GA Telesis, LLC et al v. Salesforce.Com, Inc. et al

Filing 56

ORDER by Magistrate Judge Alex G. Tse denying 42 Motion to Dismiss Amended Complaint. (agtlc2, COURT STAFF) (Filed on 11/8/2021)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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GA TELESIS, LLC, et al.,

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Plaintiffs,

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ORDER DENYING MOTION TO
DISMISS AMENDED COMPLAINT

v.

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SALESFORCE.COM, INC.,

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Re: Dkt. No. 42

Defendant.

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United States District Court
Northern District of California

Case No. 21-cv-02701-AGT

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Salesforce’s motion to dismiss GA Telesis’s amended trade secret claims is denied. The

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amended complaint sufficiently pleads the required elements of a claim for misappropriation of

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trade secrets under both the federal Defend Trade Secrets Act (“DTSA”) and the California

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Uniform Trade Secrets Act (“CUTSA”). To state a claim under the DTSA, a plaintiff must allege

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(1) the existence and ownership of a trade secret, (2) that the defendant misappropriated the trade

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secret, and (3) that the misappropriation caused or threatened damage to the plaintiff. InteliClear,

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LLC v. ETC Glob. Holdings, Inc., 978 F.3d 653, 657–58 (9th Cir. 2020). The elements of a

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CUTSA claim are “substantially similar.” Id. at 657 (analyzing the DTSA and CUTSA claims

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together). Salesforce does not dispute, for purposes of this motion, that GA Telesis has adequately

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alleged elements one and three—ownership of a protectable trade secret (the “synopsis” of the

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GATES Production System,1 which GA Telesis provided to Salesforce pursuant to a non-

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disclosure agreement) and harm. Instead, challenging element two, Salesforce argues that GA

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GA Telesis also identifies its GATES Production System as a trade secret in the amended
complaint, but its allegations of trade secret misappropriation primarily concern the synopsis. As
alleged, GA Telesis’s GATES Production System and the synopsis thereof “comprise a method,
technique and process used to provide specialized services to aircraft lessors, air carriers and cargo
operators that differ from MRO [maintenance, repair, and overhaul] services offered by [GA
Telesis’s] competitors” in the commercial aviation industry. Dkt. 41, FAC ¶ 26.

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Telesis has failed to plead “misappropriation” as statutorily defined. The Court disagrees.
“Misappropriation” under the DTSA and CUTSA includes “disclosure or use of a trade
secret of another without express or implied consent by a person who . . . at the time of disclosure

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or use, knew or had reason to know that the knowledge of the trade secret was . . . acquired under

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circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of

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the trade secret.” 18 U.S.C. § 1839(5); Cal. Civ. Code § 3426.1(b). While “mere possession of a

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trade secret or mere internal discussion within the company of a trade secret” is not enough to

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constitute use, “‘[e]mploying the confidential information in manufacturing, production, research

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or development, marketing goods that embody the trade secret, or soliciting customers through the

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use of trade secret information, all constitute use.’” 02 Micro Int’l Ltd. v. Monolithic Power Sys.,

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United States District Court
Northern District of California

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Inc., 399 F. Supp. 2d 1064, 1072 (N.D. Cal. 2005) (quoting PMC, Inc. v. Kadisha, 78 Cal. App.

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4th 1368, 1383 (2000)).

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GA Telesis has plausibly alleged misappropriation by Salesforce through its improper

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disclosure and use of the trade secret synopsis. According to the amended complaint, GA Telesis

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gave Salesforce a copy of the secret synopsis, which was marked “GA Telesis proprietary

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document – cannot be reproduced or transmitted without written authorization,” after Salesforce

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executed a non-disclosure agreement requiring that Salesforce “maintain the information it

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received in secret, not to be disclosed.” FAC ¶¶ 33–35, 72. Salesforce then took confidential

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information directly from the synopsis, with full knowledge of its trade secret status, and

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transmitted it via email to GA Telesis’s direct competitor, Barfield, on October 30, 2019. See id.

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¶¶ 51–52. Salesforce’s email to Barfield comprised two pages and included, among other things,

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“descriptive information that is within the synopsis of the GATES Production System,” an

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“example and outline of a ‘GATE’ process,” links to a “relevant MRO video” and a GA Telesis

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“use case” created by Salesforce, and an “express acknowledgement that [Salesforce] had no right

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to make such disclosure[s].” Id. As further alleged, Salesforce also unlawfully utilized and

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disclosed GA Telesis’s trade secret information in the referenced “use case” that it created and

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transmitted to Barfield. See id. ¶¶ 57, 73. This alleged disclosure and use was without GA

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Telesis’s consent and in an effort by Salesforce to solicit and procure business from Barfield, for
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Salesforce’s sole benefit and to GA Telesis’s detriment. Id. ¶¶ 73, 76. These allegations, taken as

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true and viewed in the light most favorable to GA Telesis, are sufficient for GA Telesis’s trade

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secret misappropriation claims to survive a motion to dismiss.
Salesforce’s argument that dismissal is warranted because GA Telesis does not allege that

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Salesforce “misused or wrongfully disclosed the entire, whole ‘trade secret’” synopsis, but rather

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only portions of it, is not persuasive. Dkt. 52 at 10 (emphasis added). According to Salesforce,

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the “most on-point authority in the country” for this proposition is Lydall, Inc. v. Ruschmeyer, 282

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Conn. 209 (2007), followed by another out-of-circuit decision, American Airlines, Inc. v. KLM

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Royal Dutch Airlines, Inc., 114 F.3d 108 (8th Cir. 1997). But neither of those cases analyzed the

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misappropriation element at the critical pleading stage; Lydall involved an appeal from judgment

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United States District Court
Northern District of California

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following a full trial on the merits, and American Airlines dealt with an appeal from a grant of

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summary judgment. Salesforce has cited—and the Court has found—no procedurally on point

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authority supporting dismissal under the circumstances alleged here.2 Salesforce’s novel

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application of the law is not warranted here and now. The inquiry at this early stage is whether

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GA Telesis has included allegations of misappropriation sufficient to state a claim for relief

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assuming the allegations in the amended complaint are true. The Court finds that it has.
***

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The motion to dismiss is denied. Salesforce must answer the amended complaint within 14

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days of this order.
IT IS SO ORDERED.

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Dated: November 8, 2021

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ALEX G. TSE
United States Magistrate Judge

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Salesforce’s counsel conceded at the hearing that, to his knowledge, no other court in the country
has addressed the argument Salesforce raises at the motion to dismiss stage.
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