UnIntellectual Property (UnIP): Trade Secret for Client List
The United States District Court for the Central District of California granted Defendant’s motion to dismiss numerous claims, including one for trade secret misappropriation brought by the Plaintiff stemming from Defendant’s alleged attempts to unionize its employees. The Court’s findings as it relates to the trade secret misappropriation claim, pursuant to California law, are worth quoting below:
Magic Laundry argues that its client list qualifies as a trade secret under California law and that Defendants acquired that list by improper means. Defendants maintain in response that Magic Laundry’s client list is not a trade secret because its marked trucks deliver its goods publically to the locations of its clients, rendering its client list public knowledge. Moreover, Defendants contend that the list was not subject to security or obtained by improper means. Apparently conceding this point, Magic Laundry narrows its claim to information about prospective clients only. Yet Magic Laundry offers no evidence to support its contention that all Defendants knew or should have known that the potential client list was improperly disclosed or that defendant Saavedra disclosed the potential client list in violation of a duty to the contrary. Cal. Civ.Code § 3426.1(a), (b).
While the Court also noted that no damages were shown by Plaintiff in finding that no prima facie case of misappropriation of trade secrets exists. In doing so, the Court granted Defendant’s Special Motion to Strike claim based upon the anti-SLAPP provision under law.
This Court found that Plaintiff’s state law claim for misappropriation of a trade secret was subject to the motion to strike because the underlying activity that formed the basis of the claim was in furtherance of “exercise of free speech in connection with a public issue or an issue of public importance qualifies as protected activity under the Anti–SLAPP statute.” I am not so certain that a trade secret misappropriation claim meets the first requirement of establishing an Anti-SLAPP defense, namely “a defendant must make a threshold showing that the act or acts giving rise to the claim were in furtherance of the right of petition or free speech, or in connection with a public issue.” Nevertheless, it also appears the Court simply found that Plaintiff failed to establish a colorable claim.
This case stood out to me because of an argument made by Defendant. Although the Court did not specifically adopt the Defendant’s argument, that the client list was not a trade secret because it uses marked trucks to deliver its goods, it did not reject it either when arguably relying upon to support its decision. I wonder if such a line of argument will be used by other entities that deliver their goods/services to their clients in the future? It seems like a stretch to me and could place any company that delivers its products to or services its customers using marked vehicles in jeopardy of losing trade secret protection for its client list. I wonder what companies like Cintas (uniform delivery), Domino’s (pizza delivery), and Art Van (furniture delivery) would think of such logic? Would a plumber, real estate company, or other service provider forego protection for its client lists by having a marked vehicle advertising its services when making a house call?
Magic Laundry Servs., Inc. v. Workers United Serv. Employees Int’l Union, CV-12-9654-MWF AJWX, 2013 WL 1409530 (C.D. Cal. Apr. 8, 2013).