Judge: Upinder S. Kalra, Case: 22STCV20515, Date: 2024-05-03 Tentative Ruling
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Case Number: 22STCV20515 Hearing Date: May 3, 2024 Dept: 51
Tentative Ruling
Judge Upinder S.
Kalra, Department 51
HEARING DATE: May
3, 2024
CASE NAME: Win Pont Investment, Inc., et al., v. Scott
Balanda, et al.
CASE NO.: 22STCV20515
DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT
MOVING PARTY: Defendant Scott Balanda
RESPONDING PARTY(S): Plaintiffs Win
Pont Investment, Inc., Excelsior Pre-School LLC, and Excelsior Online Tutoring,
LLC
REQUESTED RELIEF: Grant summary judgment, or in the
alternative, summary adjudication of all causes of action.
TENTATIVE RULING:
Summary judgment is GRANTED.
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
On June 23, 2022, Plaintiffs Win
Pont Investment, Inc. (“Win”), Excelsior Pre-School, LLC (“EPS”), and Excelsior
Online Tutoring (“EOT”) (collectively, “Plaintiffs”) has brought suit against
Defendant Scott Balanda (“Defendant” or “Balanda”) for (1) breach of
confidentiality agreement, (2) breach of duty of loyalty, (3) interference with
contractual relations, (4) interference with prospective economic advantage,
(5) misappropriation of trade secrets, (6) unfair competition (Bus. & Prof.
Code§ 17200 et seq.), and (7) common law unfair competition.
Plaintiffs allege that “[i]n 2020,
Balanda hired Wanda Webster, his roommate and close friend, to work at
Excelsior. Webster was terminated for cause in 2022. Balanda and Webster had been
conspiring with each other to interfere with and disrupt the business of
plaintiff EOT. Balanda and Webster intended to disrupt that company's business
and solicit EOT's employees to work for Balanda's company ALTA or some other
company he and she planned to establish. These plans are hinted at in a May 13,
2022 email Balanda and Webster composed that inadvertently made its way to
corporate management. In that email chain, Webster told the EOT teachers that
the company had shut down group email forwarding and reply on the back end.
However, by the time she had composed her part of the email, Webster had
already been terminated from employment. Accordingly, it is apparent that
Webster learned this company confidential information from defendant Balanda,
who had attended a meeting at which these modifications to employee email usage
rules were discussed. Indeed, the reason why the company had modified employee
email usage rules was precisely to discover the identity of the person or
persons who were behind the false and defamatory emails that were being spread
to the teachers, thus making the teachers concerned and nervous about various
aspects of corporate policy. The modifications in email usage rules ultimately
provided proof that Balanda and Webster were the ones violating company policy
and confidentiality rules in their communications with EOT personnel. Some EOT
teachers, believing the false rumors being spread by Balanda and Webster, began
inundating the company CEO and human resources director with critical, negative
emails; others actually quit the company. These negative communications and
employee resignations would not have happened, but for the false and defamatory
publicity campaign initiated by Balanda and Webster. In addition to the
forgoing, Balanda made extortionate threats to the company CEO, Mr. Li,
demanding payment for maintaining his name on the licensing applications, and
threatening to contact the Child Care Division Office ("CDSS") about
Excelsior's preschool licenses, business licenses and applications. Balanda
also contacted numerous Excelsior teachers to spread falsehoods and rumors
about Excelsior and its business.” (Complaint, ¶14.)
On February 13, 2024, Defendant Balanda
filed the instant motion for summary judgment, or in the alternative, summary
adjudication. Plaintiffs oppose.
LEGAL STANDARD:
Code of Civil Procedure section 437c,
subdivision (a) provides that a “party may move for summary judgment in any
action or proceeding if it is contended that the action has no merit or that
there is no defense to the action or proceeding.” The motion shall be granted
if there is no triable issue as to any material fact and the moving party is
entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).)
Subdivision (p)(2) of the same section provides that where a defendant presents
evidence showing one or more elements of a cause of action cannot be
established, then the burden shifts to plaintiff to show the existence of a
triable issue of material fact. (See Blue
Shield of California Life & Health Insurance Co. v. Superior Court (2011)
192 Cal.App.4th 727, 732.)¿
The moving party’s burden on summary
judgment “is more properly one of persuasion
rather than proof, since he must persuade the court that there is no
material fact for a reasonable trier of fact to find, and not to prove any such fact to the satisfaction
of the court itself as though it were sitting as the trier of fact.” (Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 850 fn.11, original italics.)
EVIDENTIARY OBJECTIONS
Plaintiffs’:
Other than listed below, the court deems the objections to
evidence are not material to disposition of the motion. (CCP § 437c(q).)
38-43 OVERRULED
Defendant’s:
Other than listed below, the court deems the objections to
evidence are not material to disposition of the motion. (CCP § 437c(q).)
2-6, 8-12,14-16 SUSTAINED
17 OVERRULED
18 OVERRULED
ANALYSIS:
Defendant Balanda
argues that there is no evidence in this case showing that he has taken any
confidential information or conveyed it to anyone, has interfered in any
economic relationship, has engaged in any competition with Plaintiffs, or that
he has breached any duty of loyalty to Plaintiffs. The crux of Plaintiffs’
Complaint is that Balanda conspired with Webster to interfere with and disrupt
the business of Plaintiff EOT and that Webster learned confidential information
from Balanda as shown in a May 13, 2022 email. (Complaint, ¶14.) This is the
underlying basis for each cause of action.
As
evidence, Balanda provides his own declaration stating, in relevant part, the
following: “I never conspired with Wanda Webster or with anyone to interfere
with or disrupt any of the plaintiffs’ business. I never conspired with Wanda
Webster or with anyone to solicit plaintiffs’ employees. I never solicited any
of plaintiffs’ employees, including plaintiff’s teachers, to work for me, for
ALTA, or for anyone. I never asked anyone to solicit any of plaintiffs’
employees. ALTA ceased operations when I was hired by plaintiffs and has not
conducted any business since. I never sent critical e-mails regarding the
Plaintiffs to any of their employees or to anyone. ALTA focused on ESL
university programs. Therefore, the teachers it required had a different
experience, qualifications and training from those that worked in plaintiffs’
on-line tutoring program. Other than a bulk email to the teachers informing
them that I resigned, I did not contact the teachers for any purpose after my
constructive termination. At no time did I tell the teachers, or any of
Plaintiffs’ employees, to leave their employment with the Plaintiffs or to
disparage the Plaintiffs in any way. I never planned to establish any competing
company with plaintiffs. I never planned to establish any company with Wanda
Webster. I never counseled or persuaded anyone to breach any contract with
plaintiffs. I never counseled or persuaded anyone to breach or alter their
contract with plaintiffs. I never counseled or persuaded anyone to alter their
relationship with plaintiff. I never used any of plaintiffs' confidential
and/or trade secret information for any purpose other than during my employment
with plaintiffs. I do not have any confidential and/or trade secret information
belonging to the plaintiffs in my custody, possession and control. I have not
had access to any such confidential and/or trade secret information since I
left plaintiffs' employment. I did not remove from plaintiffs any confidential
and/or trade secret information. In particular, I did not remove from
plaintiffs their future plans regarding planned growth in the preschool
education space. I did not disclose plaintiffs' confidential and/or trade
secret information to anyone. Since my termination of employment with
plaintiffs, I have not been employed by any educational organization nor
engaged in any activities related to education of any age level. I do not
presently compete with plaintiffs, nor have I ever competed with plaintiffs or
engaged in any activity adverse to them in any way since I left plaintiff:
employment.” (Balanda Decl., ¶¶28-38.)
Balanda
also provides the declaration of Webster stating, in relevant part, the
following: “I never conspired with Scott Balanda to interfere with or disrupt
any of the Plaintiffs' business. I never had any conversations with Scott
Balanda about anyone interfering with or disrupting any of the Plaintiffs'
business. I never planned to establish any company with Scott Balanda. I never
had any conversations with Scott Balanda about establishing any company
together or about him establishing any company. I never had any conversations
with Scott Balanda about doing anything to compete with the Plaintiffs. I never
solicited any of Plaintiffs' employees to go to work for ALTA, Scott Balanda,
any company to be formed by me, or for anyone. I never sent critical e-mails
regarding the Plaintiffs to any of their employees or to anyone. Subsequent to
my termination, I e-mailed the online instructors who reported to me to notify
them that I would be leaving, to assure continuity in operations after my
departure. The instructors' e-mail addresses were in my address book since I
was communicating with them continuously on a daily basis. At no time did I
tell the instructors to leave their employment with Excelsior or the Plaintiffs
or to disparage Excelsior or the Plaintiffs in any way. I expressly instructed
the teachers to be respectful of the company, even though some of them were
unhappy.” (Webster Decl., ¶¶8-9.)
Defendant Balanda also shows that Plaintiffs never
responded to discovery which asked them to identify the facts that support
their claims against Balanda and to identify confidential information and trade
secrets they alleged were misappropriated by him. (Baranov Decl., ¶¶2-3, Exh.
A.)
Based on this evidence, the Court finds that Defendant
has met his initial burden to show that he did not conspire to interfere with
and disrupt the business of Plaintiff EOT and he did not tell Webster any
confidential information or trade secrets.
Now the burden shifts to Plaintiffs to create a triable
issue. In opposition, Plaintiffs provide the declaration of Jason Li, Balanda’s
non-disclosure agreement and employment agreement, and the May 13, 2022 email
chain.
The declaration of Jason Li is for the most part argument
and conjecture rather than evidence. Li states that “[d]uring Webster’s
employment, she and Balanda communicated in a May 13, 2022 email chain that
apparently inadvertently made its way to corporate management . . . The email
chain indicates that Balanda and Webster had been conspiring with each other to
interfere with and disrupt the business of Plaintiff EOT and solicit EOT’s
employees to work for Balanda’s company ALTA or some other company he and
another employee, Wanda Webster, planned to establish. In that email chain,
Webster told the EOT teachers that the company had shut down group email
forwarding and reply on the back end. However, by the time she had composed her
part of the email, Webster had already been terminated from employment. Webster must have learned this company
confidential information from defendant Balanda, who had attended a meeting at
which these modifications to employee email usage rules were discussed.” (Li
Decl., ¶¶9-10.) Essentially, Plaintiffs’ entire case is premised upon the May
13, 2022 email chain, which is attached as Exhibit 2 to Li’s declaration.
The court
has reviewed the email chain and the only reasonable reading of it is that Webster
is saying she was fired and farewell. To suggest this email is evidence of a
conspiracy to set up a competitor and steal Plaintiffs’ workers, customers, and
trade secrets is sheer speculation, at best. The closest thing to hiring
workers is the solicitation by Leela Miller that she is “hiring talented
folks.” However, there is no evidence that Defendant Balanda encouraged any
employee to apply or was played any role in this solicitation. (Li Decl., Exh.
2.)
Further,
according to Li’s declaration, the alleged trade secret that Balanda told
Webster is that the company had shut down group email forwarding and reply on
the back end. (Li Decl., ¶9.) Even assuming that the shut down in the group
email forwarding is a “trade secret”, there is no evidence that Defendant
Balanda told Webster this. Plaintiffs’ belief to the contrary is not evidence,
but rather, once again, speculation.
There is no
other direct or circumstantial evidence presented that Balanda conspired to interfere
with and disrupt the business of Plaintiff EOT and that he told Webster
confidential information or trade secrets. Accordingly, Plaintiffs have failed
to present evidence creating a triable issue of material fact.
Therefore, the motion for summary
judgment is GRANTED.
CONCLUSION:
For the foregoing reasons, the
Court decides the pending motion as follows:
The motion for summary judgment is GRANTED.
Moving party to give notice.
IT IS SO ORDERED.
Dated: May 3, 2024 ___________________________________
Upinder
S. Kalra
Judge
of the Superior Court