Seyfarth Synopsis: For employees looking to leave somewhere greener for somewhere warmer, California may now be climbing to the top of their list. On September 1, 2023, Governor Newsom signed legislation that extends California’s restrictions on non-compete agreements to contracts signed out of state, effective January 1, 2024. Specifically, SB 699 provides that any contract that is void under California law is
Continue Reading Heads Carolina, Tails California – Expanded Non-Compete Prohibitions Cross State LinesCalifornia Appellate Panel Affirms Injunction Blocking Use of Employee Non-Solicitation Provision in Dispute Between Travel Nurse Providers
We’re pleased to cross-post a piece by our sister blog, Trading Secrets, regarding California’s peculiar take on employee non-solicitation provisions.
On November 1, 2018, the California Court of Appeal, Fourth Appellate District affirmed a trial court’s ruling in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. et al., No. D071924, 2018 WL 5669154 (Cal. App. 2018), which (1)
Continue Reading California Appellate Panel Affirms Injunction Blocking Use of Employee Non-Solicitation Provision in Dispute Between Travel Nurse Providers
California Court Gives Two Thumbs Down and Voids Non-Compete in Actor’s Agreement
Seyfarth Synopsis: Limitation on an actor’s ability to work in certain films struck down as an unlawful restraint of trade.
California, mecca of the film and media production industries in the U.S., is notorious for outlawing non-compete agreements. It is one of the few states that generally prohibits the unlawful restraint of one’s profession or business, with limited exceptions.
Continue Reading California Court Gives Two Thumbs Down and Voids Non-Compete in Actor’s Agreement
Growing California Trade Secret Preemption Doctrine May Thwart Efforts To Combat Employee Data Theft
Company information that is sensitive, but may not rise to the level of a trade secret is protectable in California, isn’t it?
Not necessarily. Some recent California decisions have significantly limited an employer’s ability to pursue certain claims and remedies based upon the theft of mere confidential or proprietary information by rogue employees.
Defendants (often individual former employees) who are sued in California for stealing a company’s data are increasingly using the trade secret preemption doctrine to seek dismissal of non-trade secret claims, which are often pled alongside trade secret misappropriation claims, that allegedly fall within the scope of the California Uniform Trade Secrets Act (“CUTSA”).
Non-trade secret claims advanced by the employer typically include:
- conversion
- interference with contract
- interference with prospective economic advantage
- breach of fiduciary duty
- unjust enrichment
- fraud
- statutory claims brought under Bus. & Prof. Code section 17200.
These claims are typically made because they are often easier to prove than the elements of trade secret misappropriation.
While trade secret preemption does not displace breach of contract claims, it can significantly limit the claims and remedies that companies may seek when their confidential or proprietary information is stolen.
Differences Among the States:
Other States: The breadth and scope of trade secret preemption varies from state to state. While some states have held that preemption eliminates alternative causes of action for misuse or theft of confidential, proprietary or trade secret information, other states allow common law claims to be brought for the theft of confidential or proprietary information alone or along with trade secret misappropriation claims.
California state courts: In California, CUTSA generally preempts causes of action that rely on the same “nucleus of facts” as a trade secret misappropriation claim. A recent California Court of Appeal decision reaffirmed that CUTSA provides the exclusive civil remedy for conduct falling within its terms, so as to supersede other civil remedies based upon misappropriation of a trade secret. Accordingly, California state courts typically do not allow both trade secret and non-trade secret claims to be brought for the theft of company information.
Protecting Company Information When Employees Bail: California Alternatives to Employee Non-Compete Agreements
How does a California employer prevent its business from walking out the door along with a departing employee? In most jurisdictions, the employer could have the employees sign a non-compete agreement. Not in California.
One of the notorious employment laws that separates California from other states is its long-standing prohibition of employee non-compete agreements. California’s strong public policy against non-competes
Continue Reading Protecting Company Information When Employees Bail: California Alternatives to Employee Non-Compete Agreements