Court Opinion

ID: 3157767
Source: CourtListenerOpinion
Date Created: 2015-11-24 22:03:08.991526+00
Date Added: 2024-06-11T12:01:03.163192
License: Public Domain

Filed 11/24/15

                           CERTIFIED FOR PUBLICATION

             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             SIXTH APPELLATE DISTRICT

RICHTEK USA, INC., et al.,                         H039519
                                                  (Santa Clara County
        Plaintiffs and Appellants,                 Super. Ct. No. CV192991)

            v.

UPI SEMICONDUCTOR
CORPORATION et al.,

        Defendants and Respondents.

        Here, we confront the boundaries of the use of judicially noticed records in ruling
on a demurrer. Utilizing judicially noticed documents in ruling on a demurrer is only
proper when the documents are not used to determine disputed factual issues, such as the
timing of acquisition of knowledge of the misappropriation of customer information or
power supply technology.1
        Appellants are Richtek Technology Corporation (Richtek Technology), a Taiwan
corporation and Richtek USA, Inc. (Richtek USA), its California subsidiary.
Respondents are James Chang, H.P. Huang and J.C. Chen, Taiwan residents and former
employees of Richtek Technology, and uPI Semiconductor Corporation (uPI), a
California company they formed.

        1
         By customer information, we are referring to customer contacts, needs,
requirements, feedback, et cetera. By power supply technology, we are referring to
engineering specifications and definitions for making power management products,
design layout schematics, et cetera.
       We will distinguish the employees’ cases that are governed by an employment
agreement, and the action against uPI, which remains here, and is subject to California
law, particularly as to continuing use of multiple trade secrets.
       Appellants sued respondents for trade secret misappropriation. The trial court
sustained respondents uPI, Chang and Huang’s demurrer on the ground that appellants’
claims were barred by the Taiwanese statute of limitations for trade secret
misappropriation actions. The court also granted Chen’s motion to dismiss based on a
forum selection clause in his employment agreement mandating a Taiwanese forum.
       Appellants bring this appeal asserting that the trial court erred in sustaining the
demurrer because it resolved disputed issues of fact based on information from judicially
noticed documents. In addition, appellants argue that the trial court erred in granting
Chen’s motion to dismiss based on the forum selection clause in his employment
agreement with Richtek Technology.
                         STATEMENT OF THE FACTS AND CASE2
       Richtek Technology is a Taiwanese corporation that designs, markets and sells
power management integrated circuit products. Richtek USA is a subsidiary of Richtek
Technology, and has offices in Campbell, California.
       uPI is a Taiwanese corporation that also designs, markets, and sells power
management integrated circuit products. Huang, Chang, and Chen are Taiwanese citizens
and live in Taiwan. They all are former Richtek Technology employees, who left and
went to work for uPI in Taiwan.
       While Chang, Huang and Chen were employed by Richtek Technology, they were
subject to an employment agreement. The employment agreement provides: “[The
employee] shall bear special confidentiality responsibility for any plans, documents or
       2
          We assume all facts as alleged in the amended complaint are true for the
purposes of demurrer. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6 (Evans).) The
facts as stated here are taken from the amended complaint.
                                              2
drawings classified by [Richtek Technology] as confidential . . . and s/he may not
disclose such. . . . [¶] . . . [¶] After leaving the position, [the employee] may not use any
research or marketing secret of [Richtek Technology] s/he possessed or became known
of.”
       With regard to forum selection for resolution of disputes, the employment
agreement provides: “Should [the employee] violate the above provisions, s/he
is subject to the punishment of removal from the position. Should [the employee’s]
violation involve any…disclosure of secrets or any other infringement, which results in
losses to [Richtek Technology], [the employee] shall bear any legal liabilities and
indemnify [Richtek Technology] for any losses and claims, and relinquish the
counterplea right, and agrees that Xinzhu local court shall be the court with governing
jurisdiction for first trial.”
       Respondent Chang left Richtek Technology in December 2005. While he was still
working for Richtek Technology, he founded uPI to directly compete with Richtek. He
and other former Richtek Technology employees agreed to take Richtek Technology and
Richtek USA’s trade secrets. In order to directly compete with appellants, uPI targeted
appellants’ customers in the United States. Huang, Chang, and Chen had regular and
systematic contact via e-mail, telephone and in-person meetings with individuals at
AMD, Dell, nVidia, Apple and Hewlett Packard (HP), some of which occurred in Santa
Clara County in California
       Huang, Chang and Chen improperly acquired appellants’ technical and business
trade secrets, including United States customer contacts and customer information. uPI
used that trade secret information to persuade those companies to become uPI’s
customers for power controller products designed and manufactured using appellants’
trade secrets. Appellants lost customers and sales to uPI, who offered nearly identical
products at a lower price.

                                              3
       Legal Actions in Taiwan
       Prior to the complaint being filed in the present case, Richtek Technology filed
two cases in Taiwan in 2007 related to misappropriation of its trade secrets by
respondents.3
       On July 13, 2007, Richtek Technology filed a criminal complaint in Taiwan
seeking prosecution of 11 individuals, including respondents Huang and Chang, who
were alleged to be former employees of Richtek Technology and were subsequently
employed by uPI. The complaint alleged a claim for misappropriation of trade secrets
belonging to Richtek Technology. The criminal complaint alleged that at the end of
2005, Huang and Chang left Richtek Technology with confidential information belonging
to Richtek Technology and that they illegally used the information for the benefit of uPI.
       On September 11, 2007, Richtek Technology filed a civil complaint for patent
infringement in Taiwan against uPI and the same 11 individual defendants, including
Huang and Chang. The civil complaint alleged that respondents misappropriated Richtek
Technology’s trade secrets in connection with uPI’s products and business in violation of
their Richtek Technology employment agreements.
       Legal Actions in the United States
       On December 2, 2009, Richtek Technology filed two complaints in the United
States alleging patent infringement and trade secret misappropriation: one in the United
States International Trade Commission that was terminated on September 9, 2010, and
the other in the U.S. District Court for the Northern District of California, alleging patent
infringement and trade secret misappropriation against uPI. On August 19, 2010, Richtek
Technology filed a second amended complaint adding Huang, Chang, and Chen as
defendants. On January 3, 2011, the United States District Court dismissed the trade

       3
         Appellants’ motion for judicial notice filed October 1, 2013, that was deferred
for consideration with the merits of this appeal is denied.
                                              4
secret claim for lack of subject matter jurisdiction and dismissed all claims against
Huang, Chang, and Chen for lack of personal jurisdiction. The United States District
Court action on the patent and copyright claims remains pending, but is presently stayed.
       On January 28, 2011, Richtek Technology and Richtek USA filed the present case,
alleging trade secret misappropriation against Huang, Chang, Chen, and uPI. On
October 5, 2011, uPI, Huang, and Chang filed a demurrer to the complaint on the ground
that the claims are time-barred under Taiwan’s statute of limitations for trade secret
misappropriation.
       Concurrent with the demurrer, Huang, Chang, and Chen filed a motion to dismiss
based on the forum selection clause in their employment agreements mandating a forum
in Taiwan for Richtek Technology’s trade secret claims.
       On May 23, 2012, the trial court sustained uPI, Huang, and Chang’s
demurrer with leave to amend. The court granted respondents’ request to take judicial
notice of the Taiwan Trade Secrets Act and Richtek Technology’s criminal and civil
complaints that were filed in Taiwan in 2007. The court determined Richtek
Technology’s claims were barred by Taiwan’s two-year statute of limitations for trade
secret misappropriation claims, because the Taiwan criminal and civil complaints
demonstrate that Richtek Technology had knowledge of respondents’ alleged
misappropriation in 2007.
       With regard to Richtek USA’s identical trade secret claims, the court determined
under a choice of law analysis that Taiwan’s statute of limitations also applied to bar the
misappropriation claims.
       The court denied Huang, Chang, and Chen’s motion to dismiss based on the forum
selection clause in their employment agreements as moot.
       On June 4, 2012, appellants filed an amended complaint adding allegations of
recent discoveries of the full scope of the continuing misappropriation of trade secrets.

                                             5
       On July 6, 2012, respondents again demurred to the amended complaint on the
ground that the claims were barred by the Taiwan statute of limitations. In support of
their demurrer, respondents requested that the trial court take judicial notice of the
Taiwan judicial decision in MediaTek v. MStar, Chong-Fu-Ming-Zi, No.1 Intellectual
Property Court of 2012 (MediaTek), and its English translation.
       On February 8, 2013, the trial court granted respondents’ request for judicial
notice of the MediaTek case as the law of a foreign jurisdiction. The court sustained
respondents’ demurrer without leave to amend, finding that appellants’ allegations of
recent discoveries of further misappropriation “do not appear to be instances of new
misappropriations, but rather, ongoing uses of the trade secrets originally misappropriated
from Richtek by its former employees.” The court went on to state: “None of the new
allegations . . . change the fact that Richtek knew of the act of misappropriation and the
identity of the liable parties in September 2007 . . . .”
       With regard to Richtek USA’s identical trade secret claims, the trial court stated
that it saw “no basis to reconsider its conflict of laws analysis from the prior order.”
       The court deemed Chang and Huang’s motion to dismiss moot. The court granted
Chen’s motion to dismiss, finding that the forum selection clause in the employment
agreement mandated a Taiwanese forum.
       The trial court dismissed respondents from the action, and this appeal followed.
                                         DISCUSSION
       On appeal from a judgment of dismissal after a demurrer is sustained without
leave to amend, the reviewing court assumes the truth of all facts properly pleaded by the
plaintiff. (Evans, supra, 38 Cal.4th at p. 6.) “We also accept as true all facts that may be
implied or reasonably inferred from those expressly alleged. [Citation.]” (Rotolo v. San
Jose Sports & Entertainment, LLC (2007) 151 Cal.App.4th 307, 320-321, disapproved on
other groungs in Verdugo v. Target Corp. (2014) 59 Cal.4th 312, 327.) Further, “we give

                                               6
the complaint a reasonable interpretation, and read it in context.” (Schifando v. City of
Los Angeles (2003) 31 Cal.4th 1074, 1081 (Schifando).) But we do not assume the truth
of “ ‘ “contentions, deductions or conclusions of fact or law.” ’ ” (Evans, supra, 38
Cal.4th at p. 6.)
       We also consider matters that may be judicially noticed and the complaint’s
exhibits. (Code Civ. Proc., § 430.30, subd. (a); Schifando, supra, 31 Cal.4th at p. 1081.)
Evidence Code section 452, subdivision (d) authorizes judicial notice of court records.
“ ‘The court may in its discretion take judicial notice of any court record in the United
States. [Citation.] This includes any orders, findings of facts and conclusions of law, and
judgments within court records. [Citations.] However, while courts are free to take
judicial notice of the existence of each document in a court file, including the truth of
results reached, they may not take judicial notice of the truth of hearsay statements in
decisions and court files.’ [Citation.]” (In re Vicks (2013) 56 Cal.4th 274, 314.)
       Where, as here, respondents demur on the primary ground that the action is time-
barred under the affirmative defense of the statute of limitations, we apply the following
standard: “ ‘ “A demurrer based on a statute of limitations will not lie where the action
may be, but is not necessarily, barred. [Citation.] In order for the bar . . . to be raised by
demurrer, the defect must clearly and affirmatively appear on the face of the complaint
[and matters subject to judicial notice]; it is not enough that the complaint shows that the
action may be barred. [Citation.]” [Citation.]’ [Citation.]” (Committee for Green
Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42; accord,
Code Civ. Proc., § 430.30, subd. (a).)
The Amended Complaint
       The amended complaint alleges that Richtek Technology’s former employees,
including Huang and Chang, violated the confidentiality provisions of their employment
agreements by copying and/or not returning Richtek Technology’s plans, documents,

                                               7
software and design files and disclosing them to uPI and others. The amended complaint
further alleges that Richtek Technology and uPI are Taiwanese corporations, and that
Huang and Chang are Taiwanese citizens and residents.
       As relevant in this case, with regard to the timing of appellants’ discovery of the
misappropriation, the amended complaint specifically alleges: “At the time Richtek USA
and Richtek Technology first suspected that some trade secrets may have been
misappropriated, they had not yet obtained knowledge of the acts which constituted the
misappropriation, the role of the person involved in misappropriating the trade secrets;
the identity of which specific trade secrets had been misappropriated; the scope of the
misappropriation, the identification of all of the products manufactured and sold using the
misappropriated trade secrets, some of which had not yet been designed, manufactured or
sold, and the extent to which Richtek USA, Richtek Technology and the trade secrets
were damaged by the misappropriation, use and sale of these products.” The amended
complaint further alleges: “. . . Richtek USA and Richtek Technology obtained decapped
microphotographs of uPI’s uP6201 product sometime in early 2009. Richtek reviewed
and analyzed the microphotographs and learned of the similarities between Richtek’s
products and uPI products.” “. . . Richtek USA and Richtek Technology did not become
aware of [respondents’] misappropriation of their files generated to test and verify circuit
schematics and layout design files until approximately April 2009.” “Accordingly,
Richtek USA and Richtek Technology did not suspect that [respondents] had
misappropriated their customer information, customer contacts, customer needs,
customer requirements, customer purchasing strategies, customer feedback, and solutions
provided to customer relating to product samples, evaluation boards, and demonstration
boards until approximately October 2009.
       The amended complaint contains additional specific allegations regarding other
subsequent discoveries of respondents’ misappropriation. These include information

                                             8
about Richtek USA and Richtek Technology’s “parameters for circuit schematics and
layout files,” and their “product engineering specifications and definitions for fabricating
power management IC products,” which appellants did not learn were misappropriated
until April 2010, and uPI’s use of appellants’ trade secret schematics, circuit layouts and
design files in its new generation products, which appellants learned of in
November 2011.
       Here, the trial court determined that appellants’ claims were barred by Taiwan’s
two-year statute of limitations for trade secret misappropriation. In so holding, the court
took judicial notice of the criminal and civil complaints filed in Taiwan in 2007 as
records of a United States case.4
       While it was proper for the trial court to judicially notice the Taiwanese
complaints as appended to the United States District Court case, it was not proper to use
the allegations in those complaints to resolve factual disputes for purposes of the
demurrer in this case. (Evid. Code §§ 452, 453). “In ruling on a demurrer, a court may
consider facts of which it has taken judicial notice. (Code Civ. Proc. § 430.30, subd. (a).)
This includes the existence of a document. When judicial notice is taken of a document,
however, the truthfulness and proper interpretation of the document are disputable.
[Citation.]” (StorMedia, Inc. v. Superior Court, (1999) 20 Cal.4th 449, 457, fn. 9.)
       Here, the trial court did not take notice of the existence of the complaints; rather, it
used the complaints to resolve the disputed issue of when appellants’ had knowledge of
respondents’ misappropriation of trade secrets for purposes of the statute of limitations.
The allegations in the amended complaint, which we must accept as true for purposes of
evaluating a demurrer, state that appellants learned of specific misappropriations in 2009,
2010 and 2011. This is contrary to the allegations in the Taiwanese complaints. In

       4
        The two Taiwanese complaints were appended to appellants’ complaint filed in
United Stated District Court in December 2009. (See Evid. Code, § 452, subd. (d).)
                                              9
sustaining respondents’ demurrer, the trial court used the allegations in the Taiwan
complaints to conclude that appellants had knowledge of respondents’ misappropriation
in 2007, and as such, appellants’ claims in this case were time-barred. This was
improper.
       “[A] court ruling on a demurrer cannot decide a question that may depend on
disputed facts by means of judicial notice.” (Fremont Indemnity Co. v. Fremont General
Corp. (2007) 148 Cal.App.4th 97, 115.) “ ‘On a demurrer a court’s function is limited to
testing the legal sufficiency of the complaint. [Citation.] “A demurrer is simply not the
appropriate procedure for determining the truth of disputed facts.” [Citation.] The
hearing on demurrer may not be turned into a contested evidentiary hearing through the
guise of having the court take judicial notice of documents whose truthfulness or proper
interpretation are disputable. [Citation.]’ [Citation] . . . ‘ “judicial notice of matters
upon demurrer will be dispositive only in those instances where there is not or cannot be
a factual dispute concerning that which is sought to be judicially noticed.” [Citation.]’ ”
(Id. at pp. 113-114; see also Joslin v. H.A.S. Brokerage, (1986) 184 Cal.App. 3d 369,
374; court of appeal reversed judgment entered after trial court used judicially noticed
document to sustain demurrer based on statute of limitations where there was a dispute as
to the identity of the defendant.)
       We find that the trial court erred in this case by using the 2007 Taiwan complaints
to conclude that appellants “had knowledge of both the misappropriation at issue in this
lawsuit and the identity of the parties liable for damages.” The trial court’s conclusions
regarding the Taiwan complaints are contradictory to the express allegations in the
amended complaint. The trial court erred in sustaining respondents’ demurrer.5

       5
        Because we find the trial court erred in resolving a factual dispute in sustaining
the demurrer, we do not reach the issue of the applicability of the borrowing statute
(Code Civ. Proc., § 361), or the Taiwan statute of limitations to this case.
                                              10
       Forum Selection Clause in Employment Agreement
       The trial court granted Chen’s motion to dismiss pursuant to Code of Civil
Procedure sections 410.30, subdivision (a), and 418.10, subdivision (a)(2), finding that
the plain language of the Chen’s employment agreement mandates a Taiwanese forum.
       The law in this area is well-established. “In California, the procedure for enforcing
a forum selection clause is a motion to stay or dismiss for forum non conveniens . . . , but
a motion based on a forum selection clause is a special type of forum non conveniens
motion. The factors that apply generally to a forum non conveniens motion do not
control in a case involving a mandatory forum selection clause.” (Berg v. MTC
Electronics Technologies Co. (1998) 61 Cal.App.4th 349, 358.) When a case involves a
mandatory forum selection clause, it will usually be given effect unless it is unfair or
unreasonable. (Id. at pp. 358-359.) Moreover, a court will normally reject any claims
that the chosen forum is unfair or inconvenient. (Id. at p. 359.) Also, “[a] court will
usually honor a mandatory forum selection clause without extensive analysis of factors
relating to convenience.” (Id. at pp. 358-359.)
       Here, the trial court determined that the forum selection clause in the employment
agreement was mandatory as to both Chen and Richtek Technology. Appellants argue
the forum selection clause was mandatory only as to Chen as the employee; Richtek
Technology had its choice of the venue when asserting its claims.
       As this presents an issue of contract interpretation, we decide this threshold issue
de novo, independent of the trial court’s ruling. “An appellate court is not bound by the
trial court’s construction of a contract when, as here, the interpretation is based solely
upon the terms of the written instrument without any assessment of conflicting extrinsic
evidence. [Citations.]” (Intershop Communications v. Superior Court (2002) 104
Cal.App.4th 191, 196.)

                                              11
       The employment agreement between Richtek Technology and Chen provides, in
relevant part: “Should [the employee’s] violation involve any . . . disclosure of secrets or
any other infringement, which results in losses to [Richtek Technology], [the employee]
shall bear any legal liabilities and indemnify [Richtek Technology] for any losses and
claims, and relinquish the counterplea right, and agrees that Xinzhu local court is to be
the court with governing jurisdiction for first trial.6 (Emphasis added.)
       The translated phrase “is to be” in the agreement is unequivocal, and evinces the
parties’ intent that the forum selection clause be mandatory. (See, e.g., Lu v. Dryclean–
U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490, 1492 [“ ‘[a]ny and all litigation
that may arise as a result of this Agreement shall be litigated in Dade County, Florida’ ”
(italics added)]; CQL Original Products, Inc. v. National Hockey League Players’ Assn.
(1995) 39 Cal.App.4th 1347, 1352 [“ ‘any claims . . . shall . . . be prosecuted in the
appropriate court of Ontario [Canada]’ ”] italics added; Cal-State Business Products &
Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1672, fn. 4; [“ ‘[A]ny appropriate
state or federal district court located in the Borough of Manhattan, New York City, New
York shall have exclusive jurisdiction over any case of controversy arising under or in
connection with this Agreement’ ”] italics added.)
       Moreover, the agreement’s forum selection clause presumes a lawsuit by Richtek
Technology to seek damages for Chen’s breach and misappropriation of Richtek
Technology’s trade secrets, as it begins with the phrase “[s]hould [the employee] violate
the above provisions.” In the event of such lawsuit by Richtek Technology, the forum is
selected as the Xinzhu Local Court of Taiwan. This provision is mandatory as to both

       6
           The quote as stated is from the English translation by appellant’s expert, Yang
Shao that was provided in the United States District Court case. Respondents agreed in
the trial court and here to rely upon appellants’ offered translation of the employment
agreement.
                                             12
Chen and Richtek Technology, and there is no clause permitting Richtek Technology to
choose a different forum.
      We find the forum selection clause in the employment agreement between Chen
and Richtek Technology is mandatory, and the trial court correctly granted Chen’s
motion to dismiss.
                                     DISPOSITION
      The order sustaining respondents uPI, Huang and Chang’s demurrer to the
amended complaint is reversed. Costs on appeal are awarded to appellants Richtek
Technology and Richtek USA.
      The order granting respondent Chen’s motion to dismiss is affirmed. Costs on
appeal are awarded to respondent Chen.

                                          13
                                        ______________________________________
                                                   RUSHING, P.J.

WE CONCUR:

____________________________________
           ELIA, J.

____________________________________
           MÁRQUEZ, J.

Richtek USA, Inc., et al. v. uPI Semiconductor Corporation et al.
H039519

                                          14
Trial Court:                                   Santa Clara County Superior Court
                                               Superior Court No.: CV192991

Trial Judge:                                   The Honorable James P. Kleinberg

Attorneys for Plaintiffs and                   Alston & Bird
Appellants Richtek USA, Inc. et al.:
                                               Yitai Hu
                                               Elizabeth H. Radar

Attorneys for Defendants and                   Hogan Lovells US
Respondents uPI Semiconductor
Corporation et al.                             Steven M. Levitan
                                               Clark S. Stone
                                               Jennifer M. Lantz
                                               Edward C. Kwok

Richtek USA, Inc., et al. v. uPI Semiconductor Corporation et al.
H039519

                                          15