Judge Stephen I. Goorvitch, Case 21STCV22561 2023-02-06 Tentative Ruling

Judge: Stephen I. Goorvitch, Case: 21STCV22561, Date: 2023-02-06 Tentative Ruling

Case Number: 21STCV22561 Hearing Date: February 6, 2023 Dept: 39

Steven Blain v. NTT America, Inc., et al.

Case No. 21STCV22561

Motion to Uphold Confidential Designations

BACKGROUND

Plaintiff Steven Blain (“Plaintiff”) filed this action under the Private Attorneys General Act of 2004 (“PAGA”) against NTT America, Inc. (“Defendant”). Plaintiff alleges that Defendant deprived employees of commissions by imposing a 90-day deadline to report any errors in how commissions were calculated. Similarly, Plaintiff alleges that Defendant deprived employees of reimbursement for business expenses by imposing a 90-days deadline to file a claim. Now, Defendant moves to uphold confidential designations of its compensation plan documents, which Plaintiff opposes. The motion is granted in part and denied in part.

LEGAL STANDARD

The parties stipulated to a protective order, which defines confidential materials as “any Documents, Testimony, or Information which is in the possession of a Designating Party who believes in good faith that such Documents, Testimony, or Information is entitled to confidential treatment under applicable law.” (Stipulation and Protective Order, p. 2, ¶ 1(c).) Defendant argues that its compensation plan documents are trade secrets. Per Civil Code section 3426.1, “Trade secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives 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) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civ. Code, § 3426.1.)

DISCUSSION

Defendant proffers evidence that its compensation plan documents “contain Defendant’s proprietary information not generally known to the public, including how Defendant sells particular services to its clients; the terms and policies applicable to Defendant’s clients; the terms and policies applicable for each of Defendant’s employee’s job profile; how it incentivizes and prioritizes sales of particular services by the structure of its sales employee incentives; its sales strategy and sales processes; its internal resources including proprietary internal websites and software tools used by its employees to facilitate the sales process and to administer compensation for sales employees; and Defendant’s internal business processes, procedures, and policies.” (Declaration of Rebecca Talley, ¶ 5.) Defendant also advances evidence that it marks its compensation plans as for internal use only. (Declaration of Rebecca Talley, ¶ 7.) This evidence satisfies Defendant’s burden of demonstrating that it “believes in good faith” that its compensation plan is a trade secret.

Plaintiff argues that Defendant’s compensation plan has been in the public domain for almost two years. Plaintiff argues that he attached a copy of “FY20 NTT America Sales Compensation Plan for US Client Specialist, Client Manager, Client Director” to his complaint, and Defendant neither objected nor moved to seal that document. However, Defendant’s counsel represents that this document is not at issue. Rather, Defendant’s motion concerns other compensation documents, which were Bates Numbered NTT000443 to NTT001766.

Plaintiff argues that compensation plans are exempt from confidentiality designations as a matter of law. Plaintiff cites Labor Code section 232(a), which prohibits an employer from requiring, as a condition of employment, that an employee refrain from disclosing the amount of his or her compensation. Plaintiff cites Labor Code section 232(b), which prohibits employers from requiring employees to sign waivers or other documents that purport to deny the employee the right to disclose the amount of his or her wages. Plaintiff cites cases recognizing that employees have a right to disclose compensation and argues that “public policy in California favors activities of employees to seek mutual aid and protection, including discussion of their pay and structure of their compensation.” Plaintiff argues that “[i]f compensation plans are subject to confidentiality requirements, employees would not be permitted to discuss their pay structure with anyone other than their employer.” (Plaintiff’s Opposition, p. 7:11-12.)

The Court does not interpret the protective order and Defendant’s motion from seeking to preclude Plaintiff from discussing his compensation based upon his independent knowledge from having worked at the company. To the extent Defendant seeks to do so, the motion is denied. The protective order does not prevent Plaintiff from discussing his compensation based upon his own personal knowledge or sources independent of the documents at issue.

Rather, this motion seeks to maintain the confidentiality of the documents (Bates numbered NTT000443 to NTT00176) and their contents. The motion is granted in this respect. The Labor Code does not preclude the Court from issuing a stipulated protective order in a wage and hour case. The language of section 232 is clear: “No employer may . . . [r]equire, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages [or] [r]equire an employee to sign a waiver . . . deny[ing] the right to disclose the amount of his or her wages.” (Lab. Code, § 232(a) & (b).) The plain language relates to a non-litigation context, as it merely prohibits employers from “requiring” employees to maintain the confidentiality of their wages “as a condition of employment.” “If there is no ambiguity in the plain language of a statute, a court presumes the lawmakers meant what they said, and the plain meaning of the language governs.” (Allen v. Sully-Miller Contracting Co. (2002) 28 Cal.4th 222, 227, 120 Cal.Rptr.2d 795, 47 P.3d 639.)

Even if the Court were to look beyond this plain language, the law and underlying public policy cited by Plaintiff relate to employees in a non-litigation setting. Plaintiff cites no case prohibiting the Court from issuing a stipulated protective order in a wage and hour case. In fact, there are rational reasons to treat litigation differently. For example, in an employment setting, an employer may decide how much information to disclose to employees concerning how their wages are calculated and thus has the option of maintaining the confidentiality of certain information. By contrast, in wage and hour litigation, the employer often is compelled to disclose information in discovery.

Regardless, Plaintiff overlooks a critical fact in this case: Plaintiff voluntarily agreed to a protective order that defines confidentiality broadly to include any document that Defendant “believes in good faith . . . is entitled to confidential treatment under applicable law.” Plaintiff was not required to agree to this protective order. But in doing so, Plaintiff is bound by its terms, having waived any rights to the contrary.

Finally, Plaintiff argues that the compensation documents are not actually trade secrets. That is not the issue. Rather, the issue is whether Defendant believes in good faith that the documents are trade secrets. The Court cannot conclude otherwise, given the nature of the documents and the broad definition of a trade secret.

CONCLUSION AND ORDER

Based upon the foregoing, the Court orders as follows:

1. Defendant’s motion is granted in part and denied in part.

2. Defendant’s motion is denied to the extent Defendant seeks to preclude Plaintiff from discussing his compensation based upon his own personal knowledge or sources independent of the documents at issue.

3. Defendant’s motion is granted with respect to the underlying documents, which shall be treated as confidential under the parties’ protective order.

4. Defendant’s counsel shall provide notice and file proof of such with the Court.