Sunpower Corp. v. Solarcity Corp.
| Decision Date | 11 December 2012 |
| Docket Number | Case No.: 12-CV-00694-LHK |
| Parties | SUNPOWER CORPORATION, a Delaware corporation, Plaintiff, v. SOLARCITY CORPORATION, A Delaware corporation; TOM LEYDEN, an individual; MATT GIANNINI, an individual; DAN LEARY, an individual; FELIX AGUAYO, an individual; ALICE CATHCART, an individual. Defendants. |
| Court | U.S. District Court — Northern District of California |
ORDER GRANTING DEFENDANTS'
Before the Court is Defendants SolarCity Corporation, Tom Leyden, Matt Giannini, Dan Leary, Felix Aguayo, and Alice Catchart's ("Defendants") Partial Motion to Dismiss. See ECF No. 47 ("Motion"). Having considered the parties' submissions and the relevant case law, and the parties' arguments at the hearing held on November 8, 2012, the Court GRANTS Defendants' Motion.
SunPower is a leading manufacturer and distributor of high-efficiency solar panels and other related equipment. Complaint, ECF No. 1 ("Compl.") ¶ 12. SolarCity is a distributor of solar panels and other related equipment. Id. ¶ 13. Defendants Tom Leyden, Matt Giannini, Dan Leary, Felix Aguayo, and Alice Cathcart (the "Individual Defendants") were employed by SunPower insales positions before being recruited by SolarCity. Id. ¶¶ 14-19, 38-39. Each of the Individual Defendants signed agreements at SunPower agreeing not to disclose "confidential or proprietary information" to third parties and to return such information to SunPower upon ending their employment. Id. ¶ 25.
On or about December 9, 2011, SunPower discovered that Aguayo had accessed his company email account after he was terminated. Id. ¶ 32. SunPower also discovered that Aguayo had forwarded several emails containing customer information, price lists, and market reports to his personal email address on or about November 18, 2011. Id. Based on the emails Aguayo accessed and the proximity in time to Leyden, Giannini, Leary, Aguayo, and Catchart's departures, SunPower initiated an investigation, including conducting a computer forensic analysis of the computers used by the Individual Defendants. Id. ¶ 33.
SunPower's investigation revealed that, shortly before leaving SunPower, each of the Individual Defendants had used various means, including USB devices and portable hard drives, to store SunPower files containing "confidential... and non-confidential proprietary information." Id. ¶¶ 34-48. This information consisted of, inter alia, contact information, sales histories, potential new sales, status, market and business analysis, quotes, forecast analysis, cash flow analysis, and project economics. Id. SunPower is informed and believes that this information has been delivered to Defendant SolarCity and that Defendants Id. ¶¶ 49-55.
As a result of Defendants' actions, on February 13, 2012, SunPower filed the instant action. In this action, SunPower alleges that Defendants misappropriated SunPower's trade secrets in violation of the California Uniform Trade Secrets Act, Cal. Civ. Code § 3426 et seq. ("Trade Secrets Claim"). Id. ¶¶ 63-72. In addition to SunPower's Trade Secrets Claim, SunPower alleges several causes of action based on Defendant's misappropriation of what SunPower terms "non-trade secret proprietary information." Id. ¶ 121. These causes of action include SunPower's: (1) fourth cause of action for breach of confidence (see id. ¶¶ 118-124), (2) fifth cause of action for conversion (see id. ¶¶ 125-130), (3) sixth cause of action for trespass to chattels (see id. ¶¶ 131-137), (4) seventh cause of action for tortious interference with prospective economic advantage (see id. ¶¶ 138-145); (5) eighth cause of action for common law unfair competition (see id. ¶¶ 146-151); and (6) ninth cause of action for unfair competition under California Business & Professions Code section 17200 (id. ¶¶ 152-155) (collectively, "Non-Trade Secret Claims").1
On August 2, 2012, Defendants filed the instant Motion seeking dismissal of SunPower's Non-Trade Secret Claims. Defendants' primary basis for relief is that the California Uniform Trade Secrets Act supersedes SunPower's Non-Trade Secret Claims. Motion at 1. SunPower filed its Opposition on October 11, 2012. ECF No. 51 ("Opposition"). Defendants filed their Reply on October 18, 2012. ECF No. 52 ("Reply").
A motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Dismissal under Rule 12(b)(6) may be based on either (1) the "lack of a cognizable legal theory," or (2) "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)2 . While "'detailed factual allegations'" are not required, a complaint must include sufficient facts to "'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
For purposes of ruling on a Rule 12(b)(6) motion to dismiss, the Court accepts all allegations of material fact as true and construes the pleadings in the light most favorable toSunPower. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The Court need not, however, accept as true pleadings that are no more than legal conclusions or the "formulaic recitation of the elements of a cause of action." Iqbal, 555 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Mere "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir.1996); accord Iqbal, 555 U.S. at 677-80.
In the instant Motion, Defendants move to dismiss the Non-Trade Secret Claims on the grounds that: (1) California law has never recognized causes of action for conversion, trespass to chattels, tortious interference with prospective economic advantage, common-law unfair competition, or statutory unfair competition based on the misappropriation of "non-trade secret proprietary information"; and (2) even if California law did previously allow such claims, such claims are now superseded3 by the California Uniform Trade Secrets Act ("CUTSA"). Motion at 2. Defendants also argue that SunPower's seventh cause of action for tortious interference with prospective economic advantage should be dismissed because SunPower has failed to allege that Defendants' conduct interfered with SunPower's relationship with a specific third party. Id. at 18-19. The Court addresses the supersession issue first and concludes that SunPower's Non-Trade Secret Claims are superseded.
California's Uniform Trade Secrets Act provides for the civil recovery of "actual loss" or other injury caused by the misappropriation of trade secrets. Cal. Civ. Code § 3426.3. Misappropriation means improper acquisition, or non-consensual disclosure or use of another's trade secret. Id. § 3426.1(b). The statute defines a "trade secret" as information that derives"independent economic value" from its confidentiality and "[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Id. § 3426.1(d).
CUTSA includes a savings clause (Section 3426.7) that "preempt[s] claims based on the same nucleus of facts as trade secret misappropriation." K.C. Multimedia, Inc. v. Bank of America Tech. & Operations, Inc., 171 Cal. App. 4th 939, 962 (2009); see also Cal. Civ. Code § 3426.74 . The savings clause does not affect "contractual remedies" and civil remedies "that are not based upon misappropriation of a trade secret." Silvaco Data Systems v. Intel Corp., 184 Cal. App. 4th 210, 233 (2010), disapproved on other grounds by Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011). "The preemption inquiry for those causes of action not specifically exempted by § 3426.7(b) focuses on whether other claims are not more than a restatement of the same operative facts supporting trade secret misappropriation. . . If there is no material distinction between the wrongdoing alleged in a [C]UTSA claim and that alleged in a different claim, the [C]UTSA claim preempts the other claim." Convolve, Inc. v. Compaq Comp. Corp., No. 00 CV 5141 (GBD), 2006 WL 839022, at *6 (S.D.N.Y. Mar. 31, 2006) (internal quotations omitted) (applying California law).
Following the nucleus of facts test, a number of Courts, including this Court, have held that CUTSA may supersede various claims including, inter alia, claims for conversion, common count, quantum meruit, unjust enrichment, breach of confidence, unfair competition, and intentional andnegligent misrepresentation where the wrongdoing alleged in connection with such claims is the misappropriation of trade secrets. See e.g. Louis v. Nailtiques Cosmetic Corp., 423 F. App'x 711, 713 (9th Cir. 2011) ; SOAProjects, Inc. v. SCM Microsystems, Inc., 10-CV-01773-LHK, 2010 WL 5069832 (N.D. Cal. Dec. 7, 2010) ; Silvaco, 184 Cal. App. 4th at 236 (...
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