3:19-cv-00583
S.D. Cal.Nov 4, 2020Background
- Plaintiff Spice Jazz LLC (an MLM culinary products company) alleges its CEO Colleen Walters left for Youngevity and took with her key employees, sales representatives, encrypted recipe spreadsheet, and customer data.
- Spice Jazz contends Walters converted proprietary recipes, marketing materials, and customer lists (kept in encrypted/password-protected storage) into Youngevity products and databases.
- Bianca Reyne Djafar‑Zade (Walters’s daughter) is alleged to have been paid by Spice Jazz without performing work, to have joined Youngevity, and to have assisted in recruiting Spice Jazz’s reps and transferring data.
- Procedural history: Spice Jazz filed suit; after an earlier dismissal of some claims from the Second Amended Complaint, Spice Jazz filed a Third Amended Complaint asserting claims against Djafar‑Zade for fraud, DTSA and CUTSA trade secret misappropriation (including conspiracy theories), aiding & abetting breach of fiduciary duty/misappropriation, and restitution.
- Djafar‑Zade moved to dismiss for lack of subject‑matter jurisdiction and for failure to state claims. The court heard the motion on the papers and issued the order summarized here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject‑matter jurisdiction (diversity) | Federal diversity existed when filed; dismissal of some claims shouldn't matter | If court dismisses certain claims, diversity would be destroyed and court should dismiss remaining claims | Denied — court retains jurisdiction; defendant did not show lack of original jurisdiction at filing |
| DTSA/CUTSA trade secret misappropriation | Djafar‑Zade joined Youngevity, used her downline to transfer reps, instructed/assisted employees to transfer data, and electronically received/transmitted recipe and customer databases | Allegations are conclusory, largely "on information and belief," and fail to show Djafar‑Zade had access, used improper means, or personally acquired/used trade secrets | Dismissed as to Djafar‑Zade — plaintiff plausibly alleged existence of trade secrets but did not plausibly allege Djafar‑Zade’s own misappropriation |
| Aiding & abetting (misappropriation and breach of fiduciary duty) | Djafar‑Zade substantially assisted Walters and others by recruiting reps and facilitating transfers | Mere knowledge or placement of reps under her downline is not substantial assistance; allegations are conclusory | Dismissed — plaintiff failed to plead substantial assistance or proximate causation sufficient for aiding & abetting |
| Civil conspiracy (to misappropriate trade secrets / to breach fiduciary duty) | Djafar‑Zade participated in a common plan with other defendants to misappropriate trade secrets and breach duties | Allegations are generalized, on information and belief, and plaintiff did not allege Djafar‑Zade owed the requisite duty or intended the conspiracy’s success | Dismissed — plaintiff did not plead formation/operation and intent by Djafar‑Zade or satisfy underlying tort elements |
| Fraud and restitution (fraudulent inducement / unpaid work) | Djafar‑Zade was fraudulently paid for hours not worked and induced hiring by misrepresentation; seeks restitution | Claims are time‑barred and inadequately pleaded under Rule 9(b) | Denied — court takes judicial notice of prior declaration but finds statute‑of‑limitations not apparent on face; Rule 9(b) satisfaction adequate for fraud/restitution claim to survive |
| Leave to amend | Plaintiff requests leave to cure pleading defects | Defendant opposes further amendment | Denied — court finds further amendment futile after multiple opportunities |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (establishes the plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (court need not accept legal conclusions or bald assertions)
- MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993) (plaintiff must identify trade secrets and show they exist)
- Imax Corp. v. Cinema Techs., Inc., 152 F.3d 1161 (9th Cir. 1998) (trade‑secret subject matter must be described with sufficient particularity)
- Blantz v. California Dep’t of Corr. & Rehab., 727 F.3d 917 (9th Cir. 2013) (allegations pleaded "on information and belief" require supporting factual assertions)
- Neilson v. Union Bank of California, N.A., 290 F. Supp. 2d 1101 (C.D. Cal. 2003) (elements and standards for aiding and abetting liability)
- Fiol v. Doellstedt, 50 Cal. App. 4th 1318 (1996) (mere knowledge and failure to prevent wrongdoing is not aiding and abetting)
- Duncan v. Stuetzle, 76 F.3d 1480 (9th Cir. 1996) (elements required for civil conspiracy under California law)
- Von Saher v. Norton Simon Museum, 592 F.3d 954 (9th Cir. 2010) (statute‑of‑limitations dismissal appropriate only when untimeliness is apparent on the complaint’s face)
- Gonzalez v. Planned Parenthood, 759 F.3d 1112 (9th Cir. 2014) (futility of amendment can justify denial of leave to amend)