MEMORANDUM & ORDER RE MOTION TO DISMISS
Plaintiff Acculmage Diagnostics Corp. (“Acculmage”) brought this action against defendants TeraReeon, Inc. (“TeraRecon”), Robert Taylor (“Taylor”), Douglas Boyd (“Boyd”), Motoaki Saito (“Saito”),
BACKGROUND 1
Plaintiff Acculmage and defendant TeraRecon are corporations engaged in the development of software for the medical imaging applications business.
In 1996, Acculmage began developing its AccuView Diagnostic Imaging Workstation (“AccuView”), whiсh is a computer software system for the management and post-processing of medical imaging data from various devices, including CT scans and other imaging modalities. In 1999, Acculmage received FDA approval for the Accuview Workstation. AccuView utilizes plug-in software modules to expand its capabilities to provide advanced processing functions. One such module developed by Acculmage, the AccuScore program, enables physicians to analyze and generate reports detailing the amount of calcium in patients’ coronary arteries in minutes. This capability and AccuScore’s comprehensive, user-configurable report generation and database package purportedly gives Acculmage a competitive advantage over other companies in the medical imaging application business, such as defendant TeraRecon. The source code for the AccuScore applicatiоn, patient database, and report generator is the intellectual property of Acculmage.
Defendant Taylor worked on the AccuScore program as a consultant and employee of Acculmage and later became Acculmage’s Chief Executive Officer. In these capacities with Acculmage, Taylor executed an Employment Agreement, which contained a “Non-Solicitation and Non-Competition” provision, in addition to a “Confidentiality, Trade Secrets, and Assignment of Inventions” provision. In late October 2000, Taylor began having disagreements with the Acculmage Board of Directors. Although Taylor resigned from his position as CEO in November 2000, he asked to remain an Acculmage employee while he began circulating his resume to other companies because of concerns about his immigration status. Acculmage complied with Taylor’s request and appointed him Chief Technology Officer pursuant to the terms of a two-month employmеnt agreement. While still an Acculmage employee, Taylor allegedly assisted TeraRecon at an industry trade show in late November 2000.
Defendant Saito is the founder, President, Chief Executive Officer and Chairman of the Board of TeraRecon. In this capacity, Saito expressed an interest in hiring Taylor to defendant Boyd, who plaintiff claims was then both an Acculmage board member and a major TeraRecon shareholder. When Acculmage expressed concern to Boyd about Saito’s interest in hiring Taylor, Boyd allegedly assured Acculmage there was no need for concern because TeraRecon was not going to hire Taylor.
In early 2001, TeraRecon purchased the Real Time Visualization division of Mitsubishi Electric, whose IiVS workstation performed medical image processing. Plaintiff claims, however, that the IiVS workstation had no calcium scoring capabilities whatsoever, nor did TeraRecon
In February 2001, Taylor resigned his position with Aceulmage and immediаtely started working for TeraRecon as its Chief Operating Officer and Executive Vice-President. Plaintiff claims that when Taylor resigned, Boyd allowed Taylor to keep his Aceulmage laptop computer, which contained highly confidential and sensitive proprietary and trade secret information. At the same time, TeraRecon hired away several other key Aceulmage employees who had knowledge and possession of Acculmage’s source code and proprietary information.
Plaintiff claims that less than two months after Taylor’s arrival, TeraRecon publicly demonstrated a new product called the Aquarius Workstation, which was a renamed version of the IiVS workstation with a calcium scoring capability. TeraRecon was granted FDA approval for the Aquarius Workstation in May 2001. Aceulmage claims that TeraRecon’s Aquarius workstation utilizes the source code for the AccuScore software program.
Based on the above conduсt, Aceulmage alleges that TeraRecon, Taylor, Saito and Boyd conspired to steal Acculmage’s trade secrets and proprietary information. Beginning in November 2000, plaintiff claims that defendants created a plan to obtain a calcium scoring capability because defendants realized that such capability would improve TeraRecon’s sales prospects. Aceulmage also claims that TeraRecon previously expressed an interest in acquiring Aceulmage, but that when this plan did not work out, Taylor’s departure from Aceulmage provided defendants with the opportunity it needed to obtain the calcium scoring capability.
In addition, plaintiff claims that defendants competed unfairly against Aceulmage by making false representations about Acculmage’s products to actual and potential Aceulmage customers around the country. Given TeraRecon’s use of the look and feel of the AccuScore prоgram’s reports in its Aquarius workstation, plaintiff maintains that defendants are intentionally trying to confuse and win over Acculmage’s customers by persuading them to buy TeraRecon’s product instead. Specifically, plaintiff claims that defendants have intentionally misled existing and potential Aceulmage customers by telling them that Acculmage’s products are not FDA approved.
On October 17, 2002, Aceulmage filed a complaint alleging twelve causes of action against TeraRecon, Taylor, Saito and Boyd for: 1) false advertising in violation of the Lanham Act; 2) trade dress infringement in violation of the Lanham Act; 3) unfair competition; 4) violation of California Business and Professions Code section 17500; 5) trade secret misappropriation in violation of California Civil Code section 3426 et seq.; 6) common law misappropriation; 7) conspiracy; 8) breach of fiduciary duty; 9) breach of contract; 10) intentional interference with economic advantage; 11) negligent interference with economic advantage; and 12) unjust enrichment. Many of plaintiffs claims are brought against both TeraRecon and against Saito or Boyd in their capacity as directors, officers or shareholders of Aceulmage and TeraRecon. In the complaint, Aceulmage maintains that the conduct of TeraRecon, Taylor, Saito and Boyd has and will cause injury to Aceulmage in an amount to be proven at trial, but in excess of $3,000,000.
On December 13, 2002, Boyd filed a motion to dismiss claims five, six; seven, eight and twelve. On December 20, 2002, TeraRecon, Taylor and Saito filed a joint motion to dismiss the following claims: TeraRecon moved to dismiss claims one, two, six, seven, ten and eleven; Taylor moved to dismiss claims one, six, seven, ten and
LEGAL STANDARD
I. Motion to Dismiss
A motion to dismiss for failure to state a claim will be denied unless it appears that the plaintiff can prove no set of facts which would entitle him or her to relief.
Conley v. Gibson,
Finally, while Rule 8(f) of the Federal Rules of Civil Procedure requires a liberal reading of complaints,
Yamaguchi v. United States Dept. of the Air Force,
DISCUSSION
Each ground for dismissal will be considered in turn.
I. Claim Seven — Conspiracy
As a threshold matter, civil conspiracy is not a separate and distinct cause of action under California law.
Entm’t Research Group, Inc. v. Genesis Creative Group, Inc.,
While “[c]ivil conspiracy is not a cause of action,” it is “a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, sharе with the immediate tortfeasors a common plan or design in its perpetration.”
Applied Equip. Corp. v. Litton Saudi Arabia Ltd.,
Here, the complaint does not properly put defendants on notice of the conspiracy claims with which they are charged.
However, plaintiff cannot indiscriminately allege that conspiracies existed between and among all defendants. Given the holdings of
Black
and
Wise,
plaintiff cannot state a claim against Saito for conspiring with TeraRecon while he was acting in his official capacity.
See Black,
II. Claim One — Violation of the Lanham Act section 48(a)
Plaintiff alleges that TeraRecon and Taylor have engaged in false advertising in violation of section 43(a) of the Lanham Act. Compl. 111136-41. Defendants move to dismiss this claim because they argue plaintiff did not ahege facts with sufficient particularity to satisfy the elements of the claim.
To state a claim for false advertising under section 43(a) of the Lanham Act, plaintiff must allege that: (1) defendant made a false statement of fact in a commercial advertisement or promotion about its own or another’s product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products. Lanham Act § 43(a) (codified as amended at 15 U.S.C. § 1125(a));
see also Southland Sod Farms v. Stover Seed Co.,
The court finds that Taylor is entitled to more specific allegations of what conduct plaintiff claims is actionable as to Taylor under section 43(a) of the Lanham Act. The complaint alleges that defendants misrepresented Acculmage’s product when they “told current and potential Acculmage customers that, among other things, Acculmage’s products are not FDA approved when, in fact, they are.” Compl. 1137. Plaintiff also alleges that Taylor “made false and misleading representations ... to actual and potential Acculmage customers around the country to persuade them to purchase TeraRecon’s ... products.” Compl. H 33. The complaint does not, however, allege any facts regarding the location, timing, or content of Taylor’s allegedly false statements.
The court also finds that TeraRecon does not have sufficient notice of the corporation’s allegedly actionable conduct under this claim. Plaintiff uses the language of the stаtute to plead this cause of action but does not provide sufficient factual information about TeraRecon’s actionable conduct aside from the allegation that they misrepresented whether or not Acculmage’s product was FDA approved. See Compl. If 37. As stated above, plaintiff must make more detailed allegations to satisfy the elements of the cause of action, such as: the circumstances under which TeraRecon made false statements, how the statements entered interstate commerce, and how plaintiff has been or is likely to be damaged as a result of defendants’ false statements. Accordingly, the court grants TeraRecon’s motion to dismiss claim one with leave to amend. 2
III. Claim Two — Violation of the Lanham Act section 43(a)
Plaintiff alleges that defendant TeraRecon engaged in trade dress infringement in violation of section 43(a) of the Lanham Act. Compl. H1142-46. To state a claim for trade dress infringement, plaintiff must allege: (1) that its claimed trade dress is inherently distinctive; (2) that its claimed trade dress is nonfunctional; and (3) that defendant’s product creates a likelihood of consumer confusion.
See, e.g., Clicks Billiards, Inc. v. Sixshooters, Inc.,
Plaintiff alleges that: 1) its AccuScore program “produces a calcium scoring and diagnostic report that is that is proprietary, unique and distinctive in the medical imaging applications industry”; 2) that the “look and feel of the reports generated by AccuScore are non-functional”; and 3) that TeraRecon’s report copied the “overall ‘look and feel’ of the AccuScore report such that the report generated by TeraRecon’s Aquarius workstation is virtually indistinguishable from the AccuScore report,” which “has caused or is likely to cause customer confusion.” Compl. 111143-45.
Despite these allegations, the complaint does not sufficiently put TeraRecon on notice of the trade dress claim alleged. As it stands now, the complaint does little more than mimic the language of the statute. To state a claim for trade dress infringement, plaintiff must рlead with specificity how the AccuScore reports are unique and inherently distinctive. Plaintiff also has not plead sufficient facts for the court to determine whether the alleged trade dress is nonfunctional. Thus, plaintiff must provide more detail about the layout and appearance of the report to give the court sufficient information to determine wheth
IV. Claim Five — Misappropriation of Trade Secrets — Violation of Civil Code section 3126 et seq.
Plaintiffs fifth claim for relief alleges that all defendants misappropriated Acculmage’s trade secrets in violation of California Civil Code section 3426 et seq. Compl. UK 54-57. Only Boyd and Saito move to dismiss this claim.
To state a cause of action for misappropriation of trade secrets under the Uniform Trade Secrets Act (“UTSA”), plaintiff must plead two primary elements: (1) the existence of a trade secret, 3 and (2) misappropriation of the trade secret. See Cal. Civ.Code § 3426.1(b). Neither defendant challenges plaintiffs claim that Acculmage’s technology constitutes a “trade secret.” Instead, Boyd and Saito challenge plaintiffs claim on the grounds that their alleged conduct does not constitute “misappropriation” under the statute.
A. Saito’s Motion to Dismiss Claim Five
Saito argues that plaintiff alleged no actionable conduct on his part aside from expressing an interest in hiring a new employee and acting in his position as a corporate executive for TeraRecon.
A corporate director or officer’s status “neither immunizes • [such] person from personal liability for tortious conduct nor subjects him or her to vicarious liability for such acts.”
Frances T. v. Village Green Owners Ass’n.,
Despite plaintiffs allegations that Saito willfully conspired to misappropriate Acculmage’s trade secrets and that he expressed an interest in hiring Taylor away from Acculmage, the court holds that plaintiff fails to allege sufficient specific conduct by Saito to state a claim for statutory trade secret misappropriation. While plaintiff argues that Saito participated directly in the tortious conduct, Compl. UH21, 31, 33, 34, nowhere does the complaint sufficiently allege that Saito acted beyond his capacity as a corporate officer of TeraRecon. If plaintiff can more clearly allege actionable conduct by Saito outside the scope of his employment, the court could consider whether such conduct forms a properly plead misappropriation of trade secrets claim against him.
Saito also argues that plaintiffs conspiracy to misappropriate trade secrets claim should be dismissed because of the opera
B. Boyd’s Motion to Dismiss Claim Five
Boyd presents two arguments in support of his position that both misappropriation claims should be dismissed against him. First, Boyd argues that plaintiff has not alleged that Boyd misappropriated any confidential information. Next, Boyd argues that the misappropriation claims must fail because plaintiff does not “allege and prove that the use of disclosure of the trade secret was unauthorized or nonconsensual.”
Both plaintiff and Boyd misstate the elements needed to state a claim for misappropriation under the UTSA. The UTSA defines “misappropriation” to include two types of conduct: (1) acquisition, or (2) disclosure or use. 4 See Cal. Civ.Code § 3426.1(b). Plaintiff fails to allege that Boyd directly misappropriated trade secrets. Even if Boyd knew of TeraRecon’s misappropriation of Acculmage’s trade secrets and intentionally allowed Taylor to take his Acculmage laptop with him to his new employment, Boyd still never acquired, possessed, disclosed or used Acculmage’s trade secrets without express or implied consent. 5 See Cal. Civ.Code § 3426.1(b).
Furthermore, even if the court assumes that Boyd was “one of TeraRecon’s largest shareholders,” his status as а shareholder still does not satisfy either the possession or the disclosure or use elements of the cause of action. Corporate shareholders are ordinarily not liable for the torts of the corporation.
Wyatt,
While the court does not find that Boyd directly misappropriated Acculmage’s trade secrets, plaintiff alleges that Boyd conspired to misappropriate trade secrets. Evidence of involvement in a civil conspiracy does not always require overt action.
Mox,
Boyd cannot persuasively argue that plaintiffs conspiracy claim against him is groundless. First, the underlying tort of statutory misappropriation is still alleged against TeraRecon and Taylor. Second, plaintiff pleads facts that sufficiently implicate Boyd in an agreement to misappropriate Acculmage’s intellectual property. Finally, even if Boyd did not overtly commit the alleged wrongful acts, he can be hable as a coconspirator for misappropriation if he entered the agreement and he allowed Taylor to keep his laptop and begin new employment with TeraRecon. From this circumstantial conduct, Boyd’s involvement in the conspiracy can be inferred.
See Dimidowich,
V. Claim Six — Common Law Misappro- ' priation
Plaintiff aheges a claim for common law misappropriation based on an allegation that ah defendants misappropriated Acculmage’s “proprietary information and trade secrets.” Compl. Hlf 58-61. The court will address TeraRecon and Taylor’s argument that this common law cause of action is preempted by California’s enactment of the UTSA in 1985.
First, the court examines whether California case law resolves the preemption issue. Plaintiff states that no California case has ever held that common law misappropriation of trade secret causes of action are preempted by the UTSA. To support its position that common law misappropriation claims are not preempted, plaintiff cites one case where a lower court’s issuance of an injunction prohibiting disclosure of trade secrets on both common law and UTSA misappropriation of trade secrets claims was upheld.
See Fleishman v.Super. Ct.,
Second, the court turns to concepts of statutory interpretation to determine whether the UTSA preempts common law misappropriation of trade secrets claims. The parties argue that the language of the UTSA resolves the issue. Section 3426.7 of the UTSA provides: “[e]xcept as otherwise expressly provided, this title does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets.” Cal. Civ. Code § 3426.7. The provision also states that contractual remedies, whether based on misappropriation of a trade secret or not, are not affected by the title nor are other civil remedias [e.g., common law] that are not based upon misappropriation of a trade secret. Id. Defendants argue that this language preempts plaintiffs noncontractual and nonstatutory tradе secret tort claims for common law misappropriation. Plaintiff argues that section 3426.7 is ambiguous and that the word “preemption” appears nowhere in the text of the statute.
Only if the legislature enacts a statute intending to “cover the entire subject or ... to occupy the field” does a statute supersede the common law.
I.E. Assocs. v. Safeco Title Ins. Co.,
Here, the eleven provisions of the UTSA set forth: the definition of “misappropriation” and “trade secret,” injunctive relief for actual or threatened misappropriation, damages, attorney fees, methods for preserving the secrecy of trade secrets, the limitations period, the effect of the title on other statutes or remedies, statutory construction, severability, the application of title to acts occurring prior to the statutory date, and the application of official proceedings privilege to disclosure of trade secret information. Cal. Civ.Code §§ 3426.1-3426.11. The comprehensive structure and breadth of the UTSA provides strong evidence of legislative intent to supersede claims for common law misappropriation after the enactment of the UTSA. See also 3 Matthew Bender, California Torts § 40.50[2][a] (2002) (“With respect to trade secret misappropriations occurring after January 1, 1985, it is clear that the UTSA supercedes the common law in the areas where the UTSA has specific provisions.”).
Furthermore, in indicating what statutes and other remedies are superseded, section 3426.7 of the California Civil Code provides that the UTSA does not supersede ... (2) other civil [nonstatutory] remedies that are not based upon misappropriation of a trade secret.... The implication is that common law remedies based on misappropriation of trade secrets are superseded.
California courts, however, have been more opaque, even equivocal at times.
See, e.g., Fleishman v. Superior Court,
The California Supreme Court’s most recent pronouncement on the UTSA addressed the issue of continuing misappropriation spanning the effective date of the Act. The Court noted, in keeping with the language of section 3426.10, that if a misappropriation occurred before the effective date of the Act, but occurred again after the effective date “the claim must be divided in two... one common law claim and one UTSA claim” respectively.
Cadence Design Systems, Inc. v. Avant! Corp.,
The language of Cadence Design and the absence of other clear California authority, taken together with persuasive decisions of district courts from other states that have enacted similar versions of the UTSA finding that common law misappropriation claims are preempted in their jurisdictions, 6 persuades this court that the UTSA occupies the field in California. Plaintiffs common law misappropriation of trade secrets claim is therefore deemed superseded because the conduct at issue occurred after the enactment of the UTSA. Accordingly, plaintiffs sixth claim for relief is dismissed as to all dеfendants with prejudice.
-VI. Claim Four — Unfair Competition
Plaintiff alleges that all defendants except Boyd have engaged in unfair competition. Compl. KK 50-53. Only Saito moves to dismiss on grounds that the complaint does not state a claim against him for unfair competition.
California Business & Professions Code prohibits “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof.Code § 17200;
Cel-Tech Communications Inc. v. Los Angeles Cellular Tel. Co.,
The complaint alleges that the relevant actionable conduct by defendants was unlawful. While section 17200 has broad application,
AICCO,
As stated above in section IV(A), plaintiff fails to allege any specific unlawful conduct on the part of Saito. Plaintiffs allegation that “defendants TeraRecon, Saito, Boyd and Taylor have engaged in a combination, plan, conspiracy and concerted course of action to steal Acculmage’s trade secrets and proprietary information” and that “Saito ... knowingly and willfully conspired and agreed with Taylor, and the other employees it hired away from Acculmage to breach their agreements with Acculmage,” Compl. 1ÍK 25, 64, do not sufficiently plead actionable conduct by Saito for unfair competition.
Saito also argues that plaintiff’s conspiracy to engage in unfair competition claim should be dismissed because of thе operation of the “agent’s immunity rule.”
See Doctors’ Co.,
Given the lack of specific unlawful conduct alleged against Saito and without reaching the issue of whether the agent’s immunity rule definitively applies to sectiоn 17200, the court dismisses claim four with leave to amend. The viability of a claim against Saito for conspiracy to engage in unfair competition will turn on what if any additional facts plaintiff can allege.
VII. Claim Eight — Breach of Fiduciary Duty
Plaintiff alleges breach of fiduciary duty against Boyd and Taylor. Compl. H116771. Only Boyd moves to dismiss this claim.
To state a claim for breach of fiduciary duty, plaintiff must allege: 1) the existence of a fiduciary relationship; 2) its breach; and 3) damage proximately caused by that breach.
See, e.g., Pierce v. Lyman,
Plaintiff alleges that until March 2001, Boyd was a member of the Board of Directors of Acculmage. Compl. H 5. As a board mеmber, Boyd clearly owed a fiduciary duty to plaintiff Acculmage.
See
Cal. Corp.Code § 309;
Frances T.,
VIII. Claim Ten — Intentional Interference with Economic Advantage
TeraRecon and Taylor move to dismiss plaintiffs tenth cause of action for intentional interference with economic advantage. While the tenth claim for relief as set forth in the complaint is labeled “Intentional Interference with Economic Advantage,” the body of the claim states causes of action for two separate torts: intentional interference with contractual relations and intentional interference with prospective еconomic advantage. Compl. KK 76-81. In the interest of addressing all issues raised by the parties’ papers, the court will address both of plaintiffs intentional interference claims.
A. Plaintiff’s Intentional Interference with Contractual Relations Claim
To plead an interference with contractual relations claim, plaintiff must allege: 1) the existence of a valid contract between plaintiff and a third party; 2) the defendant’s knowledge of the contract; 3) the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; 4) actual breach or disruption of the contractual relationship; and 5) resulting damage.
Quelimane Co. v. Stewart Title,
Plaintiff makes eonclusory allegations that valid “contracts” exist between itself and an unspecified third party. See Compl. 1f 77. Absent notice to the defendants of some facts surrounding the type or nature of the “contracts” their conduct аllegedly interfered with, the court must dismiss this claim with leave to amend.
B. Plaintiff’s Intentional Interference with Economic Advantage Claim
To state a claim for intentional interference with economic advantage, plaintiff must allege: 1) an existing economic relationship or one “containing the probability of future economic benefit”; 2) knowledge by the defendant of the relationship; 3) acts by defendant designed to disrupt the relationship; 4) actual disruption of the relationship; 5) damages proximately caused by the acts of the defendant.
Della Penna v. Toyota Motor Sales, U.S.A.,
Again, the court finds that plaintiff makes eonclusory allegations that economic relationships between plaintiff and another exist that “cоntain[] a probable
Furthermore, plaintiff fails to allege wrongful conduct on behalf of defendants to satisfy the elements of the tort. Given the court’s dismissal of plaintiffs Lanham Act claim for false advertising with leave to amend, plaintiff has not demonstrated that defendants were engaging in wrongful conduct. To successfully bring this claim, plaintiff must allege specific wrongful acts that defendant committed that gave rise to the interference with plaintiffs alleged economic relationships. Therefore, the court grants defendants’ motion to dismiss claim ten with leave to amend.
IX. Claim Eleven — Negligent Interference with Economic Advantage
Plaintiff brings a cause of action for negligent interference with economic advantage against TeraRecon and Taylor. Both defendants move to dismiss this claim. To state a claim for negligent interference with economic advantage, plaintiff must allege defendant owed plaintiff a duty of care in addition to the elements required to state a cause of action for intentional interference with economic advantage. J'A
ire Corp. v. Gregory,
As stated above, plaintiff fails to satisfy the underlying elements of an interference with economic advantage claim.
Plaintiff also fails to allege that either TeraRecon or Taylor owed a duty to plaintiff that would invoke this kind of tort claim. Plaintiff claims that TeraRecon has a duty to Acculmage because the two companies compete against each other and competitors generally have a duty not to engage in unfair competition.
See PMC,
^ Plaintiff also alleges that Taylor owed a duty to plaintiff in support of its negligent interference with economic advantage claim.
See J'Aire,
Finally, the court fails to understand what aspects of defendants’ alleged conduct was negligent. The complaint is rife with allegations of intentional, not negligent, conduct. Thus, the court believes that a jury could not find that defendants negligently interfered with plaintiffs economic relationships. For the reasons stated above and in the absence of allegations of negligent conduct, the court dismisses claim eleven with leave to amend.
X. Claim Twelve — Unjust Enrichment
Plaintiff alleges that all defendants have “received revenues and saved costs which they would not otherwise have received and saved” but for the misuse оf Acculmáge’s trade secrets or proprietary information. Compl. UK 87-91. Only Saito and Boyd move tb dismiss this claim.
To state a claim for unjust enrichment, plaintiff must allege: 1) receipt of a benefit, and 2) unjust retention of the benefit at the expense of another.
Lectrodryer v. SeoulBank,
A. Saito’s Motion to Dismiss Claim Twelve
Plaintiff fails to allege sufficient facts .to support an unjust enrichment claim against Saito. The allegation that Saito received a benefit because of his position either as an officer or shareholder of TeraRecon does not satisfy pleading requirements. Furthermore, the additional facts that plaintiff includes in its opposition, suсh as the allegation that “[a]ny benefit to TeraRecon’s bottom line as a result of defendants’ tortious activity will surely inure to Saito’s individual benefit,” do not state a valid claim because plaintiff fails to allege any specific facts regarding the amount of benefit that Saito received or any detail, of the circumstances surrounding Saito’s actual receipt of the benefit.
Similarly, plaintiffs sweeping allegation that Saito as a TeraRecon shareholder received a benefit because of his alleged ownership interest in the corporation fads to state a claim for unjust enrichment. Therefore, the court dismisses claim twelve as to Saito with leave to amend.
B. Boyd’s Motion to Dismiss Claim Twelve
Plaintiffs allegation that Boyd was unjustly enriched in his position as a TeraRecon shareholder and as a member of Acculmage’s Board of Directors also fails to meet pleading requirements. Even if the court assumes that Boyd was “one of TeraRecon’s largest shareholders,” plaintiff fails to allege facts establishing that Boyd received a benefit from the alleged wrongful conduct. Indeed, plaintiff does not allege that Boyd sold his stock holdings or personally received a benefit at plaintiffs expense. Nor does plaintiff explain why the court should hold both TeraRecon and its shareholders liable for the benefit the defendant corporation allegedly received by misappropriating plaintiffs trade secrets. If TeraRecon is eventually forced to disgorge the unjust benefit the corporation received, any benefit that
CONCLUSION
The court would have been less rigorous in the disposition of these claims had plaintiff been more selective in its pleadings. Defendants simply do not have sufficient notice of the basis for many of the claims against them. Contrary to plaintiffs view, the court holds that discovery is not the appropriate time to ascertain whether such fundamental facts indeed exist.
For the foregoing reasons, the court: 1) GRANTS with prejudice defendants’ motions to dismiss claim six and claim seven against all defendants; 2) GRANTS with leave to amend defendants’ motions to dismiss claim one against TeraRecon and Taylor, claim two against TeraRecon, claim four against Saito, claim five against Saito, claim ten against TeraRecon and Taylor, claim eleven against TeraRecon and Taylor, and claim twelve against Boyd and Saito; and 3) DENIES defendants’ motions to dismiss claim five against Boyd, and claim eight against Boyd.
IT IS SO ORDERED.
Notes
. All facts in this section are contained in the complaint, unless otherwise cited.
. TeraRecon also argues that plaintiff fails to satisfy the “commercial advertisement or promotion” prong within the first element of a false advertising claim. The Ninth Circuit has held that statements satisfy this рrong if they are: (1) commercial speech; (2) made by a defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to buy defendant's goods or services; and (4) made either in a “classic advertising campaign” or are more informal types .of “promotion” that are “disseminated sufficiently to the relevant purchasing public to constitute 'advertising' or 'promotion' within that industry.”
Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co.,
. The UTSA defines the term "trade secret" as: information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosurе or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Cal. Civ.Code § 3426.1(d).
. Under section 3426.1(b) of the UTSA, "misappropriation” means:
(1) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(2) disclosure or use of a trade secret of another without express or implied consent by a person who:
(A) used improper means to acquire knowledge of the trade secret; or
(B) at the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:
(i) derived from or through a person who had utilized improper means to acquire it;
(ii) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(iii) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
(C) before a material change of his or hеr position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
. In determining what constitutes "use” and “disclosure” of trade secrets in the context of misappropriation, courts have held that mere possession of trade secrets is not sufficient to satisfy this element of the cause of action.
See Gibson-Homans Co. v. Wall-Tite, Inc.,
.
Learning Curve Toys, L.P. v. Playwood Toys, Inc.,
. The California Supreme Court has not defined the conduct that would be deemed wrongful within the meaning of this tort. Justice Mosk suggests, however, that conduct may be wrongful if it is independently tortious or restrains trade.
See Della Penna,