Case Name:??? Rajappan & Meyer Consulting Engineers, Inc. v. Martha Dadala, et al.
Case No.:??????? 2015-1-CV-284049
- Motion for Summary Judgment by Defendant Martha Dadala
- Motion for Order Sealing Certain Documents in Support of Defendant?s Motion for Summary Judgment by Defendant Martha Dadala
Plaintiff Rajappan & Meyer Consulting Engineers, Inc. (?RMCE?) is a specialized transportation project development, engineering, and design firm providing consulting services to public entities and private corporations throughout California to develop and design highway and street projects. (Complaint, ?5.)? Defendant Martha Dadala (?Dadala?) was formerly employed as plaintiff RMCE?s principal civil engineer. (Complaint, ?6.)? Defendant Dadala voluntarily resigned from her employment with plaintiff RMCE in July 2015. (Id.)
As a former RMCE employee, defendant Dadala possesses knowledge of plaintiff?s trade secrets which consist of confidential client information including, but not limited to, names and contact information for decision makers employed with plaintiffs? clients and specific details of client requirements. (Complaint, ?7.)? After defendant Dadala left her employment with RMCE, she began improperly using RMCE?s confidential customer information in an attempt to solicit business away from RMCE. (Complaint, ?8.)
On July 17, 2015, plaintiff RMCE sent defendant Dadala a letter reminding defendant Dadala of her legal obligations and requesting confirmation that defendant Dadala would cease and desist from misusing plaintiff RMCE?s property. (Complaint, ?9.)? Defendant Dadala failed and refused to respond. (Id.)? On information and belief, plaintiff RMCE alleges defendant Dadala is using plaintiff RMCE?s trade secrets to lure plaintiff?s customers away. (Complaint, ?10.)
On August 6, 2015, plaintiff RMCE filed a complaint against defendant Dadala asserting a single cause of action for misappropriation of trade secrets.
On November 5, 2015, defendant Dadala filed her answer to the complaint.? Also on that date, Dadala cross-complained against RMCE alleging that, on July 16, 2015, Dadala provided RMCE with two weeks? notice of her intent to resign. (Cross-Complaint, ?5.)? Dadala?s decision to resign was based, in part, on concerns about RMCE?s business practices including, but not limited to, the failure to pay prevailing wages to foreign employees. (Id.)? In response to Dadala?s two week notice, RMCE immediately terminated Dadala?s employment and ordered her to vacate her office without paying Dadala until July 24, 2015. (Cross-Complaint, ??5 ? 6.)
Dadala?s cross-complaint alleges causes of action for (1) violation of Labor Code section 201; and (2) violation of Unfair Competition Law.? RMCE filed an answer to Dadala?s cross-complaint on December 10, 2015.
On June 17, 2016, defendant Dadala filed the two motions now before the court: (1) a motion for summary judgment of plaintiff RMCE?s complaint; and (2) a motion for order sealing certain documents.
- Defendant Dadala?s motion for an order sealing certain documents is GRANTED.
A court has the authority to order that a record be filed under seal only if it expressly finds facts that establish:
- there exists an overriding interest that overcomes the right of public access to the record;
- the overriding interest supports sealing the record;
- a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;
- the proposed sealing is narrowly tailored; and
- no less restrictive means exist to achieve the overriding interest.
(Cal. Rules of Court, Rule 2.550.)
The California Rules of Court do not define what constitutes an ?overriding interest.?? Instead, this has been left to case law.? Different ?[c]ourts have found that, under appropriate circumstances, various statutory privileges, trade secrets, and privacy interests, when properly asserted and not waived, may constitute overriding interests.?? (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 298, fn.3 (quoting Judicial Council advisory committee comment to [former] Rule 243.1) (affirming lower court order unsealing certain records over defendants? objection that the materials contained proprietary trade secrets); see also NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1222, fn.46 (overriding interests found in various cases include: protection of minor victims of sex crimes from further trauma and embarrassment, privacy interests of a prospective juror during individual voir dire, protection of witnesses from embarrassment or intimidation so extreme that it would traumatize them or render them unable to testify, protection of trade secrets, protection of information within the attorney-client privilege, and enforcement of binding contractual obligations not to disclose, safeguarding national security, ensuring the anonymity of juvenile offenders in juvenile court, ensuring the fair administration of justice, and preservation of confidential investigative information).)
A declaration supporting a motion to seal should be specific, not conclusory, as to the facts supporting the overriding interest.? If the court finds that the supporting declarations are conclusory or otherwise unpersuasive, it may conclude that the moving party has failed to demonstrate an overriding interest that overcomes the right of public access.? (In re Providian Credit Card Cases, supra, 96 Cal.App.4th at pp. 301, 305.)
Further, where some material within a document warrants sealing but other material does not, the document should be edited or redacted if possible, to accommodate the moving party?s overriding interest and the strong presumption in favor of public access.? (Cal. Rules of Court, Rule 2.550, subd. (e)(1)(B); see In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 309.)? In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or-nothing basis.? (In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 309.)
Defendant Dadala?s motion to seal is unopposed.? Defendant Dadala requests sealing the declaration of Frank R. Ubhaus in support of defendant Martha Dadala?s motion for summary judgment as it contains deposition testimony and documents which are the subject of a protective order, acknowledging that the parties maintain a right of privacy in those records.? The request appears to be narrowly tailored.
Accordingly, defendant Dadala?s motion for order sealing certain documents in support of defendant?s motion for summary judgment is GRANTED.? The court finds: (1) there exists an overriding interest that overcomes the right of public access to the record; (2) the overriding interest supports sealing the record; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest.
The court clerk is directed to seal the following unredacted documents and no public access to the unredacted documents will be allowed without further order from this court: Declaration of Frank R. Ubhaus in Support of Defendant Martha Dadala?s Motion for Summary Judgment.
- Defendant Dadala?s motion for summary judgment is DENIED.
?A cause of action for monetary relief under CUTSA may be said to consist of the following elements: (1) possession by the plaintiff of a trade secret; (2) the defendant’s misappropriation of the trade secret, meaning its wrongful acquisition, disclosure, or use; and (3) resulting or threatened injury to the plaintiff. The first of these elements is typically the most important, in the sense that until the content and nature of the claimed secret is ascertained, it will likely be impossible to intelligibly analyze the remaining issues.? (Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 220 (Silvaco), internal citations omitted.)
- Trade secret.
In moving for summary judgment, defendant Dadala raises several arguments.? Defendant Dadala?s first argument is that the allegedly trade secret customer list and related information does not actually constitute trade secret.? Civil Code section 3426.1, subdivision (d) defines ?Trade secret? to mean ?information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.?? ? ?[R]easonable efforts to maintain secrecy have been held to include advising employees of the existence of a trade secret, limiting access to a trade secret on ?need to know basis,? and controlling plant access.?? (Courtesy Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278, 1288.)? ?Requiring employees to sign confidentiality agreements is a reasonable step to ensure secrecy.? (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1454.)
Here, the complaint alleges, in relevant part, ?Dadala possesses knowledge of Plaintiff?s trade secrets, which consist of confidential information regarding its clients.? This confidential information includes but is not limited to names and contact information of decision makers employed with Plaintiff?s clients, and specific details of client requirements.? Plaintiff is the owner of this information which is not known to the public.? (Complaint, ?7.)
Defendant Dadala focuses only on the identity of the clients and proffers affirmative evidence that the ?customer list? maintained by plaintiff RMCE had no independent value.[1]? The ?customer list? maintained by plaintiff RMCE was not confidential and was not maintained in a confidential fashion by plaintiff RMCE.[2]? This proffered fact is supported, in part, by defendant Dadala?s declaration which states that at no time during her employment with plaintiff RMCE was defendant Dadala ever asked to sign a confidentiality agreement with respect to any of plaintiff RMCE?s business.? The ?customer list? maintained by plaintiff RMCE was readily accessible to competitors.[3]? The ?customer list? maintained by plaintiff RMCE was made up of public entities whose identities are publicly available.[4]? Plaintiff RMCE obtains its business by submitting responses to Requests for Quote (?RFQs?) or Requests for Proposals (?RFPs?) from public entities and those RFPs and RFQs are sent to any engineering firm interested in the business.[5]? Contracts are awarded by public agencies based on quality of work, experience of the company and its staff and not on personal relationships.[6]
In opposition, plaintiff RMCE points out that the trade secret is broader than simply the identity of its clients and the decision makers employed by those clients, but also includes client requirements, specifications, and contracts; as well as plaintiff?s methods and procedures for meeting client requirements, specifications, and contracts (e.g., the methods used to perform independent quality control and quality assurance of deliverables.)[7]? Moreover, plaintiff RMCE notes that defendant Dadala?s argument is incomplete or incorrect in that it focuses only on a ?customer list? comprised of public entities.? Plaintiff RMCE proffers evidence that its customer list is also comprised of private entities.[8]? Plaintiff RMCE dubs all of the aforementioned its ?confidential client information? and proffers evidence that it has independent economic value because it is not known to plaintiff?s competitors.[9]? Plaintiff RMCE also proffers evidence that it undertakes measures to keep the information confidential.[10]
?The secrecy requirement is generally treated as a relative concept and requires a fact-intensive analysis.? (DVD Copy Control Ass’n Inc. v. Bunner (2004) 116 Cal.App.4th 241, 251.)? ?Whether information is a trade secret is ordinarily a question of fact.? (San Jose Const., Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1537; see also In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 306.)? The evidence before the court is in dispute and, consequently, a triable issue of material fact exists with regard to whether the purportedly trade secret information derives independent economic value and was the subject of reasonable efforts to maintain its secrecy.
Defendant Dadala argues next that even if the alleged information is trade secret, she did not engage in misappropriation as defined by Civil Code section 3426.1.? Civil Code section 3426.1, subdivision (b) defines misappropriation of trade secret as follows:
?Misappropriation? means:
(1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(2) Disclosure or use of a trade secret of another without express or implied consent by a person who:
(A) Used improper means to acquire knowledge of the trade secret; or
(B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:
(i) Derived from or through a person who had utilized improper means to acquire it;
(ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
(C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
?A trade secret is misappropriated if a person (1) acquires a trade secret knowing or having reason to know that the trade secret has been acquired by ?improper means,? (2) discloses or uses a trade secret the person has acquired by ?improper means? or in violation of a nondisclosure obligation, (3) discloses or uses a trade secret the person knew or should have known was derived from another who had acquired it by improper means or who had a nondisclosure obligation or (4) discloses or uses a trade secret after learning that it is a trade secret but before a material change of position.? (Ajaxo Inc. v. E*Trade Group Inc. (2005) 135 Cal.App.4th 21, 66; see also CACI, No. 4401.)
Here, defendant Dadala proffers affirmative evidence that she did not misappropriate any confidential or proprietary information and did not solicit any of plaintiff RMCE?s clients.[11]? Defendant Dadala acknowledges that she did contact RMCE clients to notify them of the fact that she was no longer employed with RMCE and, in some instances, notify them of the identity of her new employer.[12]? Defendant Dadala cites legal authority for the proposition that a former employee has the right to announce or inform customers of new and/or changed employment.? ?Our Supreme Court has previously distinguished solicitation?which is actionable?from announcing a job change?which is not: ?Merely informing customers of one’s former employer of a change of employment, without more, is not solicitation. Neither does the willingness to discuss business upon invitation of another party constitute solicitation on the part of the invitee. Equity will not enjoin a former employee from receiving business from the customers of his former employer, even though the circumstances be such that he should be prohibited from soliciting such business.? ? (Hilb, Rogal & Hamilton Ins. Services v. Robb (1995) 33 Cal.App.4th 1812, 1821, internal citation omitted; emphasis added.)
In?Reeves v. Hanlon?(2004) 33 Cal.4th 1140, 1156, the California Supreme Court wrote, ?the UTSA does not forbid an individual from announcing a change of employment, even to clients on a protected trade secret client list. [Citations.] As one decision explains, merely announcing a new business affiliation, without more, is not prohibited by the UTSA definition of misappropriation because such conduct is ?basic to an individual?s right to engage in fair competition.? [Citation.]? ?However, the use of this information to?solicit?clients may be a violation. (Id.; emphasis added.)
In opposition, plaintiff RMCE contends defendant Dadala?s announcement of her change in employment went beyond a mere announcement and amounted to solicitation.
At common law, the boundary separating fair and unfair competition in the context of a protected customer list has been drawn at the distinction between an announcement and a solicitation. In the course of its discussion in Aetna Bldg. Maintenance Co. v. West, supra, 39 Cal.2d at pp. 203?204, 246 P.2d 11, our Supreme Court noted the difference and stated the verb ? ?[s]olicit? is defined as: ?To ask for with earnestness, to make petition for, to endeavor to obtain, to awake or excite to action, to appeal to, or to invite.? [Citation.] ?It implies personal petition and importunity addressed to a particular individual to do some particular thing, …? [Citation.] It means: ?To appeal to (for something); to apply to for obtaining something; to ask earnestly; to ask for the purpose of receiving; the endeavor to obtain by asking or pleading; to entreat, implore or importune; to make petition to; to plead for; to try to obtain.? [Citation.]?
(American Credit Indemnity Co. v. Sacks (1989) 213 Cal.App.3d 622, 634 (Sacks).)
In Sacks, the appellate court reversed a trial court ruling which denied a motion for preliminary injunction.? The Sacks court found a letter from an insurance sales agent to former clients went beyond a mere announcement and amounted to solicitation.
On March 4, 1988, Sacks resigned from ACI. She sent a letter dated March 7, 1988, to each of the approximately 50 ACI policyholders she personally had serviced. It stated: ?After almost fifteen years as both an agent and policyholder, I have left [ACI] and am very pleased to announce the formation of an independent insurance agency. [? ] I shall continue to specialize in Credit Insurance but will now primarily be representing FIDELITY AND DEPOSIT COMPANY OF MARYLAND [F & D], who [sic] is offering companies a very interesting alternative to the types of policies being written by both [ACI] and Continental. If you would like to learn more about the [F & D] policy, I will be happy to discuss it in detail with you when you are ready to review your ongoing credit insurance needs at renewal time. [? ] In the meantime, ACI will assign a new agent to your policy. If I can be of assistance to you during the transition period or answer any questions for you at any time, please do not hesitate to call me. [? ] I have really enjoyed our past association and hope we don’t lose touch!?
(Sacks, supra, 213 Cal.App.3d at p. 626.)
Sacks claims the March 7 letter merely announced a change of employment. Although the letter begins as an announcement of her departure from ACI and affiliation with F & D, it soon assumes a different tone. Sacks informs ACI’s customers of the interesting competitive alternative F & D offers as compared to ACI’s policies. She invites their inquiry about the F & D policy and indicates she would be happy to discuss it in detail when they are ready to renew. She personally petitions, importunes and entreats ACI’s customers to call her at any time for information about the better policies F & D can provide and for assistance during the agent transition period. [?] Phrased in the terms used in the Aetna definition, Sacks is endeavoring to obtain their business. Sacks, in a word, solicited. ?Therefore, as a matter of law, Sacks’s letter of March 7, 1988, constituted a solicitation.
(Id. at pp. 636?37.)
The Sacks court contrasted the announcement with one which did not involve solicitation.
The most recent case to deal with the announcement rule is Moss, Adams & Co. v. Shilling (1986) 179 Cal.App.3d 124, 224 Cal.Rptr. 456, upon which the trial court relied in finding Sacks properly could solicit the ACT policyholders she personally had serviced. [?] Moss, Adams, involved departing employees of an accounting firm who announced the formation of a new accounting partnership to those clients the former employees had serviced on behalf of the firm. The trial court granted summary judgment in favor of the employees based upon the Aetna rule that ? ?[m]erely informing customers of one’s former employer of a change of employment, without more, is not solicitation.? [Citations.]? [Citation.] [?] The announcement to the former employer’s clients in Moss, Adams stated: ? ?John D. Shilling and Cynthia L. Kenyon, formerly with Moss Adams, are pleased to announce the formation of a new partnership: Shilling, Kenyon & Co. [,] Certified Public Accountants[,] Lloyds Bank Building[,] One Almaden Blvd., Suite 1110[,] San Jose, CA 95113[,] (408) 295?3822[.]? ? [Citation.]
(Id. at p. 635.)
Here, the underlying evidence submitted by defendant Dadala includes her announcements to RMCE clients.? While there is some variation, several announcements included the following: ?As of yesterday, I no longer work for Rajappan and Meyer Consulting Engineers and I will be joining HDR Inc., as Principal starting from July 30th, Please do not hesitate to contact me if you have any questions and I sincerely hope to work together in near future.?? Had defendant Dadala?s announcement included only her first sentence, it would be more akin to the announcement in Moss, Adams.? Instead, the second sentence continues and includes language which does endeavor, petition, or invite the reader for inquiry and/or future collaboration.? While this court declines to make a determination as a matter of law as the court in Sacks did, the language here is similar enough to the last two sentences of the announcement in Sacks to at least present a triable issue of fact.
- Resulting injury.
In the notice of motion, defendant Dadala argues she is entitled to summary judgment because there is no evidence that plaintiff suffered any resulting injury.? As noted above, resulting injury is an element to a claim for misappropriation. (Silvaco, supra, 184 Cal.App.4th at p. 220.)? However, defendant Dadala does not meet its burden.? Defendant Dadala must affirmatively demonstrate that plaintiff cannot establish an element of its claim.? Defendant Dadala has not affirmatively negated an element of the claim.? Defendant Dadala cannot simply say that plaintiff has no evidence to support the element of damages; defendant Dadala must affirmatively demonstrate that no such evidence exists.? ?Defendant does so by presenting evidence that plaintiff ?does not possess and cannot reasonably obtain, needed evidence? (because plaintiff must be allowed a reasonable opportunity to oppose the motion. [Citation.] [?] Such evidence usually consists of admissions by plaintiff following extensive discovery to the effect that he or she has discovered nothing to support an essential element of the cause of action.? (Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2015) ?10:242, p. 10-100 citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854 ? 855.)? Defendant Dadala has not presented any affirmative evidence and, consequently, has not met her burden.
For the reasons stated above, defendant Dadala?s motion for summary judgment is DENIED.
- Evidentiary objections.
In opposition to the motion for summary judgment, plaintiff RMCE filed evidentiary objections.? Plaintiff RMCE?s evidentiary objections, nos. 3 ? 4, are OVERRULED.? ?In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.? (Code Civ. Proc., ?437c, subd. (q).)
[1] See Separate Statement of Undisputed Material Facts in Support of Defendant Martha Dadala?s Motion for Summary Judgment (?Dadala UMF?), Fact No. 1.
[2] See Dadala UMF, Fact No. 2.
[3] See Dadala UMF, Fact No. 3.
[4] See Dadala UMF, Fact No. 4.
[5] See Dadala UMF, Fact No. 5.
[6] See Dadala UMF, Fact No. 6.
[7] See Declaration of Bala Rajappan in Support of Plaintiff?s Opposition to Defendant Martha Dadala?s Motion for Summary Judgment (?Declaration Rajappan?), ?6.
[8] See Declaration Rajappan, ?7.
[9] See Declaration Rajappan, ?8.
[10] See Declaration Rajappan, ?9.
[11] See Dadala UMF, Fact Nos. 7 ? 8.
[12] See Dadala UMF, Fact No. 9.