Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC367888, Malcolm H. Mackey, Judge.
Mattingly & Minnis, David J. Mattingly and Aaron P. Minnis for Plaintiff and Appellant.
Lavely & Singer, Martin D. Singer, William J. Briggs II and Allison Hart Sievers for Defendants and Respondents.
JACKSON, J.
INTRODUCTION
Plaintiff Martin Nielsen appeals from a judgment of dismissal entered after the trial court sustained without leave to amend the demurrer of the Platinum Equity defendants. We affirm.
Although the document is entitled order of dismissal, it orders that “judgment is hereby entered in favor of Defendants.”
Defendants are Platinum Equity, LLC; Platinum Equity Advisors, LLC; Platinum Equity Capital Partners, L.P.; Platinum Equity Capital Partners-A, L.P.; Platinum Equity Capital Partners-PF, L.P.; Platinum Equity Investment Holdings, LLC; and Platinum Equity Partners, LLC.
For the purposes of an appeal from a dismissal after a demurrer is sustained without leave to amend, we assume the truth of the complaint’s properly pleaded or implied factual allegations and matters which have been or may be judicially noticed (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081), including facts alleged in earlier pleadings (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 877). We do not consider contentions, deductions or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.4th 634, 638.)
In November 2002, defendants hired plaintiff to work on the security detail assigned to protect their CEO, Tom Gores (Gores), and his family. Plaintiff obtained a concealed weapon permit and purchased a firearm, which he carried on the job. Plaintiff did not recall if he signed an employment agreement at the time.
Plaintiff and another security agent on the Gores regular security rotation also took turns being on call. They traveled with the Gores family and performed whatever services were necessary. Gores and his wife complimented plaintiff on his work and treated him like a member of the family.
Plaintiff also provided security for and traveled with other executives employed by defendants. Plaintiff’s duties included providing for their various needs and intervening in volatile situations.
Plaintiff and three other members of the Gores security detail had their own security business, Templar, for which they worked when they were not working for defendants. Templar was not in competition with defendants for clients. Plaintiff believed defendants knew that he and the others had performed outside work while employed by defendants.
In October 2006, Gores informed plaintiff and the others that they were being placed on administrative leave. Gores and his wife said they had discovered a website showing that plaintiff and the others were operating their own security business during their off hours. They considered it a betrayal. They told plaintiff and the others they had to take down their website and suspend their business before they could return to work for defendants. The promise that plaintiff and the others could return to work was designed to lure them into signing a new employment agreement with defendants. Plaintiff and the others complied with defendants’ demands that they discontinue their business and take down the website.
On December 7, 2006, while plaintiff was still on administrative leave, defendants’ CFO, Mary Ann Sigler (Sigler), sent plaintiff and the other three an email with a new employment agreement attached. Sigler’s email stated: “We are updating our corporate records and as you will see by the e-mail below, our General Counsel has sent out to each employee of Platinum Equity the attached confidential agreement for review and execution. I need each of you to review the document, place your name at the top of page one and sign and date the agreement on the last page and return it to MY ATTENTION as soon as possible.”
The specific terms of the agreement will be set forth in the discussion where relevant.
The email from the general counsel stated: “As you know, Platinum has grown and evolved into a much more complex and sophisticated organization than the one you first joined. And as we have grown, we have learned that we need to continually look for ways to ensure that we protect our assets and the value that we have created over the years.
“In keeping with that objective, we have updated our company confidentiality agreement to reflect the full spectrum of issues that our firm faces in today’s business environment. Attached is a copy of this new agreement which we are asking all employees to review and sign. [¶]... [¶]
“As the business climate evolves, we will periodically review and revise our policies and practices to ensure they remain up-to-date....”
Plaintiff and his coworkers refused to sign the agreement, even after Sigler pressured them to do so. Plaintiff was not offered the opportunity to negotiate the terms of the employment agreement.
On February 8, 2007, plaintiff and his coworkers who refused to sign the agreement were terminated because of their refusal to sign. Plaintiff was told that Gores decided to terminate his employment and that defendant could terminate him because he was an at-will employee.
PROCEDURAL BACKGROUND
Plaintiff filed this action against defendants on March 13, 2007. His original complaint contained seven causes of action: violation of Labor Code section 232.5, tortious termination in violation of public policy, interference with prospective economic advantage, promissory fraud, breach of implied contract/bad faith, unfair business practices, and declaratory and injunctive relief. He filed the action as a John Doe.
Defendants demurred on the ground plaintiff impermissibly filed the action under a fictitious name, and the failure to identify himself rendered the complaint confusing and uncertain. The trial court sustained the demurrer with leave to amend on the ground of uncertainty.
Plaintiff filed a first amended complaint in his own name. Defendants again demurred, this time on the ground the first amended complaint failed to state facts sufficient to constitute a cause of action. They also filed a motion to strike. The trial court sustained the demurrer with leave to amend. It granted the motion to strike on the grounds the subject allegations were not relevant to plaintiff’s causes of action and were beyond the scope of its previous order.
Plaintiff then filed his second amended complaint. This contained 19 causes of action, for: violation of Labor Code section 232.5; tortious termination in violation of public policy—Labor Code section 232.5; tortious termination in violation of public policy—Labor Code sections 2802 and 2804; tortious termination in violation of public policy—Business and Professions Code section 16600; tortious termination in violation of public policy—availability of statutory rights; tortious termination in violation of public policy—Labor Code section 1102.5; tortious termination in violation of public policy—Civil Code section 1670.5; intentional or negligent interference with prospective economic advantage; promissory fraud; unfair business practices (Bus. & Prof. Code, § 17200 et seq.)—Labor Code section 232.5; unfair business practices (Bus. & Prof. Code, § 17200 et seq.)—Labor Code section 2802; unfair business practices (Bus. & Prof. Code, § 17200 et seq.)—statutory rights; unfair business practices (Bus. & Prof. Code, § 17200 et seq.)—Labor Code section 1102.5; unfair business practices (Bus. & Prof. Code, § 17200 et seq.)—Civil Code section 1670.5; and five causes of action for declaratory relief.
Defendants demurred to the second amended complaint on the ground it failed to state facts sufficient to constitute a cause of action. The trial court sustained the demurrer without leave to amend, noting that while the second amended complaint contained 19 rather than 7 causes of action, it “add[ed] few new factual allegations.” The court then dismissed the action.
DISCUSSION
A demurrer tests the sufficiency of the plaintiff’s complaint, i.e., whether it states facts sufficient to constitute a cause of action upon which relief may be based. (Code Civ. Proc., § 430.10, subd. (e); Friedland v. City of Long Beach (1998) 62 Cal.App.4th 835, 841-842.) In determining whether the complaint states facts sufficient to constitute a cause of action, the trial court may consider all material facts pleaded in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law. (Moore v. Conliffe, supra, 7 Cal.4th at p. 638; Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal.App.4th 784, 790.) The trial court also may consider matters of which it may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) However, it may not consider in making its ruling the available evidence, the plaintiff’s ability to prove the allegations in the complaint or other extrinsic matters. (Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 922; see City of Atascadero, supra, at p. 459.)
A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)
On appeal, we review the trial court’s sustaining of a demurrer without leave to amend de novo, exercising our independent judgment as to whether a cause of action has been stated as a matter of law and applying the abuse of discretion standard in reviewing the trial court’s denial of leave to amend. (Williams v. Housing Authority of Los Angeles (2004) 121 Cal.App.4th 708, 718-719; Montclair Parkowners Assn. v. City of Montclair, supra, 76 Cal.App.4th at p. 790.) Plaintiff bears the burden of proving the trial court erred in sustaining the demurrer or abused its discretion in denying leave to amend. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 68 Cal.App.4th at p. 459; Coutin v. Lucas (1990) 220 Cal.App.3d 1016, 1020.) To show abuse of discretion, plaintiff must show in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; J.B. Aguerre, Inc. v. American Guarantee & Liability Ins. Co. (1997) 59 Cal.App.4th 6, 18.)
On appeal, plaintiff contends the trial court erred in sustaining defendants’ demurrer to his third, fourth, fifth, sixth and eighth causes of action. He also contends the arbitration provision in the employment agreement is unenforceable. We examine these claims of error. As to the causes of action in the second amended complaint about which plaintiff raises no claims of error, we deem any such claims waived. (Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125.)
A. Tortious Termination in Violation of Public Policy
1. Business and Professions Code section 16600
Although “an employer has the right to discharge an at-will employee for a good reason, for no reason, or even for an arbitrary or irrational reason, such an employee may not be terminated ‘for an unlawful reason or a purpose that contravenes fundamental public policy.’” (D’Sa v. Playhut, Inc. (2000) 85 Cal.App.4th 927, 932.) An at-will employee therefore may maintain a cause of action for wrongful termination if he is terminated for “‘(1) refusing to violate a statute [citation]; (2) performing a statutory obligation [citation]; (3) exercising a statutory right or privilege [citation]; and (4) reporting an alleged violation of a statute of public importance [citations].’” (Stevenson v. Superior Court (1997) 16 Cal.4th 880, 889.) In order to support a cause of action for wrongful termination, the termination must be in violation of “‘a clear constitutional or legislative declaration of fundamental public policy forbidding plaintiff’s discharge.’” (Phillips v. Gemini Moving Specialists (1998) 63 Cal.App.4th 563, 571; see, e.g., Lujan v. Minagar (2004) 124 Cal.App.4th 1040.) The termination may be based on the employee’s refusal to sign an unlawful noncompetition agreement. (Thompson v. Impaxx (2003) 113 Cal.App.4th 1425, 1427.)
Plaintiff alleges that defendants fired him for refusing to sign the new employment agreement. He contends that the agreement violated a fundamental public policy expressed in Business and Professions Code section 16600 because it constituted “an unenforceable restraint on his ability to secure future employment.”
Paragraph 3 of the agreement provides: “Non-Solicitation. Employee acknowledges that the identities of [Company’s] customers and other information gained during employment about those customers is secret and confidential, and Employee agrees that, except with Company’s prior written consent, for a period of twelve (12) months following the termination of Employee’s employment, Employee will not, directly or indirectly, either for his/her own account or for or on behalf of any other person or entity, call upon, contact or attempt to effect any transaction with any customer or prospect that was being pursued by [Company] (or of which Employee otherwise became aware or with which Employee had any contact) during the six month period immediately preceding the termination of Employee’s employment. Employee also agrees that Employee will not contact, solicit or recruit, or assist others in contacting, soliciting or recruiting for employment, any person who is or was an employee of [Company] during the six month period immediately prior to the termination of Employee’s employment, in an attempt to have such person terminate their employment relationship with such entity or to work in any capacity in any other corporation, association, or entity or business.”
Business and Professions Code section 16600 (section 16600) provides that, except as provided by statute, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Under section 16600, an employment agreement which restrains an employee’s ability to practice his profession is invalid. (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 948.)
Paragraph 3 does not preclude plaintiff from practicing his profession, however. It is not a traditional noncompetition provision but rather a nonsolicitation provision. Such a provision does not violate section 16600, as long as it protects information which is confidential, proprietary or a trade secret. (Thompson v. Impaxx, Inc., supra, 113 Cal.App.4th at pp. 1429-1430.) Neither is section 16600 violated by a provision that prevents employees from raiding their former employer’s staff. (Id. at p. 1430.)
Plaintiff argues that paragraph 3 “is an impermissible restriction because it prohibits [plaintiff] from pursuing employment opportunities with [defendants’] customers or prospects whose identities he learned while” working for defendants. Plaintiff’s argument is valid only if the restriction does not protect information which is confidential or a trade secret. (Thompson v. Impaxx, Inc., supra, 113 Cal.App.4th at p. 1430.) He points to no allegations in his second amended complaint that this is the case.
Plaintiff next argues that there is no “trade secrets” exception to section 16600. He relies on a statement in Edwards v. Arthur Andersen LLP, supra, that “[n]oncompetition agreements are invalid under section 16600 in California even if narrowly drawn, unless they fall within the applicable statutory exceptions....” (44 Cal.4th at p. 955.) As plaintiff acknowledges, however, Edwards did not “address the applicability of the so-called trade secret exception to section 16600.” (Id. at p. 946, fn. 4.) Additionally, there was no claim in Edwards “that the provision of the noncompetition agreement prohibiting [plaintiff] from recruiting [defendants’] employees violated section 16600.” (Ibid.) Edwards therefore does not support plaintiff’s argument. (People v. Partida (2005) 37 Cal.4th 428, 438, fn. 4.)
Plaintiff also argues that the trade secrets exception is inapplicable without proof that the information designated as confidential consists of trade secrets, relying on Thompson v. Impaxx, Inc., supra, 113 Cal.App.4th 1425. It is true that in Thompson, the court held that the question whether information constituted a trade secret was a question of fact. (Id. at p. 1430.) Thompson, however, involved a judgment on the pleadings. The plaintiff alleged that the information sought to be protected was not proprietary or a trade secret, and the defendant alleged that it was. (Id. at p. 1428.) Here defendants filed a demurrer, and plaintiff did not include allegations that the information sought to be protected was not confidential. The issue was whether plaintiff stated a cause of action (Friedland v. City of Long Beach, supra, 62 Cal.App.4th at pp. 841-842), not whether there was a question of fact requiring trial.
Plaintiff further suggests that defendants had the burden of proving they had protectable trade secrets or confidential information or of proving that paragraph 3 was intended to protect confidential information. As previously stated, on demurrer the only question is whether plaintiff has stated a cause of action. (Friedland v. City of Long Beach, supra, 62 Cal.App.4th at pp. 841-842.) On appeal, it is plaintiff’s burden to demonstrate that he has stated a cause of action and the trial court therefore erred in sustaining defendants’ demurrer. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 68 Cal.App.4th at p. 459.)
In sum, plaintiff failed to state a cause of action for wrongful termination based on his refusal to sign an employment agreement which contravened public policy by violating section 16600. The demurrer to that cause of action was properly sustained. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
2. Labor Code sections 2802 and 2804
Labor Code section 2802 requires an employer to indemnify an employee for losses incurred in discharging his or her duty. Labor Code section 2804 provides that a contract waiving the provisions of section 2802 is null and void. Plaintiff asserts that these Labor Code provisions reflect a strong public policy favoring indemnification; section 6 of the employment agreement violates the provisions; therefore the employment agreement was void; his termination for refusal to sign the employment agreement violated public policy, allowing him to maintain an action for wrongful termination.
Paragraph 6 of the employment agreement is entitled: “Release of Prior Claims.” Section 6.1 of paragraph 6 provides: “Except as to such rights or obligations as may be created by the Agreement, Employee releases and forever discharges the [Company]... from any and all claims, demands, liabilities, suits, debts, obligations, controversies, costs, expenses, accounts, damages, losses, or judgments of every kind or character, defenses, and causes of action, known or unknown, arising in law or equity, that he/she ever had, now has, or hereafter may have based upon or by reason of, in whole or in part, any act or omission to act, transaction, practice, or conduct, whether known or unknown, suspected or unsuspected, existing at any time before the date of this Agreement, including without limitation claims relating to, or arising out of claims of employment discrimination and harassment under Title VII of the Civil Rights Act, as amended, the California Fair Employment & Housing Act, age discrimination under the Age Discrimination in Employment Act, as amended, the Americans with Disabilities Act, 42 U.S.C. § 1981, the Employment Retirement Income Security Act, and the California Labor Code....”
In Edwards v. Arthur Andersen LLP, supra, 44 Cal.4th 937, the purchaser of a portion of Arthur Andersen’s business made an offer of employment to the plaintiff. The offer was withdrawn after the plaintiff refused to sign a “Termination of Non-compete Agreement.” (Id. at pp. 942-943.) That agreement contained a release of “any and all” claims against Arthur Andersen arising from the plaintiff’s employment by Arthur Andersen. (Id. at p. 950.) The plaintiff claimed the agreement was unlawful, in that it encompassed the nonwaivable provisions of Labor Code section 2802. (Id. at p. 942.)
The Supreme Court began its analysis with the observation that “Labor Code section 2804 voids any agreement to waive the protections of Labor Code section 2802 as against public policy.... Thus, indemnity rights are nonwaivable, and any contract that does purport to waive an employee’s indemnity right would be contrary to the law and therefore unlawful to that extent.” (Edwards v. Arthur Andersen LLP, supra, 44 Cal.4th at pp. 951-952, fn. omitted.)
The Supreme Court concluded that “under Labor Code section 2802, a contract provision releasing ‘any and all’ claims generally does not encompass nonwaivable statutory protections, and in particular does not implicitly apply to an employee’s right to indemnification from the employer.” (Edwards v. Arthur Andersen LLP, supra, 44 Cal.4th at p. 953.) It must be presumed the employer was aware of all applicable laws in existence at the time the agreement was drafted and therefore knew that the provisions of Labor Code section 2802 could not be waived. (Id. at p. 954.) “Therefore, the waiver of ‘any and all’ claims would not encompass the right to indemnification....” (Id. at p. 955.) Thus, the agreement before the court did not waive the indemnity protection provisions of the Labor Code and was not void as against public policy. (Ibid.)
Under Edwards, we must presume that defendants were aware of the provisions of Labor Code sections 2802 and 2804 making an employee’s right to indemnification unwaivable. (Edwards v. Arthur Andersen LLP, supra, 44 Cal.4th at p. 954.) Therefore, the provisions of paragraph 6 waiving “any and all claims” do not encompass plaintiff’s statutory right to indemnification, and the employment agreement is not void as against public policy. (Id. at p. 955.)
Plaintiff thus has no cause of action against defendants for wrongful termination based on his refusal to sign an employment agreement that violates Labor Code sections 2802 and 2804. It follows that the trial court did not err in sustaining defendants’ demurrer to this cause of action. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
3. Right to File Administrative Charges
Plaintiff further contends that the employment agreement would force him to relinquish his right to file administrative claims with the Equal Employment Opportunity Commission (EEOC) or the Department of Fair Employment and Housing or would force him to arbitrate such claims. He specifically points to paragraphs 2, 5 and 6.
Paragraph 6, as discussed above, deals with the release of prior claims. Paragraph 2 addresses the disclosure of confidential information. It provides in pertinent part: “Notwithstanding anything to the contrary herein, Employee shall be permitted to disclose Confidential information, as expressly permitted by the Company, or as is otherwise required by law. Employee shall otherwise be permitted to disclose Confidential information to any person or entity only if compelled to do so by valid legal process....”
Paragraph 5 of the employment agreement provides that “[i]n recognition of the mutual benefits to Company and Employee of a voluntary system of alternative dispute resolution which involves binding confidential arbitration of all disputes of any kind which may arise between them, the exclusive manner of resolution of any and all disputes, claims or controversies arising between them of any kind or nature whatsoever,... shall be resolved by mandatory BINDING confidential arbitration to the greatest extent permitted by law.... Arbitration shall not apply to any claims which cannot by law be resolved through arbitration (e.g., claims for workers’ compensation benefits)....”
Plaintiff first asserts that paragraph 5 “leaves the deliberate impression that save for workers’ compensation claims, an employee must arbitrate administrative charges that lawfully belong on the desk of state and federal enforcement agencies.” Paragraph 6, he argues, would require him to forfeit any claims of discrimination that might come to his attention after signing the employment agreement. He finally claims that paragraph 2 would prevent him from providing information in administrative proceedings for fear of breaching the confidentiality provisions of the employment agreement.
Both California and federal law favor arbitration agreements, “including agreements to arbitrate statutory rights” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97), “regardless of whether [arbitration] is in lieu of a judicial or administrative forum” (Davis v. O’Melveny & Myers (9th Cir. 2007) 485 F.3d 1066, 1082). However, “although such rights are arbitrable, an arbitration forum must allow for the pursuit of the legal rights and remedies provided by such statutes.” (Ibid.)
Paragraph 5 of the employment agreement here provides that disputes must be resolved by mandatory binding confidential arbitration “to the greatest extent permitted by law.” (Italics added.) Since the law does not permit waiver of the right to file administrative charges, the employment agreement does not require waiver of that right. Thus, despite the “deliberate impression” of which plaintiff complains, paragraph 5 does not require plaintiff to relinquish his right to file administrative charges. (See Davis v. O’Melveny & Myers, supra, 485 F.3d at pp. 1082-1083.)
Paragraph 6 includes a release of prior claims, “including without limitation claims relating to, or arising out of claims of employment discrimination and harassment under Title VII of the Civil Rights Act, as amended, the California Fair Employment & Housing Act, age discrimination under the Age Discrimination in Employment Act, as amended, the Americans with Disabilities Act, 42 U.S.C. § 1981, the Employment Retirement Income Security Act, and the California Labor Code....”
Plaintiff relies on the principle “‘that an individual may not contract away [the] right to file a charge with the EEOC[.]’ [Citation.]” (Davis v. O’Melveny & Myers, supra, 485 F.3d at p. 1083.) However, while an individual cannot prospectively waive the right to bring a discrimination claim (see E.E.O.C. v. Luce, Forward, Hamilton & Scripps (9th Cir. 2002) 303 F.3d 994, 1007), such claims may be released retrospectively by a knowing waiver or release (Bardin v. Lockheed Aeronautical Systems Co. (1999) 70 Cal.App.4th 494, 506-507; see, e.g., Graham v. Balcor Co. (9th Cir. 1998) 146 F.3d 1052, affd. in part (9th Cir. 2001) 241 F.3d 994). Paragraph 6 therefore does not violate public policy by requiring plaintiff to waive his right to bring a statutory claim arising in the future.
Paragraph 2 of the employment agreement permits plaintiff to disclose confidential information when “required by law” or if “compelled to do so by valid legal process.” (Underscoring omitted.) Plaintiff asserts this provision is unlawful, relying on E.E.O.C. v. Astra USA, Inc. (1st Cir. 1996) 94 F.3d 738. In Astra, the defendant, against whom charges of sexual harassment had been made, entered into settlement agreements with its employees in which the employees agreed not to file charges with the EEOC or to assist others who filed charges with the EEOC. The EEOC asked the defendant to rescind those portions of the settlement agreements. The defendant refused to do so, taking the position that the employees could share information with the EEOC if subpoenaed. The EEOC sought injunctive relief. (Id. at pp. 741-742.)
The court addressed the defendant’s claim that there was no evidence of irreparable harm and thus no basis for the injunction in that the EEOC could obtain the information it sought through the use of its subpoena power. (E.E.O.C. v. Astra USA, Inc., supra, 94 F.3d at p. 745.) The court stated: “This boils down to a contention that employees who have signed settlement agreements should speak only when spoken to. We reject such a repressive construct. It would be most peculiar to insist that the EEOC resort to its subpoena power when public policy so clearly favors the free flow of information between victims of harassment and the agency entrusted with righting the wrongs inflicted upon them. Such a protocol would not only stultify investigations but also significantly increase the time and expense of a probe.” (Ibid.)
Even assuming arguendo that Astra holds that an agreement which prohibits an employee from speaking to an administrative agency unless subpoenaed to testify, a closer reading of paragraph 2 in context (Civ. Code, § 1641), reveals that the problem addressed in Astra does not exist here. Paragraph 1 defines “confidential information” to include business or personal information about defendants and those connected with them, private and confidential matters concerning defendants and those connected with them, their business records and propriety business information, and the employment agreement and its terms. The agreement not to disclose confidential information extends to “any person, firm or entity whatsoever, including, but not limited to, past, future or potential employers, investment bankers, private equity firms, family members, friends, associates, journalists or other members of any media organization....”
The confidentiality provisions are not concerned with the disclosure of information concerning statutory violations by defendants to administrative agencies. Rather, they are concerned with disclosure of business and personal information to the public. Thus, paragraph 2 does not contravene public policy in the manner claimed by plaintiff.
In summary, the employment agreement does not prevent an employee from filing charges with an administrative agency or assisting in the investigation of such charges. Plaintiff therefore does not have a cause of action for wrongful termination based on his refusal to sign an agreement that prohibits his exercise of his statutory rights. It follows that the trial court did not err in sustaining defendants’ demurrer to this cause of action. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
Labor Code section 1102.5, subdivision (b), provides “that an employer may not retaliate against an employee for disclosing a violation of state or federal regulation to a governmental or law enforcement agency. This provision reflects the broad public policy interest in encouraging workplace whistle-blowers to report unlawful acts without fearing retaliation.” (Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 76-77.) Plaintiff contends the confidentiality terms of the employment agreement would preclude him from reporting workplace violations and therefore violates public policy.
Just as the employment agreement would not prevent plaintiff from filing administrative charges, it also would not prevent him from reporting workplace violations to a public entity. In re JDS Uniphase Corp. Securities Litigation (N.D.Cal. 2002) 238 F.Supp.2d 1127 (JDSU), on which plaintiff relies, does not compel a different conclusion. JDSU involved comprehensive confidentiality agreements and an investigation into securities transactions. The state moved to limit the scope of the confidentiality agreements. The court found that the “confidentiality agreements are so broad that they cover information that cannot possibly be considered confidential. To the extent that those agreements preclude former employees from assisting in investigations of wrongdoing that have nothing to do with trade secrets or other confidential business information, they conflict with the public policy in favor of allowing even current employees to assist in securities fraud investigations.” (Id. at p. 1137.)
The court did not rule the confidentiality agreements unenforceable as against public policy. It merely ruled that their scope must be limited in the course of whistleblower litigation. Assuming that the employment agreement here could be interpreted to preclude reporting workplace violations, JDSU stands for the proposition that the scope of the agreement would be limited to permit such reporting without breaching the agreement. Nothing in JDSU supports a claim that plaintiff has a cause of action for wrongful termination based on his refusal to sign the employment agreement. The trial court did not err in sustaining defendants’ demurrer to that cause of action. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
5. Arbitration Provisions
Plaintiff next contends the confidentiality and arbitration provisions of the employment agreement unconscionably favor defendants, in that the confidentiality provisions would prevent plaintiff from contacting other employees to build his case or assist them in their own cases.
In Davis v. O’Melveny & Myers, supra, 485 F.3d 1066, on which plaintiff relies, the confidentiality agreement “preclude[d] even mention to anyone ‘not directly involved in the mediation or arbitration’ of ‘the content of the pleadings, papers, orders, hearings, trials, or awards in the arbitration’ or even ‘the existence of a controversy and the fact that there is a mediation or an arbitration proceeding.’” (Id. at p. 1078.) The court observed that “[s]uch restrictions would prevent an employee from contacting other employees to assist in litigating (or arbitrating) an employee’s case. An inability to mention even the existence of a claim to current or former O’Melveny employees would handicap if not stifle an employee’s ability to investigate and engage in discovery.... Strict confidentiality of all ‘pleadings, papers, orders, hearings, trials, or awards in the arbitration’ could also prevent others from building cases.” (Ibid.) Ultimately, the court concluded that the agreement was substantively unconscionable. (Id. at p. 1081.)
The court acknowledged “that confidentiality provisions in an arbitration agreement are [not] per se unconscionable under California law.” (Davis v. O’Melveny & Myers, supra, 485 F.3d at p. 1079, citing Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 178.) It agreed that “[c]onfidentiality by itself is not substantively unconscionable; the [defendant’s] confidentiality clause, however, is written too broadly.” (Ibid.)
Plaintiff also relies on Ting v. AT&T (9th Cir. 2003) 319 F.3d 1126, which involved a class action suit claiming that AT&T’s Consumer Services Agreement violated the Consumer Legal Remedies Act and the Unfair Practices Act. The agreement contained a confidentiality provision which the plaintiffs claimed was substantively unconscionable. The court observed: “Although facially neutral, confidentiality provisions usually favor companies over individuals.... [B]ecause companies continually arbitrate the same claims, the arbitration process tends to favor the company.... Yet because of plaintiffs’ lawyers and arbitration appointing agencies like the AAA, who can scrutinize arbitration awards and accumulate a body of knowledge on a particular company, [there is less] likelihood of any harm occurring from the ‘repeat player’ effect.” (Id. at pp. 1151-1152.)
In the case before it, however, if the confidentiality provision were enforced, the plaintiffs would be “unable to mitigate the advantages inherent in being a repeat player.” (Ting v. AT&T, supra, 319 F.3d at p. 1152.) The court found this “particularly harmful here, because the contract at issue affects seven million Californians. Thus, AT&T has placed itself in a far superior legal posture by ensuring that none of its potential opponents have access to precedent while, at the same time, AT&T accumulates a wealth of knowledge on how to negotiate the terms of its own unilaterally crafted contract. Further, the unavailability of arbitral decisions may prevent potential plaintiffs from obtaining the information needed to build a case of intentional misconduct or unlawful discrimination against AT&T.” (Ibid.) For this reason, the court concluded the trial court did not err in finding the confidentiality provision unconscionable. (Ibid.)
Plaintiff points to no specific provisions in the employment agreement here similar to the provisions found objectionable in Davis. Paragraph 1.2, the agreement not to disclose confidential information, is clearly directed at persons outside of defendants’ employ, identified as “‘Third Parties.’”
Plaintiff also points to no allegations of the complaint suggesting that the instant case is similar to Ting, i.e., that the employment agreement affected a large number of people who would be bringing similar claims against defendants and who would be disadvantaged by the lack of access to arbitral decisions.
Under the facts of the instant case, the confidentiality provisions alone are not substantively unconscionable, as in Ting. Additionally, the employment agreement does not have provisions similar to those in Davis. Therefore, the employment agreement is not substantively unconscionable. (Mercuro v. Superior Court, supra, 96 Cal.App.4th at p. 178; Davis v. O’Melveny & Myers, supra, 485 F.3d at p. 1079.) Plaintiff has no cause of action for wrongful termination based on his refusal to sign an employment agreement containing an unconscionable arbitration provision, and the trial court did not err in sustaining defendants’ demurrer on that basis. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
B. Interference with Prospective Economic Advantage
The elements of a cause of action for intentional interference with prospective economic advantage are: (1) an economic relationship between plaintiff and a third party, with the probability of future economic benefit to plaintiff; (2) defendants’ knowledge of the relationship; (3) defendants’ intentional acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) resulting damage. (Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 475.)
Plaintiff alleged defendants “interfered with plaintiff’s economic relationship with a non-competing side-business, Templar, including clients and prospective clients of Templar” by telling plaintiff and his coworkers that they had to take down Templar’s website and suspend their outside business. He further alleged that “defendants’ interference with plaintiff’s relationship with Templar was designed to lure plaintiff into accepting the unlawful [employment agreement]. Plaintiff was under no contractual or legal obligation to work exclusively for defendants, and defendants’ proffered agreement does not contain an exclusivity clause.” Defendants’ actions “disrupted Templar’s business and caused plaintiff substantial damages.”
It is established that “a plaintiff seeking to recover for an alleged interference with prospective contractual or economic advantage must plead that the defendant not only knowingly interfered with the plaintiff’s expectancy, but engaged in conduct that was wrongful by some legal measure other than the fact of the interference itself.” (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.) Plaintiff argues that defendants’ actions were “wrongful because [they] had no right to control [plaintiff] during his non-working hours under Labor Code § 96[, subdivision ](k) and § 98.6, that prohibit an employer from demoting, suspending or discharging an employee for lawful conduct occurring during non-working hours away from the employer’s premises.”
Labor Code section 96, subdivision (k), provides for assignment of “[c]laims for loss of wages as the result of demotion, suspension, or discharge from employment for lawful conduct occurring during nonworking hours away from the employer’s premises.” Labor Code section 98.6, subdivision (a), provides that “[n]o person shall discharge an employee... because the employee... engaged in any conduct delineated in this chapter, including the conduct described in subdivision (k) of Section 96....”
Plaintiff did not allege that he was discharged because of his lawful conduct during nonworking hours. Thus, Labor Code sections 96, subdivision (k), and 98.6 are inapplicable.
Plaintiff alleged that defendants’ “interference with plaintiff’s relationship with Templar was designed to lure plaintiff into accepting the unlawful [employment agreement].” Since, as previously discussed, the employment agreement was not unlawful, plaintiff failed to allege any independently wrongful conduct on the part of defendants. He thus failed to state a cause of action for interference with prospective economic advantage (Della Penna v. Toyota Motor Sales, U.S.A., Inc., supra, 11 Cal.4th at p. 393), and the trial court did not err in sustaining defendants’ demurrer to those causes of action (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081).
C. Denial of Leave to Amend
Plaintiff has failed to state a cause of action for wrongful discharge or interference with prospective economic advantage. The trial court therefore did not err in sustaining defendants’ demurrer to these causes of action. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
Plaintiff does not separately argue that the trial court abused its discretion in denying him leave to amend his complaint. However, plaintiff had already been given two opportunities to amend his complaint, and in denying him leave to amend, the trial court noted that the second amended complaint “add[ed] few new factual allegations.” Under these circumstances, there was no abuse of discretion in denying leave to amend. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 68 Cal.App.4th at p. 459; Krawitz v. Rusch, supra, 209 Cal.App.3d at p. 967.)
DISPOSITION
The judgment is affirmed. Defendants are to recover their costs on appeal.
We concur: PERLUSS, P. J., WOODS, J.