Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00718/USCOURTS-casd-3_17-cv-00718-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331as Fed. Question: Assault, Libel, Slander

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

PHYSICIAN’S SURROGACY, INC.,

Plaintiff,

v. 

KENIA GERMAN; GLORY NASH; 

VERONICA MUNOZ; JESSICA SIMAS; 

XOCHITL RACHELLE MACIAS; 

CLAUDIA ESCAMILLA; KARLA 

JIMENEZ; RAFAEL MARTINEZ; and 

ESMERALDA LEON, 

Defendants.

Case No.: 17CV0718-MMA (WVG)

ORDER RE DEFENDANTS’ 

MOTIONS TO DISMISS, MOTIONS 

TO STRIKE, AND PLAINTIFF’S 

MOTION FOR PRELIMINARY 

INJUNCTION 

[Doc. Nos. 4, 13, 14, 15, 16, 17, 18, 19] 

 On April 7, 2017, Plaintiff Physician’s Surrogacy, Inc. filed this action alleging 

multiple causes of action against Defendants Kenia German, Glory Nash, Veronica 

Munoz, Jessica Simas, Xochitl Rachelle Macias, Claudia Escamilla, Karla Jimenez, 

Rafael Martinez, and Esmeralda Leon. See Doc. No. 1. Via five separate motions to 

dismiss, Defendants move to dismiss Plaintiff’s claims for failure to state a claim 

pursuant to Federal Rule of Civil Procedure 12(b)(6), and for insufficient service of 

process pursuant to Federal Rule of Civil Procedure 12(b)(5). See Doc. Nos. 4, 14, 15, 

17, 19. Also, Defendants German and Leon move to strike state law claims pursuant to 

California’s anti-SLAPP statute, California Code of Civil Procedure § 425.16. See Doc. 

Nos. 16, 18. Lastly, Plaintiff moves for a preliminary injunction. See Doc. No. 13. The 

Court took the matters under submission on the briefs and without oral argument 

pursuant to Civil Local Rule 7.1.d.1. For the following reasons, the Court QUASHES

service as to Defendants Escamilla, Jimenez, Martinez, and German, and DENIES AS 

MOOT their motions to dismiss, Doc. Nos. 14, 15, and Defendant German’s motion to 

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strike, Doc. No. 16. The Court GRANTS IN PART Defendants’ Nash, Simas, and 

Munoz’s motion to dismiss, Doc. No. 4, and GRANTS IN PART Defendants Leon and 

Macias’s motions to dismiss, Doc. Nos. 17, 19. Specifically, the Court DISMISSES

Plaintiff’s federal claims as to all properly served defendants, and declines to exercise 

supplemental jurisdiction over all state law claims asserted against all properly served 

defendants. Further, the Court DENIES without prejudice Defendant Leon’s motion to 

strike, Doc. No. 18, and DENIES without prejudice Plaintiff’s motion for a preliminary 

injunction, Doc. No. 13. 

BACKGROUND

 Plaintiff makes the following allegations.1 Plaintiff Physician’s Surrogacy, Inc. is 

a “private fertility and surrogacy agency located in San Diego, California, recruiting 

surrogates and other donors so that a medical corporation may provide in vitro 

fertilization and surrogacy and egg donation services for intended parents who can select 

from a qualified pool of surrogates.” Doc. No. 1, Compl. ¶ 15. Plaintiff has a “unique 

affiliation with a medical corporation, Reproductive Sciences Medical Center, Inc.,” 

(“RSMC”) which allows Plaintiff and RSMC to provide “an integrated service where 

agency and surrogate recruiting services are seamlessly integrated with fertility medical 

procedures to match surrogates and intended parents for procedures such as surrogacy, 

egg donation and fertility treatment.” Compl. ¶ 15. Based on this close affiliation, 

Plaintiff and RSMC “are commonly referred to collectively as ‘RSMC.’” Compl. ¶ 15. 

A “key aspect of Plaintiff’s business” is the recruitment of potential surrogate mothers. 

Compl. ¶ 16. Plaintiff “hires recruiters to consult, recruit, screen and supervise 

applications by potential surrogate mothers.” Compl. ¶ 17. Plaintiff earns revenue from 

payment by the intended parents who assume parenting responsibilities for the baby 

                                                                

1

 For the purposes of determining the pending motions to dismiss, the Court must accept as true the 

allegations set forth in the Complaint. See Hosp. Bldg. Co. v. Trs. Of Rex Hosp., 425 U.S. 738, 740 

(1976). However, in doing so, the Court does not make any findings of fact. 

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immediately upon birth.” Compl. ¶ 21. 

 Plaintiff has expended “significant time and resources creating and developing 

proprietary business methods and systems for surrogate intake and recruiting as well as 

various work product related to intake, including, but not limited to, surrogacy 

applications, screening forms, and surrogacy case checklists.” Compl. ¶ 19. For that 

reason, Plaintiff requires employees to sign the Proprietary Information and Innovation 

Assignment Agreement (“PIIAA”), which “identifies Plaintiff’s proprietary information 

and trade secrets,” such as Plaintiff’s “surrogate lists,” and requires employees to 

maintain the confidentiality of that information, both during and after employment. 

Compl. ¶¶ 20, 51. The PIIAA also prohibits employees, during the term of their 

employment, from “engag[ing] in any employment or business activity which is 

competitive with, or would otherwise conflict with, [the employees’] employment” 

without Plaintiff’s “express written consent.” Compl. ¶ 52. Further, for one year after 

the date of termination of their employment with Plaintiff, the PIIAA prohibits former 

employees from soliciting or attempting to solicit any of Plaintiff’s employees to 

terminate their employment with Plaintiff, or inducing or attempting to induce any person 

or entity “to terminate a relationship with” Plaintiff “or interfere with [Plaintiff’s] 

business relationships.” Compl. ¶ 55. The PIIAA also prohibited the use of “Proprietary 

Information to solicit or attempt to solicit the business of any customer . . . of the 

Company” who, “at the time of termination or one (1) year immediately prior thereto, 

was doing business with the Company, or listed on the Company’s customer . . . list, if 

the result of the solicitation of business would be any reduction in the business which 

would have been transacted between the Company and such [entity].” Compl. ¶ 55. 

 Defendant German began working for Plaintiff as a recruiter on April 1, 2016, and 

was promoted to a “Senior Surrogacy Recruiter” shortly thereafter. Compl. ¶ 22. In that 

position, Defendant German “supervised recruiting, screening, and approval of 

applications by potential surrogates, as well as the overall surrogacy process once 

surrogates were approved and had signed contracts with Plaintiff.” Compl. ¶ 22. 

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Defendant German “worked with a team of subordinate employees,” including 

Defendants Nash, Simas, Macias, and Munoz. Compl. ¶ 22. “Immediately after her 

employment commenced in the spring of 2016,” Defendant German formulated a plan to 

terminate her employment with Plaintiff and form a competitive surrogacy agency. 

Compl. ¶ 23. Defendant “conspired with the other Defendants in this action” to do so. 

Compl. ¶ 23. 

Beginning on approximately April 5, 2016, “Defendants misappropriated a 

significant amount of [Plaintiff’s] proprietary information and trade secrets.” Compl. ¶¶ 

24, 25. “All of Plaintiff’s information regarding applications, screening, identification of 

surrogates and matching with intended parents is stored on Plaintiff’s computer systems, 

including its own server.” Compl. ¶ 18. Accordingly, Defendants emailed the 

proprietary information “from [Plaintiff’s] computers and work email accounts, to an 

outside Gmail email address at rsmcsurrogacy@gmail.com, which Ms. German (and/or 

the other Defendants) created in or around early 2016.” Compl. ¶ 24. For example, 

“Defendants emailed lists of Plaintiff’s surrogates and potential surrogates, as well as 

Plaintiff’s proprietary business forms, including intake forms, surrogacy applications and 

other proprietary documents.” Compl. ¶ 24. Also, on or around April 29, 2016, 

Defendant German sent emails to an email address belonging to her husband, Defendant 

Martinez, with copies of proprietary information such as “email templates for various 

surrogacy-related scenarios, surrogacy FAQs, intake forms, benefit lists and job 

descriptions.” See Compl. ¶ 24. Defendant Martinez bought computer hardware to store 

the information. 

At some point, Defendants Escamilla and Jimenez, who are Defendant German’s 

sisters-in-law, began to use the email address “rsmcsurrogacy@gmail.com” to email 

Plaintiff’s potential surrogates and surrogates who had already entered into contracts with 

Plaintiff. Defendants told the recipients that the email address was a new address for 

Plaintiff, and solicited information from them under the pretenses that they were acting 

on Plaintiff’s behalf. In those emails, the sender was listed as “RSMC Fertility.” See

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Compl. § 26. Defendants chose to use “RSMC” in the name of the sender and in the 

email address in order to “intentionally confuse Plaintiff’s surrogates and potential 

surrogates” into thinking that they were communicating with Plaintiff’s employees. See 

Compl. ¶ 26. Further, Defendant Escamilla signed her name on emails as “Assitant [sic] 

to Kenia German, Surrogate Program Director, and included Plaintiff’s RSMC logo and 

address.” See Compl. ¶ 28. Plaintiff alleges that Defendants ultimately used the email 

address to “induce surrogates to breach their Acceptance Agreements with Plaintiff” and 

persuade them to instead act as surrogates for Defendants’ competing business. See 

Compl. ¶ 30. 

On approximately December 20, 2016, Defendants German and Martinez “filed for 

a fictitious business name of ‘Elite Women Surrogacy’ with the County of Orange ClerkRecorder.” See Compl. ¶ 29. Defendants also created a Facebook page for Elite Women 

Surrogacy, which “states that the business launched on November 12, 2016.” See Compl. 

¶ 29. 

 In February 2017, Defendant German resigned from her position with Plaintiff, and 

Defendants Nash, Simas, Macias, and Munoz followed suit “within a few weeks.” See

Compl. ¶ 25. Following their resignations, Defendants began operating Elite Women 

Surrogacy “in full force.” See Compl. ¶ 31. Since her resignation, Defendant German 

has allegedly “refused to return certain property of Plaintiff’s, including a company credit 

card, office keys, an electronic key card and a cell phone.” See Compl. ¶ 125. 

 Further, Plaintiff alleges Defendants have “started a smear campaign against 

Plaintiff.” See Compl. ¶ 32. For example, on the Facebook page for Elite Women

Surrogacy, Defendant German wrote a post describing “getting hired by Plaintiff,” and 

stated that the agency “look[ed] nice” but was “terribly wrong.” See Compl. ¶ 32. The 

post criticized Plaintiff’s owner, calling her greedy and arrogant, and stating that the 

owner was willing to accept surrogates that were 18 years old or had “bad medical 

records.” See Compl. ¶ 32. In the post, Defendant German stated that upon leaving 

Plaintiff’s employ, Defendant “received vicious attacks from the owner” as well as 

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threatening emails and phone calls. See Compl. ¶ 32. Additionally, Defendant Leon 

allegedly “posted reviews online” falsely stating “that she received a letter from Plaintiff 

to her regarding enforcement of her surrogacy contract” and which demanded payment. 

See Compl. ¶ 138. Defendant included a photograph of a letter in an online review on 

Yelp, but Plaintiff denies ever sending it. In the Yelp review, Defendant stated that 

Plaintiff “would rather see you suffer through your [surrogacy] journey than care for 

you!” See Compl. ¶ 138. 

 Based on the foregoing, the Complaint asserts the following causes of action 

against all Defendants: violation of the Economic Espionage Act (“EEA”), 18 U.S.C. § 

1831 et seq., as amended by the Defend Trade Secrets Act of 2016 (“DTSA”), PL 114-

153, May 11, 2016, 130 Stat 376;2

 intentional interference with contractual relations; 

inducing breach of contracts; intentional interference with prospective economic 

relations; negligent interference with prospective economic relations; violation of the 

California Comprehensive Computer Data Access and Fraud Act, Cal. Pen. Code § 502; 

violation of the California Business and Professions Code, Cal. Bus. & Prof. Code § 

17200; conversion; and civil conspiracy. The Complaint also alleges: breach of contract 

claims against Defendants German, Nash, Simas, Macias, and Munoz; claims for 

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

German, Nash, Simas, Macias, Munoz, Escamilla, Jimenez, and Martinez; claims for 

breach of the duty of loyalty against Defendants German, Nash, Simas, Macias, and 

Munoz; a cause of action for “claim and delivery” against Defendant German; and trade 

libel claims against Defendants German and Leon. 

PROCEDURAL BACKGROUND

Defendants have filed several motions to dismiss, and two motions to strike. 

Specifically, Defendants Nash, Simas, and Munoz move to dismiss the following claims 

pursuant to Rule 12(b)(6) for failure to state a claim: violation of the DTSA; breach of 

                                                                

2

 Hereinafter, for the purposes of this Order, the Court refers to this cause of action as the DTSA claim. 

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contract; intentional interference with contractual relations; inducing breach of contracts; 

intentional interference with prospective economic relations; negligent interference with 

prospective economic relations; violation of the Computer Fraud and Abuse Act; 

violation of California’s Comprehensive Computer Data Access and Fraud Act; breach of 

the duty of loyalty; violation of California’s Business and Professions Code; conversion; 

and civil conspiracy. See Doc. No. 4. 

Defendants Escamilla, Jimenez, and Martinez join the motion to dismiss filed by 

Defendants Nash, Simas, and Munoz insofar as it requests dismissal of the following 

claims: violation of the DTSA; intentional interference with contractual relations; 

inducing breach of contracts, intentional interference with prospective economic 

relations; negligent interference with prospective economic relations; violation of 

California’s Business and Professions Code; and conversion. See Doc. No. 14. 

Defendants Escamilla, Jimenez, and Martinez also move to dismiss Plaintiff’s claim for 

violation of the Computer Fraud and Abuse Act,3

 and seek dismissal of all claims against 

them for insufficient service of process pursuant to Rule 12(b)(5). 

Defendant German has also filed a motion to dismiss, joining Defendants Nash, 

Simas, and Munoz’s motion to dismiss in its entirety, as well as moving to dismiss 

Plaintiff’s trade libel claim, and seeking dismissal for insufficient service of process 

under Rule 12(b)(5). See Doc. No. 15. 

Additionally, Defendant Leon filed a motion to dismiss, joining Defendants Nash, 

Simas, and Munoz’s motion to dismiss insofar as it seeks dismissal of the following 

claims: violation of the DTSA; intentional interference with contractual relations; 

inducing breach of contracts; intentional interference with prospective economic 

relations; negligent interference with prospective economic relations; breach of duty of 

loyalty; violation of California’s Business and Professions Code; conversion; and civil 

conspiracy. See Doc. No. 17. Defendant Leon also moves to dismiss Plaintiff’s claim for 

                                                                

3

 The Complaint asserts two separate claims for violation of the Computer Fraud and Abuse Act. 

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trade libel. 

Further, Defendant Macias filed a motion to dismiss stating that she joins 

Defendants Nash, Simas, and Munoz’s motion to dismiss in its entirety. See Doc. No. 19. 

Also, Defendants German and Leon move to strike Plaintiff’s trade libel claims 

pursuant to California’s anti-SLAPP statute. See Doc. Nos. 16, 18. 

 Finally, Plaintiff moves for a preliminary injunction based on its claims for 

violation of the DTSA, violation of California’s Business and Professions Code, breach 

of contract, and conversion. See Doc. No. 13. 

LEGAL STANDARD

A. Rule 12(b)(5) Motion to Dismiss for Insufficient Service of Process 

Federal Rule of Civil Procedure 4 governs service of process. See Fed. R. Civ. P. 

4. “A federal court does not have jurisdiction over a defendant unless the defendant has 

been served properly under [Rule] 4.” Direct Mail Specialists, Inc. v. Eclat 

Computerized Techs., Inc., 840 F.2d 685, 688 (9th Cir. 1988). However, “Rule 4 is a 

flexible rule that should be liberally construed so long as a party receives sufficient notice 

of the complaint.” Vasic v. Patent Health, L.L.C., No. 13CV849 AJB (MDD), 2013 WL 

12076475, at *2 (S.D. Cal. Nov. 26, 2013) (quoting United Food & Commercial Workers 

Union v. Alpha Beta Co., 736 F.2d 1371, 1382 (9th Cir. 1984)). Nevertheless, “neither

actual notice nor simply naming the defendant in the complaint will provide personal 

jurisdiction.” Id. (quoting Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986)). 

Pursuant to Federal Rule of Civil Procedure 12(b)(5), a defendant may move to 

dismiss or quash service for insufficient service of process, thereby challenging “the 

sufficiency of the manner of attempted service.” See Perrotte v. Johnson, No. 1:15-cv00026-LJO-SAB (PC), 2016 WL 4440972, at *4 (E.D. Cal. Aug. 19, 2016). “Where 

service of process is insufficient, the court has broad discretion to dismiss the action or to 

retain the case but quash the service that has been made on defendant.” See Cranford v. 

United States, 359 F. Supp. 2d 981, 984 (E.D. Cal. 2005). “Ordinarily,” the court will 

“quash service and require [the] plaintiff to effect proper service.” See Agricola ABC, 

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S.A. de C.V. v. Chiquita Fresh N. Am., LLC, No. 10CV772-IEG NLS, 2010 WL 4809641, 

at *3 (S.D. Cal. Nov. 19, 2010).

B. Rule 12(b)(6) Motion to Dismiss for Failure to State a Claim

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro 

v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain 

statement of the claim showing that the pleader is entitled to relief . . . .” Fed. R. Civ. P. 

8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is 

plausible on its face.” Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 

570 (2007). The plausibility standard thus demands more than “a formulaic recitation of 

the elements of a cause of action,” or “naked assertions devoid of further factual 

enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations omitted). 

Instead, the complaint “must contain allegations of underlying facts sufficient to give fair 

notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 

F.3d 1202, 1216 (9th Cir. 2011). 

In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth 

of all factual allegations and must construe them in the light most favorable to the 

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). 

The court need not take legal conclusions as true merely because they are cast in the form 

of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). 

Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to 

defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). 

In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not 

look beyond the complaint for additional facts. United States v. Ritchie, 342 F.3d 903, 

908 (9th Cir. 2003). “A court may, however, consider certain materials—documents 

attached to the complaint, documents incorporated by reference in the complaint, or 

matters of judicial notice—without converting the motion to dismiss into a motion for 

summary judgment.” Id.; see also Fed. R. Evid. 201; see also Lee v. City of Los Angeles, 

250 F.3d 668, 688 (9th Cir. 2001) overruled on other grounds by Galbraith v. Cnty. Of 

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Santa Clara, 307 F.3d 1119, 1125–26 (9th Cir. 2002). 

Where dismissal is appropriate, a court should grant leave to amend unless the 

plaintiff could not possibly cure the defects in the pleading. Knappenberger v. City of 

Phoenix, 566 F.3d 936, 942 (9th Cir. 2009). 

C. Motion to Strike 

California’s anti-SLAPP4

 statute provides a mechanism for striking “lawsuits 

brought primarily to chill the valid exercise of the constitutional rights of freedom of 

speech and petition for the redress of grievances.” See Cal. Code. Civ. P. § 425.16. 

“Motions to strike a state law claim under California’s anti-SLAPP statute may be 

brought in federal court,” whether the court is sitting in diversity or exercising federal 

question jurisdiction. See Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1109 (9th Cir. 

2003) (citing United States ex rel. Newsham v. Lockheed Missiles & Space Co., 190 F.3d 

963, 970–73 (9th Cir. 1999)). However, California’s anti-SLAPP statute does not apply 

to federal law causes of action. See Hilton v. Hallmark Cards, 599 F.3d 894, 901 (9th 

Cir. 2009). 

“Resolution of an anti-SLAPP motion requires the court to engage in a two-step 

process.” Jarrow Formulas, Inc. v. LaMarche, 31 Cal.4th 728, 733 (2003) (internal 

citations and quotations omitted). First, the defendant must make a “threshold showing 

that the challenged cause of action is one arising from protected activity.” Id. Second, 

to avoid dismissal, the plaintiff must demonstrate a probability of prevailing on the claim. 

Id. 

D. Motion for Preliminary Injunction

“A preliminary injunction is an extraordinary remedy never awarded as of right.” 

Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 9 (2008). “A plaintiff seeking a 

preliminary injunction must establish that he is” (1) “likely to succeed on the merits,” (2) 

                                                                

4

 “SLAPP stands for strategic lawsuits against public participation.” Ampex Corp. v. Cargle, 128 Cal. 

App. 4th 1569, 1573 (2005). 

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“likely to suffer irreparable harm in the absence of preliminary relief,” (3) “that the 

balance of equities tips in his favor,” and (4) “that an injunction is in the public interest.” 

Id. at 20; see JL Beverage Co., LLC v. Jim Beam Brands Co., 828 F.3d 1098, 1105 (9th 

Cir. 2016) (stating that the plaintiff “bears the burden of establishing the merits of its 

claims” on a motion for preliminary injunction). The Ninth Circuit employs a “‘sliding 

scale’ approach to evaluating the first and third Winter elements,” which dictates that “a 

preliminary injunction may be granted when there are ‘serious questions going to the 

merits and a hardship balance that tips sharply toward the plaintiff,’ so long as ‘the other 

two elements of the Winter test are also met.’” See Ass’n des Eleveurs de Canards et 

d’Oies du Quebec v. Harris, 729 F.3d 937, 944 (9th Cir. 2013) (quoting Alliance for the 

Wild Rockies v. Cottrell, 632 F.3d at 1131–32 (9th Cir. 2011)). “Serious questions” are 

“substantial, difficult and doubtful, as to make them a fair ground for litigation and thus 

for more deliberative investigation.” See Republic of the Philippines v. Marcos, 862 F.2d 

1355, 1362 (9th Cir. 1988). “Serious questions need not promise a certainty of success, 

nor even present a probability of success, but must involve a ‘fair chance of success on 

the merits.’” Id. 

Further, “[i]n deciding a motion for preliminary injunction, the district court ‘is not 

bound to decide doubtful and difficult questions of law or disputed questions of fact.’” 

Int’l Molders’ and Allied Workers’ Local Union No. 164 v. Nelson, 799 F.2d 547, 551 

(9th Cir.1986) (citing Dymo Indus., Inc. v. Tapewriter, Inc., 326 F.2d 141, 143 (9th 

Cir.1964)). But, if a court does make factual findings or legal conclusions “when 

evaluating the merits of a preliminary injunction motion,” those findings and conclusions 

“are not binding at trial on the merits.” See Purdum v. Wolfe, No. C-13-04816 DMR, 

2014 WL 171546, at *4 (N.D. Cal. Jan. 15, 2014) (quoting Univ. of Tex. v. Camenisch,

451 U.S. 390, 395 (1981)). 

// 

// 

// 

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DISCUSSION

A. Motions to Dismiss for Insufficient Service of Process 

 Defendants Escamilla, Jimenez, Martinez, and German move to dismiss all claims 

asserted against them for insufficient service of process pursuant to Rule 12(b)(5). See 

Doc. Nos. 14, 15. Rule 4(e) provides that an individual may be served by delivering a 

copy of the summons and complaint to the individual personally, “leaving a copy of each 

at the individual’s dwelling or usual place of abode with someone of suitable age and 

discretion who resides there,” or delivering a copy of each to an agent authorized to 

accept service on the individual’s behalf. See Fed. R. Civ. P. 4(e)(2). Or, a plaintiff may 

also “utilize the procedures of the state in which the district court is located to serve a 

summons and complaint.” See Agricola ABC, S.A. de C.V. v. Chiquita Fresh N. Am., 

LLC, No. 10CV772-IEG NLS, 2010 WL 4809641, at *4 (S.D. Cal. Nov. 19, 2010); Fed. 

R. Civ. P. 4(e)(1). Under California law, where a plaintiff is unable to personally serve a 

defendant despite “reasonable diligence,” a plaintiff may execute service by “leaving a 

copy of the summons and complaint at the person’s dwelling house, usual place of abode, 

usual place of business, or usual mailing address other than a United States Postal Service 

post office box, in the presence of a competent member of the household . . . at least 18 

years of age, who shall be informed of the contents thereof, and by thereafter mailing a 

copy of the summons and of the complaint by first-class mail.” Id. (quoting California 

Code of Civil Procedure § 415.20(b)). 

 “When a defendant challenges service, the plaintiff bears the burden of 

establishing the validity of service as governed by Federal Rule of Civil Procedure 4.” 

See Bernhoft Law Firm, S.C. v. Pollock, No. 3:12-CV-1608 W-BLM, 2012 WL 5511777, 

at *1–2 (S.D. Cal. Nov. 14, 2012). A plaintiff may meet that burden by producing the 

proof of service, which courts typically accept as prima facie evidence of proper service. 

Id. However, a defendant may show, either by a defect apparent on the face of the proof 

of service, or by producing “affidavits, discovery materials, or other admissible evidence” 

that service was insufficient. Id. 

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 Here, the relevant proofs of service state that the process server “left the summons 

at the individual’s residence or place of abode with Delores Villa . . . a person of suitable 

age and discretion who resides there, on 4/17/2017, and mailed a copy to the individual’s 

last known address.” See Doc. Nos. 5, 6, 7, 10. Specifically, the proofs of service all

state that the process server went to the same address in Maywood, California three times 

in April 2017, but was unable to contact anyone at that location. The process server 

states that she went back a fourth time, and “Sub-served Dolores Villa, Co-Tenant.” See 

Doc. Nos. 5, 6, 7, 10. She states that it was “[v]ery hard getting information from” Ms. 

Villa, and that Ms. Villa “did not want to answer any questions about defendants.” See 

Doc. Nos. 5, 6, 7, 10. While the proofs of service may be prima facie evidence of proper 

service, Defendants Escamilla, Jimenez, and Martinez declare under penalty of perjury 

that they do not live at the address that the process server visited, and that they have 

never lived at that address. See Doc. No. 14. Defendant German declares under penalty 

of perjury that she formerly lived at that address, but has not lived there since June 2016. 

See Doc. No. 15. Accordingly, Defendants produce evidence demonstrating that service 

was insufficient. 

 Plaintiff does not provide evidence to the contrary, and its arguments in response 

are unpersuasive. Plaintiff argues Defendants have not met their burden to show service 

was insufficient because Defendants “do not provide any evidence as to where their 

purported dwelling or usual place of abode is, if not at the property where they were 

served.” See Doc. No. 25. However, where Defendants do reside is beside the point for 

our purposes. In this instance, the propriety of the method of service used turns on 

whether the address that the process server visited constituted Defendants’ “residence or 

place of abode,” and Defendants explicitly deny that they lived at that address in April 

2017. See Doc. Nos. 5, 6, 7, 10. Second, Plaintiff argues it has made a prima facie case 

of proper service because Defendants clearly received notice and have filed motions to 

dismiss based on the merits of Plaintiff’s claims. However, actual notice is insufficient to 

provide personal jurisdiction over Defendants. See Vasic, 2013 WL 12076475, at *2. 

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 In sum, the uncontroverted evidence indicates that service of process was 

insufficient as to Defendants Escamilla, Jimenez, Martinez, and German. However, in its 

discretion, the Court declines to dismiss this action against them. Instead, the Court 

QUASHES SERVICE as to Defendants Escamilla, Jimenez, Martinez, and German. As

such, the Court DENIES AS MOOT Defendants Escamilla, Jimenez, Martinez, and 

German’s motions to dismiss, Doc. Nos. 14, 15, and DENIES AS MOOT Defendant 

German’s motion to strike, Doc. No. 16.5

 

B. Motions to Dismiss for Failure to State a Claim 

 The Court turns to those motions filed by properly served defendants. In 

particular, Defendants Munoz, Nash, Simas, Macias, and Leon move to dismiss all of the 

causes of action against them. Because the Court’s jurisdiction over this action is based 

on federal question jurisdiction, the Court begins by addressing the sufficiency of 

Plaintiff’s federal claims. 

i. Defend Trade Secrets Act of 2016 

Plaintiff alleges a claim for violation of the Defend Trade Secrets Act of 2016. On 

May 11, 2016, Congress enacted the DTSA, which creates a civil cause of action for 

owners of trade secrets that are misappropriated “if the trade secret is related to a product 

or service used in, or intended for use in, interstate or foreign commerce.” See Cave 

Consulting Grp., Inc. v. Truven Health Analytics Inc., No. 15-CV-02177-SI, 2017 WL 

1436044, at *3 (N.D. Cal. Apr. 24, 2017); 18 U.S.C. § 1836(b)(1). The DTSA only 

provides a cause of action for acts that occurred on or after the date of its enactment. See 

Cave Consulting Grp., Inc., 2017 WL 1436044, at *3; Wang v. Golf Tailor, LLC, No. 17-

CV-00898-LB, 2017 WL 2861111, at *4 (N.D. Cal. July 5, 2017). “Trade secret” is 

defined as “all forms and types of financial, business, scientific, technical, economic, or 

engineering information, including patterns, plans, compilations, program devices, 

                                                                

5

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German’s declaration filed in support of her motion to strike. See Doc. No. 27. 

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formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or 

codes” so long as that information “derives value from being secret,” and “the owner 

took reasonable measures to keep [it] secret.” See 18 U.S.C. § 1839(3); Cave Consulting 

Grp., Inc., 2017 WL 1436044, at *3. “Misappropriation” includes both the “acquisition 

of a trade secret” “by a person who knows or has reason to know that the trade secret was 

acquired by improper means” and “disclosure or use of a trade secret . . . without express 

or implied consent by a person who [] used improper means to acquire knowledge of the 

trade secret,” or “knew or had reason to know that the knowledge” was gained through a 

person who had improperly acquired it or owed a duty to maintain its secrecy. See 18 

U.S.C. § 1839(5). In sum, the DTSA “contemplates three theories of liability: (1) 

acquisition, (2) disclosure, or (3) use.” See Cave Consulting Grp., Inc., 2017 WL 

1436044, at *4; 18 U.S.C. § 1839(5). 

Here, insofar as Plaintiff wishes to assert theories of liability based on the 

acquisition and disclosure of trade secrets, Plaintiff does not sufficiently allege claims 

based on conduct occurring after the enactment of the DTSA. Although the Complaint 

states in conclusory fashion that the “misappropriation appears to have begun on or 

around April 5, 2016, and was ongoing until February 2017,” the Complaint does not 

include any fact-specific allegations of conduct amounting to acquisition or disclosure of 

purported trade secrets occurring after April 2016. Rather, the Complaint focuses on 

conduct occurring in or prior to April 2016. For example, Plaintiff alleges Defendant 

German began working at Physician’s Surrogacy in April 2016, and “immediately” 

thereafter planned to terminate her employment and form a competing agency. See 

Compl. ¶ 23. The Complaint states that one of the defendants created an email address 

“in or around early 2016,” which Defendants used to email “a significant amount of the 

proprietary information and trade secrets . . . from [Plaintiff’s] computers and work email 

accounts.” See Compl. ¶ 24. Further, Plaintiff alleges Defendant German sent emails 

“with copies of proprietary information” to Defendant Martinez “on or around April 29, 

2016.” See Compl. ¶ 24. Those allegations constitute essentially all of the Complaint’s 

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factual allegations regarding alleged acquisition and disclosure of purported trade secrets. 

As such, the Court is left only with Plaintiff’s conclusory statement that 

“misappropriation . . . was ongoing until February 2017,” which is insufficient to state a 

claim for violation of the DTSA arising after its enactment. 

As the Complaint is currently pleaded, Plaintiff also fails to sufficiently state a usebased claim arising out of actions occurring after the DTSA’s enactment. “Nothing 

suggests that the DTSA forecloses a use-based theory simply because the trade secret 

being used was misappropriated before the DTSA’s enactment.” See Cave Consulting 

Grp., Inc., 2017 WL 1436044, at *4. Regarding Defendants’ use of potentially 

proprietary information, Plaintiff alleges Defendants stole “lists of Plaintiff’s surrogates 

and potential surrogates,” and emailed some of those individuals. See Compl. ¶¶ 24, 26, 

27. Even assuming that Plaintiff’s lists of surrogates and potential surrogates constitute 

trade secrets, the Complaint does not state when Defendants sent emails to surrogates and 

potential surrogates or whether those recipients were included in the allegedly 

misappropriated lists. Further, insofar as Plaintiff wishes to assert a use-based claim 

based on Defendants’ competing surrogacy agency, the Complaint fails to allege what, if 

any, misappropriated trade secrets Defendants used in creating and running their 

competing agency. 

As an aside, the Court notes that in coming to the above conclusions, the Court 

applies general pleading standards, which require plausibility as opposed to particularity. 

In other words, the Court finds unpersuasive Defendants’ argument that Plaintiff must 

plead DTSA claims with particularity, as is required of plaintiffs asserting claims under 

California’s Uniform Trade Secrets Act (“CUTSA”). See David Bohrer, Threatened 

Misappropriation of Trade Secrets: Making A Federal (DTSA) Case Out of It, 33 Santa 

Clara High Tech. L. J. 506, 521 (2017) (stating that the DTSA “does not incorporate the 

requirement . . . that . . . the plaintiff must identify its relevant trade secrets with 

‘reasonable particularity’”). Even under general pleading standards, Plaintiff’s claims 

lack sufficient detail with regard to any conduct that may have occurred after May 11, 

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2016. 

As such, the Court GRANTS Defendants Munoz, Nash, Simas, Macias, and 

Leon’s request for dismissal of the DTSA claims, and DISMISSES those claims without 

prejudice, and with leave to amend. 

ii. Violation of the Federal Computer Fraud and Abuse Act 

The Computer Fraud and Abuse Act (“CFAA”), a federal statute, “was originally 

designed to target hackers who accessed computers to steal information or to disrupt or 

destroy computer functionality, as well as criminals who possessed the capacity to 

‘access and control high technology processes vital to our everyday lives . . . .’” See 

LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1130 (9th Cir. 2009) (citing 1131 H.R. 

Rep. 98–894, 1984 U.S.C.C.A.N. 3689, 3694 (July 24, 1984)). “The CFAA prohibits a 

number of different computer crimes, the majority of which involve accessing computers 

without authorization or in excess of authorization, and then taking specified forbidden 

actions, ranging from obtaining information to damaging a computer or computer data.” 

See Brekka, 581 F.3d at 1131; 18 U.S.C. § 1030(a)(1)–(7). 

Relevant here, section 1030(a)(4) provides for the punishment of any individual 

who “knowingly and with intent to defraud, accesses a protected computer without 

authorization, or exceeds authorized access, and by means of such conduct furthers the 

intended fraud and obtains anything of value . . . .” See Brekka, 581 F.3d at 1131; 18 

U.S.C. § 1030(a)(4). Section 1030(g) of the act provides a private right of action for 

individuals who have been injured by the crimes delineated by the Act so long as the 

defendant’s conduct involves one of the factors set forth in section 1030(c)(4)(A)(i), 

subclause (I), (II), (III), (IV), or (V). See Brekka, 581 F.3d at 1131; 18 U.S.C. § 1030(g). 

Subclause (I) proscribes conduct that causes a loss of at least $5,000 to one or more 

persons during any one-year period. See 18 U.S.C. § 1030(c)(4)(A)(i)(I). Thus, to bring 

a civil action for a violation of § 1030(a)(4), a plaintiff must show that the defendant: “(1) 

accessed a ‘protected computer,’ (2) without authorization or exceeding such 

authorization that was granted, (3) ‘knowingly’ and with ‘intent to defraud,’ and thereby 

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(4) ‘further[ed] the intended fraud and obtain[ed] anything of value,’ causing (5) a loss to 

one or more persons during any one-year period aggregating at least $5,000 in value.” 

See Brekka, 581 F.3d at 1131; 18 U.S.C. §§ 1030(a)(4), (g). 

In the Complaint, Plaintiff alleges Defendants German, Nash, Simas, Macias, 

Munoz, Escamilla, Jimenez, and Martinez violated section 1030(a)(4) of the CFAA. 

Because the Court quashes service as to Defendants German, Escamilla, Jimenez, and 

Martinez, the Court only addresses Plaintiff’s claims as to Defendants Nash, Simas, 

Macias, and Munoz, who were all formerly employees of Plaintiff.

6

 Defendants argue 

Plaintiff fails to state a claim for violation of the CFAA because Plaintiff does not 

sufficiently allege Defendants exceeded their authorized access. The CFAA 

contemplates liability for those who access protected computers “without authorization, 

or exceed[] authorized access.” See 18 U.S.C.A. § 1030(a)(4). Pursuant to the Act, “the 

term ‘exceeds authorized access’ means to access a computer with authorization and to 

use such access to obtain or alter information in the computer that the accesser is not 

entitled so to obtain or alter.” See 18 U.S.C.A. § 1030(e)(6). In other words “an 

individual who is authorized to use a computer for certain purposes but goes beyond 

those limitations . . . has exceeded authorized access.” See Brekka, 581 F.3d at 1133 

(internal quotations and alterations omitted). “On the other hand, a person who uses a 

computer ‘without authorization’ has no rights, limited or otherwise, to access the 

computer in question.” Id. 

The Complaint alleges Plaintiff “provided [Defendants] access” to Plaintiff’s 

“protected computer . . . for the limited purpose of performing their duties and 

responsibilities as employees of Plaintiff.” See Compl. ¶ 88. The Complaint alleges 

Defendants’ access was “unauthorized,” however, because Defendants accessed 

Plaintiff’s protected computer with the intent to misappropriate trade secrets and 

                                                                

6

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and Munoz. 

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proprietary information, did in fact do so, and thereby violated Defendants’ contractual 

obligations and common law duties to Plaintiff. See Compl. ¶¶ 88, 89. 

Based on the foregoing, Plaintiff fails to allege Defendants’ were “without 

authorization” or “exceeded authorization” in accessing the computer. “[A]n employer 

gives an employee ‘authorization’ to access a company computer when the employer 

gives the employee permission to use it.” Brekka, 581 F.3d at 1133. Here, Plaintiff 

admits it gave Defendants permission to use the computer. Further, Plaintiff does not 

allege Defendants obtained or altered any information on the computer that Defendants 

were not authorized to access or alter. Moreover, the Ninth Circuit has explicitly rejected 

the argument that “authorization to use a computer ceases when an employee resolves to 

use the computer contrary to the employer’s interest,” or that an employee exceeds 

authorization “if the defendant breaches a state law duty of loyalty to an employer.” Id. 

at 1133, 1135 n.7. The CFAA does not give rise to liability where “an employee is 

authorized to access information while employed and then later misuses the information 

because the CFAA governs unauthorized access rather than use.” See Astec Am. LLC v. 

Li, No. 14CV1457 JLS (NLS), 2014 WL 12516024, at *3 (S.D. Cal. Nov. 17, 2014). 

“[T]he CFAA is not meant to serve as a supplement or replacement for misappropriation 

claims.” Lakeland Tours, LLC v. Bauman, No. 13CV2230-CAB-JMA, 2014 WL 

12570970, at *4 (S.D. Cal. Feb. 11, 2014). 

As such, the Court GRANTS Defendants Nash, Simas, Macias, and Munoz’s 

motion to dismiss Plaintiff’s CFAA claims, and DISMISSES Plaintiff’s CFAA claims 

against those defendants without prejudice and with leave to amend. See Doc. Nos. 4, 19. 

iii. Plaintiff’s State Law Claims 

“A district court ‘may decline to exercise supplemental jurisdiction’ if it ‘has 

dismissed all claims over which it has original jurisdiction.’” See Sanford v. 

MemberWorks, Inc., 625 F.3d 550, 561 (9th Cir. 2010) (citing 28 U.S.C. § 1367(c)(3)). 

“[I]n the usual case in which all federal-law claims are eliminated before trial, the 

balance of factors to be considered under the pendent jurisdiction doctrine—judicial 

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economy, convenience, fairness, and comity—will point toward declining to exercise 

jurisdiction over the remaining state-law claims.” Id. (quoting Carnegie–Mellon Univ. v. 

Cohill, 484 U.S. 343, 350 n.7 (1988), superseded on other grounds by statute as 

recognized in Fent v. Okla. Water Res. Bd., 235 F.3d 553, 557 (10th Cir. 2000)). 

Plaintiff also asserts numerous California state law claims. However, because 

Plaintiff fails to state a claim over which the Court has original jurisdiction, the Court 

declines to exercise supplemental jurisdiction over Plaintiff’s state law claims at this 

time. See Shames v. Hertz Corp., No. 07-CV-2174 H, 2008 WL 11318291, at *5 (S.D. 

Cal. Apr. 8, 2008). The Court DISMISSES Plaintiff’s supplemental state law claims 

without prejudice as to all properly served Defendants. If Plaintiff sufficiently alleges a 

federal claim in a future amended complaint, the Court will reconsider exercising 

supplemental jurisdiction over Plaintiff’s state law claims. 

 iv. Defendants’ Requests for Judicial Notice 

In support of their motion to dismiss, Defendants Nash, Simas, and Munoz request 

judicial notice of a copy of a PIIAA agreement, a copy of the Recommendations for 

Practices Utilizing Gestational Carriers by the American Society for Reproductive 

Medicine, and a copy of an Ethics Committee opinion regarding “consideration of the 

gestational carrier.” See Doc. No. 4-2. However, judicial notice of these documents is 

unnecessary for the instant purposes, as the Court finds dismissal is proper without 

reference to those documents. See Kuzmenko v. Lynch, 606 F. App’x 399 (9th Cir. 2015) 

(“[J]udicial notice is inappropriate where the facts to be noticed are not relevant to the 

disposition of the issues before the court.”). Accordingly, the Court declines to take 

judicial notice of the proffered documents. 

C. Motions to Strike 

Defendants German and Leon move to strike Plaintiff’s trade libel claims pursuant 

to California’s anti-SLAPP statute, California Code of Civil Procedure § 425.16. 

However, as noted above, the Court dismisses Defendant German’s motion to strike 

without prejudice because the Court quashes service as to Defendant German. Regarding 

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Defendant Leon’s motion, the Court declines to address the propriety of her motion to 

strike at this stage based on the Court’s dismissal without prejudice of all claims against 

those Defendants who were properly served. “[G]ranting a defendant’s anti-SLAPP 

motion to strike a plaintiff’s initial complaint without granting the plaintiff leave to 

amend would directly collide with Fed. R. Civ. P. 15(a)’s policy favoring liberal 

amendment.” Verizon Delaware, Inc. v. Covad Commc’ns Co., 377 F.3d 1081, 1091 (9th 

Cir. 2004) (emphasis added). This outcome does not cause prejudice to defendants 

because “the purpose of the anti-SLAPP statute, the early dismissal of meritless claims, 

would still be served if plaintiffs eliminated the offending claims from their original 

complaint.” See id. “If the offending claims remain in the first amended complaint, the 

anti-SLAPP remedies remain available to defendants.” Id. 

In sum, because the Court dismisses the offending claim on other grounds, the 

Court DENIES without prejudice Defendant Leon’s motion to strike. 

D. Motion for Preliminary Injunction 

 Plaintiff moves for a preliminary injunction based on its claims for violation of the 

DTSA, unfair competition, breach of contract, and conversion. However, as discussed, 

the Court dismisses all claims against those Defendants who were properly served 

without prejudice and with leave to amend. Accordingly, Plaintiff has not shown a 

likelihood of success or serious questions going to the merits of Plaintiff’s claims. See 

Winter, 555 U.S. at 20 (stating that a plaintiff seeking a preliminary injunction must 

generally establish a likelihood of success); Ass’n des Eleveurs de Canards et d’Oies du 

Quebec v. Harris, 729 F.3d 937, 944 (9th Cir. 2013) (stating that, alternatively, a plaintiff 

may demonstrate “serious questions going to the merits,” meaning at least a “fair chance 

of success on the merits,” and that equities tip sharply in the plaintiff’s favor). 

Based on the foregoing, the Court DENIES without prejudice Plaintiff’s motion 

for a preliminary injunction. See Doc. No. 13; see Shames, 2008 WL 11318291 at *5 

(denying without prejudice motion for preliminary injunction on basis that the court 

dismissed without prejudice all federal claims and declined to exercise supplemental 

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jurisdiction over state law claims); Youngevity Int’l Corp. v. Smith, No. 16-CV-0704 W 

(JLB), 2016 WL 7626582, at *5 (S.D. Cal. June 29, 2016); Kwai Ling Chan v. Chase 

Home Loans Inc., No. C12-0273JLR, 2012 WL 1252649, at *2 (W.D. Wash. Apr. 13, 

2012). 

CONCLUSION

 For the foregoing reasons, the Court QUASHES SERVICE as to Defendants 

Escamilla, Jimenez, Martinez, and German. As such, the Court DENIES AS MOOT

Defendants Escamilla, Jimenez, Martinez, and German’s motions to dismiss, Doc. Nos. 

14, 15, and DENIES AS MOOT Defendant German’s anti-SLAPP motion to strike, 

Doc. No. 16. Further, as set forth above, the Court DISMISSES without prejudice all 

remaining claims as to properly served Defendants. The Court also DENIES without 

prejudice Defendant Leon’s anti-SLAPP motion to strike, Doc. No. 18, and DENIES

without prejudice Plaintiff’s motion for a preliminary injunction, Doc. No. 13. 

 The Court further ORDERS that Plaintiff must file an amended complaint, if any, 

on or before September 22, 2017.

7

 

IT IS SO ORDERED.

Dated: August 23, 2017 _____________________________

 Hon. Michael M. Anello 

United States District Judge 

                                                                

7

 The Court further notes that Plaintiff must comply with Civil Local Rule 15.1(c) in doing so. 

Specifically, Rule 15.1(c) states that “[a]ny amended pleading filed after the granting of a motion to 

dismiss or motion to strike with leave to amend, must be accompanied by a version of that pleading that 

shows---through redlining, underlining, strikeouts, or other similarly effective typographic methods---

how that pleading differs from the previously dismissed pleading.” Civ. LR 15.1(c). 

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