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Blueline Software Services, Inc. v. Systems America, Inc.

United States District Court, N.D. California

July 14, 2017

SYSTEMS AMERICA, INC., et al., Defendants.


          EDWARD M. CHEN United States District Judge


         According to the complaint, Plaintiff Blueline Software Services, Inc. (“Blueline”) had a contract with Defendant Systems America, Inc. (“Systems America”) whereby Systems America paid Blueline a fee for providing the services of its employee (Defendant and Movant Anil Kumar Mukunda) to Systems America's client, Infosys Ltd (“Infosys”). Docket No. 1 (Complaint) at ¶ 25; Ex. A to Complaint (Staffing Services Agreement). Mukunda knew of this contract between Systems America and Blueline and solicited and encouraged Systems America to violate its Services Agreement by hiring Mukunda directly and allowing him to continue providing services directly through Systems America to the client. Docket No. 1 at ¶¶ 3, 29, 46. On or about September 15, 2016, Mukunda resigned from Blueline. Id. at ¶ 26. After resigning from Blueline, Mukunda continued to provide services at Infosys through Systems America. Id. at ¶ 27. Plaintiff alleges that Mukunda intended to (and did) induce Systems America to breach its contract with Blueline and avoid paying Blueline its fee based on Mukunda's services to Infosys, Ltd. Id. at ¶¶ 29, 46.

         Plaintiff brought a single count of tortious interference with contract against Defendant Mukunda. Id. at ¶¶ 45-47. Specifically, Blueline contends that Mukunda's resigning from Blueline and continuing to work for Infosys through Systems America interfered with Section 5.0 of the Services Agreement, which provides:

Notwithstanding anything contained herein, company [Systems America] agrees that during the terms of this contract and for 2 years thereafter, it shall not directly or indirectly solicit and/or hire on its payroll the designated contractor or any of the contractor's consultants [Mukunda] that have been introduced to the company or have worked on the company issued SOW.

Id. at ¶ 23.

         Pending before the Court is Defendant's Mukunda's motion to dismiss Plaintiff's verified complaint under Fed.R.Civ.P. 12(b)(6). Docket No. 13. Mukunda moved “on the grounds that (1) Mukunda is being sued because he left employment with plaintiff . . . (Blueline) and accepted employment with defendant . . . (Systems America); and (2) Mukunda had a legal right to accept employment with Systems America pursuant to California Business & Professions Code § 16600.” Docket No. 13 at 2. The Court DENIES the motion.


         A. Legal Standard

         Fed. R. Civ. P. 12(b)(6) provides: “Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion: (6) failure to state a claim upon which relief can be granted.” A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). In considering such a motion, a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although “conclusory allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal.” Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). While “a complaint need not contain detailed factual allegations . . . it must plead 'enough facts to state a claim to relief that is plausible on its face.'” Id. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “The plausibility standard is not akin to a 'probability requirement, ' but it asks for more than sheer possibility that a defendant acted unlawfully.” Id.

         B. Discussion

         “The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118, 1126 (1990) (internal citations omitted).

         Mukunda's motion focuses on the validity of the contractual restriction at issue. In order to prevail on this motion to dismiss, Mukunda must establish that Section 5.0 of the Services Agreement, the basis of Plaintiff's legal claim, is invalid under Business & Professions Code Section 16600. Section 16600 provides: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” The Court, for the reasons stated below, denies the motion. Docket No. 13 at 3-5.

         In order to prevail, Mukunda must establish Section 5.0 is void. The Court cannot, ...

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