Opinion
Case No. 2:17-cv-04062-SVW-SS
08-16-2017
Calendar Research LLC v. StubHub, Inc. et al
CIVIL MINUTES - GENERAL
Present: The Honorable STEPHEN V. WILSON, U.S. DISTRICT JUDGE Paul M. Cruz
Deputy Clerk N/A
Court Reporter / Recorder Attorneys Present for Plaintiffs: N/A Attorneys Present for Defendants: N/A Proceedings: IN CHAMBERS ORDER REGARDING MOTIONS TO DISMISS [32] [33] [34]
The Court partially DENIES and partially GRANTS Defendants' motions to dismiss. The Court also STAYS all pending claims except for one: Plaintiff's Defend Trade Secrets Act claim against Defendant StubHub. All other claims are stayed until the Court has decided the one claim above. I. Factual And Procedural Background
Defendant Michael Hunter Gray was a co-founder and CEO of a start-up called Calaborate, which developed a group scheduling application. Dkt. 40-10 TAC ¶ 1. Knight and Bishop, L.P., invested in Calaborate. Id. In 2013, Gray executed an assignment agreement with Calaborate. Id. at ¶ 50. In 2013 and 2014, Vice President of Engineering, Lisa Dusseault, and Developer Lasha Efremidze both signed similar agreements. Id. at ¶ 17-20.
Gray tried to sell Calaborate and his most successful attempt was to an online ticket vendor known as StubHub, Inc., wholly owned by eBay, Inc. Id. at ¶ 34. The deal did not go through; however, Gray left Calaborate to go work for StubHub and eBay regardless. Id. at ¶¶ 36-37. Gray also took two Calaborate employees, Lisa Dusseault and Lasha Efremidze, to StubHub with him. Plaintiff claims that Gray, Dusseault, and Efremidze downloaded proprietary Calaborate information, maintained access to Calaborate's source code, and planned to build a similar group scheduling application while working for StubHub and eBay. Dkt. 40-10.
At the point that Gray, Dusseault, and Efremidze left Calaborate, the company was insolvent. Id. at ¶ 40. Calendar Research, the plaintiff in this case, had investors Knight and Bishop, L.P., assign Knight and Bishop's Calaborate debts to Calendar Research. Plaintiff accordingly bought all of Calaborate's assets at a foreclosure sale. Id. Gray allegedly claimed that he would transfer all of Calaborate's property to Calendar Research as required by both the foreclosure sale, as well as a separate transfer agreement and loan agreement between Calaborate and Bishop and Knight. . Id. at ¶¶ 53, 54, 56, 57. Allegedly, Gray, Dusseault, and Efremidze withheld and continue to withhold Calendar Research's property.
Plaintiff Calendar Research now sues for sole possession of all property that once belonged to Calaborate and now belongs to Plaintiff. Plaintiff also claims that Gray, Dusseault, and Efremidze separately downloaded or copied Calaborate research property for misuse.
Calendar Research originally filed this action in Los Angeles Superior Court in November 2015. Dkt. 1-1, Ex. 1 to Not. of Removal. Calendar Research filed a Second Amended Complaint in September 2016. Defendant Gray filed another demurrer; however, the state court overruled the demurrer as to all causes of action except one. Dkt. 40-7. The court sustained Gray's demurrer as to the breach of fiduciary duty cause of action. With most claims intact, Calendar filed the Third Amended Complaint, which included StubHub and eBay as Defendants. Dkt. 1-5, Ex. 45 to Not. Of Removal. Plaintiff also added two federal causes of action: the Defend Trade Secrets Act and the Computer Fraud and Abuse Act. Defendants StubHub and eBay then filed a notice for removal based on federal question jurisdiction. Now, Gray, Dusseault, StubHub and eBay have all filed motions to dismiss. II. Relevant Legal Standards
To survive a motion to dismiss, the plaintiff's complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Aschroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A complaint that offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Id. In deciding a 12(b)(6) motion, the Court must accept all allegations of material fact as true and construe the allegations in the light most favorable to the nomnoving party. Daniel v. County of Santa Barbara, 288 F.3d 375, 380 (9th Cir. 2002). The court should draw all reasonable inferences in favor of the nonmoving party. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Even if a motion to dismiss is granted, a court should giant leave to amend "unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure any deficiency." Schreiber v. Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). III. The Court Dismisses All Claims Against eBay With Leave to Amend.
Plaintiff has not shown a plausible basis for claims against eBay other than the fact that eBay is the parent company of StubHub. That is not an adequate basis for any of Plaintiff's claims, especially without any further information in the complaint regarding eBay's specific role. While Plaintiff does allege more of a connection in its opposition, those allegations are not visible on the face of Plaintiff's complaint. The Court grants eBay's motion to dismiss on all claims with leave to amend. IV. Plaintiff Has Stated an Adequate Claim for Trade Secret Misappropriation under DTSA and CUTSA.
To state a cause of action for trade secret misappropriation under CUTSA, the plaintiff must allege the following: "(1) the plaintiff owned a trade secret, (2) the defendant acquired, disclosed, or used the plaintiff's trade secret through improper means, and (3) the defendant's actions damaged the plaintiff." Cytodyn, Inc. v. Amerimmune Pharm., Inc., 160 Cal. App. 4th 288 (2008); see also Cal. Civ. Code § 3426.1(b). The Defend Trade Secrets Act ("DTSA") contains a federal private cause of action in favor of the "owner of a trade secret that is misappropriated." 18 U.S.C. § 1836(b)(1). The DTSA was modeled on the Uniform Trade Secrets Act and includes definitions and remedies substantially similar to provisions in CUTSA.
Information qualifies as a trade secret under federal and state law if "the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information" and "the owner thereof has taken reasonable measures to keep such information secret." 18 U.S.C. § 1839(3)(A)-(B); see also Mattel, Inc. v. MGA Entm't, Inc., 782 F. Supp. 2d 911, 959 (C.D. Cal. 2011) (quoting Cal. Civ. Code § 3426.1).
a. Plaintiff Pleads Its Alleged Trade Secrets with Sufficient Particularity.
Courts require "some minimally plausible factual explanation for why trade secret protection applies." Synopsys, Inc. v. ATopTech, Inc., No. 13-02965, 2013 WL 5770542, at *6 (N.D. Cal. Oct. 24, 2013). "[I]nsight, knowledge and know-how acquired by an insider to a particular trade does not, in and of itself, constitute trade secrets." Agency Solutions.com, LLC v. TriZetto Grp., Inc., 819 F. Supp. 2d 1001, 1019 (E.D. Cal. 2011).
However, a plaintiff alleging trade secret misappropriation need not "spell out the details of the trade secret" but must identify the trade secret with sufficient particularity to give defendants "reasonable notice of the issues which must be met at the time of trial and to provide reasonable guidance in ascertaining the scope of appropriate discovery." Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 252-53 (1968); see Pellerin v. Honeywell, Int'l, Inc., 877 F. Supp. 2d 984, 988 n.1 (S.D. Cal. 2012) (citing a case Defendants rely upon for the proposition that "courts in the Ninth Circuit look to Diodes for guidance on the applicable pleading standard for claims brought under the CUTSA.").
Defendants rely on Jobscience, Inc. v. CVPartners, Inc., No. 13-4519, 2014 WL 1724763, at *2-*3 (N.D. Cal. May 1, 2014). The court stated that:
Experience has shown that it is easy to allege theft of trade secrets with vagueness, then take discovery into the defendants' files, and then cleverly specify what ever happens to be there as having been trade secrets stolen from plaintiff. A true trade secret plaintiff ought to be able to identify, up front, and with specificity the particulars of the trade secrets without any discovery.Jobscience, Inc. v. CVPartners, Inc., No. 13-4519, 2014 WL 1724763, at *2-*3 (N.D. Cal. May 1, 2014). Jobscience may seem similar to this case; however, it is not. There, the court granted a motion to dismiss after the plaintiff failed three times to specify any trade secret at issue, despite two prior orders warning plaintiff of the deficiency. Id. at 3*. Here, Plaintiff has alleged specific trade secrets in a detailed description in the full text of the TAC's paragraph 107. A plaintiff is not required to describe its trade secrets in exhaustive detail. Diodes, 260 Cal. App. 2d at 252-53. This case is unlike Jobscience or Synopsys, Inc. v. ATopTech, Inc., 2013 WL 5770542 (N.D. Cal. Oct 24, 2013), where the allegations naming trade secrets were too conclusory, sweeping, and vague to provide notice. Id. at *6-7. The other cases Defendants cite do not involve the sufficient pleading standard for a motion to dismiss and are therefore irrelevant. Plaintiff Calendar Research provides enough information to conduct discovery.
b. Defendants' May Still Be Liable For Disclosing Portions of Plaintiff's Trade Secrets To The Public.
Defendants also argue that part of Plaintiff Calendar Research's source code is available publicly and is therefore not a trade secret; however, it is evident based on the face of the pleading that Plaintiff alleges that Defendant Efremidze uploaded this source code. Dkt. 40-10 (TAC) ¶ 125. At this stage, such allegations must be taken in favor of the non-moving party. Courts have rejected the notion that defendants can be inoculated from liability for trade secret misappropriation because one of them disclosed a portion of the trade secrets to the public. See HiRel Connectors, Inc. v. U.S., 2005 WL 4958547, at *7 (C.D. Cal. Jan. 4, 2005) ("a misappropriator or his privies cannot 'baptize' their wrongful actions by general publication of the secret."). Therefore, Plaintiff has sufficiently plead this cause of action.
c. Plaintiff Adequately Pleads that the Trade Secrets Derive Economic Value from Not Being Publicly Available.
To have independent economic value, a trade secret must be "sufficiently valuable and secret to afford an actual or potential economic advantage over others." Yield Dynamics, Inc. v. TEA Sys. Corp., 154 Cal. App. 4th 547, 564 (2007). Independent economic value can be shown by "circumstantial evidence of the resources invested in producing the information, the precautions taken to protect its secrecy, and the willingness of others to pay for its access." Religious Tech. Ctr. v. Netcom On-Line Commc'n Servs., Inc., 923 F. Supp. 1231, 1253 (N.D. Cal. 1995). Moreover, "information can have independent economic value even if there is no actual product on the market utilizing the information...." Leatt Corp. v. Innovative Safety Tech., LLC, 2010 WL 1526382, at *6 (S.D. Cal. Apr. 15, 2010).
The standard to show that trade secrets derive economic value is not a high standard. Plaintiff has already stated that the trade secrets "enable the creation of economically successful applications for use on mobile phones and the Web. Such creation and development would be less profitable without the expedited and simplified development processes inherent in these trade secrets." Dkt. 40-10 (TAC) ¶ 109. Motions to dismiss have been denied for far less extensive allegations of economic value. See Fuhu, Inc. v. Toys "R" US, Inc., 2013 WL 12097569, at *9 (S.D. Cal. Mar. 1, 2013) (finding allegation that alleged trade secret "has actual or potential independent economic value because it was secret" was sufficient to survive a motion to dismiss). Just because the features of the application were visible to the user does not mean the code itself was visible to the user. Defendant's motion to dismiss fails on this prong.
d. Plaintiff Adequately Alleges that StubHub Acquired Trade Secrets Through Improper Means
The TAC adequate pleads that Defendants StubHub knew or should have known that the individual defendants had stolen Calendar Research's trade secrets. The evidence is in the relevant portions:
• StubHub, "having previously attempted unsuccessfully to acquire Calaborate and its assets, including its trade secrets, had full knowledge of the valuable proprietary assets owned by Calaborate." Dkt. 40-10 TAC ¶ 115.It is unclear what more Plaintiff could allege to show improper use without the use of at least some discovery.
• Gray "had frequent communications with employees of StubHub," including an individual in StubHub's mergers and acquisitions department "who informed Gray that eBay and StubHub wanted to incorporate the source code of the Klutch application into StubHub's existing and future applications." Id. ¶ 123.
• "Conversations between Gray, Dusseault, and StubHub demonstrate that at the time StubHub acquired the proprietary information of Calendar Research, StubHub knew that Gray and Dusseault were no longer authorized to possess or disseminate that information." Id. ¶ 126.
Similarly, Defendants argue that Calendar Research does not allege in detail how StubHub used Calendar Research's trade secrets. But allegations regarding a defendant's use of trade secrets are properly made "on information and belief because such information "is not presumptively in the knowledge of the pleading party." Brocade Communications Sys., Inc. v. Networks, Inc., 2011 WL 1044899, at *6 (N.D. Cal. Mar. 23, 2011). Plaintiff has sufficiently plead the allegations regarding trade secrets.
e. All Defendants Incorrectly Argue That The Court Should Dismiss The Seventh Cause of Action for Violation of the Defend Trade Secrets Act (DTSA) Because Plaintiff's Allegations Predate the Enactment of DTSA.
The Defend Trade Secrets Act (DTSA) was enacted on May 11, 2016. See DTSA, Pub. L. No. 114-153, §2(e). Plaintiff alleges that all Defendants misappropriated Plaintiff's trade secrets beginning around May 2015. Continued misappropriation of trade secrets after DTSA's enactment can constitute a DTSA violation.
Defendants rely on Cave Consulting Group Inc. v. Truven Health Analytics, where the court dismissed a DTSA claim because the purported trade secrets were allegedly misappropriated before the effective date of the DTSA. 2017 WL 1436044, at *5 (N.D. Cal. Apr. 24, 2017); however, in Cave, the Plaintiffs did not allege the Defendants used the trade secrets after May 11, 2016. In the case at hand, Plaintiff Calendar Research alleges that Defendants used the trade secrets after May 11, 2016 in developing an updated version of StubHub's mobile application. Defendants also argue that even if Plaintiff alleges misappropriation of trade secrets after DTSA's enactment, such allegations would be insufficient. See Avago Technologies, 2017 WL 412524, at *8-*9 (N.D. Cal. Jan. 31, 2017) (dismissing a DTSA claim because the plaintiff only alleged pre-DTSA disclosures of alleged trade secrets).
Plaintiff relies on a separate set of cases, arguing that DTSA's text does not require any allegation of additional misappropriation of trade secrets after DTSA's enactment; continued misappropriation after DTSA's enactment is sufficient to defeat a motion to dismiss. See Brand Energy & Infrastructure Servs., Inc. v. Irex Contracting Grp., 2017 WL 1105648, at *3 (E.D. Pa. Mar. 24, 2017) (quoting Defend Trade Secrets Act of 2016, Pub. L. No. 114-153, § 2(e), 130 Stat. 376 (2016)); Syntel Sterling Best Shores Mauritius Ltd. v. Trizetto Grp., Inc., 2016 WL 5338550, at *6 (S.D.N.Y. Sep. 23, 2016) (granting a defendant leave to amend a cross-complaint to add a DTSA claim where the alleged acquisition occurred pre-DTSA enactment, but alleged use occurred post-enactment because the "plain language of the Act defines misappropriation to include "disclosure or use of a trade secret without the consent of another.") (emphasis in original) (quoting 18 U.S.C. § 1839(5)). While Plaintiff's interpretation does significantly increase the class of cases covered by DTSA when compared to Defendant's interpretation, Plaintiff's interpretation is much more in line with the statutory text of DTSA. Therefore, the Court denies all three Defendants' motions to dismiss on this ground.
V. Only Some of Plaintiff's Claims Are Preempted by CUTSA; The Court Grants The Motion to Dismiss Such Relevant Claims with Leave to Amend.
a. Plaintiff's First, Second, and Tenth Causes of Action for Claim & Delivery, Conversion, and Receipt of Stolen Property Are Preempted by CUTSA.
The California Uniform Trade Secrets Act (CUTSA) preempts and supersedes "other civil remedies based upon misappropriation of a trade secret," as CUTSA is "the exclusive civil remedy for conduct failing within its terms." Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 236 (2010), as modified (May 27, 2010), disapproved on other grounds by Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 337 (2011) (addressing the Silvaco decision's treatment of standing under the UCL); Cal. Civ. Code § 3426.7. Although CUTSA does not supersede contractual remedies, it supersedes "claims based on the same nucleus of facts as the misappropriation of trade secrets claim for relief." K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939, 958, 90 Cal. Rptr. 3d247 (2009).
This preemption includes "information that does not fit [the] definition [of a trade secret], and is not made property by some provision of positive law . . . ." Silvaco, 184 Cal. App. 4th at 239 n.22. Judge Lucy Koh further explained this preemption in SunPower Corp. v. SolarCity Corp., 2012 U.S. Dist. LEXIS 176284, at *28 (N.D. Cal. Dec. 11, 2012)
In light of Silvaco, the Court concludes that [Plaintiff's] claims based on its non-trade secret proprietary information are superseded unless one of the following conditions is met: (1) [Plaintiff] can allege facts that show that the non-trade secret proprietary information was made property by some provision of positive law on grounds that are qualitatively different from the grounds upon which trade secrets are considered property, or (2) it can otherwise be concluded that [Plaintiff's] Non-Trade Secret Claims allege wrongdoing that is materially distinct from the wrongdoing alleged in a CUTSA claim.Id. While CUTSA's preemptive sweep under Silvaco is extraordinary, the Court must respect and apply Silvaco to Plaintiff's first, second, and tenth causes of action.
Plaintiff argues that common law claims can survive CUTSA preemption "if [the] property interest is not rooted in the property's status as a trade secret." TMC Aerospace, Inc. v. Elbit Sys. of America LLC, 2016 WL 3475322, at *7 (C.D. Cal. Jan. 29, 2016) (citing Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 238 (2010)). However, Plaintiff's imposition of the label "Non-Trade Secret Property" does not automatically remove the claim from CUTSA preemption. Defendants note that the claim still relies "on facts identical to Plaintiff's claim for misappropriation of trade secrets." TMC Aerospace, Inc. v. Elbit Sys. of Am. LLC, No. 15-7595, 2016 WL 3475322, at *7 (C.D. Cal. Jan. 29, 2016). On the face of the current complaint, Plaintiff's misappropriation claims, conversion claim, and receipt of stolen property claim all stem from the same underlying allegation: Gray, Dusseault, and Efremidze retained and used Calaborate's proprietary information following the asset sale. Accordingly, alleging that the same conduct amounted to both trade secret misappropriation and conversion simply because the trade secrets were contained in physical property is precisely what CUTSA preemption precludes.
The Court acknowledges that the Los Angeles Superior Court already overruled a demurrer with regard to Defendant Gray on this exact claim. In most cases, this Court would follow the Ninth Circuit's ruling in Jenkins v. Commonwealth Land Title Ins. Co., 95 F.3d 791, 795 (9th Cir. 1996), which states that "the longstanding principle is that after removal, the federal court takes the case up where the State court left it off." While the Court would typically follow this holding and does follow that holding with regard to all other portions of this case, the particular circumstances with regard to this claim are different. The Court does not feel duty-bound to follow the Los Angeles Superior Court's decision where such a decision would lead to dismissal of claims against Defendants StubHub, eBay, and Dusseault while still permitting the exact same claim against Defendant Gray. Therefore, the Court dismisses claims against all Defendants.
b. Plaintiff's Third, Eleventh, and Twelfth Causes of Action, Based on Contractual Claims, Are Not Superseded by CUTSA.
Unlike with tort remedies CUTSA does not supersede "contractual remedies, whether or not based upon misappropriation of a trade secret...." Cal. Civ. Code § 3426.7(b)(1); accord Angelica, 220 Cal. App. 4th at 506. Thus, Calendar Research's breach of contract claim is not superseded by CUTSA, and neither are any of its claims that, "although related to a trade secret misappropriation, are independent and based on facts distinct from the facts that support the misappropriation claim." Angelica Textile Servs., 220 Cal. App. 4th at 506; see also Contemporary Services Corp. v. Landmark Event Staffing Services, Inc., 2014 WL 12586121, at *19 (C.D. Cal. Sept. 9, 2014), affirmed in part and reversed in part on other grounds, and remanded, 677 Fed. App'x. 314 (9th Cir. Jan. 30, 2017), as amended on denial of rehearing (Mar. 30, 2017) (finding that CUTSA did not preempt contract claim even though it arose "out of the same common nucleus of facts").
Furthermore, StubHub also argues that California's policy favoring labor mobility (codified in Cal. Bus. & Prof. Code § 16600, et seq.), bars a claim for interference or inducement. However, Plaintiff notes that contractual restraints on labor mobility that are "designed to protect an employer's proprietary information do not violate section 16600." Gatan, Inc. v. Nion Co., 2017 WL 1196819, at *7 (N.D. Cal. Mar. 31, 2017). Defendant responds that if these restrictions are designed to protect an employer's proprietary information, the restrictions are related to CUTSA and thus preempted. This argument fails because as noted above, even if contract provisions arise out of the same nucleus of operative fact as a CUTSA claim, CUTSA still does not preempt those causes of action.
c. CUTSA Does Not Preempt Plaintiff's Fifth Cause of Action for Promissory Fraud and Plaintiff's Eighth Cause of Action for CFAA Violations.
CUTSA does not preempt the promissory fraud cause of action because the allegations arise from a separate set of facts. The TAC claims that Gray promised Knight and Bishop's principal that he would return all Calaborate property that he had retained. Dkt. 40-10 (TAC) ¶¶ 46, 53, 56. Those false promises—different from the trade secret claims—form the basis of the fraud claim.
Similarly with regard to the CFAA claim, the Ninth Circuit has stated that "the plain language of the CFAA targets the unauthorized procurement or alteration of information, not its misuse or misappropriation." United States v. Nosal, 676 F.3d 854, 863 (9th Cir. 2012). "The CFAA is an 'anti-hacking' statute and not a misappropriation statute." Hat World, Inc. v. Kelley, 2012 WL 3283486, at *5 (E.D. Cal. Aug. 10, 2012). Thus, in the Ninth Circuit, claims alleging violation of the CFAA are not preempted by the CUTSA. Farmers Ins. Exchange v. Steele Ins. Agency, Inc., 2013 WL 3872950, at *11 (E.D. Cal. Jul. 25, 2013) (finding no preemption of CFAA claims). Also, a state law cannot preempt a federal statute. See Sign Designs, Inc. v. Johnson United, Inc., 2011 WL 1549396, at *2 (E.D. Cal. Apr. 21, 2011) (holding that there "is absolutely no authority for [the] erroneous contention that CUTSA in any way preempts federal law."). VI. Plaintiff Adequately Pleads the Eighth Cause of Action, the Computer Fraud and Abuse Act Violation, Against Defendant Gray.
Plaintiff claims that Defendant Gray "accessed official Calaborate accounts on services such as Google Drive, Dropbox, and Evernote, among others, after his authorization to do so had been terminated." TAC, ¶135. Defendant claims that cloud-based, third-party services—Google Drive, Dropbox, and Evernote—do not constitute the use of a "protected computer." This is an incorrect understanding of the CFAA.
"Pleading specific facts that the defendant accessed a computer connected to the internet is sufficient to establish that the accessed computer was 'protected.'" Merritt Hawkins & Associates, LLC v. Gresham, 948 F. Supp. 2d 671, 674 (N.D. Tex. 2013) (citing United States v. Trotter, 478 F.3d 918, 921 (8th Cir. 2007) (holding that the accessed computer was "protected" because defendant "admitted the computers were connected to the Internet"); Becker v. Toca, 2008 WL 4443050, at *5 (E.D. La. Sept. 26, 2008) (plaintiff sufficiently pleaded that computer was "protected" because he claimed that "computers were connected to the internet")). Furthermore, Defendant Gray's argument that a "protected computer" cannot include third-party, cloud-based services lacks authority. To the contrary, courts have found that third-party and cloud-based services qualify as a "protected computer" under the CFAA. See Simmonds Equip., LLC v. GGR Int'l, Inc., 126 F. Supp. 3d 855, 863-64 (S.D. Tex. 2015) (denying motion to dismiss CFAA claim; "allegations that [defendant] accessed [plaintiff's] website via a third-party hosting company . . . are factually sufficient to satisfy the requirement for pleading that GGR accessed a 'protected computer.'"). Plaintiff has adequately stated a claim for violation of the CFAA. VII. Plaintiff Adequately States the Eleventh and Twelfth Causes of Action for Failure to State a Viable Contractual Claim.
Plaintiff's Eleventh and Twelfth claims involve interference and inducement of breach of contract. The first element of either action is that there is a valid contract between the plaintiff and a third party. Plaintiff had adequately plead in the TAC that Calendar Research is a party to the contracts. The TAC states that Calaborate executed a valid transfer statement under Section 9619 of the UCC, which provides that Calendar Research "is entitled to, among other things, the benefit and enjoyment conferred upon [Calendar Research] by section 9619(b) of the CA UCC," and incorporates the transfer statement by attaching it to the complaint. Dkt. 40-10 (TAC) ¶ 50. The transfer statement explicitly states that Calendar Research obtained all "right, title, and interest in and to ... all ... general intangibles (including contracts and contract rights..." formerly belonging to Calaborate. Dkt. 40-3, Sch. 1, at p. 46. The TAC states and adequate cause of action for failure to state a viable claim.
VIII. The Court Dismisses All of Plaintiff's Claims Relating to Breaches of Fiduciary Duty and Negligent Interference with a Contract.
Calendar Research withdrew its thirteenth cause of action regarding negligent interference with a contract.
Regarding all claims alleging breaches of fiduciary duty (or aiding and abetting such breaches), the Court grants each Defendant's motion to dismiss. As noted before, a federal court should take up cases where the State Court left off. Here, the Los Angeles Superior Court sustained Defendant Gray's demurrer regarding claims of breaches of fiduciary duty. See Dkt. 1, Notice of Removal, Ex. 25 ¶¶ 84-92. Plaintiff's claims against Defendants StubHub and eBay are predicated on the same facts. Therefore, the Court giants their motions to dismiss breach of fiduciary duty claims as well.
IX. Conclusion
The Court GRANTS eBay's motion to dismiss all claims with leave to amend. The Court GRANTS each Defendant's motions to dismiss Plaintiff's first, second, and tenth causes of action for claim and delivery, conversion, and receipt of stolen property. The three claims are preempted by CUTSA; however, Plaintiff has leave to amend the claims. The Court GRANTS Defendants' motions to dismiss on the fourth and ninth claims for breach of fiduciary duty and the fourteenth claim for aiding and abetting a breach of fiduciary duty. Finally, the Court also GRANTS Defendants' motions to dismiss the thirteenth claim regarding negligent interference with a contract.
The Court DENIES all Defendants' motions to dismiss on the DTSA and CUTSA claims and STAYS the CUTSA claims until resolution of the DTSA claims. The Court DENIES all Defendants' motions to dismiss Plaintiff's third, fifth, eighth, eleventh, and twelfth causes of actions. These claims are not preempted by CUTSA; however, the claims are STAYED until resolution of the DTSA claim. The Court DENIES Defendants' motions to dismiss claiming that Plaintiff did not state a viable contractual claim; however, these claims are also STAYED for the reasons mentioned above. The Court DENIES Defendant Gray's Motion to Dismiss on the Eighth Cause of Action, the Computer Fraud and Abuse Act, and STAYS that claim as well.