Cloudera, Inc. v. Databricks, Inc., 4:21-cv-01217

Background

Cloudera sued Databricks and former employee Richard Doverspike alleging DTSA and GTSA trade-secret misappropriation, CFAA and state computer claims (against Doverspike), and tortious-interference claims against Databricks.
Doverspike moved to compel arbitration under a Mutual Arbitration Agreement; the Northern District of Georgia compelled arbitration as to Doverspike and transferred claims against Databricks to the N.D. Cal. court.
JAMS arbitration between Cloudera and Doverspike commenced; Databricks moved to stay the California action pending that arbitration and separately moved to dismiss Cloudera’s amended complaint.
Cloudera’s FAC alleges multiple named former employees copied, emailed, or stored Cloudera materials and that Databricks solicited and used those employees (vicarious liability, collusion, ratification).
The Court denied Databricks’s Landis stay request, found Cloudera had plausibly pleaded trade-secret misappropriation, dismissed the non-disclosure tortious-interference claim with prejudice (preempted by GTSA), and dismissed the non-solicitation tortious-interference claim with leave to amend.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the case should be stayed pending JAMS arbitration of Cloudera v. Doverspike	Arbitration concerns overlapping facts; but Cloudera will not be prejudiced and arbitration is proceeding	Stay avoids inconsistent rulings and may simplify issues	Denied — risk of spoliation and limited simplification outweighed defendant’s showing of hardship
Sufficiency of trade-secret misappropriation pleading (acquisition, employer involvement)	Allegations and circumstantial facts (emails, slide decks, recruitment calls, USB use) plausibly show acquisition and Databricks’ involvement	Vicarious liability requires specific factual allegations of employer knowledge/involvement	Granted as to survival — FAC sufficiently alleges specific instances and employer involvement; claims survive dismissal
Adequacy of allegations that Cloudera took reasonable measures to protect secrets and suffered injury	Cloudera alleges NDAs/PIIAs, cybersecurity, training, forensic notice to Databricks and resulting assurances; alleges reputational and economic injury	Delay in suing and alleged failure to enjoin earlier conduct undermine trade-secret status and damages	Denied as to dismissal — Court finds protections and injury adequately pleaded for now
Whether tortious-interference claims survive: (a) non-disclosure; (b) non-solicitation	(a) Interference stems from induced breaches to obtain confidential info; (b) Databricks induced recruitment of employees in breach of PIIAs	(a) GTSA preempts claims premised on same facts as misappropriation; (b) allegations are speculative/on information-and-belief without factual specifics	(a) Non-disclosure claim dismissed with prejudice as preempted by GTSA; (b) Non-solicitation claim dismissed with leave to amend for inadequate factual particularity

Key Cases Cited

Landis v. North American Co., 299 U.S. 248 (stay standard; district court discretion)
CMAX, Inc. v. Hall, 300 F.2d 265 (9th Cir. 1962) (factors to evaluate Landis stay)
Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059 (9th Cir. 2007) (discretionary nature of Landis stay)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must be plausible)
Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not assumed true on a motion to dismiss)
Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097 (9th Cir. 2008) (12(b)(6) standard)
Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025 (9th Cir. 2008) (construing pleadings for nonmoving party)
In re Gilead Sciences Securities Litigation, 536 F.3d 1049 (9th Cir. 2008) (reject conclusory allegations)
Robbins v. Supermarket Equipment Sales, LLC, 290 Ga. 462 (Ga. 2012) (GTSA preemption of overlapping claims)
Park v. Thompson, 851 F.3d 910 (9th Cir. 2017) (information-and-belief pleading where facts peculiarly within defendant’s control)