Tag Archives: San Francisco

Ninth Circuit Compels Arbitration in Kilgore v. KeyBank, But Avoids Vitiating Broughton-Cruz Rule

English: Diamond Katana aircraft owned by Amer...

English: Diamond Katana aircraft owned by American School of Aviation, an FAA Part 141 flight school based in Atwater, California. (Photo credit: Wikipedia)

In a ruling that was expected to have a broad impact on mandatory employment arbitration agreements, the Ninth Circuit today compelled arbitration in Kilgore v. Keybank, National Association, but avoided a broad ruling vitiating the Broughton-Cruz rule.  Kilgore v. Keybank, National Association, No. 09-16703, __ F.3d __ (9th Cir. Apr. 11, 2013) (en banc).  The appeal involved a putative class action by former students of a failed flight-training school who seek broad injunctive relief against the bank that originated their student loans among others.  The en banc court held that the arbitration agreement was not unconscionable under California law and reversed and remanded with instructions to compel arbitration.

Arbitration Clause

The Court quoted the relevant part of the arbitration clause as follows:

IF ARBITRATION IS CHOSEN BY ANY PARTY WITH RESPECT TO A CLAIM, NEITHER YOU NOR I WILL HAVE THE RIGHT TO LITIGATE THAT CLAIM IN COURT OR HAVE A JURY TRIAL ON THAT CLAIM . . . . FURTHER, I WILL NOT HAVE THE RIGHT TO PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS PERTAINING TO ANY CLAIM SUBJECT TO ARBITRATION. . . . I UNDERSTAND THAT OTHER RIGHTS I WOULD HAVE IF I WENT TO COURT MAY ALSO NOT BE AVAILABLE IN ARBITRATION. . . .

Defendants sought a broad ruling that the U.S. Supreme Court’s 2011 ruling in Concepcion vitiated the Broughton-Cruz rule that makes unenforceable arbitration agreements that bar certain claims for public injunctive relief.  The Ninth Circuit did not reach this question: Continue reading

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Engaging in Voluminous Discovery and Litigating Two Motions to Compel Sufficient to Waive Right to Arbitrate

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In an unpublished decision, the First District Court of Appeal affirmed the trial court’s denial of a motion to compel arbitration in a wage and hour class action, where defendants conducted voluminous discovery and filed and fully litigating two motions to compel further responses to discovery, a motion for sanctions and a motion for a protective order.    Partridge, et al. v. Hott Wings, Inc., et al., No. A130266, 2012 WL 470458 (Feb. 14, 2012).

Discussion

The Court found that Defendants’ delay in filing their petition to compel arbitration “connotes an intent not to arbitrate”.  Id. Defendants conducted substantial discovery:

Between March 2010 and the October 2010 hearing on defendants’ motion to compel arbitration, defendants engaged in voluminous written discovery to which plaintiffs responded.   In addition, defendants deposed numerous plaintiffs and third party witnesses.   Although plaintiffs had begun deposing witnesses, they had not yet obtained basic documents from defendants through discovery.   The discovery focused on the liability of individual defendants and the franchise defendants that employ plaintiffs.   As a result of defendants’ discovery requests, plaintiffs provided information regarding plaintiffs’ estimated damages, which defendants were responsible for which violations, and the liability of the individual as well as the franchise defendants.   A reasonable inference is that the information gained from defendants’ discovery goes to significant issues in plaintiffs’ case.

Id.

In addition, the Court found that Defendants “substantially invoked the litigation machinery” by: Continue reading

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Trade Secrets Preemption Ruling: CUTSA Supersedes Common Law Claims Where Plaintiff Alleges a Confidentiality Agreement But Failed to Allege Defendant Was Bound by It

District Judge Jeffrey S. White of the Northern District of Californ

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ia held that the California Uniform Trade Secret Act (“CUTSA”) superseded common law claims for misappropriation, conversion, unjust enrichment, and trespass to chattels.  Heller v. Cepia, L.L.C., No. C1101146JSW, 2012 WL 13572 (N.D. Cal. Jan. 4 2012) (slip op.).  Plaintiff alleged the existence of confidentiality agreements but not that defendants were bound by them.  Id.

Background

Plaintiff Heller was the sole proprietor of Floating Lightbulb Toys. Id. *1. He accused Cepia, A-Tech, The Bean and Ying Leung International Limited (“Ying Leung”) of misappropriating his trade secrets regarding his toy hamster project.  Id.  Cepia moved to dismiss Plaintiff’s claims for failure to state a claim and for sanctions under FRCP 11. Id. Plaintiff filed a counter-motion for sanctions against Cepia. Id. The Bean and A-Tech moved to dismiss based on lack of personal jurisdiction. Id.

Discussion

Cepia argued that Plaintiff’s common law claims were superseded by CUTSA. Id. Citing Silvaco Data Systems v. Intel Corp., 184 Cal.App.4th 210 (April 29, 2010), the court noted that “common law claims premised on the wrongful taking of information that does not qualify as a trade secret are also superseded, unless the plaintiff identifies some law which confers property rights protecting the information.”   Heller, 2012 WL 13572, at *1.

While Plaintiff argued that his confidential information that was not a trade secret is still property because he entered into agreements providing that any non-secret confidential and proprietary business information would remain his property. Id. The court disagreed, dismissing the common law claims: Continue reading

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First District Denies Alter Ego Liability Even Where Officer Pays Self and Wife, While Failing to Pay Wages and Commissions

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The Court of Appeal for the First District held that an officer’s failure to pay wages and commissions to an employee, while paying himself and his wife during the same period, is not the type of conduct that requires piercing the corporate veil.  Wymore v. Minto, No. A125476, 2010 WL 3687511 (Cal. Ct. App. 1st Dist. Sept. 22, 2010).

Nor do we see any merit to appellants’ various arguments that it would work an injustice to allow respondent to hide behind EWM because it was his decision, as a director and officer of EWM, not to pay appellants wages and commissions in 2007, while paying himself and his wife during the same calendar year. The fact that respondent, as the president of EWM, may have intentionally failed to pay appellants is not the type of conduct that requires piercing the corporate veil. Continue reading

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Defense Verdict in Bartender Overtime and Meal Break Case

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After a bench trial, a San Francisco Superior Court rendered a defense verdict in an overtime and meal break case.  Tun Cun vs. Cafe Tiramisu, No. CGC08482090, 36 Trials Digest 13th 19 (Verdict Date March 26, 2009).  According to court records: Plaintiff Evangelina Tun Cun was a bartender under an oral employment agreement who worked form 4 pm to midnight. Ms. Tun Cun alleged she was owed wages from defendant Cafe Tiramisu LLC.  Plaintiff alleged she was also employed by MMP Restaurants LLC dba Campannina from 9 a.m. to 3 p.m. each day. She claimed the two employers jointly employed her, and she was not paid overtime, though she worked for 11 to 15 hours of work per day. Plaintiff claimed she was not given meal breaks, was not paid overtime, and was owed waiting-time penalties. Continue reading

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Morrison & Foerster Wins $9.36 Million in Compensatory Damages and $1.525 Million in Punitive Damages in Trade Secrets Trial

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A San Francisco Superior Court jury granted $1.525 million in punitive damages Friday to Technology Information Group, adding to the $9.36 million in compensatory damages it awarded to the company a day earlier in a trade secrets dispute with its former employees and a competitor. As reported in law360.com, the “jury found San Francisco-based FusionStorm, three of its executive officers and three former TIG employees who were hired by FusionStorm liable for breach of fiduciary duty, breach of loyalty, misappropriation of trade secrets and other causes of action . . . .”

The complaint alleged that the improper conduct began while the former employees still worked at TIG’s Tampa, Fla., offices. The former employees were accused of trying to lure away other of TIG’s employees and customers to FusionStorm, which was then setting up in the area. TIG filed its lawsuit in 2007 and won a temporary restraining order that enjoined FusionStorm from soliciting additional TIG employees and from conducting business with certain customers, MoFo said.

The jury verdict comes after a five-week trial.  FusionStorm was represented by Orrick Herrington & Sutcliffe LLP.  TIG was represented by Morrison & Foerster LLP.  The docket may be viewed here.

By CHARLES H. JUNG

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Judge Walker Lifts Stay

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Judge Vaughn R. Walker of the Northern District of California today lifted a stay on his decision where he ruled that Proposition 8 was unconstitutional.  Judge Walker, however, delayed implementation of the order to lift his stay until August 18.

Defendant-intervenors Dennis Hollingsworth, Gail Knight, Martin Gutierrez, Mark Jansson and ProtectMarriage.com brought a motion to stay the court’s judgment last week to ensure that Proposition 8 remains in effect as they pursue their appeal in the Ninth Circuit. In the alternative, proponents sought a brief stay to allow the court of appeals to consider the matter.

San Francisco asked the court to deny the stay and order the injunction against Proposition 8 to take effect immediately. California’s Governor and Attorney General also opposed any stay.

The Court held that “[b]ecause proponents fail to satisfy any of the factors necessary to warrant a stay, the court denies a stay except for a limited time solely in order to permit the court of appeals to consider the issue in an orderly manner.”

Federal courts look to four factors in deciding whether a stay is appropriate:

(1) whether proponents have made a strong showing that they are likely to succeed on the merits;

(2) whether proponents will be irreparably injured absent a stay;

(3) whether the stay will substantially injure other interested parties; and

(4) whether the stay is in the public interest.

See Nken v. Holder, 556 U.S. —-, 129, S. Ct. 1749, 1761 (2009) (noting overlap with Winter v. Natural Resources Defense Council, Inc., 555 U.S. —-, 129 S. Ct. 365, 374 (2008)).  The first two factors “are the most critical.”  Nken, 129 S. Ct. at 1757.

The order reads:

None of the factors the court weighs in considering a motion to stay favors granting a stay. Accordingly, proponents’ motion for a stay is DENIED. Doc #705. The clerk is DIRECTED to enter judgment forthwith. That judgment shall be STAYED until August 18, 2010 at 5 PM PDT at which time defendants and all persons under their control or supervision shall cease to apply or enforce Proposition 8.

By CHARLES H. JUNG

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