Case Number: BC712531 Hearing Date: July 24, 2018 Dept: 85

Momentum Engineering Corp. v. Philip Wang, et al., BC 712531

Tentative decision on application for preliminary injunction: granted

Plaintiff Momentum Engineering Corp. (“MEC”) applies for a preliminary injunction against Defendants Philip Wang (“Wang”) and Impact Reconstruction Engineering, LLC (“Impact”) (1) enjoining Defendants from directly or indirectly using or disclosing any information contained in MEC records and (2) requiring Defendants to preserve all computer and electronic storage devices used by Wang.

The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

A. Statement of the Case

1. Complaint

Plaintiff MEC commenced this proceeding on July 3, 2018, alleging causes of action for (1) conversion, (2) violation of the Uniform Trade Secrets Act, (3) breach of duty of loyalty, and (4) unfair competition. The Complaint alleges in pertinent part as follows.

Wang commenced employment with MEC in 2008 and worked as a forensic engineer at MEC’s Torrance office until his resignation on June 26, 2018. Wang’s responsibilities as a forensic engineer included accident reconstruction, animation, and expert witness testimony.

While employed at MEC, Wang had access to highly sensitive proprietary trade secret information which he learned as a result of his employment at MEC. This information concerned, inter alia, MEC’s processes and techniques, client case work product, client contact information, business information, and other private and confidential information regarding clients and MEC. Because a majority of MEC’s clients are lawyers, the work product doctrine and applicable protective orders protects much of this information from disclosure.

On June 26, 2018, Wang informed MEC’s President that he was resigning from MEC, effective that day. When asked why, Wang told the President that he planned to start a competing business. He told the President that, while working at MEC, he removed client files in an attempt to solicit clients for his new business.

Prior to leaving MEC, Wang engaged in widespread deletion of client files and transferred MEC and MEC client trade secret information to himself. He also misappropriated approximately 25 hard copy MEC client files pertaining to MEC clients whom Wang had assisted.

On the day of his resignation, Wang additionally sent MEC clients emails stating that he was leaving MEC to open company Defendant Impact which would also specialize in accident reconstruction, animation, and expert witness testimony. In the email, Wang directed clients to fill out a form which asked clients whether they wished to have Wang continue as their expert or to continue being served by MEC. The email provides the false impression that MEC approves of the communication.

MEC has suffered severe and irreparably injury as a result of Wang’s actions.

2. Course of Proceedings

On July 3, 2018, the court granted MEC’s ex parte application for a temporary restraining order (“TRO”) and order to show cause (“OSC”) re: preliminary injunction. The TRO enjoins Defendants Wang and Impact from directly or indirectly using or disclosing any information contained in MEC records. The OSC directs Wang to show cause why he should not be enjoined pendent lite (1) from directly or indirectly using or disclosing any information contained in MEC records, (2) to return to MEC all originals and copies of any MEC client files, work product, software, and business and financial information, and (3) to preserve all computer and electronic storage devices used by Wang.

The court ordered personal service of all papers. Proofs of service on file with the court show that both Defendants were electronically served with the Complaint, Summons, moving papers, OSC, and TRO on July 5, 2018.

B. Applicable Law

An injunction is a writ or order requiring a person to refrain from a particular act; it may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. CCP §525. An injunction may be more completely defined as a writ or order commanding a person either to perform or to refrain from performing a particular act. See Comfort v. Comfort, (1941) 17 Cal.2d 736, 741. McDowell v. Watson, (1997) 59 Cal.App.4th 1155, 1160.[1] It is an equitable remedy available generally in the protection or to prevent the invasion of a legal right. Meridian, Ltd. v. City and County of San Francisco, et al., (1939) 13 Cal.2d 424.

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. See Scaringe v. J.C.C. Enterprises, Inc., (1988) 205 Cal.App.3d 1536. Grothe v. Cortlandt Corp., (1992) 11 Cal.App.4th 1313, 1316; Major v. Miraverde Homeowners Assn., (1992) 7 Cal.App.4th 618, 623. The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. Voorhies v. Greene (1983) 139 Cal.App.3d 989, 995, quoting United Railroads v. Superior Court, (1916) 172 Cal. 80, 87. 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402.

A preliminary injunction is issued after hearing on a noticed motion. The complaint normally must plead injunctive relief. CCP §526(a)(1)-(2).[2] Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. See e.g. Ancora-Citronelle Corp. v. Green, (1974) 41 Cal.App.3d 146, 150. Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. See CCP §527(a). For this reason, a pleading alone rarely suffices. Weil & Brown, California Procedure Before Trial, 9:579, 9(ll)-21 (The Rutter Group 2007). The burden of proof is on the plaintiff as moving party. O’Connell v. Superior Court, (2006) 141 Cal.App.4th 1452, 1481.

A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. CCP §526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors, (1967) 255 Cal.App.2d 300, 307; Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565. The concept of “inadequacy of the legal remedy” or “inadequacy of damages” dates from the time of the early courts of chancery, the idea being that an injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff. Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565.

In determining whether to issue a preliminary injunction, the trial court considers two factors: (1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)), and (2) a balancing of the “irreparable harm” that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402; Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1283; Davenport v. Blue Cross of California, (1997) 52 Cal.App.4th 435, 446; Abrams v. St. Johns Hospital, (1994) 25 Cal.App.4th 628, 636. Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief. Doe v. Wilson, (1997) 57 Cal.App.4th 296, 304. The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Thornton v. Carlson, (1992) 4 Cal.App.4th 1249, 1255.

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. See CCP §529(a); City of South San Francisco v. Cypress Lawn Cemetery Assn., (1992) 11 Cal.App.4th 916, 920.

C. Statement of Facts

1. Plaintiff’s Evidence

a. Overview

MEC is a consulting firm specializing in accident reconstruction, forensic engineering, heavy truck safety, graphics, and animation. Landerville Decl. ¶2. MEC offers accident reconstruction and investigation services ranging from rapid response to final trial testimony. Id. The great majority of MEC’s clients are lawyers and law firms. Id. As a result, the work that MEC consultants perform is often protected from disclosure under the work product doctrine or a protective order. Id.

The work performed often involves (1) confidential client information, such as client contact information, and (2) confidential MEC proprietary information, such as software used for accident reconstruction, graphic design and animation, and forensic analysis of each case using MEC techniques and processes. Id. This information is stored in hard-copy client files and digitally on computers. Landerville Decl. ¶8.

This information would be highly valuable to a competitor desiring to solicit MEC clients and serves as an invaluable tool for any forensic engineer or consultant seeking to keep abreast of the activity in MEC client matters or seeking to encourage MEC clients to transfer to another firm. Id.

b. MEC’s Employee Handbook

Wang commenced his employment with MEC in 2008. Landerville Decl. ¶3. He worked as a forensic engineer in MEC’s Torrance office. Id.

In February 2016, Wang signed an acknowledgment form providing that he understood and would comply with company policies set forth in MEC’s Employee Handbook (“Handbook”). Landerville Decl. ¶12, Ex. D. The Handbook possesses a confidentiality policy that obligates MEC employees to maintain and preserve client confidentiality. Landerville Decl. ¶11, Ex. C. The Handbook states in pertinent part: “Information that pertains to [MEC’s] business, including all nonpublic information concerning the Company, its clients, vendors and suppliers, is strictly confidential and must not be given to people who are not employed by [MEC]. Under no circumstances are employees permitted to disclose any client matter unless necessary to perform job duties. Client matter includes client identities, strategies, testimony, and any other information related to the representation of clients.” Landerville Decl. Ex. C.

c. Resignation

On June 26, 2018, Wang informed MEC’s President, John B. Landerville (“Landerville”), that he was resigning from MEC, effective that day. Landerville Decl. ¶3. Landerville asked Wang if Wang had taken any client files. Id. Wang responded that he had taken client files, including client lists with client contact information. Id. He also admitted that, while an employee at MEC, he had contacted clients and requested that they transfer their files to Wang’s new business by signing authorizations. Id.

Upon learning about Wang’s misconduct, Landerville asked Wang to leave MEC’s premises immediately and return his MEC-owned laptop and inspection kit. Landerville Decl. ¶3. Wang returned home to retrieve his laptop. Id. When he returned, he turned on his desktop computer and began deleting files therefrom. Id.; see Massoud Decl. ¶¶ 9-10. Landerville observed this and immediately instructed Wang to desist. Landerville Decl. ¶3.

d. Impact

After Wang’s resignation, Landerville learned that Wang founded company Defendant Impact. Landerville Decl. ¶4. Impact’s Articles of Organization filed with the California Secretary of State bears a filing date of April 24, 2018, over two months prior to his resignation. Landerville Decl. ¶4, Ex. A. Landerville believes that Wang’s founding of Impact explains why Wang billed an unusually low number of hours from April 24 to the date of his resignation. Id.

e. Solicitation

On the same day that Wang resigned from MEC, he solicited MEC clients to transfer their business to Impact. Landerville Decl. ¶7, Ex. B. Wang sent clients an email with the subject line “Change in Firm Representation,” stating “I write to advise that after ten years at [MEC], I am leaving MEC to open [Impact]. [Impact] specializes in accident reconstruction, animation and expert witness testimony. Although I would like to continue working with you, the decision on who handles your accident reconstruction needs in the future is completely yours. For your convenience, please see the enclosed form that contains options regarding expert retention.” Id. The aforementioned form is entitled “Change in Firm Representation” and requests the recipients to check one of two boxes: the first box indicating that the client wishes to have Wang continue as the client’s expert and the second box indicating that the client wishes to continue being serviced by MEC. Id. The form also indicates that the client should return this “directive” to Wang at Impact’s address and to do so quickly in order “[t]o best protect your interest and promote continuity of service.” Id.

f. Hard Copy Client Files

An inspection of Wang’s former work area following his resignation revealed that approximately 25 hard-copy MEC client files pertaining to MEC clients whom Wang serviced were missing from MEC’s Torrance office. Landerville Decl. ¶6. Wang removed these hard copy files. Id. These files contain proprietary trade secret information regarding MEC’s business and its client. Id. Upon demand, Wang returned these files to MEC, but it is unclear whether Wang made copies of them. Id. Several of the folders appeared to have been disassembled, consistent with the inference that they were copied. Id.

g. Digital Files

On June 29, 2018, a certified forensic computer examiner assessed Wang’s work desktop computer and laptop. Massoud Decl. ¶3; see also Jovel Decl. ¶2. An examination of Wang’s laptop showed that the laptop user used two USB storage devices on June 26, 2018. Massoud Decl. ¶¶ 4-6. Such devices are used to transport and sort data and suggests that Wang might have done the same with regard to information on his work laptop. Massoud Decl. ¶¶ 5-6. An examination of Wang’s desktop showed that the operator used the same two USB storage devices. Massoud Decl. ¶¶ 7-8.

h. Irreparable Harm

The names, addresses, telephone numbers, and work product of MEC’s clients are the lifeblood of MEC. Landerville Decl. ¶15. MEC has maintained these items at great expense and effort over a long period of time and fostered client relationships in the process. Id. If Wang uses this information to his own advantage, he will cause MEC irreparable harm because these matters will no longer be confidential, thereby eroding clients’ confidence and trust in MEC. Wang’s use of this information will also weaken MEC’s competitive niche in the market. See Landerville Decl. ¶14.

2. Defendants’ Evidence

From 2008 to June 26, 2018, Wang was a Senior Forensic Engineer with MEC. Wang Decl. ¶3. During his ten-year tenure there, he analyzed over 2,500 accidents involving commercial vehicles, passenger vehicles, motorcycles, bicycles, and pedestrians, conducted night-time visibility studies and re-enactments, and trained engineering staff. Id. Wang also formed good working relationships with a number of attorney-clients. Id.

MEC client files typically consist of relevant pleadings, photos, discovery, depositions, and the testifying engineer’s demonstrative exhibits, reports, notes and data compilations. Wang Decl. ¶4.

On June 14, 2018, Wang began sending letters to active clients advising them that he would be leaving. Wang Decl. ¶5, Ex. 1. He advised them: “Although I would like to continue working with you, the decision on who handles your accident reconstruction needs in the future is completely yours.” Id. He sent these letters in order to eliminate disputes and facilitate the client-transfer process. Id.

On June 26, 2018, Wang gave Landerville two-weeks’ notice that he was leaving MEC. Wang Decl. ¶6. He also told Landerville that a number of attorney-clients had decided to continue working with him. Id. Landerville responded by terminating Wang immediately. Id.

On June 27, 2018, Wang received a letter from Landerville’s attorney demanding “originals” of attorney-client files. Wang Decl. ¶7, Ex. 4. The next day, Wang complied and turned over all original files. Id. Wang believed that the signed letters from his attorney-clients authorized him to retain copes of these files so he did so. Id. He believed these files to be necessary to continue to adequately represent them and to minimize delays and interruptions in their representation. Id.

The information that Wang deleted from his MEC computer was personal, private, and confidential. Wang Decl. ¶8. It included family photographs, videos, personal documents, and personal financial records. Id. He also downloaded some of his older case studies, data, and report templates. Id. This is not information which constituted trade secret information. Id.

D. Analysis

Plaintiff MEC applies for a preliminary injunction against Defendants on the ground that Wang misappropriated MEC’s proprietary trade secret information. MEC seeks a preliminary injunction enjoining Defendants (1) from directly or indirectly using or disclosing any information contained in MEC records, (2) to return to MEC all originals and copies of any MEC client files, work product, software, and business and financial information, and (3) to preserve all computer and electronic storage devices used by Wang. Defendants oppose.

1. Service of Process

A plaintiff must serve the defendant with the complaint, summons, TRO/OSC, moving papers, and any supporting declarations within five days after the TRO is issued or two days prior to the hearing, whichever is earlier. CCP §527(d)(2). If the defendant has not appeared, the TRO/OSC must be served in the manner of serving summons and complaint. CRC 3.1150(a). The service requirement is jurisdictional, and the court may not issue a preliminary injunction without personal jurisdiction over the defendant. If the defendant has not been served by the date of the OSC hearing, the judge must dissolve the TRO. CCP §527(d)(3).

A proof of service on file reflects that MEC electronically served Defendants with the Complaint, moving papers, and TRO/OSC by July 5, 2018.[3] This mode of service is non-compliant both with CRC 3.1150(a) and CCP §§ 413(a) (requiring service of summons pursuant to CCP section 415.10 et seq.), and with the court’s order that MEC personally serve these documents.

Notwithstanding this violation, the court has personal jurisdiction over Defendants because they filed an opposition brief and submitted to the court’s jurisdiction. See CCP §1014; Wilson v. Barry, (1951) 102 Cal.App.2d 778, 781 (holding that the filing of a motion or affidavit, other than for the purpose of presenting matters bearing on the court’s jurisdiction, constitutes a general appearance). The court will consider MEC’s application in spite of its service failure.

2. Probability of Success

a. Trade Secret Misappropriation

A trade secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Civ. Code §3426.1(d). Confidential customer lists warrant trade secret protection where the employer has expended time and effort identifying customers with particular needs or characteristics and the information is not otherwise readily ascertainable. See, e.g., Morlife, Inc. v. Perry, (1997) 56 Cal.App.4th 1514, 1521-22.

Misappropriation of a trade secret means (1) the acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means or (2) disclosure or use of a trade secret of another without express or implied consent by a person who, inter alia, used improper means to acquire knowledge of the trade secret. Civ. Code §3426.1(b). To state a prima facie claim for misappropriation of trade secrets, the plaintiff must demonstrate (1) the plaintiff owned a trade secret, (2) the defendant acquired, disclosed, or used the plaintiff’s trade secret through improper means, and (3) the defendant’s actions damaged the plaintiff. Cytodyn, Inc. v. Amerimmune Pharmaceuticals, Inc., (“Cytodyn”) (2008) 160 Cal.App.4th 288, 297.

Actual or threatened misappropriation of trade secrets may be enjoined. Civ. Code §3426.2(a); see also Retirement Group v. Galante, (2009) 176 Cal.App.4th 1226, 1238 (trial court may enjoin “former employee from using trade secret information to identify existing customers, to facilitate the solicitation of such customers, or to otherwise unfairly compete with the former employer.”) If the court determines that it would be unreasonable to prohibit future use, an injunction may condition future use upon payment of a reasonable royalty for no longer than the period of time the use could have been prohibited. Civ. Code §3426.2(b). In appropriate circumstances, affirmative acts to protect a trade secret may be compelled by court order. Civ. Code §3426.2(c).

(i). Trade Secret Ownership

MEC argues that its client information constitutes a trade secret. App. at 9. MEC defines this putative trade secret as a “compilation” of client information and consulting technique that encompasses, inter alia, the names of clients, work product information, and physical case information. Id. The Landerville declaration elaborates that this information includes proprietary engineering software, graphic design and analysis of each case using techniques proprietary to MEC, and physical evidence, photographs, videos, charts, and reports. Landerville Decl. ¶2. This information would be “highly valuable” to a competitor desiring to solicit MEC clients. Landerville Decl. ¶¶ 2, 8. This information serves as “an invaluable tool” for any forensic engineer or consultant seeking to keep abreast of these clients’ matters and to divert these clients to another firm. Landerville Decl. ¶8.

These statements are somewhat conclusory, but the argument is at least partly well-taken. The client file can be described as (1) law firm contact information, (2) MEC proprietary software, (3) graphic design and analysis using this software and proprietary techniques, and (4) underlying evidence from the lawsuit. As to independent economic value, the Landerville declaration demonstrates that MEC is a consulting firm which routinely receives confidential information from clients that is necessary for its consulting work. Landerville Decl. ¶2. The declaration also reflects that MEC is dependent on sustained client relationships. See Landerville Decl. ¶15. It is sensible that some of this information would have independent economic value by virtue of it not being generally known to competitors.

As to reasonable efforts to promote confidentiality, the Landerville declaration explains that MEC via its Handbook institutes a fairly elaborate policy concerning protection of confidential information. Landerville Decl. ¶11, Ex. C. The Handbook advises, inter alia, for MEC employees to discuss work and client matters only with other MEC employees in non-public places, to monitor MEC visitors to ensure that they do not have access to confidential information, and to secure confidential information in desk drawers and the like at the end of every business day. Id.

Defendants argue that the client files do not belong to MEC, but rather to the lawyer-clients. They note that the Landerville declaration expressly states that materials in the client files are often protected from disclosure under the work product doctrine. Id.; Landerville Decl. ¶2. “Work produced by an attorney’s agents and consultants, as well as the attorney’s own work product, is protected by the attorney work-product doctrine. [Citation]. The attorney is the holder of this privilege.” Citizens for Ceres v. Superior Court, (“Ceres”) (2013) 217 Cal.App.4th 889, 911. Opp. at 6.

Defendants misconstrue Ceres, which concerns the work product doctrine and the attorney as the holder of the privilege. There is a difference between holding a privilege and ownership. Ceres does not discuss ownership of a consultant’s work product, which usually is resolved by the agreement between the attorney and the consulting expert. It is not clear who owns MEC’s work product contained in the client files taken by Wang. MEC contends that it does under Labor Code section 2860. Reply at 5. This may or may not be true, depending on its consulting agreements with the lawyer-clients. In any event, Defendants have no ownership interest in the client files.

Defendants also oversimplify the contents of the MEC client file, which includes more information than accident reconstruction work product – it includes graphic design and analysis using proprietary software and techniques. The file also includes the law firm contact information, MEC proprietary software, and underlying evidence from the lawsuit.

Defendants contend that the law firm contact information is not confidential as the lawyer-clients are embroiled in litigation matters that involve public filing. Opp. at 7. There is truth to this contention. Wang worked on a limited number of matters, and the attorneys on those matters are publicly known. However, the client file includes contact information which is not publicly available, including email address and personal telephone numbers for the lawyer-clients. Landerville Decl. ¶2. See Reply at 6-7.

In sum, some portions of MEC’s client files may not be protected. For example, attorney information may be publicly available, the attorneys may have paid for and own MEC’s accident reconstruction work product, and the underlying lawsuit evidence does not belong to MEC. At this stage, however, it appears that some portions of the MEC client file are protected, including the MEC proprietary software, non-public lawyer contact information, and potentially the accident reconstruction work product.

(ii). Improper Means

Improper means of acquiring a trade secret includes breaching a duty to maintain secrecy. K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc., (2009) 171 Cal.App.4th 939, 961.

The evidence shows that 25 hard copy client files handled by Wang were missing from MEC’s Torrance office. Landerville Decl. ¶6. Wang took these files, as evidence by the fact that on June 28, 2018, he returned all of the hard copy files taken, copying those files where the lawyer-clients retained him. Wang Decl. ¶7, Ex. 4. Wang took these hard copy files in violation of the Employee Handbook. Landerville Decl. Exs. C, D.

Wang also copied digital files from his laptop and desktop computers without authorization. Landerville Decl. ¶3; Massoud Decl. ¶¶ 4, 6. Wang further deleted files on the date of his termination (Landerville Decl. ¶3) and cleaned his desktop computer shortly before his resignation/termination. Massoud Decl. ¶9. Wang presents evidence that he only downloaded some of his older case studies, data, and report templates, and deleted only personal information such as family photographs, videos, and personal records. Wang Decl. ¶8. He does not show that this information was not owned by MEC. See Reply at 5. He also does not explain his attempt to scrub his computer. The timing of downloading and deletion also is suspicious.

MEC further contends that Wang performed an aggressive campaign of soliciting clients by email. Landerville Decl. ¶7, Ex. B. MEC argues that the email unfairly fails to give clients the option of contacting MEC and implies that MEC approved its form. App. at 7. In reply, MEC contends that Wang solicited business beginning on June 14, 2008, while still a MEC employee. Reply at 3.

The court finds this argument untenable. A former employee has a right to compete with his former employer, and anti-solicitation covenants are void as unlawful business restraints under B & P Code section 16600 except where their enforcement is necessary to protect trade secrets. Thompson v. Impaxx, Inc., (2003) 113 Cal.App.4th 1425, 1429 (citation omitted). A former employee may not solicit new business from the former employer’s customers using customer information that is “confidential, proprietary and/or a trade secret.” Retirement Group v. Galante, (2009) 176 Cal.App.4th 1226, 1240. Robert L. Cloud & Assocs., Inc. v. Mikesell, (1999) 69 Cal.App.4th 1141, 1150; ReadyLink Healthcare v. Cotton, (“ReadyLink”) (2005) 126 Cal.App.4th 1006, 1015. The former employee’s use of confidential contact information to solicit new accounts on behalf of a new employer constitutes misappropriation of a trade secret. Morlife, Inc. v. Perry, (1997), 56 Cal.App.4th 1514, 1526 (permanent injunction preventing former employee from dealing with any of 32 customers of plaintiff that were unlawfully solicited). Even if some of the customer information might have been available to the public or the employer’s competitors, its use is enjoinable so long as a portion of the information is a trade secret. ReadyLink, supra, 126 CalApp.4th at 1020.

With the exception of a breach of his duty of loyalty by soliciting clients while still a MEC employee, MEC points to nothing in Wang’s email solicitation that is unlawful. A former employee’s solicitation is not required to be “fair”, or to allow the former employer an equal opportunity to be contacted. The former employee is entitled to compete. Presumably, MEC knew what clients were handled by Wang and could contact them directly. MEC does not show that the email used trade secret information, including confidential contact information. Landerville Decl. ¶7. The solicitations were not part of an enjoinable trade secret violation.

(iii). Damages

MEC’s “lifeblood” is its clients, and it would be harmed if Wang were not restrained from misappropriating its trade secrets. Landerville Decl. ¶15.

(iv) Conclusion

MEC’s misappropriation of trade secrets cause of action is is full of generalizations, and therefore is not overwhelming. But it does possess a reasonable probability of success. Wang took client files home, and then admittedly kept copies after the MEC client retained him. It does not appear that he had the legal right to do so because the MEC client file is confidential and contains proprietary information. Even where the lawyer-client has paid for the work product or otherwise owns it, some information in the file still belongs to MEC. Thus, Wang should be enjoined to return all copies of the client files, including those where he has been retained by a former MEC client. The lawyer-client may instruct MEC to turn over whatever portions of the file belong to the lawyer-client.[4]

b. Conversion

Conversion is the wrongful exercise of dominion over the property of another. Lee v. Hanley, (2015) 61 Cal.4th 1225, 1240. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. Id.

For the same reasons stated ante, this cause of action possesses a reasonable probability of success. MEC owns the client information. Wang wrongfully acquired and used this information. As a result, MEC suffered damages, including the work product’s value, loss of reputation, and client trust.

c. Breach of Duty of Loyalty

The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach. Tribeca Companies, LLC v. First American Title Insurance Company, (2015) 239 Cal.App.4th 1088, 1114.

An employee owes a duty of loyalty to an employer. See Stokes v. Dole Nut Co., (1995) 41 Cal.App.4th 285, 295. This duty is breached when the employee takes action which is inimical to the best interests of the employer. Id.

This claim is fairly weak. MEC does little to show that Wang breached his duty of loyalty while employed by MEC. He formed a new company while still employed, which has little impact. There is nothing wrong with the solicitation on the day he left. Wang’s lower level of billings and receipt of a bonus and training also do not show a loyalty breach. The removal and destruction of files does support such a claim. This cause of action possesses a reasonable probability of success.

d. Unfair Competition

Business and Professions Code section 17200 prohibits any unlawful, unfair, or fraudulent business practice. A business practice is unfair when it violates the spirit of a law or an established public policy. People v. Casa Blanca Convalescent Homes, Inc., (1984) 159 Cal.App.3d 509, 530. Any person who engages in unfair competition may be enjoined in any court of competent jurisdiction. Bus. & Prof. Code §17203.

This cause of action has merit because of the other claims.

2. Balance of Hardships

In determining whether to issue a preliminary injunction, the second factor which a trial court examines is the interim harm that plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. Donahue Schriber Realty Group, Inc. v. Nu Creation Outreach, (2014) 232 Cal.App.4th 1171, 1177. This factor involves consideration of the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo. Id.

MEC contends that the balance of hardships weighs in favor of issuance of a preliminary injunction. App. at 13. According to MEC, Wang has disrupted valuable client relationships and misappropriated confidential client information which these clients entrusted to MEC. App. at 12. Wang has also allegedly damaged office stability by his actions which could set a precedent for other MEC personnel adopting similar actions. App. at 13.

Defendants argue that the equities heavily weigh against issuance of an injunction. Opp. at 5. Defendants argue that Wang and his attorney-clients are free to continue to work together and anything that prohibits their ability to continue to work together imposes extreme harm on them. Opp. at 5-6.

MEC’s point is well taken. If a preliminary injunction is denied, Defendants will continue to use MEC’s trade secret information to MEC’s financial and reputational detriment. By contrast, Defendants’ hardship is that they will be restrained from using information that does not belong to them.

Contrary to Defendants’ position, the preliminary injunction will not enjoin them from working with attorney-clients who retain them. If the attorneys own some or part of the client files, they may obtain them by directing MEC to turn over that information to Defendants. Wang’s misappropriation of the client files cannot be justified by a subsequent agreement with the attorney-client.

Defendants posit that damages constitute an adequate remedy because the case simply involves a conflict stemming from Wang’s solicitation of MEC clients. Opp. at 8, 10. This is untrue. MEC’s lawsuit does not only challenge a past wrong, but also an ongoing misuse of MEC trade secret information. The reputational harm to MEC is difficult to calculate and warrants injunctive relief.

The balance of hardships weighs in favor of MEC.

E. Conclusion

The application for a preliminary injunction is granted. A preliminary injunction shall issue enjoining Defendants (1) from directly or indirectly using or disclosing any information contained in MEC records, including its client files, (2) to return to MEC all originals and copies of any MEC client files, work product, software, and business and financial information, and (3) to preserve all computer and electronic storage devices used by Wang. The attorney-clients at issue may, of course, instruct MEC to turn over to Wang any client file owned by them. At that point, the parties would have to address whether MEC owns information in the client file.

The court must impose a bond on MEC for the preliminary injunction. The purpose of the bond is to protect Defendants in the event that the court has improvidently issued the preliminary injunction. It must be based on the damages Defendants will incur from complying with the injunction, as well as attorney’s fees necessary to set aside the preliminary injunction. The court will discuss the amount of the bond with counsel at hearing.

[1] The courts look to the substance of an injunction to determine whether it is prohibitory or mandatory. Agricultural Labor Relations Bd. v. Superior Court, (1983) 149 Cal.App.3d 709, 713. A mandatory injunction — one that mandates a party to affirmatively act, carries a heavy burden: “[t]he granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Assoc. v. Furlotti, (1999) 70 Cal.App.4th 187, 1493.

[2] However, a court may issue an injunction to maintain the status quo without a cause of action in the complaint. CCP §526(a)(3).

[3] MEC’s proof of service filed with the court on July 6, 2018 indicates that a proof of service dated July 3, 2018 was served on Defendants. No July 3, 2018 proof of service was filed with the court.

[4] The opposition contends without evidence that some 15 law firms and one insurance company have signed letters retaining Wang and stating that they want “their files [transferred] to him.” Opp. at 11. The court has no opinion on whether this contention, if proved, would suffice.