Judge: Kevin C. Brazile, Case: 22STCV04773, Date: 2023-01-12 Tentative Ruling

Hearing Date: January 12, 2023

Case Name: Digital Dolphin Supplies, LLC v. Cotton, et al.

Case No.: 21STCV00223

Matter: Motion for Summary Judgment/Adjudication

Moving Party: Defendants Justin Cotton and Quire Office Products LLC

Responding Party: Plaintiff Digital Dolphin Products, LLC

Notice: OK

Ruling: The Motion for Summary Adjudication is granted as to the second

cause of action; the Motion is otherwise denied.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

On January 5, 2021, Plaintiff Digital Dolphin Products, LLC filed the operative Complaint against Defendants Justin Cotton and Quire Office Products LLC for (1) breach of fiduciary duty, (2) misappropriation of trade secrets, (3) breach of contract, (4) interference with contractual relations, and (5) interference with prospective economic advantage.  Plaintiff alleges that Defendants stole Plaintiff’s trade secrets and created a competing business while still employed by Plaintiff. 

On April 15, 2022, Justin Cotton and Quire Office Products LLC, individually and on behalf of others similarly situated, filed a Second Amended Cross-Complaint against Digital Dolphin Products, LLC, a California LLC, and Digital Dolphin Products, LLC, a Nevada LLC, for (1) violation of Bus. & Prof. Code § 17200, (2) declaratory relief, (3) breach of contract, (4) violation of Penal Code § 496, (5) fraud, (6) fraudulent concealment, and (7) nonpayment of wages.  Among other things, Cross-Complainants allege that the Digital Dolphin entities fraudulently underpaid commissions on sales of personal protective equipment (“PPE”).  

Defendants Justin Cotton and Quire Office Products LLC now seek summary judgment or, alternatively, summary adjudication of the second and third causes of action in the Complaint, as well as the claim for compensatory damages.  

The law of summary judgment provides courts “a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)  In reviewing a motion for summary judgment or adjudication, courts employ a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”  (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)  The moving party bears the initial burden of production to make a prima facie showing of the nonexistence of any triable issue, in which case the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue.  (Code Civ. Proc. § 437c(p)(2).)  To show a triable issue of material fact exists, the opposing party may not rely on the mere allegations or denials of the pleadings, but instead must set forth the specific facts showing that a triable issue exists as to that cause of action or a defense thereto.  (Aguilar, at p. 849.)  Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

With regard to the trade secret claim, Plaintiff states it “has not s[ought] to prosecute a claim for trade secret misappropriation.”  Therefore, the Motion for Summary Adjudication is granted as to the second cause of action.

The only other issue is Defendants’ argument that the breach of employment contract claim fails because Plaintiff has suffered no damages.  Defendants contend “[t]he alleged harm—a lost sale—would have happened even if Mr. Cotton never undertook the alleged breach” of soliciting customers.  Defendants contend this is because Cotton was not involved in making Plaintiff’s bid to the Bureau of Prisons; Cotton’s bid on behalf of Quire did not use any information derived from Plaintiff; and Plaintiff would not bid under a certain (sealed) price, and that price was above anything the Bureau would accept.  

In its Opposition, Plaintiff contends, among other things, that “there is substantial evidence that there were a number of sales of office products (such as toner) through Quire while Cotton was still employed by Digital Dolphin that could have and should have been sold through Digital Dolphin. These sales were by customers other than the Bureau of Prisons (Shanetta Thomas).”

The moving papers are entirely premised on the sale of gloves to the Bureau of Prisons; however—contrary to Defendants’ arguments in their Reply—the third cause of action also incorporates allegations that Defendants would “contact Digital Dolphin’s customers and sell products in the Ink & Toner Market through Defendant Quire”.  (Compl. ¶ 39(b).)  Because the moving papers fail to present evidence on the issue of damages stemming from toner sales, Defendants have failed to carry their burden.  

As a note, Defendants also argue in their Reply that “Digital Dolphin [has not] submitted any evidence that Mr. Cotton solicited any customers, potential customers, or employees. None of the exhibits show any solicitations by Mr. Cotton. Instead, they show other persons submitting orders to Mr. Cotton.”  Again, however, it was Defendants’ burden to first present evidence on the issue of solicitation of toner customers.  

In sum, the Motion for Summary Adjudication is granted as to the second cause of action; the Motion is otherwise denied.  The Request for Judicial Notice is granted.  The objections are overruled.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.