United States District Court, C.D. California
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS
[21]
OTIS
D. WRIGHT, II UNITED STATES DISTRICT JUDGE.
I.
INTRODUCTION
Plaintiff
Conversion Logic, Inc. (“Conversion”) brings an
action against Measured, Inc. (“Measured”),
Trevor Testwuide (“Testwuide”), Madan Bharadwaj
(“Bharadwaj”), and Antonio Magnaghi
(“Magnaghi”), (collectively,
“Defendants”). (See Compl., ECF No. 1.) Pending
before the Court is Defendants' Motion to Dismiss for
failure to state a claim. (Mot. to Dismiss
(“Mot.”), ECF No. 21.) For the reasons that
follow, the Court GRANTS Defendants'
Motion.[1]
II.
BACKGROUND Plaintiff Conversion Logic offers software and
services analyzing which marketing efforts generate a return
on investment. (Compl. ¶ 1.) Testwuide was
Conversion's CEO, and Bharadwaj and Magnaghi were
Conversion's formal advisors. (Compl. ¶ 3.) While at
Conversion, Testwuide, Bharadwaj, and Magnaghi had access to
Conversion's scientific and technical trade secrets,
including “confidential and proprietary information
related to Conversion['s] machine-learning-based
techniques, methodologies, and data-science models.”
(Compl. ¶ 4.) The three also had access to
Conversion's sales-related trade secrets including
“confidential customer and sales information such as
current and prospective customer lists, contact information,
pricing information, and contracts.” (Compl. ¶ 4.)
Between 2014 and 2017, Conversion had entered into several
contracts, which included various convenants, with Testwuide,
Bharadwaj, and Magnaghi.[2]
In
2017, Testwuide left Conversion. (Compl. ¶ 10.) Within
weeks, Testwuide and Bharadwaj started Measured, allegedly to
compete against Conversion. (Compl. ¶ 10.) Defendant
Magnaghi joined them and allegedly used Conversion's
trade secrets to help build Measured. (Compl. ¶ 10.)
Testwuide and Bharadwaj also allegedly solicited
Conversion's customers and former employees. (Compl.
¶ 11.)
Testwuide
entered into a Confidentiality Agreement. (Compl. ¶ 290;
Vu Decl. Ex. A (“Confidentiality Agreement”), ECF
No. 21-2.) The agreement indicated that Testwuide's
obligation to maintain the confidentiality of
Conversion's trade secrets “will survive expiration
or termination of [the Confidentiality Agreement].”
(Compl. ¶ 293.) Conversion alleges that Testwuide
breached the Confidentiality Agreement by obtaining and
refusing to return technical and sales-related trade secrets,
soliciting former employees and current advisors of
Conversion to join Measured, soliciting clients of Conversion
such as AARP, and failing to disclose and assign rights of
discoveries and inventions. (Compl. ¶¶ 294-299.) In
August 2017, Testwuide also entered into a Separation
Agreement with Conversion. (Compl. ¶ 300; Vu Decl. Ex. B
(“Separation Agreement”), ECF No. 21-2.)
Conversion alleges that Testwuide breached the Separation
Agreement by misappropriating technical and sales-related
trade secrets, soliciting advisors and former employees of
Conversion to work for Measured, and disparaging Conversion
both publicly and privately. (Compl. ¶¶ 303- 305.)
Regarding
Bharadwaj, on June 15, 2015, he entered into an Advisor
Agreement with Conversion. (Compl. ¶ 308; Vu Decl. Ex. C
(“Advisor Agreement”), ECF No. 21-2.) He
allegedly breached the Advisor Agreement by misappropriating
Conversion's technical and sales-related trade secrets,
soliciting employees and advisors of Conversion to become
employees of Measured, developing and failing to disclose and
assign inventions, and providing services to Measured.
(Compl. ¶¶ 314- 318.) Bharadwaj also entered into
two subsequent consulting agreements: the First Consulting
Agreement on September 24, 2015 and the Second Consulting
Agreement on June 1, 2016. (Compl. ¶¶ 319, 326; Vu
Decl. Ex. D (“First Consulting Agreement”), ECF
No. 21-2; Vu Decl. Ex. E (“Second Consulting
Agreement”), ECF No. 21-2.) Bharadwaj allegedly
breached both the First and Second Consulting Agreement by
misappropriating Conversion's technical and sales-related
trade secrets and failing to disclose and assign
“inventions, discoveries, improvements, and
copyrightable works.” (Compl. ¶¶ 324, 325,
330, 331.) Conversion alleges that Bharadwaj also breached
the Second Consulting Agreement by co-founding Measured and
offering his services to Conversion's competition, and by
soliciting Conversion's former employees, advisors, and
clients. (Compl. ¶¶ 332-335.)
Regarding
Magnaghi, on August 26, 2014, he signed the Advisory Services
Letter Agreement. (Compl. ¶ 338; Vu Decl. Ex. F
(“Advisor Services Agreement”), ECF No. 21-2.)
Magnaghi allegedly breached the Advisor Services Agreement by
misappropriating technical and sales-related trade secrets,
failing to disclose and assign inventions and other
discoveries to Conversion, and providing services to
Measured. (Compl. ¶¶ 346-348.)
Plaintiff
Conversion brings suit against Defendants alleging thirteen
causes of action.[3] (See Compl. ¶¶ 265-424.)
Defendants move to dismiss the breach of contract claims
against Testwuide, Bharadwaj, and Magnaghi-the second, third
and fourth claims respectively. (See Mot. 1.)
III.
LEGAL STANDARD
A court
may dismiss a complaint under Rule 12(b)(6) for lack of a
cognizable legal theory or insufficient facts pleaded to
support an otherwise cognizable legal theory. Balistreri
v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th
Cir. 1988). To survive a dismissal motion, a complaint need
only satisfy the minimal notice pleading requirements of Rule
8(a)(2)-a short and plain statement of the claim. Porter
v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual
“allegations must be enough to raise a right to relief
above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). That is, the
complaint must “contain sufficient factual matter,
accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (internal quotation marks omitted).
The
determination of whether a complaint satisfies the
plausibility standard is a “context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679. A
court is generally limited to the pleadings and must construe
all “factual allegations set forth in the complaint . .
. as true and . . . in the light most favorable” to the
plaintiff. Lee v. City of Los Angeles, 250 F.3d 668,
679 (9th Cir. 2001). But a court need not blindly accept
conclusory allegations, unwarranted deductions of fact, and
unreasonable inferences. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
Where a
district court grants a motion to dismiss, it should
generally provide leave to amend unless it is clear the
complaint could not be saved by any amendment. See
Fed.R.Civ.P. 15(a); Manzarek v. St. Paul Fire &
Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
IV.
DISCUSSION
Defendants
move to dismiss Conversion's second, third and fourth
claims primarily because clauses in the six agreements at
issue violate the California Business and Professions Code
section 16600. (See Mot.9.) Conversion preliminarily argues
that, even if those clauses were invalid, the motion should
be denied as Conversion has adequately plead alternative
unchallenged grounds for a breach of contract against
Testwuide, Bharadwaj, and Magnaghi. (Opp'n 3-5.)
Conversion ...