Applied Biological Laboratories, Inc. v. Diomics Corporation et al

Filing 21

ORDER Granting in Part and Denying in Part Defendants' Motion to Dismiss (Doc. No. 8 ). The Court denies Defendants motion to dismiss for the first and second claims for relief. The Court also denies Defendants' motion for a more definite statement. The Court grants Defendants' motion to dismiss for the third claim and permits Plaintiff leave to amend. Should Plaintiff choose to do so, this Amended Complaint is due by 9/20/2021. Signed by Judge Anthony J. Battaglia on 9/6/2021. (jrm)

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Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.118 Page 1 of 12 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 17 18 APPLIED BIOLOGICAL LABORATORIES, INC., Case No.: 3:20-CV-2500-AJB-LL ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS Plaintiff, v. DIOMICS CORPORATION, a Delaware corporation; ANTHONY ZOLEZZI, an individual; and DOES 150, inclusive, (Doc. No. 8) Defendants. 19 20 Before the Court is Defendant Diomics Corporation and Defendant Anthony 21 Zolezzi’s (“Defendant Diomics” and “Defendant Zolezzi”) motion to dismiss, (Doc. No. 22 8), Plaintiff Applied Biological Laboratories, Inc.’s (“Plaintiff”) Complaint. (Doc. No. 1.) 23 In the alternative, Defendants moves for a more definite statement. (Doc. No. 8.) Plaintiff 24 opposed the motions, (Doc. No. 10), and Defendants replied. (Doc. No. 11.) For the reasons 25 set forth below, the Court DENIES Defendants’ motion to dismiss Counts I and II and 26 GRANTS Defendants’ motion to dismiss Count III. 27 28 I. BACKGROUND Plaintiff brings this action against Defendants, alleging Defendants violated the 1 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.119 Page 2 of 12 1 Defend Trade Secrets Act (“DTSA”), the California Uniform Trade Secrets Act 2 (“CUTSA”), and the California Business & Professions Code § 17200 (“Section 17200”). 3 (Doc. No. 1 at 1.)1 Plaintiff asserts Defendants engaged in unfair competition and 4 misappropriated Plaintiff’s trade secrets relating to Plaintiff’s antiviral nasal spray 5 technology. (Id. ¶ 1.) Specifically, Plaintiff alleges Defendants used confidential, 6 proprietary, and trade secret information obtained by Defendant Zolezzi through business 7 negotiations with Plaintiff to launch a competing antiviral nasal spray product, DioGuard. 8 (Id. ¶ 32.) Plaintiff also asserts its product has the potential to inactivate both rhinoviruses 9 and novel respiratory pathogens such as COVID-19, making the product the first of its 10 kind. (Id. ¶¶ 1, 20.) Plaintiff claims its product will address a significant unmet public 11 health opportunity, and the market for antiviral nasal spray technology will develop 12 rapidly. (Id. ¶¶ 2, 37.) Thus, Plaintiff contends its opportunities in such a market will be 13 irreparably harmed by Defendants’ alleged exploitation of stolen intellectual property. (Id. 14 ¶ 37). 15 As background, Plaintiff is a biotechnical company specializing in healthcare 16 products. (Id. ¶ 8.) For years, Plaintiff performed confidential research into the various 17 mechanisms causing respiratory infections. (Id. ¶ 3.) Through this research, Plaintiff 18 determined the primary pathway for pathogens to enter a host body is through aerosol 19 droplets interacting with mucous membranes in an individual’s nose and mouth. (Id. ¶ 18.) 20 According to Plaintiff, traditional nasal saline sprays damage a body’s epithelial barrier. 21 (Id. ¶ 16.) Plaintiff sought to address this issue by inventing antiviral nasal spray 22 technology which maintains a healthy nasal and esophageal microbiome. (Id. ¶¶ 2, 16.) By 23 using naturally occurring protein molecules, Plaintiff designed its antiviral nasal spray to 24 create a barrier between viral droplets and the exterior cells of the respiratory tract. (Id. 25 ¶ 20.) Such a barrier prevents pathogens from binding to their target receptors. (Id.) The 26 27 28 1 The page citations refer to the ECF-generated page numbers at the top of each filing. 2 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.120 Page 3 of 12 1 natural ingredients in Plaintiff’s product help control inflammatory responses and 2 strengthen the epithelial barrier. (Id. ¶ 22.) 3 Plaintiff used the results of private scientific testing to create its product and 4 accumulated confidential information on the marketability of such products through its 5 development process. (Id. ¶¶ 21, 23.) The general information Plaintiff garnered includes: 6 the implementation and manufacturing of its product to improve performance, safety, and 7 costs; concepts proving ineffective, unsafe, too expensive, or otherwise unworkable for the 8 mass market; “dead-end” concepts contributing to the ongoing development of Plaintiff’s 9 product and general antiviral nasal spray technology; details used in Plaintiff’s product; 10 and lessons learned from Plaintiff’s years of research and development. (Id. ¶ 23.) Plaintiff 11 alleges these materials constitute trade secrets highly valuable to Plaintiff and any 12 competitor in the antiviral nasal spray market. (Id.) 13 In 2017, Plaintiff initiated business communications with private equity fund 14 manager, Pegasus and its affiliate, PanTheryx (a nutrition and biotechnology company 15 specializing in gastro-intestinal microbiome). (Id. ¶ 25.) Plaintiff inquired with Pegasus 16 and PanTheryx on opportunities available to develop its antiviral nasal spray technology. 17 (Id.) Defendant Zolezzi, employed as Pegasus’s Operating Partner at the time, participated 18 in the business negotiations. (Id.) All parties consented to non-disclosure agreements 19 (“NDAs”) safeguarding Plaintiff’s private information. (Id. ¶ 26.) 20 In November 2017, Plaintiff granted Defendant Zolezzi, Craig Cogut (Pegasus’s 21 founder and Co-Managing Partner), and Pegasus’s team of scientists, access to Plaintiff’s 22 secured computer systems and electronic document repositories. (Id. ¶¶ 27, 28.) These 23 encrypted repositories contained confidential information concerning Plaintiff’s scientific 24 research, finances, and corporate organization. (Id. ¶ 27.) Plaintiff claims various trade 25 secrets were housed in these files, such as “the formulations of its products and proposed 26 products; its methods of manufacturing, developing, and producing products, proposed 27 products, and the ingredients within them; the mechanism of action of Applied Bio’s 28 products, proposed products, and formulations; the non-public patent applications filed by 3 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.121 Page 4 of 12 1 Applied Bio or its principles; information about every scientific test or study that Applied 2 Bio has carried out; and the names of each supplier of ingredients for inclusion by Applied 3 Bio in its products.” (Id. ¶ 41.) In 2017, Plaintiff obtained a patent for components of its 4 antiviral nasal spray which did not include the information stored in the aforementioned 5 repository. (Id. ¶¶ 21, 42.) 6 During negotiations, Plaintiff and Defendant Zolezzi communicated directly with 7 one another over the course of ten months. (Id. ¶ 29.) Plaintiff discussed the various 8 proteins, ingredients, and research of its antiviral nasal spray technology with Defendant 9 Zolezzi, Pegasus, and PanTheryx, including its use of immunoglobulin G (“IgG”). (Id.) 10 Plaintiff alleges Defendant Zolezzi frequently asked questions regarding the proteins and 11 ingredients Plaintiff used in its research. (Id.) In 2018, Plaintiff ceased negotiations with 12 Pegasus, PanTheryx, and Defendant Zolezzi. (Id. ¶ 31.) 13 In March 2020, Defendant Diomics hired Defendant Zolezzi as its Chief Executive 14 Officer. (Id. ¶ 32.) Plaintiff asserts Defendant Diomics originated as a developer of 15 products to “collect and analyze biological samples.” (Id.) In August 2020, Plaintiff 16 maintains Defendant Diomics’s website reflected a corporate focus on “a proprietary bio- 17 polymer that captures biological material and delivers compounds to improve hearing, and 18 a suite of rejuvenating biological compounds that deliver growth factors and healing 19 cytokines.” (Id. ¶ 34.) By September 2020, Plaintiff claims Defendant Diomics 20 redeveloped its website to announce its “intra-nasal system that couples IgG antibodies 21 with Diomat nanobeads to enable a passive prophylactic therapy.” (Id.) 22 Concerned by Defendant Diomics’s rapid shift in focus and launch of a new product 23 line, Plaintiff conducted investigations from September 2020 to October 2020 into the 24 events surrounding Defendant Zolezzi’s acquisition of Plaintiff’s intellectual property, 25 Diomics’s hiring of Defendant Zolezzi, and Diomics’s development of DioGuard. (Id. 26 ¶ 35.) Plaintiff contends Defendant Diomics had no previous experience in the field of 27 nasal spray technology before hiring Defendant Zolezzi in March 2020. (Id. ¶ 32.) Plaintiff 28 further alleges that Defendant Zolezzi’s only experience with antiviral nasal spray 4 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.122 Page 5 of 12 1 technology came from his confidential discussions with Plaintiff. (Id.) 2 II. LEGAL STANDARD 3 A motion to dismiss under Rule 12(b)(6) calls into question the legal sufficiency of 4 the pleadings, requesting the court to dismiss a complaint after determining that it fails to 5 state a cause of action upon which relief may be granted. See Ashcroft v. Iqbal, 556 U.S. 6 662, 678–79 (2009). The court may dismiss a complaint for lack of cognizable legal theory 7 or insufficient facts under a cognizable legal claim. See SmileCare Dental Grp. v. Delta 8 Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996). A complaint must allege sufficient 9 facts “stat[ing] a claim to relief that is plausible on its face” to overcome a motion to 10 dismiss. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The complaint must avoid 11 restating legal “labels and conclusions” or a “formulaic recitation of elements.” Iqbal, 556 12 U.S. at 678. When evaluating a Rule 12(b)(6) motion to dismiss, “all allegations of material 13 fact are taken as true and construed in the light most favorable to plaintiff.” Smile Dental, 14 88 F.3d at 782. A court should assume the veracity of “well-pleaded factual allegations” 15 and “determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. 16 at 679. 17 III. DISCUSSION 18 A. 19 Defendants move to dismiss Plaintiff’s first and second causes of action. (Doc. No. 20 8 at 7–8.) Plaintiff’s first cause of action alleges trade secret misappropriation in violation 21 of the Defend Trade Secrets Act (“DTSA”) enacted under 18 U.S.C. § 1836. (Doc. No. 1 22 ¶¶ 40–52.) Plaintiff’s second claim assert a violation under the California Uniform Trade 23 Secrets Act (“CUTSA”), using duplicate facts as those supporting Plaintiff’s DTSA claim. 24 (Id. ¶¶ 53–63.) The provisions between the CUTSA and DTSA are materially the same and 25 may be analyzed consistently with one another. See Deerpoint Group, Inc. v. Agrigenix, 26 LLC, 345 F. Supp. 3d 1207, 1227–28 (E.D. Cal. 2018). Therefore, the Court will analyze 27 Plaintiff’s first and second causes of actions as one. 28 DTSA and CUTSA Claims Trade secret misappropriation claims under the DTSA require a plaintiff to plead: 5 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.123 Page 6 of 12 1 “(1) the plaintiff owned a trade secret; (2) the defendant misappropriated the trade secret; 2 and (3) the defendant’s actions damaged the plaintiff.” Power Integrations, Inc. v. De Lara, 3 No. 20-CV-410-MMA (DEB), 2020 WL 4582675, 10 (S.D. Cal. Aug. 10, 2020). Courts 4 generally require pleadings to be sufficient enough to grant the other party notice of what 5 has been purported to be misappropriated. See MAI Systems Corp. v. Peak Computer, Inc., 6 991 F.2d 511, 522 (9th Cir. 1993). A plaintiff must also show how “improper acquisition, 7 disclosure, or use occurred or is threatened.” Agency Solutions.Com, LLC v. TriZetto Grp., 8 Inc., 819 F. Supp. 2d 1001, 1027 (E.D. Cal. 2011). A complaint may rely on circumstantial 9 evidence of misappropriation while balancing such allegations with the standards of fair 10 notice required under Rule 8. See Droeger v. Welsh Sporting Goods Corp., 541 F.2d 790, 11 792 (9th Cir. 1976). 12 Defendants have not disputed the third element of trade secret misappropriation 13 regarding the damaged value of Plaintiff’s trade secret technology and competitive 14 prospects. (Doc. No. 1 ¶¶ 36, 38.) Defendants do, however, contest the first element, 15 claiming Plaintiff did not allege which trade secrets Defendants used, or how the trade 16 secrets were used in developing Defendants’ new product. (Doc. No. 8 at 8). Defendants 17 similarly challenge the second element, asserting Plaintiff’s circumstantial evidence is 18 insufficient to show how Defendants acquired, disclosed, or used Plaintiff’s trade secrets. 19 (Doc. No. 11 at 3.) The Court disagrees with Defendants’ conclusions. The Court finds that 20 at the motion to dismiss stage, the information Plaintiff provided is sufficient to plead trade 21 misappropriation. 22 1. Plaintiff’s Trade Secrets 23 Regarding the first element of trade secret misappropriation, Defendants claim 24 Plaintiff did not sufficiently plead which trade secrets were used, or how they were used. 25 (Doc. No. 8 at 8.) The Court finds Defendants’ arguments inadequate. Plaintiff explicitly 26 mentions in the Complaint that “[Defendant] Zolezzi . . . improperly disclosed to 27 [Defendant] Diomics the results of Applied Bio’s resource-intensive research.” (Doc. No. 28 1 ¶ 5.) Plaintiff also alleges, “Defendants Diomics and Zolezzi have taken Applied Bio’s 6 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.124 Page 7 of 12 1 intellectual property so they could avoid incurring the risk, time, and expense of 2 independently developing their own technology.” (Id. ¶ 1.) “Misappropriation includes not 3 only wholesale pirating of an ideas, but also the unauthorized utilization of an idea as a 4 starting point or guide in developing a process or as a means to understand what pitfalls to 5 avoid.” Yeiser Research & Development LLC v. Teknor Apex Company, 281 F. Supp. 3d 6 1021, 1047 (S.D. Cal. 2017). 7 Furthermore, Plaintiff explicitly claims that Defendants used Plaintiff’s trade secrets 8 to launch DioGuard, an antiviral nasal spray. (Doc. No. 1 ¶ 32, 35.) The trade secrets 9 Plaintiff claims were used relate to Plaintiff’s scientific expertise, the mechanism of action 10 in its products, the product’s ingredients, and the “dead-ends” in their research. (Id. ¶¶ 23, 11 29, 41.) Furthermore, Plaintiff states that in its business negotiations with Defendant 12 Zolezzi and Pegasus, it mentioned the use of IgG in Plaintiff’s research and development. 13 (Id. ¶ 29.) Plaintiff alleges that Defendants’ product, DioGuard, not only uses similar 14 mechanisms to Plaintiff’s product to inactivate similar viruses in similar pathogenic 15 pathways, but does so with similar ingredients, namely IgG. (Id. ¶ 34.) Through what is 16 alleged above, Plaintiff sufficiently pinpoints the nature of its trade secrets, as well as 17 which trade secrets could have been misappropriated by Defendants. Therefore, Plaintiff 18 plausibly pleads the first element of trade secret misappropriation. 19 2. Defendants’ Misappropriation of Plaintiff’s Trade Secrets 20 In regard to the second element of trade secret misappropriation, Plaintiff alleges 21 sufficient circumstantial evidence demonstrating how Defendants could have acquired 22 Plaintiff’s trade secrets. The expedited nature of Defendants’ development process in a 23 field previously unknown to them raised concerns for Plaintiff regarding the misuse of 24 trade secrets. (Doc. No. 1 ¶ 35.) Defendants liken these concerns to the concerns of the 25 plaintiff in Accenture Glob. Servs. GMBH v. Guidewire Software Inc., who alleged that the 26 defendant “seemed to develop its products ‘surprisingly quickly.’” 581 F. Supp. 2d 654, 27 663–64 (D. Del. 2008). The Accenture court was not persuaded by this fact, and this 28 dismissed the trade secrets claim. But Accenture is distinguishable. The Accenture court 7 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.125 Page 8 of 12 1 noted that the speed of Defendants’ product development was of no import because the 2 plaintiff did not present facts explaining how the defendants accessed the plaintiff’s trade 3 secrets, or how the trade secrets were used. 4 In contrast to Accenture, Plaintiff here alleges Defendants misappropriated the 5 confidential information in Plaintiff’s encrypted repositories to develop DioGuard, a 6 similar antiviral nasal spray to Plaintiff’s product. (Doc. No. 1 ¶ 27.) Plaintiff claims 7 Defendant Zolezzi had access to confidential research files with information containing the 8 tried-and-true development methods tested by Plaintiff for Plaintiff’s own product. (Id. 9 ¶¶ 27, 28.) This information is not included in Plaintiff’s publicized patent information and 10 were accessible to Defendant Zolezzi only during his business negotiations with Plaintiff. 11 (Id.) Therefore, Plaintiff adequately pleads Defendant acquired Plaintiff’s trade secrets 12 from Plaintiff’s encrypted repository, a storehouse Defendant Zolezzi had prior 13 authorization to access. 14 Moreover, Plaintiff alleges Defendant Zolezzi did not know of antiviral nasal spray 15 technology before conferring with Plaintiff through their private discussions. (Id. ¶ 32.) 16 Plaintiff purports that Defendant Diomics also had no prior experience in the field of 17 antiviral nasal sprays before beginning its work under Defendant Zolezzi. (Id. ¶ 35.) 18 Plaintiff notes that Defendant Zolezzi had specific curiosity in Plaintiff’s product 19 development and research. (Id. ¶ 29.) This is analogous to Yeiser Research & Dev. LLC v. 20 Teknor Apex Co., wherein the court found that a defendant with no prior knowledge in an 21 industry, who also expresses a curiosity toward the product the plaintiff was developing, is 22 enough to plead misappropriation of trade secrets when the defendant develops a similar 23 product. See 281 F. Supp. 3d at 1043–44. 24 Each of these facts work in concert to provide insight into which trade secrets were 25 used and how Defendants used the trade secrets. Considering the covert nature of trade 26 secret misappropriation, the exact means of knowing what was used is nearly impossible 27 for Plaintiff to know without discovery. See Accenture, 581 F. Supp. 2d at 663 (“It is not 28 common for a trade secret misappropriation plaintiff to know, prior to discovery, the details 8 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.126 Page 9 of 12 1 surrounding the purported theft”). Defendants’ contention that Plaintiff must affirmatively 2 demonstrate how Defendant used its trade secrets is not feasible granted the realities of 3 trade secret misappropriation at the pleading stage. To require Plaintiff to convey such a 4 level of specificity in its pleadings would be unusual, if not unattainable. 5 Plaintiff has therefore provided sufficient grounds to plead a plausible claim that 6 Defendants misappropriated Plaintiff’s trade secrets to develop their product. Accordingly, 7 the Court DENIES Defendants’ motion to dismiss the first and second claim. Moreover, 8 at the current pleadings stage, it is not feasible for Plaintiff to provide additional 9 information into how Defendants acquired Plaintiff’s trade secrets, or which trade secrets 10 were used. The information given by Plaintiff sufficiently pleads circumstantial evidence 11 allowing the Court to infer plausible bases for Plaintiff’s trade secret misappropriation 12 claim. Therefore, the Court also DENIES Defendants’ motion for a more definite 13 statement. 14 B. 15 California law renders common law and statutory unfair competition claims 16 “preempted under [§ 3426.7 of the CUTSA]” if the claim asserts the same “nucleus of 17 facts” as the trade secret misappropriation claim. See K.C. Multimedia, Inc. v. Bank of Am. 18 Tech. & Operations, Inc., 171 Cal. App. 4th 939, 961 (2009). This is due to the exclusive 19 nature of CUTSA’s the civil remedy, which supersedes alternative civil remedies if 20 identical facts are used “based upon misappropriation of a trade secret.” Erhart v. BofI 21 Holding, Inc., No. 15-CV-02287-BAS-NLS, 2020 WL 1550207, at *36 (S.D. Cal. Mar. 31, 22 2020) (quoting K.C. Multimedia, 171 Cal. App. at 958)). Plaintiff’s § 17200 Unfair Competition Claim 23 “[T]he determination of whether a claim is based on trade secret misappropriation is 24 largely factual.” Angelica Textile Services, Inc. v. Park, 220 Cal. App. 4th 495, 505 (2013), 25 as modified (Oct. 29, 2013), as modified on denial of reh’g (Nov. 7, 2013). Therefore, 26 statutory unfair competition claims relying solely on the factual allegations made for a 27 trade secret misappropriation claim are preempted. See K.C. Multimedia, 171 Cal. App. at 28 962; Anokiwave, Inc. v. Rebeiz, No. 18-CV-629 JLS (MDD), 2018 WL 4407591, at *2 9 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.127 Page 10 of 12 1 (S.D. Cal. Sept. 17, 2018) (“If there is no material distinction between the wrongdoing 2 alleged . . . the CUTSA claim preempts the other claim.”) (quoting Convolve, Inc. v. 3 Compaq Comp. Corp., No. 00 CV 5141 (GBD), 2006 WL 839022, at *6 (S.D.N.Y. Mar. 4 31, 2006) (applying California law)). 5 Plaintiff asserts in its opposition that its CUTSA claim relies on a different set of 6 facts and legal theories and therefore does not preempt its § 17200 claim. (Doc. No. 10 at 7 21.) Plaintiff purports Defendants’ lack of knowledge in the antiviral nasal spray industry 8 will diminish credibility in Plaintiff’s own product and jeopardize its marketability. (Id. at 9 16.) Plaintiff contends Defendants breached Plaintiff’s NDA and confidence in 10 Defendants. (Id.) Finally, Plaintiff asserts its § 17200 claim provides relief for confidential 11 information which does not amount to a trade secret. (Id. at 17.) In response, Defendants 12 challenges Plaintiff’s use of a shotgun pleading, alleging that Plaintiff is attempting to 13 recast its CUTSA allegations as a separate unfair competition claim. (Doc. No. 11 at 8.) 14 Defendants claim Plaintiff fails to allege specific facts in support of unfair competition 15 apart from facts shared with Plaintiff’s allegation of trade secret misappropriation. (Doc. 16 No. 8 at 9.) This Court agrees with Defendants. 17 A shotgun pleading incorporates all preceding paragraphs of a complaint into a cause 18 of action. Kennedy v. MUFG Union Bank, 2020 WL 218521 at *6 (Cal. App. 4th Dist. 19 2020). It is impermissible if it “fails to connect its factual allegations to the elements 20 comprising plaintiff’s claims” and denies parties information on which allegations support 21 each cause of action. In re Metro. Sec. Litig., 532 F. Supp. 2d 1260, 1279–80 (E.D. Wash. 22 2007). Here, Plaintiff uses a shotgun pleading by way of the phrase “‘incorporates all of 23 the above paragraphs as though fully set forth herein’” to prelude its § 17200 cause of 24 action. (Doc. No. 1 ¶ 64). 25 Through this shotgun pleading strategy, Plaintiff limits the contentions it uses for its 26 § 17200 cause of action to paragraphs 1–64. (Id. ¶¶ 64–69.) Plaintiff does not allege distinct 27 facts in its complaint that differentiate its § 17200 claim from its CUTSA claim. In its 28 opposition, Plaintiff continues to use the same nucleus of facts to propose its alleged 10 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.128 Page 11 of 12 1 alternative legal theories. (Doc. No. 10 at 15–17.) Plaintiff claims in its second cause of 2 action that it used NDAs to maintain its trade secrets’ confidentiality. (Id. ¶ 55.) Plaintiff 3 later concedes in its opposition that it also relies on this fact to claim Defendants breached 4 Plaintiff’s confidence. (Doc. No. 10 at 16). Plaintiff similarly concedes an overlap in facts 5 regarding Defendants’ lack of prior experience in the antiviral nasal spray industry as a 6 factor to claim misappropriation and unfair competition. (Doc. No. 10 at 11, 16.) Although 7 Plaintiff may purport a difference between the theories, the nucleus of facts each theory 8 relies upon remain the same. 9 In addition, Plaintiff’s statements alleging its unfair competition claim is also 10 comprised solely of conclusory statements. (Doc. No. 1 ¶¶ 65–69). Each sentence claims 11 either “unlawful”, “fraudulent”, or “unfair” actions but does not enumerate which facts in 12 paragraphs 1–64 support these conclusions. (Id.) Plaintiff’s opposition to Defendants’ 13 motion to dismiss does not provide adequate clarification on this matter. From the framing 14 of Plaintiff’s unfair competition claim, Plaintiff has not alleged any factual allegations 15 different from its CUTSA claim. The Court finds it beneficial to provide Plaintiff a chance 16 to clarify its unfair competition claim and provide facts materially different from the facts 17 asserted in its trade secret misappropriation claims to avoid preemption. Therefore, the Court GRANTS Defendants’ motion to dismiss the third claim and 18 19 allows Plaintiff leave to amend. 20 IV. CONCLUSION 21 Accordingly, for the reasons stated: 22 1. The Court DENIES Defendants motion to dismiss for the first and second claims 23 for relief. (Doc. No. 8.) The Court also DENIES Defendants’ motion for a more 24 definite statement. (Doc. No. 8.) 25 2. The Court GRANTS Defendants’ motion to dismiss for the third claim and 26 permits Plaintiff LEAVE TO AMEND. (Doc. No. 8.) Should Plaintiff choose to 27 /// 28 /// 11 3:20-CV-2500-AJB-LL Case 3:20-cv-02500-AJB-LL Document 21 Filed 09/07/21 PageID.129 Page 12 of 12 1 do so, this Amended Complaint is due by September 20, 2021. 2 3 4 IT IS SO ORDERED. Dated: September 6, 2021 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 3:20-CV-2500-AJB-LL

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