Prostar Wireless Grp., LLC v. Domino's Pizza, Inc.
360 F. Supp. 3d 994
N.D. Cal.2018Background
- Prostar developed a custom GPS driver-tracking "Solution" (integrated with Domino's Pulse POS) and worked with IBM and Domino's personnel from ~2007–2015, testing pilots at franchise stores.
- Prostar became an approved IBM vendor and performed substantial development work under the understanding that IBM would market/sell the integrated Solution to Domino's franchisees.
- Domino's repeatedly provided feedback, requested feature changes, and at times expressed support, but declined to sign a Project Change Request in 2013 and ultimately told Prostar in 2015 it would not use Prostar's Solution while it developed an in‑house alternative.
- Prostar sued Domino's asserting ten causes of action (including breach of fiduciary duty/joint venture, trade-secret misappropriation, implied contract, fraud, promissory estoppel, tortious interference, and UCL), seeking lost profits of ~$170 million; Domino's moved for summary judgment.
- The court held most non‑contract tort claims were preempted by California's Uniform Trade Secrets Act (CUTSA) except the fiduciary‑duty theory, but granted summary judgment to Domino's on all claims on the merits (including fiduciary duty), and denied most sealing requests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether common‑law tort claims are preempted by CUTSA | Prostar: its tort claims allege wrongdoing distinct from trade‑secret misappropriation (fraud, misuse of labor/insight) | Domino's: claims rest on same nucleus as trade‑secret allegations and thus are preempted | Court: All non‑contract claims except fiduciary‑duty were preempted by CUTSA; others dismissed on merits too |
| Existence of fiduciary duty / joint venture | Prostar: long collaboration, shared development, and mutual stake created a joint venture and fiduciary duties | Domino's: no agreement to share profits or joint control; communications were preliminary negotiations | Court: No triable issue — no evidence of profit‑sharing or joint control; SJ for Domino's |
| Implied‑in‑fact contract / promissory estoppel | Prostar: conduct and assurances show an implied promise that Domino's would allow Prostar to sell the finished Solution to franchisees | Domino's: NDA and other writings govern and preclude any contradictory implied agreement; statements were too indefinite and lacked mutual assent | Court: NDA precluded implied contract; even without NDA, evidence of intent and definite terms was insufficient; SJ for Domino's on implied contract and promissory estoppel |
| Trade‑secret misappropriation and lost profits | Prostar: Solution and its algorithms/architecture were trade secrets; lost profits from franchisee sales are provable | Domino's: alleged secrets were generally known or widely disclosed; many asserted algorithms were never shared; Prostar failed to keep secrecy; lost‑profit estimates speculative | Court: Prostar failed to show secrecy, disclosure to Domino's, or admissible proof of algorithms; lost profits speculative and unsupported; SJ for Domino's |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment and inferences)
- Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (independently wrongful act requirement for tortious interference)
- Sargon Enterprises, Inc. v. University of Southern California, 55 Cal.4th 747 (proof required for lost profits/reliable methodology)
- Grupe v. Glick, 26 Cal.2d 680 (uncertainty of anticipated profits for new business)
- Walker v. University Books, Inc., 602 F.2d 859 (trade‑secret secrecy requirement)