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1 Gary Gansle, Esq., Bar No. 200755
GGansle@perkinscoie.com
2 PERKINS COIE LLP
3150 Porter Drive ELECTRONICALLY
3 Palo Alto, California 94304-1212
Telephone: 650.838.4300
F I L E D
Superior Court of California,
4 Facsimile: 650.838.4350 County of San Francisco
07/08/2020
5 Matthew Goldberg, Esq., Bar No. 267295 Clerk of the Court
MGoldberg@perkinscoie.com BY: SANDRA SCHIRO
Deputy Clerk
6 PERKINS COIE LLP
505 Howard Street, Suite 1000
7 San Francisco, California 94105-3204
Telephone: 415.344.7000
8 Facsimile: 415.344.7050
9 Jeannil D. Boji, Esq. (appearing pro hac vice)
JBoji@perkinscoie.com
10 Christopher R. Lepore, Esq. (appearing pro hac vice)
CLepore@perkinscoie.com
11 PERKINS COIE LLP
131 S. Dearborn St., Suite 1700
12 Chicago, Illinois 60603-5559
Telephone: 312.324.8400
13 Facsimile: 312.324.9400
14 Attorneys for Plaintiffs
INFINITE EQUITY, INC., JON BURG AND DEIDRE
15 SALISBURY
16 SUPERIOR COURT OF THE STATE OF CALIFORNIA
17 COUNTY OF SAN FRANCISCO
18 INFINITE EQUITY, INC., a Delaware Case No. CGC-20-582962
Corporation, JON BURG, an individual, and
19 DEIDRE (SCHELIN) SALISBURY, an individual, [Designated Complex - Assigned for all
purposes to Dept. 304]
20 Plaintiffs,
MEMORANDUM OF POINTS OF
21 v. AUTHORITY IN SUPPORT FOR
MOTION FOR PRELIMINARY
22 AON PLC, a United Kingdom Corporation, AON INJUNCTION
GROUP, INC., a Maryland Corporation, AON
23 CONSULTING & INSURANCE SERVICES, [Filed concurrently with Notice of
INC., a California Corporation, and AON Motion and Motion for Preliminary
24 CONSULTING, INC., a New Jersey Corporation, Injunction, Decl. of Jon Burg, Decl. of
DOES 1 through 50, inclusive, Deidre Salisbury, Decl. of Christopher
25 Lepore, Compendium of Non-California
Defendants.
Authorities, and [Proposed] Order]
26
Date: July 30, 2020
27 Time: 11:00 a.m.
28
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 Action Filed: February 14, 2020
Trial Date: None set.
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MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 TABLE OF CONTENTS
2 Page
3 2
PRELIMINARY STATEMENT..................................................................................................... 6
4
FACTUAL AND PROCEDURAL BACKGROUND .................................................................... 6
5 I. Plaintiff Jon Burg’s Employment with Aon............................................................ 6
6 II. Plaintiff Deidre Salisbury’s Employment with Aon ............................................... 7
III. Burg and Salisbury leave Aon for Infinite Equity .................................................. 7
7
IV. Burg’s RSU Agreements ......................................................................................... 8
8 V. Salisbury’s Confidentiality and Non-Solicitation Agreement ................................ 9
9 VI. Because Aon Cannot Legitimately Compete, it is Attempting to Leverage
its Considerable Resources to Circumvent California Law and ENFORCE
10 UNLAWFUL RESTRICTIONS ........................................................................... 10
LEGAL STANDARD ................................................................................................................... 10
11
I. PLAINTIFFS ARE LIKELY TO PREVAIL ON THE MERITS OF THEIR
12 DECLARATORY JUDGMENT CAUSES OF ACTION (CAUSES OF
ACTION I-III)....................................................................................................... 11
13 A. California Law Applies to Burg’s RSU Agreements ................................ 12
14 1. The Choice-of-Law and Choice-of-Forum Venue Provisions
in the RSU Agreements Are Void under Section 925 of the
15 California Labor Code .................................................................. 12
2. Even if Section 925 Does Not Apply, California Law
16 Applies to Burg’s RSU Agreements Under California’s
Choice-of-Law Rules .................................................................... 13
17
3. The Non-Competes Violate Fundamental California Public
18 Policy ............................................................................................ 14
4. California Has a Materially Greater Interest in the Dispute ......... 15
19
B. The Anti-Competitive Restrictive Covenants in Salisbury’s and
20 Burg’s Agreements Are Unlawful and Unenforceable under
California Law .......................................................................................... 16
21 C. Salisbury’s Claims are Ripe and Justiciable ............................................. 17
22 II. PLAINTIFFS ARE LIKELY TO PREVAIL ON THEIR CLAIM FOR
UNFAIR COMPETITION (CAUSE OF ACTION IV)........................................ 18
23 III. THE IRREPARABLE HARM TO PLAINTIFFS WITHOUT AN
INJUNCTION SIGNIFICANTLY OUTWEIGHS ANY SUPPOSED
24 HARM TO AON ................................................................................................... 19
25 IV. CONCLUSION ..................................................................................................... 20
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MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 TABLE OF AUTHORITIES
2 Page
3 CASES
4 AMN Healthcare, Inc. v. AYA Healthcare Servs. Inc.
(2018) 28 Cal.App.5th 923 ...........................................................................................11, 17, 20
5
6 Anderson v. Souza
(1952) 38 Cal.2d 825 ................................................................................................................19
7
Application Group, Inc. v. Hunter Group, Inc.
8 (1998) 61 Cal.App.4th 881 ............................................................................................... passim
9 Arkley, et al. v. Aon Risk Services Companies, Inc., et al.
(C.D. Cal. Jun. 13, 2012) No. CV-12-1966 DSF, Dkt. No. 49 .................................................17
10
Davis v. Advanced Care Techs., Inc.
11
(E.D. Cal. Aug. 8, 2007) No. ....................................................................................................15
12
Davis v. Continental Airlines, Inc.
13 (1997) 59 Cal.App.4th 205 .......................................................................................................14
14 Donahue Schriber Realty Group, Inc. v. Nu Creation Outreach
(2014) 232 Cal.App.4th 1171 ...................................................................................................19
15
Dowell v. Biosense Webster, Inc.
16 (2009) 179 Cal.App.4th 564 .....................................................................................................16
17
Edwards v. Arthur Andersen LLP
18 (2008) 44 Cal.4th 937 .........................................................................................................14, 16
19 Heffernan v. Aon Risk Services Companies, Inc., et al.
(Oct. 16, 2017, Super. Ct. Santa Clara County, Case No. 16-CV-290777) ..................16, 17, 18
20
Integrated Dynamic Sols., Inc. v. VitaVet Labs, Inc.
21 (2016) 6 Cal.App.5th 1178 .......................................................................................................11
22
Korea Supply Co. v. Lockheed Martin Corp.
23 (2003) 29 Cal.4th 1134 .............................................................................................................18
24 Lawrence & Allen, Inc. v. Cambridge Human Res. Grp., Inc.
(1997) 292 Ill.App. 3d 131........................................................................................................14
25
Lee v. Silveira
26 (2016) 6 Cal.App.5th 527 .........................................................................................................11
27 Lyon v. Neustar, Inc.
28 (E.D. Cal. May 3, 2019) No. 2:19-cv-00371-KJM-KJN, 2019 WL 1978802 ..........................12
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 TABLE OF AUTHORITIES
(continued)
2 Page
3 Osseous Techs. of Am., Inc. v. DiscoveryOrtho Partners LLC
(2010) 191 Cal.App.4th 357 .....................................................................................................11
4
Rincon EV Realty LLC v. CP III Rincon Towers, Inc.
5
(2017) 8 Cal.App.5th 1 .............................................................................................................13
6
Roadrunner Intermodal Servs., LLC v. T.G.S. Transportation, Inc.
7 (E.D. Cal. Mar. 28, 2019) No. 1:17-cv-01056-DAD-BAM, 2019 WL 1400093 .....................14
8 Robbins v. Superior Court
(1985) 38 Cal.3d 199 ................................................................................................................10
9
Robinson v. U-Haul Co. of California
10 (2016) 4 Cal.App.5th 304 ...................................................................................................17, 18
11
Sobremonte v. Superior Court
12 (1998) 61 Cal.App.4th 980 .......................................................................................................14
13 Take Me Home Rescue v. Luri
(2012) 208 Cal.App.4th 1342 ...................................................................................................11
14
Taylor v. Aon Risk Services Consulting Inc., et al.
15 (Nov. 6, 2019, Super. Ct. San Francisco County, Case No. CGC19580564) ...........................17
16 Wind v. Herbert
17 (1960) 186 Cal.App.2d 276.......................................................................................................19
18 Yeomans v. World Fin. Grp. Ins. Agency, Inc.
(N.D. Cal. Nov. 6, 2019) No. 19-cv-00792-EMC, 2019 WL 5789273 ....................................13
19
STATUTES
20
California Business and Professions Code:
21 Section 16600 .................................................................................................................... passim
22 Section 17204 ............................................................................................................................18
Section 17200 ................................................................................................................14, 18, 19
23
California Code of Civil Procedure:
24 Section 526(a)(2).......................................................................................................................10
Section 1060 ..............................................................................................................................11
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California Labor Code Section 925 ..........................................................................................12, 13
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MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 PRELIMINARY STATEMENT
2 Plaintiffs Infinite Equity, Inc., (“Infinite Equity”), Jon Burg (“Burg”), and Deidre
3 Salisbury (“Salisbury”) (collectively, “Plaintiffs”) seek a preliminary injunction to stop
4 Defendants Aon plc, Aon Group, Inc., Aon Consulting & Insurance Services, Inc., and Aon
5 Consulting Inc.’s (“Aon”)1 from their harmful unfair business practices of subjecting California
6 residents and employers to unequivocally unlawful anti-competitive restrictions. Because Aon is
7 well aware its restrictive covenant agreements cannot be enforced in California, it employs a
8 series of well-worn (yet oft-rejected) tactics to avoid the judicial scrutiny of California courts.
9 Aon utilizes a complex corporate scheme with numerous entities incorporated in various states
10 across the country. Aon then requires its employees, as a condition of employment, to sign
11 employment agreements or Restricted Stock Unit (“RSU”) Agreements with different entities that
12 contain unlawful restrictive covenants, which have different and conflicting provisions governing
13 choice of law, venue, and forum. California courts have already found these tactics unlawful and
14 declared the restrictive covenants in Aon’s employment agreements unenforceable as a matter of
15 law. Aon’s anti-competitive conduct runs afoul of fundamental principles of California law, has
16 harmed (and will continue to harm) Plaintiffs, and must be stopped.
17 FACTUAL AND PROCEDURAL BACKGROUND
18 I. PLAINTIFF JON BURG’S EMPLOYMENT WITH AON.
19 As alleged in the Complaint, Plaintiff Jon Burg specializes in the area of equity
20 compensation consulting. Declaration of Jon Burg in Support of Plaintiff’s Motion for
21 Preliminary Injunction (“Burg Dec.”) ¶ 2. Prior to joining Aon, Burg had over 10 years of
22 consulting experience doing this exact type of work at other firms. Id. Upon information and
23 belief, Burg was hired and employed by Aon Consulting & Insurance Services, Inc. (a California
24 corporation) as a member of the Equity Services division of Aon’s Radford Rewards Consulting
25 team (the “Equity Services Team”) in San Francisco in May 2009. Id. Aon Consulting &
26 Insurance Services, Inc. is listed on Burg’s paystubs and paid Burg’s wages during his
27
1
For purposes of this memorandum, “Aon” is used to refer to Defendants together with other relevant Aon entities,
28 but Plaintiffs do not concede employment with any particular Aon entity by using this term.
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 employment. Id. Burg interviewed with Aon in San Francisco, worked for Aon in San Francisco,
2 lived in San Francisco during the entirety of his employment with Aon, and now works for
3 Infinite Equity in San Francisco. Id.
4 Aon provides equity valuation services, design of long-term incentive programs and
5 employee stock purchase plans, and tools to track equity compensation metrics. Id. at ¶ 3.
6 Beginning in 2014, Aon required Burg to execute five (5) separate RSU Agreements over the
7 course of four (4) years. Id. at ¶ 4. Burg executed the RSU Agreements in San Francisco. Id.
8 The RSU Agreements are attached to the Burg Declaration as Composite Exhibit A. Id. Burg
9 was required by Aon to sign the RSU Agreements as a condition of his employment in order to
10 receive the full compensation promised to him as a result of his employment. Id. Burg was not
11 represented by counsel in connection with his execution of the RSU Agreements. Id.
12 II. PLAINTIFF DEIDRE SALISBURY’S EMPLOYMENT WITH AON.
13 Plaintiff Deidre Salisbury was hired to the Aon Equity Services Team in San Francisco as
14 an Associate Director in May 2018. Declaration of Diedre Salisbury in Support of Plaintiff’s
15 Motion for Preliminary Injunction (“Salisbury Dec.”) ¶ 2. Prior to joining Aon, Salisbury had
16 eight years of consulting experience at another firm. Id. Aon Consulting & Insurance Services,
17 Inc. (a California corporation) is listed on Salisbury’s paystubs and paid Salisbury’s wages
18 throughout her employment with Aon. Id. Salisbury interviewed with Aon in San Francisco,
19 worked for Aon in San Francisco, lived in San Francisco during the entirety of her employment
20 with Aon, and now works for Infinite Equity in San Francisco. Id. As a condition of her
21 employment with Aon, Aon required that Salisbury sign a Confidentiality and Non-Solicitation
22 Agreement (“Confidentiality and Non-Solicitation Agreement”). See id., Ex. A.
23 III. BURG AND SALISBURY LEAVE AON FOR INFINITE EQUITY.
24 Burg provided notice to Aon on March 3, 2019 but remained employed until May 29,
25 2019. Burg Dec. ¶ 5. Salisbury provided notice on May 20, 2019 and left Aon’s employ on June
26 7, 2019. Salisbury Dec. ¶ 3. Both went to work for Infinite Equity which is based in San
27 Francisco. Neither Burg, Salisbury, nor any other employee of Infinite Equity misappropriated,
28 used or disclosed any of Aon’s confidential or proprietary information when leaving Aon or in the
7
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 formation of or while working at Infinite Equity. Burg Dec. ¶ 6; Salisbury Dec. ¶ 3. Since Burg
2 and Salisbury began working for Infinite Equity, clients with which they worked while at Aon
3 continue to reach out to Infinite Equity due to the unparalleled expertise and skills of Burg,
4 Salisbury, and other Infinite Equity employees, which they attained through years of education
5 and experience. Burg Dec. ¶ 8.
6 IV. BURG’S RSU AGREEMENTS.
7 By conditioning substantial, and increasing, portions of Burg’s compensation upon his
8 execution of the RSU Agreements, Aon sought to pressure and manipulate him and others into
9 forfeiting their rights as California citizens. To that end, Section 9(b) of the RSU Agreements
10 contains the following covenant not to compete (the “Non-Competes”), which purports to prohibit
11 Burg, during and for a period of two (2) years after the termination of his employment, from:
12 [d]irectly or indirectly call[ing] upon, solicit[ing], accept[ing], engag[ing]
in, servic[ing] or perform[ing], other than on behalf of Aon, any business
13 of the same type or kind as the Business performed by Aon from or with
respect to (i) clients of Aon with respect to whom the Participant provided
14 services, either alone or with others, or had a business relationship, or on
whose account the Participated worked or became familiar, or supervised
15 directly or indirectly the servicing activities related to such clients, during
the twenty-dour (24) months prior to Participant’s Termination Date and,
16 further provided such clients were clients of Aon either on the
Participant’s termination date or within the twelve (12) months prior to
17 such Termination Date and (iii) prospective clients of Aon which the
Participant alone, in combination with others, or in a supervisory capacity,
18 solicited during the 6 months prior to the Participant’s termination Date
and to which a proposal for services was rendered by Aon during the six
19 (6) months prior to Participant’s Termination Date. “Client” means any
person or entity listed on the books of Aon as such.
20
Burg Dec., ¶ 4, Ex. A. (emphasis added). As discussed below, the Non-Competes are per se
21
unlawful under California law.
22
Similarly, the RSU Agreements prevent Burg from recruiting any Aon employee (even
23
low-level employees who perform manual work) in any position anywhere in the world for a
24
period of two years (the “Employee Non-Solicit”):
25
The Participant also agrees, [during and for two years following separation of
26 employment] not to directly or indirectly solicit, induce, or cause any person
or other entity to solicit or induce, any employee of Aon to work for the
27 Participant or for any third party or entity, or to leave the employ of Aon.
28 Id. at Ex. A.
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MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 It is hard to understate the breadth of this provision: Aon2 boasts it employs 50,000
2 employees in 120 different countries across various industries. Declaration of Christopher R.
3 Lepore (“Lepore Dec.”), ¶ 5. Thus, this provision is not in any way reasonably related to Aon’s
4 legitimate business interests and is per se unenforceable under California law.
5 To effectuate Aon’s heavy-handed attempts to impose unlawful restrictions on their
6 California employees and foreclose Burg and others from pursuing lawful employment outside of
7 Aon, the RSU Agreements contain Illinois choice-of-law and venue provisions. See Burg Dec., ¶
8 4, Ex. A, §§10(j),10(k) and 11 (the RSU Agreements “shall be governed by and construed in
9 accordance with the substantive internal laws of the State of Illinois, without regard to the conflict
10 of law principles, rules or statutes of any jurisdiction” and purport to set the “exclusive venue and
11 exclusive jurisdiction” of any arbitration or court action arising therefrom in Chicago, Illinois).3
12 V. SALISBURY’S CONFIDENTIALITY AND NON-SOLICITATION AGREEMENT.
13 Section 1(b) of the Confidentiality and Non-Solicitation Agreement is practically identical
14 to the Non-Competes. Thus, like the restriction against Burg, Section 1(b) of the Confidentiality
15 and Non-Solicitation Agreement broadly purports to prevent Salisbury from even accepting
16 business from an “Aon client” for a period of two years following her separation from Aon. See
17 Salisbury Dec., ¶ 2, Ex. A. Section 1(c) mirrors the Employee Non-Solicit and purports to
18 prevent Salisbury from soliciting any Aon employee in the world for a period of two years. Id.
19 The Confidentiality and Non-Solicitation Agreement is subject to the law of the state in which
20
2
Aon, which is headquartered in the United Kingdom, employs a complex corporate structure through which it has
21 incorporated numerous entities across various states, with which it requires employees (in this case Burg and
Salisbury) to assent to agreements, even though such entities are irrelevant to their employment. The agreements
22 generally (as they do here) require that the employee acknowledge “that each Aon entity is an intended third-party
beneficiary of this Agreement” and could be a plaintiff in an action against them. Aon then picks and chooses the
23 entity that suits it in any given case.
3
The 2017 RSU Agreement executed on June 5, 2017 expressly provides that it modifies all “Other Covenants”
24 that preceded that Agreement as such: “To the extent there is a conflict or overlap between any Other Covenant and a
covenant contained in this Agreement, this Agreement shall control.” Id., Sec. 9(d). It also states (as does the 2018
25 RSU Agreement) that its arbitration clauses govern all claims arising or relating to that Agreement and any Other
Covenant. It defines “Other Covenants” as: “any restrictive covenant provision contained in any prior or subsequent
26 agreement entered into by the Participant… including without limitation any covenant contained in any
Confidentiality and Non-Solicitation Agreement between the Participant and any Aon entity, and further including
27 without limitation any covenant not to compete, to solicit or perform services for clients, or to solicit employees, any
confidentiality or intellectual property covenant, and any covenant with respect to a pre-resignation notice period.”
28 Id.
9
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 Salisbury resides - i.e., California. Id., Section 5(c); Salisbury Dec. ¶ 2. Accordingly, like it did
2 with Burg and the RSU Agreements, Aon engaged in unfair competition and violated California
3 law when it required Salisbury to sign the Confidentiality and Non-Solicitation Agreement.
4 VI. BECAUSE AON CANNOT LEGITIMATELY COMPETE, IT IS ATTEMPTING
TO LEVERAGE ITS CONSIDERABLE RESOURCES TO CIRCUMVENT
5 CALIFORNIA LAW AND ENFORCE UNLAWFUL RESTRICTIONS.
6 Even though the restrictive covenants are unenforceable under California law, Aon
7 persists in attempting to enforce the overly broad restrictions contained in the RSU Agreements,
8 not only against Burg, but against Infinite Equity and all of its employees, first through
9 threatening communications (including a cease and desist letter), and then through aggressive,
10 meritless litigation and arbitration in multiple venues. Burg Dec., ¶ 6, Ex. B. On November 13,
11 2019, Aon plc and Aon Group filed suit against Burg, Infinite Equity, and other former Aon
12 employees who joined Infinite Equity in the U.S. District Court of the Northern District of
13 Illinois, Case No. 19-cv-07504 (the “Illinois Federal Action”). Lepore Dec. ¶ 2.
14 While Salisbury is not named as a defendant in the Illinois Federal Action, her claims
15 against Aon are ripe. The Illinois Federal Action expressly references her, and the relief
16 requested seeks to enjoin Infinite Equity and its employees, including Salisbury. Lepore Dec. ¶ 3.
17 Furthermore, on February 11, 2020, after attending a status conference in the Illinois Federal
18 Action, Aon’s counsel expressly threatened to sue every single Infinite Equity employee
19 individually, including Salisbury, and to seek expansive discovery with the stated goal of seeking
20 to “enjoin Infinite Equity out of existence.” Id.
21 LEGAL STANDARD
22 A preliminary injunction should be granted “[w]hen it appears by the complaint or
23 affidavits that the commission or continuance of some act during the litigation would produce
24 greater or irreparable injury to a party.” Cal. Civ. Proc. Code § 526(a)(2). The two-part test for
25 granting injunctive relief asks whether there is (1) a reasonable probability the plaintiff will
26 prevail on the merits; and whether (2) the harm that will occur to the plaintiff without an
27 injunction outweighs the harm the injunction will cause to the defendant. Robbins v. Superior
28 Court (1985) 38 Cal.3d 199, 206. “The latter factor involves consideration of such things as the
10
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the
2 status quo.” Take Me Home Rescue v. Luri (2012) 208 Cal.App.4th 1342, 1350 (internal citations
3 and quotations omitted). These two showings operate on a sliding scale: ‘[T]he more likely it is
4 that [the party seeking the injunction] will ultimately prevail, the less severe must be the harm
5 that they allege will occur if the injunction does not issue.’” Integrated Dynamic Sols., Inc. v.
6 VitaVet Labs, Inc. (2016) 6 Cal.App.5th 1178, 1183.
7 ARGUMENT
8 I. PLAINTIFFS ARE LIKELY TO PREVAIL ON THE MERITS OF THEIR
DECLARATORY JUDGMENT CAUSES OF ACTION (CAUSES OF ACTION I-
9 III).
10 Code of Civil Procedure section 1060 provides that “[a]ny person interested under a
11 written instrument…or under a contract, or who desires a declaration of his or her rights with
12 respect to another…may…bring an [action] for a declaration of his or her rights and duties,
13 including a determination of any question of construction or validity arising under the instrument
14 or contract.” A party requesting declaratory relief must establish: (1) his claim is a “proper
15 subject” for such relief; and (2) there is “an actual controversy involving justiciable questions
16 relating to the rights or obligations of a party. Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.
17 “The mere circumstance that another remedy is available is an insufficient ground for refusing
18 declaratory relief, and doubts regarding the propriety of an action for declaratory relief ...
19 generally are resolved in favor of granting relief.” Osseous Techs. of Am., Inc. v. DiscoveryOrtho
20 Partners LLC (2010) 191 Cal.App.4th 357, 364.
21 Here, there is a justiciable controversy because Aon has threatened and/or pursued
22 litigation against Plaintiffs and continues to maintain the restrictive covenants in the employment
23 agreements are enforceable. See Application Group, Inc. v. Hunter Group, Inc. (1998) 61
24 Cal.App.4th 881, 893. As set forth in greater detail below, because California law applies to Burg
25 and Salisbury’s restrictive covenants, they are invalid. California courts have repeatedly granted
26 declaratory relief where, as here, a former employer has forced a former employee to sign an
27 unlawful restrictive covenant. See e.g., AMN Healthcare, Inc. v. AYA Healthcare Servs. Inc.
28
11
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 (2018) 28 Cal.App.5th 923, 950-53. Plaintiffs are therefore likely to prevail on their claims for
2 declaratory relief.
3 A. California Law Applies to Burg’s RSU Agreements.
4 1. The Choice-of-Law and Choice-of-Forum Venue Provisions in the
RSU Agreements Are Void under Section 925 of the California Labor
5 Code.
6 As a threshold matter, the choice of law and choice-of-forum/venue provisions in the RSU
7 Agreements are null and void under Section 925 of the California Labor Code (“Section 925”).
8 Section 925 provides that, unless an employee is represented by counsel, an employer shall not
9 require an employee who primarily resides and works in California, as a condition of
10 employment, to agree to a non-California venue.
11 Since Burg was a California resident unrepresented by counsel when he executed the RSU
12 Agreement (most notably, the RSU Agreements executed in June 2017 and June 2018), he was
13 within his rights to void the choice-of-law and choice-of-venue/jurisdiction clauses and litigate
14 this matter in a California court and under California law. Accordingly, pursuant to Section
15 925(b), Burg provided notice of his intent to void the choice-of-forum and venue provisions and
16 litigate his claims in California on February 14, 2020. Burg Dec. ¶ 7. Burg also immediately
17 filed this action for, inter alia, declaratory and injunctive relief under Section 925. Id.
18 As noted above, Section 9(d) of the RSU Agreement Burg executed in June 2017
19 expressly provides that it modifies all prior “Other Covenants” as such: “To the extent there is a
20 conflict or overlap between any Other Covenant and a covenant contained in this Agreement, this
21 Agreement shall control.” Id., Ex. A, 2017 RSU Agreement, §9(d) and both the 2017 and 2018
22 RSU Agreements contained arbitration provisions which purport to govern all previous
23 covenants. Accordingly, by modifying all the RSU Agreements that preceded them, the 2017 and
24 2018 RSU Agreements render all choice-of-venue/jurisdiction and arbitration clauses before it
25 subject to Section 925. Lyon v. Neustar, Inc. (E.D. Cal. May 3, 2019) No. 2:19-cv-00371-KJM-
26 KJN, 2019 WL 1978802, at *7 (holding employment agreement entered into prior to January
27
28
12
MEMORANDUM OF POINTS OF AUTHORITY ISO MOTION FOR PRELIMINARY INJUNCTION
[Case No. 20-CGC-582962]
1 2017 was modified by a subsequent agreement and thus subject to Section 925).4 Under Section
2 925, Burg is entitled to litigate this matter in California under California law.
3 2. Even if Section 925 Does Not Apply, California Law Applies to Burg’s
RSU Agreements Under California’s Choice-of-Law Rules.
4
The RSU Agreements purport to select Illinois law “without regard to the conflict of law
5
principles, rules or statutes of any jurisdiction.” Burg Dec., ¶4, Ex. A. Under such
6
circumstances, California applies the following conflicts-of-law test:
7
In Nedlloyd, our Supreme Court explained that, under the Restatement
8 approach, a court must first determine “(1) whether the chosen state
has a substantial relationship to the parties or their transaction, or
9 (2) whether there is any other reasonable basis for the parties’ choice
of law. If neither of these tests is met, that is the end of the inquiry,
10 and the court need not enforce the parties’ choice of law. If, however,
either test is met, the court must next determine whether the chosen
11 state’s law is contrary to a fundamental policy of California. If there is
no such conflict, the court shall enforce the parties’ choice of law. If,
12 however, there is a fundamental conflict with California law, the court
must then determine whether California has a ‘materially greater
13 interest than the chosen state in the determination of the particular
issue....’ (Rest., § 187, subd. (2).) If California has a materially greater
14 interest than the chosen state, the choice of law shall not be enforced,
for the obvious reason that in such circumstance we will decline to
15 enforce a law contrary to this state’s fundamental policy.” (Nedlloyd,
supra, 3 Cal.4th at p. 466, 11 Cal.Rptr.2d 330, 834 P.2d 1148, fns.
16 omitted.)
17 Rincon EV