Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_19-cv-01544/USCOURTS-caed-2_19-cv-01544-6/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 18:1836(a) Injunction against Misappropriation of Trade Secrets

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

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ZOOM IMAGING SOLUTIONS, INC.,

Plaintiff,

v.

EDWARD ROE; MAXWELL RAMSAY; JON 

CROSSEN; CORINNE FUEREST; ANDREW 

ALSWEET; KEVIN TOON; JASON 

PEEBLER; ABIGAIL NEAL; POWER 

BUSINESS TECHNOLOGY, LLC; BRYAN 

DAVIS; MAURA LOPEZ; JEFFREY 

ORLANDO; JESSICA HINTZ, and DOES 

1 through 100, inclusive,

Defendant.

No. 2:19-cv-01544 WBS KJN

ORDER RE: DEFENDANTS’ MOTION 

TO DISMISS

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In its Order of November 8, 2019, this court dismissed, 

and gave leave to amend, plaintiff’s claims for breach of 

contract, breach of implied covenant of good faith and fair 

dealing, misappropriation of trade secrets under state and 

federal law, intentional interference with contractual relations, 

violation of California’s Unfair Competition Law (“UCL”), and 

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violation of the Computer Fraud and Abuse Act. (Docket No. 23 at 

27-28.) 

Plaintiff subsequently filed a First Amended Complaint

(“FAC”) containing the following eleven causes of action: (1) 

breach of contract against Roe pursuant to the 2017 Executive 

Agreement; (2) breach of contract against all defendants pursuant 

to the 2018 Employee Handbook; (3) breach of contract against 

Roe, Crossen, and Lopez pursuant to the 2013 Employee Handbook; 

(4) breach of the implied covenant of good faith and fair 

dealing; (5) violation of the California Uniform Trade Secrets 

Act (CUTSA), Cal. Civ. Code § 3426 et seq.; (6) violation of the 

Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836; (7) 

intentional interference with contractual relations; (8) 

violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030;

(9) breach of fiduciary duty; (10) breach of the duty of loyalty;

and (11) unfair business practices under California’s Unfair 

Competition Law, Cal. Bus. & Prof. Code § 17200, et seq. (Docket 

No. 61 (“FAC”).) 

Defendants now move to dismiss all claims of the FAC, 

except claims (8), (9), and (10).1 (Docket No. 68.) 

 

1 In its previous order, the court found that plaintiff 

adequately pleaded causes of action for breach of fiduciary duty 

and breach of the duty of loyalty against Roe. (Docket No. 53 at 

20, 22.) The court, however, dismissed plaintiff’s Computer 

Fraud and Abuse Act claim because plaintiff did not allege that 

defendants did not have authorized access to the information they 

allegedly misappropriated. (Docket No. 53 at 25-26.) In its FAC, 

plaintiff now alleges that defendants accessed the systems 

“without permission, in excess of their authorized scope.” (FAC 

¶ 256.) The allegations suffice to remedy the deficiencies in 

the original complaint and defendants do not contest that they 

do. 

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I. Breach of Contract (Counts One, Two, and Three)

In the original complaint, plaintiff alleged one breach 

of contract claim, wherein plaintiff included violations of three 

distinct agreements by multiple defendants, none of whom were 

parties to all three agreements. The court dismissed plaintiff’s 

claim for failure to comply with Rule 10 of the Federal Rules of 

Civil Procedure and instructed plaintiff to allege a separate 

count for each breach of contract claim and to identify the 

defendants and the provisions each defendant violated. (Docket 

No. 53 at 5-7.)

The FAC now alleges three separate breach of contract 

claims. The first claim alleges Roe’s violation of the noncompete and non-solicitation provisions of the 2017 Executive 

Agreement (Count One). (FAC ¶ 60.) The second claim alleges all 

defendants’ violations of the 2018 Employee Handbook’s

“Confidentiality Obligation Policy” (Count Two). (FAC ¶ 74.) 

Finally, the third claim alleges Roe, Crossen, and Lopez’s breach 

of the 2013 Employee Handbook’s prohibitions on unauthorized 

disclosure, use, and removal from company premises of Zoom’s 

confidential information (Count Three). (FAC ¶ 159.) As 

instructed by the court, plaintiff has separated each breach of 

contract claim, and has identified the breaching defendants and 

the specific provisions breached. Plaintiff has thus remedied 

the defects in the original complaint. Accordingly, the court 

will not dismiss Counts One, Two, and Three of the FAC.

II. Breach of Covenant of Good Faith and Fair Dealing (Count 

Four)

In its previous order, the court dismissed plaintiff’s 

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breach of covenant of good faith and fair dealing for failure to 

identify the specific contractual provision that was frustrated

by the defendants’ actions. (Docket No. 53 at 7-8.) 

Once again, the complaint does not identify the

specific provisions frustrated by defendants’ actions. Plaintiff 

alleges that defendants failed “to make reasonable efforts to 

perform his obligations under . . . the agreements in Paragraphs 

59-72, 73-80, and 158-164.” (FAC ¶ 197.) Those paragraph ranges 

do not refer to specific provisions. For example, from Paragraph 

59 to Paragraph 72, only Paragraph 60 includes contractual 

provisions. Paragraph 60 itself then includes two provisions. 

Again, “[t]he court must dismiss plaintiff’s claim because it 

fails to identify the specific contractual provision frustrated 

by defendants’ conduct.” (Docket No. 53 at 7-8 (citing Ahmadi v. 

United Cont'l Holdings, Inc., No. 1:14-CV-00264-LJO, 2014 WL 

2565924, at *6 (E.D. Cal. June 6, 2014); Plastino v. Wells Fargo 

Bank, 873 F. Supp. 2d 1179, 1191 (N.D. Cal.2012); Perez v. Wells 

Fargo Bank, N.A., No. C-11-02279 JCS, 2011 WL 3809808, at *18 

(N.D. Cal. Aug. 29, 2011)).) Accordingly, the court will dismiss 

Count Four of the FAC.

III. Misappropriation of Trade Secrets in Violation of CUTSA and 

DTSA (Counts Five and Six)

In its previous order, the court dismissed plaintiff’s 

state and federal law claims for misappropriation of trade 

secrets because the complaint did not sufficiently identify the 

trade secrets at issue. (Docket No. 53 at 11-12.) 

The FAC now specifically alleges that defendants

misappropriated “[1] Zoom’s customer list consisting of key 

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customer contact information and the amounts and frequency of 

their purchases from Zoom’s business . . . ; [2] the underlying 

costs, profit margins, and pricing information, for equipment and 

services sold to Zoom’s customers by Zoom; [3] Zoom’s employee’s 

costs, including the rates and amounts of insurance premiums, 

salary history and information of Zoom’s employees . . . ; [4] 

the duration and expiration dates of service contracts sold and 

service by Zoom; and [5] the specific costs and prices of 

maintenance services within the financed loan amounts for Zoom 

equipment sold to customers.” (FAC ¶ 213.) 

These new allegations sufficiently allege the existence 

of trade secrets. Cf. Ikon Office Sols., Inc. v. Rezente, No. 

2:10-1704 WBS KJM, 2010 WL 5129293, at *2 (E.D. Cal. Dec. 9, 

2010) (finding allegations of misappropriated customer lists to 

suffice at the motion to dismiss stage). The allegations 

“describe the subject matter of the trade secret with sufficient 

particularity . . . and permit[] the defendant to ascertain at 

least the boundaries within which the secret lies.” Alta 

Devices, Inc. v. LG Elecs., Inc., 343 F. Supp. 3d 868, 881 (N.D. 

Cal. 2018); see also Imax Corp. v. Cinema Techs., Inc., 152 F.3d 

1161, 1164 (9th Cir. 1998). Because plaintiff has thus remedied 

the defect in the original complaint, the court will not dismiss 

Counts Five and Six of the FAC.

IV. Intentional Interference with Contractual Relations (Count 7)

In evaluating plaintiff’s claim for intentional 

interference with contractual relations, the court found that 

“[p]laintiff’s allegations sufficiently plead wrongful conduct 

distinct from the alleged misappropriation of trade secrets.” 

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(Docket No. 53 at 16.) The court thus concluded that plaintiff’s 

claim was not preempted by the CUTSA. (Id.; see also Ikon, 2010 

WL 5129293, at *4 (“Because this allegation arises from facts 

different from the claim of misappropriation of trade secrets, 

the claim is not preempted by CUTSA.”).) The court nonetheless 

dismissed plaintiff’s claim because the complaint did not allege 

actual breach or disruption of the contractual relationships at 

issue. (Docket No. 53 at 17 (citing Walters v. Fid. Mortg. of 

Cal., 730 F. Supp. 2d 1185, 1210 (E.D. Cal. 2010).)

The FAC now alleges that “at least 74 Zoom customers 

have cancelled their agreements with Zoom.” (FAC ¶ 249.) The 

FAC therefore now sufficiently pleads a claim for intentional 

interference with contractual relations. (See Docket No. 53 at 

16-17 (finding that the complaint satisfies all other elements of 

the cause of action).) Accordingly, the court will not dismiss 

Count 7 of the FAC. 

V. Unfair Business Practices (Count 11)

This court previously dismissed plaintiff’s original 

claim under the unlawful prong of the UCL because it explicitly 

relied on defendant’s misappropriation of trade secrets and was 

therefore preempted by the CUTSA. (Docket No. 53 at 23.) Just 

as in the original complaint, plaintiff’s claim in the FAC that 

defendants acted unlawfully is explicitly based on the same 

nucleus of facts as trade secret misappropriation. (FAC ¶ 281 

(Defendants “have violated the UCL’s prohibition against engaging 

in any unlawful act . . . as a result of their violations of 

[CUTSA].”).) This claim is therefore identical to the 

misappropriation claim and “there is no material distinction 

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between the wrongdoing underlying” the two claims. See Ikon, 

2010 WL 5129293, at *3. The CUTSA thus preempts plaintiff’s 

claim for a violation of the unlawful prong of the UCL.

The court also dismissed plaintiff’s original claim

under the unfair prong of the UCL for the same reasons. In the 

original complaint, plaintiff alleged that defendants acted 

unfairly because plaintiff “use[d] Zoom’s confidential and 

proprietary business information” to solicit employees and 

customers. (Docket No. 53 at 23 (citing Complaint ¶ 149).)

Plaintiff has now amended its allegations to allege 

that defendants “publicize[d] false business information about 

Zoom to its customers . . . and . . . solicit[ed] Zoom’s 

salespersons and technicians based on false information.” (FAC ¶ 

282.) Specifically, plaintiff alleges that defendants Alsweet 

and Roe made such allegedly false representations. (FAC ¶¶

49(c)-(d); Ex. D.) To make false representations, Alsweet 

“use[d] Zoom’s confidential information.” (FAC ¶ 49(d).) 

Similarly, to reach out to Zoom’s customers and communicate 

Zoom’s alleged closing, “Roe us[ed] Zoom’s confidential 

information directly and indirectly” (FAC ¶ 65), including Zoom’s 

customer lists (FAC ¶ 167). 

Just as in the original complaint, the alleged unfair 

conduct in the FAC relies on the misappropriation allegations, so

the CUTSA preempts this claim. Accordingly, the court will 

dismiss Count 11 of the First Amended Complaint.

VI. Further Amendment

In its Order of November 8, 2019, the court made it 

clear what plaintiff needed to do in order to cure the defects in 

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its complaint with respect to the dismissed claims. In the 

Second Amended Complaint, plaintiff has cured the defects with 

respect to the breach of contract, trade secrets, and 

interference with contractual relations claims. However, 

plaintiff has failed to cure the defects with respect to its 

breach of implied covenant or UCL unfair conduct claims. Since 

plaintiff has been given a full and fair opportunity to do so, 

the court must infer that plaintiff is unable in good faith to

allege facts sufficient to state either of those claims.

Under these circumstances, to give plaintiff yet 

another opportunity to amend its complaint would serve only to 

prolong this litigation, enhance the costs of the opposing party, 

and unnecessarily consume additional judicial time and resources.

IT IS THEREFORE ORDERED that defendant’s Motion to 

Dismiss (Docket No. 68) be, and the same hereby is, GRANTED IN 

PART without leave to amend as to the following claims: (1) 

breach of implied covenant of good faith (Count Four); and (2) 

violation of the UCL for unlawful and unfair conduct (Count 11).

IT IS FURTHER ORDERED that defendant’s Motion to 

Dismiss be, and the same hereby is, DENIED IN PART as to the 

following claims: (1) breach of the 2017 Executive Agreement by 

Roe (Count 1); (2) breach of 2018 Employee Handbook by all 

defendants (Count 2); (3) breach of 2013 Employee Handbook by 

Roe, Cross, and Lopez (Count 3); (4) violation of the CUTSA

(Count 5); (5) violation of the DTSA (Count 6); and (6) 

intentional interference with contractual relations (Count 7).

Dated: January 29, 2020

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