Unpublished Disposition, 924 F.2d 1062 (9th Cir. 1991)

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US Court of Appeals for the Ninth Circuit - 924 F.2d 1062 (9th Cir. 1991)

Robert BANGHART; David E. Pastrana; Ronald C. Stock,Plaintiffs-Appellants,v.NORTHROP CORPORATION; Northrop Data Systems, Inc.; WilliamElliott; Ralph R. Blair; Alfred E. Johns,Defendants-Appellees.

No. 89-56041.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 13, 1990.Decided Feb. 1, 1991.



Appellants appeal from a summary judgment in favor of appellee Northrop Data Systems, Inc. ("NDSI") on appellants' claims for malicious prosecution. We affirm.

NDSI's prior suit, which appellants claim was malicious, was for breach of a confidentiality agreement by former NDSI employee Banghart, and for intentional interference with that agreement by attorneys Pastrana & Stock. The attorneys allegedly induced Banghart to breach his obligation of confidentiality when they asked him to provide internal documents and information for use in litigation against NDSI.

Contrary to appellants' contention, the district court used the correct standard for determining whether the uncontroverted facts established probable cause for appellee's prior suit against appellants. The district court correctly decided whether probable cause had been established based on "whether any reasonable attorney would have thought the claim tenable," under the facts as appellee knew them at the time it filed suit. Sheldon Appel Co. v. Albert & Oliker, 47 Cal. 3d 863, 885-86, 765 P.2d 498, 254 Cal. Rptr. 336 (1989).

As the district court held, appellee had a tenable claim for breach of contract against Banghart and for intentional interference with contract against Pastrana & Stock under the facts as it knew them when the action was filed.

It is undisputed that Banghart had a contractual obligation not to disclose, before or after his employment with NDSI, any proprietary information he learned while employed by that company. He also had a contractual obligation not to remove from NDSI any documents or other materials belonging to NDSI upon the termination of his employment, or to disclose at any time any documents or other materials belonging to NDSI. When Banghart appeared at an NDSI deposition as appellants' expert, ten days after allegedly internal sales "pitch books" had been produced by Pastrana & Stock at another NDSI deposition, it was reasonable for appellee to infer that Banghart had provided the "pitch books" to Pastrana & Stock.1  The "pitch books" arguably contained protected trade secrets. See R. Milgrim, 1 Milgrim on Trade Secrets Sec. 2.09 [a], 2-288--2-293. The district court correctly found no evidence that appellee had information before it filed suit that Pastrana & Stock had obtained the "pitch books" from another legitimate source. Appellants argue that an issue of fact was created by Pastrana's declaration that he had told appellee's counsel the source of the documents before appellee filed suit. However, Pastrana's declaration cannot create an issue of fact because it is contradicted by his deposition testimony. Compare Excerpts of Record 13 with Clerk's Record 168, Exhibit D. See Foster v. Arcata Assoc., Inc., 772 F.2d 1453, 1462 (9th Cir. 1985) cert. denied, 475 U.S. 1048 (1986).

Appellants contend that the attorneys' actions cannot be the basis of a suit for interference with contract because they were undertaken as part of their professional responsibilities as lawyers. Appellee had at least a tenable argument, however, that Pastrana & Stock should have obtained their information from Banghart through formal discovery procedures to give appellee an opportunity to move for appropriate protective orders. See ITT Telecom Products, 214 Cal. App. 3d 307, 319-20, 262 Cal. Rptr. 773 (1989); In re Data General Corp. Antitrust Litigation, 5 Fed.Rules Serv.3d 510, 511 (N.D. Cal. 1986).

Appellants also question NDSI's standing to bring suit because NDSI was no longer doing business and had sold its computer technology to Kalbro. We hold that NDSI still arguably had standing to sue Banghart and Pastrana & Stock because it was tenable for an attorney to hold the view that NDSI still had a proprietary interest in sales information retained by Banghart. Although NDSI had abandoned some documents to Kalbro, it never gave up its interest in sales documents it or its employees retained. NDSI could reasonably have inferred that Banghart retained sales information because the "pitch books" were introduced at the deposition just before Banghart appeared as Pastrana & Stock's expert.

Appellants also argue that various forms of judicial privilege were obvious bars to appellee's suit. We agree with the district court that an attorney could reasonably believe that these privileges did not apply.

First, an attorney could reasonably conclude that Cal.Civ.Code Sec. 47(2) did not bar the action against Banghart because Banghart had an express confidentiality agreement with appellee. ITT Telecom Products, 214 Cal. App. 3d 307, held that breach of an express confidentiality agreement was not privileged under Sec. 47(2). Although ITT Telecom was decided after NDSI initiated its litigation, it shows that NDSI's position was tenable.

Second, an attorney could also reasonably conclude that Sec. 47(2) did not bar appellee's claims against Pastrana & Stock. Based on dicta in Block v. Sacramento Clinical Labs, Inc., 131 Cal. App. 3d 386, 182 Cal. Rptr. 438 (1982), a reasonable attorney could have concluded that the privilege of Sec. 47(2) should bar only suits for injurious falsehoods.

Appellants' final contention that the broad injunctive relief requested by appellee in the prior action was unconstitutional was not raised below and need not be considered here. Jovanovich v. United States, 813 F.2d 1035, 1037 (9th Cir. 1987).



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3


Appellants argue that appellee knew Banghart could not possibly have provided these documents to Pastrana & Stock because they were produced after Banghart left NDSI. While that may be true of the 1980 Sales Manual that was introduced at NDSI depositions, however, the "pitch books" were undated