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Contemporary Services Corp. v. Landmark Event Stafflng Services Inc.

United States District Court, C.D. California

June 12, 2017

CONTEMPORARY SERVICES CORPORATION
v.
LANDMARK EVENT STAFFLNG SERVICES INC.

          Present: The Honorable BEVERLY REID O'CONNELL, United States District Judge

          CIVIL MINUTES - GENERAL

         Proceedings: (IN CHAMBERS)

         ORDER RE CSC'S MOTION TO REMAND [392]

         I. INTRODUCTION

         Currently pending before the Court is Plaintiff Contemporary Services Corporation's ("CSC") Motion to Remand. (See Dkt. No. 392 (hereinafter, "Mot.").) After considering the papers filed in support of and in opposition to the instant motion, the Court deems this matter appropriate for resolution without oral argument of counsel. See Fed. R. Civ. P. 78; CD. Cal. L.R. 7-15. For the following reasons, CSC's Motion is GRANTED

         II. FACTUAL AND PROCEDURAL BACKGROUND

         A. Factual Background

         Plaintiff CSC is a California corporation with its principal place of business in Northridge, California. (See Dkt. No. 74 (hereinafter, "FAC") ¶ 1.) CSC provides event-staffing, security, and crowd-management services for concerts and sporting events throughout the United States. (FAC ¶ 13.) Although the parties dispute exactly how CSC was formed, it is undisputed that the company grew rapidly in the 1980s due to the work of CSC's two principals, Peter Kranske and his then-partner Damon Zumwalt. (See Dkt. No. 350 (hereinafter, "Order") at 1-2.)

         CSC brings this action against three defendants: Landmark Event Staffing Services, Inc. ("Landmark"), Peter Kranske, and Michael Harrison (collectively, "Defendants"). (See FAC.) Landmark is a Delaware corporation with its principal place of business in Irvine, California. (See Dkt. No. 75 (hereinafter, "Answer") ¶ 2.) Landmark also provides security and crowd-management services and directly competes with CSC. (Answer ¶ 23.) Defendant Kranske founded Landmark and serves as the President and majority owner of Landmark. (Answer ¶ 3.) Kranske formerly co-owned CSC and worked for CSC for thirty-eight years. (Id.) Defendant Michael Harrison serves as the Executive Vice President and General Counsel of Landmark. (Answer ¶ 4.) Harrison is also a former Vice President, General Counsel, and Senior Vice President of CSC. (Answer ¶ 4.)

         This case arises out of the alleged theft and misappropriation of CSC trade secrets by Grant Haskell, a former CSC employee who now works for Landmark as its Vice President of Operations. (FAC ¶¶ 9-10; Answer ¶ 10.) CSC alleges that Defendants colluded prior to Haskell's departure from CSC to obtain protected and confidential information from CSC in order to gain an unfair advantage in the private security and event-management market. (FAC ¶¶ 39-48.) Further, CSC claims that Haskell and Defendants have unlawfully solicited CSC's employees, (FAC ¶ 56), and that Defendants have unlawfully solicited CSC's customers and potential customers, (FAC ¶ 64). These allegations are all linked to the purported theft and misappropriation of CSC's trade secrets by Haskell and Defendants. (FAC ¶¶ 57-63, 65-77.)

         Prior to the initiation of this lawsuit, CSC, Haskell, Kranske, and Zumwalt litigated claims related to the underlying facts in other jurisdictions. First, after CSC fired Kranske in 2005, Kranske filed a lawsuit against Zumwalt in the Superior Court of California, County of Los Angeles for alleged refusal to pay Kranske his ownership interest in CSC. (See Order at 2-3.) Zumwalt then filed a cross-complaint against Kranske for negligence, willful misconduct, and breach of fiduciary duty. (Order at 3.) The parties eventually settled that matter in March 2006. (Id.) The settlement allowed Landmark to compete with CSC. (Id.) Approximately five months later, CSC filed a lawsuit against Haskell in the Superior Court of Washington, King County. (Id.) This lawsuit was based on Haskell's alleged theft of CSC's trade secrets when he left CSC. (Id.) The case terminated in a consent judgment on March 19, 2009. (Id.)

         B. Procedural Background

         CSC initially filed this action on June 2, 2009, in the Superior Court of California, County of Orange. (Dkt. No. 1 at 5.) Defendants removed the action to this Court on June 9, 2009, based on federal question jurisdiction arising from CSC's claim brought pursuant to the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, etseq., and the matter was assigned to the Honorable Andrew J. Guilford. (Dkt. No. 1.) On June 26, 2009, Defendants filed a motion to dismiss, which the Court granted, finding that the Washington action barred CSC's claims. (See Dkt. No. 32 at 5.) On October 27, 2011, the Ninth Circuit Court of Appeals reversed, finding that "the alleged actions of Landmark and the other defendants in authorizing Haskell's conduct and subsequently utilizing CSC's proprietary information are separate from and additional to those of Haskell in initially misappropriating the information. CSC could have, but need not have, brought all claims in the Washington action." Contemporaiy Servs. Corp. v. Landmark Event Staffing Servs., Inc., 455 F.App'x 760, 760-61 (9th Cir. 2011). The Ninth Circuit remanded the case for further proceedings consistent with its opinion. Id. at 761.

         On January 13, 2012, CSC filed its First Amended Complaint ("FAC"). (See FAC.) CSC's FAC alleges the following causes of action: (1) misappropriation of trade secrets in violation of California's Uniform Trade Secrets Act ("CUTSA"), California Civil Code section 3426, etseq.; (2) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, etseq.., (3) violation of the California Computer Data Access and Fraud Act, California Penal Code section 502, et seq.\ (4) intentional interference with prospective economic advantage; (5) civil conspiracy; (6) unfair competition in violation of California Business and Professions Code section 17200, et seq.\ (7) unjust enrichment; (8) aiding and abetting; and, (9) breach of contract. (Id.) The case was transferred to this Court on May 2, 2013. (Dkt. No. 128.) The parties then stipulated to continue the trial date to October 7, 2014. (Dkt. No. 154.) On February 14, 2014, CSC sought leave from the Court to file a Second Amended Complaint, (Dkt. No. 159), which the Court denied on March 26, 2014, (Dkt. No. 169). On July 16, 2014, Defendants filed a motion for summary judgment, (Dkt. No. 219), which the Court granted on September 9, 2014, (Dkt. No. 350). The Court held that, of the twenty-three documents CSC argued were trade secrets, only two were actually trade secrets, but CSC failed to create a triable issue of fact as to whether Defendants had acquired these documents through improper means. (See id.)

         CSC appealed this Court's grant of summary judgment as to its CUTSA and breach of contract claims. (See Dkt. No. 380 at 2.) On January 30, 2017, the Ninth Circuit affirmed this Court's decision in part and reversed it in part. (See Dkt. No. 380.) Specifically, the Court held that CSC created a triable issue of fact as to whether four of its twenty-three proffered documents were trade secrets and as to whether Defendants ratified the alleged misappropriation. (See Dkt. No. 380 at 3-4.) Thus, the Ninth Circuit reversed this Court's decision as to those four documents, though it affirmed this Court's decision as to the other nineteen documents. (Id.) In addition, because CSC's breach of contract claim was derivative of its CUTSA claim, the Ninth Circuit reversed this Court's decision on that claim as to the same four documents. Accordingly, the Ninth Circuit remanded the action to this Court for further proceedings and to permit the Court to address the final element of CSC's CUTSA claim (which it had not initially addressed when it granted summary judgment), causation of damages. (Dkt. No. 380 at 5.)

         Therefore, as the action currently stands, the only claims currently before it are CSC's breach of contract and CUTSA claims arising from the four enumerated documents that qualify as trade secrets. The Court held a status conference on May 8, 2017, during which CSC informed the Court that it intended to file a Motion to Remand and the Court ordered the parties to file simultaneous briefing of no more than ten pages on the issue of causation.[1] (Dkt. No. 391.) Accordingly, CSC filed the instant Motion to Remand on May 15, 2017. (See Mot.) ...


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