28 Cal.App.5th 923
Cal. Ct. App.2018Background
- AMN and Aya are competing national travel-nurse staffing companies; four former AMN travel-nurse recruiters (Stein, Wallace, Hernandez, Ogilvie) left AMN and went to work for Aya.
- Each recruiter had signed AMN’s Confidentiality and Non-Disclosure Agreement (CNDA), which (1) broadly defined “Confidential Information” to include employee names and placement/compensation details and (2) contained a nonsolicitation-of-employee clause barring solicitation of any AMN employee for one year (some CNDAs said 18 months) after termination.
- AMN sued for breach of contract, trade-secret misappropriation (UTSA), tortious interference, breach of duty of loyalty, conspiracy/aiding-and-abetting, and UCL violations based on recruiters’ contacts with AMN travelers and certain forwarded AMN documents.
- Defendants moved for summary judgment, arguing the nonsolicitation clause is void under Bus. & Prof. Code § 16600, and that AMN’s non–trade-secret confidentiality theories and asserted trade secrets (nurse identities, contact info, a brief Wilhelm e‑mail, and a TOA list) were not protected or were already known to Aya.
- The trial court granted summary judgment for defendants, adjudicated declaratory relief in defendants’ favor, enjoined AMN from enforcing the nonsolicitation clause as to former California employees, and awarded defendants attorney fees; the Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of CNDA nonsolicitation clause under § 16600 | Clause merely protects AMN’s employees (travel nurses) and is therefore permissible | Clause unlawfully restraints recruiters’ ability to practice their profession (recruiting travel nurses) and is void | Clause is void under § 16600 as it restrains lawful profession/trade (affirmed) |
| Can employer enforce confidentiality claims based on non–trade-secret confidential info to bar solicitation | AMN: confidential (non–trade-secret) info may support tort/interference/UCL claims and justify enforcement | Defendants: non–trade-secret confidentiality cannot lawfully restrain employment under § 16600 | Non–trade-secret confidentiality cannot support post‑termination restraint; related contract/tort claims fail |
| Trade-secret misappropriation (identities/contact/placement, Wilhelm e‑mail, TOA list) | AMN: nurse identities, terms, histories, and the Wilhelm e‑mail and TOA list are trade secrets and were misappropriated | Defendants: the nurse identities/contact info were known to Aya (preexisting, public/social media/multiple agencies); email was general and not economically valuable; TOA list not used or was already known | No triable issue of protectable trade secret or of use causing harm; trade-secret claims fail |
| Scope of injunctive relief & entitlement to attorney fees under CCP § 1021.5 | Injunction overbroad if it bars enforcement of trade-secret–based restrictions; fees not warranted | Injunction needed to stop AMN’s repeated enforcement of void clause against former employees; litigation conferred public benefit so fees appropriate | Injunction properly enjoined AMN from enforcing clause as to former CA employees; fees under CCP § 1021.5 properly awarded (public‑interest enforcement) |
Key Cases Cited
- Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (Cal. 2008) (section 16600 bars contractual restraints on practicing a profession absent statutory exceptions; rejects narrow-restraint exception)
- Galante v. The Retirement Group, 176 Cal.App.4th 1226 (Cal. Ct. App. 2009) (trade-secret misuse may be enjoinable independent of contractual nonsolicitation but confidentiality alone cannot circumvent § 16600)
- Dowell v. Biosense Webster, Inc., 179 Cal.App.4th 564 (Cal. Ct. App. 2009) (broad nonsolicitation clauses preventing post‑termination services to former employer’s accounts/customers void under § 16600)
- Cotton v. ReadyLink Healthcare, 126 Cal.App.4th 1006 (Cal. Ct. App. 2005) (preliminary-injunction context recognizing a staffing agency’s databases and compilations may be protectable trade secrets where proprietary and not public)
- Metro Traffic Control, Inc. v. Shadow Traffic Network, 22 Cal.App.4th 853 (Cal. Ct. App. 1994) (broad noncompetition/nonsolicitation provisions may be void under § 16600)
- Aas v. Superior Court, 24 Cal.4th 627 (Cal. 2000) (breach of contract generally cannot be recast as tort absent independent tort duty)
- Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503 (Cal. 1994) (conspiracy or aiding-and-abetting liability requires an underlying independent tort)