World Financial Group, Inc. v. Hbw Ins. & Financial Services, Inc., No. B210884.

CourtCalifornia Court of Appeals
Writing for the CourtPerren
Citation172 Cal.App.4th 1561,92 Cal. Rptr. 3d 227
PartiesWORLD FINANCIAL GROUP, INC., Plaintiff and Respondent, v. HBW INSURANCE & FINANCIAL SERVICES, INC., et al., Defendants and Appellants.
Docket NumberNo. B210884.
Decision Date16 April 2009
172 Cal.App.4th 1561
92 Cal. Rptr. 3d 227
WORLD FINANCIAL GROUP, INC., Plaintiff and Respondent,
v.
HBW INSURANCE & FINANCIAL SERVICES, INC., et al., Defendants and Appellants.
No. B210884.
Court of Appeals of California, Second District, Division Six.
April 16, 2009.

[172 Cal.App.4th 1563]

Davis Wright Tremaine, John P. LeCrone, Mary H. Haas and Rochelle L. Wilcox for Defendants and Appellants.

Seyfarth Shaw, Erik B. von Zeipel, Daniel R. Sable and Brian T. Ashe for Plaintiff and Respondent.

[172 Cal.App.4th 1564]

OPINION

PERREN, J.—


Defendants HBW Insurance & Financial Services, Inc. (HBW), and six of its agents1 appeal the denial of their motion to strike the complaint filed against them by World Financial Group, Inc. (WFG), pursuant to Code of Civil Procedure section 425.16 (the anti-SLAPP statute (strategic lawsuit against public participation)).2 The complaint primarily alleges that defendants, WFG's direct competitors, misappropriated WFG's trade secrets and utilized confidential information to solicit WFG's associates and customers. The trial court denied the motion on the ground that defendants failed to make a prima facie showing that the complaint arose from protected activity. We affirm.

FACTS AND PROCEDURAL HISTORY
The Parties

WFG is a corporation that provides insurance, pension, and financial services to businesses and individuals in the United States and Canada. HBW is WFG's direct competitor. Defendants Dominique Moore, Terry Kennedy, Gabriel Paredes, and Jaime Paredes (hereinafter collectively referred to as the contracting defendants) are all former associates at WFG offices in California and Nevada who are now agents for HBW.3 Defendants Jeff Crawford and James Crawford are HBW agents at offices in California.

The Associate Membership Agreement

In securing employment with WFG, each contracting defendant executed an AMA.4 Included in the AMA are nine covenants, six of which are particularly relevant here. In section D(2), the contracting defendants agree that during the term of the AMA and for a period of two years thereafter they shall refrain from inducing any of their WFG customers "to terminate, reduce coverage under or replace any of the Products and Services which have been

172 Cal.App.4th 1565

sold by the Associate or his/her Downline Associates."5 Section D(3) provides the associate shall not induce any other WFG associates or employees to terminate their relationship with WFG during the same period or "hire, induce or attempt to hire or induce any such persons to sell or solicit products and services which are competitive with the Products and Services for any person or entity other than WFG."

In section D(4), the associate promises not to "use, disseminate or reveal, other than on behalf of WFG as authorized by WFG . . . any confidential information or trade secrets of WFG . . ., which the Associate has or hereafter receives, including any Customer or list of WFG associates, whether obtained from WFG or any other person, or compiled by or on behalf of the Associate; provided, however, that confidential information does not include information which becomes generally available to the public other than as a result of disclosure by the Associate or any member of WFG's network of contractually affiliated sales associates." The associate also agrees that upon termination of the AMA he or she will immediately return all documents containing WFG's confidential information or trade secrets. "Confidential information" is defined as "any and all confidential and proprietary data and information created by or belonging to WFG which has value to and are not generally known by the competitors or potential competitors of WFG now or hereafter acquired or disclosed to the Associate."

Section D(5) generally provides that during the term of the agreement the associate will not solicit other WFG associates to purchase any products or services other than WFG's. In section D(6), the associate acknowledges (1) that all other WFG associates have executed identical or similar agreements, and (2) that any act seeking to induce another associate to breach any term of his or her AMA would constitute wrongful interference with WFG's contractual rights.

The Complaint

On June 18, 2008, WFG filed a first amendment complaint against defendants alleging claims for breach of contract, breach of the implied covenant of good faith and fair dealing, conversion, violation of the Uniform Trade Secrets Act (Civ. Code, § 3426 et seq.) and the unfair competition law, intentional and negligent interference with prospective economic advantage,

172 Cal.App.4th 1566

and unjust enrichment.6 The complaint alleges that from November 2007 through February 2008, WFG discovered the contracting defendants were using WFG's confidential information and trade secrets, including associate and customer lists as well as sales and marketing information and documents, to solicit WFG agents to leave WFG and join HBW. WFG further alleges the contracting defendants "continue to use WFG proprietary and confidential information" notwithstanding the fact that each of them received a letter demanding that they cease and desist doing so, and "continue to induce or attempt to induce WFG's clients to terminate or reduce coverage under or replace products and services selected, approved and designated by WFG."

Jeff Crawford and James Crawford are named as defendants on all causes of action other than breach of contract and breach of the implied covenant, on the allegation that they "are aiding and abetting" the contracting defendants in soliciting WFG associates and customers and in using WFG's confidential information and trade secrets. The complaint refers to a telephonic conference call that took place on April 18, 2008, during which Jeff Crawford invited several WFG associates to join HBW. Attached to the complaint is a copy of a "flyer" that was sent to the associates that contains a comparison of HBW and "Company B," which was subsequently identified as WFG. The complaint further alleges that defendants Kennedy and Moore actively participated in the call with Jeff Crawford's knowledge. As to James Crawford, the complaint specifically alleges that he attempted to recruit four WFG associates and represented to one of them that WFG was for sale. James Crawford also forwarded a "PowerPoint" presentation to associates that contains information about WFG's commission structure and other information that was designed to persuade the associates to join HBW. A copy of this presentation is attached as an exhibit to the complaint.

In the prayer for relief, WFG seeks to enjoin defendants from using or disclosing WFG's confidential information and trade secrets and to compel them to return all documents containing such information or trade secrets. WFG also seeks to enjoin defendants from any further solicitation of WFG associates or customers "to the extent such business practices violate the agreements, covenants and business practices sought to be protected by this Complaint." The complaint also seeks general and punitive damages.

The Anti-SLAPP Motion

On August 13, 2008, defendants filed their motion to dismiss the complaint as a SLAPP suit pursuant to section 425.16. Defendants contended that all of

172 Cal.App.4th 1567

WFG's claims were based on defendants' speech and conduct in furtherance of the exercise of their right of free speech in connection with a public issue, as contemplated by subdivision (e)(4) of section 425.16. Specifically, defendants asserted that their speech and conduct involved "the pursuit of lawful employment pursuant to Bus. & Prof. § 16600" as well as "workforce mobility and free competition," all of which are matters "of public interest and protected public policy." Defendants further argued that WFG could not show a likelihood of prevailing on the merits because the covenants of the AMA they allegedly violated were void under Business and Professions Code section 16600. Defendants also claimed WFG could not establish that any of them had improperly used WFG's confidential information or trade secrets. In support of the motion, each defendant submitted a declaration denying all of the allegations against them in the complaint.

In opposing the motion, WFG argued that defendants had failed to satisfy the first prong of the anti-SLAPP statute because, among other things, "[the] complaint involves private conduct, done in a non-public forum, resulting in the violation of a private contract and unfair misappropriation of WFG's confidential trade secret information." WFG also asserted the communications at issue were exempt from the anti-SLAPP statute under section 425.17, subdivision (c). Finally, WFG claimed it would prevail on all of its claims, and offered supporting declarations and documentation.

Defendants filed a reply to WFG's opposition in which they reiterated their previous argument as to how the communications giving rise to the complaint involved a matter of public interest. In challenging WFG's contention that its claims fell within the commercial speech exception to the anti-SLAPP statute as contemplated by section 425.17, subdivision (c), defendants asserted among other things that "Plaintiff is not challenging the content of the statements made but rather the very fact such communications occurred . . . ."

After a hearing, the court found that defendants had failed to meet their burden of proving that the conduct and communications upon which WFG's claims were based involved a matter of public interest, as required by section 425.16, subdivision (e)(4). Accordingly, the motion was denied. This appeal followed.

DISCUSSION
I.
Section 425.16

Defendants contend their anti-SLAPP motion should have been granted because (1) they met their burden of establishing that the complaint arose

172 Cal.App.4th 1568

from protected activity, and (2) WFG failed to demonstrate a likelihood of succeeding...

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112 practice notes
  • Balla v. Hall, D074804
    • United States
    • California Court of Appeals
    • 6 Enero 2021
    ...involve the public interest, citing 59 Cal.App.5th 675 World Financial Group, Inc. v. HBW Insurance & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1572, 92 Cal.Rptr.3d 227. That case found that statements for the "sole purpose" of furthering business interests were unprotected, and......
  • Okorie v. L. A. Unified Sch. Dist., B268733
    • United States
    • California Court of Appeals
    • 16 Agosto 2017
    ...(2014) 230 Cal.App.4th 953, 967–968, 179 Cal.Rptr.3d 198 ; World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc . (2009) 172 Cal.App.4th 1561, 1574, 92 Cal.Rptr.3d 227.) A claim based on protected activity is incidental or collateral if it "merely provide[s] context, without su......
  • Cross v. Cooper, No. H033164.
    • United States
    • California Court of Appeals
    • 12 Octubre 2011
    ...sufficient to meet the statutory requirements' of the anti-SLAPP statute.” ( World Financial Group, supra, 172 Cal.App.4th at p. 1570, 92 Cal.Rptr.3d 227, quoting Dyer v. Childress (2007) 147 Cal.App.4th 1273, 1280, 55 Cal.Rptr.3d 544; accord, D.C., supra, 182 Cal.App.4th at p. 1216, 106 Ca......
  • Cross v. Cooper, H033164
    • United States
    • California Court of Appeals
    • 11 Julio 2011
    ...& Associates v. Haberman (2009) 173 Cal.App.4th 1, 9; World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1573 (World Financial Group); Hailstone v. Martinez (2008) 169 Cal.App.4th 728, 736 (Hailstone); Jewett v. Capital One Bank (2003) 113 Cal.Ap......
  • Request a trial to view additional results
111 cases
  • Balla v. Hall, D074804
    • United States
    • California Court of Appeals
    • 6 Enero 2021
    ...involve the public interest, citing 59 Cal.App.5th 675 World Financial Group, Inc. v. HBW Insurance & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1572, 92 Cal.Rptr.3d 227. That case found that statements for the "sole purpose" of furthering business interests were unprotected, and......
  • Okorie v. L. A. Unified Sch. Dist., B268733
    • United States
    • California Court of Appeals
    • 16 Agosto 2017
    ...(2014) 230 Cal.App.4th 953, 967–968, 179 Cal.Rptr.3d 198 ; World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc . (2009) 172 Cal.App.4th 1561, 1574, 92 Cal.Rptr.3d 227.) A claim based on protected activity is incidental or collateral if it "merely provide[s] context, without su......
  • Cross v. Cooper, No. H033164.
    • United States
    • California Court of Appeals
    • 12 Octubre 2011
    ...sufficient to meet the statutory requirements' of the anti-SLAPP statute.” ( World Financial Group, supra, 172 Cal.App.4th at p. 1570, 92 Cal.Rptr.3d 227, quoting Dyer v. Childress (2007) 147 Cal.App.4th 1273, 1280, 55 Cal.Rptr.3d 544; accord, D.C., supra, 182 Cal.App.4th at p. 1216, 106 Ca......
  • Cross v. Cooper, H033164
    • United States
    • California Court of Appeals
    • 11 Julio 2011
    ...& Associates v. Haberman (2009) 173 Cal.App.4th 1, 9; World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1573 (World Financial Group); Hailstone v. Martinez (2008) 169 Cal.App.4th 728, 736 (Hailstone); Jewett v. Capital One Bank (2003) 113 Cal.Ap......
  • Request a trial to view additional results

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