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This case was last updated from Los Angeles County Superior Courts on 06/20/2019 at 02:39:35 (UTC).

DOLLAR SHAVE CLUB INC ET AL VS EDGEWELL PERSONAL CARE CO ET

Case Summary

On 10/06/2017 DOLLAR SHAVE CLUB INC filed a Contract - Other Contract lawsuit against EDGEWELL PERSONAL CARE CO ET. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is DEIRDRE HILL. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****8761

  • Filing Date:

    10/06/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

DEIRDRE HILL

 

Party Details

Plaintiffs and Petitioners

DOLLAR SHAVE CLUB INC

O'MALLEY MICHAEL

DOLLAR SHAVE CLUB INC.

Defendants and Respondents

EDGEWELL PERSONAL CARE GROUP INC

DOES 1 TO 20

EDGEWELL PERSONAL CARE COMPANY

SCHICK MANUFACTURING INC

EDGEWELL PERSONAL CARE GROUP INC.

SCHICK MANUFACTURING INC.

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

KIRKLAND & ELLIS LLP

YAGHOUBIAN BENJAMIN A.

Defendant and Respondent Attorneys

HUNTON & WILLIAMS LLP

JUAREZ ROLAND M

 

Court Documents

NOTICE OF CHANGE OF FIRM NAME

4/10/2018: NOTICE OF CHANGE OF FIRM NAME

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS? MOTION TO COMPEL RESPONSES TO REQUEST FOR PRODUCTION OF DOCUMENTS AND INTERROGATORIES

7/17/2018: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS? MOTION TO COMPEL RESPONSES TO REQUEST FOR PRODUCTION OF DOCUMENTS AND INTERROGATORIES

DEFENDANTS' REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS, OR IN THE ALTERNATIVE, STAY, THE PENDING ACTION ON THE GROUND OF INCONVENIENT FORUM

7/23/2018: DEFENDANTS' REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS, OR IN THE ALTERNATIVE, STAY, THE PENDING ACTION ON THE GROUND OF INCONVENIENT FORUM

DECLARATION OF D. ANDREW QUIGLEY IN SUPPORT OF DEFENDANTS' UNOPPOSED EX PARTE APPLICATION FOR AN ORDER CONTINUING HEARING DATES

8/29/2018: DECLARATION OF D. ANDREW QUIGLEY IN SUPPORT OF DEFENDANTS' UNOPPOSED EX PARTE APPLICATION FOR AN ORDER CONTINUING HEARING DATES

ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

10/2/2018: ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

Case Management Statement

11/26/2018: Case Management Statement

Order

12/7/2018: Order

Declaration

2/22/2019: Declaration

Notice

3/14/2019: Notice

Notice

3/28/2019: Notice

Declaration

4/22/2019: Declaration

Proof of Service (not Summons and Complaint)

4/24/2019: Proof of Service (not Summons and Complaint)

Notice

6/4/2019: Notice

Minute Order

6/5/2019: Minute Order

DECLARATION OF BENJAMIN YAGHOUBIAN IN SUPPORT OF OPPOSITION TO DEFENDANTS' MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

1/29/2018: DECLARATION OF BENJAMIN YAGHOUBIAN IN SUPPORT OF OPPOSITION TO DEFENDANTS' MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

DECLARATION OF JENNIFER LONGNION IN SUPPORT OF OPPOSITION TO DEFENDANTS' MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

1/29/2018: DECLARATION OF JENNIFER LONGNION IN SUPPORT OF OPPOSITION TO DEFENDANTS' MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

DECLARATION OF BENJAMIN A. YAGHOUBIAN IN SUPPORT OF VERIFIED APPLICATION OF JOSEPH A. LOY FOR PRO HAC VICE ADMISSION

11/9/2017: DECLARATION OF BENJAMIN A. YAGHOUBIAN IN SUPPORT OF VERIFIED APPLICATION OF JOSEPH A. LOY FOR PRO HAC VICE ADMISSION

FIRST AMENDED COMPLAINT FOR DECLARATORY RELIEF (C.C.P. ? 1060) AND VIOLATION OF CAL. BUS. & PROF. CODE SECTION 17200

11/22/2017: FIRST AMENDED COMPLAINT FOR DECLARATORY RELIEF (C.C.P. ? 1060) AND VIOLATION OF CAL. BUS. & PROF. CODE SECTION 17200

144 More Documents Available

 

Docket Entries

  • 06/17/2019
  • at 3:00 PM in Department 49; Informal Discovery Conference (IDC) ((previously vacated by the Court on 6-13-19)) - Held

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  • 06/17/2019
  • Minute Order ( (Informal Discovery Conference (IDC) (previously vacated by th...)); Filed by Clerk

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  • 06/13/2019
  • at 3:00 PM in Department 49; Informal Discovery Conference (IDC) - Not Held - Taken Off Calendar by Court

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  • 06/13/2019
  • Minute Order ( (Informal Discovery Conference (IDC))); Filed by Clerk

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  • 06/06/2019
  • Notice (OF ENTRY OF ORDER REGARDING PLAINTIFFS? MOTION FOR A PROTECTIVE ORDER PRECLUDING DEFENDANTS FROM TAKING DISCOVERY RELATING TO PURPORTED TRADE SECRETS AND SETTING SUMMARY JUDGMENT HEARING); Filed by Dollar Shave Club, Inc. (Plaintiff); Michael O'Malley (Plaintiff)

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  • 06/05/2019
  • at 08:31 AM in Department 49; Hearing on Motion for Protective Order - Held - Motion Denied

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  • 06/05/2019
  • at 08:30 AM in Department 49; Status Conference (re mediation completion (c/f 5-10-19 per court)) - Held

    Read MoreRead Less
  • 06/05/2019
  • at 08:30 AM in Department 49; Status Conference (reMSJ SETTING DATE) - Held

    Read MoreRead Less
  • 06/05/2019
  • Minute Order ( (Hearing on Motion for Protective Order; Status Conference re ...)); Filed by Clerk

    Read MoreRead Less
  • 06/05/2019
  • Order Appointing Court Approved Reporter as Official Reporter Pro Tempore (CSR: Marco Neilly / #13564); Filed by Clerk

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251 More Docket Entries
  • 11/09/2017
  • VERIFIED APPLICATION OF JOSEPH A. LOY FOR PRO HAC VICE ADMISSION

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  • 11/09/2017
  • VERIFIED APPLICATION OF MARY C. MAZZELLO FOR PRO HAC VICE ADMISSION

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  • 10/25/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

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  • 10/25/2017
  • ORDER TO SHOW CAUSE HEARING

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  • 10/25/2017
  • OSC-RE Other (Miscellaneous); Filed by Clerk

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  • 10/25/2017
  • Notice of Case Management Conference; Filed by Clerk

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  • 10/06/2017
  • COMPLAINT FOR DECLARATORY RELIEF (C.C.P. 1060) AND VIOLATION OF CAL. BUS. & PROF. CODE SECTION 17200

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  • 10/06/2017
  • SUMMONS

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  • 10/06/2017
  • Complaint; Filed by Dollar Shave Club, Inc. (Plaintiff); Michael O'Malley (Plaintiff)

    Read MoreRead Less
  • 01/22/2013
  • Notice; Filed by Dollar Shave Club, Inc. (Plaintiff); Michael O'Malley (Plaintiff)

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Tentative Rulings

Case Number: BC678761    Hearing Date: March 17, 2021    Dept: 49

Superior Court of California

County of Los Angeles

Dollar Shave Club, Inc., et al.,   

Plaintiffs,

Case No.

BC678761

v.

[Tentative] Ruling

Edgewell Personal Care Company, et al.,

Defendants.

Hearing Date: March 17, 2021

Department 49, Judge Stuart M. Rice

Plaintiffs and Cross-Defendants’ Motions to Compel Further Responses

Moving Party: Plaintiffs and Cross-Defendants Dollar Shave Club, Inc. and Michael O’Malley

Responding Party: Defendant and Cross-Complainant Edgewell Personal Care Company

Ruling: The motions are taken off calendar as moot.

Plaintiffs and Cross-Defendants Dollar Shave Club, Inc. and Michael O’Malley (“DSC parties”) move for an order compelling Defendant and Cross-Complainant Edgewell Personal Care Company (“Edgewell”) to provide further responses to its Request for Admission and Requests for Production of Documents.

The court need not delve into the dispute between the parties pertaining to its meet and confer efforts. The DSC parties withdraw both motions to compel further responses because Edgewell has agreed to provide the requested supplemental responses sought. (Reply 4:7-10.) The parties are reminded that better and more timely communication could have avoided the extensive work necessary to fully brief this discovery dispute. After a productive IDC on February 16, 2021 for which the court expresses its appreciation to both counsel in this hotly contested lawsuit, it is perplexing that these issues could not have been resolved sooner.

The motions are taken off calendar as moot.

Date: March 17, 2021

Honorable Stuart M. Rice

Judge of the Superior Court

Case Number: BC678761    Hearing Date: July 28, 2020    Dept: 49

Superior Court of California

County of Los Angeles

Dollar Shave Club, Inc., et al.,  

Plaintiff,

Case No.

BC678761

v.

[Tentative] Ruling

Edgewell Personal Care Company, et al.   

Defendants.

Hearing Date: July 28, 2020

Department 49, Judge Stuart M. Rice

(1) Defendants’ Motion to Dismiss Plaintiffs’ Claims

(2) Plaintiffs’ Motion for Entry of Judgment

Moving Party:  Defendants Edgewell Personal Care Company, Edgewell Personal Care Group, Inc., and Schick Manufacturing, Inc. (Dismiss); Plaintiffs Dollar Shave Club, Inc. and Michael O’Malley (Entry of Judgment)

Responding Party:      Vice Versa

Ruling: Defendants’ motion to dismiss is granted in full. Plaintiffs’ motion for entry of judgment is denied.

covid-19 pandemic, they were continued to this date.

Background

On November 8, 2017, defendant Edgewell filed an action in the Connecticut Superior Court against plaintiff O’Malley, alleging that he breached a noncompete clause. Edgewell later added claims against plaintiff Dollar Shave Club for tortious interference with contract and against both plaintiffs for trade secret misappropriation.

Defendants moved for judgment on the pleadings in this action on March 4, 2019, arguing that plaintiffs’ declaratory relief and UCL claims were moot because the subject noncompete clause had already expired. The court denied defendants’ motion on March 28, 2019.

On February 14, 2019, in the Connecticut action, plaintiffs filed a motion to strike portions of Edgewell’s second amended complaint which related to the noncompete clauses on grounds which included that the noncompete clause is unenforceable. The Connecticut court granted O’Malley’s motion on August 21, 2019, holding that Missouri—not California—law applied to the subject agreements, and that the noncompete clauses were unenforceable under Missouri law. (Mary Mazzello Decl., Exhibit 10.)

The court ordered the parties to file briefs regarding the impact of the Connecticut court’s August 21, 2019 ruling on this action and set a hearing on that issue as well as the following hearings for October 21, 2019: plaintiffs’ motion for a stay, any party’s dispositive motions, FSC, TSC, and status conference regarding motion setting for pending discovery motions. Edgewell’s motion for leave to file a cross-complaint was initially scheduled to be heard on November 22, 2019. In response to defendants’ ex parte application to continue the October 21, 2019 hearing date, the court continued the hearings on that date to January 31, 2020, to which date it also continued Edgewell’s motion for leave to file a cross-complaint.

On January 8, 2020, defendants filed a motion to dismiss plaintiffs’ claims for lack of subject matter jurisdiction. On January 14, 2020, the parties filed a joint stipulation and proposed order expressing the agreement that Edgewell would file its cross-complaint in this action in exchange for its dismissal of the Connecticut action without prejudice. Edgewell agreed that it would seek full adjudication of its claim in the California Superior Court and would not refile the Connecticut action during the pendency of the California action or any appeal therefrom. On January 23, 2020, plaintiff filed a notice of withdrawal of its motion to stay, and Edgewell filed its cross-complaint.

Based on the Connecticut court’s August 21, 2019 ruling, plaintiffs filed a motion for entry of judgment in their favor on their causes of action for declaratory relief and violation of the UCL.

Defendants’ Motion to Dismiss & Plaintiffs’ Motion for Entry of Judgment

Defendants move to dismiss plaintiffs’ claims for declaratory relief and violation of California’s Unfair Competition Law (UCL) on the ground that there is no longer an actual case or controversy such that the claims are moot. Plaintiffs move for entry of judgment in their favor based on the Connecticut court’s ruling that Missouri law, not California law, applies to the noncompete provision, and the noncompete clauses are unenforceable under Missouri law. Because these motions mirror one another and the moving papers with respect to each raise similar arguments, the motions are addressed together below.

Plaintiff’s Claim for Declaratory Relief

Code of Civil Procedure section 1060 provides that a court “may make a binding declaration” in cases of actual controversies as to a litigant’s rights or duties under a contract. It also expressly provides that such declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought. (Id.) Section 1060 must be read together with section 1061, under which the court has discretion to refuse to grant declaratory relief if is not necessary or proper at the time in light of all the circumstances. (Code Civ. Proc. § 1061.)

Declaratory relief is designed to be a practical means of resolving controversies, so that parties can conform their conduct to the law and prevent future litigation. (Meyer v. Spring Spectrum L.P. (2009) 45 Cal.4th 634, 647.)

Whether an action is justiciable for purposes of Code of Civil Procedure section 1060 is “a matter entrusted to the sound discretion of the trial court.” (Application Group, Inc. v. Hunter Group, Inc. (1998) 61 Cal.App.4th 881, 893.) In Application Group, Inc., the court of appeal vacated the trial court’s declaratory judgment as to the individual employee concerning a noncompete provision on the ground that there was no “actual controversy” given the following circumstances: the restriction’s one-year term had expired, final judgment had been entered in plaintiff’s favor (via motion for summary judgment) in a lawsuit in another state, and there was no indication that the employee faced any further liability, or that she was interested in becoming reemployed by a company requiring covenants not to compete in the near future. (Id. at pp. 894-895.)

Here, it is undisputed that the noncompete provisions which are the subject of plaintiffs’ declaratory relief claim have expired. The Connecticut court ruled in favor of O’Malley on his motion to strike Edgewell’s complaint to the extent it relies on noncompete provisions. (See RJN, Exhibit C at p. 8.) Finding that Missouri law, not California law, applied, the Connecticut court held that the noncompete provisions were unenforceable, even given Missouri’s more permissive stance towards noncompete clauses. (See id.) Further, defendants entered into a covenant not to sue on September 26, 2019, in which they agreed “not to institute any action or suit at law or in equity in California, or otherwise assert any claim(s) or demand(s) against Michael O’Malley or Dollar Shave Club, Inc. in California, [or] seek damages from them in California relating to any alleged breach of Article II, paragraph 2 in O’Malley’s 2010 Award Agreement, and any alleged breach of Article II, paragraph 2 of O’Malley’s 2015 Award Agreement.” (Defendants’ Request for Judicial Notice (RJN), Exhibit D.) The foregoing circumstances support the conclusion that there is no “actual controversy” as to plaintiffs’ rights under the agreements containing the subject noncompete provisions.

Plaintiffs’ main arguments that a controversy remains are as follows: defendants continue to dispute that the noncompete clauses are enforceable in California; because their covenant not to sue is limited to California, said covenant lacks full assurance that defendant will not enforce the noncompete clauses; defendants’ covenant not to sue is limited to the 2010 and 2015 award agreements, yet there are three additional agreements containing identical noncompete provisions; and defendants have not promised there will be no appeal of the Connecticut court’s decision holding the noncompete clauses unenforceable.

As defendants point out, their representation that they would dispute whether the noncompete clauses are enforceable in California was conditioned on plaintiffs’ declaratory relief claim surviving this motion to dismiss based on mootness. There appears to be no other reason for defendants to dispute the noncompete provisions’ enforceability given that they have now expired. Thus, defendants’ hypothetical statement that they would dispute the enforceability of the noncompete provisions does not create an actual controversy. For the same reason, the fact that defendants’ agreement not to sue is limited to California does not support plaintiffs’ contention that there is an actual controversy. Nor does the far-fetched, hypothetical scenario in which defendants move to vacate their voluntary dismissal of the Connecticut action and subsequently appeal the Connecticut court’s August 21, 2019 ruling.

Plaintiffs’ assertion that there are three award agreements in addition to the 2010 and 2015 agreements, all of which contain identical noncompete provisions, is also inconsequential because plaintiff’s declaratory relief claim only concerns the 2010 and 2015 agreements. The other purported agreements are therefore not at issue in this action. Further, if the noncompete provisions in those agreements are “identical,” as plaintiffs contend, then they too have already expired.

The lack of an agreement by defendants not to appeal the Connecticut court’s ruling is insufficient to form the basis of an “actual controversy.” This is particularly so given that the nonenforcement provisions have expired and defendants have voluntarily dismissed their action in Connecticut. Defendants have agreed not to attempt to enforce the noncompete provisions in California. There is no other action pending with regard to the expired noncompete provisions. The court finds that there is no “actual controversy” to form the basis of plaintiffs’ declaratory relief claim.

Additionally, even if there were an “actual controversy,” the court would refuse to grant declaratory relief under Code of Civil Procedure section 1061 because it is not necessary or proper at this time in light of all the circumstances set forth above. (See generally Osseous Technologies of American, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357 [trial court acted well within the discretion provided by section 1061 where: there was no allegation of an ongoing contractual relationship between the parties, the future impact of any declaratory relief on the parties’ behavior was speculative, and the timing of the plaintiff’s complaint suggested that the plaintiff filed the declaratory action for strategic purposes (forum selection), and an adequate remedy existed for parties to resolve their dispute, i.e., a breach of contract action].)

Finally, plaintiffs argue that they are entitled to judgment in their favor on their declaratory judgment claim under the full faith and credit clause in article IV of the United States Constitution. “The full faith and credit clause requires only that judgment be given as much effect in the state of the forum as in the state of its rendition.” (In re Mary G. (2007) 151 Cal.App.4th 184, 201, internal quotations omitted.) Although defendants argue that the Connecticut court’s ruling is not entitled to full faith and credit because it is not an enforceable final judgment, the court need not address that issue because even assuming a final judgment is required and that the Connecticut court’s ruling qualifies as a final judgment, there is no indication that plaintiff would be entitled to declaratory judgment under Connecticut law.

Therefore, plaintiffs’ motion for entry of judgment in their favor on their declaratory relief claim is denied. Defendants’ motion to dismiss is granted as to plaintiffs’ claim for declaratory relief. 

Cause of Action for Violation of the Unfair Competition Law

Plaintiffs oppose defendants’ motion to dismiss and move for entry of judgment on this cause of action because defendants could still attempt to enforce the noncompete clauses, whether against O’Malley or someone else. Plaintiffs’ declaratory relief cause of action is alleged with respect to the 2010 and 2015 award agreements, which contain the same noncompete clause that plaintiffs refer to in their complaint as “the Non-Compete Clause.” (See FAC ¶ 24.) In their prayer for relief, plaintiffs request injunctive relief barring defendants from enforcing “the Non-Compete Clause.” This action is not a class or representative action, and plaintiffs’ complaint is insufficient to form the basis for an injunction as it would pertain to individuals other than O’Malley. For the same reasons set forth above, with respect to plaintiffs’ claim for declaratory relief, there is no longer a need to enjoin defendants from enforcing the noncompete provisions in the agreements to which O’Malley is a party.

Date: July 28, 2020

Honorable Stuart M. Rice

Judge of the Superior Court

Superior Court of California

County of Los Angeles

Dollar Shave Club, Inc., et al.,  

Plaintiff,

Case No.

BC678761

v.

[Tentative] Ruling

Edgewell Personal Care Company, et al.   

Defendants.

Hearing Date: July 28, 2020

Department 49, Judge Stuart M. Rice

(1) Demurrer to Cross-Complaint

(2) Motion to Strike

Moving Party:  Cross-Defendants Dollar Shave Club, Inc. and Michael O’Malley

Responding Party:      Cross-Complainants Edgewell Personal Care Company, Edgewell Personal Care Group, Inc., and Schick Manufacturing, Inc.

Ruling: Cross-defendants’ demurrer to the first and second causes of action for trade secret misappropriation is overruled. The demurrer is sustained with 30 days leave to amend as to the fourth, fifth, sixth, and seventh causes of action for breach of the covenant of good faith and fair dealing, breach of the duty of loyalty, intentional interference with contractual relations, and violation of the unfair competition law.

The motion to strike is denied.

Meet and Confer

Demurrer to Cross-Complaint

First Cause of Action for Violation of the CUTSA, ConUTSA, or MUTSA

Second Cause of Action for Violation of the DTSA

A complaint is generally sufficient if it alleges ultimate rather than evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) The plaintiff must set forth the essential facts of its case with reasonable precision and particularity sufficient to acquaint the defendant with the nature, source, and extent of the plaintiff’s claim. (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1120.)

Section 2019.210 was intended to codify this requirement set forth in Diodes. (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 44, citing Brescia v. Angelin (2009) 172 Cal.App.4th 133, 144.) But rather than requiring such particularity in the pleadings, the Legislature chose merely to require it prior to the commencement of discovery. The Diodes court specifically noted that there did not exist a single case discussing the sufficiency of the allegations of a complaint in an action based upon a misappropriation of trade secret. (Id. at p. 250.) Even today—likely due in part to the existence of section 2019.210—there is no California case addressing the sufficiency of pleadings in an action for trade secret misappropriation.

Fourth Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing

For example, cross-complainants cite paragraph 19, which alleges that O’Malley began discussions with DSC about employment that would violate his contractual obligations to Edgewell even though he had mentioned to Edgewell that he was considering retiring. Discussing other employment options plainly falls short of being actionable. Cross-complainants also cite paragraph 22-26, which allege that O’Malley took Edgewell’s confidential information the same day he signed a lease in California and two days before he resigned from Edgewell. These allegations support the trade secret misappropriations claims. To the extent these allegations support a cause of other than one for trade secret misappropriation or breach of contract, they are preempted by the CUTSA.

It is unclear whether cross-complainants are attempting to rely on the noncompete provisions in their opposition to this demurrer, or whether those are just mentioned in passing. To the extent that they are asserting the noncompete provisions as a basis for their fourth cause of action, such reliance is rejected because (1) the fourth cause of action for breach of good faith and fair dealing as alleged in the cross-complaint does not arise from a breach of the noncompete provisions, and (2) cross-complainants have already agreed “not to institute any action at law or in equity in California or in any other state, or otherwise assert any claim(s) or demand(s) against Plaintiffs…to enforce the [noncompete provisions].” (Ronald M. Juarez Decl. iso Opposition to Motion for Entry of Judgment, Exhibit B, “Covenant Not to Sue,” ¶ I.)

Because the cross-complaint does not provide a factual basis for this cause of action distinct from the breach of contract or trade secret misappropriation claims, the demurrer is sustained with 30 days leave to amend with respect to the fourth cause of action for breach of good faith and fair dealing.

CUTSA Preemption—Fifth, Sixth, and Seventh Causes of Action for Breach of Duty of Loyalty, Intentional Interference with Contractual Relations, and Violation of the Unfair Competition Law

“CUTSA includes a specific provision concerning preemption. That provision, section 3426.7, reads in pertinent part as follows: (a) Except as otherwise expressly provided, this title does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets [¶] (b) This title does not affect (1) contractual remedies, whether or not based upon misappropriation of a trade secret, (2) other civil remedies that are not based upon misappropriation of a trade secret, or (3) criminal remedies whether or not based upon misappropriation of trade secret.” (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 954, citing Civ. Code, § 3426.7.)

CUTSA’s “‘comprehensive structure and breadth’ suggests a legislative intent to occupy the field.” (K.C. Multimedia, at p. 957.) “The stated purpose of the [C]UTSA is to provide ‘unitary definitions of trade secret and trade secret misappropriation, and a single statute of limitations for the various property, quasi-contractual, and violation of fiduciary relationship theories of noncontractual liability utilized at common law.” (Id.)

Subdivision (b)(2) of section 3426.7 contains the following language: “(b) This title does not affect... (2) other civil remedies that are not based upon misappropriation of a trade secret....” (Id. at p. 958) This provision would be rendered meaningless if, in fact, claims which are based on trade secret misappropriation are not preempted by the state’s statutory scheme. (Id.) “Additionally, the pertinent statutory language—‘based upon misappropriation’—strongly suggests a factual inquiry, one that examines the conduct alleged in the claim.” (Id.; see also Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 505 [“the determination of whether a claim is based on trade secret misappropriation is largely factual].)

CUTSA preempts common law claims that are “based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.” (K.C. Multimedia., 171 Cal.App.4th at p. 958.) In other words, where the gravamen of the wrongful conduct underlying a claim asserted is the misappropriation of trade secrets, CUTSA preempts that claim. (Id. at p. 961.) Even a statutory unfair competition claim may be preempted by CUTSA if it relies on the same facts as the misappropriation claim. (Id.)

The same holds true for the sixth cause of action for intentional interference with contractual relations. (See Cross-Complaint ¶¶ 69-83.) Even though some allegations are made in addition to those alleged in support of the trade secrets claim, such as that Dollar Shave “induced O’Malley to breach his non-disclosure obligations by assisting O’Malley in the initiation of the legal action in California in an attempt to nullify the Stock Agreements so that O’Malley could perform the same or substantially similar services he provided for [Edgewell] at [Dollar Shave]” (Cross-Complaint ¶ 71), those additional allegations still involve the same nucleus of facts for the purpose of CUTSA preemption. The seventh cause of action for violation of California’s Unfair Competition Law (Business and Professions Code section 17200) contains no additional factual allegations and incorporates by reference all prior allegations in the complaint. For all the same reasons, it too is preempted by CUTSA.

In support of their opposition to the demurrer as made on CUTSA preemption grounds, cross-complainants cite Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495. In that case, the court reversed the trial court’s order granting summary adjudication, on the basis of CUTSA preemption, of plaintiff’s claims for breach of duty of loyalty, breach of fiduciary duty, unfair competition, breach of contract, and conversion because those claims were based on facts distinct from those alleged in support of the misappropriation claim. (Id. at p. 499.)

The defendant in Angelica, while still employed with the plaintiff, prepared and negotiated to form a new enterprise—engaged in the same business as the plaintiff (laundry)—to provide services for the plaintiff’s customers, including two of its largest customers. (Id. at p. 500.) While still employed with the plaintiff, the defendant organized a competing laundry business and negotiated new contracts with the plaintiff’s customers. (Id. at p. 501.) After obtaining financing for the new business, the defendant resigned from employment with the plaintiff. (Id. at p. 502.)

Here, there is no independent factual basis for the non-CUTSA claims, unlike the case in Angelica. The cross-complaint does not set forth factual allegations that O’Malley violated his duty of loyalty to cross-complainants in any way other than by plotting with Dollar Shave to leave his employment (not actionable in itself) and taking cross-complainants’ proprietary information with him to his new employment (same nucleus of facts as trade secret misappropriation claim). There is no allegation that O’Malley solicited cross-complainants’ customers to direct business to Dollar Shave during his employment, as was the case in Angelica. Nor is there an allegation that O’Malley worked towards forming a new entity that would compete with cross-complainants during the course of his employment with Edgewell. Because there is no meaningful similarity between the facts at hand and those in Angelica, cross-complainants’ reliance on Angelica is unpersuasive.

For the foregoing reasons, cross-defendants’ demurrer to the fifth, sixth, and seventh causes of action in the cross-complaint is sustained with 30 days leave to amend.

Motion to Strike

Cross-defendants assert that the cross-complaint does not allege any difference between the MUTSA and any of the other referenced trade secret misappropriation laws. As it was put in Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 890:

A quarter-century ago the code authorized a motion to strike “irrelevant and redundant” matter from a pleading. (Former Code Civ. Proc., § 453, repealed 1982.) But the parallel provision now empowers the court only to “[s]trike out any irrelevant, false, or improper matter inserted in any pleading.” (Code Civ. Proc., § 436, subd. (a).) The elimination of the reference to redundancy may have rested on the irreproachable rationale that it is a waste of time and judicial resources to entertain a motion challenging part of a pleading on the sole ground of repetitiveness. (See Civ. Code, § 3537 [“Superfluidity does not vitiate”].) This is the sort of defect that, if it justifies any judicial intervention at all, is ordinarily dealt with most economically at trial, or on a dispositive motion such as summary judgment.

Conclusion

Cross-defendants are ordered to give notice of this ruling.

Date: July 28, 2020

Honorable Stuart M. Rice

Judge of the Superior Court

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