s former
6 clients. Rather, the misappropriation was complete upon the illegal download of Talkdesk’s trade
7 secrets and was otherwise committed when Defendants revealed Talkdesk’s trade secrets to 8x8.
8 Notably, if the misappropriated information turned out, for example, not to be trade secrets at all,
9 the other claims would still be viable. This is unlike the situation in K.C. Multimedia, where “the
10 complaint as a whole rests on factual allegations of trade secret misappropriation.” K.C.
11 Multimedia, 171 Cal. App. 4th at 959. Instead, Talkdesk’s intentional interference claim is
12 “independent and based on facts distinct from the facts that support the misappropriation claim.”
13 See Angelica Textile Services, Inc. v. Park, 220 Cal. App. 4th 495, 506 (2013).
14 c. The Preemption Analysis is Premature
15 California supports a plaintiff’s right to plead factually or legally alternative (and even
16 inconsistent) theories. Adams v. Paul, 11 Cal. 4th 583, 593 (1995). California even disproves of
17 forcing a party to elect between alternative legal theories at the pleading stage. Clauson v. Super.
18 Ct. (Pedus Services, Inc.), 67 Cal. App. 4th 1253, 1256 (1998); Smith v. Golden Eagle Ins. Co.,
19 69 Cal. App. 4th 1371, 1375 (1999). It is inappropriate to deprive Talkdesk of its right to plead in
20 the alternative at the pleading stage prior to the Court deciding the meaning and scope of CUTSA.
21 See Courtesy, 222 Cal. App. 3d at 1290-92; see also Radar v. Stone, 178 Cal. App. 3d 10, 29
22 (1986) (it is reversible error to require election between remedies before trial).
23 Moreover, common sense favors permitting alternative theories of liability for the simple
24 but important reason that if Talkdesk’s trade secrets are found not to be trade secrets, which is
25 something Defendants have and certainly will argue at trial, Talkdesk would be left
26 without any remedy if its non-trade secrets claims are preempted. That would be an unjust result
27 when the theft of confidential information, which does not rise to the level of trade secrets, is
28 itself a wrong requiring a remedy.
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1 Put differently, the fact that Talkdesk expects to prevail on its misappropriation claim
2 does not mean that it is not entitled to maintain independent claims, or should not be compensated
3 for Defendants' wrongdoing in the event the jury disagrees not with the wrongful acts of
4 Defendants but with the characterization of Talkdesk’s confidential business information as a
5 “trade secret.”
6 2. Talkdesk Alleges Interference of a Contract with a Third-Party
7 Defendants argue that the intentional interference claim fails because Talkdesk “does not
8 plead sufficient facts showing the existence of a valid contract with any client or partner, or (a)
9 allege that any of those unidentified third-parties breached, or failed to perform, any of their
10 contractual promises to Talkdesk, or (b) allege that Defendants made Talkdesk’s performance of
11 a third-party contract more difficult.” (Dem. at 14.)
12 To the contrary, Talkdesk adequately pleads an existing contractual or economic
13 relationship, or one containing the probability of future economic benefit, and acts by Defendant
14 designed to disrupt that relationship. See Della Penna v. Toyota Motor Sales, 11 Cal. App. 4th
15 376, 380 (1995); Quelimane Co. v. Stewart Title, 19 Cal. 4th 26, 55 (1998).
16 In Reeves v. Hanlon, 33 Cal. 4th 1140 (2004), two former employees of a law firm were
17 found liable for wrongfully interfering with the firm’s client relationships. The trial court found
18 that the defendants intentionally disrupted and impaired the plaintiff’s relationship with its clients
19 by destroying files and soliciting the clients through improper means and representations. Id. at
20 1146-47. Id. at 1153-55. The Court found wrongful conduct in the defendants’ intentional efforts
21 to cripple the plaintiff’s business by destroying client files, soliciting away the clients, and
22 cultivating employee discontent. Id. at 1154-55.
23 Here, Talkdesk’s allegations that the Defendants wrongfully interfered with Talkdesk’s
24 client relationships are sufficient to survive a demurrer. Talkdesk alleged that Defendants were
25 aware that Talkdesk had contracts with specific clients, with whom Defendants developed
26 relationships during the course of their employment with Talkdesk. FAC ¶¶ 47, 48, 59, 60, 61.
27 The FAC also alleges that Defendants intentionally interfered with those contracts by using
28
PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 9
DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458
G
1 information gained during their former employment with Talkdesk. Accordingly, Talkdesk
2 alleges facts sufficient to survive demurrer.
3 C. Talkdesk Adequately Pleads a Claim for Breach of Contract
4 Defendants argue that Talkdesk fails to allege breach of contract under either of two
5 theories—Defendants breached the Confidentiality Agreements and Defendant Rapp breached the
6 “non-solicitation provision” in the PIIA. (Dem. at 15.) Talkdesk adequately pleads breach under
7 both theories.
8
Preview
G 1 AYSE KENT (SBN 251114) ayse@aklaw.co 2 AK EMPLOYMENT LAW OFFICE ELECTRONICALLY 3 100 Pine Street, Suite 1250 San Francisco, CA 94111 F I L E D Superior Court of California, 4 Tel: (415) 638-9471 County of San Francisco 04/28/2020 5 Attorneys for Plaintiff Clerk of the Court BY: ERNALYN BURA 6 Deputy Clerk 7 SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 9 COUNTY OF SAN FRANCISCO 10 TALKDESK, INC., a Delaware corporation, Case No. CGC-19-580458 11 PLAINTIFF’S MEMORANDUM 12 Plaintiff, OF POINTS AND vs. AUTHORITIES IN OPPOSITION 13 TO DEFENDANTS’ DEMURRER JANICE RAPP, an individual; PATRICK TO FIRST AMENDED 14 RUSSELL, an individual; SARAH ERVIN, an COMPLAINT individual; MARINA MITCHELL, an individual; 15 JEFFREY CHANDLER GALT, an individual; and Date: May 11, 2020 16 DOES 1-10, inclusive. Time: 9:30 a.m. Dept: 302 17 Defendants. 18 Action filed: November 1, 2019 Trial date: None Set 19 20 21 22 23 24 25 26 27 28 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 TABLE OF CONTENTS 2 I. INTRODUCTION ............................................................................................................... 1 3 II. ARGUMENT ....................................................................................................................... 2 4 A. TALKDESK STATES A CLAIM FOR MISAPPROPRIATION OF TRADE 5 SECRETS....................................................................................................................... 2 6 1. Talkdesk Alleges a Protectable Trade Secret ........................................................... 3 7 2. Talkdesk Alleges that Defendants Improperly Acquired a Trade Secret ................. 5 8 B. TALKDESK ADEQUATELY PLEAD A CAUSE OF ACTION FOR INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS ............. 6 9 1. CUTSA Does Not Preempt the Claim for Intentional Interference with Contractual 10 Relations................................................................................................................... 7 11 a. The Intentional Interference Claim Should Survive Demurrer Because CUTSA 12 Has a Preemptive Effect Only to the Extent it Applies...................................... 7 13 b. The Intentional Interference Claim Does Not Depend Upon the Misappropriation of Trade Secrets ..................................................................... 7 14 c. The Preemption Analysis is Premature .............................................................. 8 15 16 2. Talkdesk Alleges Interference of a Contract with a Third-Party ............................. 9 17 C. TALKDESK ADEQUATELY PLEADS A CLAIM FOR BREACH OF CONTRACT ................................................................................................................ 10 18 1. Defendants Breached Their Confidentiality Obligations ....................................... 10 19 2. Defendant Rapp Breached the Non-Solicitation Provision.................................... 10 20 a. The Non-Solicitation Provision is Valid and Not Void ................................... 11 21 b. Talkdesk Alleges that Defendant Rapp Solicited Talkdesk’s Employees ....... 11 22 23 D. THE FAC SHOULD NOT BE DISMISSED ON THE BASIS OF UNCERTAINTY 12 24 E. IF THE COURT SUSTAINS THE DEMURRER, TALKDESK SHOULD BE GIVEN LEAVE TO AMEND................................................................................................... 13 25 III. CONCLUSION .................................................................................................................. 13 26 27 28 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ i DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 TABLE OF AUTHORITIES 2 CASES 3 ABBA Rubber Co. v. Seaquist, 235 Cal. App. 3d 1 (1991) ........................................................... 5 4 Adams v. Paul, 11 Cal. 4th 583 (1995) ......................................................................................... 8 5 Advanced Modular Sputtering, Inc. v. Superior Court, 132 Cal. App. 4th 826 6 (2005) .................................................................................................................................. 3, 4 7 American Paper & Packaging Products, Inc. v. Kirgan, 183 Cal. App. 3d 1318 8 (1986) ...................................................................................................................................... 4 9 Angelica Textile Services, Inc. v. Park, 220 Cal. App. 4th 495 (2013) ........................................ 8 10 Angie M. Superior Court (Hiemstra), 37 Cal. App. 4th 1217 (1995) ........................................... 2 11 Boughton v. Socony Mobil Oil Co., 231 Cal. App. 2d 188 (1984) ............................................. 11 12 Brescia v. Angelin, 172 Cal. App. 4th 133 (2009) .................................................................... 3, 4 13 C.A. v. William S. Hart Union High Sch. Dist., 53 Cal. 4th 861 (2012) ....................................... 2 14 Centex Homes v. St. Paul Fire & Marine Ins. Co., 237 Cal. App. 4th 23 (2015) ...................... 13 15 Clauson v. Super. Ct. (Pedus Services, Inc.), 67 Cal. App. 4th 1253 (1998) ............................... 8 16 Courtesy Temporary Service, Inc. v. Camacho, 222 Cal. App. 3d 1278 (1990) ...................... 5, 8 17 Della Penna v. Toyota Motor Sales, 11 Cal. App. 4th 376 (1995) ............................................... 9 18 Duncan v. Stuetzle, 76 F.3d 1480 (9th Cir. 1996) ......................................................................... 4 19 20 General Commercial Packaging, Inc. v. TPS Package Engineering, Inc., 114 F.3d 888 (9th Cir. 1996) ................................................................................................................ 11 21 Gervase v. Superior Court, 31 Cal. App. 4th 1218 (1995) ........................................................... 2 22 In re Sotera Wireless, Inc., 591 B.R. 453 (2018) .......................................................................... 6 23 Javo Beverage, Inc. v. California Extraction Ventures, Inc., 2019 WL 6467802 24 (S.D. Cal. Dec. 2, 2019) .......................................................................................................... 7 25 Jensen v. Home Depot, Inc., 24 Cal. App. 5th 92 (2018) ........................................................... 13 26 K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc., 171 Cal. 27 App. 4th 939 (2009) ............................................................................................................ 7, 8 28 Khoury v. Maly’s of Cal., Inc., 14 Cal. App. 4th 612 (1993)................................................ 12, 13 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ ii DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 Loral Corp. v. Moyes, 174 Cal. App. 3d 268 (1985) .................................................................. 11 2 Merlino v. West Coast Macaroni Mfg. Co., 90 Cal. App. 2d 106 (1949) ................................... 12 3 Morlife, Inc. v. Perry, 56 Cal. App. 4th 1514 (1997) ................................................................... 5 4 O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc., 420 F. Supp. 2d 1070 (N.D. 5 Cal. 2006) ................................................................................................................................ 5 6 PMC, Inc. v. Kadisha, 78 Cal. App. 4th 1368 (2000) ................................................................... 6 7 Quelimane Co. v. Stewart Title, 19 Cal. 4th 26 (1998) ................................................................. 9 8 Radar v. Stone, 178 Cal. App. 3d 10 (1986 .................................................................................. 8 9 ReadyLink Healthcare v. Cotton, 126 Cal. App. 4th 1006 (2005) ................................................ 6 10 Reeves v. Hanlon, 33 Cal. 4th 1140 (2004) .................................................................................. 9 11 Rodas v. Spiegel, 87 Cal. App. 4th 513 (2001) ....................................................................... 2, 12 12 Smith v. Golden Eagle Ins. Co., 69 Cal. App. 4th 1371 (1999) .................................................... 8 13 United States v. Nosal, 844 F.3d 1024 (9th Cir. 2016) ................................................................. 5 14 Vacco Indus., Inc. v. Van Den Berg, 5 Cal. 4th 34 (1992) ............................................................ 5 15 Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443, 1456 (2002)............................................... 4 16 Youngman v. Nevada Irrigation Dist., 70 Cal.2d 240 (1969) ..................................................... 13 17 18 STATUTES 19 Cal. Civ. Code § 1712 ................................................................................................................... 6 20 Cal. Civ. Code § 1713 ................................................................................................................... 6 21 Cal. Civ. Code § 3426 ................................................................................................................... 5 22 Cal. Civ. Code § 3426.1(a) ........................................................................................................... 5 23 OTHER AUTHORITIES 24 1 Weil & Brown, Civil Procedure Before Trial (1990) § 7:85 ................................................... 13 25 26 5 Witkin, Cal. Proc. (3d ed. 1985) Pleading, § 927 .................................................................... 13 27 28 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ iii DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 I. INTRODUCTION 2 Defendants Janice Rapp, Patrick Russell, Sarah Ervin, Marina Mitchell, and Jeffrey 3 Chandler Galt (“Defendants”) used to work in the marketing department at Plaintiff Talkdesk, 4 Inc. (“Talkdesk”). As part of their employment, they signed a number of agreements that 5 contained confidentiality clauses, including the Proprietary Information and Inventions 6 Agreement (PIIA), Privacy and Security Policy, and Separation Letter and/or Separation 7 Agreement (collectively, the “Confidentiality Agreements”). The Confidentiality Agreements 8 specifically prohibited the disclosure or use of Talkdesk’s trade secrets and other proprietary or 9 confidential information. The PIIA also contained a non-solicitation provision that prohibited 10 each Defendant from soliciting employees of Talkdesk for one year after termination of their 11 employment. 12 As set forth in Plaintiff’s First Amended Complaint (“FAC”), on May 14, 2019, 13 Defendant Rapp left Talkdesk to work for Talkdesk’s direct competitor, 8x8, Inc. (“8x8”). 14 Defendant Rapp then solicited and encouraged the other Defendants to leave Talkdesk and join 15 her at 8x8. Within days to months, each of the Defendants left Talkdesk to work at 8x8. During 16 the last few days of their employment with Talkdesk, each of the Defendants accessed large 17 amounts of confidential and proprietary data belonging to Talkdesk and downloaded or e-mailed 18 such data to their personal e-mail accounts. This data was not only confidential but contained 19 Talkdesk’s trade secrets. The Defendants then disclosed this information to 8x8 and other of 20 Talkdesk’s competitors. 21 The FAC asserts three causes of action. The first cause of action for breach of contract 22 alleges that all Defendants breached the Confidentiality Agreements and that Defendant Rapp 23 breached the non-solicitation provision in the PIIA. The second cause of action for intentional 24 interference with contractual relations alleges that Defendants, in the course of their employment 25 with 8x8, disrupted Talkdesk’s economic relationship with its clients. The third cause of action 26 for misappropriation of trade secrets under the California Uniform Trade Secrets Act (“CUTSA”) 27 alleges, in part, that Defendants improperly acquired and used Talkdesk’s trade secrets by 28 downloading confidential files prior to leaving Talkdesk and beginning work at 8x8. PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 1 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 Defendants’ Demurrer seeks dismissal of the entire FAC based on misapplications of the 2 law and contradictions in their own legal arguments, and therefore, should be overruled as to each 3 cause of action. Specifically, Defendants argue that Plaintiff has failed to allege sufficient facts 4 for each cause of action and, in explaining what is “lacking,” they demand more factual 5 specification than is legally required by California law. Although Defendants claim that the FAC 6 “generate[s] more questions than they answer,” (see Dem. at 6), Defendants will have the 7 opportunity to obtain more detailed information through discovery. 8 II. ARGUMENT 9 “A demurrer tests the sufficiency of the pleadings, the allegations of which must be 10 accepted as true by the court for purposes of review.” Angie M. Superior Court (Hiemstra), 37 11 Cal. App. 4th 1217, 1224 (1995). “A demurrer is not concerned with the likelihood that the 12 plaintiffs will prevail, nor even whether they have evidence to support their allegations.” Gervase 13 v. Superior Court, 31 Cal. App. 4th 1218, 1224 (1995) (internal citations omitted). Therefore, 14 “the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact 15 that might eventually form part of the plaintiff’s proof need not be alleged.” C.A. v. William S. 16 Hart Union High Sch. Dist., 53 Cal. 4th 861, 872 (2012). “[A]ll material facts pleaded in the 17 complaint and those that arise by reasonable implication, but not conclusions of fact or law, are 18 deemed admitted by the demurring party. The complaint must be construed liberally by drawing 19 reasonable inferences from the facts pleaded.” Rodas v. Spiegel, 87 Cal. App. 4th 513, 517 (2001) 20 (citations omitted). 21 A. Talkdesk States a Claim for Misappropriation of Trade Secrets 22 Defendants argue that “[b]ecause Talkdesk has failed to adequately allege facts 23 demonstrating a protectable trade secret and that the trade secret was acquired through improper 24 means, its trade secret misappropriation claim fails.” (Dem. at 10.) In doing so, Defendants apply 25 a heightened pleading standard of “sufficient particularity.” (See id. at 11 [“The Amended 26 Complaint fails to allege the subject matter of Talkdesk’s alleged trade secrets with sufficient 27 particularity to survive a demurrer.”].) As set forth above, California law liberally construes 28 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 2 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 complaints and for most causes of action only requires pleading facts sufficient to state a cause of 2 action. Even though Plaintiff’s FAC does allege facts with sufficient particularity, the standard for 3 misappropriation of trade secret claims is the more flexible “reasonable particularity.” 4 The Advanced Modular court emphasized the flexibility of the statutory standard: ‘Reasonable particularity’ mandated by [CUTSA] does not mean that the party 5 alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of litigation. Nor does it require a discovery referee or trial court 6 to conduct a miniature trial on the merits of a misappropriation claim before discovery may commence. Rather, it means that the plaintiff must make some 7 showing that is reasonable, i.e.,fair, proper, just and rational, under all of the circumstances to identify its alleged trade secret in a manner that will allow the trial 8 court to control the scope of subsequent discovery, protect all parties’ proprietary information, and allow them a fair opportunity to prepare and present their best case 9 or defense at a trial on the merits. The degree of ‘particularity’ that is ‘reasonable’ will differ, depending on the alleged trade secrets at issue in each case. . . . But it 10 remains true that, at this preliminary stage of the litigation, the proponent of the alleged trade secret is not required, on pain of dismissal, to describe it with the 11 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. 12 Brescia v. Angelin, 172 Cal. App. 4th 133, 145 (2009) (emphasis in original) (citing Advanced 13 Modular Sputtering, Inc. v. Superior Court, 132 Cal. App. 4th 826, 835-36 (2005)). 14 Because of the sensitive nature of misappropriation of trade secret claims, the more liberal 15 standard of “reasonable particularity” is applied. Defendants failed to mention the appropriate 16 legal standard. Additionally, Defendants’ assertion that Plaintiff failed to allege sufficient facts to 17 support the first two elements of a trade secret misappropriation claim is without merit. 18 The FAC sufficiently identifies the trade secrets at issue, including by naming specific 19 documents that contain trade secrets. Talkdesk also alleges exactly how such trade secrets were 20 misappropriated; Defendants downloaded documents containing Talkdesk’s trade secrets and 21 forwarded them to personal e-mail accounts in the last few days of their employment. This level 22 of detail is sufficient to allow the court to control discovery, where further facts will be 23 uncovered. 24 1. Talkdesk Alleges a Protectable Trade Secret 25 Defendants also claim that Talkdesk fails to allege a trade secret because the FAC does 26 not plead facts showing the existence of a subject matter which is capable of protection as a trade 27 secret. (Dem. at 11.) Specifically, Defendants claim that Talkdesk’s “‘proprietary business, 28 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 3 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 marketing and customer information’ which may or may not include information concerning 2 ‘research and development, marketing, strategy, customer contacts, allocation of resources, 3 pricing, margins, profitability, customer initiatives, leadership and talent initiatives and other 4 confidential information’” are “conclusory allegations” or “broad categories of business 5 information.” (Id. at 11 [quoting FAC ¶¶ 34, 66].) Defendants are incorrect. 6 First, Defendants completely ignore that the FAC lists specific documents that include or 7 constitute trade secrets: “Talkdesk Boost Datasheet, Opentalk 2019, Talkdesk’s FY20 Events, 8 Marketing for Field Sales, 2019 Customer Newsletter Template, Boost Campaign Messaging, 9 Future Vision – Emerging Growth, Aligned Meets Agile, Programs of the Year – Customer 10 Engagement, Sirius Foundations – Customer Engagement, CRO Plan – FY20, Digital Marketing 11 Reports/Stats.” (FAC ¶ 39.) Talkdesk need not describe the content of these documents under a 12 standard of reasonable particularity. See Advanced Modular, 132 Cal. App. 4th at 835 13 (“‘Reasonable particularity’ mandated by [CUTSA] does not mean that the party alleging 14 misappropriation has to define every minute detail of its claimed trade secret at the outset of 15 litigation.”); see also Brescia, 172 Cal. App. 4th at 149 (“The designation [of the trade secret] 16 should be liberally construed, and reasonable doubts about its sufficiency resolved in favor of 17 allowing discovery to go forward.”). 18 The FAC also describes Talkdesk’s trade secrets with reasonable particularity. (See FAC 19 ¶¶ 34, 39, 43, 66 [Talkdesk’s trade secrets include “product planning, technology, strategic 20 business planning, resource allocation, products under development, customer initiatives, 21 customer relationships, pricing, margins and marketing strategies”].) 22 Alleging categories of trade secrets protectable under California law, including marketing 23 strategy, customer lists, and product development plans, is sufficient under a standard of 24 reasonable particularity. See, e.g., Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443, 1456 25 (2002) (marketing plan is a protectable trade secret); Duncan v. Stuetzle, 76 F.3d 1480, 1488 n.1 26 (9th Cir. 1996) (same); American Paper & Packaging Products, Inc. v. Kirgan, 183 Cal. App. 3d 27 1318, 1323-24 (1986) (“A customer list is one of the types of information which can qualify as 28 a trade secret.”); ABBA Rubber Co. v. Seaquist, 235 Cal. App. 3d 1, 18, 18-20 (1991) (same); PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 4 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 Courtesy Temporary Service, Inc. v. Camacho, 222 Cal. App. 3d 1278, 1288 (1990) (same); 2 Morlife, Inc. v. Perry, 56 Cal. App. 4th 1514, 1521-22 (1997) (same); Vacco Indus., Inc. v. Van 3 Den Berg, 5 Cal. 4th 34, 50 (1992) (“Plans and designs for an employer's products, which it 4 treated as secrets and took reasonable steps to protect, were trade secrets both at common law and 5 under the UTSA.”). 6 Defendants are also incorrect that the FAC does not allege facts separating its trade secrets 7 from matters of general knowledge. (See Dem. at 11.) Defendants fail to recognize that 8 protectable trade secrets may contain public information. See O2 Micro Int’l Ltd. v. Monolithic 9 Power Sys., Inc., 420 F. Supp. 2d 1070, 1089-90 (N.D. Cal. 2006). In fact, “[i]t does not matter if 10 a portion of the trade secret is generally known or even that every individual portion of the trade 11 secret is generally known, as long as some combination of all such information is not generally 12 known.” Id.; see also United States v. Nosal, 844 F.3d 1024, 1042 (9th Cir. 2016) (“The thrust of 13 [defendant’s] argument is that the source lists are composed largely, if not entirely, of public 14 information and therefore couldn't possibly be trade secrets. But he overlooks the principle that 15 a trade secret may consist of a compilation of data, public sources or a combination of proprietary 16 and public sources.”). 17 2. Talkdesk Alleges that Defendants Improperly Acquired a Trade Secret 18 Defendants argue that Talkdesk failed to allege misappropriation because “Talkdesk does 19 not plead any facts indicating that any of the items that the Defendants allegedly acquired 20 reflected or constituted Talkdesk’s trade secrets.” (Dem. at 12-13.) However, as discussed above, 21 the FAC adequately alleges the existence of trade secrets. Tellingly, Defendants do not argue that 22 their acquisition of the “items” constituting trade secrets was not misappropriation. 23 As noted by Defendants, to plead a cause of action for trade secret misappropriation under 24 CUTSA, a plaintiff must allege that the defendant acquired, disclosed, or used the trade secret 25 through improper means. Cal. Civ. Code § 3426. “Improper means” includes theft, bribery, 26 misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage 27 through electronic or other means. Cal. Civ. Code § 3426.1(a). Actual or threatened 28 misappropriation or use of trade secrets may be inferred from both direct and circumstantial PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 5 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 evidence. See PMC, Inc. v. Kadisha, 78 Cal. App. 4th 1368, 1388-89 (2000). 2 Here, Talkdesk alleges that Defendants acquired the trade secrets through improper 3 means. Specifically, the FAC states that “within the last few days of their employment with 4 Talkdesk, each and every one of the Defendants accessed large amounts of confidential and 5 proprietary data belonging to Talkdesk that they had no reason or right to access, and downloaded 6 and/or e-mailed Talkdesk’s confidential data to their personal e-mail accounts.” (FAC ¶ 38.) 7 Defendants knew they were taking information that would be valuable to them in their 8 employment at 8x8 and that such taking was wrongful because they were bound by the 9 Confidentiality Agreements. See ReadyLink Healthcare v. Cotton, 126 Cal. App. 4th 1006, 1023 10 (2005) (former employee stealing documents prior to separation of employment is 11 misappropriation); In re Sotera Wireless, Inc., 591 B.R. 453 (2018) (when defendant downloaded 12 his prior employer’s files, he misappropriated the employer’s trade secrets within the meaning of 13 CUTSA). Again, it is telling that Defendants do not argue that the downloading and/or e-mailing 14 of Talkdesk’s documents does not constitute improper means, only that the information 15 downloaded did not contain trade secrets. 16 Further, the facts pled indicate that Defendants took Talkdesk’s files and records for their 17 new business dealings at 8x8. (See FAC ¶ 40 [Defendants’ disclosing of confidential and 18 proprietary information to third parties, including 8x8 and other competitors of Talkdesk also 19 constitutes “improper means”].) Defendants had no lawful right to use and possess Talkdesk’s 20 property, and certainly no lawful right to exploit Talkdesk’s confidential information and trade 21 secrets for their—or their new employer’s—benefit. See Cal. Civ. Code § 1712, 1713. 22 Therefore, Talkdesk adequately alleges a cause of action for trade secret misappropriation. 23 B. Talkdesk Adequately Plead a Cause of Action for Intentional Interference with Contractual Relations 24 Defendants argue that Talkdesk’s second cause of action for intentional interference with 25 contractual relations fails for two reasons: (1) because the cause of action is preempted by 26 CUTSA and (2) because Talkdesk fails to allege breach of a contract with a third-party. Dem at 27 13, 14. Both arguments are without merit. 28 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 6 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 1. CUTSA Does Not Preempt the Claim for Intentional Interference with 2 Contractual Relations 3 CUTSA does not preempt Talkdesk’s claim for intentional interference with contractual 4 relations for three reasons. First, CUTSA can only preempt the intentional interference claim if 5 CUTSA applies, and Defendants argue that the FAC does not state a claim under CUTSA. 6 Second, the intentional interference claim does not depend on the misappropriation of trade 7 secrets. Third, the preemption analysis is premature. 8 a. The Intentional Interference Claim Should Survive Demurrer 9 Because CUTSA Has a Preemptive Effect Only to the Extent it Applies 10 CUTSA can only preempt other causes of action if it applies. Therefore, if this Court 11 agrees with Defendants’ argument that Talkdesk’s allegations cannot state a claim under CUTSA 12 because there is no protectable trade secret or misappropriation, CUTSA would be inapplicable. 13 Moreover, CUTSA has no preemptive effect on the non-CUTSA claims in the FAC. 14 b. The Intentional Interference Claim Does Not Depend Upon the 15 Misappropriation of Trade Secrets 16 In support of their preemption argument, Defendants rely solely on K.C. Multimedia, Inc. 17 v. Bank of America Technology & Operations, Inc., 171 Cal. App. 4th 939, 959 (2009), which 18 held that the plaintiff’s common law claims were preempted because “[i]n this case, the complaint 19 as a whole rests on factual allegations of trade secret misappropriation.” There, “each and every 20 cause of action hinge[d] upon the factual allegation that [defendants] misappropriated 21 [appellant’s] trade secrets.” Id. (alternations in original). K.C. Multimedia does not address the 22 scope of preemption where the other causes of action do not “depend upon the misappropriation 23 of trade secrets.” Thus, K.C. Multimedia does not stand for the broad proposition that CUTSA 24 bars all claims that simply share factual allegations. California courts, instead, hold that CUTSA 25 preempts only those claims “based upon the misappropriation of trade secrets.” See Javo 26 Beverage, Inc. v. California Extraction Ventures, Inc., 2019 WL 6467802, at *4 (S.D. Cal. Dec. 27 2, 2019) (held that CUTSA does not preempt contractual interference claim based solely on 28 confidential (but not trade secret) information. PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 7 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 Here, unlike in K.C. Multimedia, the FAC alleges non-misappropriation related conduct 2 supporting the intentional interference claim. For example, the FAC alleges that Defendants 3 intentionally acted to deprive Talkdesk of its existing customer and contractual relationships by 4 conduct other than misappropriation of a trade secret. See FAC ¶ 61. Further, the trade secret 5 misappropriation claim is not based on the disclosure of trade secrets to Talkdesk’s former 6 clients. Rather, the misappropriation was complete upon the illegal download of Talkdesk’s trade 7 secrets and was otherwise committed when Defendants revealed Talkdesk’s trade secrets to 8x8. 8 Notably, if the misappropriated information turned out, for example, not to be trade secrets at all, 9 the other claims would still be viable. This is unlike the situation in K.C. Multimedia, where “the 10 complaint as a whole rests on factual allegations of trade secret misappropriation.” K.C. 11 Multimedia, 171 Cal. App. 4th at 959. Instead, Talkdesk’s intentional interference claim is 12 “independent and based on facts distinct from the facts that support the misappropriation claim.” 13 See Angelica Textile Services, Inc. v. Park, 220 Cal. App. 4th 495, 506 (2013). 14 c. The Preemption Analysis is Premature 15 California supports a plaintiff’s right to plead factually or legally alternative (and even 16 inconsistent) theories. Adams v. Paul, 11 Cal. 4th 583, 593 (1995). California even disproves of 17 forcing a party to elect between alternative legal theories at the pleading stage. Clauson v. Super. 18 Ct. (Pedus Services, Inc.), 67 Cal. App. 4th 1253, 1256 (1998); Smith v. Golden Eagle Ins. Co., 19 69 Cal. App. 4th 1371, 1375 (1999). It is inappropriate to deprive Talkdesk of its right to plead in 20 the alternative at the pleading stage prior to the Court deciding the meaning and scope of CUTSA. 21 See Courtesy, 222 Cal. App. 3d at 1290-92; see also Radar v. Stone, 178 Cal. App. 3d 10, 29 22 (1986) (it is reversible error to require election between remedies before trial). 23 Moreover, common sense favors permitting alternative theories of liability for the simple 24 but important reason that if Talkdesk’s trade secrets are found not to be trade secrets, which is 25 something Defendants have and certainly will argue at trial, Talkdesk would be left 26 without any remedy if its non-trade secrets claims are preempted. That would be an unjust result 27 when the theft of confidential information, which does not rise to the level of trade secrets, is 28 itself a wrong requiring a remedy. PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 8 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 Put differently, the fact that Talkdesk expects to prevail on its misappropriation claim 2 does not mean that it is not entitled to maintain independent claims, or should not be compensated 3 for Defendants' wrongdoing in the event the jury disagrees not with the wrongful acts of 4 Defendants but with the characterization of Talkdesk’s confidential business information as a 5 “trade secret.” 6 2. Talkdesk Alleges Interference of a Contract with a Third-Party 7 Defendants argue that the intentional interference claim fails because Talkdesk “does not 8 plead sufficient facts showing the existence of a valid contract with any client or partner, or (a) 9 allege that any of those unidentified third-parties breached, or failed to perform, any of their 10 contractual promises to Talkdesk, or (b) allege that Defendants made Talkdesk’s performance of 11 a third-party contract more difficult.” (Dem. at 14.) 12 To the contrary, Talkdesk adequately pleads an existing contractual or economic 13 relationship, or one containing the probability of future economic benefit, and acts by Defendant 14 designed to disrupt that relationship. See Della Penna v. Toyota Motor Sales, 11 Cal. App. 4th 15 376, 380 (1995); Quelimane Co. v. Stewart Title, 19 Cal. 4th 26, 55 (1998). 16 In Reeves v. Hanlon, 33 Cal. 4th 1140 (2004), two former employees of a law firm were 17 found liable for wrongfully interfering with the firm’s client relationships. The trial court found 18 that the defendants intentionally disrupted and impaired the plaintiff’s relationship with its clients 19 by destroying files and soliciting the clients through improper means and representations. Id. at 20 1146-47. Id. at 1153-55. The Court found wrongful conduct in the defendants’ intentional efforts 21 to cripple the plaintiff’s business by destroying client files, soliciting away the clients, and 22 cultivating employee discontent. Id. at 1154-55. 23 Here, Talkdesk’s allegations that the Defendants wrongfully interfered with Talkdesk’s 24 client relationships are sufficient to survive a demurrer. Talkdesk alleged that Defendants were 25 aware that Talkdesk had contracts with specific clients, with whom Defendants developed 26 relationships during the course of their employment with Talkdesk. FAC ¶¶ 47, 48, 59, 60, 61. 27 The FAC also alleges that Defendants intentionally interfered with those contracts by using 28 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ 9 DEMURRER TO FIRST AMENDED COMPLAINT; Case No. CGC-190580458 G 1 information gained during their former employment with Talkdesk. Accordingly, Talkdesk 2 alleges facts sufficient to survive demurrer. 3 C. Talkdesk Adequately Pleads a Claim for Breach of Contract 4 Defendants argue that Talkdesk fails to allege breach of contract under either of two 5 theories—Defendants breached the Confidentiality Agreements and Defendant Rapp breached the 6 “non-solicitation provision” in the PIIA. (Dem. at 15.) Talkdesk adequately pleads breach under 7 both theories. 8