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POLARIS POOL SYSTEMS, INC. v. GREAT AMERICAN WATERFALL CO.

August 29, 2005.

POLARIS POOL SYSTEMS, INC., Plaintiff,
v.
GREAT AMERICAN WATERFALL COMPANY, et al., Defendant.



The opinion of the court was delivered by: ROGER BENITEZ, District Judge

ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT and GRANTING DEFENDANTS' MOTION TO TRANSFER VENUE TO THE MIDDLE DISTRICT OF FLORIDA
Now before the Court are Plaintiff's Motion for Summary Judgment and Defendants' Motion to Transfer Venue to the Middle District of Florida. No hearing is necessary. Having reviewed the arguments and the evidence presented the Court finds that genuine issues of material fact exist which preclude the entry of summary judgment and require resolution by trial. Therefore, Plaintiff's Motion for Summary Judgment is Denied. Because a trial on the merits is necessary to resolve the case, the Court next considers Defendant's Motion to Transfer Venue. The Motion to Transfer Venue is Granted.

I. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

  The salient facts and the standards governing motions for summary judgment are set forth in this Court's earlier Order filed September 29, 2004 and need no repeating here. This Court has granted Plaintiff a preliminary injunction, having previously found that Plaintiff is likely to succeed on the merits of its claims. Nevertheless, Defendant has come forward with sufficient evidence to establish genuine issues of material fact which cannot be decided as a matter of law, precluding the entry of summary judgment on Plaintiff's seven claims for relief.

  For example, Claims One and Two allege Ruthenberg and Dixon breached the non-compete, non-solicitation, confidentiality, and inventions provisions of their employment agreements with Plaintiff. However, there are many genuine issues of fact surrounding what information Defendants used and whether it was kept confidential by Plaintiff.

  Likewise, there are genuine issues of fact precluding summary judgment on Plaintiff's misappropriation of trade secrets claim (Claim Four). For example, simply proving that Defendants used Plaintiff's customer list is not enough. That is because customer lists that merely identify customers "are often not protectable trade secrets." Ernest Paper Products, Inc. v. Mobile Chemical Company, Inc., slip op. Case No. CV95-7918 LGB (AJAX) 1997 U.S. Dist. LEXIS 21817 (C.D. Cal. Sept. 17, 1997) (citing ABBA Rubber Co. v. Seaquist, 235 Cal.App.3d 1 (1991)); Sargent Fletcher, Inc. v. Able Corp., 110 Cal.App.4th 1658 (2003) (identifying plaintiff's burden of proof for a misappropriation of trade secrets claim). To be protectable as a trade secret, the customer information must be the subject of efforts that are reasonable to maintain secrecy and derive independent economic value from not being generally known to the public. Id. "The central question is whether [Plaintiff]'s trade secrets . . . were secret, meaning: (1) they were valuable because they were unknown to others, and (2) [Plaintiff] attempted to keep them secret." Pixion, Inc. v. Placeware, Inc., slip op. Case No. C 03-02909 SI, 2005 U.S. Dist. LEXIS 11356 (N.D. Cal. Jan. 13, 2005) (citing DVD Copy Control Assn., Inc. v. Bunner, 116 Cal. App. 4th 241 (2004)). There are genuine issues regarding Plaintiff's efforts to maintain the secrecy of its customer information and the independent economic value of its customer information. There are genuine issues about whether Defendants "cherry picked" business from Plaintiff's customer base or used generally available industry information and product pricing information to seek customer's for the new waterfall business. There are genuine issues as to whether Defendants used Plaintiff's customer lists or developed customer targets through publicly available trade association information. These and other genuine issues of material fact preclude entering summary judgment for Plaintiff. Ernest Paper Products v. Mobile (denying summary judgment on misappropriation of trade secret claim due to genuine issues of whether customer lists were a trade secret based on their economic value and efforts made to maintain secrecy); Gamma-Metrics, Inc. v. Scantech Ltd., 52 U.S.P.Q.2d (BNA) 1568 (S.D. Cal. 1998) (denying summary judgment on misappropriation of trade secrets claim due to existence of fact issues).

  There are also genuine issues of material fact which preclude summary judgment on Plaintiff's claim of tortious interference with business relations (Claim Three) and unfair competition claim (Claim Seven). "A claim for tortious interference requires a plaintiff to `plead and prove as part of its case-in-chief that the defendant not only knowingly interfered with the plaintiffs expectancy, but engaged in conduct that was wrongful by some legal measure other than the fact of interference itself.'" Id. (quoting Della Penna v. Toyota Motor Sales, USA, Inc., 11 Cal. 4th 376, 393, 902 P.2d 740 (1995)). Unfair competition includes business practices that are at the same time forbidden by law. Id. (citing Summit Technology, Inc. v. High-Line Medical Instruments, 933 F. Supp. 918 (C.D.Cal. 1996)). "The common element of intentional interference with economic relations and unfair competition is unlawful conduct on the part of the defendant." Id. Because Defendants have presented evidence which creates genuine issues of fact concerning the lawfulness of their conduct, summary judgment is unwarranted. Id. (denying summary judgment on intentional interference and unfair competition claims). Moreover, there are genuine issues as to whether Plaintiff lost business as a result of the activities of the new waterfall company. This provides another basis for the denial of summary judgment on a tortious interference claim. PMC, Inc. v. Saban Entertainment, Inc., 45 Cal. App. 4th 579, 595, 52 Cal. Rptr. 2d 877 (1996) (to prevail on a claim for interference plaintiff must demonstrate: (1) existence of a prospective business relationship; (2) knowledge by defendant of that relationship; (3) intentional acts designed to disrupt that relationship; (4) actual causation; and (5) damages to plaintiff caused by defendant's conduct.)

  As to Plaintiff's trademark infringement claim (Claim Six), plaintiff has failed to make out a prima facie case of infringement. In the recent case of KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 125 S.Ct. 542 (2004), the Supreme Court observed, "a plaintiff claiming infringement of an incontestable mark must show likelihood of consumer confusion as part of the prima facie case, 15 U.S.C. § 1115(b), while the defendant has no independent burden to negate the likelihood of any confusion." Id. at 551. Here, Plaintiff alleges infringement based upon the "Florida Falls" mark being left on Defendants' building. However, Plaintiff has not identified any evidence of actual customer confusion, and very little evidence bearing on any of the other seven factors of the eight-factor test the Ninth Circuit uses to determine whether a likelihood of confusion exists. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 608 (9th Cir. 2005) (reversing grant of summary judgment on remand from the Supreme Court). Instead, Plaintiff simply asserts that a likelihood of confusion existed. This is insufficient to grant Plaintiff's motion for summary judgment. Id. ("Due to the factual nature of likelihood of confusion, determining whether a likelihood of confusion exists at the summary judgment stage is generally disfavored.")

  In the same way, for Plaintiff's common law conversion claim (Claim Five), Plaintiff has put forth no evidence to support its claim that Defendants converted "customer files and information contained in boxes." Complaint, ¶¶ 60, 62. Instead, Plaintiff makes a new argument now: that it was Defendant Ruthenberg's Aqua Stream device and T-baffle prototype that was "converted." This is a departure from the Complaint and cannot justify summary judgment for Plaintiff on the Complaint.

  These examples of material fact disputes are not exhaustive, but illustrative of the issues which must be resolved at trial and which preclude summary judgment for Plaintiff at this stage.

  II. DEFENDANT'S MOTION TO TRANSFER VENUE

  "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404. The moving party bears the burden of showing that the balance of convenience to the parties and witnesses and the interest of justice would be served by the transfer. See Decker Coal Co. v. Commonwealth Edison Co., 805 F. 2d 834, 843 (9th Cir. 1986).

  A. This Action Could Have Originally Been Brought in Florida

  This action could have properly been brought in the transferee venue. 28 U.S.C. § 1404(a). Venue can be properly brought in "a judicial district where any defendant resides, if all defendants reside in the same State." 28 U.S.C. § 1391(a)(1). "[A] defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c). Personal jurisdiction over a corporation is proper in the district where the corporation is headquartered and from which it conducts substantial business. Royal Queentex Enterprises v. Sara Lee Corp., 2000 WL 246599, 3 (N.D. Cal. 2000). Defendants Douglas A. Ruthenberg and Benjamin F. Dixon are citizens of the State of Florida and appear to reside within the Middle District of Florida. See Complaint ¶ 1. Defendant Great American Waterfall Company ("GAWC") is a corporation incorporated in Florida and has its principal place of business in Spring Hill, Florida. GAWC' headquarters, corporate officers, and business records are all located in Spring Hill, Florida, within the Middle District of Florida. Radford Declaration at ...


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