By:       Lizbeth V. West, Esq.

Robert v. Board of County Commissioners of Brown County, Kansas, et. al. (10th Cir. Aug. 29, 2012) No. 11-3902

The job description for Robert’s job as a supervisor of felony offenders included 18 “essential functions.”   Some of those included functions like performing drug screenings, ensuring compliance with court orders, testifying in court, and “field work,” which consisted of visiting the homes of individuals who had been released from prison to assist them in their reentry into society. The job required “considerable fieldwork . . . throughout the 22nd Judicial District," "visits in less than desirable environments," and "potentially dangerous situations in field/office contacts."

Continue Reading Is Leave Required As An Accommodation If It Is Unclear If The Employee Will Be Able To Perform The Job In The Near Future?

By:       James Kachmar

Readers of this blog will note that we frequently remind them that California law generally prohibits non-compete agreements. There are very limited exceptions to this general rule, one being that the seller of goodwill in a business can be bound by a valid non-compete agreement to protect the goodwill that is being purchased. Sometimes, the buyer of a company will want to continue to employ certain key employees, who can also be the sellers of the goodwill of the former company.   We have seen instances where the purchasing company gets creative and subjects the seller/key employee to two covenants not to compete, one in the purchase agreement and the other in an employment agreement.   Last week, a California appellate court shut the door on this approach in the case Fillpoint, LLC v. Maas.

Continue Reading Another Door Closes on Non-Compete Agreements

          Readers of this blog will note our frequent reminders that preemption under California’s Uniform Trade Secret Act (“CUTSA”) can threaten other common law claims if not properly pled.  A recent decision out of the Eastern District of California in Hat World, Inc. v. Kelly, 2012 U.S. Dist. Lexis 113060 (Aug. 10, 2012) reinforces this position. 

           In Hat World, the plaintiff-company sued a former employee claiming that he misappropriated trade secret information when he left his employment to join a competitor, including customer lists, purchase orders, invoices and spreadsheets.  In addition to a claim under CUTSA, plaintiff sued its former employee for common law trade secret misappropriation, unfair competition, conversion, intentional interference with contractual relations and prospective economic relations, breach of contract and violation of the computer Fraud and Abuse Act.  The defendant filed a motion to dismiss many of plaintiff’s claims on the grounds of CUTSA preemption. 

           Preemption under CUTSA arises because the Legislature enacted a “comprehensive structure” with regard to trade secret misappropriation that was intended to “occupy the field” with respect to common law trade secret misappropriation claims.  CUTSA is intended to provide the sole civil remedy for trade secret misappropriation under California law and thus preemption applies “to all common law claims that are `based on the same nucleus of facts as the misappropriation of trade secret claim.’”  (Citing K.C. Multimedia, Inc. v. Bank of America Tech. & Operations, Inc., (2009) 171 Cal.App.4th 939.)  There are three exceptions to CUTSA preemption: (1) claims based on contractual remedies; (2) other civil remedies not based on trade secret misappropriation; and (3) criminal remedies.

           In bringing his motion to dismiss, the former employee argued that plaintiff’s claims for common law trade secret misappropriation, interference with contractual relations and prospective economic relations and conversion were all based on the “same nucleus of facts” underlying the CUTSA trade secret misappropriation claim.  Plaintiff sought to avoid preemption of these claims by stating that in addition to containing allegations regarding trade secrets, they also alleged other wrongful conduct such as the “unlawful solicitation of Hat World customers and employees” and “unlawful conversion of purchase orders for Hat World products.” 

           Nevertheless, the Court agreed with the defendant employee and found that because it appeared that all of these claims seemed to be based in some part on the misappropriation of trade secrets, they were preempted under CUTSA and had to be dismissed.  However, the Court ruled that because it was possible that some of the claims could be alleged based on facts different from those underlying trade secret misappropriation, the Court granted plaintiff an opportunity to amend the complaint to avoid preemption.

           The Hat World ruling reminds attorneys that they need to be careful in drafting complaints asserting trade secret misappropriation and other common law claims to avoid preemption.  Attorneys should include language making clear that the common law claims have a factual basis separate from that underlying a CUTSA claim.  Otherwise, that attorney’s client faces the prospect of having its claims dismissed because of preemption and/or incurring additional fees in having to amend the complaint.

By:James Kachmar

As this blog frequently reminds its readers, California state courts take a hard look at arbitration agreements in the employment context. The recent case: Sparks v. Vista Del Mar Child & Family Services, from the Second Appellate District of California provides additional support for why employers need to be extra careful in establishing enforceable arbitration provisions.

Continue Reading Employers: Relying on an Arbitration Provision In Your Employee Handbook May Not Protect You

While the bulk of trade secret litigation focuses on civil claims and remedies, an article from last week’s Chicago Tribune is a reminder that stealing trade secrets can have serious consequences. The Chicago Tribune story (link here: http://www.chicagotribune.com/business/breaking/chi-chinese-engineer-to-be-sentenced-for-stealing-motorola-secrets-20120719,0,1594304.story) reports that the sentencing for a software developer caught with taking Motorola, Inc.’s trade secrets will be postponed until next month. The developer was boarding a plane to China when she was arrested and found to have taken 1,000+ confidential documents concerning a walkie talkie type feature on Motorola cell phones. Federal prosecutors argued that this technology would benefit the Chinese military. The developer could face up to 30 years in federal prison as a result of this trade secret theft.

Under California law, the theft of trade secrets can be a felony punishable by up to one year in prison and/or by a fine not exceeding $5,000. (See Cal. Penal Code §499(c).) Importantly, it is no defense for a prosecution of the theft of trade secret theft that the person returned or intended to return the trade secrets to the proper owner.

Thus, owners of trade secrets who are the victims of misappropriation are reminded that there is a wide range of remedies available to them, including possible criminal prosecution.