Whiteslate, LLP v. Dahlin
| Decision Date | 07 July 2021 |
| Docket Number | 20-CV-1782 W (BGS) |
| Parties | WHITESLATE, LLP DBA SLATE LAW GROUP, Plaintiff, v. DEREK DAHLIN, et al., Defendants. |
| Court | U.S. District Court — Southern District of California |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS [DOC. 11]
Defendants Derek Dahlin, Brian Evans, Robert Smith, Wes Brummette, and Mango Technologies, Inc. DBA ClickUp (“ClickUp”) (collectively “Defendants”) move to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6). Plaintiff Whiteslate, LLP DBA Slate Law Group (“Slate”) opposes.
The Court decides the matter on the papers submitted and without oral argument. See Civ. L.R. 7.1(d)(1). For the reasons stated below, the Court GRANTS-IN-PART and DENIES-IN-PART the motion to dismiss [Doc 11].
The following allegations are taken from the Complaint. (Compl. [Doc. 1].)
On March 9, 2020, Slate conducted a formal interview with Derek Dahlin (“Dahlin”) for a position at Slate as an associate attorney. (Id. ¶ 20.) On March 10, 2020, Slate made an offer to Dahlin for the position, which he rejected because he wanted to remain employed at the company he was working for at the time. (Id. ¶¶ 21-23.) However, Dahlin expressed interest in working for Slate as a 1099 independent contractor. (Id. ¶ 24.) Slate accepted Dahlin's request and Dahlin began work at Slate as an independent contractor on March 19, 2020. (Id. ¶¶ 26-27.)
On March 25, 2020, as part of Slate's onboarding process, Dahlin reviewed Slate's Non-Disclosure and Confidentiality Agreement (“NDA”), which is required for all Slate employees and independent contractors. (Id. ¶¶ 28-29, 35.) Dahlin signed and returned the NDA the same day. (Id. ¶ 32.) Among the relevant language of the NDA is that Dahlin “shall not use, disclose, or cause the use or disclosure of any Confidential and Proprietary Information and/or Trade Secret Information for any purpose other than to diligently carry out the negotiations and undertakings . . . under this Agreement.” (Id., Ex. A § 8.)
Shortly after Dahlin began working at Slate as an independent contractor, Dahlin expressed discontent working for his full-time employer and began negotiations with Slate to start working as a full-time employee. (Id. ¶¶ 43-45.) On April 14, 2020, Slate extended another offer to Dahlin by letter for the same associate attorney position he initially interviewed for. (Id. ¶¶ 47-48.) On April 15, 2020, Dahlin accepted full-time employment with Slate by signing and returning the offer letter that indicated an anticipated start date of April 21, 2020. (Id. ¶¶ 48-49.) By signing and returning the letter, Dahlin effectively agreed to and accepted Slate's employment terms, including terms in the NDA that Dahlin signed on March 25, 2020. (Id. ¶¶ 50-51.) On April 21, 2020, Dahlin began working as a full-time employee at Slate. (Id. ¶ 52.)
As a full-time associate transactional attorney, Dahlin was assigned to oversee the cases of several clients, one being ClickUp. (Id. ¶¶ 53-54.) ClickUp had been a client of DuFord Law, which was subsequently bought out by Slate, since October 3, 2019. (Id. ¶¶ 55-56.) Dahlin began working with ClickUp on April 9, 2020, when he was still an independent contractor for Slate. (Id. ¶¶ 59-61.) Dahlin continued working with ClickUp after becoming a full-time Slate employee under the supervision of Kelly DuFord (“DuFord”), the managing partner of Slate. (Id. ¶¶ 60-61.)
On April 9, 2020, Dahlin sent an email introducing himself as the main point of contact for the officers of ClickUp at the time: Brian Evans (“Evans”), chief executive officer; Robert Smith (“Smith”), chief financial officer and secretary; and Wes Brummette (“Brummette”), agent for service of process. (Id. ¶ 62.) Dahlin worked on various transactional matters for ClickUp through June 2020. (Id. ¶¶ 63-64.)
On May 14, 2020, Brummette sent a message through Slack, Slate's client correspondence portal, asking Dahlin whether he would be interested in an in-house counsel position at ClickUp. (Id. ¶ 66.) Dahlin responded that he was interested in exploring this role with ClickUp; Brummette and Dahlin subsequently set up an informational interview the following day on May 15, 2020. (Id. ¶¶ 67-68.) The afternoon after the interview, another ClickUp officer messaged Dahlin through Slack, “We got the good news and I'm happy to hear that we might be able to get you full-time.” (Id. ¶ 69.) Dahlin was then requested to interview with another ClickUp attorney for the in-house counsel position. (Id. ¶ 70.)
On May 21, 2020, Dahlin met with DuFord and brought up ClickUp's offer for the in-house counsel position. (Id. ¶ 71.) DuFord explained to Dahlin that he was not permitted to take on ClickUp as a personal client, nor was he allowed to leave Slate for ClickUp for the in-house counsel position pursuant to the NDA that he had signed. (Id. ¶ 72.)
On June 1, 2020, Brummette messaged Dahlin via Slate's Slack portal informing Dahlin that he had created a ClickUp email for Dahlin to access ClickUp's own correspondence portal, also through Slack, which granted Dahlin limited guest access to ClickUp's portal. (Id. ¶¶ 73-74.) Dahlin then instructed Brummette to close out Dahlin's Slate email from ClickUp's Slack spaces. (Id. ¶ 77.) Slate alleges that during the time Dahlin was negotiating employment with ClickUp, Dahlin was providing ClickUp with various documents, templates, and other work product belonging to Slate. (Id. ¶¶ 78-79.) The alleged documents are password-protected in Cloud storage and only accessible by employees who are interviewed and vetted by DuFord. (Id. ¶¶ 79, 81.) These documents are only accessible to employees after onboarding and signing Slate's NDA, and when employees terminate employment with Slate, their access to the documents is immediately removed. (Id. ¶¶ 83-85.)
On June 16, 2020, Dahlin sent a formal resignation by email providing two weeks' notice to Duford and Slate's then Lead Litigation Attorney and Partner, Michael Weiner (“Weiner”). (Id. ¶¶ 86-89.) Dahlin stated in the letter that after resigning, he intended to take some time off work and fly to Vermont on July 2, 2020. (Id. ¶¶ 90, 93.) On June 21, 2020, Dahlin called Weiner via FaceTime informing Weiner of ClickUp's offer to Dahlin for the in-house counsel position and that he intended to take the job. (Id. ¶¶ 93- 95.) Weiner instructed Dahlin to speak with DuFord about moving to a client. (Id. ¶ 96.)
On September 10, 2020, Plaintiff filed this lawsuit against Defendants. The Complaint alleges the following causes of action against all Defendants: misappropriation of trade secrets under the Federal Defend Trade Secrets Act, misappropriation of trade secrets under the California Uniform Trade Secrets Act, copyright infringement, vicarious copyright infringement, and contributory copyright infringement. (Id. [Doc. 1].) The Complaint alleges the following causes of action against Defendants Evans, Smith, Brummette, and ClickUp: aiding and abetting breach of duty of loyalty, intentional interference with contractual relations, negligent interference with contractual relations, intentional interference with prospective economic relationship, negligent interference with prospective economic relationship, and interference of contract in an at-will relationship. (Id.) Plaintiff alleges the following causes of action against Defendant Dahlin only: violation of the California Computer Data Access and Fraud Act, fraud based on intentional misrepresentation, fraud based on negligent misrepresentation, fraudulent concealment, breach of contract, breach of the covenant of good faith and fair dealing, breach of the duty of loyalty, unjust enrichment, and unfair business practice. (Id.)
Defendants now seek dismissal of each cause of action in Plaintiff's Complaint. (See Mot. to Dismiss [Doc. 11-1].)
The court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). In ruling on the motion, a court must “accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party.” Vasquez v. L.A. Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007). But a court is not required to accept legal conclusions couched as facts, unwarranted deductions, or unreasonable inferences. Papasan v. Allain, 478 U.S. 265, 286 (1986); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
Complaints must contain “a short plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The Supreme Court has interpreted this rule to mean that “[f]actual allegations must be enough to rise above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The allegations in the complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 570).
Where a motion to dismiss is granted, “leave to amend should be granted ‘unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'” DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655 658 (9th Cir. 1992) ...
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