The Hays Group, Inc. v. Burnham Benefits Insurance Services, Inc.

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.May 3, 2017

Case No. 8:17-cv-00519-DOC-JDE DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AARON F. OLSEN (SBN 224947) E-Mail aolsen@fisherphillips.com FISHER & PHILLIPS LLP 4747 Executive Drive, Suite 1000 San Diego, CA 92121 Telephone: (858) 597-9600 Facsimile: (858) 597-9601 USAMA KAHF, SBN 266443 E-Mail ukahf@fisherphillips.com FISHER & PHILLIPS LLP 2050 Main Street, Suite 1000 Irvine, California 92614 Telephone: (949) 851-2424 Facsimile: (949) 851-0152 Attorneys for Defendant, BURNHAM BENEFITS INSURANCE SERVICES, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION THE HAYS GROUP, INC., Plaintiff, v. BURNHAM BENEFITS INSURANCE SERVICES, INC., Defendant. Case No: 8:17-cv-00519-DOC-JDE DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6) [concurrently filed with Memorandum of Points and Authorities; Declaration of Aaron F. Olsen; and Proposed Order] Date: Monday, June 5, 2017 Time: 8:30 a.m. Courtroom: 9D Complaint Filed: March 23, 2017 Case 8:17-cv-00519-DOC-JDE Document 15 Filed 05/03/17 Page 1 of 2 Page ID #:78 1 Case No. 8:17-cv-00519-DOC-JDE DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO ALL PARTIES HEREIN AND THEIR RESPECTIVE ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on Monday, June 5, 2017, at 8:30 a.m. or as soon thereafter as the matter may be heard in Courtroom 9D, located at the Ronald Reagan Federal Building, United States Courthouse, 411 West Fourth Street, Santa Ana, California, 92701, Defendant Burnham Benefits Insurance Services, Inc. (“Defendant”) will and hereby does move this Court to dismiss the claims asserted in the Complaint filed by Plaintiff The Hays Group, Inc. (“Plaintiff”), for failure to state a claim pursuant to Fed. Rule of Civ. Proc. 12(b)(6). This motion is made on the grounds that Plaintiff’s Complaint, which is replete with conclusory allegations, fails to allege sufficient facts to state all three claims that Plaintiff alleges against Defendant. The motion will be based on this Notice of Motion and Motion, the Memorandum of Points and Authorities, the Declaration of Aaron F. Olsen, including any exhibits attached thereto, the pleadings and papers filed herein, and such oral and documentary evidence as may be presented at or before the hearing of this motion. This motion is made following the conference of counsel pursuant to L. R. 7-3 which took place on April 11, 2017. Date: May 3, 2017 FISHER & PHILLIPS LLP By: /s/ Aaron F. Olsen AARON F. OLSEN USAMA KAHF Attorneys for Defendant, BURNHAM BENEFITS INSURANCE SERVICES, INC. Case 8:17-cv-00519-DOC-JDE Document 15 Filed 05/03/17 Page 2 of 2 Page ID #:79 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AARON F. OLSEN (SBN 224947) E-Mail aolsen@fisherphillips.com FISHER & PHILLIPS LLP 4747 Executive Drive, Suite 1000 San Diego, CA 92121 Telephone: (858) 597-9600 Facsimile: (858) 597-9601 USAMA KAHF, SBN 266443 E-Mail ukahf@fisherphillips.com FISHER & PHILLIPS LLP 2050 Main Street, Suite 1000 Irvine, California 92614 Telephone: (949) 851-2424 Facsimile: (949) 851-0152 Attorneys for Defendant, BURNHAM BENEFITS INSURANCE SERVICES, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION THE HAYS GROUP, INC., Plaintiff, v. BURNHAM BENEFITS INSURANCE SERVICES, INC., Defendant. Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6) [concurrently filed with Notice of Motion to Dismiss; Declaration of Aaron F. Olsen; and Proposed Order] Date: Monday, June 5, 2017 Time: 8:30 a.m. Courtroom: 9D Complaint Filed: March 23, 2017 Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 1 of 27 Page ID #:80 i Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION......................................................................................1 II. STATEMENT OF FACTS.........................................................................2 A. The Parties....................................................................................... 2 B. Plaintiff Accuses Defendant Burnham of Misappropriating “Customer Contact Information” and “Feasibility Studies”........... 3 C. Plaintiff Does Not Allege Facts Showing the “Customer Contact Information” Is Confidential. ............................................ 3 D. Plaintiff Mixes Innocuous Facts With Speculation When Describing Tunnell’s Involvement With “Feasibility Studies”. .......................................................................................... 4 E. Plaintiff Makes Circumstantial Allegations Against Three Other Employees Based on Mere Assumptions. ............................ 5 F. Plaintiff Lumps the Former Employees Together in Accusing Them of Using Confidential Information....................... 6 G. Plaintiff Alleges That Defendant Aided and Abetted A Breach of Fiduciary Duty Based on the Same Alleged Conduct as Plaintiff’s DTSA and CUTSA Claims......................... 6 III. LEGAL ANALYSIS ................................................................................. 7 A. Legal Standard For A Motion to Dismiss....................................... 7 B. Plaintiff’s DTSA and CUTSA Claims Fail for Lack of Sufficient Factual Allegations......................................................... 8 1. To state a claim under the DTSA or CUTSA, Plaintiff must plausibly allege steps it took to protect its trade secrets...................................................................... 8 2. To state a claim under the DTSA or CUTSA, Plaintiff must identify and differentiate the alleged trade secrets from matters of general knowledge in the industry. ........................................................................ 10 3. In alleging claims under the DTSA and CUTSA, Plaintiff recites the elements of these claims using the language of both statutes as though such conclusory allegations are sufficient. .................................................... 13 4. Plaintiff’s allegations at best amount to an inevitable disclosure theory, which is dead on arrival in California. ........................................................................... 14 Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 2 of 27 Page ID #:81 ii Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. Plaintiff Fails to State a Claim for Aiding and Abetting Breach of Fiduciary Duty.............................................................. 16 1. Plaintiff’s claim for aiding and abetting breach of fiduciary duty is preempted by the CUTSA because it is based on the same nucleus of facts as Plaintiff’s CUTSA claim. .................................................................... 16 2. Even if Plaintiff’s claim for aiding and abetting were not preempted, Plaintiff fails to allege sufficient facts for this claim. ...................................................................... 19 IV. CONCLUSION ....................................................................................... 21 Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 3 of 27 Page ID #:82 iii Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Federal Cases Albrecht v. Lund, 845 F. 2d 193 (9th Cir. 1988).............................................................................8 Ashcroft v. Iqbal, 556 U.S. 669 (2009) ...........................................................................................7 Avago Technologies U.S. Inc. v. Nanoprecision Products, Inc., 2017 WL 412524 (N.D. Cal. Jan. 31, 2017) ....................................................17 Balistreri v. Pacifica Police Dept., 901 F. 2d 696 (9th Cir. 1988).............................................................................7 Bayer Corp. v. Roche Molecular Sys., Inc., 72 F. Supp. 2d 1111 (N.D. Cal. 1999) .......................................................14, 16 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...........................................................................................7 Chang v. Biosuccess Biotech Co., Ltd., 76 F. Supp. 3d 1022, 1040-43 (C.D. Cal. 2014) ........................................16, 18 Daniels-Hall v. Nat’l Educ. Ass’n., 629 F. 3d 992 (9th Cir. 2010).............................................................................7 Engility Corp. v. Daniels, 2016 WL 7034976 (D. Colo. Dec. 2, 2016).....................................................16 Fortinet Inc. v. FireEye Inc., 2014 WL 4955087 (N.D. Cal. Sept. 30, 2014)...................................................9 GlobeSpan, Inc. v. O’Neill, 151 F. Supp. 2d 1229, 1235-36 (C.D. Cal. 2001) ............................................14 Heller v. Cepia, L.L.C., 2012 WL 13572 (N.D. Cal. Jan. 4, 2012), aff’d in part, 560 Fed. Appx. 678 (9th Cir. 2014) ................................................................................17 Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 4 of 27 Page ID #:83 iv Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Imax Corp. v. Cinema Technologies, Inc., 152 F. 3d 1161 (9th Cir. 1998).........................................................................10 Knievel v. ESPN, 393 F. 3d 1068 (9th Cir. 2005)...........................................................................7 Laing v. BP Exploration & Production Inc., 2014 WL 272846 (M.D. Fla. Jan. 14, 2014) ......................................................9 M.C. Dean, Inc. v. City of Miami Beach, 199 F. Supp. 3d 1349, 1353 (S.D. Fla. 2016).....................................................9 Mattel, Inc. v. MGA Entertainment, Inc., 782 F. Supp. 2d 911 (C.D. Cal. 2011)........................................................17, 18 Moeller v. Qualex Inc., 458 F. Supp. 2d 1069 (C.D. Cal. 2006)..............................................................7 Pellerin v. Honeywell Intern., Inc., 877 F. Supp. 2d 983 (S.D. Cal. 2012) ..................................................10, 11, 13 Peralta v. California Franchise Tax Board, 124 F. Supp. 3d 993, 1002 (N.D. Cal. 2015) ...................................................18 Schreiber Distributing Co. v. Serv-Well Furniture Co., Inc., 806 F. 2d 1393 (9th Cir. 1986)...........................................................................8 Stoffwechselforschung GmbH v. ProSciento, Inc., 2017 WL 1198992 (S.D. Cal. Mar. 31, 2017)............................................10, 11 SunPower Corp. v. SolarCity Corp., 2012 WL 6160472 (N.D. Cal. Dec. 11, 2012) .................................................17 Weisbuch v. County of Los Angeles, 119 F. 3d 778 (9th Cir. 1997).............................................................................7 State Cases Casey v. U.S. Bank Nat’l Ass’n, 127 Cal. App. 4th 1138 (2005).........................................................................19 K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939 (2009).....................................................................17, 18 Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 5 of 27 Page ID #:84 v Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pellegrini v. Weiss, 165 Cal. App. 4th 515 (2008)...........................................................................19 Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210 (2010)...........................................................................17 Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443 (2002).........................................................................14 Federal Statutes 18 U.S.C. § 1836 (2)................................................................................................1 18 U.S.C. § 1836(b)(1) ............................................................................................8 18 U.S.C. § 1839(5)...............................................................................................14 Defend Trade Secrets Act................................................1, 2, 6, 8, 9, 10, 13, 14, 16 State Statutes Cal. Civ. Code § 3426.1(b)....................................................................................14 Cal. Civ. Code § 3426.1(d)......................................................................................8 Cal. Civ. Code § 3426.7(b)....................................................................................17 Cal. Civ. Code § 3426-3426.11 (3) .........................................................................1 California Uniform Trade Secrets Act.....1, 2, 6, 8, 9, 10, 11, 14, 15, 16, 17, 18, 19 Rules Federal Rule of Civil Procedure 12(b)(6)......................................................2, 7, 21 Local Rule 7-3 .........................................................................................................2 Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 6 of 27 Page ID #:85 1 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiff The Hays Group, Inc. (“Plaintiff” or “Hays”) filed the instant action against Defendant Burnham Benefits Insurance Services, Inc. (“Defendant” or “Burnham”), asserting claims for (1) violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836, (2) violation of the California Uniform Trade Secrets Act (“CUTSA”), Cal. Civ. Code §§ 3426-3426.11, (3) and aiding and abetting breach of fiduciary duty. As set forth below, Plaintiff’s Complaint lacks critical factual allegations that are necessary to state a claim against Burnham. Thus, Plaintiff’s Complaint should be dismissed in its entirety. Plaintiff fails to state claims under DTSA and CUTSA for misappropriation of trade secrets. Plaintiff alleges that four of its former employees—none of whom are named as defendants in this case—took and used Plaintiff’s information. What is clearly missing from the Complaint, however, are allegations as to what makes the particular information at issue a trade secret, including what steps Plaintiff took, if it took any, to maintain the confidentiality of this information, whether the information is generally available through public sources, and how particular types of information at issue (such as contact information) is confidential and not generally available. Also missing from the Complaint are factual allegations of any actual taking or acquisition of trade secret information by any of the former employees or by Burnham. Plaintiff makes the conclusory allegation that Burnham acquired and used trade secrets without alleging any factual basis for this conclusion. Rather than alleging facts, Plaintiff merely recites the elements of the claims using the language of the DTSA and CUTSA. At best, Plaintiff’s allegations amount to no more than the “inevitable disclosure” theory of a trade secret misappropriation claim, which has been emphatically rejected by courts in California, and which cannot be extended Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 7 of 27 Page ID #:86 2 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 under the DTSA, as discussed below. Under this theory, Plaintiff asserts that the Former Employees must have taken and disclosed trade secrets because why else would clients choose to switch their business from Plaintiff to Burnham. Plaintiff attempts to rely on an inference that it is inevitable for the Former Employees to divulge or rely upon their former employer’s trade secrets in their new positions at Burnham. In other words, Plaintiff alleges nothing more than that (a) the former employees had access to trade secrets, (b) they joined a competitor, and (c) clients switched from Plaintiff to the competitor shortly thereafter. These allegations are insufficient as a matter of law to infer that the Former Employees must have used or disclosed trade secrets in their new positions at Burnham. Additionally, Plaintiff asserts that Burnham conspired with Plaintiff’s former employees in their alleged breach of fiduciary duties owed to Plaintiff. Even if all of the allegations associated with this claim were true, this claim is preempted by the CUTSA because it is based on the same alleged conduct underlying Plaintiff’s CUTSA claim and misappropriation of the same allegedly confidential information. And even if this claim were not preempted, the facts alleged are insufficient to establish the elements of this aiding and abetting claim. Accordingly, this Court should dismiss all of Plaintiff’s claims pursuant to Rule 12(b)(6) for failure to state a claim upon which this Court can grant relief.1 II. STATEMENT OF FACTS A. The Parties Plaintiff alleges that it is a competitor with Burnham in the retail insurance brokerage business. Compl. ¶¶ 6-8. Plaintiff alleges that in or about late October 2016, four of its employees, Ray Tunnell (“Tunnell”), Ann Gedalanga (“Gedalanga”), Mary Garcia (“Garcia”), and Andrea Nichelson (“Nichelson”) 1 Pursuant to Local Rule 7-3, Defendant’s counsel met and conferred with Plaintiff’s counsel by phone on April 11, 2017 regarding this Motion to Dismiss. Declaration of Aaron F. Olsen, ¶¶ 2-3. Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 8 of 27 Page ID #:87 3 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (collectively, the “Former Employees”) resigned from Hays to go work for Burnham in various capacities. Compl. ¶ 9. None of the Former Employees are named as defendants in this case. B. Plaintiff Accuses Defendant Burnham of Misappropriating “Customer Contact Information” and “Feasibility Studies”. In Plaintiff’s first and second causes of action, Plaintiff alleges that Burnham “acquired Plaintiff’s trade secrets, including, but not limited to, customer contact information and Feasibility Studies.” Compl. ¶¶ 33, 38. Plaintiff defines “Feasibility Studies” in paragraph 14 of the Complaint as “feasibility studies for actual and prospective employer clients with fully insured health coverage or who provided health coverage for their employees through self-funded insurance plans.” Plaintiff alleges that “Feasibility Studies” use Plaintiff’s “confidential client claim data.” Compl. ¶ 14. Plaintiff does not allege any facts regarding how Burnham allegedly acquired Plaintiff’s trade secrets and from whom exactly. C. Plaintiff Does Not Allege Facts Showing the “Customer Contact Information” Is Confidential. Although Plaintiff alleges that “customer contact information” is one of Plaintiff’s trade secrets2, Plaintiff does not allege facts showing that Plaintiff keeps “customer contact information” confidential. In fact, other than accusing Burnham of “acquiring” the customer contact information in paragraphs 33 and 38 of the Complaint, the only allegation specifically referring to “customer contact information” is in paragraph 30 of the Complaint. In paragraph 30 of the Complaint, Plaintiff alleges that their former employees “used customer contact information” to “convert clients from Hays to Burnham.” However, there are no allegations that the “customer contact information” is confidential in the first 2 See Compl. ¶¶ 33, 38. Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 9 of 27 Page ID #:88 4 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 place and how this information qualifies as a trade secret, including whether the information is available through public sources and what steps Plaintiff takes to protect the confidentiality of the information. D. Plaintiff Mixes Innocuous Facts With Speculation When Describing Tunnell’s Involvement With “Feasibility Studies”. Plaintiff alleges that Tunnell had access to a database of information from “aggregated de-identified claims data of Hays’s clients.” Compl. ¶ 13. Plaintiff alleges that this allowed Tunnell to advise clients and potential clients on the feasibility of providing fully insured health coverage or self-funded plans. Id. at ¶ 14. Plaintiff alleges that it uses “Feasibility Studies in over 90% of its sales presentations emanating from its California offices.” ¶ 15. However, according to Plaintiff, only Tunnell knew how to use the “complex spreadsheet” necessary to create the Feasibility Studies. Id. ¶ 16. Plaintiff summarily concludes that the Feasibility Studies, the methods used to produce them, and the data which comprised them are trade secrets under the confidentiality agreement Tunnell executed with Hays. Id. ¶ 17. Curiously, after alleging that Tunnell knew how to use the “complex spreadsheet” for Feasibility Studies that were routinely created as part of his job, Plaintiff implies that it is suspicious that a forensic computer exam allegedly shows that Tunnell was, in fact, continuing to work on Feasibility Studies shortly before the end of his employment. For instance, Plaintiff alleges that “in his last three weeks with Hays, Tunnell created or updated Feasibility Studies for many of the clients he ultimately brought with him to Burnham” or “who moved to Burnham shortly after the Former Employees’ departure.” Id. ¶¶ 18, 23. A less accusatory interpretation is that Tunnell was doing his job. Plaintiff also alleges that in the weeks prior to his resignation from Hays, Tunnell “transferred a large amount of customer data to removable USB storage devices,” though missing from the Complaint are any allegations as to whether or Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 10 of 27 Page ID #:89 5 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 not this was a standard way for employees to transfer data for legitimate Hays- related purposes or any explanation whether Tunnell allegedly retained the referenced USB storage devices after he resigned. Id. ¶ 22. Plaintiff also alleges that Tunnell maintained a Dropbox account where he stored “vast amounts of confidential information.” Id. ¶ 23. Once again, plaintiff does not allege what types of information Tunnell allegedly stored in a Dropbox account, what makes this information confidential, whether Tunnell maintained a Dropbox account for legitimate Hays-related purposes as part of his job, and whether Tunnell actually retained confidential information after he resigned and joined Burnham. E. Plaintiff Makes Circumstantial Allegations Against Three Other Employees Based on Mere Assumptions. Plaintiff alleges that shortly after Tunnell resigned from Hays and joined Burnham, three other employees also resigned and joined Burnham. Id. ¶¶ 25-29. As for Nichelson, Plaintiff alleges that shortly before she resigned, she accessed “customer data while using a removable USB device, in a manner that usually indicates she transferred the data to the USB device.” Id. ¶ 27. Once again, Plaintiff does not allege what type of customer data she allegedly accessed and whether her access was related to legitimate Hays-related work she was performing at the time, and whether she retained the USB device and data after her resignation from Plaintiff. Next, Plaintiff alleges that before Gedalanga resigned from Hays, she received an email from Oremor Automotive Group (“Oremor”), a former client of Plaintiff who at the time of this email (i.e., prior to her resignation) had already switched to Burnham, stating: “Signed broker with Burnham Benefits! I hope you join them!! You have done an outstanding job for us! Thank you!” Id. ¶ 28. It is perplexing what about this email from Oremor that Plaintiff believes indicates that Gedalanga had anything to do with Oremor switching their / / / Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 11 of 27 Page ID #:90 6 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 business to Burnham. Plaintiff does not plead any facts showing that Gedalanga caused this client to join Burnham. Finally, as for Garcia, Plaintiff alleges nothing more than that Garcia resigned three days after Tunnell and then joined Burnham immediately after resigning from Plaintiff. Id. ¶ 29. F. Plaintiff Lumps the Former Employees Together in Accusing Them of Using Confidential Information. Plaintiff alleges that both during their employment with Hays and since they resigned from Hays, “the Former Employees used customer contact information, as well as proprietary data that formed the basis for the Feasibility Studies, to convert clients from Hays to Burnham.” Id. ¶ 30. Plaintiff fails to allege how each of the Former Employees allegedly used the information, i.e., what did they do with the information that allegedly constitutes “use.” Plaintiff does not allege even one example of how the Former Employees allegedly used confidential information to solicit clients. Plaintiff then alleges that, “as a result of the efforts of Burnham and the Former Employees, Hays has lost clients to Burnham.” Id. ¶ 31. This is the first mention in the Complaint of any alleged conduct by Burnham other than accepting business from Plaintiff’s former clients. Plaintiff fails to specify in any way what “efforts of Burnham” are referred to in Paragraph 31. G. Plaintiff Alleges That Defendant Aided and Abetted A Breach of Fiduciary Duty Based on the Same Alleged Conduct as Plaintiff’s DTSA and CUTSA Claims. Plaintiff’s third claim for aiding and abetting breach of fiduciary duty begins by incorporating all of the factual allegations that preceded it. Compl. ¶ 43. Plaintiff alleges that the Former Employees had a fiduciary relationship with Hays. Id. ¶ 44. The Former Employees allegedly breached their fiduciary duty to Hays by allegedly “sharing customer data with their new employer [Burnham], Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 12 of 27 Page ID #:91 7 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and by exploiting the proprietary data and tools comprising the Feasibility Studies.” Id. ¶ 45. Plaintiff alleges that Burnham “knowingly participated in the breach by working to transfer business from Hays, both before and after the Former Employees began working at Burnham.” Id. ¶ 46. III. LEGAL ANALYSIS A. Legal Standard For A Motion to Dismiss A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in the complaint. See Fed. R. Civ. Pro. 12(b)(6). A Rule 12(b)(6) dismissal is proper where there is either a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” Moeller v. Qualex Inc., 458 F. Supp. 2d 1069 (C.D. Cal. 2006); Balistreri v. Pacifica Police Dept., 901 F. 2d 696, 699 (9th Cir. 1988). On a Rule 12(b)(6) motion, the court accepts all material facts alleged in the complaint as true and construes them in the light most favorable to the plaintiff. Knievel v. ESPN, 393 F. 3d 1068, 1072 (9th Cir. 2005). However, the court need not accept conclusory allegations, unwarranted deductions of fact, or unreasonable inferences. Daniels-Hall v. Nat’l Educ. Ass’n., 629 F. 3d 992, 998 (9th Cir. 2010). To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 669, 678 (2009). While courts do not require “heightened fact pleading of specifics,” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 544, 555. Where on the face of the complaint there is some insuperable bar to relief, dismissal under FRCP Rule 12(b)(6) is appropriate. Weisbuch v. County of Los Angeles, 119 F. 3d 778, 783, n. 1 (9th Cir. 1997). Where it appears beyond doubt Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 13 of 27 Page ID #:92 8 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that plaintiff can prove no set of facts which would entitle him to relief, his claim must be dismissed without leave to amend. Schreiber Distributing Co. v. Serv- Well Furniture Co., Inc., 806 F. 2d 1393, 1401 (9th Cir. 1986) (recognizing that leave to amend should be denied only if the court determines that “allegation(s) of other facts consistent with the challenged pleading could not possibly cure the deficiency.”); Albrecht v. Lund, 845 F. 2d 193, 195-196 (9th Cir. 1988) (refusing to grant leave to amend proper where the facts are not in dispute, and the sole issue is whether there is liability as a matter of substantive law). In the present case, even if all material allegations are accepted as true and construed in favor of Plaintiff, Plaintiff’s claims fail to state a claim upon which relief may be granted against Burnham. B. Plaintiff’s DTSA and CUTSA Claims Fail for Lack of Sufficient Factual Allegations. 1. To state a claim under the DTSA or CUTSA, Plaintiff must plausibly allege steps it took to protect its trade secrets. The DTSA creates a private cause of action in favor of the “owner of a trade secret that is misappropriated . . . if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1). Under the DTSA, a “trade secret” is information that the owner “has taken reasonable measures to keep . . . secret” and that “derives independent economic value . . . 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.” Id. § 1839(3). Under the CUTSA, a trade secret is information that “(a) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Cal. Civ. Code § 3426.1(d). Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 14 of 27 Page ID #:93 9 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 To state a claim under the DTSA or CUTSA, the plaintiff must allege sufficient facts that, if true, would demonstrate that it took reasonable steps to maintain the secrecy of the protected information. M.C. Dean, Inc. v. City of Miami Beach, 199 F. Supp. 3d 1349, 1353 (S.D. Fla. 2016); Fortinet Inc. v. FireEye Inc., 2014 WL 4955087, *7 (N.D. Cal. Sept. 30, 2014). In Laing v. BP Exploration & Production Inc., 2014 WL 272846, *1 (M.D. Fla. Jan. 14, 2014), the plaintiff formulated a proposal for BP to use in repairing the ruptured vessel following the 2010 explosion of an off-shore drilling platform, the famous Deepwater Horizon oil leak. The plaintiff also presented the document to a lieutenant commander of the U.S. Coast Guard, who forwarded it to BP. See id. The court rejected the plaintiff’s argument that the adequacy of his efforts to maintain the secrecy of his idea could not be resolved on a motion to dismiss. See id. at *3. The court granted defendant’s motion to dismiss. See id. at *5. Here, Plaintiff fails to allege what reasonable steps it took, if any, to protect the secrecy of the information in question. First, Plaintiff fails to allege what steps it took to protect the secrecy of customer contact information or other “customer data.” This is probably because Plaintiff cannot make such allegation in good faith. Plaintiff does not identify where and how the information is stored, whether the information is publicly available, whether access to the information is limited on a need-to-know basis, whether it implemented any physical or electronic security measures to secure the information, and whether it labeled the information as confidential. In addition, with respect to the so-called Feasibility Studies, Plaintiff’s own allegations admit that this information was shared with clients and prospective clients in over 90% of Plaintiff’s sales presentations in California. See Compl. ¶ 15. Like the plaintiff in Laing, Plaintiff does not allege that it requires clients or prospective clients to execute non-disclosure agreements prior to Plaintiff’s sharing of its Feasibility Studies with them or that the information was disclosed Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 15 of 27 Page ID #:94 10 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 with a mechanism to maintain its secrecy. Thus, on its face, Plaintiff’s Complaint indicates that Plaintiff’s Feasibility Studies are readily shared with third parties who have no known or alleged duty to maintain such information as confidential. Finally, to the extent Plaintiff’s argument is that Tunnell must have misappropriated Hays’s data on “aggregated de-identified claims” in order to conduct Feasibility Studies (Compl. ¶ 21), Plaintiff fails to allege that the only source of “aggregated de-identified claims” is from Hays. In other words, Hays appears to claim that it has created a database of claims information which has had the names of the people making the claims “de-identified” (presumably to protect their confidentiality) so that Hays can compare a potential client’s employee population against the larger population to estimate the feasibility of that client being self-insured. Plaintiff, however, does not allege (because it cannot), that the only source of “aggregated de-identified claims” is from Hays. 2. To state a claim under the DTSA or CUTSA, Plaintiff must identify and differentiate the alleged trade secrets from matters of general knowledge in the industry. Plaintiffs seeking relief in federal court for misappropriation of trade secrets, whether under the DTSA or CUTSA, must identify what the trade secrets are, and should describe the trade secrets with sufficient particularity to separate the trade secrets from matters of either general knowledge in the trade or special knowledge of those skilled in the trade. See Profil Institut fur Stoffwechselforschung GmbH v. ProSciento, Inc., 2017 WL 1198992, *5 (S.D. Cal. Mar. 31, 2017) (citing Imax Corp. v. Cinema Technologies, Inc., 152 F. 3d 1161, 1164-65 (9th Cir. 1998)). While Imax applied this standard at the summary judgment stage, the standard at the pleading stage requires only notice and plausibility. This requirement has been applied, in a more relaxed form, at the pleading stage. In Pellerin v. Honeywell Intern., Inc., 877 F. Supp. 2d 983, 988 (S.D. Cal. 2012), for Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 16 of 27 Page ID #:95 11 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 example, in granting a motion to dismiss, the court found that although the plaintiff identified its end product as foam earplugs, the plaintiff did not describe the manufacturing process with sufficient particularity to identify what was claimed as a trade secret and did not adequately plead the existence of a trade secret under the CUTSA. The plaintiff’s allegations that simply recited the statutory definition of a trade secret and concluded that a former employee had access to and acquired a former employer’s trade secret information were insufficient to state a claim. Id. at 988-89 (citing Iqbal, 556 U.S. at 678). Similarly, in Profil, the court emphasized the fact that the plaintiff was the source of the alleged trade secrets and, therefore, should know the trade secrets well enough to be able to plead a claim for misappropriation of trade secrets. 2017 WL 1198992 at *5. The court expected the plaintiff to differentiate the identified information from general knowledge within the trade or general public knowledge because “this is not a case where discovery is needed, or might be needed, to allege facts identifying the trade secrets.” Id. Here, Plaintiff alleges that the Former Employees, and by implication from simply hiring them, Burnham, misappropriated “customer contact information” and “customer data.” Compl. ¶¶ 22, 27, 30, 33, 38, 44. Plaintiff fails to identify what types of customer contact information is at issue, as this category of information does not automatically have trade secret status. Plaintiff fails to identify whether this pertains to particular customers as bits and pieces of contact information as opposed to any compilation or list of contact information. Plaintiff also fails to allege how customer contact information is confidential in the first place and how this information qualifies as a trade secret, including whether the information is available through public sources and what steps Plaintiff takes to protect the confidentiality of the information. As for “customer data,” missing from the Complaint is any explanation as to what types of customer data is alleged to have been acquired, disclosed or used Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 17 of 27 Page ID #:96 12 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 in any way, and whether this customer data is even confidential vs. generally available through public sources. Customer data is a broad and vague category that may encompass a lot of information that does not qualify as a trade secret or that is generally available. Plaintiff knows its own trade secrets better than Burnham ever will and, therefore, Plaintiff must be required to specify what it means by “customer data” before proceeding on a fishing expedition by casting such a wide net. Plaintiff’s description of its Feasibility Studies is also insufficient. Plaintiff does not allege that the idea of estimating the probable healthcare costs of a particular employer by comparing the characteristics of its employees with a large group of “aggregated de-identified claims” data is a proprietary concept. In other words, Plaintiff conspicuously fails to allege that the concept of analyzing a large data bank of health care costs to advise employers who are considering a self- funded insurance plan is, by itself, a concept that is only known to Plaintiff.3 Likewise, Plaintiff does not allege that other insurance companies and actuarial firms do not have access to “de-identified claims” and census data that they can use for assessing risk and projecting claims. In other words, while Plaintiff may allege that Tunnel was the only person working for Plaintiff who knew how to conduct Feasibility Studies, Plaintiff fails to allege facts showing whether Hays is the only company providing Feasibility Studies or whether there are thousands of other companies who also provide Feasibility Studies. At best, Plaintiff contends that conducting Feasibility Studies is complex and that Tunnell was the only person at Plaintiff who knew how to conduct them. Compl. ¶ 16. However, 3 To the extent Plaintiff were to argue otherwise, it should be noted that Plaintiff allegedly uses “Feasibility Studies in over 90% of its sales presentations emanating from its California offices.” Compl. ¶ 15. However, there are no allegations that any of these clients or potential clients agree to keep the concept of Feasibility Studies confidential. Thus, on its face, Plaintiff’s Complaint indicates that Plaintiff’s Feasibility Studies are readily shared with third parties who have no known duty to maintain such information as confidential. Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 18 of 27 Page ID #:97 13 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 possessing a specialized set of skills is not the same as possessing trade secret information. Thus, Plaintiff has failed to allege what information about the Feasibility Studies is a trade secret. 3. In alleging claims under the DTSA and CUTSA, Plaintiff recites the elements of these claims using the language of both statutes as though such conclusory allegations are sufficient. As in Pellerin, Plaintiff’s claims for violations of the DTSA and CUTSA allege no more than barebones, conclusory allegations that track the language of the statutes. First, Plaintiff alleges that Burnham acquired or misappropriated “Plaintiff’s trade secrets, including, but not limited to, customer contact information and the Feasibility Studies.” Id. ¶¶ 33, 38. This is the first mention in the Complaint of Burnham ever acquiring Plaintiff’s trade secrets. Plaintiff fails to allege how Burnham “acquired” its trade secrets and from whom. Plaintiff also fails to allege what trade secrets Burnham allegedly acquired and what makes the information a trade secret (including whether the information is generally available through public sources and whether Plaintiff took any steps to protect the confidentiality of the information). While Plaintiff mentions customer contact information and Feasibility Studies, it assumes that both categories of information qualify as a trade secret without any factual allegations supporting this conclusion. Next, Plaintiff alleges that “at the time Defendant acquired the trade secrets, Defendant knew or had reason to know that the trade secrets were acquired by improper means.” Id. ¶¶ 34, 39. Plaintiff also alleges that “at the time Defendant acquired the trade secrets, Defendant knew or had reason to know at the time of their disclosure or use that the trade secrets were: a. Derived from or through a person who had utilized improper means to acquire it; b. Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or c. Derived from or through a person who owed a duty to the person seeking Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 19 of 27 Page ID #:98 14 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 relief to maintain its secrecy or limit its use.” Id. ¶¶ 35, 40. Again, these allegations simply recite the elements of the claim or the language of the statute without alleging any factual basis. See 18 U.S.C. § 1839(5) and Cal. Civ. Code § 3426.1(b). Ultimately, Plaintiff does not allege what it is that Burnham is accused of doing that Plaintiff believes constitutes misappropriation of trade secrets. As a result, Plaintiff has not been put on notice of the factual basis for Plaintiff’s DTSA and CUTSA claims. These claims should, therefore, be dismissed. 4. Plaintiff’s allegations at best amount to an inevitable disclosure theory, which is dead on arrival in California. Under the inevitable disclosure doctrine, which has been adopted in some states but expressly rejected by California courts, a former employer asserts that its former employee engaged in actual or threatened misappropriation of trade secrets because the employee had access to trade secrets and then joined a direct competitor and, therefore, will inevitably disclose or use the former employer’s trade secrets by virtue of his/her new employment in a competitive capacity. In Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443, 1463-64 (2002), the court emphatically rejected the inevitable disclosure doctrine. A federal district court likewise declared that “[t]he theory of ‘inevitable disclosure’ is not the law in California.” Bayer Corp. v. Roche Molecular Sys., Inc., 72 F. Supp. 2d 1111, 1112 (N.D. Cal. 1999) (also id. at 1119: “[F]or the purposes of a preliminary injunction, under California law, the theory of inevitable disclosure does not supply the proof needed to establish a probability of success on the merits nor does it suffice to raise serious questions about actual use or threat.”). See also GlobeSpan, Inc. v. O’Neill, 151 F. Supp. 2d 1229, 1235-36 (C.D. Cal. 2001) (“The Central District . . . has considered and rejected the inevitable disclosure doctrine;” finding allegation that disclosure of trade secret was inevitable in new / / / Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 20 of 27 Page ID #:99 15 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 employment was insufficient to state claim of trade secret misappropriation under California law). Here, other than conclusory allegations that Burnham and the Former Employees acquired or used alleged trade secrets, Plaintiff makes nothing more than a baseless assumption of misappropriation based on the allegations that (a) the Former Employees had access to alleged trade secrets while at Plaintiff, (b) the Former Employees joined a competitor around the same time, and (c) some of Plaintiff’s clients switched their business from Plaintiff to Burnham shortly after the Former Employees. These allegations cannot as a matter of law constitute misappropriation of trade secrets under the CUTSA because they are tantamount to “inevitable disclosure.” See, e.g., Compl. ¶ 21 (“Unless [Tunnell] misappropriated the Hays confidential claim data, Tunnell would not be able to produce the same Feasibility Studies.”). Plaintiff’s allegations assume that the Former Employees have used or disclosed or will use or disclose Plaintiff’s trade secrets in their new positions with Burnham. Plaintiff’s allegations also assume that Burnham has acquired and used trade secrets because it hired the employees who allegedly have knowledge of the trade secrets and then started doing business with some of Plaintiff’s clients. This is precisely the premise of the inevitable disclosure doctrine that has been rejected by the courts: the assumption that clients who switched their business to a competitor must have only switched as a result of use and/or disclosure of trade secrets, as well as the assumption that a competitor must have acquired another’s trade secrets by virtue of hiring employees who had access to or knowledge of their former employer’s trade secrets. In other words, Plaintiff thinks so highly of itself that it cannot fathom why clients do not want to do business with it and is, therefore, concocting conspiracy theories about a sinister plot to use trade secrets because why else would clients ever switch their business to a competitor. Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 21 of 27 Page ID #:100 16 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Because the inevitable disclosure doctrine is insufficient to state a claim under the CUTSA, the Court should dismiss the CUTSA claim. The result should be the same for the DTSA claim. Although Defendant is unaware of any federal court that has decided whether the inevitable disclosure doctrine is permitted under the DTSA, the DTSA contains a provision that courts have suggested means that the DTSA cannot be construed to conflict with applicable State law prohibiting restraints on competition. See Engility Corp. v. Daniels, 2016 WL 7034976, *10 (D. Colo. Dec. 2, 2016) (citing 18 U.S.C. § 1836(b)(3)(A)(i)(II)). The inevitable doctrine has been rejected in California because it conflicts with California policy against unlawful restraints of trade. See Bayer, 72 F. Supp. 2d at 1112. Therefore, at least in California, the DTSA may not be construed to permit a claim to proceed based on the inevitable disclosure doctrine. C. Plaintiff Fails to State a Claim for Aiding and Abetting Breach of Fiduciary Duty. 1. Plaintiff’s claim for aiding and abetting breach of fiduciary duty is preempted by the CUTSA because it is based on the same nucleus of facts as Plaintiff’s CUTSA claim. Common law claims, such as Plaintiff’s claim for aiding and abetting breach of fiduciary duty, are preempted by the CUTSA if they are based on the same nucleus of facts as the misappropriation of trade secrets claim for relief. Chang v. Biosuccess Biotech Co., Ltd., 76 F. Supp. 3d 1022, 1040-43 (C.D. Cal. 2014). If there is no material distinction between the wrongdoing alleged in the CUTSA claim and that alleged in a common law claim, the CUTSA preempts the other claim. Id. The CUTSA’s preemption can extend to confidential information other than trade secrets. In order to survive a motion to dismiss based on the superseding effect of the CUTSA, a claim must be based on more than the same nucleus of facts as the misappropriation of trade secrets claim for / / / Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 22 of 27 Page ID #:101 17 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 relief. Mattel, Inc. v. MGA Entertainment, Inc., 782 F. Supp. 2d 911, 985 (C.D. Cal. 2011). The CUTSA’s preemption is based on its “savings clause,” which provides, in relevant part, that the CUTSA “does not affect (1) contractual remedies, whether or not based upon misappropriation of a trade secret, [or] (2) other civil remedies that are not based upon misappropriation of a trade secret. . . .” Cal. Civ. Code § 3426.7(b). Based on the CUTSA’s “comprehensive structure and breadth,” California courts and federal courts applying California law have found that “section 3426.7, subdivision (b), preempts common law claims that are ‘based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.’” Avago Technologies U.S. Inc. v. Nanoprecision Products, Inc., 2017 WL 412524, *5-6 (N.D. Cal. Jan. 31, 2017) (quoting Digital Envoy, Inc. v. Google, Inc., 370 F. Supp. 2d 1025, 1035 (N.D. Cal. 2005); see also Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 236 (2010), as modified on denial of reh’g (May 27, 2010), disapproved of on other grounds by Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011)) (“CUTSA provides the exclusive civil remedy for conduct falling within its terms, so as to supersede other civil remedies ‘based upon misappropriation of a trade secret’”) (quoting Cal. Civ. Code § 3426.7(b)); see also K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939, 954, 958 (2009). Based on the Silvaco decision, federal courts in California have concluded that CUTSA preemption extends to claims based on the misappropriation of confidential and proprietary information, regardless of whether it qualifies as a “trade secret.” See SunPower Corp. v. SolarCity Corp., 2012 WL 6160472, at *5-6 (N.D. Cal. Dec. 11, 2012) (“absent ‘convincing evidence that’ the California Supreme Court ‘would decide [this issue] differently,’ this Court believes it prudent to follow Silvaco”); Heller v. Cepia, L.L.C., 2012 WL 13572, at *7 (N.D. Cal. Jan. 4, 2012), aff’d in part, 560 Fed. Appx. 678 (9th Cir. 2014) (“Silvaco also Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 23 of 27 Page ID #:102 18 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 made clear that common law claims premised on the wrongful taking of information that does not qualify as a trade secret are also superseded, unless the plaintiff identifies some law which confers property rights protecting the information”); Mattel, 782 F. Supp. 2d at 987 (“UTSA supersedes claims based on the misappropriation of confidential information, whether or not that information meets the statutory definition of a trade secret”). Numerous state and federal courts have dismissed with prejudice common law claims similar to Plaintiff’s aiding and abetting claim where the common law claims were based on the same alleged conduct and same allegedly confidential information underlying the claims brought under the CUTSA. See, e.g., Peralta v. California Franchise Tax Board, 124 F. Supp. 3d 993, 1002 (N.D. Cal. 2015) (dismissing with prejudice based on CUTSA preemption a claim for breach of fiduciary duty, among other claims); Chang, 76 F. Supp. 3d at 1043 (dismissing common law claims that are based on alleged misappropriation of the same information as the CUTSA claim or where no separate property right is alleged); Mattel, 782 F. Supp. 2d at 988 (finding that claims for breach of fiduciary duty and aiding and abetting such breach were preempted by the CUTSA); K.C. Multimedia, 171 Cal. App. 4th at 962 (affirming trial court’s ruling that claims for breach of confidence, interference with contract, and unfair competition were preempted by the CUTSA because they rest squarely on the factual allegations of trade secret misappropriation). Applying the above principles, the Court should find that Plaintiff’s aiding and abetting claim is preempted by the CUTSA. First, this claim is based on and incorporates all the factual allegations pertaining to Plaintiff’s CUTSA claim. See Compl. ¶ 43. Second, Plaintiff alleges that the Former Employees breached their fiduciary duty to Plaintiff by allegedly “sharing customer data with their new employer [Burnham], and by exploiting the proprietary data and tools comprising the Feasibility Studies.” Id. ¶ 45. Plaintiff further alleges that Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 24 of 27 Page ID #:103 19 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Burnham “knowingly participated in the breach by working to transfer business from Hays, both before and after the Former Employees began working at Burnham.” Id. ¶ 46. On their face, these allegations put this claim squarely within the CUTSA’s scope, as they are based on alleged acquisition, disclosure and use of the same allegedly confidential information that Plaintiff points to in asserting its CUTSA claim. Thus, Plaintiff cannot escape CUTSA’s preemption of this claim. This is a deficiency in Plaintiff’s pleading that Plaintiff cannot possible cure by amending the pleading. The Court should, therefore, dismiss the aiding and abetting claim with prejudice. 2. Even if Plaintiff’s claim for aiding and abetting were not preempted, Plaintiff fails to allege sufficient facts for this claim. To state a claim for aiding and abetting, Plaintiff must allege facts to establish (1) a breach of fiduciary duty by a Hays employee; and (2) knowledge of the breach and substantial encouragement or assistance by Burnham. Casey v. U.S. Bank Nat’l Ass’n, 127 Cal. App. 4th 1138, 1144 (2005). A breach of fiduciary duty requires (1) the existence of a fiduciary duty; (2) its breach; and (3) resulting damages. Pellegrini v. Weiss, 165 Cal. App. 4th 515, 524 (2008). Here, Plaintiff fails to allege any factual basis for its conclusory allegations that the Former Employees owed a fiduciary duty to Hays, that any of the Former Employees breached such duty during his/her employment with Hays, and that Burnham both had knowledge of the breach and provided substantial encouragement or assistance to the employee in committing the breach. First, although Plaintiff alleges that the Former Employees had a fiduciary relationship with Plaintiff, Plaintiff does not explain what such relationship entailed and what sort of obligations it imposed on the Former Employees. / / / / / / Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 25 of 27 Page ID #:104 20 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Second, Plaintiff lumps the four Former Employees together in accusing all of them of breaching their fiduciary duties. Plaintiff does not identify what each of the Former Employees did that Plaintiff believes constituted a breach. In fact, as alleged, Garcia did nothing more than resign from Hays and immediately join Burnham. Compl. ¶ 29. Another employee, Gedalanga, happened to receive an email from a then-former client of Hays shortly before her resignation in which the client informed her of its decision to switch business from Hays to Burnham. Id. ¶ 28. How unfortunate for Gedalanga to be on the receiving end of such a complimentary email from a former client, as this is the only alleged fact against Gedalanga. Nothing about these allegations suggest that these employees crossed some sort of line and breached their alleged fiduciary duty. Third, other than alleging in a conclusory manner that Burnham “knowingly participated in the breach,” Plaintiff fails to allege any facts to identify what it is that Burnham allegedly did besides hiring the Former Employees and accepting business from Plaintiff’s former clients, which is entirely lawful. In other words, Plaintiff must allege whether and how Burnham allegedly knew that each of the Former Employees allegedly engaged in conduct that constitutes a breach of his/her fiduciary duty, and what Burnham allegedly did that constitutes encouraging or assisting each of the Former Employees in engaging in such conduct. Clearly, none of Plaintiff’s allegations state a plausible claim for aiding and abetting breach of fiduciary duty or put Burnham on notice of Plaintiff’s factual basis for this claim and what Burnham is actually being accused of doing. / / / / / / / / / / / / / / / Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 26 of 27 Page ID #:105 21 Case No: 8:17-cv-00519-DOC-JDE MEMORANDUM OF POINTS AND AUTHORITIES ISO DEFT’S MOTION TO DISMISS PLTF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. CONCLUSION For the reasons set forth herein, Plaintiff’s claims should be dismissed in their entirety with prejudice pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, as Plaintiff has not stated a claim on which relief may be granted. Date: May 3, 2017 FISHER & PHILLIPS LLP By: /s/ Aaron F. Olsen AARON F. OLSEN USAMA KAHF Attorneys for Defendant, BURNHAM BENEFITS INSURANCE SERVICES, INC. Case 8:17-cv-00519-DOC-JDE Document 15-1 Filed 05/03/17 Page 27 of 27 Page ID #:106 Case No: 8:17-cv-00519-DOC-JDE DECLARATION OF AARON F. OLSEN IN SUPPORT OF MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AARON F. OLSEN (SBN 224947) E-Mail aolsen@fisherphillips.com FISHER & PHILLIPS LLP 4747 Executive Drive, Suite 1000 San Diego, CA 92121 Telephone: (858) 597-9600 Facsimile: (858) 597-9601 USAMA KAHF, SBN 266443 E-Mail ukahf@fisherphillips.com FISHER & PHILLIPS LLP 2050 Main Street, Suite 1000 Irvine, California 92614 Telephone: (949) 851-2424 Facsimile: (949) 851-0152 Attorneys for Defendant BURNHAM BENEFITS INSURANCE SERVICES, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION THE HAYS GROUP, INC., Plaintiff, v. BURNHAM BENEFITS INSURANCE SERVICES, INC., Defendant. Case No: 8:17-cv-00519-DOC-JDE DECLARATION OF AARON F. OLSEN IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6) [concurrently filed with Notice of Motion to Dismiss; Memorandum of Points and Authorities; and Proposed Order] Date: Monday, June 5, 2017 Time: 8:30 a.m. Courtroom: 9D Complaint Filed: March 23, 2017 Case 8:17-cv-00519-DOC-JDE Document 15-2 Filed 05/03/17 Page 1 of 2 Page ID #:107 1 Case No: 8:17-cv-00519-DOC-JDE DECLARATION OF AARON F. OLSEN IN SUPPORT OF MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF AARON F. OLSEN I, Aaron F. Olsen, declare and state as follows: 1. I am a partner with Fisher & Phillips LLP, attorneys of record for Burnham Benefits Insurance Services, Inc. (“Defendant”), in the above-captioned matter. I am the lead counsel for Defendant in this matter. I am admitted to practice before all courts of the State of California, and I am admitted to practice before this Court. I have personal knowledge of the facts set forth herein and, if called as a witness, I could and would testify competently thereto. 2. In accordance with Local Rule 7-3, on April 6, 2017, I sent an email to counsel for Plaintiff The Hays Group, Inc. (“Plaintiff”) requesting to schedule a conference call to meet and confer regarding Defendant’s plan to file a motion to dismiss Plaintiff’s Complaint. Counsel for Plaintiff responded and we scheduled the call for Tuesday April 11, 2017. 3. On Tuesday April 11, 2017, I participated in a conference call with Plaintiff’s counsel during which I informed Plaintiff’s counsel of the basis for Defendant’s motion to dismiss and the deficiencies in Plaintiff’s Complaint. I inquired whether Plaintiff would amend its Complaint to cure the deficiencies I identified. Plaintiff’s counsel indicated that they see no problem with the allegations in the Complaint. I requested that Plaintiff’s counsel consider the points I raised and let me know if they change their minds. The Parties are now at an impasse regarding Defendant’s motion to dismiss. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct and that this declaration is executed on the 3rd day of May, 2017 in San Diego, California. _________________________________ AARON F. OLSEN Case 8:17-cv-00519-DOC-JDE Document 15-2 Filed 05/03/17 Page 2 of 2 Page ID #:108 Case No: 8:17-cv-00519-DOC-JDE [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AARON F. OLSEN (SBN 224947) E-Mail aolsen@fisherphillips.com FISHER & PHILLIPS LLP 4747 Executive Drive, Suite 1000 San Diego, CA 92121 Telephone: (858) 597-9600 Facsimile: (858) 597-9601 USAMA KAHF, SBN 266443 E-Mail ukahf@fisherphillips.com FISHER & PHILLIPS LLP 2050 Main Street, Suite 1000 Irvine, California 92614 Telephone: (949) 851-2424 Facsimile: (949) 851-0152 Attorneys for Defendant, BURNHAM BENEFITS INSURANCE SERVICES, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION THE HAYS GROUP, INC., Plaintiff, v. BURNHAM BENEFITS INSURANCE SERVICES, INC., Defendant. Case No: 8:17-cv-00519-DOC-JDE [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6) [concurrently filed with Notice of Motion and Motion; Memorandum of Points and Authorities; and Declaration of Aaron F. Olsen] Date: Monday, June 5, 2017 Time: 8:30 a.m. Courtroom: 9D Complaint Filed: March 23, 2017 Case 8:17-cv-00519-DOC-JDE Document 15-3 Filed 05/03/17 Page 1 of 3 Page ID #:109 1 Case No: 8:17-cv-00519-DOC-JDE [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION THE HAYS GROUP, INC., Plaintiff, v. BURNHAM BENEFITS INSURANCE SERVICES, INC., Defendant. Case No: 8:17-cv-00519-DOC-JDE [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6) [concurrently filed with Notice of Motion and Motion; Memorandum of Points and Authorities; and Declaration of Aaron F. Olsen] Date: Monday, June 5, 2017 Time: 8:30 a.m. Courtroom: 9D Complaint Filed: March 23, 2017 Defendant Burnham Benefits Insurance Services, Inc.’s (“Defendant’s”) Motion to dismiss Plaintiff The Hays Group, Inc.’s (“Plaintiff’s”) Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) came on for hearing before the Honorable David O. Carter, in Courtroom 9D of the above-captioned Court. / / / / / / / / / Case 8:17-cv-00519-DOC-JDE Document 15-3 Filed 05/03/17 Page 2 of 3 Page ID #:110 2 Case No: 8:17-cv-00519-DOC-JDE [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(B)(6) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Having considered the pleadings in this action, the moving, opposition, and reply papers, the argument of counsel, and all such matters as are properly before it the Court finds good cause for GRANTING Defendant’s motion. THE COURT HEREBY ORDERS as follows: Defendant’s motion to dismiss Plaintiff’s Complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is GRANTED in its entirety, without leave to amend. THE COURT ALSO ORDERS that: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ IT IS SO ORDERED. Dated: ____________________________ Honorable David O. Carter United States District Court Judge Case 8:17-cv-00519-DOC-JDE Document 15-3 Filed 05/03/17 Page 3 of 3 Page ID #:111 1 Case No. 8:17-cv-00519-DOC-JDE CERTIFICATE OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AARON F. OLSEN (SBN 224947) E-Mail aolsen@fisherphillips.com FISHER & PHILLIPS LLP 4747 Executive Drive, Suite 1000 San Diego, CA 92121 Telephone: (858) 597-9600 Facsimile: (858) 597-9601 USAMA KAHF (SBN 266443) E-Mail ukahf@fisherphillips.com FISHER & PHILLIPS LLP 2050 Main Street, Suite 1000 Irvine, California 92614 Telephone: (949) 851-2424 Facsimile: (949) 851-0152 Attorneys for Defendant, BURNHAM BENEFITS INSURANCE SERVICES, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION THE HAYS GROUP, INC., Plaintiff, v. BURNHAM BENEFITS INSURANCE SERVICES, INC., Defendant. Case No: 8:17-cv-00519-DOC-JDE CERTIFICATE OF SERVICE Complaint Filed: March 23, 2017 At the time of service, I was over 18 years of age and not a party to this action. My residence or business address is 4747 Executive Drive, Suite 1000, San Diego, California 92121. On May 3, 2017 I served the foregoing documents entitled: 1. DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6); / / / / / / Case 8:17-cv-00519-DOC-JDE Document 15-4 Filed 05/03/17 Page 1 of 3 Page ID #:112 2 Case No. 8:17-cv-00519-DOC-JDE CERTIFICATE OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6); 3. DECLARATION OF AARON F. OLSEN IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6); and 4. [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FRCP RULE 12(b)(6) I served the aforementioned document(s) on the person(s) below, as follows: Jill S. Casselman, Esq. ROBINS KAPLAN LLP 2049 Century Park East, Suite 3400 Los Angeles, CA 90067-3208 T: 310-552-0130 F: 310-229-5800 E: jcasselman@robinskaplan.com Counsel for Plaintiff, The Hays Group, Inc. Christopher W. Madel, Esq. MADEL PA 800 Hennepin Avenue, Suite 700 Minneapolis, MN 55403 T: 612-605-0630 F: 612-326-9990 E: cmadel@madellaw.com Co-Counsel for Plaintiff, The Hays Group, Inc. Sam E. Khoroosi, Esq. ROBINS KAPLAN LLP 800 LaSalle Avenue, Suite 2800 Minneapolis, MN 55402 T: 612-349-8500 F: 612-339-4181 E: SKhoroosi@RobinsKaplan.com Co-Counsel for Plaintiff, The Hays Group, Inc.  [by ELECTRONIC SUBMISSION] - I served the above listed document(s) described via the United States District Court’s Electronic Filing Program on the designated recipients via electronic transmission through the CM/ECF system on the Court’s website. The Court’s CM/ECF system will generate a Notice of Electronic Filing (NEF) to the filing party, the assigned judge, and any registered users in the case. The NEF will constitute service of the document(s). Registration as a CM/ECF user constitutes consent to electronic service through the court’s transmission facilities.  [by FAX] - I caused the aforementioned document(s) to be telefaxed to the aforementioned facsimile number(s). The facsimile machine I used complied with California Rules of Court, Rule 2003(3) and no error was reported by the machine. Pursuant to California Rules of Court, Rule 2005(i), I caused the machine to print a transmission record of the transmission, a copy of which is attached to this declaration and/or no error was reported by the machine. Case 8:17-cv-00519-DOC-JDE Document 15-4 Filed 05/03/17 Page 2 of 3 Page ID #:113 3 Case No. 8:17-cv-00519-DOC-JDE CERTIFICATE OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28  [by MAIL] - I am readily familiar with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at San Diego, California in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postage cancellation date or postage meter date is more than one day after date of deposit for mailing this affidavit. I declare that I am employed in the office of a member of the bar of this Court at whose direction the service was made. Executed May 3, 2017, at San Diego, California. AMANDA FUNKHOUSER Case 8:17-cv-00519-DOC-JDE Document 15-4 Filed 05/03/17 Page 3 of 3 Page ID #:114