Demurrer in GUIDEWIRE SOFTWARE, INC. vs. JOSE CANNON, et al.| Trellis.Law

On October 07, 2016 a Complaint,Petition was filed involving a dispute between Guidewire Software, Inc, and Cannon, Jose, Does 2 Through 20, Inclusive, Galluzzo, Jay, for civil in the District Court of San Mateo County.

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TODD H. STITT (SBN 179694)
F H L E D
tstitt@mrllp.com . SAN MATFG COUNTY
ROBERT D. ESTRIN (SBN 260402)
restrin@mrllp.com
TAYLOR C. FOSS (SBN 253486)
tfoss@mrllp.corn
MICHELMAN & ROBINSON, LLP
17901 Von Karman Avenue, 10th Floor
fear Irvine, CA 92614 __—
133E355?
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Telephone: 714-557—7990
Facsimile: 714-557-7991 DEM
Demurrer to

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Attorneys for Defendant i
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SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN MATEO
GUIDEWIRE SOFTWARE, INC., Case No. 16—CIV—01769

Plaintiff, DEFENDANT JAY GALLUZZO’S NOTICE
OF DEMURRER AND DEMURRER TO
vs. FIRST AMENDED COMPLAINT;
MEMORANDUM OF POINTS AND
JAY GALLUZZO, and DOES 1 through 20, AUTHORITIES
inclusive,
[Proposed] Order, Declaration of Robert Estrin;
Defendants. . and Appendix of Non-CA AuthOrity ﬁled
concurrently hereﬁ'th]
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Date: Januaryﬁtf, 2018
Time: 9:00 am.
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Dept: LM
Complaint Filed: October 7, 2016
Trial Date: June 11, 2018

TO PLAINTIFF GUIDEWIRE SOFTWARE, INC. AND ITS. COUNSEL OF

RECORD:
PLEASE TAKE NOTICE that Defendant JAY GALLUZZO hereby will and does demur-

to Plaintiff GUIDEWIRE SOFTWARE, INC.’s second and third causes of action contained in

Plaintiff s First Amended Complaint in this action. This Demurrer will be heard on January 24,

2018, at 9:00 am, or as soon thereafter as the matter may be heard, in the above-captioned court,

located at 400 County Center, Redwood City, California 94063.

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DEFENDANT JAY GALLUZZO’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
4829-5376-1365
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DEMURRER TO SECOND CAUSE OF ACTION
1'.
Plaintiff Guidewire Software, Inc.’s Second Cause of Action for conversion fails to

state facts sufﬁcient to constitute a cause of action against Defendant Jay Galluzzo and is subject to"

a general demurrer. (C.C.P. §I430.10(e)).

DEMURRER TO THIRD CAUSE OF ACTION
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2.‘ Plaintiff Guidewire Software, Inc.’s Third Cause of Action for unfair competition in
Violation of California Business and Professions Code section 17200 fails to state facts sufficient to
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constitute“ a cause of action against Defendant Jay Galluzzo and is subject to a general demurrer.
(C.C.P. § 430.10(e)).

Dated: December'i‘2017 , MICHELMAN & ROBINSON, LLP

By: W
Todd H. Stitt
W
Robert D. Estrin
Taylor C. Foss
Attorneys for Defendant
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JAY GALLUZZO

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DEFENDANT JAY GALLUZZO’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES '
4829-5376-1365
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
In its First Amended Complaint (“FAC”), Plaintiff Guidewire Software, Inc.

(“Guidewire”) added a cause of action for misappropriation of trade secrets. Guidewire’s-

decision to do so preempted its causes of action for conversion and unfair competition in
California
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violation of California Business and Professions Code section 17200. Pursuant to

Civil Code Section 3426.7 and KC. Multimedia, Inc. v. Bank of Am. Tech & Operations, Inc,
(2009) 171 Cal. App. 4th 939, Guidewire cannot simultaneously proceed with its conversion and

unfair competition causes of action! in addition to its newly stated cause of action for

misappropriation of trade secrets. Guidewire’s cause of action for misappropriation of trade
secrets preempts these two causes of action because all of three of these causes of action are

based on the same nucleus of alleged facts — Defendant Jay Galluzzo’s (“Galluzzo”) alleged

retention of confidential Guidewire documents. Accordingly, the Court should sustain

Galluzzo’s demurrer to Guidewire’s second and third causes of action iwithout leave to amend.

II. GALLUZZO’S COUNSEL MET AND CONFERRED WITH GUIDEWIRE’S
COUNSEL REGARDING THIS DEMURRER;
On December 14, 2017, counsel for Galluzzo met and conferred with counsel for

Guidewire via telephone. (Declaration of Robert Es‘trin (“Estrin Decl.”) at par. 2); Counsel for
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Galluzzo explained its reasoning for the demurrer and counsel for Guidewire disagreed with

Galluzzo’s position. (Ibidj. Thus, the parties could no reach agreement to resolve the issues

raised in this demurrer. (Ibid).

III. THE COURT HAS AUTHORITY TO SUSTAIN THIS DEMURRER.
A person against whom a complaint has been ﬁled may demur to the complaint within the
time permitted to'file an anSwer to the pleadings. (C.C.P. § 430.40). Furthermore, a demurrer

may be taken as to the Whole complaint or as to any individual cause of action therein. (C.C.P. §

430.50(a); Skrbina v. Fleming Companies (1996) 45 Cal. App. 4th 1353, 1364. A demurrer is

intended to challenge the legal sufﬁciency of the pleading on its face by raising questions of law,

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DEFENDANT JAY GALLUZZ'D’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
'
4829—5376-1365
not to weigh the evidence and make factual ﬁndings. See Trustees of Capital Wholesale Elec. v.

Shearson Lehman Brothers, Inc. (1990) 221 Cal. App. 3d 617, 621. “[The] face of the

complain ” includes matters shown and exhibits attached to the Complaint, as well as those

incorporated by reference. Frantz v.Blackwell (1987) 189 Cal. App. 3d 91, 94.

\oooqoxmhwtop—Furthermore, a demurrer should be treated as admitting all material facts as properly pled,

“but not contentions, deductions or conclusions of fact or law which may be alleged in a

complaint.” Chicago Title Ins. Co. v. Great Western Fin Corp. (1968) 69 Cal. 2d 305, 327

(citation omitted). In addition, “in order to sufﬁciently state a cause of action, the plaintiff must
allege in its complaint certain facts in addition to the elements of the alleged unlawful act so that
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the defendant can understand the nature of the alleged wrong.” Quelimane Co v. Stewart Title
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Guar. C0., (1998) 19 Cal. 4th 26, 48 (citation omitted).
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IV. GUIDEWIRE’S CLAIM FOR MISAlPPROPRIATION OF TRADE SECRETS
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PREEMPTS ITS CAUSES OF ACTION FOR CONVERSION AND UNFAIR
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COMPETITION.
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California law holds that Guidewire’s claim for misappropriation of trade secrets

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preempts its causes of action for conversion and unfair competition. KC. Multimedia, Inc. v.
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Bank of America Technology & Operations, Inc., (2009) 171 Cal. App. 4th 939 supports

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Galluzzo’s argument. In K C. Multimedia, the court reasoned that California Civil Code section

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3426.7(b) “preempts common law claims that fare based on the same nucleus of facts as the

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misappropriation Of trade secrets claim for relief.’” Id. at 948. (citation Omitted). importantly,

N the court observed that California Civil Code section 3426.7(b) “would appear to be rendered

U) meaningless if, in fact, claims 'which are based on [trade secret misappropriation are not

-§ preempted by the state’s statutory scheme.” Id. at 958 (citation omitted). Just as here, the

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plaintiff in KC. Multimedia tried to bring causes Of action for misappropriation of trade secrets

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and unfair competition. The court reasoned‘that “at bottom, trade secret protection is itself but a
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branch of unfair competition law.” Id.‘ at 961 (quoting Balboa‘Ins. Co. v. Trans Global Equities
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(1990) 218 Cal. App. 3d 1327, 1341). The court ﬁther reasoned that a “[a] claim for common

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DEFENDANT JAY GALLUZZO’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
'

4829-5376-1365
law or even statutory unfair competition may be preempted under [California Civil Code section

3426.7(b)] if it relieson the same facts as the misappropriation claim.” Id. at 961. The court in

K. C. Multimedia held that because the claim for unfair competition rested on the same nucleus of

facts it was preempted by the misappropriation of trade secrets claim. Id. at 962.
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Recent cases have relied on KC. Multimedia to preempt conversion claims such as

Guidewire’s. “[A] number of courts have held that the CUTSA may preempt various claims,

including claims for conversion, common count, quantum meruit, unjust enrichment, breach of

conﬁdence, unfair competition as well as intentional and negligent misrepresentation, where" the

wrongdoing alleged in connection with such claims is the misappropriation of trade secrets.”

Copart v. Sparta Consulting Inc., 2017 WL 4269921 at *18 (ED. Cal. Sept. 26, 2017). In

Copart, the court reasoned that in “evaluating preemption of a conversion claim [courts] look to

the source of the property’s value rather than a person’s basis for owning it.” Id. at *20. The

court held that based on this standard the CUTSA “preempts Copart’s conversion claim.” Ibid.

Guidewire does not explain in its FAC how anything allegedly taken by Galluzzo has any value

other than its value as a trade secret. Since only the trade secrets or conﬁdential information that

Guidewire alleges Galluzzo took could have value, Guidewire’s misappropriation of trade secrets
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claim preempts its conversion and unfair competition causes of action.
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In Silvaco Data Systems v. Intel Corp, (2010) 184 Cal. App. 4th 210, 232 the appellate
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court sustained a demurrer to plaintiffs claims, including conversion, as preempted by the

CUTSA. The court agreed with Intel’s arguments on demurrer that (1) the CUTSA “preempts

any other statutory or common—law claim predicated on the theft of a trade secret; (2) each of
Silvaco’s non-CUTSA claims is predicated on the theft of a trade secret; [and] (3) therefore none

of the non-CUTSA counts sates a separable cause of action.” Id. at 232. The appellate court

“reafﬁrm[ed] that CUTSA provides the exclusive civil remedy for conduct falling within its

terms, so as to supersede other civil remedies based upon the misappropriation of a trade secret.”

Id. at,235. As explained below Guidewire’s FAC is based upon the misappropriation of trade
secrets and conﬁdential information allegedly taken by Galluzzo.

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DEFENDANT JAY GALLUZZO’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED
.
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
4829-5376-1365
H Paragraph 27 of the PAC contains the key allegation upon which Guidewire basis its

FAC. Guidewire alleges “[d]uring the course of his employment with One, Inc., Galluzzo

continued to have access to Company Documents, including some of which contained Guidewire
Conﬁdential Information.” Guidewire has sued because it believes Galluzzo retained access to

Guidewire Confidential Information and trade secrets. The fact that Guidewire alleges Galluzzo

may
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competition causes of action from preemption. The nucleus of facts upon which Guidewire’s

conversion and unfair competition claims are based mirror the facts upon which Guidewire bases

its misappropriation of trade'secrets claim — an allegation that Galluzzo retained Guidewire
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Conﬁdential Information and trade secrets. Guidewire’s FAC is replete with allegations that
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show Guidewire’s case is based on allegations that Galluzzo took Guidewire Confidential
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Information and trade secrets with him after his employment ended. (FAC at pars. 32, 33, 49,
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and 50). Since Guidewire’s misappropriation of trade secrets cause of action is based on the
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same nucleus of facts as its conversion and unfair competition causes of action, this case closely~
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resembles KC. Multimedia and Copart. Therefore, the Court should sustain Galluzzo’s
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demurrer as Guidewire’s misappropriation of trade secrets claim preempts its causes of action. for
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conversion and unfair competition.

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III._ CONCLUSION

NO For the foregoing reasons, Defendant Jay Galluzzo respectfully requests this Court sustain

NH his demurrer to Plaintiff Guidewire Software, Inc.’s second cause of action for conversion and third
[\2 N cause of action for unfair competition in violation of California Business and Professions Code

N b3 section 17200 without leave to amend.

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N U1 Dated: December _, 2017 MICHELMAN & ROBINSON, LLP
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’By:
Todd H. Stitt
N 00 Robert D. Estrin
Attorneys for Defendant JAY GALLUZZO
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DEFENDANT JAY GALLUZZO’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
4829-5376-1365
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PROOF OF SERVICE
Guidewire Software, Inc. v. Jay Galluzzo
San Mateo County Superior Court Case No. 16CIV01769
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
I am employed 1n the County of Los Angeles, State of California. I am over the age of 18 and
within action. business address is 10880 Wilshire Blvd., 19th Floor, Los
not a party to the My
Angeles, CA 90024
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JAY
On December
GALLUZZO’S
ﬂ,
NOTICE
2017,
OF
I served the
DEMURRER
document(s)
AND
described
DEMURRER
as follows:
TO FIRST
DEFENDANT
AMENDED
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES on the interested parties
in this action, by placing a true copy thereof enclosed in a sealed envelope(s) addressed to the
following addressee(s): -

Jonathan A. Patchen Attorneys for Plaintiffs
.—
Max B. Twine '

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TAYLOR & PATCHEN, LLP
One Ferry Building, Suite 355.
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San Francisco, CA 94111
Tel: 415-788-8200
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Fax: 415-788-8208
Email: jpatchen@taylorpatchen.com
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Email: mtwine@taylorpatchen.com

(BY E-MAIL OR ELECTRONIC TRANSMISSION): Per agreement of the Parties or
I caused the documents
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based on a court order to accept service by e-mail or electronic transmission,
to be sent to the persons
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at the e-mail addresses listed above. I did not receive, within a reasonable
time after. the transmission, any electronic message or other indication that the transmission was
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unsuccessful.
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E BY MAIL: I caused such envelope to be deposited in
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the mail at Los Angeles,
“readily familiar”
California.
with the law
The envelope was mailed with postage thereon fully prepaid. am
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ﬁrm’s practice of collection and processing correspondence for mailing. Under the practice, it would
N be deposited with the US. Postal Service on that same day with postage thereon fully prepaid at
Encino, California, in the ordinary course of business. I am aware that on motion of a party served,
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service is presumed invalid ifthe postal cancellation date or postage meter is more than one day after
N the date of deposit for mailing the afﬁdavit.

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I declare under penalty of perjury under the laws of the State of California, that the above is
true and correct. Executed on December , 2017, at Los Angeles, California.
N

N
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N
America Garcia
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DEFENDANT JAY GALLUZZO’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED
COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
'
4829-5376-1365

Case Info

Judge

Chou, Danny Y. Track Judge’s New Case

Case No.

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Document Filed Date

December 19, 2017

Case Filing Date

October 07, 2016

County

Parties

CANNON, JOSE Defendant
DOES 2 THROUGH 20, INCLUSIVE Defendant
ESTRIN, ROBERT D Attorney for the Defendant
GALLUZZO, JAY Defendant
GUIDEWIRE SOFTWARE, INC Plaintiff
PATCHEN, JONATHAN A. Attorney for the Plaintiff
Ilse Scott Attorney
David Lee Attorney
Taylor Foss Attorney
Max Twine Attorneys for Plaintiffs
Cheryl Galvin Attorneys for Plaintiffs
Todd Stitt Attorney
Sanford Michelman Attorney
Winston Krone Attorney

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Complaint,Petition: GUIDEWIRE SOFTWARE, INC. vs. JOSE CANNON, et al.

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