Judge Robert B. Broadbelt, Case Number: 21STCV26547, Date: 2024-11-26 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 21STCV26547, Date: 2024-11-26 Tentative Ruling

Tentative rulings are sometimes, but not always, posted. The purpose of posting a tentative ruling is to to help focus the argument. The posting of a tentative ruling is not an invitation for the filing of additional papers shortly before the hearing.

The court considered the moving, opposition, and reply papers filed in connection with this motion.[1]

The court notes that, in response to the material facts set forth in the separate statement, cross-defendant David Maijala asserted various objections. (See, e.g., Maijala Sep. Statement, pp. 3:21-28, 7:16-24, 16:11-20, 18:7-10, 19:12-13, 20:6-7.) But (1) to the extent that the objections are directed to evidence, all such objections “must be served and filed separately from other papers in support of or in opposition to the motion” and must be in the format required by the California Rules of Court, and (2) to the extent that cross-defendant David Maijala is attempting to object to the recitation of material facts, the court finds that such objections are improper because they are not directed to evidence. (Cal. Rules of Ct., rule 3.1354, subd. (b).) The court therefore has not ruled on the objections included in cross-defendant David Maijala’s response separate statement.

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with 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.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) For the purposes of motion for summary judgment and summary adjudication, “[a] plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(1).) “Once the plaintiff . . . has met that burden, the burden shifts to the defendant . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(1).) “When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467; Code Civ. Proc., § 437c, subd. (c).)

Cross-complainant Mulgrew Aircraft Components, Inc. (“Mulgrew”) moves the court for an order granting summary judgment in its favor and against cross-defendant David Maijala (“Maijala”) on Mulgrew’s Cross-Complaint or, in the alternative, granting summary adjudication on each cause of action alleged against Maijala in its Cross-Complaint.

“‘A cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.’” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.)

The court finds that Mulgrew has not met its burden of showing that there is no defense to the first cause of action for breach of contract because Mulgrew has not proven the elements of (1) the existence of a contract between Mulgrew and Maijala that required Maijala to comply with the terms of Mulgrew’s Security provision and Voice Mail, E-Mail, and Computer Files provision, (2) Mulgrew’s performance or excuse for nonperformance pursuant to the terms of the parties’ agreement, and (3) resulting damages.

First, the court finds that Mulgrew has not met its burden to prove the existence of a contract between it, on the one hand, and Maijala, on the other hand, pursuant to which Maijala agreed to comply with the terms of Mulgrew’s Security provision and Voice Mail, E-Mail, and Computer Files provision since the evidence submitted by Mulgrew shows that a triable issue of material fact exists as to this element.

Mulgrew has submitted the parties’ Employee Handbook, in which Mulgrew (1) set forth “[e]xamples of impermissible conduct, which may lead to disciplinary action,” including the “[t]heft, stealing, or unauthorized removal of property belonging to [Mulgrew], another employee, a customer or a visitor, regardless of the value of the item” (the Security provision), and (2) stated that the email system should not be used to send or receive trade secrets or proprietary information without prior authorization from Mulgrew (the Voice Mail, E-Mail, and Computer Files provision). (Houshiar Decl., Ex. A, Employee Handbook, pp. MACI000068, ¶ 12, MACI000082.) However, Mulgrew has not shown that the parties intended these provisions to create contractual obligations on the part of Maijala to not engage in such conduct.

The Employee Handbook begins by stating that it “is presented as a matter of information” to inform Mulgrew’s employees about its “employment practices, policies, and the benefits provided to [its] valued employees, as well as the conduct expected from them.” (Houshiar Decl., Ex. A, Employee Handbook, p. MACI000053 [emphasis added].) The Employee Handbook also states that it “contains the entire agreement between [the employee] and [Mulgrew] as to the duration of [the employee’s] employment and the circumstances under which [the] employment may be terminated.” (Id. at p. MACI000054.) This language does not state that the Employee Handbook constitutes an agreement pursuant to which the employee must perform the obligations therein.

Further, while the Employee Handbook Acknowledgment Form, signed by Maijala on May 20, 2019, states that Maijala “agree[d] to abide by the rules of conduct and other personnel policies set forth therein[,]” the acknowledgment expressly states that the Employee Handbook is not intended to create a contract. (Houshiar Decl., Ex. B.) Specifically, the acknowledgement states that “nothing contained in the Mulgrew Aircraft Components Employee Handbook or this Acknowledgement Form shall be construed to . . . create any contract pertaining to [Maijala’s] employment, including employment for a specified time.” (Ibid.) The acknowledgement further states that the Employee Handbook and acknowledgement form shall not “be construed to create a contractual obligation, express or implied, on the part of Mulgrew pertaining to any portion of the Handbook or any aspect of any employment.” (Ibid.)

The court notes that the Employee Handbook also provides that, in consideration of the employee’s employment, the employee (i.e., Maijala) agrees to preserve certain information as highly confidential, to not disclose the information to any person or entity absent consent, to not copy or duplicate any information without consent, and to return all information to Mulgrew upon request. (Houshiar Decl., Ex. A, Employee Handbook, pp. MACI000080-81.) Thus, that provision appears to include language indicating the existence of an agreement. But (1) that language only applies to the Confidentiality and Non-Disclosure provision, and (2) as set forth above, there is conflicting language regarding whether the parties intended to create a contract pursuant to the terms of the Employee Handbook.

Thus, there is conflicting language in the Employee Handbook and the Employee Handbook Acknowledgement Form that appears to indicate both that the parties did and did not intend to create a legally enforceable obligation on the part of Maijala to comply with Mulgrew’s policies and procedures. (See, e.g., Houshiar Decl., Ex. B [“nothing contained in the Mulgrew Aircraft Components Employee Handbook or this Acknowledgement Form shall be construed to . . . create any contract pertaining to [Maijala’s] employment”] [emphasis added]; Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 789 [finding that employee handbook’s indication that it was not intended to establish an agreement undermined the argument that the handbook and its arbitration provision was intended to create a legally enforceable agreement to arbitrate].) Specifically, Mulgrew has not shown that the parties entered into a contract that obligated Maijala (1) to comply with the Security Provision of the Employee Handbook, and (2) to comply with the Voice Mail, E-Mail, and Computer Files provision. (Mot., pp. 11:22-12:8, 13:19-27, 18:3-7 and 18:13-15 [arguing that Maijala breached these provisions].)

Mulgrew has not addressed the language of the Employee Handbook and the Employee Handbook Acknowledgement Form in its moving papers. Thus, the court finds that Mulgrew has not presented adequate argument, analysis, and authority to show that the parties intended to enter into a binding agreement pursuant to which Maijala was required to comply with all of the terms of the Employee Handbook.

The court notes that Mulgrew has argued that Maijala “acknowledges entering into a contractual relationship with Mulgrew, based on the Employee Handbook and Offer Letter.” (Mot., p. 11:13-14; Def. Fact No. 5.) The court disagrees. While Maijala stated, in response to the interrogatory asking whether the employment relationship was governed by any written rules, policies, or procedures, “Yes, Employee Handbook[,]” Maijala did not expressly state that the written rules, polices, or procedures formed a valid and enforceable contract between the parties. (Nenni Decl., Ex. G-2, p. 3 [Interrogatory No. 200.4]; Nenni Decl., Ex. G-1, p. 3:18-19 [Maijala’s response to No. 200.4].) Further, Maijala testified not that he agreed that the parties entered into a contractual relationship in which he agreed to all of the terms set forth in the Employee Handbook as advanced by Mulgrew, but that (1) he agreed to the terms of the offer letter and accepted those terms, (2) he acknowledged that (i) the Employee Handbook included certain provisions and policies, and (ii) he acknowledged receipt and his understanding of those provisions and policies at the beginning of his employment, and (3) he signed the job offer extended to him by Mulgrew. (Nenni Decl., Ex. I, Maijala Dep., p. 111:1-15; Nenni Decl., Ex. J, Maijala Dep., pp. 280:1-281:1, 287:3-14.)

The court therefore finds Mulgrew has not shown that the parties intended to create the subject contractual obligations on the part of Maijala pursuant to the Employee Handbook, such that Mulgrew has not met its burden to prove that element of its cause of action for breach of contract since Mulgrew’s own evidence shows that a triable issue of material fact exists as to whether the parties entered into an agreement. (Miles, supra, 236 Cal.App.4th at p. 402.)

Second, even if Mulgrew had met its burden to prove the existence of a contract between the parties that obligated Maijala to comply with the terms of Mulgrew’s Security provision and Voice Mail, E-Mail, and Computer Files provision, the court finds that Mulgrew has not met its burden to prove that it performed under the terms of the agreement or was excused from its nonperformance because Mulgrew did not address that element in its moving papers. (Miles, supra, 236 Cal.App.4th at p. 402.)

Third, even if Mulgrew had met its burden to prove the existence of a contract, Maijala’s breach, and Mulgrew’s performance or excuse for nonperformance thereunder, the court finds that Mulgrew has not met its burden to prove that it suffered damages as a result of Maijala’s breach because Mulgrew (1) did not present adequate argument and authority addressing this element in its moving papers, and instead has merely stated, in conclusory fashion, that it has been harmed by Maijala’s conduct and that data theft such as the theft allegedly committed by Maijala “can lead to[,]” inter alia, loss of revenue and reputational harm, and (2) did not cite evidence to show that it has suffered damages, such as lost revenues and profits. (Miles, supra, 236 Cal.App.4th at p. 402; Mot., p. 19:3-8 [emphasis added]; Cross-Compl., ¶ 28 [alleging that Mulgrew has suffered damages, including lost revenue and profits, as a result of Maijala’s breach of contract].)

The court therefore denies Mulgrew’s motion for summary adjudication as to the first cause of action for breach of contract.

“[M]isappropriation of a trade secret under the California [Uniform Trade Secrets Act (Civ. Code, § 3426 et seq.) (“UTSA”)] consists of only two elements: (1) existence of a trade secret, and (2) improper acquisition, use, or disclosure of that trade secret.” (Applied Medical Distribution Corp. v. Jarrells (2024) 100 Cal.App.5th 556, 569-570; Civ. Code, § 3426.1, subd. (b) [defining “Misappropriation”].)

The court finds that Mulgrew has not met its burden of showing that there is no defense to the second cause of action for misappropriation of trade secrets because Mulgrew has not proven the element of the existence of a trade secret. (Applied Medical Distribution Corp., supra, 100 Cal.App.5th at pp. 569-570.)

In support of its motion, Mulgrew asserts that Maijala misappropriated the following trade secrets: (1) its customer contacts; (2) its operatory planning, process and procedures, templates and technical data; (3) its customer invoices; (4) the pricing arrangements under which Mulgrew provided services to its customers; (5) its training materials; (6) its notes from customer meetings; and (7) its supply, vendor, customer, and pricing information. (Mot., pp. 14:14-21 [citing material fact numbers 15 and 19], 22:16-20.) The court finds that Mulgrew has not shown that any of the above-described categories of information constitutes its trade secrets.

A trade secret is statutorily defined to mean information that “(1) [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 [¶] (2) [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civ. Code, § 3426.1, subd. (d).) “’In short, the test for a trade secret is whether the matter sought to be protected is information (1) that is valuable because it is unknown to others and (2) that the owner has attempted to keep secret.’” (Amgen Inc. v. Health Care Services (2020) 47 Cal.App.5th 716, 734.)

Mulgrew has submitted the declaration of its President and Chief Executive Officer, Mohammad Houshiar, in which Houshiar has stated the following: “The documents which Maijala removed from Mulgrew on or about October 2, 2019, include trade secrets, including information not generally known to the public, in which Mulgrew has invested substanntial [sic] time, money, and energy to create and maintain, including customer and vendor lists, pricing and pricing methodologies, policy and contractual language, purchase orders which identify vendors, customers, inspections, and processes, information relating to audits, including audits related to quality control, procurement, supplier selection, and delivery, and manufacturing processes, among other information Mulgrew deems confidential.” (Houshiar Decl., ¶¶ 1, 17.) Houshiar has further stated that Maijala took other confidential documents, “several thousand” of which “Mulgrew deems confidential and proprietary, as well as a smaller subset containing trade secrets . . . .” (Houshiar Decl., ¶ 18.) The court finds that this evidence does not show that the documents allegedly taken by Maijala constitute Mulgrew’s trade secrets.

First, the court finds that Houshiar’s assertions in his declaration do not show that the documents allegedly taken by Maijala constitute Mulgrew’s trade secrets because, although Houshiar has stated that this information is “not generally known to the public,” Houshiar did not state facts establishing that this information “[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[.]” (Civ. Code, § 3426.1, subd. (d)(1); Amgen Inc., supra, 47 Cal.App.5th at p. 734.) Mulgrew did not cite any other evidence establishing that this information derives such economic value from not being known to the public.

Second, Houshiar did not state facts establishing that this information “[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civ. Code, § 3426.1, subd. (d)(2).) Houshiar did not describe any efforts undertaken by Mulgrew to maintain the secrecy of any of the seven delineated categories of its alleged trade secrets in his declaration.

The court notes that, in its moving papers, Mulgrew has argued that it required employees to sign a confidentiality and non-disclosure agreement before making this information available and as a condition of employment with Mulgrew. (Mot., p. 23:4-7.) But (1) as set forth above, this provision is in the Employee Handbook, the receipt and acknowledgement of which includes language that the parties did not intend to create a contract pertaining to Maijala’s employment, and (2) even if the court were to find that the Employee Handbook and Employee Handbook Acknowledgement Form created the existence of a non-disclosure agreement as a condition of Maijala’s employment, the court notes that the Employee Handbook did not name its training materials to be the subject of such a non-disclosure agreement, such that Mulgrew has not shown that every category of its trade secrets that it contends that Maijala misappropriated was the subject of reasonable efforts to maintain its secrecy.[2] (Houshiar Decl., Ex. A, Employee Handbook, pp. MACI000080-81; Houshiar Decl., Ex. B, Employee Handbook Acknowledgement Form [nothing contained in the Mulgrew Aircraft Components Employee Handbook or this Acknowledgement Form shall be construed to . . . create any contract pertaining to [Maijala’s] employment”]; Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1454 [“Requiring employees to sign confidentiality agreements is a reasonable step to ensure secrecy”]; Civ. Code, § 3426.1, subd. (d)(2).)

The court also notes that counsel for Mulgrew has stated, in his declaration, that “[t]he documents which Maijala removed from Mulgrew on or about October 2, 2019, appear to include trade secrets, including documents relating to customer lists, vendors, parts, pricing, supplies and procurement, contractual language and internal policy language, manufacturing processes, supplier-selection processes, [and] audits assessing on-time deliveries.” (Nenni Decl., ¶ 18 [emphasis added].) The court finds that this assertion is insufficient to show that the subject documents contain information that derives independent economic value from not being generally known to the public and that is the subject of efforts to maintain its secrecy. (Civ. Code, § 3426.1, subd. (d).) Thus, the court finds that counsel’s declaration does not show that the documents allegedly taken by Maijala constitute Mulgrew’s trade secrets.

The court therefore denies Mulgrew’s motion for summary adjudication as to the second cause of action for misappropriation of trade secrets.

“[U]nfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice . . . .” (Bus. & Prof. Code, § 17200.) “‘To bring a UCL claim, a plaintiff must show either an (1) “unlawful, unfair, or fraudulent business act or practice,” or (2) “unfair, deceptive, untrue, or misleading advertising.” ’” (Adhav v. Midway Rent A Car, Inc. (2019) 37 Cal.App.5th 954, 970.) “Because the UCL is written in the disjunctive, ‘ “it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent.” ’” (Ibid.)

The court finds that Mulgrew has not met its burden of showing that there is no defense to the third cause of action for unfair business practices because Mulgrew has not proven the element of an underlying unlawful business act or practice since (1) Mulgrew has based this cause of action on the allegations that Maijala misappropriated Mulgrew’s trade secrets (Cross-Compl., ¶¶ 40-41) and breached his non-disclosure agreement with Mulgrew (Cross-Compl., ¶ 40), and (2) the court has determined that Mulgrew has not met its burden to prove the elements of its causes of action for breach of contract and misappropriation of trade secrets, such that Mulgrew has not met its burden to show that Maijala engaged in unlawful and unfair business practices in support of this cause of action. (Bus. & Prof. Code, § 17200; Adhav, supra, 37 Cal.App.5th at p. 970; People ex rel. Elliot v. Kaiser Foundation Health Plan, Inc. (2024) 105 Cal.App.5th 1114, 326 Cal.Rptr.3d 458, 468-469 [“In prohibiting unlawful business acts or practices, the UCL borrows rules set out in other laws and makes violations of those rules independently actionable”] [internal quotation marks and citation omitted].)

The court therefore denies Mulgrew’s motion for summary adjudication as to the third cause of action for unfair business practices.

“‘The elements for a claim of unjust enrichment are “receipt of a benefit and unjust retention of the benefit at the expense of another.” [Citation.] “The theory of unjust enrichment requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” [Citation.]’” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769.)

The court finds that Mulgrew has not met its burden of showing that there is no defense to the fourth cause of action for unjust enrichment because Mulgrew has not proven the element of Maijala’s receipt of a benefit and his unjust retention thereof at Mulgrew’s expense. (Lyles, supra, 225 Cal.App.4th at p. 769.)

As a threshold matter, the court notes that Mulgrew appears to base this cause of action on the same facts and theories set forth in connection with its causes of action for breach of contract and misappropriation of trade secrets. (Cross-Compl., ¶¶ 44-45 [incorporating above allegations and alleging that Maijala has been unjustly enriched as a result of his conduct].) Thus, to the extent that Mulgrew has based this cause of action on the allegation that Maijala has misappropriated its trade secrets and therefore has retained the benefit of those trade secrets, the court has found, for the reasons set forth above, that Mulgrew has not met its burden to show that Maijala misappropriated its trade secrets.

Moreover, to the extent that Mulgrew has based this cause of action on the allegation that Maijala unjustly obtained Mulgrew’s confidential and proprietary information, the court notes that such a theory may be separate from and independent of the breach of contract cause of action. But (1) this cause of action also appears to be based on the theory that Maijala misappropriated Mulgrew’s trade secrets, which the court has concluded that Mulgrew has not met its burden to prove, which (2) precludes an order granting summary adjudication in Mulgrew’s favor on this ground because it would not completely dispose of this cause of action. (Code Civ. Proc., § 437c, subd. (f)(1) [“A motion for summary adjudication shall be granted only if it completely disposes of a cause of action . . . .”] [emphasis added].) Thus, the court does not evaluate whether Mulgrew has shown that Maijala unjustly retained the benefit of Mulgrew’s proprietary information.

The court also notes that Mulgrew’s Cross-Complaint requests, as a remedy, “disgorgement of the revenue and profits of such conduct, plus accrued interest” (Cross-Compl., ¶ 45), but that Mulgrew did not present (1) argument and authority explaining its entitlement to disgorgement of profits, and (2) evidence establishing the amounts of such revenue and profits that it contends that it is entitled to recover from Maijala in connection with this cause of action.

The court therefore denies Mulgrew’s motion for summary adjudication as to the fourth cause of action for unjust enrichment.

5. Fifth Cause of Action for Injunctive Relief Pursuant to the Uniform Trade Secrets Act

“Actual or threatened misappropriation [of a trade secret] may be enjoined.” (Civ. Code, § 3426.2, subd. (a).)

The court finds that Mulgrew has not met its burden of showing that there is no defense to the fifth cause of action for injunctive relief pursuant to the UTSA because (1) this cause of action alleges only a claim for relief based on the alleged misappropriation of its trade secrets (Cross-Compl., ¶ 47), and (2) Mulgrew has not met its burden to prove each element of its cause of action for misappropriation of trade secrets for the reasons set forth above, such that it has not shown that it is entitled to injunctive relief pursuant to the UTSA. (Applied Medical Distribution Corp., supra, 100 Cal.App.5th at p. 573 [“A permanent injunction is merely a remedy for a proven cause of action. It may not be issued if the underlying cause of action is not established”] [internal quotation marks and citation omitted].)

The court therefore denies Mulgrew’s motion for summary adjudication as to the fifth cause of action for injunctive relief pursuant to the UTSA.

In his opposition to this motion, Maijala challenges Mulgrew’s prayers for attorney’s fees and punitive damages. The court does not reach these arguments in ruling on Mulgrew’s motion because (1) Mulgrew did not move for summary adjudication on its claim for punitive damages, and (2) these arguments are irrelevant to ruling on Mulgrew’s motion for summary judgment.

The court denies cross-complainant Mulgrew Aircraft Components, Inc.’s motion for summary judgment or, in the alternative, summary adjudication.

[1] On October 28, 2024, the court issued an order exercising its discretion to continue the hearing on this motion because (1) cross-complainant Mulgrew Aircraft Components, Inc. filed a notice of lodging of documents conditionally under seal, but (2) did not file a motion to seal as required. (Oct. 28, 2024 Order, pp. 1:22-2:2, 2:23-3:7.)

[2] Even if the court had concluded that Mulgrew had shown that all the categories of information were subject to reasonable efforts to maintain their secrecy, the court has concluded, as set forth above, that Mulgrew has not submitted evidence showing that the information derives economic value from not generally being known to the public as required. (Civ. Code, § 3426.1, subd. (d)(1).)

david maijala; Plaintiff, vs. mulgrew aircraft components, inc., et al.; Defendants.	Case No.:	21STCV26547

	Hearing Date:	November 26, 2024

	Time:	10:00 a.m.

	[Tentative] Order RE: cross-complainant’s motion for summary judgment or, in the alternative, summary adjudication