Garfias v. Portland Spray Works, Inc.
3:20-cv-00873
| D. Or. | Jan 3, 2021Background
- Plaintiff Martin Garfias worked as a carpenter for Portland Spray Works, Inc. from May 2018 until his termination in July 2019; he sued alleging various leave- and disability-related employment claims.
- Portland Spray Works counterclaimed, alleging Garfias and co-worker Raul Gutierrez formed a competing business (Big Pops Construction, LLC) and misappropriated trade secrets (customer lists, contact and sales info, bid forms) to bid for a client (D.R. Horton).
- Defendant pleaded affirmative defenses including unclean hands and that the complaint was brought in bad faith; it asserted OTSA misappropriation, interference with contracts/economic relations, and breach of fiduciary duty counterclaims against Garfias and identical third-party claims against Gutierrez.
- Garfias moved to strike certain affirmative defenses and to dismiss/make more definite the counterclaims; Defendant moved for default judgment against Gutierrez after default was entered by the Clerk.
- The court granted in part Garfias’s motion to strike (struck the "bad faith" defense but declined to strike "unclean hands"), granted in part Garfias’s motion to dismiss (OTSA claim dismissed without prejudice for failure to plead secrecy measures; interference claims preempted by OTSA as pled; breach of fiduciary duty survives), and denied Defendant’s motion for default judgment against Gutierrez.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Motion to strike affirmative defenses (unclean hands; bad faith) | Strike both defenses as insufficient or based on deficient counterclaims | Defenses are permissible; unclean hands tied to counterclaims | Court refused to strike unclean hands (dispute of law/fact); struck bad-faith defense for lack of factual grounding/fair notice |
| 2. Sufficiency of OTSA counterclaim (trade secrets, secrecy measures, misappropriation) | Counterclaim fails: descriptions too general; no facts showing reasonable secrecy measures | Identified customer lists, sales/pricing, bid forms, and alleged use in competing bid; alleged employee duty to keep info confidential | Court found trade-secret categories and misappropriation allegations adequate but held allegations about reasonable efforts to maintain secrecy were conclusory; OTSA claim dismissed without prejudice (leave to amend) |
| 3. Whether non-OTSA torts are preempted by OTSA | Interference and related tort claims are preempted because they rest on same operative facts as OTSA claim | Some torts (e.g., breach of fiduciary duty) arise from broader wrongful acts beyond trade-secret misappropriation | Court held interference claims preempted as pled; breach of fiduciary duty not preempted because it alleges broader conduct (use of equipment/resources, retention of property) |
| 4. Motion for default judgment vs. third-party defendant Raul Gutierrez | (Garfias opposed; court considered risk of inconsistent rulings) | Defendant sought default judgment after Clerk entered default against Gutierrez | Court denied default judgment: Gutierrez and Garfias are similarly situated; entering default against one while adjudicating the other risks inconsistent outcomes under Frow and Rule 54(b) |
Key Cases Cited
- Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970 (9th Cir. 2010) (Rule 12(f) motion context; strikes disfavored)
- Simmons v. Navajo County, 609 F.3d 1011 (9th Cir. 2010) (fair-notice standard for affirmative defenses)
- Kohler v. Flava Enterprises, Inc., 779 F.3d 1016 (9th Cir. 2015) (general-terms pleading for defenses suffices)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions need not be credited on motion to dismiss)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Vesta Corp. v. Amdocs Mgmt. Ltd., 80 F. Supp. 3d 1152 (D. Or. 2015) (elements of OTSA claim)
- Acrymed, Inc. v. Convatec, 317 F. Supp. 2d 1204 (D. Or. 2004) (trade-secret act preemption analysis)
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (factors for default-judgment discretion)
- Frow v. De la Vega, 82 U.S. 552 (1872) (default against one of several similarly situated defendants risks inconsistent relief)
- In re First T.D. & Inv., Inc., 253 F.3d 520 (9th Cir. 2001) (similar-party default-principles)