Case Name: Global Protein Products, Inc. v. Kevin K. Le, et al.
Case No.: 1-05-CV-043903

This is an action for misappropriation of trade secrets, breach of a confidentiality agreement, and unfair competition by plaintiff Global Protein Products, Inc. (“Plaintiff”) against defendants Kevin K. Le (“Le”) and West Coast Ag, LLC (“West Coast”) (collectively, “Defendants”). Plaintiff filed the complaint in 2005, alleging that Le worked for Plaintiff from 2000-2003, entered into a confidentiality agreement to preserve its proprietary information, and then formed West Coast using its trade secrets. The parties settled the case by executing a stipulated settlement agreement in December 2005. Based on the settlement agreement, Judge McKenney issued a permanent injunction in January 2006, prohibiting Defendants from using Plaintiff’s trade secret information in the future. Plaintiff moved for an order to show cause re contempt in July 2014, asserting that Defendants violated the permanent injunction. The Court granted the motion, and the parties commenced discovery regarding the possible violation.

Judge Stoelker granted a motion to intervene by intervenors The VPS Companies, Inc. (“VPS”) and Inn Foods, Inc. (“Inn Foods”) (collectively, “Intervenors”) on October 30, 2014. On November 17, 2014, Intervenors filed a complaint in intervention.

Judge Manoukian entered Plaintiff and Defendants’ stipulated protective order on November 12, 2014, providing that proprietary information disclosed in discovery be maintained in confidence. The same day, Plaintiff filed its designation of trade secrets. Defendants believed the initial designation was deficient, and sent a meet and confer letter to Plaintiff’s counsel. On December 12, 2014, Plaintiff filed an amended trade secret designation, identifying eight trade secrets. Defendants believe the amended designation is inadequate, and sent a meet and confer letter to Plaintiff’s counsel on December 17, 2014, advising that they would move to compel Plaintiff to identify its trade secrets and for a protective order prohibiting Plaintiff from conducting discovery.

Defendants demur to the complaint in intervention for failure to state a claim and uncertainty, move to compel Plaintiff to identify its alleged trade secrets and for a protective order preventing Plaintiff from conducting discovery until after it has identified its trade secrets. (See Code Civ. Proc. [“CCP”], §§ 387, 430.10, subds. (e)-(f), & 2019.210; see also Civ. Code, § 3426.5.)

I. Demurrer to the Complaint in Intervention

CCP section 387, subdivision (a) provides: “any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding. An intervention takes place when a third person is permitted to become a party to an action . . . either by joining the plaintiff in claiming what is sought by the complaint, or by uniting with the defendant in resisting the claims of the plaintiff, or by demanding anything adversely to both the plaintiff and the defendant, and is made by complaint, setting forth the grounds upon which the intervention rests, filed by leave of the court.” That provision also authorizes any party to demur to a complaint in intervention. A complaint in intervention seeking affirmative relief is in effect a cross-complaint. (White v. Besse (1904) 145 Cal. 223, 226.)

In the complaint in intervention, Intervenors allege the following: Le misappropriated information about Plaintiff’s shelf-life extenders by forming West Coast which falsely claimed to be the owner/inventor of the shelf-life extenders, and Defendants admitted in the settlement agreement in 2005 that Le obtained information about the shelf-life extenders—which are subject to the confidentiality agreement—from Plaintiff. (Compl. Intervention, ¶¶ 3-5.) In 2006, the court issued a permanent injunction prohibiting Defendants from acquiring, disclosing, or using information about Plaintiff’s shelf-life extenders, and Plaintiff now claims that Defendants violated that injunction. (Id., ¶¶ 5 & 10.) VPS hired Le in 2007, but Le did not inform VPS of the confidentiality agreement, permanent injunction, or the fact that the shelf-life extenders were Plaintiff’s trade secrets. (Id., ¶ 6.) VPS sold products to Kidco Farms Processing, Inc. (“Kidco”) until Le resigned in 2012, at which time Kidco ceased business with VPS and began buying products from Defendants, and Defendants transferred their purported interest in the shelf-life extenders to Mid-Con Ag, LLC (“Mid-Con”). (Id., ¶¶ 6-7.) Intervenors filed an action against Defendants, Kidco, and Mid-Con, and entered into a settlement agreement in that case, thereby relinquishing certain rights in the shelf-life extenders, in reliance on Defendants’ false statements that Le—not Plaintiff—developed the shelf-life extenders and Defendants had owned the extenders. (Id., ¶¶ 8-9.) Intervenors have intervened because Plaintiff asserts that Defendants’ used/disclosed/sold its shelf-life extenders, and Intervenors seek a determination of rights and obligations regarding the shelf-life extenders. (Id., ¶¶ 5 & 10.) Specifically, they seek a determination of (1) the rights and duties under the settlement agreement to market shelf-life extenders, (2) whether Defendants or Plaintiff developed the shelf-life extenders, and (3) whether they can market Plaintiff’s shelf-life extenders. (Id., ¶ 11.)

Intervenors’ complaint in intervention states sufficient facts to show that they align with Plaintiff by asserting that Defendants violated the permanent injunction. Intervenors sufficiently state a claim for declaratory relief regarding rights and obligations with respect to the shelf-life extenders. (See Otay Land Co. v. Royal Indem. Co. (2008) 169 Cal.App.4th 556, 562-563 [on demurrer, courts evaluate whether the allegations of a declaratory relief claim reveal that an actual controversy exists between the parties]; see also CCP, § 1060 [authorizing declaratory relief].) Contrary to Defendants’ contention, the fact that Intervenors do not include a separate heading for the declaratory relief claim is of no consequence. (See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 [if the allegations of the complaint are adequate to state a cause of action under any legal theory, then the demurrer must be overruled].) Defendants also take issue with Intervenors’ prayer for monetary damages. However, “a demurrer tests the sufficiency of the factual allegations of the complaint rather than the relief suggested in the prayer of the complaint.” (Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1562.) Thus, the demurrer for failure to state a claim is OVERRULED.

A demurrer for uncertainty is sustained only where the pleading is so unintelligible that the defendant cannot reasonably respond. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) The complaint in intervention is sufficiently certain for Defendants to respond. The demurrer for uncertainty is therefore OVERRULED.

II. Motion to Compel Trade Secret Designation & for a Protective Order

Defendants move for an order compelling Plaintiff to provide a trade secret designation and for a protective order prohibiting Plaintiff from conducting discovery until it provides another trade secret designation on the ground that Plaintiff’s amended trade secret designation does not comply with CCP section 2019.210.

The Uniform Trade Secrets Act (“UTSA”) defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: [¶] (1) Derives independent economic value . . . 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, subd. (d).) In any UTSA claim, “before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity.” (CCP, § 2019.210.) The purposes of CCP section 2019.210 are to (1) promote well-investigated claims; (2) prevent the plaintiffs from using discovery as a means to obtain the defendants’ trade secrets; (3) help the court frame the scope of discovery; and (4) enable the defendants to form defenses. (Perlan Therapeutics, Inc. v. Super. Ct. (2009) 178 Cal.App.4th 1333, 1343.) The designation should be interpreted liberally. (Advanced Modular Sputtering, Inc. v. Super. Ct. (2005) 132 Cal.App.4th 826, 835 [“Advanced Modular”].)

“Reasonable particularity” . . . does not mean that the party alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of the litigation. . . . [or that a] court [should] conduct a miniature trial on the merits of a misappropriation claim before discovery may commence. Rather, it means that the plaintiff must make some showing that is reasonable, i.e., fair, proper, just and rational ([citation]), under all of the circumstances to identify its alleged trade secret in a manner that will allow the trial court to control the scope of subsequent discovery, protect all parties’ proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at a trial on the merits. ([Citations].) [¶] The degree of “particularity” that is “reasonable” will differ, depending on the alleged trade secrets at issue in each case. Where . . . the alleged trade secrets consist of incremental variations on, or advances in the state of the art in a highly specialized technical field, a more exacting level of particularity may be required to distinguish the alleged trade secrets from matters already known to persons skilled in that field. . . . But . . . the proponent of the alleged trade secret is not required . . . to describe it with the greatest degree of particularity possible . . . . What is required is not absolute precision . . . .

(Id., pp. 835-836.) Also, a court may enter a protective order to preserve the secrecy of an alleged trade secret. (CCP, § 2019.210 [designation is “subject to any orders that may be appropriate under Section 3426.5 of the Civil Code”]; Civ. Code, § 3426.5 [“a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders”].)
The first category identified in the amended trade secret designation is the proprietary formulations of Plaintiff’s shelf-life extenders for “P100-Fresh Cut Potatoes,” “Clean and Core,” and “P200” (“Subject Shelf-Life Extenders”). The second category is Plaintiff’s pricing for the Subject Shelf-Life Extenders, and the third and fourth categories are Plaintiff’s proprietary formulas and ingredients for the same. Defendants argue that these categories are not described with reasonable particularity because Plaintiff does not disclose the proprietary formulations, pricing, formulas, and ingredients. This argument lacks merit because Plaintiff is not required to identify every minute detail of the alleged trade secret in order to satisfy the reasonable particularity requirement. (See Advanced Modular, supra, at p. 835.) Defendants further argue that these categories are deficient because Plaintiff does not explain how they differ from matters already known in the industry. CCP section 2019.210 “was intended to require the trade secret claimant to identify the alleged trade secret with adequate detail to allow the defendant to investigate how it might differ from matters already known”; the plaintiff is not required to explain how the alleged trade secret might differ from matters known in the industry absent a showing by the defendant that such an explanation is necessary. (Brescia v. Angelin (2009) 172 Cal.App.4th 133, 147-150 [“Brescia”].) Here, the alleged trade secrets and the technical field in which they arise do not make the descriptions inadequate, and Defendants have not shown that an elaboration is necessary. Defendants’ argument is therefore unavailing. Moreover, Plaintiff has provided sufficient information for the Court to ascertain the scope of discovery and protect the parties’ proprietary information, and for Defendants to defend against Plaintiff’s claim. Accordingly, the first, second, third, and fourth categories are described with reasonable particularity.

The fifth category is Plaintiff’s general concepts, general specifications, product ideas, or formulas for the Subject Shelf-Life Extenders. The sixth category is Plaintiff’s customer product ideas related to general concepts, general specifications, product ideas, or formulas for the Subject Shelf-Life Extenders. The seventh category is computer printouts and records relating to the general concepts, general specifications, product ideas, or formulas for the same. Defendants insist that these categories are insufficient because they contain the word “general,” and thus it necessarily follows that the categories are not described with reasonable particularity. This argument is not well-taken. The use of the word “general” to describe concepts and specifications for the Subject Shelf-Life Extenders does not suggest that these descriptions lack reasonable particularity. The descriptions are sufficient for the Court to control discovery and protect the parties’ proprietary information, and for Defendants to form a defense. The fifth, sixth, and seventh categories are therefore described with reasonable particularity.

The eighth category is the identities of customers who have purchased the Subject Shelf-Life Extenders. Defendants contend that the eighth category is overbroad and vague because it refers to the “identities of customers” without explaining how this information is a trade secret. As discussed above, Plaintiff is not required to set forth every minute detail about the alleged trade secret. Additionally, to the extent Defendants challenge the merits of Plaintiff’s alleged trade secret in its customer information, the designation requirement of CCP section 2019.210 “does not create a procedural device to litigate the ultimate merits of the case—that is, to determine as a matter of law on the basis of evidence presented whether the trade secret actually exists.” (Brescia, supra, at p. 149.) Furthermore, the description of identities of Plaintiff’s customers is sufficient for the Court to determine the scope of discovery and protect the parties’ proprietary information, and for Defendants to defend against Plaintiff’s claims. Accordingly, the eighth category is described with reasonable particularity.

In sum, the eight categories of Plaintiff’s alleged trade secrets are described with reasonable particularity as required by CCP section 2019.210. Thus, an order compelling a trade secret designation is not warranted. Similarly, given that Plaintiff has described the alleged trade secrets with reasonable particularity, a protective order precluding Plaintiff from conducting discovery is also not warranted.

Defendants’ motion to compel a trade secret designation and for a protective order is accordingly DENIED.