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Norsat International, Inc. v. B.I.P. Corp.

United States District Court, S.D. California

May 30, 2014

NORSAT INTERNATIONAL, INC., Plaintiff,
v.
B.I.P. CORPORATION, Defendant. B.I.P. CORPORATION, Counterclaimant,
v.
NORSAT INTERNATIONAL, INC.; IK TECH; IGOR KAZHDAN aka ALEX STANTON, an individual, and DOES 1 through 20, inclusive, Counter-Defendants. And Related Counterclaims.

ORDER

WILLIAM Q. HAYES, District Judge.

The matter before the Court is the Motion for Summary Judgment or, Alternatively, Partial Summary Judgment ("Motion for Summary Judgment"), filed by Counter-Defendants IK Tech and Igor Kazhdan (ECF No. 56).

I. Background

On March 30, 2012, Plaintiff Norsat International, Inc. ("Norsat") initiated this action by filing a Complaint against Defendant B.I.P. Corporation ("B.I.P."). (ECF No. 1).

On October 3, 2012, B.I.P. filed a Counterclaim against IK Tech and Igor Kazhdan (collectively, "IK Tech parties"), and Norsat. (ECF No. 12).

On November 13, 2012, the IK Tech parties filed a Counterclaim against B.I.P., Actox Corporation ("Actox") and Nikita Hatset. (ECF No. 19). On December 3, 2012, the IK Tech parties filed an Amended Counterclaim against B.I.P., Actox and Nikita Hatset. (ECF No. 23).

On January 25, 2013, the Court granted a joint motion to dismiss filed by Norsat and B.I.P., dismissing all of Norsat's claims against B.I.P. with prejudice and dismissing all of B.I.P.'s counterclaims against Norsat with prejudice. (ECF No. 29).

On May 24, 2013, B.I.P. filed a First Amended Counterclaim against the IK Tech parties. (ECF No. 38). B.I.P. alleges that Kazhdan, a former satellite equipment/electronics salesperson for B.I.P., unlawfully solicited B.I.P.'s customers and suppliers when Kazhdan left B.I.P. to establish a competing business named IK Tech. B.I.P. asserts the following causes of action against the IK Tech parties: (1) unfair competition under 15 U.S.C. § 1125(a); (2) defamation (Cal. Civ. Code § 46(1)); (3) unfair competition (Cal. Bus. & Prof. Code § 17200); (4) misappropriation in violation of the California Uniform Trade Secrets Act (Cal. Civ. Code § 3426); and (5) intentional interference with economic advantage.

On November 4, 2013, the Court granted a joint motion to dismiss filed by B.I.P. and the IK Tech parties, dismissing B.I.P.'s second cause of action for defamation with prejudice. (ECF No. 53).

On February 17, 2014, the IK Tech parties filed the Motion for Summary Judgment. (ECF No. 56). The IK Tech parties contend they are entitled to summary judgment pursuant to Federal Rule of Civil Procedure 56 as to all remaining claims brought by B.I.P.

On March 10, 2014, B.I.P. filed an opposition to the Motion for Summary Judgment. B.I.P. contends that the IK Tech parties are not entitled to summary judgment or partial summary judgment because there are disputes as to material facts.

On March 17, 2014, the IK Tech parties filed a reply in support of the Motion for Summary Judgment. (ECF No. 58). On April 9, 2014, B.I.P. filed a "Response to New Evidence Put Forth in the Reply Brief." (ECF No. 60). On April 24, 2014, the IK Tech parties filed a "Request for Leave of Court to File Supplemental Brief in Response to B.I.P.'s Surreply and Objections to Declarations Submitted by B.I.P. in Surreply."[1] (ECF No. 61). On May 20, 2014, the Court conducted oral argument on the Motion for Summary Judgment. (ECF No. 63).

II. Evidentiary Materials

A. IK Tech Parties' Evidence

In support of the Motion for Summary Judgment, the IK Tech parties submit two declarations and attached exhibits. The IK Tech parties' attorney, Jason Black, submits a declaration stating that, "B.I.P. ultimately identified its customer and vendor lists' as the sole trade secrets at issue in this case." (Black Decl. ¶ 11, ECF No. 56-4 at 3). Black states that "B.I.P. was unable to produce any document that constituted its alleged customer' and/or vendor list' in response to discovery requests." Id. Black states: "As part of B.I.P.'s motion for a [temporary restraining order], B.I.P. submitted to the Court as an exhibit a redacted commission statement which B.I.P. has identified as its customer list' in this case." Id. The document, which is attached to the Motion for Summary Judgment as Exhibit F, lists sales apparently made by B.I.P. during July of 2010. (ECF No. 56-4).

Igor Kazhdan, IK Tech's owner, submits a declaration which states that what B.I.P. refers to as its "customer lists' were actually just commission statements." (Kazhdan Decl. ¶ 4, ECF No. 56-3 at 3). Kazhdan states that "IK Tech and other contracting companies, including Anikita Corp. (operated by Nikita Hatset), were required to keep track of [their] own commissions." Id. at 2. The commission statements "were freely passed around, put together and distributed amongst all contractors' to determine how much each company would make each month. The commission statements were not password protected or held in a secure location - all contractors had easy and immediate access to them." Id. at 3. Kazhdan states that he "filed these documents away in IK Tech's records each month on the advice of [his] tax advisor because they were necessary for tax purposes and general recordkeeping." Id.

Kazhdan states that "[s]ince IK Tech's relationship with B.I.P. ended in approximately February of 2011 [he has] attended at least eight (8) trade shows for the satellite industry." Id. Igor Kazhdan states that he has "developed many relationships and friendships with people in the satellite industry over the years." Id.

Kazhdan states that since "IK Tech stopped working with B.I.P. in 2011 [he] sent a very simple announcement to people [he] worked with directly in the past. All of the announcement emails [Kazhdan] sent were exactly the same. [He] located their contact information through publically available means using internet searches of satellite related terms and trade journals." Id. The "announcement emails" stated: "I have left BIP Corporation as of Mar/1/2011 to pursue my own business goals. Please see below my new contact information. Kindest Regards, Alex Stanton, " and lists a phone number and email address. Id. at 4, 6.

B. B.I.P.'s Evidence

In opposition to the Motion for Summary Judgment, B.I.P. submits two declarations and attached exhibits. (ECF No. 57). B.I.P.'s attorney, David L. Skilling, submits a declaration stating that the IK Tech parties "produced a document showing a detailed customer list of B.I.P., complete with customer names, order information and pricing." (Skilling Decl. ¶ 4, ECF No. 57-5; see also ECF No. 56-4). Skilling states that "[h]undreds of emails have been produced by Kazhdan and IK Tech in response to discovery." (Skilling Decl. ¶ 6, ECF No. 57-5). The emails referenced by Skilling, which are attached to the opposition to the Motion for Summary Judgment as Exhibit C, are primarily comprised of the "announcement emails" sent by Kazhdan and certain email exchanges which followed the "announcement emails." (ECF No. 57-6). Skilling states that "IK Tech [] produced numerous invoices showing sales it made to various entities" (Skilling Decl. ¶ 7, ECF No. 57-5); and "[he] reached a stipulation with [IK Tech's] attorney regarding an entity IK Tech sold products to named Pathfinder." Id. ¶ 8; see also ECF No. 57-7. Skilling states that "Kazhdan's counsel now refuses to make his client available to take [an] agreed-upon deposition [of Kazhdan]."[2] (Skilling Decl. ¶ 9, ECF No. 57-5).

Al Hatset, B.I.P.'s owner, submits a declaration which states that "Kazhdan contracted with B.I.P from 2004 to 2011. When he began conducting business with B.I.P. in 2004, Kazhdan signed a confidentiality and non-disclosure agreement." (Hatset Decl. ¶ 5, ECF No. 57-2; see ECF No. 57-4 (agreement)). Hatset states: "All other contractors and sales people with access to B.I.P. proprietary information, including customer information, have executed non-disclosure agreements." (Hatset Decl. ¶ 6, ECF No. 57-2). Hatset states:

[O]nly Igor Kazhdan was preparing commission statement[s] based on the earnings and expenses statements prepared by B.I.P.'s accounting department. The tracking of sales and expenses is done by B.I.P.'s accounting department. The only independent contractor who had access to the commission statement was Igor Kazhdan as he created these on his own without permission. As such, the statements have never been intended to be accessible on any [of] B.I.P.'s commonly accessible computers. Kazhdan has never been authorized to keep [a] hard copy of these commission statements he made without permission, or save them on his private computer or any kind of storage devices.

Id. ¶ 7.

Hatset states that "[i]n 2011, B.I.P. cut ties with Kazhdan. Since that time, [the IK Tech parties] have begun to sell products exclusively to B.I.P. customers using the B.I.P. sales name, Alex Stanton.' IK Tech has utilized the B.I.P. customer database to make these sales. Many of those same customers stopped buying products from B.I.P., especially because [the IK Tech parties] would make derogatory statements and undercut B.I.P.'s prices." Id. ¶ 9; see also id. ¶ 11 ("B.I.P. has also learned that IK Tech and Igor Kazhdan are using B.I.P.-created customer lists and supplier lists to lure customers away from B.I.P. to purchase their satellite needs with IK Tech instead."). Hatset states that "B.I.P. took reasonable precautions under the circumstances to prevent disclosure of the customer and supplier lists, including having all independent contractors such as [the IK Tech parties] who had access to the list sign non-disclosure agreements." Id. ¶ 11; see also id. ¶ 12. Hatset states:

IK Tech has repeatedly sent emails to former and current customers of B.I.P. by introducing itself as Alex Stanton, a former salesperson working with B.I.P. The emails then proceed to list prices significantly lower than B.I.P.'s standard pricing in an attempt to lure away B.I.P.'s customers. B.I.P. has received numerous versions of this email forwarded on by its clients. B.I.P. has also recently discovered that [the IK Tech parties] are using B.I.P.'s supplier ...

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