Genentech , Inc v. JHL Biotech, Inc. et al, No. 3:2018cv06582 - Document 216 (N.D. Cal. 2019)
Court Description: ORDER GRANTING 144 MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT. Signed by Judge William Alsup. (whalc2, COURT STAFF) (Filed on 6/13/2019)
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Genentech , Inc v. JHL Biotech, Inc. et al Doc. 216 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 GENENTECH, INC., 12 13 14 No. C 18-06582 WHA Plaintiff, 11 For the Northern District of California United States District Court 10 v. ORDER GRANTING MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT JHL BIOTECH, INC., et al., Defendants. / 15 16 INTRODUCTION 17 In this action for trade secret misappropriation, computer fraud, and various state law 18 claims, plaintiff moves for leave to file an amended complaint. For the reasons stated below, 19 the motion is GRANTED. 20 STATEMENT 21 Plaintiff Genentech, Inc. accuses defendant JHL Biotech, Inc., a competitor in the 22 biopharmaceutical space, and various individual defendants of misappropriating its trade 23 secrets, computer fraud, and violating various state laws. A prior order has set forth the detailed 24 background of this action (Dkt. No. 128). In short, Genentech sells medicines called 25 “biologics” — typically large-molecule, protein-based drugs produced by living cells and 26 recombinant DNA technology — including Rituxan, Herceptin, Avastin, and Pulmozyme. JHL, 27 a Taiwanese start-up founded by defendants Rose Lin and Racho Jordanov, currently seeks to 28 market “biosimilars” (effectively generics) of these four biologics in China and Europe. Dockets.Justia.com For the Northern District of California United States District Court 1 The relatively swift development of JHL’s biosimilars is allegedly thanks to defendant 2 Xanthe Lam, Genentech’s former principal scientist. Genentech accuses Xanthe of 3 misappropriating its trade secrets to aid JHL while she was still employed by Genentech. In 4 2016, JHL hired defendant John Chan, the Lams’ family friend, who eventually became project 5 leader for the Pulmozyme biosimilar development. In 2017, JHL hired defendant James Quach, 6 another former Genentech employee, to manage JHL’s manufacturing facility in China. Shortly 7 before leaving for his new job in China, Quach allegedly visited the Lams’ home on three 8 separate occasions in the July 2017 and used Xanthe’s log-in credentials to access and 9 download onto a personal USB drive hundreds of confidential Genentech documents related to 10 manufacturing policies and protocols. And, once Quach began his job in China, he allegedly 11 asked Xanthe to send him additional confidential Genentech documents. 12 A prior order granted in part and denied in part defendants’ Rule 12(b)(6) motion to 13 dismiss various claims (Dkt. No. 128 at 14–23). That order allowed Genentech to seek leave to 14 amend certain claims that were dismissed (see id. at 44). The dismissed claims given leave to 15 amend included the following: (1) violation of the Defend Trade Secrets Act (“DTSA”) as to 16 John Chan for failure to adequately allege an agreement between JHL and Chan (id. at 16); (2) 17 violation of the Computer Fraud and Abuse Act (“CFAA”), conspiracy to violate the CFAA, 18 and violation of California’s Computer Data Access and Fraud Act (“CDAFA”) for failure to 19 adequately allege an agreement between Quach and JHL and failure to adequately allege that 20 Quach was acting as JHL’s agent when he accessed Genentech documents using Xanthe’s log- 21 in credentials (id. at 20–21, 23); and (3) common law claims involving intentional interference 22 with contractual relations and aiding and abetting Xanthe’s breach of the duty of loyalty for 23 lack of clarity in Genentech’s pleading (id. at 21–22). 24 Genentech now moves for leave to file an amended complaint, arguing that its proposed 25 amended complaint cures the aforementioned deficiencies (as well as those not reached in the 26 prior order) (Dkt. No. 144). Only JHL opposes, with the other individual defendants generally 27 joining in JHL’s opposition (Dkt. Nos. 161–63, 165–67). JHL argues that amendment would be 28 futile. This order follows full briefing and oral argument. 2 1 2 Rule 15(a)(2) permits a party to amends its pleadings with the court’s leave, advising 3 that “[t]he court should freely give leave when justice so requires.” In ruling on a motion for 4 leave to amend, courts consider: (1) bad faith, (2) undue delay, (3) prejudice to the opposing 5 party, (4) futility of amendment, and (5) whether plaintiff has previously amended his 6 complaint. Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). Futility alone can 7 justify denying leave to amend. Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2004). For 8 purposes of assessing futility on this motion, the legal standard is the same as it would be on a 9 motion to dismiss under Rule 12(b)(6). Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th For the Northern District of California 10 United States District Court ANALYSIS Cir. 1988). 11 1. CHAN’S VIOLATION OF THE DTSA (CLAIM 1). 12 Genentech’s proposed amended complaint realleges a DTSA claim against John Chan 13 (Claim 1) (Dkt. No. 144-1 ¶¶ 277–92). Genentech asserts that the additional allegations are 14 sufficient to support a reasonable inference that Chan agreed with JHL to misappropriate its 15 trade secrets (Dkt. No. 144 at 5). Chan does not specifically oppose amendment of this claim. 16 (Though he joins JHL’s opposition generally (Dkt. No. 165), JHL itself did not make any 17 arguments opposing the DTSA claim against Chan.) The unopposed motion to amend Claim 1 18 is therefore GRANTED.* 19 2. 20 The proposed amended complaint also re-alleges claims under the CFAA and CDAFA. 21 Specifically, Genentech reasserts the following: (1) violation of the CFAA, 18 U.S.C. § 1030, 22 against Quach and JHL (Claim 6); (2) conspiracy to violate the CFAA against Xanthe Lam, 23 Quach, and JHL (Claim 7); and (3) violation of the CDAFA, Cal. Pen. Code § 502, against 24 Xanthe Lam, Quach, and JHL (Claim 8) (Dkt. No. 144-1 ¶¶ 342–75). VIOLATION OF THE CFAA AND CDAFA. 25 26 27 28 * During oral argument, counsel for the Lams argued that the prior order dated March 1 had already dismissed with prejudice Genentech’s conspiracy allegations. Not so. That order dismissed with prejudice Genentech’s standalone claim regarding conspiracy to violate the DTSA(Dkt. No. 128 at 21). The order otherwise clearly found that Genentech had adequately alleged conspiracy (see id. at 16–20). 3 1 A. Violation of CFAA Against JHL and Quach & Violation of CDAFA Against JHL, Xanthe, and Quach (Claims 6 & 8). 2 Genentech asserts claims of violation of the CFAA against JHL and Quach and violation 3 of the CDAFA against JHL, Xanthe, and Quach (Dkt. No. 144-1 ¶¶ 342–53, 361–75). It argues 4 that the proposed amended complaint plausibly alleges that Xanthe had both actual and apparent 5 authority to act for JHL, and as such, JHL is liable for the conspiracy Xanthe entered on its 6 behalf (Dkt. No. 169 at 6). Specifically, Genentech contends that Quach’s alleged downloading 7 sessions in July 2017 using Xanthe’s Genentech log-in credentials to access Genentech’s 8 manufacturing trade secrets and Quach’s request to Xanthe for additional Genentech documents 9 in August 2017 were on JHL’s behalf, and that Xanthe acted within the scope of her agency 10 for Xanthe’s (JHL’s agent) intentional torts, according to Genentech. (Dkt. No. 169 at 6 (citing For the Northern District of California United States District Court (Dkt. Nos. 169 at 6; 144-1 ¶¶ 207–08, 214). California law thus holds JHL (the principal) liable 11 12 Lisa M. v. Henry Mayo Newhall Mem’l Hosp., 12 Cal. 4th 291, 296–97 (1995)). 13 To find a principal liable for the acts of an ostensible agent, (1) “[t]he person dealing 14 with the agent must do so with belief in the agent’s authority and this belief must be a 15 reasonable one”; (2) “such belief must be generated by some act or neglect of the principal 16 sought to be charged”; and (3) “the third person in relying on the agent’s apparent authority 17 must not be guilty of negligence.” Associated Creditors’ Agency v. Davis, 13 Cal. 3d 374, 399 18 (1975). 19 “[T]he ostensible authority of an agent cannot be based solely upon the agent’s 20 conduct.” C.A.R. Transp. Brokerage Co., Inc. v. Darden Restaurants, Inc., 213 F.3d 474, 480 21 (9th Cir. 2000). The principal, however, need not make explicit representations regarding an 22 agent’s authority to the third party. Ibid. An agency is ostensible (i.e., apparent) when the 23 principal “intentionally, or by want of care, causes a third person to believe another to be his 24 agent who is not really employed by him.” Cal. Civ. Code § 2300. Further, apparent authority 25 arises by “a person’s manifestation that another has authority to act with legal consequences for 26 the person who makes the manifestation, when a third party reasonably believes the actor to be 27 authorized and the belief is traceable to the manifestation.” Mavrix Photographs, LLC v. 28 Livejournal, Inc., 873 F.3d 1045, 1055 (9th Cir. 2017) (quoting Restatement (Third) of Agency 4 1 § 3.03 (Am. Law Inst. 2006)). “The principal’s manifestations giving rise to apparent authority 2 may consist of . . . the granting of permission to the agent to perform acts . . . under 3 circumstances which create in him a reputation of authority.” Ibid. (citation omitted). 4 5 case and may be proved by circumstantial evidence.” C.A.R. Transp., 213 F.3d at 479–80. 6 “[U]nless only one conclusion may be drawn, [the] existence of an agency and the extent of an 7 agent’s authority is a question of fact.” Id. at 480. For the Northern District of California 8 United States District Court Moreover, “[a]n agent’s authority may be implied from the circumstances of a particular No defendant opposes Genentech’s allegation that Xanthe and Quach conspired to 9 misappropriate Genentech’s trade secrets and violated the CFAA and CDAFA. JHL, however, 10 argues, inter alia, that Genentech failed to adequately plead Xanthe’s agency relationship at the 11 time of the alleged violations (Dkt. No. 161 at 13–14, 17). This order disagrees. Genentech has 12 alleged sufficient facts that, when viewed in light most favorable to Genentech, support a 13 reasonable inference that JHL allowed Xanthe “to acquire a reputation of authority for acting on 14 JHL’s behalf” and that Xanthe’s reputation “is what led Quach to contact her for assistance in 15 securing a job at JHL” (Dkt. No. 169 at 3–4). 16 JHL argues that Genentech failed to adequately plead the second element required to 17 find apparent authority. Specifically, it asserts that Genentech did not allege any act by JHL 18 that created a reasonable belief in Xanthe’s agency (Dkt. No. 161 at 13–14). But JHL did 19 allegedly perform such acts that (at least negligently) plausibly created a reasonable belief. For 20 example, JHL authorized Xanthe to act as a high-level manager when it allegedly placed her “in 21 charge of the company” when its senior management left for the United States for the holidays 22 (Dkt. No. 144-1 ¶¶ 27, 167, 216). JHL authorized her to formally interview then-candidate 23 Chan and subsequently authorized her to supervise Chan’s work by holding regular Skype 24 conference calls with him through November 2016 and providing Genentech’s alleged trade 25 secrets (id. ¶¶ 169, 176, 216). As Genentech points out, these alleged facts show that JHL 26 authorized or at least acquiesced in Xanthe’s “wide-ranging conduct” on its behalf (Dkt. No. 27 169 at 4). 28 5 1 2 That is, according to JHL, Genentech failed to plead that Genentech believed Xanthe had 3 apparent authority to act on JHL’s behalf or that Genentech relied on Xanthe’s apparent 4 authority (Dkt. No. 161 at 13). As Genentech points it, however, apparent authority does not 5 necessarily require the purportedly injured party to retain the belief of apparent authority. Our 6 court of appeals has held that a defendant principal may be liable for the actions of its agents 7 based on apparent authority where the plaintiff itself was not alleged to have believed in or 8 relied upon the agent’s apparent authority; a third party’s belief was sufficient. See Mavrix, 873 9 F.3d at 1055. Thus under these circumstances, it is sufficient that Quach allegedly believed that 10 11 For the Northern District of California United States District Court JHL also asserts that Genentech failed to adequately plead the first and third elements. Xanthe was authorized to act on JHL’s behalf to support the inference of apparent authority. Specifically, on May 6, 2017, Quach allegedly emailed Xanthe a copy of his resume and 12 let her know that he was “very interested in Roslyn’s project and any other job opportunities” 13 and that he “hope[d he] spell [sic] her name right” (Dkt. No. 144-1 ¶ 204). Xanthe responded 14 that same day to set up a call with Quach “about the job openings at JHL Biotech” and clarified 15 that her “friend’s name is called [sic] Rose Lin” (ibid.). On May 11, 2017, Quach again 16 allegedly sent Xanthe his resume for her review and set up another phone call with Xanthe to 17 discuss taking a position at JHL (id. ¶ 205). And, in July 2017, he allegedly conspired with 18 Xanthe to unlawfully use her Genentech log-in credentials to access confidential Genentech 19 documents in preparation for his new job at JHL (id. ¶¶ 355–56). Taking all allegations as true 20 and in light most favorable to Genentech, as this order must, it is thus reasonable to infer that 21 Quach believed Xanthe had the authority to act on JHL’s behalf regarding his employment at 22 JHL and that his reliance on such belief is likely traceable to her high-level responsibilities at 23 JHL (Dkt. No. 169 at 4). See Mavrix, 873 F.3d at 1055. 24 As such, this order finds that, at this early stage, there are sufficient factual allegations to 25 support a plausible inference that Xanthe acted with apparent authority on behalf of JHL during 26 the alleged CFAA and CDAFA violations. In turn, JHL (as Xanthe’s alleged principal) is 27 therefore liable for Xanthe’s actions. Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 940 (9th 28 Cir. 2017) (“The legal consequences of an agent’s actions may be attributed to a principal when 6 1 the agent has actual authority (express or implied) or apparent authority.” (citing Restatement 2 (Third) of Agency § 2 intro. note)). Accordingly, Genentech’s motion to amend Claims 6 and 8 3 is GRANTED. B. 4 Conspiracy to Violate the CFAA Against JHL, Quach, Xanthe (Claim 7). 5 JHL opposes Genentech’s proposed separate claim of conspiracy to violate the CFAA 6 (Claim 7), arguing that (1) the CFAA does not provide for a conspiracy claim, and (2) 7 Genentech failed to adequately plead an agreement between JHL and Quach (Dkt. No. 161 at 8 14–17). 9 First, this order finds that the CFAA allows for a claim of conspiracy to violate the 10 violation of this section” to “maintain a civil action against the violator.” 18 U.S.C. § 1030(g) For the Northern District of California United States District Court CFAA. Section 1030(g) allows “[a]ny person who suffers damage or loss by reason of a 11 12 (emphasis added). JHL argues that a civil conspiracy claim under the CFAA “would extend 13 CFAA liability beyond the ‘violator,’ thereby expanding the civil claim beyond Congress’s 14 intent” (Dkt. No. 161 at 14). Section 1030, however, does not only proscribe certain conduct 15 under subsection (a) (e.g., accessing a computer without authorization), the violation of which 16 “shall be punished as provided in subsection (c) of this section.” 18 U.S.C. § 1030(a). It also 17 proscribes, under subsection (b), the “conspir[acy] to commit or attempt[] to commit an offense 18 under subsection (a),” the violation of which also “shall be punished as provided in subsection 19 (c).” Id. § 1030(b). Thus Congress intended to bring co-conspirators who violate Section 20 1030(b) within the purview of a civil action. See Flynn v. Liner Grode Stein Yankelevitz 21 Sunshine Regenstreif & Taylor LLP, No. C 09-00422 PMP, 2011 WL 2847712, at *3 (D. Nev. 22 July 15, 2011) (Judge Philip Pro) (“The statute’s plain language sets forth who is liable under 23 [Section] 1030: a primary violator, a person who attempts a primary violation, and a 24 co-conspirator of a primary violator.”). 25 JHL’s citation to Agilysys, Inc. v. Hall, 258 F. Supp. 3d 1331 (N.D. Ga. 2017), is 26 unavailing. There, the plaintiff asserted a claim relating to the violation of the CFAA against 27 both defendants, Solutions II and individual defendant Hall. The district court noted that 28 “[e]ven if Plaintiff had alleged sufficient facts to show that Solutions II directed or induced Hall 7 For the Northern District of California United States District Court 1 to act, the CFAA states that the person who has suffered damage or loss by a violation of the 2 CFAA may maintain a civil action against the ‘violator.’ ” Id. at 1343–44. It further noted that 3 the plaintiff “alleged that Hall was the individual who acted, or was the violator, not Solutions 4 II. Indeed, Solutions II did not access [the plaintiff’s] computers.” Ibid. (citing 18 U.S.C. § 5 1030(g)). The district court accordingly held that “Solutions II may not be held liable as the 6 violator under the CFAA.” Id. at 1344. As Genentech points out, however, the district court’s 7 reasoning is unclear and does seemingly recognize a conspiracy claim in the very next 8 paragraph. That is, the district court further noted that a “claim under section (b) requires 9 evidence of an agreement and common activities in furtherance of the unlawful act.” Id. at 10 1344 (citing Welenco, Inc. v. Corbell, 126 F. Supp. 3d 1154, 1176 (E.D. Cal. 2015)). It then 11 found “no allegation supported by facts that Hall and Solutions II entered into an agreement for 12 Hall to commit the unlawful act of accessing information beyond authorization.” Ibid. This 13 order thus finds JHL’s reliance on Agilysis for the proposition that Section 1030 does not 14 provide for a claim for conspiracy to violate the CFAA unpersuasive. 15 Second, for the reasons stated above, this order finds that Genentech has adequately pled 16 Xanthe’s agency relationship with JHL at the time of the alleged violations. As such, 17 Genentech has adequately pled an agreement between Quach and JHL (through Xanthe). 18 Accordingly, Genentech’s motion to amend Claim 7 is GRANTED. 19 3. STATE LAW CLAIMS. 20 Genentech realleges the following state law claims: (1) intentional interference with 21 Xanthe’s contractual relations against JHL, Racho Jordanov, Rose Lin, Allen Lam, and James 22 Quach (Claim 4); and (2) aiding and abetting Xanthe’s breach of duty of loyalty against JHL, 23 Jordanov, Lin, Allen Lam, Chan, and Quach (Claim 5) (Dkt. No. 144-1 ¶¶ 318–41). These 24 claims are based on allegations that defendants “induc[ed]” and/or “encouraged” Xanthe to 25 breach her employment agreement with Genentech (id. ¶¶ 10, 324, 328). JHL argues that these 26 claims are both time-barred and superseded by California’s Uniform Trade Secrets Act 27 (“CUTSA”) (Dkt. No. 161 at 2–11). 28 8 1 A. 2 For the Northern District of California “Because the applicability of the equitable tolling doctrine often depends on matters 3 outside the pleadings, it ‘is not generally amenable to resolution on a Rule 12(b)(6) motion.’ ” 4 Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206 (9th Cir. 1995) (quoting Cervantes 5 v. City of San Diego, 5 F.3d 1273, 1276 (9th Cir. 1993)). A court may dismiss a claim based on 6 the statute of limitions “only if the assertions of the complaint, read with the required liberality, 7 would not permit the plaintiff to prove that the statute was tolled.” Jablon v. Dean Witter & 8 Co., 614 F.2d 677, 682 (9th Cir. 1980). “In fact, a complaint cannot be dismissed unless it 9 appears beyond doubt that the plaintiff can prove no set of facts that would establish the 10 United States District Court Statute of Limitations. timeliness of the claim.” Supermail Cargo, 68 F.3d at 1207 (citing Jablon, 614 F.2d at 682). 11 “Generally speaking, a cause of action accrues at ‘the time when the cause of action is 12 complete with all of its elements.’ ” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 806 13 (2005) (quoting Norgart v. Upjohn Co., 21 Cal. 4th 383, 397 (1999)). “An important exception 14 to the general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of 15 action until the plaintiff discovers, or has reason to discover, the cause of action.” Id. at 807. 16 “A plaintiff has reason to discover a cause of action when he or she ‘has reason at least to 17 suspect a factual basis for its elements.’ ” Ibid. (quoting Norgart, 21 Cal. 4th at 398). “Under 18 the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with 19 knowledge of any remaining elements, will generally trigger the statute of limitations period.” 20 Ibid. 21 Genentech argues that the first amended complaint adequately pleads that it did not 22 know (nor had reason to know) of Xanthe Lam’s involvement with JHL until mid-November 23 2016 when Genentech’s Healthcare Compliance Office gained access to Xanthe Lam’s email 24 account, at which time the state law claims at issue accrued (Dkt. No. 169 at 8). Reading the 25 proposed complaint with the “required liberality,” this order agrees. 26 JHL contends that the statute of limitations period began when Genentech first learned 27 of Xanthe’s illicit consulting relationship with AP Biosciences, another biotechnology 28 competitor, on October 11, 2016 (Dkt. Nos. 161 at 4–6; 144-1 ¶¶ 259–61). It argues that 9 For the Northern District of California United States District Court 1 Genentech’s knowledge of a breach of a duty is enough to trigger the clock regarding the claims 2 premised on that breach and that knowledge of the defendant’s identity does not postpone the 3 accrual of that claim (Dkt. No. 161 at 4). In support, JHL cites Bernson v. Browning-Ferris 4 Industries, 7 Cal. 4th 926, 932 (1994), for the proposition that the discovery rule is “premised 5 on the commonsense assumption that once the plaintiff is aware of the injury, the applicable 6 limitations period (often effectively extended by the filing of a Doe complaint) normally affords 7 sufficient opportunity to discover the identity of all the wrongdoers.” The injury here, JHL 8 asserts, is Xanthe’s violation of the Proprietary Information Agreement and breach of duty of 9 loyalty, and Genentech’s awareness of these alleged injuries was thus sufficient to start the 10 clock (Dkt. No. 161 at 4). Genentech’s common law claims are therefore barred, according to 11 JHL, because Genentech brought the instant action on October 29, 2018 — just outside the two- 12 year window. 13 This argument, however, is unpersuasive. True, Xanthe allegedly violated the 14 Proprietary Information Agreement and duty of loyalty for many years prior to the instant 15 action by consulting for multiple competitors. But Xanthe’s involvement with those other 16 competitors such as AP Biosciences did not give rise to a claim against JHL for the distinct 17 injury JHL allegedly caused by intentionally interfering with contractual relations or aiding and 18 abetting Xanthe in breaching her duty of loyalty. Fox thus gains no ground for JHL, as this 19 order agrees with Genentech that the issue here is not simply Genentech’s ignorance of a 20 defendant’s identity, but rather Genentech’s ignorance of the existence of a cause of action 21 (Dkt. No. 169 at 8). See Fox, 35 Cal. 4th at 812. As such, this order finds that Genentech’s 22 notice of a potential claim against AP Biosciences did not begin the limitations period relating 23 to a separate claim against JHL. 24 JHL also asserts that Genentech failed to plead that its delay of one month between the 25 time Genentech first learned of Xanthe’s potential breach of the Proprietary Information 26 Agreement and its gaining of access to Xanthe’s email account was reasonable (Dkt. No. 161 at 27 6–7). A party relying on the discovery rule must plead facts to show “the inability to have made 28 earlier discovery despite reasonable diligence.” Fox, 35 Cal. 4th at 808 (quoting McKelvey v. 10 1 Boeing North American, Inc., 74 Cal. App. 4th 151, 160 (1999)). JHL argues that Genentech 2 failed to explain why its Health Compliance Officer took one month to access Xanthe Lam’s 3 email account and files where Genentech’s policies appears to have allowed access without 4 delay (Dkt. No. 161 at 6–7 (citing Dkt. No. 1., Exh. E at 45)). This order, however, cannot say 5 at this stage that it “appears beyond doubt” that Genentech’s diligence was unreasonable simply 6 based on the one month gap. Supermail Cargo, 68 F.3d at 1207. For the Northern District of California United States District Court 7 JHL further argues that Genentech impermissibly attempts to contradict its prior 8 allegation that it “received notice of the allegations described herein on or about October 11, 9 2016” by limiting that notice to AP Biosciences (Dkt. No. 161 at 4 (citing Dkt. Nos. 1 ¶ 244). 10 This order disagrees. The proposed amendment is more accurately described as expansion of 11 Genentech’s prior allegation with further context rather than an outright contradiction. 12 Accordingly, this order finds that at this stage, Genentech’s state law claims are timely. 13 14 B. Supersession. Under California law, CUTSA provides the exclusive civil remedy for conduct falling 15 within its terms and supersedes other civil remedies based upon misappropriation of a trade 16 secret. CUTSA therefore supersedes claims based on the same nucleus of facts as trade secret 17 misappropriation. Cal. Civ. Code § 3426.7; Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 18 210, 232, 236 (2010), disapproved on other grounds by Kwikset Corp. v. Superior Court, 51 19 Cal. 4th 310 (2011). “At the pleadings stage, the supersession analysis asks whether, stripped 20 of facts supporting trade secret misappropriation, the remaining factual allegations can be 21 reassembled to independently support other causes of action.” Waymo LLC v. Uber Techs., 22 Inc., 256 F. Supp. 3d 1059, 1062 (N.D. Cal. 2017). 23 JHL argues that CUTSA supersedes Genentech’s common law claims because they 24 “arise from the same nucleus of facts as Genentech’s trade secret misappropriation claims” 25 (Dkt. No. 161 at 8). This order disagrees. Though there is certainly overlap between the 26 common law claims and the trade secret misappropriation claims, Xanthe’s alleged 27 unauthorized work for JHL leading to her breaches of contract and duty of loyalty are not “one 28 and the same as her alleged disclosure and use of trade secrets,” as JHL so contends (id. at 9). 11 For the Northern District of California United States District Court 1 As Genentech points out, the mere fact that Xanthe consulted for JHL, a clear 2 Genentech competitor, gives rise to these common law claims regardless of whether Xanthe 3 misappropriated trade secrets in the process (Dkt. No. 169 at 10–11). The Proprietary 4 Information Agreement prohibited Xanthe from “ ‘engag[ing] in any employment or activity 5 other than for the Company in any business in which the Company is now or may hereafter 6 become engaged’ without Genentech’s express written consent” (Dkt. No. 144-1 ¶ 328). 7 Genentech’s Code of Conduct similarly prohibited Xanthe “from engaging in conduct that 8 could give rise to conflicts of interest, including by moonlighting for another company, or by 9 engaging in activities creating personal interests at odds with those of Genentech” (Dkt. No. 10 144-1 ¶ 340). The premise of Genentech’s common law claims are therefore distinguishable 11 from that in Anokiwave, Inc. v. Rebeiz, No. C 18-629 JLS (MDD), 2018 WL 4407591 (S.D. Cal. 12 Sept. 17, 2018) (Judge Janis L. Sammartino), where the alleged breach of fiduciary duty was 13 based on the defendant’s use of his position “to receive certain information and then disclose[] 14 this information to” other defendants and the alleged intentional interference with existing 15 contractual relations was based on a contract “which prohibited [the defendant] from disclosing 16 [the plaintiff’s] Proprietary Information.” Id. at *4, 6. 17 Here, in contrast, many aspects of Xanthe’s involvement with JHL — such as traveling 18 to Taiwan for JHL, getting paid by JHL, and interviewing and supervising Chan — go beyond 19 the trade secret misappropriation claim, as those alleged acts alone and violated contractual 20 relations and duty of loyalty by engaging in activities with another company without 21 Genentech’s express written consent and that created personal interests at odds with those of 22 Genentech. Those activities are thus “materially distinct from the wrongdoing alleged in” the 23 CUTSA claim. Waymo, 256 F. Supp. 3d at 1063. CUTSA thus does not supersede Genentech’s 24 common law claims. 25 26 Accordingly, Genentech’s motion to amend its common law claims (Claims 4 and 5) is GRANTED. 27 28 12 1 2 CONCLUSION For the foregoing reasons, Genentech’s motion for leave to file an amended complaint is 3 GRANTED. Genentech shall file an amended complaint that comports with this order by JUNE 4 17 AT NOON. There will be no more Rule 12 practice. 5 IT IS SO ORDERED. 6 7 Dated: June 13, 2019. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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