Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-00248/USCOURTS-casd-3_18-cv-00248-3/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

SOUTHERN DISTRICT OF CALIFORNIA

BETH WESTBURG and LAURIE 

LIPMAN,

Plaintiffs,

vs.

GOOD LIFE ADVISORS, LLC, et al.,

Defendants.

CASE NO. 18cv248-LAB (MDD)

ORDER GRANTING DEFENDANTS’ 

MOTION TO DISMISS [Dkt. 22];

GRANTING MOTIONS FOR JUDICIAL 

NOTICE [Dkts. 23, 27]

The Defendants have filed a Motion to Dismiss. Dkt. 22. The Court’s previous 

order (Dkt. 19) lays out the background of this case and, except where necessary, the 

facts are not repeated here. 

Plaintiffs’ Federal Claims for Declaratory Relief

a. Subject-Matter Jurisdiction

Defendants argue this Court lacks subject-matter jurisdiction because the only 

basis for jurisdiction is Plaintiffs’ claim for declaratory relief under the Defend Trade 

Secrets Act (“DTSA”) and the Computer Fraud and Abuse Act (“CFAA”). In Defendants’

view, because Defendants have not (and do not intend to) assert claims under these 

statutes, Plaintiffs’ prayer for declaratory relief is simply an attempt to “bootstrap” their 

way into federal court via a request for an impermissible advisory opinion. Not so. 

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The Declaratory Judgment Act gives district courts discretion to issue declaratory 

relief. 28 U.S.C. § 2201. The purpose of a declaratory judgment is “to relieve potential 

defendants from the Damoclean threat of impending litigation which a harassing 

adversary might brandish, while initiating suit at his leisure—or never.” Spokane Indian 

Tribe v. United States, 972 F.2d 1090, 1091-92 (9th Cir. 1992) (quoting Hal Roach 

Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542, 1555 (9th Cir.1990)). But a 

request for declaratory judgment cannot be used to bypass Article III’s requirements; a 

federal court has jurisdiction to award declaratory relief only where a true case or 

controversy exists. Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1157 (9th Cir. 2007) 

(“Absent a true case or controversy, a complaint solely for declaratory relief under 28 

U.S.C. § 2201 will fail for lack of jurisdiction under Rule 12(b)(1).”). In other words, a

claim for declaratory judgment is justiciable only when “the facts alleged, under all the 

circumstances, show that there is a substantial controversy, between parties having 

adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a 

declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). 

Federal suits premised on declaratory relief present a unique challenge: a court 

must ask itself whether it’s properly granting a claim for declaratory relief or improperly 

issuing an advisory opinion. The outcome depends on the nature of the underlying 

claim—if “the declaratory judgment defendant could have brought a coercive action in 

federal court to enforce its rights, then [the federal court] has jurisdiction notwithstanding 

the declaratory judgment plaintiff’s assertion of a federal defense.” Janakes v. U.S. Postal 

Serv., 768 F.2d 1091, 1093 (9th Cir. 1985). In other words, if the Defendants here could 

have brought a suit against the Plaintiffs in federal court, the Plaintiffs can head that off 

by first seeking declaratory relief stating that they did not do what the Defendants said 

they did. The key words here are “could have.” It’s not necessary that a suit by the 

Defendants was imminent, only that the Defendants “could have asserted [their] own 

rights.” Standard Ins. Co. v. Saklad, 127 F.3d 1179, 1181 (9th Cir. 1997); see also 

Household Bank v. JFS Grp., 320 F.3d 1249, 1257 (11th Cir. 2003) (“[T]he Declaratory 

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Judgment Act permits a party[] ‘to bootstrap its way into federal court by bringing a federal 

suit that corresponds to one the opposing party might have brought.’”) (emphasis in 

original) (quoting Gulf States Paper Corp. v. Ingram, 811 F.2d 1464, 1467 (11th Cir.

1987)). 

Here, assuming the truth of the allegations in Plaintiffs’ Complaint, it’s clear that 

the Defendants “could have” brought a suit against Plaintiffs for violation of the DTSA and 

CFAA. Indeed, Defendants’ actions admit as much. Their suit in Pennsylvania state 

court—which was filed just days after this motion—alleges that Plaintiffs misappropriated

trade secrets when they left the company. See Request for Judicial Notice, Dkt. 27, Ex. 

1 at 20.1 Given that Pennsylvania trade secret law “essentially protect[s] the same type 

of information as the DTSA,” it’s not a stretch to conclude that Defendants could have 

brought a suit against Plaintiffs for violation of the DTSA, and likely for violation of the 

CFAA as well. Teva Pharm. USA, Inc. v. Sandhu, 291 F. Supp. 3d 659, 675 (E.D. Pa. 

2018). At the outset of this case, the Court had subject-matter jurisdiction over this case 

based on Plaintiffs’ claim for declaratory relief.

b. Mootness

Perhaps sensing the weakness of their argument that Plaintiffs’ declaratory 

judgment claim does not give rise to subject-matter jurisdiction, Defendants attempt

instead to moot the case by “perpetually releas[ing] and disclaim[ing] any intent to file any 

claim against Plaintiffs under the CFAA or DTSA. This judicially estops Defendants from 

pursuing any such claim, further mooting Plaintiffs’ forum-shopping-driven attempt at an 

anticipatory defense.” Reply, Dkt. 28, at 2. Although unusual, the Court finds that this 

waiver moots Plaintiffs’ claims for declaratory relief and leaves it without jurisdiction. 

 

1 Each party has requested that the Court take judicial notice of certain documents. 

Defendants request that the Court take judicial notice of the parties’ “Operating 

Agreement,” which is incorporated by reference into Plaintiffs’ Complaint. Dkt. 23. 

Plaintiffs request that the Court take judicial notice of the complaint filed by Defendants 

in Pennsylvania state court. Dkt 27. Neither request is opposed and both documents are 

proper subjects for judicial notice, so the requests are GRANTED.

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Claims for declaratory relief, like all other claims in federal court, are subject to the 

doctrine of mootness. See Pub. Util. Comm'n of State of Cal. v. F.E.R.C., 100 F.3d 1451, 

1459 (9th Cir. 1996) (“A federal court cannot issue a declaratory judgment if a claim has 

become moot.”). “In general a case becomes moot ‘when the issues presented are no 

longer “live” or the parties lack a legally cognizable interest in the outcome.’” Id. at 1458 

(quoting Murphy v. Hunt, 455 U.S. 478, 481 (1982)). Stated another way, the “central 

question . . . is whether changes in the circumstances that prevailed at the beginning of 

litigation have forestalled any occasion for meaningful relief.” Gator.com Corp. v. L.L. 

Bean, Inc., 398 F.3d 1125, 1129 (9th Cir. 2005) (quoting West v. Sec'y of the Dep't of 

Transp., 206 F.3d 920, 925 n.4 (9th Cir. 2000)).

Plaintiffs argue that a representation by a defendant that it does not intend to bring 

a federal claim against a declaratory judgment plaintiff will not “moot the controversy and 

destroy subject matter jurisdiction.” Opp., Dkt. 26, at 7 (citing Kidder, Peabody & Co. v. 

Maxus Energy Corp., 925 F.2d 556, 563 (2d Cir. 1991)). Fair enough. A defendant’s

assertion that it does not intend to bring a federal claim does not, by itself, moot a claim

for declaratory relief. See Kidder, Peabody & Co., 925 F. 2d at 563; Cmty. State Bank v. 

Strong, 485 F.3d 597, 612 (11th Cir. 2007) (“Neither the fact that [defendant] brought a 

suit asserting only state-law claims nor the fact that he has since represented that he will 

not amend that complaint to add federal claims prohibits [defendant] from changing his 

mind.”), reh’g en banc granted and opinion vacated on other grounds, 508 F.3d 576 (11th 

Cir. 2007). But Plaintiffs themselves concede that a defendant can moot a claim for 

declaratory relief by settling the claims or entering into some other “judicially enforceable 

agreement” not to bring the claims in the future. See Opp. at 7; see also Kidder, Peabody

& Co., 925 F.2d at 563 (finding claims for declaratory judgment “inarguably . . . moot” 

where “the parties have entered into a settlement, . . . or where the defendant has entered 

into a binding, judicially enforceable agreement.”) (internal citations and quotation marks 

omitted). The question here is whether self-imposed judicial estoppel is equivalent to a 

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settlement or “judicially enforceable agreement” such that it moots the claim for 

declaratory relief. The Court concludes that it is.

Under the judicial estoppel doctrine, “where a party assumes a certain position in 

a legal proceeding, and succeeds in maintaining that position, he may not thereafter, 

simply because his interests have changed, assume a contrary position, especially if it be 

to the prejudice of the party who has acquiesced in the position formerly taken by him.” 

New Hampshire v. Maine, 532 U.S. 742, 749 (2001). By judicially estopping themselves, 

Defendants have unambiguously waived the ability to ever bring a suit against Plaintiffs 

for violation of the DTSA or CFAA. This waiver is judicially enforceable; should 

Defendants violate the waiver by asserting such claims and taking a “contrary position” in 

the future, the claims would be subject to immediate dismissal by the court where they 

are brought. See, e.g., Finn v. Sullivan, 228 F. Supp. 3d 972, 985 (N.D. Cal. 2017) 

(dismissing with prejudice plaintiff’s claims that were barred by judicial estoppel); see also

Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001) (“This court 

invokes judicial estoppel not only to prevent a party from gaining an advantage by taking 

inconsistent positions, but also because of ‘general consideration[s] of the orderly 

administration of justice and regard for the dignity of judicial proceedings,’ and to ‘protect 

against a litigant playing fast and loose with the courts.’”) (quoting Russell v. Rolfs, 893 

F.2d 1033, 1037 (9th Cir.1990)). 

Plaintiffs having conceded that their claim for declaratory relief would be moot if 

Defendants entered into a “legally-binding settlement releasing the potential federal 

claims,” Opp. at 7, the Court concludes there’s no meaningful difference in this context 

between a legally binding settlement and self-imposed estoppel. In Kidder, Peabody & 

Co., the Second Circuit recognized that a defendant’s representation that it would not 

bring a federal action does not, standing alone, moot a claim for declaratory relief because 

“[w]ithout a declaratory judgment, [defendant] again could put [plaintiff] to the task of 

defending against the federal . . . claims.” Kidder, Peabody & Co., 925 F.2d at 563. Not 

so here. Defendants have not simply represented to the Plaintiffs that they do not intend 

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to bring DTSA or CFAA claims against them, they are now precluded from asserting such 

claims. There is no risk that Defendants will “put [Plaintiffs] to the task of defending 

against [DTSA and CFAA] claims,” so there is no need for declaratory relief. Id. This 

self-imposed estoppel functions as a “judicially enforceable agreement” that moots 

Plaintiffs’ claims for declaratory relief. Id.

Plaintiffs’ claims for declaratory relief under the DTSA and CFAA are MOOT and 

DISMISSED WITH PREJUDICE. In the absence of these claims, there is no basis for 

federal jurisdiction in this case.2 

Supplemental Jurisdiction

Without Plaintiffs’ claims for declaratory relief under the DTSA and CFAA, only 

Plaintiffs’ seven state-law claims remain. “[I]n in 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 economy, convenience, fairness, and comity—will 

point toward declining to exercise jurisdiction over the remaining state-law claims.” 

Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988). Here, there is another 

pending action involving the same underlying set of facts. Because retaining and ruling 

on Plaintiffs’ state-law claims would present the risk of inconsistent rulings and 

unnecessary duplication of efforts, judicial economy would not be served by retaining 

supplemental jurisdiction over these claims. The Court declines to exercise supplemental 

jurisdiction and DISMISSES WITHOUT PREJUDICE Plaintiffs’ state-law claims.

/ / /

/ / /

 

2

 There is no diversity jurisdiction because citizens from California appear on both sides 

of the “v.” Plaintiffs are both citizens of California. See Complaint, Dkt. 1., at ¶¶ 2, 3. 

Defendant Good Life Management, a limited liability company, is a citizen of every state 

in which its members are citizens. See Johnson v. Columbia Properties Anchorage, LP, 

437 F.3d 894, 899 (9th Cir. 2006). Defendants submit that at least one member of Good 

Life Management, Otis Jacobs, is a California citizen, which precludes this Court from 

exercising diversity jurisdiction. See Reply at 6 n.1. 

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For the reasons above, Defendants’ Motion to Dismiss is GRANTED IN PART. 

Dkt. 22. The parties’ requests for judicial notice are GRANTED. Dkts. 23, 27. Plaintiffs’

claim for declaratory relief under the DTSA and CFAA is DISMISSED WITH PREJUDICE 

AS MOOT. The Court won’t exercise supplemental jurisdiction over Plaintiffs’ remaining 

state-law claims, so it DISMISSES THOSE CLAIMS WITHOUT PREJUDICE. The clerk 

is directed to enter judgment accordingly and close the case. 

IT IS SO ORDERED.

Dated: April 5, 2019

HONORABLE LARRY ALAN BURNS

Chief United States District Judge

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