Replacing the Words “Trade Secrets” with “Confidential Information” Does Not Allow a Party to Bypass Its Obligations Under California Code of Civil Procedure Section 2019.210

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In a recent discovery dispute before the Northern District of California,[1] Plaintiff Monolithic Power Systems, Inc. (“Monolithic”) unsuccessfully attempted to bypass California Code of Civil Procedure section 2019.210 which requires the party making a claim of trade secret misappropriation under the California Uniform Trade Secrets Act (“CUTSA”) to identify the trade secret “with reasonable particularity” before “commencing discovery relating to the trade secret.”
 

In its original complaint, Monolithic sued its former employees for breach of contract, violation of the Computer Fraud and Abuse Act (“CFAA”) and fraud arising from alleged misappropriation of trade secrets.  In dismissing Monolithic’s complaint in part, the trial court applied CUTSA’s preemption provision and held that Monolithic was attempting to “evade the strictures of CUTSA by restating its trade secrets claim as something else.”  In amending its complaint, Monolithic removed its CFAA claim, and replaced the words “trade secret” with “confidential information.”

Monolithic then sought to compel discovery against the former employees.  The former employees argued that under Section 2019.210 Monolithic was required to first identify the trade secrets with particularity before commencing discovery. Monolithic argued that it was not required to comply with this statute because it did not specifically assert a claim under CUTSA.

In the Court’s discovery order, Magistrate Judge Laurel Beeler ruled in favor of the former employees and held that Monolithic was required to comply with Section 2019.210.  In making this determination, the Court relied in part on Neothermia Corp. v. Rubicor Med., Inc., 345 F. Supp. 2d 1042, 1043 (2004), where the Northern District Court of California determined, as an issue of first impression, that the statute is not limited to a CUTSA cause of action but applies to any action alleging misappropriation of trade secrets.  Based on this precedent, Magistrate Judge Beeler explained that Section 2019.210 applied in this action because, notwithstanding Monolithic’s substitution of the terms “trade secret” with “confidential information,” the “crux of the claims” remained the same: “trade-secret misappropriation.”

Moving forward, as always, litigants should be mindful of the specific allegations in a complaint—just because misappropriation is not specifically alleged, does not mean it is not at issue.

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[1] Monolithic Power Sys., Inc. v. Dong, No. 20-CV-06752-JSW-LB, 2021 WL 3847961 (N.D. Cal. Aug. 27, 2021).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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