Judge Elaine W. Mandel, Case Number: 24SMCV03573, Date: 2024-12-03 Tentative Ruling

Judge: Elaine W. Mandel, Case: 24SMCV03573, Date: 2024-12-03 Tentative Ruling

Case Number: 24SMCV03573 Hearing Date: December 3, 2024 Dept: P

Tentative Ruling

AD.Net, Inc. v. Web Design and Consulting Services, Inc., Case no. 24SMCV03573

Hearing date December 3, 2024

Defendants’ Motion to Dismiss or Transfer for Forum Non Conveniens

Plaintiffs AD.Net, Inc., Michael Aragon, Sanford Lechner and Paul Schuster sue defendants Web Design and Consulting Services, Inc., AD Media and AD.Com Interactive Media, Inc. for unfair competition and interference with contractual relations in their online advertising business. Plaintiffs Aragon, Lechner and Schuster were previously employed by defendants and are now employed by plaintiff AD.Net, Inc. Defendants sued Lechner on 7/2/24 in Florida for breach of employment agreement and misuse of trade secrets. Defendants sued Aragon on 7/12/24 in US District Court in Maine for the same. Both lawsuits are currently pending.

Individual plaintiffs joined with plaintiff AD.Net, Inc., a California corporation, to file this case in California, challenging noncompete clauses in defendants’ previous contracts with plaintiffs. Defendants move to dismiss, transfer or, in the alternative, stay the instant matter until the pending matters are resolved. Plaintiffs oppose.

Plaintiffs’ Request for Judicial Notice

Plaintiffs request judicial notice of the following: (1) the existence and contents of the following court decisions from the State of Maine: Chapman & Drake v. Harrington (1988) 545 A.2d 645; Brignull v. Albert (1995) 666 A.2d 82; Sisters of Charity Health System, Inc. v. Farrago (2011) 21 A.3d 110; (2) the existence and contents of the following court decisions from the State of Florida: Sarasota Beverage Co. v. Johnson (1989) 551 So.2d 503; Freedom Medical, Inc. v. Sewpersaud (M.D.Fla.2020) 469 F.Supp.3d 1269; Alonso-Llamazares v. International Dermatology Research, Inc. (2022) 339 So.3d 385; (3) Florida Statutes Annotated §542.335; (4) the existence and contents of the following court decisions from the State of New York: BDO Seidman v. Hirshberg (1999) 93 N.Y.2d 382, 712 N.E.2d 1220, 690 N.Y.S.2d 854; Kanan, Corbin, Schupak & Aronow, Inc. v. FD International, Ltd. (2005) 8 Misc.3d 412, 797 N.Y.S.2d 883; Newmark Partners, L.P. v. Hunt (2021) 200 A.D.3d 557, 160 N.Y.S.3d 23; Photonics Industries International, Inc. v. Xiaojie Zhao (2020) 185 A.D.3d 1064, 127 N.Y.S.3d 568; TBA Global, LLC v. Proscenium Events, LLC (2014) 114 A.D.3d 571, 980 N.Y.S.2d 459; Gundermann & Gundermann Ins. v. Brassill (2007) 46 A.D.3d 615, 853 N.Y.S.2d 82; (5) the Statement of Information filed in 2024 by Web Design and Consulting Services, Inc.; and (6) the Statement of Information filed in 2024 by Ad.com Interactive Media Inc.

Cal. Evid. Code §§451(a) and (f), 452(a), (c)-(d) and (g)-(h), and 453 allow judicial notice of case and statutory law of this state and of any state in the United States, official acts of the legislative department of any state of the United States and facts of generalized knowledge. GRANTED.

Defendants’ Motion to Dismiss, Transfer or Stay

Via Code of Civil Procedure sections 410.30 and 418.10, a defendant may challenge a plaintiff's selection of California as the forum for litigation. Cal-State Bus. Prod. & Servs., Inc. v. Ricoh (1993) 12 Cal. App. 4th 1666, 1670. “[T]he doctrine of forum non conveniens allows a trial court discretion to decline to exercise jurisdiction over a cause and parties otherwise properly before it if it concludes the action may be more appropriately and justly tried elsewhere.” Id. at 1675. “In applying the traditional forum non conveniens analysis, the trial court must engage in a two-step process, on which the defendant bears the burden of proof. In the first step, the court must determine whether a suitable alternative forum exists. (citation) If the court finds that a suitable alternative forum exists, it must then balance the private interests of the litigants and the interests of the public in retaining the action in California. Animal Film, LLC v. D.E.J. Prods., Inc. (2011) 193 Cal. App.4th 466, 472. The existence of a suitable alternative forum is a legal question. Id.

Defendants argue the case should be dismissed because cases concerning the same parties and subject matter have already been filed in more appropriate venues.

Plaintiffs argue all parties have strong ties to California, making it an appropriate venue. Defendants Web Design and Consulting Services, Inc. and Ad.com Interactive Media Inc are incorporated in California, as is plaintiff AD.Net, Inc. Plaintiffs argue California is the correct venue due to California’s strong public policy against noncompete clauses, and the parties’ connections to California implicate that policy, which is regularly enforced against out-of-state parties. See Application Group, Inc. v. Hunter Group, Inc. (1998) 61 Cal.App.4th 881; Globespan, Inc. v. O'Neill (C.D.Cal.2001) 151 F.Supp.2d 1229.

Defendants argue the parties’ interest in avoiding duplicative litigation outweigh the public benefits of allowing this case to continue.

Plaintiffs argue California law strongly disfavors noncompete agreements, so there are strong public benefits to allowing the case to continue her. “This statutory prohibition on noncompetition agreements reflects not just a prohibition on contracts restricting one's business or employment but a settled public policy in favor of open competition.” In re Marriage of Greaux & Mermin (2014) 223 Cal.App.4th 1242, 1249.

Though California strongly disfavors noncompete clauses, judicial economy concerns weigh against allowing this matter to proceed. Plaintiffs’ claims in the instant action arise from the noncompete clauses in their previous employment contracts with defendants; those same contracts and clauses are the subject matter of the pending Florida and Maine lawsuits. Allowing the instant matter to go forward would result in duplicate litigation and a significant risk of competing judicial outcomes.

Defendants argue, in the alternative, the case should be stayed pending resolution of the Florida and Maine cases to avoid potentially conflicting outcomes on the same issues. Both are suitable forums for resolution of the parties’ disputes. Judicial economy favors staying this matter until the Florida and Maine cases can be resolved.

The motion to dismiss or transfer for forum non conveniens is DENIED. The motion to stay is GRANTED pending resolution of the existing Florida and Maine cases.