This case was last updated from Los Angeles County Superior Courts on 07/02/2019 at 08:37:57 (UTC).

ROYAL HOME HEALTHCARE AGENCY VS NOHO HOME HEALTH CARE ET AL.

Case Summary

On 01/04/2016 ROYAL HOME HEALTHCARE AGENCY filed a Contract - Business lawsuit against NOHO HOME HEALTH CARE. This case was filed in Los Angeles County Superior Courts, Burbank Courthouse located in Los Angeles, California. The Judges overseeing this case are RALPH C. HOFER and LAURA A. MATZ. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****4532

  • Filing Date:

    01/04/2016

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Business

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Burbank Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

RALPH C. HOFER

LAURA A. MATZ

 

Party Details

Plaintiff and Cross Defendant

ROYAL HOME HEALTHCARE AGENCY INC.

Claimant

ATLAS GENERAL INSURANCE SERVICES INC.

Defendants, Cross Plaintiffs and Cross Defendants

HERNANDEZ ELIZABETH

NOHO HOME HEALTH CARE INC.

GONZALES REMIL CHARMAINE

ASLANOVA BELLA

MECHAB INC.

ROYAL HOME HEALTHCARE AGENCY INC.

CHRISTOPHER CHEN

CHRISTINA KHAMSY

GONZALEZ REMIL CHARMAINE

KHAMSY CHRISTINA

CHEN CHRISTOPHER

Attorney/Law Firm Details

Cross Defendant and Plaintiff Attorneys

LAW OFFICE OF DAVID PHILIPSON

WAKEFIELD DANIELLE KATRIN JR

Claimant Attorney

HATKOFF BRUCE A. A LAW CORPORATION

Defendant and Cross Plaintiff Attorneys

WEGMAN LEVIN & STANLEY

NAZARETIAN & BESNILIAN

WEGMAN & LEVIN

LEVIN MICHAEL MOSHE

BUXTON MICHELLE LEE

WAKEFIELD LAW FIRM

CARROLL KELLY TROTTER FRANZEN & MCKENNA

 

Court Documents

Request for Judicial Notice

6/7/2019: Request for Judicial Notice

Motion to Compel Discovery

6/7/2019: Motion to Compel Discovery

Civil Case Cover Sheet

1/4/2016: Civil Case Cover Sheet

Legacy Document

4/26/2016: Legacy Document

Case Management Statement

5/12/2016: Case Management Statement

Legacy Document

4/20/2018: Legacy Document

Minute Order

5/2/2018: Minute Order

Legacy Document

5/2/2018: Legacy Document

Legacy Document

5/25/2018: Legacy Document

Legacy Document

7/20/2018: Legacy Document

Legacy Document

7/25/2018: Legacy Document

Other -

9/14/2018: Other -

Stipulation and Order

11/2/2018: Stipulation and Order

Request for Judicial Notice

12/12/2018: Request for Judicial Notice

Request for Judicial Notice

1/28/2019: Request for Judicial Notice

Opposition

3/11/2019: Opposition

Notice

3/12/2019: Notice

Minute Order

3/29/2019: Minute Order

220 More Documents Available

 

Docket Entries

  • 06/25/2019
  • at 08:30 AM in Department D; Hearing on Ex Parte Application (to Continue the Hearing Dates for Plaintiff Royal Health Homecare Agency, Inc's Motion to Compel Remil Charmaine Gonzales to Answer Deposition Questions and Request for Monetary Sanctions, & Defendant/Cross-Deft Remil Charmaine Gonzales' MSJ/MSA) - Held - Motion Granted

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  • 06/25/2019
  • Notice of Ruling; Filed by Remil Charmaine Gonzalez Erroneously Sued As Remil Charmaine Gonzales (Defendant)

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  • 06/25/2019
  • Minute Order ( (Hearing on Ex Parte Application to Continue the Hearing Dates...)); Filed by Clerk

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  • 06/25/2019
  • Order (GRANTING DEFENDANT'S UNOPPOSED EX PARTE APPLICATION); Filed by Clerk

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  • 06/24/2019
  • Ex Parte Application (to continue hearings); Filed by Remil Charmaine Gonzalez Erroneously Sued As Remil Charmaine Gonzales (Defendant)

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  • 06/21/2019
  • Opposition (to Plaintiff's Motion to Compel Answers); Filed by Remil Charmaine Gonzalez Erroneously Sued As Remil Charmaine Gonzales (Defendant)

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  • 06/20/2019
  • at 08:30 AM in Department D; Post-Mediation Status Conference - Not Held - Continued - Court's Motion

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  • 06/17/2019
  • at 09:00 AM in Department D; Jury Trial

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  • 06/12/2019
  • Notice (Notice of Unavailability); Filed by Remil Charmaine Gonzalez Erroneously Sued As Remil Charmaine Gonzales (Defendant)

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  • 06/07/2019
  • Motion to Compel Discovery (not Further Discovery) - 1 moving party, 1 motion; Filed by ROYAL HOME HEALTHCARE AGENCY, INC. (Plaintiff)

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399 More Docket Entries
  • 01/04/2016
  • Summons; Filed by ROYAL HOME HEALTHCARE AGENCY, INC. (Plaintiff)

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  • 01/04/2016
  • Notice of Case Management Conference

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  • 01/04/2016
  • Notice (of Order to Show Cause); Filed by ROYAL HOME HEALTHCARE AGENCY, INC. (Plaintiff)

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  • 01/04/2016
  • Notice of Case Reassignment and Order for Plaintiff to Give Notice

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  • 01/04/2016
  • Civil Case Cover Sheet; Filed by ROYAL HOME HEALTHCARE AGENCY, INC. (Plaintiff)

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  • 01/04/2016
  • Summons Filed; Filed by Attorney for Plaintiff

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  • 01/04/2016
  • Complaint filed-Summons Issued (- VERIFIED COMPLAINT FOR DAMAGES, TEMPORARY RESTRAINING ORDER, AND PRELIMINARY & PERMANENT INJUNCTIONS FOR: 1. VIOLATION OF THE FEDERAL... - RECEIPT: GLN538418004 01-04-16); Filed by Attorney for Plaintiff

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  • 01/04/2016
  • Complaint filed-Summons Issued; Filed by ROYAL HOME HEALTHCARE AGENCY, INC. (Plaintiff)

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  • 03/22/2010
  • at 08:30 AM in Department D; (Order to Show Cause; Status Conference Held) -

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  • 03/22/2010
  • at 08:30 am in Department NCGD, Ralph C. Hofer, Presiding; Order to Show Cause (- FAILURE TO COMPLY WITH TRIAL COURT DELAY REDUCTION ACT) - Status Conference Held

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Tentative Rulings

Case Number: EC064532    Hearing Date: August 14, 2020    Dept: NCD

TENTATIVE RULING

Calendar: 20

Date: 8/14/20

Case Number: EC 064532 Trial date: None Set

Case Name: Royal Home Healthcare Agency, Inc. v. Noho Home Health Care Inc., et al.

[Continued from 7/31/2020 calendar for oral arguments only]

MOTION FOR SUMMARY JUDGMENT

(OR, in the Alternative, Summary Adjudication)

[CCP § 437c; CRC 3.1350 et seq.]

Moving Party: Defendant Remil Charmaine Gonzales

Responding Party: Plaintiff Royal Home Healthcare Agency, Inc.

Relief Requested:

Summary judgment in favor of defendant Remil Charmaine Gonzales

In the alternative, summary adjudication of each cause of action

Causes of Action from Second Amended Complaint

1) Violation of the Federal Computer Fraud and Abuse Act

2) Violations of the Computer Data Access and Fraud Act

3) Tortuous (sic) Interference with Contractual Relations

4) Intentional Interference with Prospective Economic Advantage

5) Misappropriation of Trade Secrets—Statutory

6) Misappropriation of Trade Secrets—Common aw

7) Conspiracy

8) Breach of Fiduciary Duty

SUMMARY OF COMPLAINT:

Plaintiff Royal Home Healthcare Agency, Inc. alleges that its former employee, defendant Remil Charmaine Gonzales, used her access to plaintiff’s information to illegally steal plaintiff’s client and employee lists for the benefit of defendant NoHo Home Health Care, Inc., and its owner, defendant Bella Aslanova. It is also alleged that Gonzales intentionally allowed plaintiff’s current roster of patients’ medical authorizations to lapse without seeking renewals, and then failed to respond to requests for access to all of her billing sites’ usernames and passwords, so that without those usernames and passwords, plaintiff was unable to bill for services provided or obtain treatment authorization requests, resulting in delayed payments for services. The complaint alleges a series of misdeeds and false statements, including failing to submit required documentation so that plaintiff’s license with the Regional Center of Orange County expired. It is also alleged that it has since been discovered that defendant Elizabeth Hernandez, another former employee, had been supplying information to aid Gonzales’ conduct, and then became an employee of defendant NoHo. It is alleged that plaintiff has received numerous Transfer of Service Agreements notifications from defendant NoHo pursuant to which patients wrongfully discharged from care by Gonzales while working for plaintiff, are now receiving home health care services from Noho, and that other of plaintiff’s patients are now being serviced by NoHo, Gonzales and Hernandez.

Defendants NoHo Home Health Care, Inc. and Bella Aslanova have filed a cross-complaint for indemnity and contribution against Gonzales, Hernandez, and cross-defendant Mechab, Inc. alleging that if

cross-complainants are held responsible to plaintiff for damages in connection with the complaint, it will be solely due to the conduct of cross-defendants, entitling cross-complainants to indemnity and contribution.

Gonzales has filed a cross-complaint against Royal Home Healthcare Agency and its administrator, cross-defendant Christopher Chen, alleging that cross-defendants have wrongfully made malicious and false statements to their employees, agents and patients regarding cross-complainant Gonzales and her character in order to damage her reputation and career. The cross-complaint alleges causes of action for slander per se, defamation, negligence, and IIED.

ANALYSIS:

CCP § 437c (p): Burdens of Proof

Under CCP § 437c(p)(2) a defendant “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant... has met that burden, the burden shifts to the plaintiff... to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”

CCP § 437c(f)(1) provides that “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”

Defendant Remil Charmaine Gonzales seeks to establish that plaintiff will be unable to establish one or more elements of each cause of action alleged in the operative complaint.

ISSUE 1: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE FEDERAL COMPUTER FRAUD AND ABUSE CAUSE OF ACTION

ISSUE 2: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE VIOLATION OF THE COMPUTER DATA ACCESS AND FRAUD ACT CAUSE OF ACTION

The first cause of action for violation of the federal Computer Fraud and Abuse Act (“CFAA”) is based on 18 U.S.C. 1030, which provides, in pertinent part:

“(a) Whoever--….

(4) knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and the value of such use is not more than $5,000 in any 1-year period;

(5)…

(C) intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage and loss….

shall be punished as provided in subsection (c) of this section.”

With respect to the second cause of action for violation of the Computer Data Access and Fraud Act (“CDAFA”), Penal Code section 502, it does not appear to be disputed that courts have found the “necessary elements of Section 502 do not differ materially from the necessary elements of the CFAA….” NovelPoster v. Javitch Canfield Group (USDC N.D. Cal. 2014) 140 F.Supp. 3d 938, 950, quotation, citations omitted).

Defendant Gonzales argues that plaintiff Royal will be unable to show that the any access to the computer system by Gonzales was not authorized, as defendant only accessed plaintiff’s computers for purposes of providing billing services at the request of plaintiff. Defendant relies on LVRC Holdings LLC v. Brekka (9th Cir. 2009) 581 F.3d 1127, in which the Ninth Circuit affirmed a district court order granting a former employee’s motion for summary judgment, finding that the former employee did not access a computer “without authorization” in violation of 1030 by emailing documents to himself prior to leaving his employment.

However, as pointed out in the opposition, in that case, the Ninth Circuit expressly stated in that case that. “There is no dispute that if [employee] accessed…information on the [employer’s] website after he left the company…, [employee]would have accessed a protected computer ‘without authorization’ for purposes of the CFAA.” LVRC Holdings, at 1136.

The evidence submitted by defendant here shows that defendant accessed the computer system after defendant left her employment. [UMF No. 8, and evidence cited]. Moreover, the opposition submits evidence that would support a reasonable inference that defendant engaged in use of the computer system, both before and after her formal leaving of employment with plaintiff, which could be found to have been without authorization, but for her own benefit, or the benefit of Noho, her other employer. [See Response to UMF Nos. 7,8, and evidence cited, Additional Facts Nos. 19, 20, 28-30, and evidence cited]. There is also evidence submitted showing that Gonzales did not provide Royal with her passwords or login information to various critical websites, disrupting Royal’s access to the services from those websites. [Additional Fact No. 39, and evidence cited]. The reply does not further argue that summary adjudication of these causes of action is appropriate on this ground.

Defendant Gonzales also argues that plaintiff Royal will be unable to establish that any alleged violations of the subject computer acts resulted in any interruption in service, or required restoration of the data system, or any other loss which is addressed by the subject acts.

18 U.S.C. 1030 (e) provides definitions for the terms used in subdivision (a). The moving papers rely on the definition set forth in subdivision (11):

“(11) the term “loss” means any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service.”

Although not cited in the moving papers, subdivision (8) defines “damage:”

“(8) the term “damage” means any impairment to the integrity or availability of data, a program, a system, or information.”

As noted above, under subdivision (a)(5), liability may be based on unauthorized access which “causes damage and loss.” The moving papers argue that to recover under the Act, plaintiff must identify some impairment or damage to the computer system resulting from unauthorized access.

This argument appears incomplete, since it is alleged that there was impairment to the availability of a system or information, and, as discussed above, even if the burden had been met, it would appear triable issues of fact have been raised with respect to the argument that Gonzales did not provide Royal with her passwords or login information to various critical websites, disrupting Royal’s access to the services from those websites. [Additional Fact No. 39, and evidence cited].

Defendant relies on AtPac, Inc. v. Aptitude Solutions, Inc. (USDC E.D. Cal. 2010) 730 F.Supp.2d 1174, in which the district court granted a motion to dismiss a cause of action for violation of the CFAA for failure to state a claim, where the allegations were that defendants had breached a license agreement and engaged violated the Act by accessing and giving a competitor of plaintiff’s access to drives on its server which contained trade secrets. The district court analyzed the statutory language in connection with the criminal nature of the statute and its intent to address computer hacking, stating:

“Plaintiff's failure to adequately plead “loss” under the CFAA provides an alternate ground for dismissal of plaintiff's CFAA claim. The CFAA is primarily a criminal statute that prohibits the intentional and knowing unauthorized accessing of computers to obtain information or anything of value or to cause damage. Under subsection (g), only persons harmed in certain ways by violations of the CFAA can bring a civil action. The CFAA provides that:

Any person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief. A civil action for a violation of this section may be brought only if the conduct involves 1 of the factors set forth in subclauses (I), (II), (III), (IV), or (V) of subsection (c)(4)(A)(i). Damages for a violation involving only conduct described in subsection (c)(4)(A)(i)(I) are limited to economic damages....

18 U.S.C. § 1030(g).

The relevant factors listed in subsection (c)(4)(A)(i) are:

(I) loss to 1 or more persons during any 1–year period (and, for purposes of an investigation, prosecution, or other proceeding brought by the United States only, loss resulting from a related course of conduct affecting 1 or more other protected computers) aggregating at least $5,000 in value;

(II) the modification or impairment, or potential modification or impairment, of the medical examination, diagnosis, treatment, or care of 1 or more individuals;

(III) physical injury to any person;

(IV) a threat to public health or safety;

(V) damage affecting a computer used by or for an entity of the United States Government in furtherance of the administration of justice, national defense, or national security; or

... [irrelevant]

18 U.S.C. § 1030(c)(4)(A)(i).

On the face of plaintiff's FAC, only the first factor could possibly apply. “Loss” is defined in the statute as:

any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service ....

18 U.S.C. § 1030(e)(11).

“Loss,” therefore, means two things: “any reasonable cost to the victim” and lost revenue or other damages incurred as a result of an interruption of service.

To allege a loss under the CFAA, “plaintiffs must identify impairment of or damage to the computer system that was accessed without authorization.” Doyle v. Taylor,  (citing cases and holding that where plaintiff alleged defendant accessed his USB thumb drive and retrieved a sealed document, “[p]laintiff would have to show that the thumb drive itself was somehow damaged or impaired by Defendant's act of accessing the drive”). Cognizable costs

also include “the costs associated with assessing a hacked system for damage[and] upgrading a system's defenses to prevent future unauthorized access.” Id.  see SuccessFactors, Inc. v. Softscape, Inc.,  ( “[W]here the offense involves unauthorized access and the use of protected information .... the cost of discovering the identity of the offender or the method by which the offender accessed the protected information [is] part of the loss for purposes of the CFAA.”).

To allege a loss of revenue, the loss must result from the unauthorized server breach itself. See Therapeutic Res. Faculty v. NBTY, Inc.,  (loss sufficiently alleged where defendant breached $100 single-user license agreement for plaintiff's medical publication subscription service by sharing username and passcode with employees, where corporate subscription would cost $40,000); SKF USA, Inc. v. Bjerkness,  (holding that former employees' unauthorized transfer of confidential files and trade secrets to thumb drives which were brought to new employer and eventually resulted in lost business to plaintiff did not constitute a “loss” under the CFAA to support a civil action) (“Purely economic harm unrelated to the computer systems is not covered by this definition.”).

Congress' restricting of civil actions to cases that cause the types of harm listed in 18 U.S.C. § 1030(c)(4)(A)(i) subsections (I) through (V) reemphasizes the court's conclusion that the sort of conduct alleged against Nevada County does not fall under the CFAA's prohibitions. “Loss” is grouped along with the harms of physical injury, threat to public health and safety, impairment of medical diagnosis or treatment, and damage to federal government computers that deal with national security and defense. It is no surprise that courts interpreting the definition of “loss” sufficient to bring a civil action have done so narrowly given the company that subsection (I) keeps. The definition of “loss” itself makes clear Congress's intent to restrict civil actions under subsection (I) to the traditional computer “hacker” scenario—where the hacker deletes information, infects computers, or crashes networks. See 18 U.S.C. § 1030(e)(11) (enumerating legitimate “costs” in terms of computer damage).”

AtPac, at 1183-1185.

The district court then applied this analysis to the case before it and concluded the subject pleading did not sufficiently allege loss:

“Plaintiff does not allege any facts that indicate that it incurred costs to update its server security protocols or otherwise analyze the circumstances of the unauthorized server access. Rather, plaintiff's fourth cause of action alleges that defendants “obtained something of value exceeding $5,000 in a single calendar year,” and contains the conclusory allegations that plaintiff has been damaged and that it has suffered immediate and irreparable harm. (FAC ¶¶ 84, 87–88.) Because plaintiff has not alleged that it incurred any costs or experienced lost revenue as a direct result of defendants' unauthorized server access, they have not alleged to have suffered a “loss” under the CFAA. Defendants' motion to dismiss will therefore be granted in its entirety.”

AtPac, at 1185.

The AtPac case is not binding on the court, but it includes a reasoned analysis of the issue which suggests that the loss to be redressed in such causes of action would not include the loss of business which was diverted to Noho by virtue of the alleged violations.

Again, it is not clear that in this situation, where there was an impairment of access by failure to provide passwords after the fact, leading to repeated efforts to have to obtain those passwords, that this cause of action cannot be appropriately established, as there appears to have been a direct effect on the computer system access,

recognized damage under the statute for which there was loss. The court could find that the initial burden on

this theory has not been met because there is evidence submitted that there was no damage to the computer systems (See UMF No. 9 and evidence cited), but the court makes no such finding on the state of this record.

Instead, the court does find that defendant has met her initial burden on this entire issue, as defendant relies on evidence that during deposition, plaintiff’s owner, sole shareholder, officer and director, Christopher Chen, testified that he had no information to support his computer fraud causes of action, and that another employee of plaintiff, Christina Khamsy, testified there was no damage to plaintiff’s computer hardware or software. [UMF Nos. 10, 11, and evidence cited]. This evidence is actually undisputed in the separate statement. [See Response to UMF Nos. 10, 11].

This evidence is sufficient to establish that plaintiff cannot establish recoverable damages permitted under the Acts. The court finds that the burden on this issue on all theories has shifted. As such, the only evidence of damages offered here in response to this showing consist of evidence purporting to show a decline in profits and loss of revenue. [See Additional Fact No. 45, and evidence cited]. The evidence submitted consists of documents prepared purporting to show the projected amount of money which would have been paid for each patient which transferred to defendant Noho had the patient not transferred. [See Exs. 13, 14]. There is no component of this showing which would implicate any expense with respect to the computer system.

Accordingly, the court finds that the burden has shifted, and also finds that the opposition has failed to raise triable issues of fact in the opposition, in effect, that plaintiff has failed to come forward with facts supporting damage or loss related to the computer system or any costs or expenses incurred to address the alleged violations, only expenses related to the alleged damages from the alleged misappropriation and use of trade secrets which eventually resulted in lost business to plaintiff, in effect purely economic harm unrelated to the computer systems. The motion appropriately is granted as to these causes of action.

ISSUE 3: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE TORTUOUS INTERFERENCE WITH CONTRACTUAL RELATIONS CAUSE OF ACTION BECAUSE PLAINTIFF DID NOT HAVE A VALID ENFORCEABLE CONTRACT WITH ITS PATIENTS OR NURSING STAFF

Defendant Gonzales argues that this cause of action cannot be established because plaintiff did not have valid enforceable contracts with its patients and nursing staff, because the patients were permitted to transfer services at any time, and the nursing staff consisted of independent contractors that were permitted to work for other home health agencies.

With respect to the claim for intentional interference with contract, to establish such a claim, plaintiff must establish the following elements:

“The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) 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.”

Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126, citations omitted.

Defendant also argues that plaintiff will be unable to establish an interference with respect to plaintiff’s license with the Regional Center of Orange County being permitted to expire.

With respect to this issue, defendant seems to argue that plaintiff is unable to provide evidence that Gonzales received the initial notice from RCOC. [UMF No. 17, and evidence cited]. The showing is

essentially that plaintiff had reason to believe Gonzales would take care of the renewal, as it was her

responsibility and she had always done so before, but that plaintiff has no direct evidence that Gonzales received the initial notice, and the second notice was dated after Gonzales had left.

The opposition submits deposition testimony of Gonzales in which she indicates that if the license was expiring she would typically bring it to the attention of Chen. [Ex. 18, Gonzales Depo. p. 69]. Plaintiff also submits Chen’s declaration in which he states that Gonzales was responsible for maintaining the updated license information with the local regional centers that provided patient referrals, and that she did not personally let Chen know the license was up for renewal in 2015. [Response to UMF No. 17, and evidence cited; Chen Decl. para. 10; See also Khamsky Decl., para. 18]. The timing of this oversight around the time Gonzales was resigning under unhappy circumstances, and otherwise directing patients from plaintiff to Noho, would appear to provide circumstantial evidence that Gonzales was not acting in the best interests of plaintiff at the time on many fronts, as she was also at the time, for example, inputting information terminating certain patients from the services at plaintiff for reasons that later turned out to be inaccurate, possibly in order to avoid alerting plaintiff to the transfers by requiring a discharge protocol, and was also permitting authorizations for treatment to lapse for those select patients. [Additional Facts Nos. 13, 16, 17, 20, 24, 25, 29, 30, 38, and evidence cited]. The evidence supports a reasonable inference that Gonzales received notice, but chose not to inform anyone at Royal about the impending expiration of the license, in a deliberate attempt to interfere with the continued licensing agreement with the RCOC. The motion as to this cause of action is accordingly denied.

ISSUE 4: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS CAUSE OF ACTION

To establish a claim for intentional interference with prospective economic advantage, the following elements are required to be proven:

“Intentional interference with prospective economic advantage has five elements: (1) the existence, between the plaintiff and some third party, of an economic relationship that contains the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant's action.

Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512, citation omitted.

Defendant Gonzalez argues that plaintiff has no evidence that Gonzales did anything improper to interfere with the relationships with plaintiff’s patients, or plaintiff’s nurses, or engaged in any activity which was wrongful beyond the fact of the interference itself. Defendant argues that there has been no evidence from plaintiff in this matter showing that defendant solicited plaintiff Royal’s patients’ parents or the nurses. [UMF No. 29, 32]. The evidence submitted to support this fact includes responses to discovery where the actual discovery requests are not submitted, which is confusing. [Id.].

Under Della Penna v. Toyota Motor Sales (1995) 11 Cal.4th 376, to support a cause of action for intentional interference with prospective economic advantage, a plaintiff “has the burden of pleading and proving that the defendant’s interference was wrongful by some measure beyond the fact of the interference itself.” Della Penna, at 392-393.

An act is considered independently wrongful “if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544-1545.

The opposition argues that there is evidence in this case that defendant Gonzales assisted Noho in obtaining the ability to take Medi-Cal patients while she was still employed by Royal, then orchestrated the

transfer of twelve Medi-cal patients of Royal’s to Noho, and that each of those patients’ respective nurses then

left their positions with plaintiff, all within days of one another, and that this could not have been merely coincidental. Plaintiff seems to argue that while there is no direct evidence of improper solicitation, there would rarely be such direct evidence in such a case, and that the circumstances here would support a finding that there was conduct beyond merely informing parties of defendant’s change in employment.

The opposition relies on Reeves v. Hanlon (2004) 33 Cal. 4th 1140, in which the California Supreme Court held that a plaintiff may recover damages for intentional interference with an at-will employment relationship. Reeves, at 1152. The opposition includes evidence which not only details the circumstances under which the exodus to Noho of numerous nurses occurred, but also includes evidence that Chen had a conversation with a former patient’s parent, in which it was disclosed that the patient transferred to Noho because the nurse was transferring there, and that one of those nurses, Hershey Mendoza, was directly asked by Gonzales to transfer to Noho. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111]. There is also evidence that background checks for those nurses were requested by Hernandez while Gonzales was still employed at Royal, from a Royal computer, and the nurses were hired by Gonzales during that time period. [Additional Fact No. 37, and evidence cited; Ex. 9].

This is sufficient to raise triable issues of fact with respect to whether there was improper solicitation of the nurses engaged in by Gonzales, and interference with the use of proprietary information concerning specific patients and their needs, and interference while misusing the resources of Royal. The motion on this issue is denied.

ISSUE 5: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 6: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 7: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—COMMON LAW

It is not clear why two identical causes of action are stated in connection with the statutory trade secrets claim.

In any case, defendant makes the same argument in connection with the trade secret causes of action; that plaintiff cannot establish that there was any solicitation of patients or independent contractor nurses here because merely informing customers of one’s former employer of a change in employment, without more, is not solicitation. Aetna Building Maintenance Co. v. Sacks (1952) 39 Cal.2d 198, 204.

The argument is that Gonzales went no further than informing patients and nurses where she would be taking on new employment, and plaintiff has no direct evidence otherwise.

With respect to trade secrets, under Evidence Code section 1060,

“The owner of a trade secret has a privilege to refuse to disclose the secret, and to prevent another from disclosing it, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.”

Customer lists have been held to be protectable as trade secrets. Courtesy Temporary Service v. Camacho (1990) 222 Cal.App.3d 1278.

Under Civil Code § 3426.1(b), “misappropriation” of a trade secret is defined to include, “(2) Disclosure or use of a trade secret of another without express or implied consent by a person who: …(B) At the time of the

disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:…(ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use….”

It is recognized that “Generally the law of unfair competition prohibits former employees from disclosing or misusing an employer’s trade secrets and confidential information—even in the absence of contractual restrictions.” Loral Corp. v. Moyes (1985) 174 Cal.App.3d 268, 275.

Defendant relies on Hangar Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc. (2008 USDC E.D. Cal.) 556 F.Supp.2d 1122, a federal district court found that plaintiff had raised genuine issues of material fact sufficient to defeat a motion for summary judgment in connection with alleged violation of the California Uniform Trade Act, finding that patient customer data could be reasonably found by a trier of fact to constitute trade secrets, which had been misappropriated, observing,

“patient files include prescriptions/referral source information, treatment records, addresses, etc. and the electronic Orthotics Prosthetics System (OPS) contains patient information, and referral source information…. In addition, Hanger's patient files have economic value because their “disclosure would allow a competitor to direct its sales efforts to those customers who have already shown a willingness to use a unique type of service or product as opposed to a list of people who only might be interested” and Hanger took reasonable steps to protect this information. Morlife, Inc., 56 Cal.App.4th at 1522, 66 Cal.Rptr.2d 731where

Hangar Prosthetics, at 1135.

The alleged trade secret here is similar to that involved in Hangar.

The opposition again relies on evidence suggesting that the conduct of Gonzales went beyond merely informing patients’ parents and nursing staff where she would be newly employed. Specifically, there is evidence submitted that as an employee of Royal, Gonzales signed a confidentiality statement preventing disclosure of patient information, and that after requests for raises which resulted in only a modest $5 per hour raise, and other disputes with Royal, Gonzalez became disgruntled with her employment with Royal. [Additional Facts Nos. 10-13, and evidence cited]. Gonzales, in October of 2015, began working for Noho while also working for Royal, without disclosing this circumstance to Royal, and during the period from October through November 30, 2015 continued to have access to her computer at Royal, and its patient list and the patients’ medical files. [Additional Facts Nos. 14-17, 19]. During that period, Gonzales worked, partly from her Royal computer, to assist Noho to reinstate its Medi-Cal pin so that it could provide nursing to Medi-Cal patients. [Additional Fact No. 21-23]. Once Noho’s Medi-Cal pin was reinstated, at the end of October, beginning of November 2015, Noho began providing shift care to 12 of 13 patients of Royal’s who were Medi-Cal patients. [Response to UMF Nos. 22, 23; Additional Fact No. 24, and evidence cited]. All of those patients transferred from Royal to Noho on either November 1, 2015 or November 2, 2015, the same time period when nurses also transferred. [Additional Facts Nos. 25, 33, and evidence cited].

Also during the period while Gonzales was working at Royal and also with Noho, there is evidence that she personally handled the paperwork discharging the twelve patients to Noho’s care, and failed to inform Royal, when the result of the patients being discharged rather than transferred was that Royal would not be alerted to the transfers, until a much later time. [Additional Fact Nos. 26-29]. Significantly, the opposition submits evidence that the reasons some patients were being transferred as represented on the discharge paperwork were false. [Additional Fact No. 30, and evidence cited]. For example, it was represented by Gonzales that one patient was deceased, so that no home care was needed, and that one patient had moved to a different state, when, in fact, the patients were transferred to Noho. [Id.; See also Tan Decl. paras. 11-13].

Also, during this period, there is evidence that Gonzales was responsible for renewing treatment authorization from Medi-Cal patients, but failed to do so, and affirmatively represented to Chen that the

authorization requests had been taken care of. [Additional Fact No. 38, and evidence cited]. There is also evidence that the hard copy medical plans of care for each of the patients transferred went missing from the files until late December 2015. [Additional Fact No. 31, and evidence cited]. Finally, as discussed above, there is evidence that would support a reasonable conclusion that there was solicitation beyond Gonzales just informing persons of her new employment. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111].

The circumstances support a reasonable inference that Gonzales relied on patient records to identify those patients who were Medi-Cal eligible in order to deliver them to Noho, and in order to target the nurses who worked with those patients to deliver them to Noho as well. Triable issues of fact have been raised and the motion is accordingly denied on these issues.

ISSUE 8: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE BREACH OF FIDUCIARY DUTY CAUSE OF ACTION

Defendant argues that plaintiff cannot establish the breach of fiduciary duty cause of action because plaintiff cannot establish that plaintiff owed a fiduciary duty to Royal, as she was simply an at will employee, and that plaintiff cannot establish any breach of such a duty because defendant merely informed the patients’ parents and the nurses of her new place of employment.

To allege a breach of fiduciary duty, a plaintiff must plead the existence of a fiduciary or confidential relationship, the breach of a duty arising under this relationship and resulting damages. Richelle L. v. Roman Catholic Archbishop (2003) 106 Cal.App.4th 257, 273.

In opposition, plaintiff argues that defendant as an employee owed a duty of loyalty to her employer. Plaintiff also argues that a fiduciary relationship can arise where confidence is reposed in one person in the integrity of another, which confidence is voluntarily accepted.

In general, a fiduciary or confidential relationship may be recognized if the following factors are present:

“1) The vulnerability of one party to the other which

2) results in the empowerment of the stronger party by the weaker which

3) empowerment has been solicited or accepted by the stronger party and

4) prevents the weaker party from effectively protecting itself.”

Richelle L. v. Roman Catholic Archbishop of San Francisco (2003) 106 Cal.App.4th 257, 272.

It is also recognized that a legally recognized fiduciary duty exists between and agent and a principal See Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1580.

Here, triable issues of fact are raised with respect to the existence of a duty of loyalty or an agency- principal relationship, particularly given the level of Gonzales’ responsibilities in directing patient relationships, and in preserving matters such as Medi-Cal authorizations and the facility licensing. [See UMF Nos. 3; Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1-3, 38, and evidence cited]. The motion accordingly cannot be granted for failure to establish a duty.

With respect to breach of such a duty, as noted above, the opposition submits evidence that while employed with plaintiff, defendant Gonzales engaged in conduct which could be reasonably construed as a

breach of that duty, including failing to keep patient information private, and accessing the patient list to contact

Medi-Cal patients, then discharging those patients from Royal in order to transfer them to Noho. [Additional Facts Nos. 10, 24- 31, 44, and evidence cited]. The evidence also supports an inference that Gonzales worked

at cross-purposes with her employer by failing to renew licensing with the RCOC and failing to renew Medi-Cal authorizations. [Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1, 38, and evidence cited].

Triable issues of material fact have been raised, and the motion on this issue is denied.

ISSUE 9: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION RELATIVE TO THE CONSPIRACY ALLEGATION BECAUSE IT IS NOT AN INDEPENDENT CAUSE OF ACTION

Defendant Gonzales argues that this cause of action should be dismissed as civil conspiracy is not an independent cause of action.

To establish a civil conspiracy a plaintiff must plead and prove a civil wrong (for example, fraud or battery), the formation and operation of the conspiracy, a wrongful act done pursuant to the conspiracy, and resulting damage. Unruh v. Truck Ins. Exchange (1972) 7 Cal.3d 616, 631, (noted to have been superseded by statute on other grounds in Hendy v. Losse (1991) 54 Cal.3d 723.)

The argument here appears directed at the operative pleading, the SAC, which in the seventh cause of action for conspiracy alleges that defendants encouraged and ratified the acts of Noho and Gonzales, including that by encouraging defendants to expropriate sensitive and trade secret information to allow plaintiff’s clients medical authorizations to lapse without renewal, and to discharge patients and transfer to Noho, as well was to misappropriate trade secrets for use by Noho. [Ex. 1, SAC, para. 93, e, f]. This appears an attempt to hold Gonzales responsible for the civil wrongs engaged in by Noho. While it might be preferred that these civil conspiracy allegations be attached to the causes of action for those civil wrongs, it does not appear that summary judgment should be premised on this argument. Even if the court were to find that argument persuasive, it would in this case at best warrant the court treating the motion as a motion for judgment on the pleadings, and permitting leave to amend, which would not fully resolve the cause of action.

The motion then broadly argues:

“As detailed above, Plaintiff lacks sufficient evidence to support any of the allegations in the SAC. In turn, Plaintiff has failed to satisfy its burden that Ms. Gonzales entered into any kind of conspiracy to commit tortious conduct. Therefore, the conspiracy cause of action must be dismissed.”

[Motion, p. 13: 13-15].

As argued in the opposition, this is insufficient to shift the burden to plaintiff, as defendant points to no facts, and makes no attempt to establish that plaintiff has demonstrated a lack of evidence to support this claim. Defendant has failed to meet the initial burden with respect to any inability to establish this cause of action on its merits, and the motion is accordingly denied.

RULING:

CCP 437c(g): Material facts which do or do not create a triable issue of controversy:

Motion of Defendant Remil Charmaine Gonzales for Summary Judgment, or in the Alternative Summary Adjudication:

Motion for Summary Judgment is DENIED.

Motion for Summary Adjudication:

ISSUE 1: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE FEDERAL COMPUTER FRAUD AND ABUSE CAUSE OF ACTION

ISSUE 2: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE VIOLATION OF THE COMPUTER DATA ACCES AND FRAUD ACT CAUSE OF ACTION

Motion is GRANTED.

Defendant Gonzales has established that the subject Acts, intended to afford redress for computer hacking, require proof of loss connected with the computer system itself. See AtPac, Inc. v. Aptitude Solutions, Inc. (USDC E.D. Cal. 2010) 730 F.Supp.2d 1174,1184-1186, citing, among other authorities, SKF USA, Inc. v. Bjerkness, 636 F.Supp.2d 696 (N.D.Ill.2009) “(holding that former employees' unauthorized transfer of confidential files and trade secrets to thumb drives which were brought to new employer and eventually resulted in lost business to plaintiff did not constitute a “loss” under the CFAA to support a civil action) (“Purely economic harm unrelated to the computer systems is not covered by this definition.”).” AtPac, at 1185.

Defendant here has submitted evidence that during deposition, plaintiff’s owner, sole shareholder, officer and director, Christopher Chen, testified that he had no information to support his computer fraud causes of action, and that another employee of plaintiff, Christina Khamsy, testified there was no damage to plaintiff’s computer hardware or software. [UMF Nos. 10, 11, and evidence cited]. This evidence is actually undisputed in the separate statement. [See Response to UMF Nos. 10, 11].

This is sufficient to establish that plaintiff cannot establish recoverable damages permitted under the Acts, shifting the burden to plaintiff to raise triable issues of material fact.

In opposition to the motion, the only evidence of damages offered is evidence purporting to show a decline in profits and loss of revenue. [See Additional Fact No. 45, and evidence cited]. The evidence submitted consists of documents prepared purporting to show the projected amount of money which would have been paid for each patient which transferred to defendant Noho had the patient not transferred. [See Exs. 13, 14]. There is no component of this showing which would implicate any expense with respect to the computer system, but

purely economic harm unrelated to the computer systems. As plaintiff will be unable to establish recoverable damages, the causes of action fail.

ISSUE 3: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE TORTUOUS INTERFERENCE WITH CONTRACTUAL RELATIONS CAUSE OF ACTION BECAUSE PLAINTIFF DID NOT HAVE A VALID ENFORCEABLE CONTRACT WITH ITS PATIENTS OR NURSING STAFF

Motion is DENIED.

The opposition submits evidence supporting a reasonable inference that defendant Gonzales engaged in interference with contractual relations with respect to plaintiff’s license with the Regional Center of Orange County being permitted to expire. The failure of Gonzales to timely renew the license or report the pending expiration to Royal, combined with the circumstances under which Gonzales was transitioning to work full time for Noho, supports a reasonable inference that the conduct was intended to disrupt the relationship. [Ex. 18, Gonzales Depo. p. 69; UMF No. 1, and evidence cited; Response to UMF No. 17, and evidence cited; Chen Decl. para. 10; See also Khamsky Decl., para. 18; Additional Facts Nos. 13, 16, 17, 20, 24, 25, 29, 30, 38, and evidence cited].

ISSUE 4: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS CAUSE OF ACTION

Motion is DENIED.

Plaintiff has raised triable issues of material fact which would support a reasonable inference that plaintiff

wrongfully solicited plaintiff’s nurses to leave their at will employment. Specifically, plaintiff has submitted evidence detailing the suspicious circumstances under which the exodus to Noho of numerous nurses occurred, as well as evidence that Chen had a conversation with a former patient’s parent, in which it was disclosed that

the patient transferred to Noho because the nurse was transferring there, and that one of those nurses, Hershey Mendoza, was directly asked by Gonzales to transfer to Noho. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111]. There is also evidence that background checks for those nurses were requested by Hernandez while Gonzales

was still employed at Royal, from a Royal computer, possibly using Royal resources, and the nurses were hired by Gonzales during that time period. [Additional Fact No. 37, and evidence cited; Ex. 9].

ISSUE 5: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 6: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 7: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—COMMON LAW

Motion is DENIED.

Defendant argues that plaintiff will be unable to establish conduct on the part of Gonzales constituting solicitation of patients or nursing staff.

Plaintiff in opposition has raised triable issues of fact with respect to whether defendant’s conduct went beyond what is claimed, given the circumstances surrounding defendant’s conduct. Specifically, there is evidence submitted that as an employee of Royal, Gonzales signed a confidentiality statement preventing disclosure of patient information, and that after requests for raises which resulted in only a modest $5 per hour raise, and other disputes with Royal, Gonzalez became disgruntled with her employment with Royal. [Additional Facts Nos. 10-13, and evidence cited]. Gonzales, in October of 2015, began working for Noho while also working for Royal, without disclosing this circumstance to Royal, and during the period from October through November 30, 2015 continued to have access to her computer at Royal, and its patient list and the patients’ medical files. [Additional Facts Nos. 14-17, 19]. During that period, Gonzales worked, partly from her Royal computer, to assist Noho to reinstate its Medi-Cal pin so that it could provide nursing to Medi-Cal patients. [Additional Fact No. 21-23]. Once Noho’s Medi-Cal pin was reinstated, at the end of October, or beginning of November 2015, Noho began providing shift care to 12 of 13 patients of Royal’s who were Medi-Cal patients. [Response to UMF Nos. 22, 23; Additional Fact No. 24, and evidence cited]. All of those patients transferred from Royal to Noho on either November 1, 2015 or November 2, 2015, the same time period when nurses also transferred. [Additional Facts Nos. 25, 33, and evidence cited]. Also during the period while Gonzales was working at Royal and also with Noho, there is evidence that she personally handled the paperwork discharging the twelve patients to Noho’s care, and failed to inform Royal, when the result of the patients being discharged rather than transferred was that Royal would not be alerted to the transfers, until a much later time. [Additional Fact Nos. 26-29]. Significantly, the opposition submits evidence that the reasons some patients were being transferred as represented on the discharge paperwork were false. [Additional Fact No. 30, and evidence cited]. For example, it was represented by Gonzales that one patient was deceased, so that no home care was needed, and that one patient had moved to a different state, when, in fact, the patients were transferred to Noho. [Id.; See also Tan Decl. paras. 11-13].

Also, during this period, there is evidence that Gonzales was responsible for renewing treatment authorization from Medi-Cal patients, but failed to do so, and affirmatively represented to Chen that the authorization requests had been taken care of. [Additional Fact No. 38, and evidence cited]. There is also evidence that the

hard copy medical plans of care for each of the patients transferred went missing from the files until late December 2015. [Additional Fact No. 31, and evidence cited]. Finally, as discussed above, there is evidence that would support a reasonable conclusion that there was solicitation beyond Gonzales just informing persons

of her new employment. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111].

The circumstances support a reasonable inference that Gonzales relied on patient records to identify those patients who were Medi-Cal eligible in order to deliver them to Noho, and in order to target the nurses who worked with those patients to deliver them to Noho as well, raising triable issues of fact.

ISSUE 8: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE BREACH OF FIDUCIARY DUTY CAUSE OF ACTION

Motion is DENIED.

Defendant argues that plaintiff cannot establish the existence of a duty and cannot show a breach of such a duty, given that defendant did not solicit patients or nursing staff.

Plaintiff in opposition has raised triable issues of material fact with respect to the existence of a duty of loyalty, a confidential relationship, or an agency- principal relationship, particularly given the level of Gonzales’ responsibilities in directing patient relationships, and in preserving matters such as Medi-Cal authorizations and the facility licensing. [See UMF Nos. 3; Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1-3, 38, and evidence cited].

With respect to breach of such a duty, as noted above, the opposition submits evidence that while employed with plaintiff, defendant Gonzales engaged in conduct which could be reasonably construed as a breach of that duty, including failing to keep patient information private, and accessing the patient list to contact Medi-Cal patients, then discharging those patients from Royal in order to transfer them to Noho. [Additional Facts Nos. 10, 24- 31, 44, and evidence cited]. The evidence also supports an inference that Gonzales worked at cross-purposes with her employer by failing to renew licensing with the RCOC, and failing to renew Medi-Cal authorizations. [Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1, 38, and evidence cited].

ISSUE 9: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION RELATIVE TO THE CONSPIRACY ALLEGATION BECAUSE IT IS NOT AN INDEPENDENT CAUSE OF ACTION

Motion is DENIED.

As to the argument that there is no stand-alone cause of action for civil conspiracy, defendant has failed to establish that the SAC has not sufficiently stated a claim pursuant to which moving defendant may be held responsible for the alleged tortious conduct of co-defendants, including defendant Noho Home Health Care, Inc.

[Ex. 1, SAC, para. 93].

As to any argument that plaintiff cannot establish a civil conspiracy, defendant has briefly asserted this argument, without pointing to specific facts, or making any attempt to establish that plaintiff has demonstrated a lack of evidence to support this claim. Defendant has failed to meet the initial burden with respect to any inability to establish this cause of action on its merits, and has failed to shift the burden to plaintiff to raise triable issues.

Defendant/Cross-Defendant’s Remil Charmaine Gonzales’ Objections to Plaintiff’s Evidence:

Objection No. 20 is SUSTAINED IN PART ONLY as to the phrase, “because Gonzales knew we would never condone it.”

Objection No. 26 is SUSTAINED IN PART ONLY as to the sentence, “I believe Gonzales intentionally… its patients.”

Objection No. 27 is SUSTAINED IN PART ONLY as to the phrase, “knew Royal’s documentation with the

Regional Center of Orange County (RCOC) would expire on November 7, 2015…”

Objections Nos. 30 and 31, which appear to state identical objections, are SUSTAINED.

Objection No. 33 is SUSTAINED IN PART ONLY as to the sentence, “Gonzales intentionally allowed…seeking any renewals.”

Objections are otherwise OVERRULED.

GIVEN THE RECENT CORONAVIRUS CRISIS, UNTIL FURTHER ORDERED, DEPARTMENT D WILL ALLOW APPEARANCES ONLY BY COURTCALL.

Please make such arrangements in advance if you wish to appear via CourtCall at (888) 882-6878 (or www.courtcall.com). Counsel and parties (including self-represented litigants) are not to personally appear, absent a compelling emergency reason. If none of the litigants on a matter set up a CourtCall appearance, then the Court will assume the parties are submitting on the tentative.

Case Number: EC064532    Hearing Date: July 31, 2020    Dept: NCD

TENTATIVE RULING

Calendar: 11

Date: 7/31/20

Case Number: EC 064532 Trial date: None Set

Case Name: Royal Home Healthcare Agency, Inc. v. Noho Home Health Care Inc., et al.

MOTION FOR SUMMARY JUDGMENT

(OR, in the Alternative, Summary Adjudication)

[CCP § 437c; CRC 3.1350 et seq.]

Moving Party: Defendant Remil Charmaine Gonzales

Responding Party: Plaintiff Royal Home Healthcare Agency, Inc.

Relief Requested:

Summary judgment in favor of defendant Remil Charmaine Gonzales

In the alternative, summary adjudication of each cause of action

Causes of Action from Second Amended Complaint

1) Violation of the Federal Computer Fraud and Abuse Act

2) Violations of the Computer Data Access and Fraud Act

3) Tortuous (sic) Interference with Contractual Relations

4) Intentional Interference with Prospective Economic Advantage

5) Misappropriation of Trade Secrets—Statutory

6) Misappropriation of Trade Secrets—Common aw

7) Conspiracy

8) Breach of Fiduciary Duty

SUMMARY OF COMPLAINT:

Plaintiff Royal Home Healthcare Agency, Inc. alleges that its former employee, defendant Remil Charmaine Gonzales, used her access to plaintiff’s information to illegally steal plaintiff’s client and employee lists for the benefit of defendant NoHo Home Health Care, Inc., and its owner, defendant Bella Aslanova. It is also alleged that Gonzales intentionally allowed plaintiff’s current roster of patients’ medical authorizations to lapse without seeking renewals, and then failed to respond to requests for access to all of her billing sites’ usernames and passwords, so that without those usernames and passwords, plaintiff was unable to bill for services provided or obtain treatment authorization requests, resulting in delayed payments for services. The complaint alleges a series of misdeeds and false statements, including failing to submit required documentation so that plaintiff’s license with the Regional Center of Orange County expired. It is also alleged that it has since been discovered that defendant Elizabeth Hernandez, another former employee, had been supplying information to aid Gonzales’ conduct, and then became an employee of defendant NoHo. It is alleged that plaintiff has received numerous Transfer of Service Agreements notifications from defendant NoHo pursuant to which patients wrongfully discharged from care by Gonzales while working for plaintiff, are now receiving home health care services from Noho, and that other of plaintiff’s patients are now being serviced by NoHo, Gonzales and Hernandez.

Defendants NoHo Home Health Care, Inc. and Bella Aslanova have filed a cross-complaint for indemnity and contribution against Gonzales, Hernandez, and cross-defendant Mechab, Inc. alleging that if

cross-complainants are held responsible to plaintiff for damages in connection with the complaint, it will be solely due to the conduct of cross-defendants, entitling cross-complainants to indemnity and contribution.

Gonzales has filed a cross-complaint against Royal Home Healthcare Agency and its administrator, cross-defendant Christopher Chen, alleging that cross-defendants have wrongfully made malicious and false statements to their employees, agents and patients regarding cross-complainant Gonzales and her character in order to damage her reputation and career. The cross-complaint alleges causes of action for slander per se, defamation, negligence, and IIED.

ANALYSIS:

CCP § 437c (p): Burdens of Proof

Under CCP § 437c(p)(2) a defendant “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant... has met that burden, the burden shifts to the plaintiff... to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”

CCP § 437c(f)(1) provides that “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”

Defendant Remil Charmaine Gonzales seeks to establish that plaintiff will be unable to establish one or more elements of each cause of action alleged in the operative complaint.

ISSUE 1: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE FEDERAL COMPUTER FRAUD AND ABUSE CAUSE OF ACTION

ISSUE 2: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE VIOLATION OF THE COMPUTER DATA ACCESS AND FRAUD ACT CAUSE OF ACTION

The first cause of action for violation of the federal Computer Fraud and Abuse Act (“CFAA”) is based on 18 U.S.C. 1030, which provides, in pertinent part:

“(a) Whoever--….

(4) knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and the value of such use is not more than $5,000 in any 1-year period;

(5)…

(C) intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage and loss….

shall be punished as provided in subsection (c) of this section.”

With respect to the second cause of action for violation of the Computer Data Access and Fraud Act (“CDAFA”), Penal Code section 502, it does not appear to be disputed that courts have found the “necessary elements of Section 502 do not differ materially from the necessary elements of the CFAA….” NovelPoster v. Javitch Canfield Group (USDC N.D. Cal. 2014) 140 F.Supp. 3d 938, 950, quotation, citations omitted).

Defendant Gonzales argues that plaintiff Royal will be unable to show that the any access to the computer system by Gonzales was not authorized, as defendant only accessed plaintiff’s computers for purposes of providing billing services at the request of plaintiff. Defendant relies on LVRC Holdings LLC v. Brekka (9th Cir. 2009) 581 F.3d 1127, in which the Ninth Circuit affirmed a district court order granting a former employee’s motion for summary judgment, finding that the former employee did not access a computer “without authorization” in violation of 1030 by emailing documents to himself prior to leaving his employment.

However, as pointed out in the opposition, in that case, the Ninth Circuit expressly stated in that case that. “There is no dispute that if [employee] accessed…information on the [employer’s] website after he left the company…, [employee]would have accessed a protected computer ‘without authorization’ for purposes of the CFAA.” LVRC Holdings, at 1136.

The evidence submitted by defendant here shows that defendant accessed the computer system after defendant left her employment. [UMF No. 8, and evidence cited]. Moreover, the opposition submits evidence that would support a reasonable inference that defendant engaged in use of the computer system, both before and after her formal leaving of employment with plaintiff, which could be found to have been without authorization, but for her own benefit, or the benefit of Noho, her other employer. [See Response to UMF Nos. 7,8, and evidence cited, Additional Facts Nos. 19, 20, 28-30, and evidence cited]. There is also evidence submitted showing that Gonzales did not provide Royal with her passwords or login information to various critical websites, disrupting Royal’s access to the services from those websites. [Additional Fact No. 39, and evidence cited]. The reply does not further argue that summary adjudication of these causes of action is appropriate on this ground.

Defendant Gonzales also argues that plaintiff Royal will be unable to establish that any alleged violations of the subject computer acts resulted in any interruption in service, or required restoration of the data system, or any other loss which is addressed by the subject acts.

18 U.S.C. 1030 (e) provides definitions for the terms used in subdivision (a). The moving papers rely on the definition set forth in subdivision (11):

“(11) the term “loss” means any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service.”

Although not cited in the moving papers, subdivision (8) defines “damage:”

“(8) the term “damage” means any impairment to the integrity or availability of data, a program, a system, or information.”

As noted above, under subdivision (a)(5), liability may be based on unauthorized access which “causes damage and loss.” The moving papers argue that to recover under the Act, plaintiff must identify some impairment or damage to the computer system resulting from unauthorized access.

This argument appears incomplete, since it is alleged that there was impairment to the availability of a system or information, and, as discussed above, even if the burden had been met, it would appear triable issues of fact have been raised with respect to the argument that Gonzales did not provide Royal with her passwords or login information to various critical websites, disrupting Royal’s access to the services from those websites. [Additional Fact No. 39, and evidence cited].

Defendant relies on AtPac, Inc. v. Aptitude Solutions, Inc. (USDC E.D. Cal. 2010) 730 F.Supp.2d 1174, in which the district court granted a motion to dismiss a cause of action for violation of the CFAA for failure to state a claim, where the allegations were that defendants had breached a license agreement and engaged violated the Act by accessing and giving a competitor of plaintiff’s access to drives on its server which contained trade secrets. The district court analyzed the statutory language in connection with the criminal nature of the statute and its intent to address computer hacking, stating:

“Plaintiff's failure to adequately plead “loss” under the CFAA provides an alternate ground for dismissal of plaintiff's CFAA claim. The CFAA is primarily a criminal statute that prohibits the intentional and knowing unauthorized accessing of computers to obtain information or anything of value or to cause damage. Under subsection (g), only persons harmed in certain ways by violations of the CFAA can bring a civil action. The CFAA provides that:

Any person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief. A civil action for a violation of this section may be brought only if the conduct involves 1 of the factors set forth in subclauses (I), (II), (III), (IV), or (V) of subsection (c)(4)(A)(i). Damages for a violation involving only conduct described in subsection (c)(4)(A)(i)(I) are limited to economic damages....

18 U.S.C. § 1030(g).

The relevant factors listed in subsection (c)(4)(A)(i) are:

(I) loss to 1 or more persons during any 1–year period (and, for purposes of an investigation, prosecution, or other proceeding brought by the United States only, loss resulting from a related course of conduct affecting 1 or more other protected computers) aggregating at least $5,000 in value;

(II) the modification or impairment, or potential modification or impairment, of the medical examination, diagnosis, treatment, or care of 1 or more individuals;

(III) physical injury to any person;

(IV) a threat to public health or safety;

(V) damage affecting a computer used by or for an entity of the United States Government in furtherance of the administration of justice, national defense, or national security; or

... [irrelevant]

18 U.S.C. § 1030(c)(4)(A)(i).

On the face of plaintiff's FAC, only the first factor could possibly apply. “Loss” is defined in the statute as:

any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service ....

18 U.S.C. § 1030(e)(11).

“Loss,” therefore, means two things: “any reasonable cost to the victim” and lost revenue or other damages incurred as a result of an interruption of service.

To allege a loss under the CFAA, “plaintiffs must identify impairment of or damage to the computer system that was accessed without authorization.” Doyle v. Taylor,  (citing cases and holding that where plaintiff alleged defendant accessed his USB thumb drive and retrieved a sealed document, “[p]laintiff would have to show that the thumb drive itself was somehow damaged or impaired by Defendant's act of accessing the drive”). Cognizable costs

also include “the costs associated with assessing a hacked system for damage[and] upgrading a system's defenses to prevent future unauthorized access.” Id.  see SuccessFactors, Inc. v. Softscape, Inc.,  ( “[W]here the offense involves unauthorized access and the use of protected information .... the cost of discovering the identity of the offender or the method by which the offender accessed the protected information [is] part of the loss for purposes of the CFAA.”).

To allege a loss of revenue, the loss must result from the unauthorized server breach itself. See Therapeutic Res. Faculty v. NBTY, Inc.,  (loss sufficiently alleged where defendant breached $100 single-user license agreement for plaintiff's medical publication subscription service by sharing username and passcode with employees, where corporate subscription would cost $40,000); SKF USA, Inc. v. Bjerkness,  (holding that former employees' unauthorized transfer of confidential files and trade secrets to thumb drives which were brought to new employer and eventually resulted in lost business to plaintiff did not constitute a “loss” under the CFAA to support a civil action) (“Purely economic harm unrelated to the computer systems is not covered by this definition.”).

Congress' restricting of civil actions to cases that cause the types of harm listed in 18 U.S.C. § 1030(c)(4)(A)(i) subsections (I) through (V) reemphasizes the court's conclusion that the sort of conduct alleged against Nevada County does not fall under the CFAA's prohibitions. “Loss” is grouped along with the harms of physical injury, threat to public health and safety, impairment of medical diagnosis or treatment, and damage to federal government computers that deal with national security and defense. It is no surprise that courts interpreting the definition of “loss” sufficient to bring a civil action have done so narrowly given the company that subsection (I) keeps. The definition of “loss” itself makes clear Congress's intent to restrict civil actions under subsection (I) to the traditional computer “hacker” scenario—where the hacker deletes information, infects computers, or crashes networks. See 18 U.S.C. § 1030(e)(11) (enumerating legitimate “costs” in terms of computer damage).”

AtPac, at 1183-1185.

The district court then applied this analysis to the case before it and concluded the subject pleading did not sufficiently allege loss:

“Plaintiff does not allege any facts that indicate that it incurred costs to update its server security protocols or otherwise analyze the circumstances of the unauthorized server access. Rather, plaintiff's fourth cause of action alleges that defendants “obtained something of value exceeding $5,000 in a single calendar year,” and contains the conclusory allegations that plaintiff has been damaged and that it has suffered immediate and irreparable harm. (FAC ¶¶ 84, 87–88.) Because plaintiff has not alleged that it incurred any costs or experienced lost revenue as a direct result of defendants' unauthorized server access, they have not alleged to have suffered a “loss” under the CFAA. Defendants' motion to dismiss will therefore be granted in its entirety.”

AtPac, at 1185.

The AtPac case is not binding on the court, but it includes a reasoned analysis of the issue which suggests that the loss to be redressed in such causes of action would not include the loss of business which was diverted to Noho by virtue of the alleged violations.

Again, it is not clear that in this situation, where there was an impairment of access by failure to provide passwords after the fact, leading to repeated efforts to have to obtain those passwords, that this cause of action cannot be appropriately established, as there appears to have been a direct effect on the computer system access,

recognized damage under the statute for which there was loss. The court could find that the initial burden on

this theory has not been met because there is evidence submitted that there was no damage to the computer systems (See UMF No. 9 and evidence cited), but the court makes no such finding on the state of this record.

Instead, the court does find that defendant has met her initial burden on this entire issue, as defendant relies on evidence that during deposition, plaintiff’s owner, sole shareholder, officer and director, Christopher Chen, testified that he had no information to support his computer fraud causes of action, and that another employee of plaintiff, Christina Khamsy, testified there was no damage to plaintiff’s computer hardware or software. [UMF Nos. 10, 11, and evidence cited]. This evidence is actually undisputed in the separate statement. [See Response to UMF Nos. 10, 11].

This evidence is sufficient to establish that plaintiff cannot establish recoverable damages permitted under the Acts. The court finds that the burden on this issue on all theories has shifted. As such, the only evidence of damages offered here in response to this showing consist of evidence purporting to show a decline in profits and loss of revenue. [See Additional Fact No. 45, and evidence cited]. The evidence submitted consists of documents prepared purporting to show the projected amount of money which would have been paid for each patient which transferred to defendant Noho had the patient not transferred. [See Exs. 13, 14]. There is no component of this showing which would implicate any expense with respect to the computer system.

Accordingly, the court finds that the burden has shifted, and also finds that the opposition has failed to raise triable issues of fact in the opposition, in effect, that plaintiff has failed to come forward with facts supporting damage or loss related to the computer system or any costs or expenses incurred to address the alleged violations, only expenses related to the alleged damages from the alleged misappropriation and use of trade secrets which eventually resulted in lost business to plaintiff, in effect purely economic harm unrelated to the computer systems. The motion appropriately is granted as to these causes of action.

ISSUE 3: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE TORTUOUS INTERFERENCE WITH CONTRACTUAL RELATIONS CAUSE OF ACTION BECAUSE PLAINTIFF DID NOT HAVE A VALID ENFORCEABLE CONTRACT WITH ITS PATIENTS OR NURSING STAFF

Defendant Gonzales argues that this cause of action cannot be established because plaintiff did not have valid enforceable contracts with its patients and nursing staff, because the patients were permitted to transfer services at any time, and the nursing staff consisted of independent contractors that were permitted to work for other home health agencies.

With respect to the claim for intentional interference with contract, to establish such a claim, plaintiff must establish the following elements:

“The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) 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.”

Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126, citations omitted.

Defendant also argues that plaintiff will be unable to establish an interference with respect to plaintiff’s license with the Regional Center of Orange County being permitted to expire.

With respect to this issue, defendant seems to argue that plaintiff is unable to provide evidence that Gonzales received the initial notice from RCOC. [UMF No. 17, and evidence cited]. The showing is

essentially that plaintiff had reason to believe Gonzales would take care of the renewal, as it was her

responsibility and she had always done so before, but that plaintiff has no direct evidence that Gonzales received the initial notice, and the second notice was dated after Gonzales had left.

The opposition submits deposition testimony of Gonzales in which she indicates that if the license was expiring she would typically bring it to the attention of Chen. [Ex. 18, Gonzales Depo. p. 69]. Plaintiff also submits Chen’s declaration in which he states that Gonzales was responsible for maintaining the updated license information with the local regional centers that provided patient referrals, and that she did not personally let Chen know the license was up for renewal in 2015. [Response to UMF No. 17, and evidence cited; Chen Decl. para. 10; See also Khamsky Decl., para. 18]. The timing of this oversight around the time Gonzales was resigning under unhappy circumstances, and otherwise directing patients from plaintiff to Noho, would appear to provide circumstantial evidence that Gonzales was not acting in the best interests of plaintiff at the time on many fronts, as she was also at the time, for example, inputting information terminating certain patients from the services at plaintiff for reasons that later turned out to be inaccurate, possibly in order to avoid alerting plaintiff to the transfers by requiring a discharge protocol, and was also permitting authorizations for treatment to lapse for those select patients. [Additional Facts Nos. 13, 16, 17, 20, 24, 25, 29, 30, 38, and evidence cited]. The evidence supports a reasonable inference that Gonzales received notice, but chose not to inform anyone at Royal about the impending expiration of the license, in a deliberate attempt to interfere with the continued licensing agreement with the RCOC. The motion as to this cause of action is accordingly denied.

ISSUE 4: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS CAUSE OF ACTION

To establish a claim for intentional interference with prospective economic advantage, the following elements are required to be proven:

“Intentional interference with prospective economic advantage has five elements: (1) the existence, between the plaintiff and some third party, of an economic relationship that contains the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant's action.

Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512, citation omitted.

Defendant Gonzalez argues that plaintiff has no evidence that Gonzales did anything improper to interfere with the relationships with plaintiff’s patients, or plaintiff’s nurses, or engaged in any activity which was wrongful beyond the fact of the interference itself. Defendant argues that there has been no evidence from plaintiff in this matter showing that defendant solicited plaintiff Royal’s patients’ parents or the nurses. [UMF No. 29, 32]. The evidence submitted to support this fact includes responses to discovery where the actual discovery requests are not submitted, which is confusing. [Id.].

Under Della Penna v. Toyota Motor Sales (1995) 11 Cal.4th 376, to support a cause of action for intentional interference with prospective economic advantage, a plaintiff “has the burden of pleading and proving that the defendant’s interference was wrongful by some measure beyond the fact of the interference itself.” Della Penna, at 392-393.

An act is considered independently wrongful “if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544-1545.

The opposition argues that there is evidence in this case that defendant Gonzales assisted Noho in obtaining the ability to take Medi-Cal patients while she was still employed by Royal, then orchestrated the

transfer of twelve Medi-cal patients of Royal’s to Noho, and that each of those patients’ respective nurses then

left their positions with plaintiff, all within days of one another, and that this could not have been merely coincidental. Plaintiff seems to argue that while there is no direct evidence of improper solicitation, there would rarely be such direct evidence in such a case, and that the circumstances here would support a finding that there was conduct beyond merely informing parties of defendant’s change in employment.

The opposition relies on Reeves v. Hanlon (2004) 33 Cal. 4th 1140, in which the California Supreme Court held that a plaintiff may recover damages for intentional interference with an at-will employment relationship. Reeves, at 1152. The opposition includes evidence which not only details the circumstances under which the exodus to Noho of numerous nurses occurred, but also includes evidence that Chen had a conversation with a former patient’s parent, in which it was disclosed that the patient transferred to Noho because the nurse was transferring there, and that one of those nurses, Hershey Mendoza, was directly asked by Gonzales to transfer to Noho. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111]. There is also evidence that background checks for those nurses were requested by Hernandez while Gonzales was still employed at Royal, from a Royal computer, and the nurses were hired by Gonzales during that time period. [Additional Fact No. 37, and evidence cited; Ex. 9].

This is sufficient to raise triable issues of fact with respect to whether there was improper solicitation of the nurses engaged in by Gonzales, and interference with the use of proprietary information concerning specific patients and their needs, and interference while misusing the resources of Royal. The motion on this issue is denied.

ISSUE 5: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 6: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 7: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—COMMON LAW

It is not clear why two identical causes of action are stated in connection with the statutory trade secrets claim.

In any case, defendant makes the same argument in connection with the trade secret causes of action; that plaintiff cannot establish that there was any solicitation of patients or independent contractor nurses here because merely informing customers of one’s former employer of a change in employment, without more, is not solicitation. Aetna Building Maintenance Co. v. Sacks (1952) 39 Cal.2d 198, 204.

The argument is that Gonzales went no further than informing patients and nurses where she would be taking on new employment, and plaintiff has no direct evidence otherwise.

With respect to trade secrets, under Evidence Code section 1060,

“The owner of a trade secret has a privilege to refuse to disclose the secret, and to prevent another from disclosing it, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.”

Customer lists have been held to be protectable as trade secrets. Courtesy Temporary Service v. Camacho (1990) 222 Cal.App.3d 1278.

Under Civil Code § 3426.1(b), “misappropriation” of a trade secret is defined to include, “(2) Disclosure or use of a trade secret of another without express or implied consent by a person who: …(B) At the time of the

disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:…(ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use….”

It is recognized that “Generally the law of unfair competition prohibits former employees from disclosing or misusing an employer’s trade secrets and confidential information—even in the absence of contractual restrictions.” Loral Corp. v. Moyes (1985) 174 Cal.App.3d 268, 275.

Defendant relies on Hangar Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc. (2008 USDC E.D. Cal.) 556 F.Supp.2d 1122, a federal district court found that plaintiff had raised genuine issues of material fact sufficient to defeat a motion for summary judgment in connection with alleged violation of the California Uniform Trade Act, finding that patient customer data could be reasonably found by a trier of fact to constitute trade secrets, which had been misappropriated, observing,

“patient files include prescriptions/referral source information, treatment records, addresses, etc. and the electronic Orthotics Prosthetics System (OPS) contains patient information, and referral source information…. In addition, Hanger's patient files have economic value because their “disclosure would allow a competitor to direct its sales efforts to those customers who have already shown a willingness to use a unique type of service or product as opposed to a list of people who only might be interested” and Hanger took reasonable steps to protect this information. Morlife, Inc., 56 Cal.App.4th at 1522, 66 Cal.Rptr.2d 731where

Hangar Prosthetics, at 1135.

The alleged trade secret here is similar to that involved in Hangar.

The opposition again relies on evidence suggesting that the conduct of Gonzales went beyond merely informing patients’ parents and nursing staff where she would be newly employed. Specifically, there is evidence submitted that as an employee of Royal, Gonzales signed a confidentiality statement preventing disclosure of patient information, and that after requests for raises which resulted in only a modest $5 per hour raise, and other disputes with Royal, Gonzalez became disgruntled with her employment with Royal. [Additional Facts Nos. 10-13, and evidence cited]. Gonzales, in October of 2015, began working for Noho while also working for Royal, without disclosing this circumstance to Royal, and during the period from October through November 30, 2015 continued to have access to her computer at Royal, and its patient list and the patients’ medical files. [Additional Facts Nos. 14-17, 19]. During that period, Gonzales worked, partly from her Royal computer, to assist Noho to reinstate its Medi-Cal pin so that it could provide nursing to Medi-Cal patients. [Additional Fact No. 21-23]. Once Noho’s Medi-Cal pin was reinstated, at the end of October, beginning of November 2015, Noho began providing shift care to 12 of 13 patients of Royal’s who were Medi-Cal patients. [Response to UMF Nos. 22, 23; Additional Fact No. 24, and evidence cited]. All of those patients transferred from Royal to Noho on either November 1, 2015 or November 2, 2015, the same time period when nurses also transferred. [Additional Facts Nos. 25, 33, and evidence cited].

Also during the period while Gonzales was working at Royal and also with Noho, there is evidence that she personally handled the paperwork discharging the twelve patients to Noho’s care, and failed to inform Royal, when the result of the patients being discharged rather than transferred was that Royal would not be alerted to the transfers, until a much later time. [Additional Fact Nos. 26-29]. Significantly, the opposition submits evidence that the reasons some patients were being transferred as represented on the discharge paperwork were false. [Additional Fact No. 30, and evidence cited]. For example, it was represented by Gonzales that one patient was deceased, so that no home care was needed, and that one patient had moved to a different state, when, in fact, the patients were transferred to Noho. [Id.; See also Tan Decl. paras. 11-13].

Also, during this period, there is evidence that Gonzales was responsible for renewing treatment authorization from Medi-Cal patients, but failed to do so, and affirmatively represented to Chen that the

authorization requests had been taken care of. [Additional Fact No. 38, and evidence cited]. There is also evidence that the hard copy medical plans of care for each of the patients transferred went missing from the files until late December 2015. [Additional Fact No. 31, and evidence cited]. Finally, as discussed above, there is evidence that would support a reasonable conclusion that there was solicitation beyond Gonzales just informing persons of her new employment. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111].

The circumstances support a reasonable inference that Gonzales relied on patient records to identify those patients who were Medi-Cal eligible in order to deliver them to Noho, and in order to target the nurses who worked with those patients to deliver them to Noho as well. Triable issues of fact have been raised and the motion is accordingly denied on these issues.

ISSUE 8: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE BREACH OF FIDUCIARY DUTY CAUSE OF ACTION

Defendant argues that plaintiff cannot establish the breach of fiduciary duty cause of action because plaintiff cannot establish that plaintiff owed a fiduciary duty to Royal, as she was simply an at will employee, and that plaintiff cannot establish any breach of such a duty because defendant merely informed the patients’ parents and the nurses of her new place of employment.

To allege a breach of fiduciary duty, a plaintiff must plead the existence of a fiduciary or confidential relationship, the breach of a duty arising under this relationship and resulting damages. Richelle L. v. Roman Catholic Archbishop (2003) 106 Cal.App.4th 257, 273.

In opposition, plaintiff argues that defendant as an employee owed a duty of loyalty to her employer. Plaintiff also argues that a fiduciary relationship can arise where confidence is reposed in one person in the integrity of another, which confidence is voluntarily accepted.

In general, a fiduciary or confidential relationship may be recognized if the following factors are present:

“1) The vulnerability of one party to the other which

2) results in the empowerment of the stronger party by the weaker which

3) empowerment has been solicited or accepted by the stronger party and

4) prevents the weaker party from effectively protecting itself.”

Richelle L. v. Roman Catholic Archbishop of San Francisco (2003) 106 Cal.App.4th 257, 272.

It is also recognized that a legally recognized fiduciary duty exists between and agent and a principal See Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1580.

Here, triable issues of fact are raised with respect to the existence of a duty of loyalty or an agency- principal relationship, particularly given the level of Gonzales’ responsibilities in directing patient relationships, and in preserving matters such as Medi-Cal authorizations and the facility licensing. [See UMF Nos. 3; Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1-3, 38, and evidence cited]. The motion accordingly cannot be granted for failure to establish a duty.

With respect to breach of such a duty, as noted above, the opposition submits evidence that while employed with plaintiff, defendant Gonzales engaged in conduct which could be reasonably construed as a

breach of that duty, including failing to keep patient information private, and accessing the patient list to contact Medi-Cal patients, then discharging those patients from Royal in order to transfer them to Noho. [Additional Facts Nos. 10, 24- 31, 44, and evidence cited]. The evidence also supports an inference that Gonzales worked

at cross-purposes with her employer by failing to renew licensing with the RCOC and failing to renew Medi-Cal authorizations. [Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1, 38, and evidence cited].

Triable issues of material fact have been raised, and the motion on this issue is denied.

ISSUE 9: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION RELATIVE TO THE CONSPIRACY ALLEGATION BECAUSE IT IS NOT AN INDEPENDENT CAUSE OF ACTION

Defendant Gonzales argues that this cause of action should be dismissed as civil conspiracy is not an independent cause of action.

To establish a civil conspiracy a plaintiff must plead and prove a civil wrong (for example, fraud or battery), the formation and operation of the conspiracy, a wrongful act done pursuant to the conspiracy, and resulting damage. Unruh v. Truck Ins. Exchange (1972) 7 Cal.3d 616, 631, (noted to have been superseded by statute on other grounds in Hendy v. Losse (1991) 54 Cal.3d 723.)

The argument here appears directed at the operative pleading, the SAC, which in the seventh cause of action for conspiracy alleges that defendants encouraged and ratified the acts of Noho and Gonzales, including that by encouraging defendants to expropriate sensitive and trade secret information to allow plaintiff’s clients medical authorizations to lapse without renewal, and to discharge patients and transfer to Noho, as well was to misappropriate trade secrets for use by Noho. [Ex. 1, SAC, para. 93, e, f]. This appears an attempt to hold Gonzales responsible for the civil wrongs engaged in by Noho. While it might be preferred that these civil conspiracy allegations be attached to the causes of action for those civil wrongs, it does not appear that summary judgment should be premised on this argument. Even if the court were to find that argument persuasive, it would in this case at best warrant the court treating the motion as a motion for judgment on the pleadings, and permitting leave to amend, which would not fully resolve the cause of action.

The motion then broadly argues:

“As detailed above, Plaintiff lacks sufficient evidence to support any of the allegations in the SAC. In turn, Plaintiff has failed to satisfy its burden that Ms. Gonzales entered into any kind of conspiracy to commit tortious conduct. Therefore, the conspiracy cause of action must be dismissed.”

[Motion, p. 13: 13-15].

As argued in the opposition, this is insufficient to shift the burden to plaintiff, as defendant points to no facts, and makes no attempt to establish that plaintiff has demonstrated a lack of evidence to support this claim. Defendant has failed to meet the initial burden with respect to any inability to establish this cause of action on its merits, and the motion is accordingly denied.

RULING:

CCP 437c(g): Material facts which do or do not create a triable issue of controversy:

Motion of Defendant Remil Charmaine Gonzales for Summary Judgment, or in the Alternative Summary Adjudication:

Motion for Summary Judgment is DENIED.

Motion for Summary Adjudication:

ISSUE 1: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE FEDERAL COMPUTER FRAUD AND ABUSE CAUSE OF ACTION

ISSUE 2: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE VIOLATION OF THE COMPUTER DATA ACCES AND FRAUD ACT CAUSE OF ACTION

Motion is GRANTED.

Defendant Gonzales has established that the subject Acts, intended to afford redress for computer hacking, require proof of loss connected with the computer system itself. See AtPac, Inc. v. Aptitude Solutions, Inc. (USDC E.D. Cal. 2010) 730 F.Supp.2d 1174,1184-1186, citing, among other authorities, SKF USA, Inc. v. Bjerkness, 636 F.Supp.2d 696 (N.D.Ill.2009) “(holding that former employees' unauthorized transfer of confidential files and trade secrets to thumb drives which were brought to new employer and eventually resulted in lost business to plaintiff did not constitute a “loss” under the CFAA to support a civil action) (“Purely economic harm unrelated to the computer systems is not covered by this definition.”).” AtPac, at 1185.

Defendant here has submitted evidence that during deposition, plaintiff’s owner, sole shareholder, officer and director, Christopher Chen, testified that he had no information to support his computer fraud causes of action, and that another employee of plaintiff, Christina Khamsy, testified there was no damage to plaintiff’s computer hardware or software. [UMF Nos. 10, 11, and evidence cited]. This evidence is actually undisputed in the separate statement. [See Response to UMF Nos. 10, 11].

This is sufficient to establish that plaintiff cannot establish recoverable damages permitted under the Acts, shifting the burden to plaintiff to raise triable issues of material fact.

In opposition to the motion, the only evidence of damages offered is evidence purporting to show a decline in profits and loss of revenue. [See Additional Fact No. 45, and evidence cited]. The evidence submitted consists of documents prepared purporting to show the projected amount of money which would have been paid for each patient which transferred to defendant Noho had the patient not transferred. [See Exs. 13, 14]. There is no component of this showing which would implicate any expense with respect to the computer system, but

purely economic harm unrelated to the computer systems. As plaintiff will be unable to establish recoverable damages, the causes of action fail.

ISSUE 3: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE TORTUOUS INTERFERENCE WITH CONTRACTUAL RELATIONS CAUSE OF ACTION BECAUSE PLAINTIFF DID NOT HAVE A VALID ENFORCEABLE CONTRACT WITH ITS PATIENTS OR NURSING STAFF

Motion is DENIED.

The opposition submits evidence supporting a reasonable inference that defendant Gonzales engaged in interference with contractual relations with respect to plaintiff’s license with the Regional Center of Orange County being permitted to expire. The failure of Gonzales to timely renew the license or report the pending expiration to Royal, combined with the circumstances under which Gonzales was transitioning to work full time for Noho, supports a reasonable inference that the conduct was intended to disrupt the relationship. [Ex. 18, Gonzales Depo. p. 69; UMF No. 1, and evidence cited; Response to UMF No. 17, and evidence cited; Chen Decl. para. 10; See also Khamsky Decl., para. 18; Additional Facts Nos. 13, 16, 17, 20, 24, 25, 29, 30, 38, and evidence cited].

ISSUE 4: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS CAUSE OF ACTION

Motion is DENIED.

Plaintiff has raised triable issues of material fact which would support a reasonable inference that plaintiff

wrongfully solicited plaintiff’s nurses to leave their at will employment. Specifically, plaintiff has submitted evidence detailing the suspicious circumstances under which the exodus to Noho of numerous nurses occurred, as well as evidence that Chen had a conversation with a former patient’s parent, in which it was disclosed that the patient transferred to Noho because the nurse was transferring there, and that one of those nurses, Hershey Mendoza, was directly asked by Gonzales to transfer to Noho. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111]. There is also evidence that background checks for those nurses were requested by Hernandez while Gonzales

was still employed at Royal, from a Royal computer, possibly using Royal resources, and the nurses were hired by Gonzales during that time period. [Additional Fact No. 37, and evidence cited; Ex. 9].

ISSUE 5: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 6: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—STATUTORY

ISSUE 7: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE MISAPPROPRIATION OF TRADE SECRETS CAUSE OF ACTION—COMMON LAW

Motion is DENIED.

Defendant argues that plaintiff will be unable to establish conduct on the part of Gonzales constituting solicitation of patients or nursing staff.

Plaintiff in opposition has raised triable issues of fact with respect to whether defendant’s conduct went beyond what is claimed, given the circumstances surrounding defendant’s conduct. Specifically, there is evidence submitted that as an employee of Royal, Gonzales signed a confidentiality statement preventing disclosure of patient information, and that after requests for raises which resulted in only a modest $5 per hour raise, and other disputes with Royal, Gonzalez became disgruntled with her employment with Royal. [Additional Facts Nos. 10-13, and evidence cited]. Gonzales, in October of 2015, began working for Noho while also working for Royal, without disclosing this circumstance to Royal, and during the period from October through November 30, 2015 continued to have access to her computer at Royal, and its patient list and the patients’ medical files. [Additional Facts Nos. 14-17, 19]. During that period, Gonzales worked, partly from her Royal computer, to assist Noho to reinstate its Medi-Cal pin so that it could provide nursing to Medi-Cal patients. [Additional Fact No. 21-23]. Once Noho’s Medi-Cal pin was reinstated, at the end of October, or beginning of November 2015, Noho began providing shift care to 12 of 13 patients of Royal’s who were Medi-Cal patients. [Response to UMF Nos. 22, 23; Additional Fact No. 24, and evidence cited]. All of those patients transferred from Royal to Noho on either November 1, 2015 or November 2, 2015, the same time period when nurses also transferred. [Additional Facts Nos. 25, 33, and evidence cited]. Also during the period while Gonzales was working at Royal and also with Noho, there is evidence that she personally handled the paperwork discharging the twelve patients to Noho’s care, and failed to inform Royal, when the result of the patients being discharged rather than transferred was that Royal would not be alerted to the transfers, until a much later time. [Additional Fact Nos. 26-29]. Significantly, the opposition submits evidence that the reasons some patients were being transferred as represented on the discharge paperwork were false. [Additional Fact No. 30, and evidence cited]. For example, it was represented by Gonzales that one patient was deceased, so that no home care was needed, and that one patient had moved to a different state, when, in fact, the patients were transferred to Noho. [Id.; See also Tan Decl. paras. 11-13].

Also, during this period, there is evidence that Gonzales was responsible for renewing treatment authorization from Medi-Cal patients, but failed to do so, and affirmatively represented to Chen that the authorization requests had been taken care of. [Additional Fact No. 38, and evidence cited]. There is also evidence that the

hard copy medical plans of care for each of the patients transferred went missing from the files until late December 2015. [Additional Fact No. 31, and evidence cited]. Finally, as discussed above, there is evidence that would support a reasonable conclusion that there was solicitation beyond Gonzales just informing persons of her new employment. [See Response to UMF Nos. 28, 29, and evidence cited; Additional Facts No. 36, 37; Ex. 20, Chen Depo. pp. 184-185; Ex. 24, Medina Depo. p. 111].

The circumstances support a reasonable inference that Gonzales relied on patient records to identify those patients who were Medi-Cal eligible in order to deliver them to Noho, and in order to target the nurses who worked with those patients to deliver them to Noho as well, raising triable issues of fact.

ISSUE 8: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION OF THE BREACH OF FIDUCIARY DUTY CAUSE OF ACTION

Motion is DENIED.

Defendant argues that plaintiff cannot establish the existence of a duty and cannot show a breach of such a duty, given that defendant did not solicit patients or nursing staff.

Plaintiff in opposition has raised triable issues of material fact with respect to the existence of a duty of loyalty, a confidential relationship, or an agency- principal relationship, particularly given the level of Gonzales’ responsibilities in directing patient relationships, and in preserving matters such as Medi-Cal authorizations and the facility licensing. [See UMF Nos. 3; Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1-3, 38, and evidence cited].

With respect to breach of such a duty, as noted above, the opposition submits evidence that while employed with plaintiff, defendant Gonzales engaged in conduct which could be reasonably construed as a breach of that duty, including failing to keep patient information private, and accessing the patient list to contact Medi-Cal patients, then discharging those patients from Royal in order to transfer them to Noho. [Additional Facts Nos. 10, 24- 31, 44, and evidence cited]. The evidence also supports an inference that Gonzales worked at cross-purposes with her employer by failing to renew licensing with the RCOC, and failing to renew Medi-Cal authorizations. [Response to UMF No. 17, and evidence cited; Additional Facts Nos. 1, 38, and evidence cited].

ISSUE 9: DEFENDANT IS ENTITLED TO SUMMARY ADJUDICATION RELATIVE TO THE CONSPIRACY ALLEGATION BECAUSE IT IS NOT AN INDEPENDENT CAUSE OF ACTION

Motion is DENIED.

As to the argument that there is no stand-alone cause of action for civil conspiracy, defendant has failed to establish that the SAC has not sufficiently stated a claim pursuant to which moving defendant may be held responsible for the alleged tortious conduct of co-defendants, including defendant Noho Home Health Care, Inc.

[Ex. 1, SAC, para. 93].

As to any argument that plaintiff cannot establish a civil conspiracy, defendant has briefly asserted this argument, without pointing to specific facts, or making any attempt to establish that plaintiff has demonstrated a lack of evidence to support this claim. Defendant has failed to meet the initial burden with respect to any inability to establish this cause of action on its merits, and has failed to shift the burden to plaintiff to raise triable issues.

Defendant/Cross-Defendant’s Remil Charmaine Gonzales’ Objections to Plaintiff’s Evidence:

Objection No. 20 is SUSTAINED IN PART ONLY as to the phrase, “because Gonzales knew we would never condone it.”

Objection No. 26 is SUSTAINED IN PART ONLY as to the sentence, “I believe Gonzales intentionally… its patients.”

Objection No. 27 is SUSTAINED IN PART ONLY as to the phrase, “knew Royal’s documentation with the

Regional Center of Orange County (RCOC) would expire on November 7, 2015…”

Objections Nos. 30 and 31, which appear to state identical objections, are SUSTAINED.

Objection No. 33 is SUSTAINED IN PART ONLY as to the sentence, “Gonzales intentionally allowed…seeking any renewals.”

Objections are otherwise OVERRULED.

GIVEN THE RECENT CORONAVIRUS CRISIS, UNTIL FURTHER ORDERED, DEPARTMENT D WILL ALLOW APPEARANCES ONLY BY COURTCALL.

Please make such arrangements in advance if you wish to appear via CourtCall at (888) 882-6878 (or www.courtcall.com). Counsel and parties (including self-represented litigants) are not to personally appear, absent a compelling emergency reason. If none of the litigants on a matter set up a CourtCall appearance, then the Court will assume the parties are submitting on the tentative.

Case Number: EC064532    Hearing Date: December 13, 2019    Dept: NCD

TENTATIVE RULING

Calendar: 12

Date: 12/13/19

Case No. EC 064532 Trial Date: February 10, 2020

Case Name: Royal Home Healthcare Agency, Inc. v. Noho Home Health Care, Inc., et al.

MOTION TO BE RELIEVED AS COUNSEL

MOTION FOR SUMMARY JUDGMENT

Moving Party: The Law Offices of Nazaretian & Besnilian (Relieved)

Defendant Remil Charmaine Gonzalez

Name of Client: Defendant Elizabeth Hernandez

Responding Party: Plaintiff Royal Home Healthcare Agency

Correct address in proof of service? (CCP §§1013, 1013a)

Client: NO POS

Other parties: NO POS

16/+5 day lapse? (CCP §1005(b)) No POS

RELIEF REQUESTED:

Relieved

Order permitting attorney to be relieved as attorney of record in this action

Motion for Summary Judgment/Adjudication

Summary judgment in favor of defendant Remil Charmaine Gonzalez.

In the alternative, summary adjudication of issues

GROUNDS FOR MOTION:

Client agreed to sign Substitution of Attorney, client has failed to return telephone calls or respond to voicemails

DECLARATION BY MOVING ATTORNEY [CRC 3.1362 (c),(d)]:

Reasons why motion is necessary: ok

Address recently confirmed (within last 30 days)

No

PROPOSED ORDER (CRC 3.1362 (e)):

Address and phone number of client set forth: No

Proper warning: Ok

Future dates filled in: Not complete

ANALYSIS:

Motion to Be Relieved as Counsel

There are several problems with this motion.

First, there is no proof of service submitted or on ecourt showing that the motion has been served.

Under CCP § 284:

“The attorney in an action or special proceeding may be changed at any time before or after judgment or final determination, as follows:

  1. Upon the consent of both client and attorney, filed with the clerk, or entered upon the minutes;

  2. Upon the order of the court, upon application of either client or attorney, after notice from one to the other.”

    (emphasis added).

    Under CRC 3.1362(d), with respect to a motion to be relieved as counsel:

    “The notice of motion and motion, the declaration, and the proposed order must be served on the client and on all other parties who have appeared in the case. The notice may be by personal service, electronic service, or mail.

    There is no proof of service that notice was given to the client or the other parties, although, as discussed below, an opposition has been filed by one other party. The motion is denied or continued to permit proper notice to be served or proof of service filed.

    The motion also indicates that the motion was served on the client by mail but is confusing with respect to whether or how the current address of the client was confirmed.

    CRC Rule 3.1362(d) authorizes the service of a motion to withdraw on the client by mail where the motion is accompanied by a declaration stating facts showing the service address is either current or the last known address:

    “If the notice is served by mail under Code of Civil Procedure section 1013, it must be accompanied by a declaration stating facts showing that either:

  1. The service address is the current residence or business address of the client; or

  2. The service address is the last known residence or business address of the client and the attorney has been unable to locate a more current address after making reasonable efforts to do so within 30 days prior to the filing of the motion to be relieved.”

    The rule further provides that;

    “As used in this rule, ‘current’ means that the address was confirmed within 30 days before the filing of the motion to be relieved. Merely demonstrating that the notice was sent to the client’s last known address and was not returned, or no electronic delivery failure message was received is not, by itself, sufficient to demonstrate that the address is current. If the service is by mail, Code of Civil Procedure section 1011(b) shall apply.”

    CCP § 1011(b) sets forth requirements for personal service of a party at a residence and provides “(3) If the party’s residence is not known, any attempt of service pursuant to this subdivision may be made by delivering the notice or papers to the clerk of the court, for that party.”

    The declaration checks the box that attorney has “confirmed within the past 30 days that the address is current” “by other means,” with a notation, “Elizabeth Hernandez’s address was verified by ***” It is not clear what this means in terms of the client being served.

    Defendant Gonzalez has filed an opposition to the motion, objecting on this ground, and arguing that it is critical that the address be known before the attorney is relieved, as evidently in reliance on a previous Substitution of Attorney, the parties have attempted to serve discovery, and are uncertain with respect to whether the party is receiving notices in this matter.

    The court will confirm that counsel undertook some effort to confirm the currentness of the client’s address, and if there had been no confirmation that the address is current, there is no information showing that counsel has complied with the requirement that “reasonable efforts” have been made to locate a more current address. The official form lists efforts such as mailing the motion return receipt requested, calling the last known telephone number, contacting persons familiar with the client, or conducting a search. The court will inquire at the hearing what the current status of the address is, and if there is some explanation why the court should consider the address current, the motion may be granted.

    Otherwise, the motion is denied or will be continued for a proper showing of reasonable efforts to locate an appropriate address, or the court may order counsel to serve the moving papers on the clerk of the court.

    Substantive

    If the court is satisfied that the address is current, the paperwork is in order, except counsel has failed to provide the client’s current address and telephone number and should be required to complete the order before the court signs it. The order also fails to specify the nature of the hearing on 1/22/20, which is a Final Status Conference.

    The summary judgment date should also be corrected to reflect the new date determined at the hearing.

    RULING:

    Motion to be Relieved as Counsel is DENIED WITHOUT PREJUDICE. There is no proof of service showing service of the moving papers on the client or the other parties who have appeared in this matter, as required under CCP § 284 and California Rules of Court, Rule 3.1362 (d). In addition, the declaration submitted in support of the motion indicates the moving papers were served on the client by mail but does not specify how the currentness of the mailing address was confirmed within the last thirty days, and the declaration also fails to show that reasonable efforts have been made to confirm the address is current or locate a more current address, as required under CRC Rule 3.1362(d). If the client’s current address is not known, service may be made by delivering notice and the papers to the clerk. CRC Rule 3.1362(d); CCP section 1011.

    Motion of Defendant Remil Charmaine Gonzalez for Summary Judgment, or in the Alternative Summary Adjudication is CONTINUED to January 31, 2020. No further papers are permitted to be filed. The court sets a TSC for January 31, 2020 at 9:00 a.m. and vacates the current trial date of February 10, 2020 and all related dates.