Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-02403/USCOURTS-cand-3_13-cv-02403-9/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1332 Diversity-Account Receivable

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ATS PRODUCTS, INC.,

 Plaintiff,

v.

CHAMPION FIBERGLASS, INC.,

 Defendant.

Case No. 13-cv-02403-SI 

ORDER GRANTING IN PART MOTION 

TO DISMISS AND DENYING MOTION 

TO STRIKE

Re: Dkt. Nos. 78, 79

Several motions are scheduled for a hearing on January 16, 2015. Pursuant to Civil Local 

Rule7-1(b), the Court determines that the matters are appropriate for resolution without oral 

argument, and VACATES the hearing. For the reasons set forth below, the Court GRANTS IN 

PART the motion to dismiss the third amended complaint, and DENIES the motion to strike. The 

Court will issue a separate order regarding the pending discovery disputes.

I. DEFENDANT'S MOTION TO DISMISS

Defendant moves to dismiss all of the claims alleged in the third amended complaint. For the 

reasons set forth in the Court's prior order, the Court concludes that plaintiff has stated a claim for 

misappropriation by acquisition.1 

The Court agrees, however, that plaintiff's claims for conspiracy to misappropriate trade 

 

1

 Plaintiff's claim for misappropriation by acquisition is based in part on allegations that 

Champion was in privity with the Ghiorso defendants, that the Ghiorso judgment has collateral 

estoppel effect in this case, and that Champion was bound by the Ghiorso injunction. The Court 

finds that plaintiff may pursue the claims (or requests) for declaratory and injunctive relief in 

connection with the claim for misappropriation by acquisition. Whether Champion was in fact in 

privity with the Ghiorso defendants, or whether the judgment and injunction in that case are 

binding on Champion, present factual questions that are not appropriate for resolution at this stage.

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United States District Court

Northern District of California

secrets, receipt of stolen property, and aiding and abetting are preempted by the California 

Uniform Trade Secrets Act ("CUTSA"), Cal. Civ. Code §§ 3426-3426.11. The CUTSA states that 

it supersedes other civil remedies based on trade secret misappropriation. See Cal. Civ. Code 

§ 3426.7(b)(2) (“This title does not affect . . . [o]ther civil remedies that are not based upon 

misappropriation of a trade secret.”). Courts have consistently held that the CUTSA "preempts 

common law claims that are 'based on the same nucleus of facts as the misappropriation of trade 

secrets claim for relief.'" K.C. Multimedia, Inc. v. Bank of America Technology & Operations, 

Inc., 171 Cal. App. 4th 939, 958 (2009) (quoting Digital Envoy, Inc. v. Google, Inc., 370 F. Supp. 

2d 1025, 1035 (N.D. Cal. 2005) (holding CUTSA preempted claims for unfair competition and 

unjust enrichment); see also NetApp, Inc. v. Nimble Storage, Inc., ___ F.Supp.2d ___, 2014 WL 

1903639, at *17 (N.D. Cal. May 12, 2014) (trespass to chattel and unfair competition claims 

preempted); Callaway Golf Co. v. Dunlop Slazenger Group Americas, Inc., 318 F. Supp. 2d 216, 

219-220 (D. Del. 2004) (applying California law and holding claims for conversion and unjust 

enrichment preempted); AccuImage Diagnostics Corp v. Terarecon, Inc., 260 F. Supp. 2d 941, 

953 (N.D. Cal. 2003) (common law misappropriation of trade secret claim preempted). 

Here, the claims for conspiracy, receipt of stolen property, and aiding and abetting are all based on 

the same nucleus of facts as the misappropriation by acquisition claim. Each of those claims stems 

out of plaintiff's allegations that Champion knew that various third parties had to use plaintiff's 

trade secrets to make their resins, and that with this knowledge, Champion agreed to purchase 

resin from those third parties. The Court agrees with the reasoning of the cases cited above, and 

holds that these claims are preempted by the CUTSA. See also RSPE Audio Solutions, Inc. v. 

Vintage King Audio, Inc., No. CV 12–06863 DDP (PJWx), 2013 WL 100178, at *2-3 (C.D. Cal. 

Jan. 7, 2013) (holding CUTSA preempted claims for intentional interference with prospective 

economic advantage, unfair business practices, and aiding and abetting misappropriation of trade 

secrets). 

ATS does not dispute that these claims arise out of the same nucleus of facts as the 

misappropriation claim. Instead, with regard to the conspiracy claims, ATS urges the Court to 

follow Powell Products, Inc. v. Marks, 948 F. Supp. 1469 (D. Colo. 1996), which held that 

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Colorado's Uniform Trade Secrets Act did not preempt a claim for civil conspiracy. However, as 

the California Court of Appeal noted in K.C. Multimedia, the uniform statute adopted in Colorado, 

only preempts common law claims that "conflict" with its 

provisions. (Powell Products, Inc. v. Marks, at p. 1474.)

California has rejected that particular provision of the 

uniform act in favor of an entirely different one. (§ 3426.7, subd. 

(a).) “Typically, when a Legislature models a statute after a uniform 

act, but does not adopt the particular language of that act, courts 

conclude the deviation was deliberate and that the policy of the 

uniform act was rejected.” (Hughes Electronics Corp. v. Citibank 

Delaware (2004) 120 Cal.App.4th 251, 258, 15 Cal.Rptr.3d 244.) 

Thus, to the extent that other states' statutes conform to the uniform 

version of section 7, subdivision (a), which California has rejected, 

decisions interpreting that provision are not persuasive in construing 

California's unique statute.

K.C. Multimedia, 171 Cal. App. 4th at 956. The K.C. Multimedia court went on to adopt the 

"broad view" of CUTSA preemption articulated by the federal district courts in Digital Envoy, 

AccuImage, and Callaway Golf, under which common law claims arising out of the same nucleus

of facts as a misappropriation claim are preempted. 

Plaintiff also argues that the claims at issue are not preempted because they are based on

federal criminal statutes. However, plaintiff does not have standing to prosecute a violation of the

criminal statutes cited in the TAC. See 18 U.S.C. § 1836(a) (Attorney General may file civil 

action to enjoin theft of trade secrets under 18 U.S.C. § 1832); 19 U.S.C. §§ 1330-1337 (setting 

out United States International Trade Commission's authority to investigate and regulate unfair 

import trade practices).

Plaintiff contends that the claim for receipt of stolen property is not preempted because it is 

based on California Penal Code § 496, and the CUTSA states that it does not affect "criminal 

remedies, whether or not based upon misappropriation of a trade secret." Cal. Civ. Code 

§ 3426.7(b). However, plaintiff's claim for receipt of stolen property does not seek criminal 

remedies under § 496 (plaintiff does not have standing to do so), but instead seeks civil remedies 

pursuant to California Penal Code § 496(c). TAC ¶ 88. The CUTSA states that civil remedies are 

not preempted if they "are not based upon misappropriation of a trade secret." Here, plaintiff 

seeks civil remedies for the receipt of stolen trade secrets, and thus this claim is preempted.

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Plaintiff requests further leave to amend in the event that any claims are dismissed. The 

Court finds that plaintiff has not demonstrated good cause for further leave to amend. Plaintiff 

does not identify any new facts it wishes to allege in a new complaint. This case was filed in May 

2013, and plaintiff has now filed four different versions of the complaint. Discovery has been 

stalled because the pleadings have not been settled. Permitting plaintiff to file another amended 

complaint will cause further delay, and the Court finds that such delay would be prejudicial to 

defendant. Accordingly, the Court exercises its discretion and DENIES leave to amend. See 

Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (court may deny leave to amend 

where amendment would cause undue delay or prejudice).

II. DEFENDANT'S MOTION TO STRIKE 

Defendant's motion to strike repeats many of the same arguments as the motion to dismiss. 

To the extent defendant's motion contends that certain allegations are conclusory -- such as the 

allegations that Thermalguard material specifications are ATS' trade secrets -- the Court disagrees 

and finds the allegations sufficient. In light of the disposition of the motion to dismiss, the Court 

DENIES the balance of the motion to strike.

IT IS SO ORDERED.

Dated: January 15, 2015

______________________________________

SUSAN ILLSTON

United States District Judge

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