Judge Christopher K. Lui, Case 22STCV31271 2023-03-07 Tentative Ruling

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the demurrer addressed herein. As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue. Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776. If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.

Plaintiff alleges that Defendant Jobot LLC—a staffing agency—solicited Defendants Alludin and Purvis from Plaintiff and stole Plaintiff’s clients using Plaintiff’s confidential information.

Defendants Jobot, LLC, Shezad Alludin, and Sydni Purvis demur to the Second Amended Complaint.

Defendants Jobot, LLC, Shezad Alludin, and Sydni Purvis’s demurrer to the Second Amended Complaint is OVERRULED as to the first, third, fourth, sixth, seventh causes of action and SUSTAINED with leave to amend as to the second, fifth and eighth causes of action.

Plaintiff is given 30 days’ leave to amend and will only be given one more opportunity to amend.

Pursuant to the stipulation and order signed on December 2, 2022, the parties obtained permission to file oversized briefs of 20, 20 and 12 pages. The Court observes, however, that the demurrer really did not require an oversized brief. The points could have been made within the standard 15-page limit.

The declaration of Adam E. Wagmeister reflects that Defendant satisfied the meet and confer requirement set forth in CCP § 430.41.

Defendants Jobot, LLC, Shezad Alludin, and Sydni Purvis demur to the Second Amended Complaint on the following grounds:

A. Re: California Employees Are Free To Compete Against Previous Employers and Employers Are Free To Compete For Talent.

Business and Professions Code section 16600 states: “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.” As Angelica points out, Business and Professions Code section 16600 has consistently been interpreted as invalidating any employment agreement that unreasonably interferes with an employee's ability to compete with an employer after his or her employment ends. (See Muggill v. Reuben H. Donnelley Corp. (1965) 62 Cal.2d 239, 242 [42 Cal. Rptr. 107, 398 P.2d 147].) However, the statute does not affect limitations on an employee's conduct or duties while employed. “While California law does permit an employee to seek other employment and even to make some ‘preparations to compete’ before resigning [citation], California law does not authorize an employee to transfer his loyalty to a competitor. During the term of employment, an employer is entitled to its employees' ‘undivided loyalty.’ [Citation.]” (Fowler v. Varian Associates, Inc. (1987) 196 Cal.App.3d 34, 41 [241 Cal. Rptr. 539].)

In sum, because Angelica's non-UTSA claims are based on Park's conduct during his employment by Angelica, contrary to Emerald's argument, they are in no sense barred by Business and Professions Code section 16600.

(Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 509 [bold emphasis added].)

Here, the breach of contract action is based, at least in part, on Defendants Allaudin and Purvis’ failure to devote their best efforts and entire working time to the performance of their RHI duties. (2AC, ¶ 44.)

A demurrer does not lie to only part of a cause of action or a particular type of damage or remedy. (See Kong v. City of Hawaiian Gardens Redevelopment Agency (2003) 108 Cal.App.4^th 1028, 1046; PH II, Inc. v. Superior Court (Ibershof) (1995) 33 Cal.App.4^th 1680, 1682.) The proper procedure is to bring a motion to strike the substantively defective allegation. (Id. at 1682-83.)

In support of this argument, Defendants argue that the 2AC does not plead sufficient facts to support this cause of action, but only conclusions. This argument is not persuasive.

In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) Described as a “cornerstone jurisprudential polic[y], … complaints are to be liberally construed … and disputes should be resolved on their merits.” (Citation omitted.) “A fact may appear by inference as well as by direct allegation.” (Citation omitted.) [*1142] “Consistent with the applicable rules of pleading, we adopt a liberal construction of plaintiffs' [proposed] amended complaint, drawing all reasonable inferences in favor of their allegations.” (Citation omitted.) The proposed amended complaint, as construed in light of the exhibits filed in support of the motion to amend, should be “fairly read.” (Citations omitted.)

“The elements of a breach of contract claim are that a contract was formed; that the plaintiff did everything required by the contract; that the defendant did not do something required by the contract; and that the plaintiff was harmed as a result. (Citation omitted.)” (CSAA Ins. Exch. v. Hodroj (2021) 72 Cal.App.5th 272, 276.)

Here, the first cause of action sufficiently pleads the elements of a breach of contract cause of action in accordance with the liberal construction of pleadings. (See 2AC, ¶¶ 44 – 46.)

2. Second Cause of Action (Breach of the Implied Covenant of Good Faith and Fair Dealing).

Here, Abacus's claim of breach of the implied covenant relies on the same acts, and seeks the same damages, as its claim for breach of contract. Further, as Careau explains, tort recovery for breach of the covenant is available only in limited circumstances, generally involving a special relationship between the contracting parties, such as the relationship between an insured and its insurer. (222 Cal. App. 3d at pp. 1398-1399.) Abacus has alleged no special relationship here.

Thus, the cause of action for breach of the implied covenant is duplicative of the cause of action for breach of contract, and may be disregarded. There was no error in the grant of summary adjudication on this cause of action.

Here, ¶ 50 alleges “while [Allaudin and Purvis] were employed by RHI, they used work time to prepare to compete against RHI, failed to diligently develop RHI’s business, and solicited RHI employee(s) to leave RHI’s employment.” This is the same conduct which allegedly forms the breach of contract cause of action. (2AC, ¶¶ 44, 45.)

As such, the BICGFFD cause of action is duplicative of the breach of contract cause of action and is superfluous.

The demurrer to the second cause of action is SUSTAINED with leave to amend. Plaintiff will only be given one more opportunity to amend.

B. Re: California Employees Are Free To Compete Against Previous Employers and Employers Are Free To Compete For Talent.

Defendants argue that this cause of action is preempted by the California Uniform Trade Secrets Act (“CUTSA”) because it does not allege wrongdoing that is material distinct from the wrongdoing which would form a CUTSA claim[1], that is, misappropriation of trade secrets, even if the information does not meet the definition of a trade secret.

Unfortunately for Defendants, the third cause of action is not only based on misappropriation of confidential and proprietary information, but also “failing to develop RHI’s business and/or diligently pursue client job posts.” (2AC, ¶ 56.) Thus, even if the misappropriation allegations are preempted by the CUTSA (which is further discussed below), such preemption would not apply to the allegations of failing to develop business and/or to diligently pursue client job posts.

As noted above, a demurrer does not lie to only part of a cause of action or a particular type of damage or remedy.

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)

Here, the third cause of action sufficiently pleads the elements of a breach of fiduciary duty cause of action in accordance with the liberal construction of pleadings. (See 2AC, ¶¶ 53 - 57.) This argument is not persuasive.

This cause of action is based, in part, upon Allaudin and Purvis agreeing to devote their best efforts and entire working time to the performance duties for RHI, and Defendant inducing Allaudin and Purvis to breach this contractual obligation. (2AC, ¶¶ 60, 61.) This is not related to misappropriation of confidential and proprietary information, so the CUTSA preemption analysis does not apply, as discussed above re: the third cause of action.

"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." (Citation omitted.) The Court of Appeal held that plaintiffs could not state a cause of action for interference with contractual relations because the allegations did not establish that defendants' conduct was wrongful for any reason other than its impact on the contracts for the purchase of tax-defaulted property. This holding fails to properly distinguish the torts of interference with prospective economic advantage and intentional interference with an existing contract.

Because interference with an existing contract receives greater solicitude than does interference with prospective economic advantage (Citation omitted), it is not necessary that the defendant's conduct be wrongful apart from the interference with the contract itself. (Citation omitted.)

(Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55-56 [bold emphasis and underlining added].)

Here, the fourth cause of action sufficiently pleads the elements of a tortious interference with contract cause of action in accordance with the liberal construction of pleadings. (See 2AC, ¶¶ 60 – 62.) This argument is not persuasive.

5. Fifth Cause of Action (Tortious Interference with Prospective Economic Advantage).

The Court will address the CUTSA preemption argument here, as this cause of action is based upon Defendants allegedly disrupting RHI’s economic relationships with its clients and candidates using RHI’s confidential information to induce RHI’s clients and candidates to cease or lessen their business with RHA and gain a competitive advantage.

“California's Uniform Trade Secrets Act (CUTSA) is codified in sections 3426 through 3426.11 of the Civil Code. [Citations.] CUTSA has been characterized as having a ‘comprehensive structure and breadth … .’ [Citation.] ‘Here, the eleven provisions of the UTSA set forth: the definition of “misappropriation” and “trade secret,” injunctive relief for actual or threatened misappropriation, damages, attorney fees, methods for preserving the secrecy of trade secrets, the limitations period, the effect of the title on other statutes or remedies, statutory construction, severability, the application of title to acts occurring prior to the statutory date, and the application of official proceedings privilege to disclosure of trade secret information.’ [Citation.] That breadth suggests a legislative intent to preempt the common law. [Citations.] At least as to common law trade secret misappropriation claims, ‘UTSA occupies the field in California.’ [Citation.]

“CUTSA includes a specific provision concerning preemption. That provision, section 3426.7, reads in pertinent part as follows: ‘(a) Except as otherwise expressly provided, this title does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets. [¶] (b) This title does not affect (1) contractual remedies, whether or not based upon misappropriation of a trade secret, (2) other civil remedies that are not based upon misappropriation of a trade secret, or (3) criminal remedies, whether or not based upon misappropriation of a trade secret.’ Section 3426.7 thus ‘expressly allows contractual and criminal remedies, whether or not based on trade secret misappropriation.’ [Citation.] ‘At the same time, § 3426.7 implicitly preempts alternative civil remedies based on trade secret misappropriation.’ (Ibid.)

“As reflected in case law decided under the California statute, the determination of whether a claim is based on trade secret misappropriation is largely factual. (Citations omitted.)

“In Callaway, for example, claims by the cross-complainant for conversion and unjust enrichment were [displaced], where they were ‘based entirely on the same factual allegations that form the basis of its trade secrets claim.’ (Citations omitted.)

“In Digital Envoy, the court determined ‘that California's statute, as persuasively interpreted in Callaway, [displaces] Digital's claims for unfair competition and unjust enrichment since those claims are based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.’ (Citations omitted.)

In considering whether a particular claim has been displaced, we must recognize “a prime purpose of the law was to sweep away the adopting states' bewildering web of rules and rationales and replace it with a uniform set of principles for determining when one is—and is not—liable for acquiring, disclosing, or using ‘information … of value.’ [Citation.]” (Citation omitted.) In general, the acquisition, disclosure or transfer of information that does not fit UTSA's definition of a trade secret does not give rise to any liability, even when that liability is couched in terms of a separate tort or statutory violation. (Citation omitted.)

However, as Angelica urges, UTSA by its terms does not displace a contract claim, even if it is based on the misappropriation of a trade secret. (Civ. Code, § 3426.7, subd. (b)(1).) Moreover, UTSA does not displace noncontract claims that, although related to a trade secret misappropriation, are independent and based on facts distinct from the facts that support the misappropriation claim. (Citations omitted.)

(Angelica Textile Servs., Inc. v. Park (2013) 220 Cal.App.4th 495, 505-06 [bold emphasis added].)

In sum, we agree with the federal cases applying California law, which hold that section 3426.7, subdivision (b), preempts common law claims that are “based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.” (Citation omitted.) Depending on the particular facts pleaded, the [*959] statute can operate to preempt the specific common claims asserted here: breach of confidence, interference with contract, and unfair competition. As we explain next, that is the case here.

In this case, the complaint as a whole rests on factual allegations of trade secret misappropriation. (Cf. Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, 835 [33 Cal. Rptr. 3d 901] [for purposes of discovery commencement, “every cause of action is factually dependent on the misappropriation allegation …”]; see id. at p. 831 [the complaint there asserted causes of action based on plaintiff's confidentiality agreements with its former employees, misappropriation of trade secrets, unfair competition, unfair business practices, interference with prospective economic advantage, conversion, unjust enrichment, and declaratory relief].) Appellant effectively conceded as much earlier in the litigation, in its opposition to a demurrer to the fourth amended complaint. That concession was warranted. “A fair reading” of appellant's fifth amended complaint thus “compels the conclusion that each and every cause of action hinges upon the factual allegation that [defendants] misappropriated [appellant's] trade secrets.” (132 Cal.App.4th at p. 834.) That includes the causes of action for breach of confidence, interference with contract, and unfair competition.

(K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 958-959 [bold emphasis added].)

California's Uniform Trade Secrets Act "occupies the field" of common law claims based on the misappropriation of a trade secret. K. C. Multimedia, Inc. v. Bank of America Tech. & Operations, Inc., 171 Cal. App. 4th 939, 954, 90 Cal. Rptr. 3d 247 (2009). However, the Act does not supersede "(1) contractual remedies, whether or not based upon misappropriation of a trade secret, [and] (2) other civil remedies that are not based upon misappropriation of a trade secret." Cal. Civ. Code § 3426.7(b). The Act's language "implicitly preempts alternative civil remedies based on trade secret misappropriation." K.C. Multimedia, 171 Cal. App. 4th at 954 (citation omitted). A claim cannot simply depend on a "different theory of liability" to survive the UTSA's supersessive effect. See id. at 957-959 & n. 7 (distinguishing rule set forth in Powell Prods., Inc. v. Marks, 948 F. Supp. 1469, 1474 (D. Colo. 1996) (allowing a claim based on trade secret misappropriation to survive if the claim "requires an [element] [] which is not an element of a misappropriation claim")). The claim must be based on more than "the same nucleus of facts as the misappropriation of trade secrets claim for relief." K.C. Multimedia, 171 Cal. App. 4th at 958 (quoting Digital Envoy, Inc. v. Google, Inc., 370 F. Supp. 2d 1025, 1035 (N.D. Cal. 2005)).

Before applying these principles to each of Mattel's counter-claims, the Court must resolve whether California's UTSA supersedes claims based upon the misappropriation of information that does not meet the statutory definition of a trade secret. . . .

The approach taken by Davey is better aligned with the decisions reached by the two recent California Court of Appeal cases to discuss UTSA's supersessive effect. K.C. Multimedia, for instance, held that UTSA supersedes any claim "based on the same nucleus of facts as the misappropriation of trade secrets claim," even though the superseded claim may seek "something more." 171 Cal. App. 4th at 958. The court rejected Powell Prods., Inc. v. Marks, in which the court stated that UTSA doesn't supersede a conspiracy claim based on the theft of trade secrets because such a claim "requires an agreement [] which is not an element of a misappropriation claim under the UTSA." 948 F. Supp. 1469, 1474 (D. Colo. 1996). It's no longer the case in California that a claim for breach of fiduciary or breach of duty of loyalty based upon the misappropriation of trade secrets would survive even though both claims require proof of "additional elements" like a relationship of trust or confidence. See K.C. Multimedia, 171 Cal. App. 4th at 960. Allowing civil plaintiffs to nevertheless proceed with such claims on the basis of the theft of confidential information that doesn't meet the statutory definition of a trade secret undermines the California Court of Appeal by "alternatively plead[ing] claims with less burdensome requirements of proof." Diamond Power Int'l, Inc. v. Davidson, 540 F. Supp. 2d 1322, 1345 (N.D. Ga. 2007). Along these lines, a recent California Court of Appeal opinion "emphatically rejected the [] suggestion that the uniform act was not intended to preempt 'common law conversion claims based on the taking of information that, though not a trade secret, was nonetheless of value to the claimant.'" Silvaco, 184 Cal.App.4th at 239 n. 22.

Like both K.C. Multimedia and Silvaco, and unlike Sokolowski, Davey eschewed a pure application of the statute [*987] for an approach that adhered to "the history, purpose, and interpretation of the statutory scheme." Compare Davey, 904 A.2d at 664, K.C. Multimedia, 171 Cal. App. 4th at 957, and Silvaco, 184 Cal. App. 4th at 239 n. 22, with Sokolowski, 717 N.W.2d at 791. In an effort to align with the California courts that have addressed this issue, the Court concludes that UTSA supersedes claims based on the misappropriation of confidential information, whether or not that information meets the statutory definition of a trade secret.

(Mattel, Inc. v. MGA Entm't, Inc. & Consol.Consol. Actions (C.D.Cal. 2010) 782 F.Supp.2d 911, 985-987 [bold emphasis added].)

Here, in connection with the allegations that Defendants used RHI’s confidential information to induce RHI’s clients and candidates to cease or lessen their business with RHA and gain a competitive advantage.

3. Rather than engage in fair competition, RHI is informed and believes that Jobot conspired with current and former RHI employees, including Allaudin and Purvis, to misappropriate RHI’s confidential and proprietary information, including information about its business practices, employees, candidates, and clients, to unlawfully use this information to usurp RHI’s business opportunities and business practices, to unlawfully divert business to Jobot, and unfairly fuel its expansion efforts, to disrupt RHI’s business relationships, and to tortiously interfere with RHI’s employment agreements.

14. RHI’s success as an industry leader and its competitive advantage are directly related to its ability to develop competitive business strategies and to hire, train, develop, and retain top talent in whom it invests significant resources and who are entrusted with confidential business strategies and information, including RHI’s procedures, financial and personnel plans, objectives and strategies, compensation and bonus structures, training platforms and technology, and compilations of confidential information about existing and prospective clients, candidates, and employees. RHI expends considerable time and resources in these efforts.

21. As a Branch Director for RHI, Allaudin was responsible for the overall operation of his branch office, including growing revenue, overseeing the hiring and development of key staff and support staff at the branch, ensuring RHI operational procedures are implemented and followed,

leading the marketing activities, and generating revenue-producing placements, among other duties. He also was entrusted with RHI’s confidential information, including revenue and financial information, the compilation of confidential client and candidate information, such as the names and identities of RHI’s existing and targeted clients and candidates, contact persons and decision-makers at those clients, the specific needs and preferences of particular RHI clients and candidates, the rates and other terms of agreements RHI may have with its clients and candidates, and other aspects of RHI’s confidential plans to compete with and differentiate itself from competitors such as Jobot.

22. This information also included RHI’s compilation of client and candidate information that Allaudin used and has access to at RHI, including the names, addresses and identity of clients who listed job orders with RHI, the job orders at issue, and the names, addresses and identity of candidates and prospective candidates for those job orders.

26. Much like Allaudin, as part of her role at RHI, Purvis was entrusted with RHI’s confidential information, including revenue and financial information and the compilation of confidential client and candidate information, such as the names and identities of RHI’s existing and

targeted clients and candidates, contact persons and decision-makers at those clients, the specific needs and preferences of particular RHI clients and candidates, the rates and other terms of agreements RHI may have with its clients and candidates, and other aspects of RHI’s confidential plans to compete with and differentiate itself from Jobot and other competitors.

29 . . . Allaudin also used confidential information gained at RHI about open job orders to solicit and fill those roles on behalf of Jobot once he moved to Jobot. Allaudin also used the RHI relationships with candidates to solicit them away from RHI clients and attempt to place them on different jobs through Jobot.

31. . . . [Puvis] was able to court the same clients and candidates that she was entrusted with at RHI by using the confidential information she obtained while working at RHI to generate business for Jobot.

32. In much the same manner as Allaudin, Purvis used RHI’s confidential information to disrupt RHI’s relationship with its clients, including by attempting to pull candidates out of jobs where she placed them with RHI clients in order to place them through Jobot at other clients with whom she worked with while at RHI. Purvis used the RHI relationships with candidates to solicit them away from RHI clients and attempt to place them on different jobs through Jobot. RHI learned of Purvis’ duplicity after one candidate sent an email to RHI expressing concern that Purvis had somehow obtained her personal email address and was contacting her on behalf of another recruiting company, namely, Jobot.

33. Purvis also used RHI’s confidential information to attempt to lure RHI clients to Jobot. Again, RHI only learned what Purvis was doing after a client mistakenly sent Purvis a calendar invite to her RHI email account.

34. Upon information and belief, Jobot solicited, encouraged, and conspired with Allaudin and Purvis to terminate their employment with RHI and to accept employment with Jobot, with the intention of misappropriating and using RHI’s confidential and proprietary business and client and candidate information before and after their departure from RHI, and to use their knowledge of RHI’s confidential and proprietary information in furtherance of the conspiracy among all Defendants to compete unfairly against RHI by saving Jobot the time and expense that would be otherwise required to establish and grow Jobot’s business and interfering with RHI’s relationships with clients where it has placed candidates.

At trial, the court found that defendants violated the UTSA (Civ. Code, § 3426 et seq.) by misappropriating plaintiffs' confidential client list and, pursuant to Civil Code section 3426.3, subdivision (b), awarded plaintiffs $ 22,000 (representing a royalty fee of $ 10 for each of the 2,200 clients on the list). Defendants argue the Court of Appeal erroneously affirmed the trial court on this matter. Under the UTSA, a client list qualifies as a “[t]rade secret” if it “[d]erives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use” and “[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Citations omitted.) A violation of the UTSA occurs when an individual misappropriates a former employer's protected trade secret client list, for example, by using the list to solicit clients (citation omitted) or to otherwise attain an unfair competitive advantage (citation omitted).

As such, Plaintiff is essentially alleging misappropriation of trade secrets and thus, this cause of action is preempted by the CUTSA.

The demurrer to the fifth cause of action is SUSTAINED with leave to amend. Plaintiff will only be given one more opportunity to amend.

This cause of action is partly based upon Alladuin and Purvis’ alleged breach of the duty of loyalty during their employment with RHI. (2AC, ¶ 71.) For the reasons discussed above, the preemption argument does not apply to these allegations and a demurrer must dispose of an entire cause of action.

California imposes liability “‘“on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person.”’” (Citations omitted].)

A person may be held liable for aiding and abetting the breach of a duty even if the person does not independently owe that duty to the plaintiff. (Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1145 n.2.)

Here, the sixth cause of action sufficiently pleads the elements of aiding and abetting the commission of torts which survive this demurrer in accordance with the liberal construction of pleadings. (See 2AC, ¶¶ 71 – 72.) This argument is not persuasive.

7. Seventh Cause of Action (Violation of California Business & Professions Code §§ 17200 et seq.)

This cause of action is based in part on the alleged breach of duty of loyalty. (2AC, ¶ 76.) For the reasons discussed above, the preemption argument does not apply to these allegations and a demurrer must dispose of an entire cause of action.

The UCL's “scope is broad. … [It] does not proscribe specific practices. Rather, … it defines ‘unfair competition’ to include ‘any unlawful, unfair or fraudulent business act or practice.’ (§ 17200.) Its coverage is ‘sweeping, embracing “‘anything that can properly be called a business practice and that at the same time is forbidden by law.’”’ [Citation.] It [*790] governs ‘anti-competitive business practices’ as well as injuries to consumers, and has a major purpose ‘the preservation of fair business competition.’ [Citations.] By proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows” violations of other laws and treats them as unlawful practices’ that the [UCL] makes independently actionable.” (Citation omitted)

“[A] practice may violate the UCL even if it is not prohibited by another statute. Unfair and fraudulent practices are alternate grounds for relief. [Citation.] . . .

Here, the seventh cause of action sufficiently pleads the elements of unfair business practices in accordance with the liberal construction of pleadings. (See 2AC, ¶¶ 75 – 77.) This argument is not persuasive.

Jobot conspired together with current and former RHI employees, including Allaudin and Purvis, to misappropriate RHI’s confidential and proprietary information, including information about its business practices, processes, employees, candidates, and clients, unlawfully use this information to raid RHI’s employees, usurp RHI’s business opportunities, disrupt its relationships, and duplicate its business practices.

81. Allaudin and Purvis were entrusted with RHI’s confidential and proprietary information during their employment and breached their duty of loyalty[2] with RHI and otherwise intentionally and wrongfully disrupted the economic relationship between RHI and its clients, candidates, and employees, including by misappropriating RHI confidential business and proprietary information and, on information and belief, all while still working at RHI. On information and belief, all Defendants had actual knowledge of the wrongful nature of all other Defendants’ acts of misappropriating RHI’s confidential and proprietary information and documents, using such information to gain unfair competitive advantages, and knowingly provided substantial assistance and encouragement to the other Defendants in these wrongful actions.

For the reason discussed above, Plaintiff is essentially alleging misappropriation of trade secrets and thus, this cause of action is preempted by the CUTSA.

The demurrer to the eighth cause of action is SUSTAINED with leave to amend. Plaintiff will only be given one more opportunity to amend.

[1] The Court notes that, for some strategic reason, Plaintiff has not plead a CUTSA cause of action.

[2] This allegation of breach of duty of loyalty pertains to allegedly not devoting their best efforts and performance while working for RHI, however, this would not constitute unfair competition benefitting Jobot.