This case was last updated from Los Angeles County Superior Courts on 04/24/2020 at 15:17:33 (UTC).

FARMERS INSURANCE EXCHANGE ET AL VS VENKATESH KAMATH ET AL

Case Summary

On 10/30/2017 FARMERS INSURANCE EXCHANGE filed an Other lawsuit against VENKATESH KAMATH. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are AMY D. HOGUE, RUTH ANN KWAN and DANIEL S. MURPHY. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****1655

  • Filing Date:

    10/30/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Other

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

AMY D. HOGUE

RUTH ANN KWAN

DANIEL S. MURPHY

 

Party Details

Plaintiffs and Petitioners

FARMERS GROUP INC

FARMERS INSURANCE EXCHANGE

Defendants and Respondents

AUTOMOBILE CLUB OF MICHEIGAN

KAMATH VENKATESH

AAA MICHEIGAN

DOES 1 TO 10

THE AUTO CLUB GROUP

ABEDI SHOHREH

MICHEIGAN AAA

BARIGEDA RAGHURAM

SUNDARAM SRIDHARAN

SUBASHACHANDRABOSE VIJAYACHANDRAN AKA VIJAY BOSE

AUTOMOBILE CLUB OF MICHIGAN DBA AAA MICHIGAN

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

MASON PETER H.

MASON PETER HAROLD

MASON PETER

HERZOG ERIC ANDREW

DI TULLIO PHILLIP ROBERT

Defendant and Respondent Attorneys

LATHAM & WATKINS

HAHN & HAHN LAW OFFICES OF

SCHECTER DANIEL SCOTT

HENRY AMBER DIANNE

MILLARD MICHELLE

GEHRING TED ALLAN

ELLISON ROBERT JAMES

KELLY PATRICK WILLIAM

GIPSON ELLIOT BRANDT

MITCHELL SARAH FRANCES

LYON D. JASON

 

Court Documents

Stipulation and Order - STIPULATION AND ORDER FURTHER JOINT AND [PROPOSED] ORDER REGARDING PLAINTIFFS' FIRST AMENDED COMPLAINT

9/19/2019: Stipulation and Order - STIPULATION AND ORDER FURTHER JOINT AND [PROPOSED] ORDER REGARDING PLAINTIFFS' FIRST AMENDED COMPLAINT

Amended Complaint - AMENDED COMPLAINT - 1ST

9/27/2019: Amended Complaint - AMENDED COMPLAINT - 1ST

FURTHER JOINT STIPULATION AND [PROPOSED] ORDER REGARDING PRELIMINARY INJUNCTION BRIEFING SCHEDULE AND HEARING

3/22/2018: FURTHER JOINT STIPULATION AND [PROPOSED] ORDER REGARDING PRELIMINARY INJUNCTION BRIEFING SCHEDULE AND HEARING

FURTHER JOINT STIPULATION AND ORDER REGARDING PRELIMINARY INJUNCTION BRIEFING SCHEDULE AND HEARING

2/5/2018: FURTHER JOINT STIPULATION AND ORDER REGARDING PRELIMINARY INJUNCTION BRIEFING SCHEDULE AND HEARING

ORDER GRANTING TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE REGARDING ISSUANCE OF A PRELIMINARY INJUNCTION

11/3/2017: ORDER GRANTING TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE REGARDING ISSUANCE OF A PRELIMINARY INJUNCTION

AMENDED JOINT STIPULATION REGARDING DISCOVERY AND INTERIM EXTENSION OF TEMPORARY RESTRAINING ORDER

12/7/2017: AMENDED JOINT STIPULATION REGARDING DISCOVERY AND INTERIM EXTENSION OF TEMPORARY RESTRAINING ORDER

DECLARATION OF BETH PERKINS IN SUPPORT OF PLAINTIFFS' EX PARTE APPLICATION

10/31/2017: DECLARATION OF BETH PERKINS IN SUPPORT OF PLAINTIFFS' EX PARTE APPLICATION

DECLARATION OF YORCK EINHAUS IN SUPPORT OF PLAINTIFFS' EX PARTE APPLICATION

10/31/2017: DECLARATION OF YORCK EINHAUS IN SUPPORT OF PLAINTIFFS' EX PARTE APPLICATION

PLAINTIFFS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION FOR: (I) ISSUANCE OF TEMPORARY RESTRAINING ORDER;

10/31/2017: PLAINTIFFS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION FOR: (I) ISSUANCE OF TEMPORARY RESTRAINING ORDER;

Notice of Lodging - NOTICE OF LODGING DOCUMENTS CONDITIONALLY UNDER SEAL

2/26/2020: Notice of Lodging - NOTICE OF LODGING DOCUMENTS CONDITIONALLY UNDER SEAL

Notice of Lodging - NOTICE OF LODGING CONDITIONALLY UNDER SEAL DEFENDANT'S OPPOSITION AND EXHIBITS B,C,D & E TO THE DECLARATION OF AMBER HENRY

2/26/2020: Notice of Lodging - NOTICE OF LODGING CONDITIONALLY UNDER SEAL DEFENDANT'S OPPOSITION AND EXHIBITS B,C,D & E TO THE DECLARATION OF AMBER HENRY

Notice of Joinder - NOTICE OF JOINDER (NAME EXTENSION) DEFENDANT VIJAYACHANDRAN SUBASHCHANDRABOSE'S NOTICE OF JOINDER TO DEFENDANTS THE AUTO CLUB GROUP AND AUTOMOBILE CLUB OF MICHIGAN D/B/A AAA MICHIG

2/26/2020: Notice of Joinder - NOTICE OF JOINDER (NAME EXTENSION) DEFENDANT VIJAYACHANDRAN SUBASHCHANDRABOSE'S NOTICE OF JOINDER TO DEFENDANTS THE AUTO CLUB GROUP AND AUTOMOBILE CLUB OF MICHIGAN D/B/A AAA MICHIG

Opposition - OPPOSITION TO OSC RE: ISSUANCE OF A PRELIMINARY INJUNCTION

2/26/2020: Opposition - OPPOSITION TO OSC RE: ISSUANCE OF A PRELIMINARY INJUNCTION

Answer

2/28/2020: Answer

Answer

8/5/2019: Answer

Notice - NOTICE OF CONTINUED HEARING DATE

12/5/2019: Notice - NOTICE OF CONTINUED HEARING DATE

Notice - Notice of Entry of Order

12/5/2018: Notice - Notice of Entry of Order

CIVIL DEPOSIT -

11/28/2017: CIVIL DEPOSIT -

171 More Documents Available

 

Docket Entries

  • 03/16/2021
  • Hearing03/16/2021 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 03/04/2021
  • Hearing03/04/2021 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 08/05/2020
  • Hearing08/05/2020 at 09:30 AM in Department 86 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion to Seal Records Lodged Conditionally Under Seal by Defendants

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  • 07/22/2020
  • Hearing07/22/2020 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion to be Admitted Pro Hac Vice

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  • 07/22/2020
  • Hearing07/22/2020 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion to be Admitted Pro Hac Vice

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  • 07/01/2020
  • Hearing07/01/2020 at 09:30 AM in Department 86 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion - Other to Seal

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  • 07/01/2020
  • Hearing07/01/2020 at 09:30 AM in Department 86 at 111 North Hill Street, Los Angeles, CA 90012; Order to Show Cause Re: re Preliminary Injunction

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  • 04/15/2020
  • Docketat 11:42 AM in Department 32, Daniel S. Murphy, Presiding; Court Order

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  • 04/15/2020
  • DocketMinute Order ( (Court Order)); Filed by Clerk

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  • 04/15/2020
  • DocketCertificate of Mailing for ((Court Order) of 04/15/2020); Filed by Clerk

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248 More Docket Entries
  • 10/31/2017
  • DocketEx-Parte Application; Filed by Plaintiff/Petitioner

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  • 10/31/2017
  • DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore; Filed by Plaintiff/Petitioner

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  • 10/31/2017
  • DocketOrder; Filed by Plaintiff/Petitioner

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  • 10/31/2017
  • DocketDeclaration; Filed by Plaintiff/Petitioner

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  • 10/31/2017
  • DocketDeclaration; Filed by Plaintiff/Petitioner

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  • 10/31/2017
  • DocketDeclaration; Filed by Plaintiff/Petitioner

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  • 10/31/2017
  • DocketDeclaration; Filed by Plaintiff/Petitioner

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  • 10/30/2017
  • DocketSUMMONS

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  • 10/30/2017
  • DocketComplaint; Filed by FARMERS GROUP, INC (Plaintiff); FARMERS INSURANCE EXCHANGE (Plaintiff)

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  • 10/30/2017
  • DocketCOMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF

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Tentative Rulings

Case Number: BC681655    Hearing Date: September 09, 2020    Dept: 86

FARMERS INSURANCE EXCHANGE et al. v. KAMATH et al.

Case Number: BC681655

Hearing Date: August 5, 2020 September 9, 2020

[Tentative] ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION


Plaintiffs, Farmers Insurance Group and Farmers Group, Inc., seek a preliminary injunction against individual defendants Shohreh Abedi (Abedi), Vijayachandran Subashchandrabose (Bose), Sridharan Sundaram (Sundaram), Raghuram Barigeda (Barigeda) and Venkatesh Kamath (Kamath). The individual defendants are all former employees of Plaintiffs.

Plaintiffs also seek a preliminary injunction against defendants AutoClub Group and the Automobile Club of Michigan (jointly, ACG). The individual defendants became employees of ACG immediately after leaving their employment with Plaintiffs.

Plaintiffs request all defendants be enjoined from accessing, using, disclosing or deleting Plaintiffs’ confidential, proprietary and trade secret information.

Defendants ACG, Bose, Abedi, Barigeda, Sundaram, and Kamath have each separately opposed Plaintiffs’ request for a preliminary injunction.[1]

Plaintiffs’ motion for a preliminary injunction is granted.

Evidentiary Objections:

ACG’s Evidentiary Objections

As to the failure of Plaintiffs to attach certain Bates numbered documents to declarations, the court cannot rely on documents it does not have before it. Moreover, ACG’s objection is not to the court receiving certain evidence. Therefore, the objection is overruled.

All the objections to the Dixit declaration are overruled except objection 10. Objection 10 is sustained.

The objections to the Albright declaration are overruled.

The objections to the Einhaus declaration are overruled.

Barigeda’s Evidentiary Objections

All objections are overruled.

Plaintiffs’ Evidentiary Objections

Plaintiffs’ objection to Barigeda’s request for judicial notice is sustained. Barigeda’s request for judicial notice of exhibits 1 through 19 is denied. The court does, however, take judicial notice of the fact that Canton, Michigan is more than 150 miles from the Central District of California.

LEGAL STANDARD

The standards governing a preliminary injunction are well known. “[A] court will deny a preliminary injunction unless there is a reasonable probability that the plaintiff will be successful on the merits, but the granting of a preliminary injunction does not amount to an adjudication of the merits.” (Beehan v. Lido Isle Community Assn. (1977) 70 Cal.App.3d 858, 866.) “The function of a preliminary injunction is the preservation of the status quo until a final determination of the merits.” (Ibid.)

As the parties recognize, “Trial courts traditionally consider and weigh two factors in determining whether to issue a preliminary injunction. They are (1) how likely it is that the moving party will prevail on the merits, and (2) the relative harm the parties will suffer in the interim due to the issuance or nonissuance of the injunction.” (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1420.) “[T]he greater the . . . showing on one, the less must be shown on the other to support an injunction.” (Ibid. [quoting Butt v. State of California, (1992) 4 Cal.4th 668, 678].) The burden of proof is on the plaintiff as the moving party “to show all elements necessary to support issuance of a preliminary injunction.” (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. (See e.g., Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 150.) A plaintiff seeking injunctive relief must also show the absence of adequate damages remedy at law. (Code Civ. Proc. § 526, subd. (a)(4).)

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. (See Code Civ. Proc. § 529, subd. (a); City of South San Francisco v. Cypress Lawn Cemetery Ass’n. (1992) 11 Cal. App. 4th 916, 920.)

ANALYSIS

Likelihood of Success on the Merits:

Plaintiffs argue they are entitled to a preliminary injunction based on two claims pending against defendants—misappropriation of trade secrets and breach of contract.[2] Plaintiffs contend they can demonstrate a likelihood of success on each claim.

Plaintiffs are property and casualty insurance carriers. Plaintiffs’ policy and claims systems are critical to keeping Plaintiffs competitive within the insurance marketplace. To that end, in the summer of 2015, Plaintiffs undertook efforts to modernize their policy and claims systems. They sought to transition from their legacy systems[3] to a new policy administration and underwriting system (the PolicyCenter Project) as well as a new, streamlined claims-handling system (the ClaimCenter Project) using Guidewire software (jointly, the Project). (Einhaus Decl., Ex. 1 at ¶¶ 3-4.)

Although Guidewire software is sold publicly, Plaintiffs represent Guidewire software’s internal processes and applications must be customized and integrated to develop an effective functioning program for Plaintiffs’ purposes. (Einhaus Decl., Ex. 1 at ¶ 4; Dixit Decl., ¶ 3.) To date, Plaintiffs contend they have invested millions of dollars in the PolicyCenter Project alone by building the framework necessary to maximize Plaintiffs’ Guidewire software implementation. (Dixit Decl., ¶¶ 3-4.)

Plaintiffs submit evidence the Project is “highly confidential.” (Dixit Decl., ¶ 6.) Plaintiffs concede it is generally known Plaintiffs have contracted with Guidewire and certain other vendors in connection with the Project. Such general knowledge is distinct, however, from the specific knowledge about Plaintiffs’ plans, processes and strategies for their implementation of the Guidewire software. Plaintiffs contend this specific implementation information is not known outside their business. Plaintiffs’ employees are instructed to maintain confidentiality with specific Project information. (Dixit Decl., ¶ 6; Einhaus Decl., Ex. 1 at ¶ 8.) Additionally, Plaintiffs require its vendors to sign confidentiality agreements to protect the confidential nature of the information. (Dixit Decl., ¶ 6; Einhaus Decl., Ex. 1 at ¶ 8.)

Plaintiffs explain maintaining the secrecy of Project documents is accomplished through internal document repositories. The repositories restrict access to those who are working on the Project. Additionally, there are certain folders within the repositories further restricting access only to those employees working on particular aspects of the Project. (Dixit Decl. ¶ 6.) To the extent employees working on the Project may need to transfer Plaintiffs’ data from the company network, such transfer requires a company-approved purpose using a company-provided encryption device. (Longoria Decl., Ex. 2 at ¶ 4 [Corcoran Declaration].)

As a condition of employment, Plaintiffs also require their employees to complete compliance trainings, and employees must agree to comply with Plaintiffs’ internal policies, including those concerning data protection, security, electronic communication and confidentiality. (Perkins Decl., ¶¶ 2-3, Ex. 1 at ¶¶ 3-7.) Plaintiffs’ Code of Business Ethics Handbook contains a confidential records and document retention section which, like Plaintiffs’ other policies and trainings, make clear that:

“The protection of confidential information is essential for both the Company and its employees’ future security. To protect such information, employees who are exposed to confidential or proprietary information about the Company, its agents or employees, may not disclose such information unless authorized by management to do so and cannot use such information for personal benefit. This information includes, but is not limited to information in Company files and special projects. Employees who disclose confidential or proprietary information are subject to disciplinary action up to and including termination of employment.” All employees are to use Farmers’ IT systems for business purposes only; they must safeguard the information stored and communicated in these systems; and they “must not release trade secrets or other proprietary, confidential or sensitive information belonging to Farmers, whether in electronic or hard copy medium.”

(Perkins Decl., Ex. 1 at ¶ 6, Ex. C (p. 2); Longoria Decl., Ex. 2 at ¶ 2.)

Further, as set forth in Plaintiffs’ electronic communication policy, all employees agree to use Plaintiffs’ information technology systems for business purposes only. Employees also agree to safeguard the information stored and communicated in Plaintiffs’ information technology systems and “not release trade secrets or other proprietary, confidential or sensitive information belonging to [Plaintiffs], whether in electronic or hard copy medium . . . .” (Perkins Decl., Ex. 1 at ¶ 7, and Ex. D (p. 6).)

Plaintiffs contend ACG—also a property and casualty insurance carrier—beginning in 2016, “poached” at least five of their employees to work for ACG. Notwithstanding Plaintiffs’ measures and layers of security intended to protect Plaintiffs’ information, ACG hired Plaintiffs’ former employees, to steal Plaintiffs’ most sensitive business documents relating to the Project to give ACG an advantage in the pursuit of its own modernization project utilizing the Guidewire software.[4]

The specific facts as to each former employee Defendant is as follows:

  1. Abedi

Abedi served as Plaintiffs’ Chief Information Officer until August 2015. (Perkins Decl., Ex. 1, ¶ 8.) She was involved in Plaintiffs’ selection of the Guidewire software as well as the launch of the Project. (Einhaus Decl., Ex. 1 at ¶ 6.) When her employment with Plaintiffs ended, Abedi entered into a written agreement and general release, wherein she agreed to return all documents related to her work at Plaintiffs and further agreed to keep confidential the proprietary and trade secret information of the companies. (Perkins Decl. ¶ 7, Ex. 3 at ¶¶ 8, 14 [Abedi Agreement and General Release].)

Despite the agreement, Abedi took confidential documents with her to when she began work for ACG as Chief Operations Technology Officer in April 2016. (See, e.g., Longoria Decl. ¶¶ 8, 13-14, Exs. 4-5, and Ex. 23 at 299:24-300:21; 303:25-304:24; 311:12-14; 362:10- 364:22; 373:23-374:18; 389:14-391:21; 395:2-4; Einhaus Decl. ¶¶ 4-6.) Plaintiffs contend Abdi improperly took the documents when she left and then actually disseminated them within ACG to develop and refine ACG’s implantation of its own Guidewire software project. (Longoria Decl., ¶¶ 15, 17, Ex. 6; Ex. 8; Ex. 23 at 303:25-304:24; 305:22-306:6; 307:23-311:14; 432:10-436:19 [Abedi Deposition Testimony].) In fact, as pointed out by Plaintiffs, these documents—even after being repurposed for uses at ACG—sometimes still contain Plaintiffs’ name within them.

  1. Bose

In October 2016, Bose left his position with Plaintiffs as Head of Infrastructure and Operations. While working with Plaintiffs, Bose was responsible for the Project’s infrastructure and production support. Bose left Plaintiffs to work for ACG. (Longoria Decl., Ex. 27 at 137:2-7, 141:12-142:3, 142:4-5.)

Bose uploaded approximately 400-500 of Plaintiffs’ documents onto ACG’s systems. (Longoria Decl. ¶ 29; Ex. 20; Ex. 27 at 28:12-29:3.) Bose reported he did not have a conversation with anyone at ACG about uploading Plaintiffs’ information onto ACG’s systems. (Longoria Decl. ¶ 29; Ex. 20; Ex. 27 at 32:9-16.) Bose explained he took Plaintiffs’ documents only for template purposes but some of the documents contained “some infrastructure documents, and some Guidewire spreadsheets to support environments and those kind of things.” (Longoria Decl., Ex. 27 at 32:1-8; 183:9-15.) Bose knew when he took the confidential documents they were considered protected by Plaintiffs. Bose also understood he was violating Plaintiffs’ policy by taking the documents and uploading them onto ACG systems. (Longoria Decl., Ex. 27 at 197:11-198:23; 249:16-22.)

Bose contends he was not interested in the content of these documents; he was only interested in them for template purposes. Of the 23 documents Plaintiffs have identified as trade secret documents, Bose locally saved 15, and the documents were accessible to him. (Roffman Decl., ¶¶ 12-14, Appx. 1, Appx. 2; Dixit Decl., ¶ 10.)

  1. Sundaram

In April 2017, Sundaram joined ACG after leaving Plaintiffs. (Longoria Decl., Ex. 25 at 12:3-5; Ex. 27 at 174:23-175:19.) Sundaram served as a lead architect of the Project for Plaintiffs and reported directly the Project’s lead. (Perkins Decl. ¶ 4; Louis Decl. ¶ 10; Longoria Decl., Ex. 25 at 35:5-36:5; 36:23-37:2; 39:6-8; 39:21-23 [Sundaram Deposition Testimony].)

Sundaram admitted to possessing confidential documents belonging to Plaintiffs on his personal storage device. Sundaram did not recall how the documents were transferred to his storage device. He also did not remember the specific documents except for certain SalesForce and Guidewire documents used for template purposes. (See Longoria Decl., ¶¶ 19-21; Ex. 10; Ex. 11 (at ACG00046359, ACG00046362); Ex. 12; Ex. 25 at 181:3-18; 183:11-21; 188:24-189:11; 201:2-7; 203:12-18; 251:19-252:3; 274:20-24; 277:15-25.)

Importantly, one of the documents Sundaram sent from his personal email account to his new ACG email account included the Project’s architecture information. The document contained detailed information about Plaintiffs’ information technology processes and strategies, potential options for deploying the PolicyCenter Project for agents as well as Guidewire user interface options evaluations. (Longoria Decl., Exs. 10, 12; Dixit Decl. ¶ 8; Louis Decl. ¶ 8.)

Plaintiff identifies Exhibit 10 and 12 of the Longoria declaration as evidence of trade secrets misappropriated by Defendant Sundaram. (Mot., p. 13-14.)

  1. Barigeda

Barigeda worked for Plaintiffs under Bose. He worked as the Director of Information Technology Infrastructure. In October 2017, ACG hired Barigeda. (Longoria Decl., Ex. 26 at 19:3-5; Perkins Decl. ¶ 4.) The evidence demonstrates Barigeda used Plaintiffs’ documents as a “template” at ACG. (Longoria Decl. ¶ 22; Ex. 13; Ex. 26 at 165:5-166:8; 175:23-176:2.)

  1. Kamath

Kamath worked as the technical delivery lead on the Project for Plaintiffs and was responsible for assisting in the customization and implementation of the PolicyCenter Project until May 2017. Kamath had significant access to Plaintiffs’ proprietary confidential information. (Einhause Decl., Ex. 1 at ¶¶ 5, 9.)

On October 2, 2017, Kamath notified Plaintiffs of his resignation as of October 13, 2017. Kamath accepted a position with ACG starting three days after his last day with Plaintiffs. (Perkins Decl., Ex. 1 at ¶ 9; Longoria Decl., Ex. 24 at 199:25-200:12.)

On October 12, 2017, his penultimate day with Plaintiffs, Kamath copied more than 6,400 files from his computer onto his personal storage device and into a backup folder. (Einhaus Decl., Ex. 1 at ¶ 11; Longoria Decl., Ex. 2 at ¶¶ 6-7, and Ex. 24 at 83:7-19; 111:15-112:10;122:9-12; 122:21-123:2.) A substantial portion of these files were related to the Project and reveal how Plaintiffs were customizing and utilizing the Guidewire software to fit their particular needs and objectives. (Einhaus Decl., Ex. 1 at ¶ 11; Dixit Decl. ¶¶ 10-11; see also Longoria Decl., Exs. 30 and 31.)

Merits of the Trade Secret Claim:

Under the California Uniform Trade Secrets Act (CUTSA), a plaintiff must show the information for which protection is sought (1) “[d]erives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from this disclosure or use;” and (2) that the information “[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civ. Code § 3426.1, subd. (d).)

Plaintiffs contend the evidence shows they are likely to prevail on the merits of their misappropriation of trade secrets claim. They assert Defendants took and disseminated their protectable trade secrets and used those trade secrets for their benefit to the detriment of Plaintiffs. (Civ. Code § 3426.1, subd. (d).)

As to information of economic value that is not generally known, Plaintiffs have met their burden by submitting evidence that (1) their documents were in the possession of their former employees who used the documents in some capacity in their new positions with ACG, and (2) the documents were trade secrets; that is, the documents are Plaintiffs’ documents pertaining to the design and architecture of the customized aspects of Plaintiffs’ Guidewire customization and contain the type of “technical ‘know-how’ [that] is the quintessential trade secret.” (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1456.) Plaintiffs also note the law extends trade secret protections to “implementation details and techniques” of systems and processes, citing TMC Aerospace, Inc. v. Elbit Systems of America LLC (Jan. 29, 2016, No. CV 15-07595-AB (EX)) 2016 WL 3475322, at *5. Similarly, pricing in the context of strategic planning documents may also warrant trade secret protection. (Whyte v. Schlage Lock Co., supra, 101 Cal.App.4th at 1455-1456.)

Plaintiffs provide a specific example of trade secret documents at issue and their importance. ACG obtained and hold Plaintiffs’ documents relating to its Master Data Management (MDM) project. The documents outline the strategy and implementation approach for the MDM system (including Plaintiffs’ assessments of the best way to design and implement the system), provided insight into the business objectives of the project, identified the “what” of the project (the goal) and the “how” of the project (in the form of architecture documents).[5] (Albright Decl. ¶¶ 8- 12; see, e.g., Longoria Decl., Exs. 19 [Document identifying Bose as the custodian] and 29 [Document identifying Bose as the custodian].)

Plaintiffs’ experts for the Project—Dharini Dixit with expertise in the Guidewire implementation and Sudham Loui with expertise in the integration architecture—identify specific information contained in Plaintiffs’ documents in Defendants’ possession to demonstrate the independent economic value derived from such confidential information.[6]

ACG contends Plaintiffs’ information does not qualify as trade secrets as the information is publicly available and/or largely known to the public. ACG further argues Plaintiffs cannot assert trade secrets concerning the Guidewire User Interface, which includes a “SalesForce Option” because Plaintiffs “scrapped” the use of this option—they are not using it. (Louis Decl., ¶ 8; Ellison Decl., Ex. 7 at 412:24-414:21; Dixit Decl., ¶ 3.) Finally, ACG contends Plaintiff’s information is either already obsolete due to the passage of time and the rapid changes in technology or only valuable to Plaintiffs and not to other businesses. (See Ellison Decl., Ex. 7 at 371:23-372:5; Onofrio Decl., ¶¶ 10-11; Iluyomade Decl., ¶¶ 11, 16, 40, subd. (a)-(c), 40, subd. (e)-(o).)

Certainly, the complexity of the Project as well as its numerous components make it difficult to ascertain exactly what information has economic value and derives its value from not being known to the public. Nevertheless, the information identified by Plaintiffs meets Plaintiffs burden in part under CUTSA for purposes of demonstrating whether they have a likelihood of success on the merits as the claimed trade secret information would save ACG time, money and labor for ACG to maintain competitiveness in the marketplace through its Guidewire customization.

The evidence also demonstrates Plaintiffs used reasonable efforts to maintain the secrecy of the information. The evidence shows extensive efforts undertaken by Plaintiffs to protect and keep their Project information secret. Plaintiffs limited employee access to the Project documents, labeled confidential Project documents as such, instructed and trained their employees about how to treat and protect confidential information pertaining to the Project, required parties with access to the documents to sign confidentiality agreements and limited employees ability to transfer sensitive confidential information. (Perkins Decl. ¶¶ 3-8, Ex. 1 at ¶¶ 3-8, Exs. A-D; Dixit Decl.¶ 6; Einhaus Decl., Ex. 1 at ¶ 8; Albright Decl. ¶¶ 4, 6; Longoria Decl., Ex. 2 at ¶¶ 2-4.)

Finally, Plaintiffs have adequately demonstrated Defendants misappropriated Plaintiffs’ trade secret information. “Misappropriation” as defined by the CUTSA includes improper acquisition, disclosure or use. (Civ. Code § 3426.1, subd. (b).)

There can be no real argument before the court Plaintiffs have demonstrated several of its former employees acquired proprietary, confidential information some of which qualifies as Plaintiffs’ trade secrets. Plaintiffs’ former employees then used that information to benefit their new employer, ACG, in some capacity.

There is no evidence ACG directed Plaintiffs’ former employees to misappropriate Plaintiffs’ trade secret information and to bring that information to ACG. Whether and to what extent, if any, ACG was aware or should have been aware of the misappropriate is extensively contested by the parties.

ACG argues the data forensic specialist it hired determined not one of the 23 documents in issue “was circulated to other ACG employees or stored on ACG’s share network.” (ACG Opposition at 7 [Daniel Roffman].) The specialist’s testimony is uncontradicted.

In response, Plaintiffs argue given the limited discovery undertaken, the court should not draw any conclusions from the fact. (Herzog Decl., Ex. 39 at 140:9-20.)[7] However, on a motion for preliminary injunction the court is limited by the evidence before it as well as reasonable inferences drawn from the evidence.[8]

Even though the evidence before the court suggests the documents were not electronically shared or stored on ACG’s systems, the evidence—and reasonable inferences therefrom—suggests ACG benefited from Plaintiff’s information. ACG’s newly hired employees used the proprietary, confidential trade secret information they misappropriated from Plaintiffs in the scope of their employment with ACG.

Alternatively, Plaintiffs argue ACG is liable under the doctrine of respondeat superior where ACG knew Plaintiffs’ former employees it hired to work on its Guidewire software customization brought Plaintiffs’ proprietary Guidewire materials with them. (See Language Line Servs., Inc. v. Language Servs. Assocs., LLC, No. C 10-02605, 2010 WL 2764714, at *3 (N.D. Cal. July 13, 2010).) An employee’s tort may subject his/her employer to vicarious liability “ ‘if the employee’s act was an outgrowth of his employment, inherent in the working environment, typical of or broadly incidental to the employer’s business, or, in a general way, foreseeable from his duties.’ ” (Ibid. [quoting Yamaguchi v. Harnsmut (2003) 106 Cal.App.4th 472, 482.)

Sundaram argues the two documents in his possession, Exhibit 10 and Exhibit 12 were not distributed to ACG and he emailed them only to himself. (Roffman Decl., ¶ 13.) Further, he asserts the information in the exhibits is not confidential or secret information. (See ACG Opp., Onofrio Decl., ¶¶ 14-15. [“Exhibit 10 entirely consists of information commonly known in the industry about the pros and cons of options that are equally available to any company.”); Iluyomade Decl., ¶ 38, subd. (i). [“There is nothing in this document that any technical architect at a large insurance company does not already know or could not otherwise figure out using minimal efforts.”]) Sundaram, however, deleted many of Plaintiffs’ documents from his personal storage device; Plaintiffs argue there were “critical [Plaintiffs’] documents relating to the Guidewire PolicyCenter Project and/or [Plaintiffs’] business” although the assertion appears to be speculation. (Louis Decl., ¶ 11.)

The evidence satisfies the misappropriation element as to all Defendants, including ACG.

Plaintiffs have carried their burden of demonstrating some likelihood of success on the merits on their misappropriation of trade secrets claim.

Merits of the Breach of Contract Claim:

Plaintiff argues it can demonstrate a likelihood of prevailing on its breach of contract claim as to Abedi and Barigeda.

Both Abedi and Barigeda signed agreements in connection with their termination from Plaintiffs employ providing for the return of confidential, proprietary and trade secret information received during their employment, and for the protection of such information after separating from Plaintiffs. (Perkins Decl., Ex. 2 at ¶¶ 11-13, and Ex. 3 at ¶¶ 8-9, 14.)

Abedi breached multiple provisions of the agreement by failing to return all documents, files or records belonging to Plaintiffs or related to her work for Plaintiffs and by disclosing, using, appropriating and communicating Plaintiffs’ confidential information while employed at ACG. (Longoria Decl. ¶¶ 8, 13-15, 17, Exs. 4-6, Ex. 8, and Ex. 23 at 299:24-300:21; 303:25-304:24; 311:12-14; 362:10- 364:22; 373:23-374:18; 389:14-391:21; 395:2-4; Einhaus Decl. ¶¶ 4-6.)

Barigeda also breached multiple provisions of the agreement by failing to return to Plaintiffs all documents, files or records belonging to them, failing to keep all confidential information strictly confidential and by communicating, disclosing, divulging, and otherwise using confidential information for reasons other than a legitimate company business purpose authorized in advance by Plaintiffs. (Longoria Decl. ¶ 22; Ex. 13; Ex. 26 at 165:5-166:8; 175:23-176:2.)

Both Abedi and Barigeda argue Plaintiffs cannot prove damages. Barigeda also argues a preliminary injunction cannot issue on a breach of contract claim.

The evidence demonstrates a breach of contract. Damages flow from the disclosure of information and trade secrets gained by a competitor. While determining the amount of damages may be difficult, there is damage nonetheless. Moreover, the difficulty in determining damages supports an injunction. (Code Civ. Proc. § 526, subd. (a)(5).)

As to Barigeda’s assertion a breach of contract action cannot support a preliminary injunction, the Code of Civil Procedure specifically allows an injunction where a breach of contract could be specifically enjoined. (See id. at subd. (a)(3) and (b)(5.)

Plaintiffs have carried their burden of demonstrating some likelihood of success on the merits of their breach of contract claim against both Abedi and Barigeda.

Balancing the Harms:

The second part of the preliminary injunction analysis requires the court to evaluate the harm the plaintiff is likely to sustain if the preliminary injunction is denied compared to the harm the defendant is likely to suffer if the injunction is issued. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69-70.) “However, ‘[a] trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.’ ” (Law School Admission Council, Inc. v. State of California (2014) 222 Cal.App.4th 1265, 1280 [quoting Butt v. State of California (1992) 4 Cal.4th at 678].)

Plaintiffs argue they have spent hundreds of millions of dollars on their Guidewire project. (Dixit Decl., ¶ 5.) In fact, Plaintiffs submit evidence millions of dollars were spent on the architecture portion of the Project and in developing the documents that were uploaded onto ACG’s system. (Dixit Decl., ¶ 5; Louis Decl., ¶¶ 4, 9.) Plaintiffs contend if the injunction is not granted then Plaintiffs’ competitors, including ACG, could use this information to gain an unfair competitive advantage. (Dixit Decl. ¶ 13; Einhaus Decl. ¶ 7, Ex. 1 at ¶ 13; see also Albright Decl. ¶¶ 3, 12- 13.)

Plaintiffs rely on Vinyl Interactive, LLC v. Guarino, No. C 09–0987 CW, 2009 WL 1228695, at *8 (N.D. Cal. 2009) to support its claim Defendants will suffer no harm if the injunction is issued. Vinyl Interactive held an injunction prohibiting the use of trade secrets does not harm a defendant who has no right to access and use a misappropriated trade secret.

Indeed, the arguments advanced by Defendants as to the harm they will suffer if the injunction is granted are weak and largely rely on the harm from imposing an impermissibly vague and overbroad injunction. According to Defendants, the lack of specificity in the proposed preliminary injunction will make compliance difficult.

For example, Sundaram does not argue he will be harmed if the injunction is granted. Rather, he contends Plaintiffs cannot demonstrate irreparable harm and that the injunctive relief sought is vague, overbroad and improper as it seeks to enjoin Defendants “from directly or indirectly accessing, using, disclosing, distributing, or deleting the following [21] categories of documents and information” that broadly relate to purported “non-public [Plaintiffs’] documents.” (See [PROPOSED] Order Granting Preliminary Injunction 3:27.)

Bose argues only that the injunctive relief sought is vague and overbroad, not that he will be harmed by the injunction. (Bose Opp. at 12:15-15:15.)

Barigeda argues his harm arises from the “vagueness of the language prohibiting ‘non-public [Plaintiffs’] documents ‘and the information contained therein.’ ” (Barigeda Opp. 16:2-8.)

ACG contends Plaintiffs cannot demonstrate harm largely because the purported trade secrets are of no value to ACG’s own modernization plans, and thus, there can be no competitive advantage gained by ACG. (Onofrio Decl., ¶ 8, 14; Brooks Decl., ¶ 5.) While this evidence persuasively minimizes the apparent risk of harm to Plaintiffs, the court cannot find, in the absence of a particularized harm identified by any Defendant, the balance of harms does not weigh in Plaintiffs’ favor.

Based on the foregoing, the court finds Plaintiffs have demonstrated the balance of harms weighs in Plaintiffs’ favor.

The Overbroad Proposed Order:

Defendants’ argument the relief sought is vague and overbroad has merit.

“An injunction must be definite enough to provide a standard of conduct for those whose activities are proscribed, as well as a standard for the ascertainment of violations of the injunctive order by the courts called upon to apply it. An injunction which forbids an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application exceeds the power of the court.” (Pitchess v. Superior Court (1969) 2 Cal.App.3d 644, 651.)

Here, the 21 categories of documents appear overbroad on their face and also appear likely to include non-trade secret information for which Plaintiffs have not demonstrated entitlement to an injunction. Further, it is not entirely clear how “non-public” is intended to be defined for enforcement purposes, or what documents may fall within these broad categories of the various designated subject matter areas.

The proposed preliminary injunction order is unenforceable as drafted.

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CONCLUSION

Plaintiffs have demonstrated they have some likelihood of prevailing on the merits of their misappropriation of trade secrets claim and their breach of contract claim. Plaintiffs have also demonstrated the balance of harms weighs substantially in their favor.

Plaintiffs’ proposed injunction is overbroad and impermissibly vague—it is unenforceable as drafted.

Plaintiffs shall be prepared to propose a form of order that is specific and enforceable.

IT IS SO ORDERED.[9]

August 5, 2020 ________________________________

Hon. Mitchell Beckloff

Judge of the Superior Court


[1] Kamath’s opposition is simply a joinder to the other Defendants’ oppositions.

[2] The moving papers indicate Plaintiffs are also seeking a preliminary injunction based on their second and third causes of action for theft and conversion. As result of the court sustaining a demurer to these claims without leave, however, Plaintiffs have abandoned these claims as a basis for the preliminary injunction.

[3] Each insurance carrier has its own legacy systems and thus different information technology needs to determine how to modify their information technology architecture to update their systems to accommodate Guidewire software. (ACG Opposition, Iluyomade Decl., ¶¶ 24-26.)

[4] According to Plaintiffs, the stolen information included critical information technology architecture diagrams, the “building blocks” for Plaintiffs’ transition to the new Guidewire software platform.

[5] The purpose of the MDM project is to provide a single, 360-degree view of Plaintiffs’ customer and to understand customers across all lines of business. (Albright Decl., ¶ 2.)

[6] While Plaintiffs’ evidence suggests the existence of a large number of confidential trade secret documents, to date Plaintiffs’ identify only 23 specific documents as trade secrets. Of those, Plaintiffs have provided 10 to the court. ACG believes the 23 documents can be grouped into three general categories:

“(1) Guidewire Integration and Architecture Documents (Category 1), which includes 17 documents relating to [Plaintiffs’] Guidewire integration and architecture, including Solution Architecture Documents (“SAD”) that summarize how Guidewire will be implemented in [Plaintiffs’] unique IT infrastructure. (Longoria Decl., Ex. 15, 18, 30-31; Dixit Decl., ¶¶ 8, 10; Einhaus Decl., ¶ 7);

(2) User Interface Documents (Category 2): Three documents analyzing and recommending the use of Salesforce as a “front end” or “user interface” option for Guidewire. (Longoria Decl., Ex. 10, 12; Dixit Decl., ¶ 10); and

(3) MDM Documents (Category 3): Three documents relating to [Plaintiffs’] MDM program and integration of [redacted] MDM software into [Plaintiffs’] unique IT infrastructure. (Longoria Decl., Ex. 19, 29; Albright Decl., ¶ 10.)”

[7] While it is true discovery is not complete, describing the discovery as limited is somewhat of a mischaracterization. This matter is set for trial in just six months. According to ACG, it collected 5,000,000 files from 26 ACG employees identified by Plaintiffs; reviewed nearly 150,000 documents and produced thousands of those documents; collected and produced several personal devices (such as cell phones, USBs, laptops) and 7,952 text messages; and engaged forensic consulting experts to analyze the data and determine whether Plaintiffs’ documents were shared onto ACG’s networks, and ran all searches requested by Plaintiffs. (Ellison Decl., ¶¶ 2-5.) Additionally, Plaintiffs took full depositions of the individual Defendants. (Ellison Decl., ¶ 6.) Notably, Plaintiffs have had ACG’s document production since December 3, 2018, which includes every document the individual Defendants allegedly misappropriated from Plaintiffs. (Ellison Decl., ¶ 5.)

[8] In Astro-Med, Inc. v. Nihon Kohden America, Inc. (1st Cir. 2009) 591 F.3d 1, 18-19, in which the court applied Rhode Island law, the federal court explained:

“There was ample evidence that the very reason Nihon Kohden hired Plant was to obtain access to his intimate knowledge of Astro–Med's business. Viewing the evidence in the light most favorable to the verdict, it is a logical inference that a competitor who hires away a rival's valued employee with access to inside information has done so in order to use that inside information to compete with the rival, and it is an equally logical inference that once Plant became a Nihon Kohden employee, he sought to justify its hiring decision by revealing and using the information Nihon Kohden had bargained for.”

Here, Plaintiff notes that, in the middle of Defendant ACG’s plans to modernize its own policy and claims systems, it hired five key Farmers’ employees who possessed specialized knowledge of and access to Farmers’ own modernization plans.

[9] A bond is generally required for a preliminary injunction. (Code Civ. Proc. § 529.) “The amount of the bond is fixed by the judge, exercising sound discretion, based on the probable damage that the enjoined party may sustain because of the injunction.” (Greenly v. Cooper (1978) 77 Cal.App.3d 382, 390.) It appears minimum bond ($10,000) is appropriate here.

Case Number: BC681655    Hearing Date: August 05, 2020    Dept: 86

[Tentative] ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO SEAL


The court’s written tentative decision on Plaintiffs’ motion for a preliminary injunction is based on all of the evidence submitted by the parties on the motion. Plaintiffs’ motion to seal, however, fails to justify sealing much of the evidence before the court. The court is prepared to proceed on the motion for preliminary injunction today and will issue its written tentative decision on the motion upon Plaintiffs’ election to proceed without sealing the documents the court does not order sealed today. Until there is an election by Plaintiffs to withdraw the conditionally-filed documents or to allow those documents to be filed by the court, the court cannot determine what evidence is before it for consideration of Plaintiffs’ motion.

Of course, Plaintiffs may demonstrate why the court’s tentative decision on this motion to seal should be revised such that the motion should be granted. If the motion to seal is granted in its entirety, the court will issue its written tentative decision on the motion for preliminary injunction.

This action arises from Plaintiffs’ claim Defendants misappropriated Plaintiffs’ trade secrets.

Plaintiffs seek a preliminary injunction enjoining Defendants from accessing, using, disclosing or deleting Plaintiffs’ confidential, proprietary and trade secret information. In conjunction with Plaintiffs’ motion for a preliminary injunction, Plaintiffs’ request a court order sealing certain exhibits and unredacted filings related to the motion for preliminary injunction.

The motion to seal is unopposed.[1]

The motion to seal is granted in part. In large part, however, the motion is denied.

LEGAL STANDARD

“A party requesting that a record be filed under seal must file a motion or an application for an order sealing the record. The motion or application must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing.” (California Rules of Court, Rule 2.551, subd. (b)(1).)

The court must make express findings to support sealing under California Rules of Court, Rule 2.550. Specifically, California Rules of Court, Rule 2.550, subdivision (d) provides:

“The court may order that a record be filed under seal only if it expressly finds that:

(1) There exists an overriding interest that overcomes the right of public access to the record;

(2) The overriding interest supports sealing the record;

(3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;

(4) The proposed sealing is narrowly tailored; and

(5) No less restrictive means exist to achieve the overriding interest.”

Courts have found enforcement of binding contractual obligations not to disclose “can constitute an overriding interest within the meaning of Rule 243.1(d) [currently California Rules of Court, Rule 2.550].” (Universal City Studios v. Superior Court of Los Angeles County (2003) 110 Cal.App.4th 1273, 1284.) Nonetheless, in ordering records to be sealed, the court must also find a substantial probability the moving party would be prejudiced absent sealing. (Id. at 1280-1284)

ANALYSIS

Here, Plaintiffs seek to seal the following documents:

(1) Exhibit 4 to the Declaration of Cristina Longoria in support of Plaintiffs’ Issuance of Preliminary Injunction (Longoria Declaration)

(2) Exhibit 5 to the Longoria Declaration

(3) Exhibit 6 to the Longoria Declaration

(4) Exhibit 8 to the Longoria Declaration

(5) Exhibit 10 to the Longoria Declaration

(6) Exhibit 11 to the Longoria Declaration

(7) Exhibit 12 to the Longoria Declaration

(8) Exhibit 13 to the Longoria Declaration

(9) Exhibit 15 to the Longoria Declaration

(10) Exhibit 16 to the Longoria Declaration

(11) Exhibit 17 to the Longoria Declaration

(12) Exhibit 18 to the Longoria Declaration

(13) Exhibit 19 to the Longoria Declaration

(14) Exhibit 20 to the Longoria Declaration

(15) Exhibit 29 to the Longoria Declaration

(16) Exhibit 30 to the Longoria Declaration

(17) Exhibit 31 to the Longoria Declaration

(18) Defendant Auto Club Group's (ACG) unredacted Opposition to Order to Show Cause Re: Issuance of a Preliminary Injunction;

(19) Unredacted Declaration of Robert J. Ellison in Support of ACG's Opposition to Order to Show Cause Re: Issuance of a Preliminary Injunction;

(20) Exhibits 2, 6 through 12, and 15 through 29 to the Declaration of Robert J. Ellison in Support of ACG's Opposition to Order to Show Cause Re: Issuance of a Preliminary Injunction;

(21) Unredacted Declaration of Wayne Iluyomade in Support of ACG's Opposition to Order to Show Cause Re: Issuance of a Preliminary Injunction;

(22) Unredacted Declaration of George Onofrio in Support of ACG's Opposition to Order to Show Cause Re: Issuance of a Preliminary Injunction;

(23) Unredacted Declaration of Dr. Chuck Brooks in Support of ACG's Opposition to Order to Show Cause Re: Issuance of a Preliminary Injunction.

(24) Defendant Abedi's unredacted Opposition to Order to Show Cause re: Preliminary Injunction;

(25) Exhibits B, C, D and E to the Declaration of Amber Henry in Support of Abedi's Opposition to Order to Show Cause re: Issuance of Preliminary Injunction;

(26) Barigeda's unredacted Opposition to Order to Show Cause Re: Issuance of a Preliminary Injunction;

(27) Unredacted Declaration of Elliot B. Gipson in Opposition to Preliminary Injunction, including Exhibit A in its entirety and portions of Exhibit B;

(28) Bose's unredacted Opposition to Order to Show Cause re: Issuance of Preliminary Injunction;

(29) Unredacted Declaration of Ted A. Gehring in Support of Bose's Opposition to Order to Show Cause re: Issuance of Preliminary Injunction, including portions of Exhibit B thereto and Exhibit C in its entirety;

(30) Sundaram’s unredacted Opposition to Order to Show Cause re: Issuance of Preliminary Injunction;

(31) Unredacted Declaration of Patricia Brum in Opposition to Order to Show Cause re: Issuance of Preliminary Injunction, including all exhibits;

(32) Exhibits 35, pages 2-3 to the Declaration of Eric A. Herzog in Support of Plaintiffs’ Consolidated Reply Memorandum in Support of Order to Show Cause re: Issuance of Preliminary Injunction (Herzog Reply Declaration);

(33) Exhibit 43 (Wayne Iluyomade Deposition Transcript), at 183:22-23 and 188:9-11 to the Herzog Reply Declaration;

(34) Exhibit 45 (Sudhan Louis Deposition Transcript), at 37:2-14; 38:4-6; 39:8; 40:17, 20; 41:9, 20; 42:3, 24; 47:1-4; 47:7-48:9; 80:15-81:2; 81:10-14; 81:19-82:12; 85:17-24; 93:21-94:1; 96:22-97:25; 117:17-119:18; 153:14-25; 154:5-14; 158:14; 289:7-8, 17-23; and 301:4-15 to the Herzog Reply Declaration;

(35) Exhibit 46 (Dharini Dixit Deposition Transcript) at 342:6-24; 382:5-6, 23; 383:6-16, 21-25; 384:2-6; 385:15-19, 24; 387:8-12, 17-21; and 396:2-5 to the Herzog Reply Declaration;

(36) Exhibit 47 (William Albright Deposition Transcript), at 182:16-183:8; 183:22; 197:3-5; and 202:8-12 to the Herzog Reply Declaration;

(37) Exhibit 1 to the Declaration of Robert W. Peck in Support of Plaintiffs’ Consolidated Reply Memorandum in Support of Order to Show Cause re: Issuance of Preliminary Injunction (Peck Declaration).

To support its sealing request, Plaintiffs contend the documents contain their confidential, proprietary, commercially-sensitive information relating to strategic projects at the company—notably Plaintiffs’ Guidewire project and its Master Data Management project—or other aspects of its business. (Herzog 7/8/2020 II Decl., ¶¶ 3-4.)

The Declaration of Dharini Dixit explains the importance of maintaining the secrecy of the following documents: Exhibit 10, 12, 15, 30, 31 to the Longoria Declaration; Dixit states the documents are critical strategy documents. (Dixit Decl., ¶¶ 8, 10; see also Louis Decl., ¶ 5.).

The Declaration of William Albright discusses the importance of maintaining the confidentiality of Exhibit 29 to the Longoria declaration. (Albright Decl., 8.)

The Declaration of Yorck Einhaus attests to the confidential nature of Exhibits 4, 5 and 18 to Longoria declaration. (Yorck 10/9/2019 Decl., ¶¶ 4-7.)

The October 10, 2019 Declaration of Eric Herzog states Exhibits 6, 8 and 11 to the Longoria Declaration, purport to be ACG documents but incorporate certain of Plaintiffs’ concepts, strategies and/or work product that Plaintiffs’ regard as confidential. (Herzog 10/8/19 Decl., ¶¶ 4-5.)

This evidence is adequate to justify sealing the bold-faced documents listed above and to find Plaintiffs will suffer substantial prejudice if the bold-faced documents listed above are not sealed. Although the evidence does not specifically address the narrowly tailored requirement for sealed documents, the court is inclined to find the evidence is also adequate to justify the full extent of sealing requested by Plaintiffs as to these specific documents.

Plaintiffs do not, however, specifically address the remaining documents for which they have requested sealing. The court is unable to locate evidence submitted specifically to support sealing Exhibits 13, 16, 17, 19, 20 to the Longoria declaration, the request to seal certain opposition evidence or the reply evidence. The only evidence in support of sealing this evidence is Herzong’s general assertion that:

“The documents contain, and the testimony directly addresses, confidential, proprietary, commercially-sensitive and/or trade secret information of Farmers relating to strategic projects at the company—notably Farmers’ Guidewire project and its Master Data Management project—or other aspects of its business. The sensitive nature of the documents, and the projects and initiatives, are explained in the declarations of Dharini Dixit, Sudhan Louis, and William Albright filed in support of Plaintiffs’ Memorandum of Points and Authorities in Support of Order to Show Cause re: Issuance of Preliminary Injunction, and in these witnesses’ deposition testimony.”

(Herzog 7/8/20 II Decl., ¶ 4.) The court cannot find this vague, sweeping and non-specific evidence is adequate to support the findings necessary under California Rules of Court, Rule 2.550, subdivision (d) to seal the balance of the documents.

Thus, the court grants the motion to seal as to Exhibits 4, 5, 6, 8, 10, 11, 12, 15, 18 29, 30, and 31 and denies as to the remaining evidence.

Pursuant to the California Rules of Court, Rule 2.551, subdivision (b)(6) Plaintiffs must advise the court whether the lodged records are to be filed unsealed.

CONCLUSION

The motion to seal granted in part.


[1] Plaintiffs filed three motions to seal (October 10, 2019, March 6, 2020, July 8, 2020). For ease, the court considers the three motions as a single motion.

Case Number: BC681655    Hearing Date: February 14, 2020    Dept: 32

farmers insurance exchange & farmers group, inc.,

Plaintiffs,

v.

VENKATESH KAMATH, et al.

Defendants.

Case No.: BC681655

Hearing Date: February 14, 2020

[TENTATIVE] order RE:

Demurrer to first amended Complaint

BACKGROUND

Plaintiffs Farmers Insurance Exchange (“FIE”) and Farmers Group, Inc. (“FGI”) (collectively, “Farmers”) commenced this action against Defendants Venkatesh Kamath (“Kamath”), Shohreh Abedi (“Abedi”), Auto Club Group (“ACG”), and Automobile Club of Michigan on October 30, 2017. The operative pleading is the First Amended Complaint (“FAC”) filed on September 27, 2019. The FAC named additional defendants to the action: Vijayachandran Subashchandrabose (“Bose”), Raghuram Barigeda (“Barigeda”), and Sridharan Sundaram (“Sundaram”). The FAC asserts causes of action for (1) violation of the Uniform Trade Secrets Act (“UTSA”), (2) violation of Penal Code section 502, (3) conversion, (4) breach of contract, and (5) inducing breach of contract. The FAC alleges in pertinent part as follows.

As one of the largest property and casualty insurance carriers in the US, FIE issues and services hundreds of thousands of policies and handles hundreds of thousands of insurance claims annually. In June 2015, FIE undertook a major project (“Project”) with Guidewire Software, Inc. (“Guidewire”) to revamp FIE’s policy servicing and handling functions by developing new policy servicing and claims handling systems. Implementation of the Project has taken years and entailed the expenditure of millions of dollars.

Beginning in 2016, ACG undertook a coordinated effort to systematically steal Farmers most sensitive business documents and information, including information related to its implementation of the Project, by poaching Farmers’ key employees and purloining its trade secrets. Through these efforts, ACG has embarked on its own project involving Guidewire.

For example, Abedi was FGI’s CIO at the time that Farmers made the decision to embark on the Project. In this role, Abedi was responsible for overseeing the Project, regularly interacted with senior leadership at Farmers, and advised its key executives with respect to the selection of the Guidewire system. Abedi ceased worked for FGI in August 2015 and joined ACG as an employee in April 2016. Abedi took with her documents pertaining to FIE’s IT strategy and detailed information regarding FIE’s IT projects.

Bose was FGI’s Head of Infrastructure and Operations, in which role he spearheaded the production support and infrastructure component of the Project. Bose worked closely with Abedi at Farmers and ACG. Sundaram was FGI’s lead architect of the Project and reported directly to the IT head. Barigeda was FGI’s Director of IT Infrastructure and reported to Bose. Between October 2016 and October 2017, Bose, Sundaram, and Barigeda left Farmers and began working for ACG. In the process, all three misappropriated hundreds, if not thousands, of highly sensitive and confidential documents from Farmers and circulated them to ACG employees.

Farmers learned about the theft because it caught former employee Kamath in the act of stealing its sensitive business documents. Kamath was employed as FGI’s Director of Personal Lines Auto IT until October 2017. After Kamath provided Farmers with his notice of resignation, Farmers began monitoring his computer activities. The monitoring revealed that, shortly after Kamath’s departure, Kamath had copied more than 6,400 files from his Farmers computer to his personal storage drive. Those files included confidential trade secret information relating to the Project and Farmers’ core insurance business. Kamath then secured employment with Auto Club.

DISCUSSION[1]

Defendants Barigeda, Bose, and Sundaram have brought demurrers. Barigeda and Bose demur to the FAC’s first, second, and third causes of action, and Sundaram demurs to the FAC’s second and third causes of action.

A. First Cause of Action

A trade secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Civ. Code § 3426.1(d).) “In short, the test for a trade secret is whether the matter sought to be protected is information (1) that is valuable because it is unknown to others and (2) that the owner has attempted to keep secret.” (DVD Copy Control Assn., Inc. v. Bunner (2004) 116 Cal.App.4th 241, 251.)

Barigeda and Bose argue that Farmers’ first cause of action for violation of the UTSA fails because Farmers has insufficiently alleged the existence of a trade secret. Barigeda and Bose primarily cite to Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244, 252 in which the appellate court noted that a plaintiff claiming trade secret protection must allege ultimate facts showing the existence of a trade secret. According to the Diodes court, “[a]n averment simply that the plaintiff has a ‘secret process’ is a bare legal conclusion.” (Ibid.)

Barigeda’s and Bose’s argument is unpersuasive. Farmers has alleged facts showing both components of a trade secret are present. First, Farmers alleges the existence of information that is valuable because it is unknown to others. According to Farmers, Defendants took “documents and information that … are highly confidential to Farmers and contain sensitive information concerning all aspects of the Guidewire project as well as Farmers’ business operations and strategies.” (FAC ¶ 73.) Supporting this allegation, Farmers enumerated the general function of the Project, the resources invested by Farmers into the Project, and the anticipated benefits of the Project to the company. (FAC ¶¶ 17-24.) Second, Farmers alleges facts showing it has attempted to keep the information secret. Farmers requires employees to receive training regarding its policies concerning data protection, security, and confidentiality. (FAC ¶ 63.) “These policies made clear that, among other things, employees who are exposed to confidential or proprietary information concerning Farmers may not use such information unless authorized by management to do so. Further, the policies require that all employees (i) are to use Farmers’ IT systems for business purposes only, (ii) must safeguard the information stored and communicated in these systems, and (iii) must not release trade secrets or other proprietary, confidential or sensitive information belonging to Farmers.” (Ibid.)

Diodes is not to the contrary. Farmers has not alleged a bare legal conclusion, such as a “secret process,” to show the existence of a trade secret. Farmers has alleged ultimate facts showing the nature, value, and secrecy of the information constituting the trade secret. Nothing else is required at the pleading stage.

Bose contends that Diodes requires a more demanding pleading standard. Bose recites the following passage from Diodes: “Before a defendant is compelled to respond to a complaint based upon claimed misappropriation or misuse of a trade secret and to embark on discovery which may be both prolonged and expensive, the complainant should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.” (Diodes, supra, 260 Cal.App.2d at 252.) However, this holding was subsequently codified by the Legislature in CCP section 2019.210. (Brescia v. Angelin (2009) 172 Cal.App.4th 133, 144.) CCP section 2019.210 instructs that “before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity….” (Emphasis added.) Hence, while Farmers must identify the trade secret with reasonable particularity prior to commencing discovery (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 44-45 (identification via a separate document)), Farmers need not satisfy this requirement at the pleading stage. (Meggitt San Juan Capistrano, Inc. v. Yongzhong (9th Cir. 2014) 575 Fed.Appx. 801, 803.)

In reply, Bose cites for the first time the general rule that statutory causes of action must be plead with particularity. (See, e.g., Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.) Bose waived this argument by not raising it in its moving papers. In any event, the Court will not apply this general rule so as to override CCP section 2019.210. The particularity demanded by CCP section 2019.210 remains a requirement inapplicable at the pleading stage.

Barigeda also contends that this cause of action is uncertain because Farmers has not identified the trade secrets which Barigeda allegedly took, individually or as part of a conspiracy. The Court disagrees.

Demurrers for uncertainty are disfavored. (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.) Such demurrers are strictly construed, even where a complaint is uncertain in some respects, because ambiguities can be clarified under modern rules of discovery. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

In this case, the FAC places Barigeda on notice that he has allegedly misappropriated information owned by Farmers pertaining to the Project. Barigeda has allegedly taken “documents relating to the contours and status of Farmers’ Sharepoint Project and detailed cost information and savings analyses relating to Farmers’ Cloud Migration initiative.” (FAC ¶ 43.) Any lingering uncertainties about what Barigeda allegedly stole can be clarified during the discovery process.

Barigeda’s and Bose’s demurrer to the first cause of action is overruled.

B. Second Cause of Action

In its second cause of action, Farmers alleges that Defendants have violated Penal Code section 502(c)(1), (2), (6), and (7). Subdivision (c) reads in pertinent part:

Except as provided in subdivision (h), any person who commits any of the following acts is guilty of a public offense:

(1) Knowingly accesses and without permission alters, damages, deletes, destroys, or otherwise uses any data, computer, computer system, or computer network in order to either (A) devise or execute any scheme or artifice to defraud, deceive, or extort, or (B) wrongfully control or obtain money, property, or data.

(2) Knowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or computer network, or takes or copies any supporting documentation, whether existing or residing internal or external to a computer, computer system, or computer network.

(6) Knowingly and without permission provides or assists in providing a means of accessing a computer, computer system, or computer network in violation of this section.

(7) Knowingly and without permission accesses or causes to be accessed any computer, computer system, or computer network.

Subdivision (b) defines “access” as meaning “to gain entry to, instruct, cause input to, cause output from, cause data processing with, or communicate with, the logical, arithmetical, or memory function resources of a computer, computer system, or computer network.” (Pen. Code § 502(b)(1).) Subdivision (e) provides a private right of action to an owner of the computer or computer system “who suffers damage or loss by reason of a violation of any of provisions of subdivision (c).”

Barigeda, Bose, and Sundaram argue that Farmers’ second cause of action for violation of Penal Code section 502 fails because Farmers has not alleged that they hacked their computers. The Demurring Defendants cite to Chrisman v. City of Los Angeles (2007) 155 Cal.App.4th 29. There the appellate court noted that section 502 “defines ‘access’ in terms redolent of ‘hacking’ or breaking into a computer.” (Id. at 34.) “Underscoring that ‘accessing’ a computer’s ‘logical, arithmetical, or memory function’ is different from the ordinary, everyday use of a computer to which people are accustomed when they speak of ‘using’ a computer, another subdivision criminalizes ‘us[ing] or caus[ing] to be used computer services’ without permission.” (Id. at 34 (citing Pen. Code § 502(c)(3)).) Based on this definition, the appellate court found that a police officer who logged into a police database to satisfy personal curiosity did not violate the statute because the police officer “was entitled to access those resources.” (Id. at 35.)

“Under the doctrine of stare decisis, all tribunals exercising inferior jurisdiction are required to follow decisions of courts exercising superior jurisdiction.” (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 455.) Because Chrisman was decided by the California Court of Appeals, the Court must follow its instructions and construe section 502’s term “access” as meaning something “redolent of ‘hacking.’ ” In the FAC, Farmers does not allege that the Demurring Defendants hacked into Farmers’ systems to obtain this information allegedly misappropriated. In fact, Farmers alleges that the Demurring Defendants “had access to” these confidential documents. (See FAC ¶ 44.) Consequently, Farmers’ second cause of action fails.

Citing to United States v. Christensen (9th Cir. 2015) 828 F.3d 763, Farmers responds that the definition of “access” should be construed more broadly. In Christensen, the Ninth Circuit held that the term “access” as used in section 502 “includes logging into a database with a valid password and subsequently taking, copying, or using the information in the database improperly.” (Christensen, supra, 828 F.3d at 789.) In reaching this conclusion, the Ninth Circuit distinguished Chrisman, noting that the interpretation set forth by Chrisman rendered redundant the words “without permission” and ran contrary to the findings of two appellate opinions preceding Chrisman Gilbert v. City of Sunnyvale (2005) 130 Cal.App.4th 1264 and People v. Hawkins (2002) 98 Cal.App.4th 1428. (Ibid.)

Farmers’ counterargument is unpersuasive. As noted ante, the Court is bound to follow the decisions of this state’s appellate courts. Chrisman, not Christensen, therefore dictates the proper interpretation of “access” under section 502. Gilbert and Hawkins are not to the contrary. Gilbert referenced section 502 once without any discussion. Hawkins examined section 502 to determine whether it could be prosecuted as a felony. Neither case considered whether the term “access” as used in section 502 means “hacking” or something analogous thereto. (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 614 (“Cases are not authority for propositions not considered therein.”).)

Barigeda’s, Bose’s, and Sundaram’s demurrer to the second cause of action is sustained without leave to amend.

C. Third Cause of Action

Barigeda, Bose, and Sundaram argue that Farmers’ third cause of action for conversion is preempted by the UTSA. The Court agrees.

The UTSA “provides the exclusive civil remedy for conduct falling within its terms, so as to supersede other civil remedies ‘based upon misappropriation of a trade secret.’ ” (Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 236 disapproved of on other grounds by Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310.) Accordingly, the UTSA “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, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 958.)

Farmers’ conversion claim is based on Defendants’ alleged theft of its “documents and other electronic files that contain confidential and/or proprietary information.” (FAC ¶ 96.) The Complaint repeatedly indicates that these are the same documents and electronic files forming the basis for Farmers’ UTSA claim. (FAC ¶¶ 1, 30-31, 44, 74, 94.) Indeed, Farmers even alleges that “[t]o the extent all or some of the above-described information does not constitute a trade secret under the [UTSA], Defendants’ knowing and intentional taking of possession of the information is conversion.” (FAC ¶ 97.) Because Farmers’ UTSA and conversion claim are based on the same nucleus of facts, Farmers’ conversion claim is preempted.

In response, Farmers argues that these causes of action are materially dissimilar because the property allegedly stolen for purposes of its conversion claim consists of documents that do not constitute a trade secret. Farmers cites Paragraphs 95 and 96 of the FAC: “In addition to Farmers’ claim under the [UTSA], Farmers alleges that Defendants converted Farmers’ non-trade-secret property, including confidential and/or proprietary information belonging to Farmers” (¶ 95), and “Farmers owned and/or possessed documents and other electronic files that contain confidential and/or proprietary information that does not constitute a trade secret under the [UTSA]” (¶ 96). However, the characterization of information as a trade secret or, conversely, a non-trade secret is plainly a legal conclusion, not an ultimate fact which must be accepted as true on demurrer. As Silvaco instructs, “If the only arguable property identified in the complaint is a trade secret, and the only basis for any property right is trade secrets law, then a conversion claim predicated on the theft of that property is unquestionably ‘based upon misappropriation of a trade secret’ (§ 3426.7, subd. (b)) and the conversion claim is preempted.” (Silvaco, supra, 184 Cal.App.4th at 238.) The only “arguable property” identified in the FAC is the confidential proprietary information which Farmers predominantly characterizes as a trade secret and alleges facts showing this to be the case. Merely relabeling this property as a non-trade secret does not alter this conclusion. (See Silvaco, supra, 184 Cal.App.4th at 240 (“[N]o attempt is made to identify any ‘Silvaco property’ other than the trade secrets supposedly used to create DynaSpice. The non-CUTSA claims therefore do not genuinely allege ‘alternative legal theories’ but are a transparent attempt to evade the strictures of CUTSA by restating a trade secrets claim as something else.”).)

Farmers argues that preemption cannot be resolved at the pleading stage because the Court cannot yet untangle the distinction between Farmers’ allegedly misappropriated trade secret information and its non-trade secret information. (Opp. at 15 (citing Amron Intern. Diving Supply, Inc. v. Hydrolinx Diving Communication, Inc. (S.D. Cal., Oct. 21, 2011, No. 11-CV-1890-H JMA) 2011 WL 5025178, at *10).) Farmers is incorrect. To the Court’s knowledge, Silvaco is the only published California opinion addressing this issue. The Silvaco court affirmed the trial court’s rejection of the plaintiff’s “non-trade secret counts on general demurrer.” (Silvaco, supra, 184 Cal.App.4th at 232 (emphasis added).) Furthermore, the Silvaco court addressed this issue directly — “It is never ‘premature’ to require that the plaintiff allege facts sufficient to constitute a viable cause of action.” (Id. at 239.)

Finally, Farmers contends that the demurring Defendants’ argument acts as “an untenable escape hatch for conduct that is clearly wrongful.” (Opp. at 15.) The Court disagrees for two reasons. First, assuming arguendo that the information allegedly stolen from Farmers is not a trade secret, the theft of this information is potentially not actionable at all. “Information that does not fit [the UTSA’s definition of trade secret], and is not otherwise made property by some provision of positive law, belongs to no one, and cannot be converted or stolen.” (Silvaco, supra, 184 Cal.App.4th at 238 n. 23; see also SunPower Corp. v. SolarCity Corp. (N.D. Cal., Dec. 11, 2012) 2012 WL 6160472, at *5 (collecting district court cases) (“[T]he Court agrees with the Silvaco Court that, in order to state a claim based on the taking of information, a plaintiff must show that he has some property right in such information (i.e. that the information is proprietary). [Citation.] If the basis of the alleged property right is in essence that the information is that it is ‘not ... generally known to the public,’ [citation] then the claim is sufficiently close to a trade secret claim that it should be superseded notwithstanding the fact that the information fails to meet the definition of a trade secret.”).) Second, sustaining this demurrer does not preclude Farmers from moving for leave to amend in the event that Farmers discovers that Defendants stole its non-trade secret information and identifies a viable property right in that information.

Barigeda’s, Bose’s, and Sundaram’s demurrer to the third cause of action is sustained without leave to amend.

CONCLUSION

Barigeda’s, Bose’s, and Sundaram’s demurrer to the FAC is OVERRULED as to the first cause of action and SUSTAINED WITHOUT LEAVE TO AMEND as to the second and third causes of action.


[1] Bose’s request for judicial notice is denied. A minute order from an unrelated superior court action is irrelevant to these demurrers.