Samsung Electronics America, Inc. v. -------- Cal.Superior,2006. Only the Westlaw citation is currently available.
Superior Court, Orange County, California.
SAMSUNG ELECTRONICS AMERICA, INC., a Delaware corporation, Plaintiff,
v.
---- -------- aka --- -------- , an individual; and Konica Minolta Printing Solutions USA, Inc., a New York corporation; and Does 1 to 100, inclusive, Defendants.
No. 06 CC 08239.
Oct. 19, 2006.
Stuart P. Jasper (91378), Jasper & Jasper, P.C., Irvine, California, for Defendant ---- '---' -------- .
ORDER SUSTAINING DEMURRERS RE UNIFORM TRADE SECRETS ACT PREEMPTION
DIDIER, J.
*1 There came on regularly for hearing the demurrers of defendant -------- . There were submissions based upon the tentative ruling by plaintiff Samsung Electronics America, Inc. ("Samsung"), by Brain Dauscher and Yael Karabelnik, defendant Konica Minolta Printing Solutions USA, Inc. ("Konica Minolta"), by Craig Schloss and Gregory A. Klawitter, and defendant -------- by Stuart Jasper. The tentative ruling thereby became the order of the court, as set forth below:
Defendant ---- '---' -------- demurrer to plaintiff's complaint is sustained with 14 days' leave to amend. The demurrers are to the second cause of action for unfair competition underBus. & Prof.Code § 17200, the third cause of action for breach of duty of loyalty, the fourth cause of action for unjust enrichment, the fifth cause of action for intentional interference with prospective economic advantage, and the sixth cause of action for conversion. Plaintiff's complaint fails to state a cause of action in the 2nd thru 6th causes of action, because the nucleus of the facts alleged are based on misappropriation of trade secrets which are preempted by the Uniform Trade Secrets Act ("UTSA").
Civil Code section 3426.1 governs the authority to bring a claim for misappropriation of trade secrets. This section is part of the Uniform Trade Secrets Act (Civil Code § 3426 et seq.) A trade secret means information including a formula, pattern, compilation, program, device, method, technique or process that derives independent economic value from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, and is maintained in secrecy. (Civil Code § 3426.1(d)(1)(2).)
Plaintiff admits that the UTSA controls in this action. Defendant argues that plaintiff's causes of action 2 through 6 are barred by this Act because the title does not affect other civil remedies that are not based upon misappropriation of a trade secret. (Civil Code § 3426.7(b)(2).) In other words, if a cause of action is based on misappropriation of a trade secret, other than brought under this statute, the cause of action is preempted. The statute does affect or preempt tort claims which are based upon misappropriation of a trade secret. (Ernest Paper Products, Inc. v. Mobil Chemical Co., Inc. (C.D.Cal.1997) 1997 WL 33483520 at 8.) Thus, if the nucleus of facts of each of the five causes of action at issue is based on misappropriation of trade secrets, then under the UTSA, these causes of action appear to be preempted.
Leave to amend is provided for plaintiff to clearly distinguish, if at all, that causes of action 2 through 6 are based on other confidential information not within the definition ofsection 3426.1(d)(1). However, any cause of action which continues to be based on information-whether labeled a trade secret or confidential information-if it derives independent economic value and is competitively significant secret information-will be preempted by the UTSA. Plaintiff also contends that causes of action 3 and 4 are based on defendant working competitively against Samsung while he was employed full-time at Samsung; plaintiff contends that cause of action 6 is also based on the taking of the actual confidential business reports/documents. Plaintiff's complaint doesn't presently allege these allegations to maintain a cause of action on facts independent of those constituting misappropriation of trade secrets, so plaintiff should be allowed the opportunity to amend to plead causes of action 3, 4, and 6 on different grounds.
*2 As to the 6th cause of action for conversion, plaintiff may not be able to overcome the requirement that the alleged converted documents had any value. Generally, conversion requires interference with tangible property. (5 Witkin, Cal.Proc. (2005) Torts § 702.) Consequently there can be no conversion of trade secrets, or a laundry list of customers. Instead, the remedy for the taking of these intangibles is an injunction. (Olschewski v. Hudson (1927) 87 Cal.App.282, 286.) A card index file containing names and addresses of clients, however, may be converted because it is distinguishable from a list. (Palm Springs-La Quinta Dev. Co. v. Kieberk Corp. (1941) 46 Cal.App.2d 234.) Plaintiff must plead that the documents themselves are somehow tangible to overcome this pleading obstacle, and it must also be able to assert that the tangible item(s) have some value. (Metropolitan Life Ins. Co. v. San Francisco Bank (1943) 58 Cal.App.2d 528, 534.) Other than the contents of the document (an intangible), the contention that the piece of paper upon which the lettering was printed and the wording written was the instrument which was converted is without merit. (U.S. Rubber Co. v. Union Bank & Trust Co. (1961) 194 Cal.App.2d 703, 708.
IT IS SO ORDERED.