United States District Court, N.D. California
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION FOR SUMMARY JUDGMENT Re: Dkt. No.
Illston United States District Judge.
motion for summary judgment came on for hearing on July 12,
2019. Having carefully considered the papers filed and the
arguments made, the Court hereby rules as follows.
17, 2018, plaintiff C2 Educational Systems, Inc.
(“C2”) filed this action based on diversity
jurisdiction against defendants Sunny Lee, Kyung Hye Debbie
Hong, and So Yeon Jang. Dkt. No. 1. Plaintiff is a company
that provides academic tutoring, standardized test
preparation, and college admissions counseling at over 180
centers nationwide. Pl.'s Ex. 11, Lobo Decl. ¶ 6. By
this lawsuit, plaintiff alleges that defendants, who are
former employees of plaintiff, began developing a competing
business (called Core Academics, LLC) while they were still
employed by plaintiff. Because the parties dispute many of
the facts at issue in this case, the Court recites the
relevant facts in further detail in the Discussion section
April 19, 2019, with the Court's leave, plaintiff filed
its first amended complaint. Dkt. Nos. 65, 66. In it,
plaintiff adds Core Academics, LLC (“Core”) as a
defendant and brings the following claims for relief: (1)
breach of duty of loyalty; (2) violation of the California
Computer Data and Access Fraud Act; (3) misappropriation and
conversion of property; and (4) tortious interference with
customer contracts. A jury trial in this case is set to begin
on October 7, 2019.
judgment is proper if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that
there is no genuine dispute as to any material fact and that
the movant is entitled to judgment as a matter of law.
See Fed. R. Civ. P. 56(a). The moving party bears
the initial burden of demonstrating the absence of a genuine
issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). The moving party, however, has no
burden to produce evidence showing the absence of a genuine
issue of material fact. Id. at 325. Rather, the
burden on the moving party may be discharged by pointing out
to the district court that there is an absence of evidence to
support the non-moving party's case. Id.
the moving party has met its burden, the burden shifts to the
non-moving party to “designate ‘specific facts
showing that there is a genuine issue for trial.'”
Id. at 324 (quoting then Fed.R.Civ.P. 56(e)). To
carry this burden, the non-moving party must “do more
than simply show that there is some metaphysical doubt as to
the material facts.” Matsushita Elec. Indus. Co.,
Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
“The mere existence of a scintilla of evidence . . .
will be insufficient; there must be evidence on which the
jury could reasonably find for the [non-moving party].”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252
deciding a summary judgment motion, the evidence of the
non-movant is to be believed, and all justifiable inferences
are to be drawn in his favor. Id. at 255.
“Credibility determinations, the weighing of the
evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge . . . ruling
on a motion for summary judgment . . . .” Id.
However, conclusory, speculative testimony in affidavits and
moving papers is insufficient to raise genuine issues of fact
and defeat summary judgment. Thornhill Publ'g Co.,
Inc. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 738
(9th Cir. 1979). The evidence the parties present must be
admissible. Fed.R.Civ.P. 56(c)(4).
parties agree that in this action based on diversity
jurisdiction, the substantive law of the state of California
applies. See Erie R. Co. v. Tompkins, 304 U.S. 64
move for summary judgment on all four of plaintiff's
claims. If the claims survive summary judgment, defendants
ask that the Court “grant summary adjudication as to
punitive damages because Plaintiff has no evidence that the
Defendants acted willfully or maliciously.” Mot. at 1.
parties agree there are numerous facts in dispute. At the
hearing, defendants asserted that those facts are not
material, but they forwarded no argument showing this to be
the case, whether at the hearing or in their papers.
Plaintiff has argued in response that the disputed facts
are material to resolution of its claims. Because
the Court agrees with plaintiff, the Court will DENY the
majority of defendants' motion for summary judgment, with
the exception of GRANTING summary judgment on the claim for
breach of the duty of loyalty as to defendant Core Academics
Breach of Duty of Loyalty
elements of a cause of action for breach of a duty of loyalty
. . . are as follows: (1) the existence of a relationship
giving rise to a duty of loyalty; (2) one or more breaches of
that duty; and (3) damage proximately caused by that
breach.” Huong Que, Inc. v. Luu, 150
Cal.App.4th 400, 410 (2007) (citation omitted). California
courts have held that “[a]n employee does not breach
his duty of loyalty by preparing to compete with his
employer.” Mamou v. Trendwest Resorts, Inc.,
165 Cal.App.4th 686, 719 (2008) (citations omitted).
Nevertheless, “while an employee may secretly
incorporate a competing business prior to departing, the
employee may not use his or her ...