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MORCOTE v. ORACLE CORPORATION

November 23, 2005.

DIEGO MORCOTE, Plaintiff(s),
v.
ORACLE CORPORATION, ET AL., Defendant(s).



The opinion of the court was delivered by: JOSEPH SPERO, Magistrate Judge

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS [Docket No. 17]
I. INTRODUCTION
On Friday, November 18, 2005, at 9:30 a.m., Defendants' Motion to Dismiss (the "Motion") came on for hearing. For the reasons stated below, the Motion is GRANTED in part and DENIED in part.

II. BACKGROUND

  A. Facts

  Defendant Oracle is a Delaware corporation with its principle place of business in Redwood Shores, California. First Amended Complaint("FAC"), ¶ 9. Defendant Juana Schurman is a resident of San Francisco and at all relevant times was a Vice President and Associate General Counsel to Oracle. FAC, ¶ 10. Morcote is a Florida resident and was employed by Oracle for seven years as a technical manager. FAC, ¶¶ 8, 11.

  In 2003, Morcote began performing work for Oracle at the Cincinnati Public Schools ("CPS"), under the supervision of Oracle manager Frank Carchedi. FAC, ¶ 12. Morcote alleges that Carchedi discriminated against him on the basis of race and that on May 6, 2004, he was constructively discharged by Oracle. FAC, ¶¶ 13-20. Following his termination, Morcote continued to work at CPS on behalf of another employer. FAC, ¶ 20. He alleges that during the spring of 2004, various Oracle employees, including Carchedi, threatened him that Oracle would initiate legal action against him for his work at CPS following his departure from Oracle on the basis that it violated the Proprietary Information Agreement ("PIA") Morcote had entered into with Oracle. FAC, ¶¶ 23. The PIA is attached to the First Amended Complaint and contains the following non-compete provisions:
I acknowledge that as a result of my Oracle employment, I may develop, receive or otherwise have access to confidential or proprietary information which is of value to Oracle. I therefore agree, as a condition of employment, to abide by the following terms and conditions:
. . .
5. I will not during my Oracle employment and for a period of six months after the termination of my Oracle employment, directly or indirectly, whether through a third party or otherwise, invite or otherwise encourage any Oracle employee to accept an employment or independent contractor or other business relationship with an employer or entity or person other than Oracle.
. . .
8. I will not, for a period of six months after the termination of my Oracle employment, for my own account, or for the account of any other person or entity, solicit, call on or provide competing services for any of Oracle's customers or clients or prospective customers or clients if I have solicited, called on or performed services for that Oracle customer or client or prospective customer or client during the twelve months preceding my termination from Oracle.
FAC, Ex. B. The PIA also contains a forum selection clause that provides as follows:
I agree that any legal action or proceeding involving Oracle which is in any way connected with this agreement may be instituted in any state or federal court located in San Francisco or San Mateo County, California. I agree to submit to the jurisdiction of, and agree that venue is proper in, the aforesaid courts in any such legal action or proceeding.
Id.

  On May 18, 2004, Oracle Vice President and General Counsel Juana Schurman sent a letter to Morcote to "remind [him] of [his] continuing obligations to Oracle" under the PIA. FAC, Ex. D. In the letter, she states, in part, as follows: It has come to our attention that you will be providing consulting services to Cincinnati Public Schools on behalf of your new employer. This causes us concern because you also provided consulting services to Cincinnati Public Schools while you were employed by Oracle. You are contractually obligated not to engage in such employment. Oracle expects that you will abide by your contractual obligations and refrain from any further improper conduct in relation to Oracle clients.

 
Violations of your agreement with Oracle may give rise to legal claims being made against you for causes of action including, but not limited to, breach of contract, misappropriation of trade secrets, unfair competition and interference with prospective business advantage. Such legal claims, if successful, could force you to disgorge any profits that you may gain as a result of any improper action you took and could result in the award of other damages to Oracle.
Please also note that Paragraph 5 of your Proprietary Information Agreement provides that for six months following the termination of you Oracle employment you are not allowed to recruit or hire any Oracle employee without Oracle's written consent. Additionally, you forever are prohibited from using or disclosing Oracle confidential information to Oracle's disadvantage. Confidential details of internal employee structure and assignment, employee compensation and employee capabilities, duties and skills, all of which you had access to during your employment at Oracle, are considered trade secrets and may not be used by you. As Oracle's employees are among its most important assets, we take this covenant seriously and will enforce it to the extent necessary.
Id.

  B. Procedural Background

  On January 26, 2005, Morcote filed the complaint in this action, asserting seven claims: 1) Unfair Competition; 2) Intentional Interference with Prospective Economic Advantage; 3) Negligent Interference with Prospective Economic Advantage; 4) Intentional Interference with Contractual Relations; 5) Intentional Infliction of Emotional Distress; 6) Negligent Infliction of Emotional Distress; and 7) Declaratory Relief. Morcote's seventh claim seeks a declaration that: 1) California law governs the PIA; and 2) the non-compete clauses of the PIA are therefore invalid. Morcote named as Defendants both Oracle Corporation and Juana Schurman.

  Morcote's First Amended Complaint includes six additional claims: 8) Constructive Discharge in Violation of Public Policy Under California Law; 9) Constructive Discharge in Violation of Public Policy Under Florida Law; 10) Constructive Discharge Under Federal Law (42 U.S.C. § 1981, et. seq. and 42 U.S.C. § 2000e, et. seq.); 11) Discrimination in Employment in Violation of 42 U.S.C. § 1981, et. seq.; 12) Discrimination in Employment in Violation of 42 U.S.C. § 2000e, et. seq.; and 13) Discrimination in Employment in Violation of Florida Civil Rights Act of 1992 (F.S.A. § 760.01, et. seq.).

  C. The Motion

  In the Motion, Oracle asks the Court to dismiss all claims against Juana Schurman and to dismiss the unfair competition and declaratory relief claims, Claims One and Seven, respectively, in their entirety. Oracle argues that Schurman cannot be individually liable as to Morcote's unfair competition and declaratory relief claims (Claims One and Seven), the tortious interference claims (Claims Two, Three, and Four), or the discrimination claims (Claims Eight through Thirteen) because the only act she was alleged to have taken — sending the May 18, 2004 letter to Morcote — was taken by Schurman on behalf of and as an agent of Oracle. In addition, Oracle argues that the claims for negligent and intentional infliction of emotional distress (Claims Five and Six) must be dismissed because no outrageous conduct is alleged in the complaint.

  Oracle asserts that Morcote's unfair competition claim (Claim One) fails as to all Defendants because he has alleged no damages. Oracle argues that Claim Seven (seeking a declaration that California law applies and the non-compete provisions of the PIA are invalid) fails for two reasons: 1) the claim is moot because the non-compete provisions expired six months after Morcote's termination and before he filed the complaint in this action; and 2) the agreement is governed by Florida law, under which such non-compete provisions are valid.

  In his Opposition, Morcote concedes that Claim One fails to state a claim as to any Defendant. Morcote also concedes that Claims Eight through Thirteen (the discrimination claims) and Claim Five (intentional infliction of emotional distress) fail to state a claim against Juana Shurman. Morcote argues that the remaining claims against Juana Schurman — Claims Two, Three, Four (the tortious interference claims), and Claim Six (negligent infliction of emotional distress) — state claims for relief against Schurman. In particular, Morcote asserts that such claims may be asserted against a managerial employee who has engaged in wrongful conduct and further, that he has alleged wrongful conduct, namely, a threat to enforce an invalid non-compete agreement. Morcote also notes that as to Claim Six, for negligent infliction of emotional distress, there is no requirement of outrageous conduct and therefore, Oracle's motion fails as to that claim because it fails to articulate any other basis for dismissal. With respect to Claim Seven, for declaratory relief, Morcote asserts that dismissal under Rule 12(b)(6) is improper for several reasons. First, Morcote rejects the assertion that the claim is moot, arguing that Oracle could still sue him under the non-compete provision for his employment with CPS in the six months following his termination. Morcote further asserts the claim is not moot because the questions Morcote asks the Court to determine — the applicable law and whether the non-compete agreement is valid — will serve as a predicate for ...


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