Opposition To Plaintiffs Application For TroOppositionCal. Super. - 2nd Dist.March 1, 2019Electronically FILED by Superior Court of California, County of Los Angeles on 03/11/2019 11:14 AM Sherri R. Carter, Executive Officer/Clerk of Court, by J . Lara,Deputy Clerk OO 0 ~~ A Wn B W DN ee No No N= No No NN No o No - - - - - p- - - - - [= =] ~~ AN Wn ~~ Ww W N = O o co = AN wh > w NY a OO CAROLEE G. KILDUFF, ESQ., SB No. 107232 JOHN A. WHITESIDES, ESQ., SB No. 125611 ANGELO, KILDAY & KILDUFF, LLP Attorneys at Law 601 University Avenue, Suite 150 Sacramento, CA 95825 Telephone: (916) 564-6100 Telecopier: (916) 564-6263 Attorneys for Defendant LEE BARKALOW SUPERIOR COURT OF CALIFORNIA COUNTY OF LOS ANGELES, CENTRAL DISTRICT CONFIRMED, LLC, a California Limited Liability Company, Case No.: 19STCV07351 ) ) ) Plaintiff, ) DEFENDANT’S SUPPLEMENTAL ) OPPOSITION TO PLAINTIFF'S vs. ) APPLICATION FOR TEMPORARY ) RESTRAINING ORDER LEE BARKALOW, an individual, and DOES ) Telephone Appearance 1-10, inclusive, ) ) Date: March 12, 2019 ) Time: 8:30 a.m. ) Dept: 85 ) Honorable James C. Chalfant ) Defendants. Mr. Barkalow’s initial opposition papers explained why they had to be filed Thursday (3/7) afternoon before receipt of Plaintiff’s TRO application the next day. Accordingly, those papers were limited to a short factual summary and some general legal principles. Plaintiff’s application, filed after the opposition, (at p. 23) addressed and purported to rebut points made in Defendant’s opposition, thus gaining an undue advantage. Additionally, Plaintiff has since filed an amended application. Having now had an opportunity to review the proposed TRO’s scope and the asserted factual grounds therefor, Barkalow can meaningfully respond, and requests the Court consider this supplemental opposition in the interest of procedural due process. 1- SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER © 0 N N n h WwW ND N O N O N N O N N N N N m E e m e m em e m e k md e d pe d e d Ww N N BR W N = O D 0 N Y BR W N = O I. CONFIRMED’S PROFFERED EVIDENCE DOES NOT SUPPORT THE RELIEF REQUESTED A. THE IDENTITIES OF NON-CLIENTS Even a cursory review of the application reveals its overbreadth. For example, “vendor contact information, partner contact information, supplier contact information, and partners’ client contact information” seemingly refer to non-client third-parties engaged in the same event/concierge trade as Confirmed.! Civil Code § 3426.1(d)(1) defines “trade secret” to require the information be unknown to “other persons who can obtain economic value” from it. (See ABBA Rubber Co. v. Seaquist (1991) 235 Cal. App.3d 1, 18 [test for trade secrets includes whether the information “is valuable because it is unknown to others”].) Obviously, these third-parties obtain value from their own identities and client lists. Confirmed neither asserts, nor submits proof, that any of these non-clients transact brie exclusively with Confirmed and/or Confirmed’s clients such that the third parties’ mere identities could arguably be deemed “proprietary” to Confirmed. To the contrary, page 12 (at 9 5) of the application? describes some of these “Partners” as possessing “their own clients” that “Confirmed never contacts directly to solicit business,” yet provides neither authority nor analysis for the conclusion those persons’ identities and contact “information is also confidential and part of the Trade Secrets.” Either the third parties shared that information with Confirmed, rendering it non- confidential, or the sole standing to enforce any corresponding trade secret would lie in those “partners” as to their customers. (See generally San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1538 [distinguishing protection of subcontractor names and bids from detailed project cost estimates and blueprints.) If these third parties compete, directly or indirectly, with Confirmed, or supply/service competitors of Confirmed, Barkalow is free to transact or compete with them just as would any other person or entity in the same trade. That Confirmed seeks to enjoin Barkalow from ! Barkalow can’t discern whether “chain of command” refers to vendors/suppliers, or to clients, or to Confirmed. 2 Citing Ampolsky’s declaration at 9 18, subp. e. The specific conversation Ampolsky describes is offered for the truth of the matter asserted therein (what Barkalow said to a fourth person) and is thus inadmissible hearsay. 2 SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER OC N N N BR W N N O N N R N N N ND e e ee p m e m e b e d ee d ee d eo N A A N hh BR W N = D O N S N i n BR W N ee OO communicating with others in the same trade reveals the proposed TRO as an illicit sword to destroy competition rather than a shield to protect purely internal processes. (See FLIR Systems, Inc. v. Parrish (2009) 174 Cal. App.4th 1270, 1282 [“condition that respondents not work with certain third party foundries was an unlawful trade restraint”].) B. LITTLE DESCRIBED IS ACTUALLY UNIQUELY CONFIRMED’S Confirmed admits its lack of evidence Barkalow disclosed any trade secret (even under Confirmed’s overbroad definition) before his termination. (See Ampolsky dec. § 5 [describing reasons for termination as unauthorized extra-company transactions],? 9 6 [stating Confirmed discovered after termination Barkalow “had begun” soliciting], and {17 [soon after...had begun soliciting])* Thus it cannot justify injunctive relief on the basis of a past transgression because none occurred. (See Barkalow dec., 4 10-11.) Since leaving Confirmed’s employ, Mr. Barkalow has not used any truly proprietary information he acquired while its employee, such as “[client] order history, order preferences.” (Id, § 12.) Nor has Confirmed shown a substantial threat of their imminent misuse. (See FLIR Systems, supra, 174 Cal.App.4th at 1279.) That he possesses such information is insufficient for injunctive relief (ibid), because that fact alone can support only speculation he might disclose in the future. (Id, at 1277 [“speculation that a departing employee may misappropriate and use a trade secret in a startup business will not support an injunction”].) C. CONFIRMED CLIENT CONTACT INFORMATION Despite the length of Ampolsky’s declaration, it contains very few specific facts, and consists mostly of general conclusions either wholly lacking an evidentiary foundation or resting on hearsay, especially concerning Barkalow’s putative solicitations, e.g., § 6 [“had begun contacting and soliciting], § 9 [“informed and believes” Barkalow “is using . . . Trade Secrets”], 9 [“information and belief” about omnibus pre-termination disclosures], § 17 [“Soon after Barkalow’s termination, Confirmed received information” Barkalow “had begun soliciting”], 9 3 Although Barkalow denies this pretextual charge, the merits of that purely past dispute do not bear on the current trade secret issues and thus will not be now addressed. * Ampolsky later reverses course and on undescribed “information and belief” asserts pre-termination use of trade secrets, which is too obviously inadmissible as lacking foundation and/or hearsay to warrant further discussion. 3- SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER O O N N n n k W N e N D RN N R DN D N D N N N me e wd ee d he ed de e ee d he ed pe d pe d ee d LO 3 AN L h A W N =m O N O N Y BR W N e e OO 18d {no foundation how Confirmed knows about Barkalow’s contacts with vendors or their contents; speculation and argument as to motive]; 9 18f [“informed and believes” solicited clients will switch their business to Barkalow]; § 18g [“informed and believes . . . Barkalow used, and will continue to use,” trade secrets to solicit clients] and 9 20 [“information indicating Barkalow is soliciting”].) None of the “information” sources are identified. (See United Farm Workers of America v. Superior Court (1975) 14 Cal.3d 902, 908 and fn. 5 [conclusionary declarations cannot support a restraining order; “plaintiff must make a clear and detailed showing of specific facts justifying equitable relief”].) Confirmed’s only specific evidence of Barkalow’s communications with its clients consists of the emails identified as Exhibits E - G, in which Barkalow announces merely his departure from Confirmed, his continued presence in the same trade, and his general interest in future business. (See Ampolsky dec., 9 18b and c.) Clients who initiated contact with Barkalow after he left Confirmed were necessarily not “solicited” by him. Nor does merely informing them of his change of employment and intent to continue in the trade so qualify. (See Morlife, Inc. v. Perry (1997) 56 Cal. App.4th 1514, 1525 [quoting Aetna Bldg. Maintenance Co. v. West (1952) 39 Cal.2d 198 regarding what constitutes “solicitation”].)> In Aetna Bldg., the Supreme Court squarely rejected the position now advanced by Confirmed (39 Cal.2d at 203): “Considering the charge of solicitation, in the light most favorable to the findings the most shown by the evidence is that West informed Aetna's clients of the termination of his employment and his plans to go into business for himself. He also eagerly accepted business from Aetna's customers when it was offered to him. There is no evidence whatever of any suggestion to an Aetna customer that it cancel Aetna's contract and give him the business. In one instance he accepted an invitation to discuss business with a firm having a manufacturing plant and an office building upon the same premises. He submitted contracts to service both of them. Upon learning that Aetna still serviced the office building and the customer was satisfied with the work done there, although not in the plant, he made no further mention of the office building. West had the right to advise Aetna's customers that he was severing his business relations with it and engaging in business for himself. 5 Although Aetna preceded California’s adoption of the Uniform Trade Secrets Act, Morlife’s reliance on it for this point confirms its present viability, which Confirmed acknowledges by also citing Aetna for the same point. (App., p. 19.) 4 SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER © 0 N N Un R W - Ro DN N N RN R O N RN D D em e m e m ke h ee d he d e m = pe c e 3 O N Wn BA W N = D D Y N R W o N = O Contrary to Confirmed’s assertion, customer identities are not necessarily confidential. As discussed in Morlife, 56 Cal.App.4th at 1521-1522, courts are “reluctant” to protect customer lists to the extent of information “readily ascertainable” through public sources, such as business directories. In contrast, where the employer expended time and effort identifying customers with particular needs or characteristics, courts will prohibit former employees from using this specific information to capture a share of the market. “Such lists are to be distinguished from mere identities and locations of customers where anyone could easily identify the entities as potential customers.” (Id, at 1521-1522, citing Klamath-Orleans Lumber, Inc. v. Miller (1978) 87 Cal. App.3d 458, 461; ABBA Rubber Co., supra, 235 Cal.App.3d at 19-20.) Unlike various appellate decisions Confirmed cites (app., pp. 14-15) that protected customer lists the employer created over time through its own marketing and service efforts, here Confirmed obtained the majority of the clients’ names and contact information from others in the trade, such as Ticketmaster and StubHub, where that information was generally available. (See Barkalow dec. 94 .) Confirmed/Ampolsky offer no specific facts indicating otherwise; their entire discussion is conclusory and vague. (See app, pp. 15-16.) Confirmed may not manufacture confidentiality by placing information obtained from external sources and available to others in the same trade, including its competitors, into a computer database, then describing it as a proprietary “customer list.” D. THE CONTRACT AND HANDBOOK HAVE LITTLE BEARING ON POST-TERMINATION ACTS California has a strong public policy, codified in Business and Professions Code §16600, of protecting the right of its citizens to pursue any lawful employment and enterprise of their choice. California courts “have consistently affirmed that section 16600 evinces a settled legislative policy in favor of open competition and employee mobility.” AMN Healthcare Services, Inc. v. AYA Healthcare Services, Inc. (2018) 28 Cal App. 5™ 923, 935, citing Edwards v. Arthur Andersen LLP (2008) 44 Cal. 4 937, 946. An employer’s use of an illegal noncompete agreement also violates the UCL (§17200-unfair competition). Dowell v. Biosense Webster, Inc. (2009) 179 Cal. App. 4% 564, 575. 5 SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER YO 0 NN A Un BR W N = N N R N N N N N R ee e m em e m ee e s ee d ed ed ed 0 1 A N Un RA W N me O O N N N R W N m ODO In Dowell, the broadly worded nonsolicitation clause prevented former employees from soliciting any business from, selling to, or rendering any service directly or indirectly to any of the accounts, customers or clients with whom they had contact during the last 12 months of employment. (/bid.) The appellate court found these noncompete and antisolictation clauses to be void and unenforceable, as they restrained the employees from practicing their chosen profession. (Ibid.) The plaintiff in Dowell argued, as does Confirmed here, that the clauses were valid because they were tailored to protect trade secret or confidential information. The appellate court disagreed, finding covenants that defined customer names as “confidential information” and prohibited the former employees from selling or rendering service to customers, “even if it is the customer who solicits the former employee” void as a matter of law. (Id. at 578, citing Kolani v. Gluska (1998) 64 Cal. App. 4%401,407.) Likewise, Confirmed’s noncompetition and antisolicitation clauses are not narrowly tailored to protect trade secrets, but rather broadly restrain competition, and are therefore unenforceable. (See id. at 577.) Exhibit “C” to the Ampolsky declaration is an employee handbook dated January 20, 2019, just two weeks before Barkalow’s termination, even though Ampolsky hired Barkalow in 2012. (See p. 21; Barkalow dec., § 1.) Plus, Barkalow never received the 2019 handbook. (Barkalow dec. 9 8.) So that document cannot support Plaintiff’s argument he was “upon employment continuously” advised of the purported trade secret nature of client identities. (Ampolsky dec. at 14 (b).) II. CONFIRMED CONTRADICTS ITS OWN CLAIM OF LIKELY SIGNIFICANT HARM Confirmed’s reliance on the notion that trade secrets, once lost, cannot be fully compensated fits a manufacturing or other purely internal process but mismatches an event client’s. identity. The Application contains no fact or reasoning indicating Confirmed’s clients must use either it or Barkalow but not both (e.g., buying an event package for one event from Barkalow, and from Confirmed for another event), just as a football fan might use StubHub for one game and Ticketmaster or Vivid Seats for another. (See Barkalow dec., § 16.) _6- SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER OO 0 1 A N Wn Bs W N ee RN Y DN N N RN N N N DN e m e m e m e m e m e m e m e d p d e d WwW 1 N h BR W R N = O 0 0 N N I E ls W N e s OO Even if Confirmed irrevocably lost a client due to solicitation by Barkalow, estimating that revenue loss would be a simple matter of calculating prior sales to that client, and Confirmed’s business with other clients would not be affected, rendering damages a full and suitable remedy.° But even if one assumes the potential for client referrals renders damages too difficult to calculate, Confirmed admits Barkalow poses little economic threat. Despite its ostensible fear that many clients will switch to Barkalow, Confirmed attacks his request for a $10,000 bond as unreasonably high, contending the proper number would be a “fraction” thereof, meaning Barkalow can achieve little financial gain by “soliciting” its customers, at least in the near future. Since Confirmed necessarily concedes Barkalow will not receive anything close to $10,000 in the next month from its present or former clients, it cannot justify extraordinary relief as required to prevent significant financial harm to it. In contrast, the TRO will significantly harm Barkalow by reducing his expected monthly earnings by 90% and causing potential clients to permanently disdain him for not responding to their inquiries. (Barkalow dec., 99 18-19.) 111. CONCLUSION Barkalow agrees he may not use truly proprietary information, such as his knowledge of what event preferences a client expressed to him while he worked at Confirmed, or Confirmed’s pricing information, to solicit or service Confirmed’s customers. No evidence suggests he has done so or likely will. To that small extent, the application is moot. Otherwise, the application overreaches by attempting to entirely preclude competition by Barkalow. The vendors/suppliers and their own customers are clearly not proprietary to Confirmed, nor has any actual solicitation of Confirmed clients been shown. Yet, the proposed order would restrain any communication by Barkalow with any client, supplier, or vendor, even to ‘6 Plaintiff’s contrary citations consist entirely of trial court decisions from other jurisdictions that offer less employee protection than California. See e.g., Merrill Lynch, Pierce, Fenner & Smith Inc. v. Ran (E.D. Mich. 1999) 67 F.Supp.2d 764, 771 [noting Michigan allows anti-competition covenants in employment contracts].) Also, the loss of a client to an investment brokerage presents a far more complicated damage scenario due to the inherent uncertainty in predicting how that clients’ investments would have changed and performed over time, thus impacting the advisor’s related fees. (See id, at 779.) He SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER P k respond to an inquiry, by barring his use of their “names, phone numbers, addresses, e-mail addresses.” By being unable to respond to a potential customer who contacted him during the pendency of a restraining order, he would likely lose that client forever. Because the proposed order-is far too broad and the financial loss to Barkalow far too large, whereas the evidentiary showing of disclosure and likely resultant harm are far too small, a restraining order is OC 0 ~~ NN Wn B W ND WW N N N n A WLW = O D N W N = D unwarranted. Dated: March 11, 2019 Attorneys for Defendant LEE BARKALOW -8- SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER Oo 0 1 S N n t Bs W N N O N N O R D N N ND mm mm em e m e m e d e d p d em pe d C O ~~ a N Ln bh W N = D N Y RX N Y W N e s OD CASE NAME: Confirmed, LLC v. Barkalow COURT: Los Angeles County Superior CASE NO. 19STCV07351 PROOF OF SERVICE I am a citizen of the United States, employed in the County of Sacramento, State of California. My business address is 601 University Avenue, Suite 150, Sacramento, California 95825. Tam over the age of 18 years and not a party to the above-entitled action. On March 11, 2019, I served the parties in this action listed below the following document(s) described as: DEFENDANT’S SUPPLEMENTAL OPPOSITION TO PLAINTIFE’S APPLICATION FOR TEMPORARY RESTRAINING ORDER Telephone Appearance The above-named document(s) were served by the following means (specify): X BY ELECTRONIC SERVICE (to individual persons) - By electronically transmitting the document(s) listed above to the email address(es) of the person(s) set forth below, based on court order or agreement of the parties to accept service via electronic transmission. The email address I used to transmit these documents is jkraus@akk-law.com on this date. 1 did not receive, within a reasonable time afier the transmission, any electronic message or other indication that the transmission was unsuccessful. (CRC 2.260 or Fed.R.Civ.P.5(b)(E); Civ. Proc. section 1010.6.) Attorneys for Plaintiff; Shahrokh Sheik Ross Dillion Kramer Holcomb Sheik LLP 1925 Century Park East, Suite 1180 Los Angeles, CA 90067 ssheik@khslaw.com rdillion@khslaw.com I declare under penalty of perjury under the laws of the State of California that the above is true and correct. Executed on March 11, 2019 at Sacramento, California. 4 “ ~~ JS / Jilie:K raus RN RN 3 oh 9- SUPPLEMENTAL OPPOSITION FOR APPLICATION FOR TEMPORARY RESTRAINING ORDER
