Citcon USA, LLC v. MaplePay Inc.

• Court: District Court, N.D. California
• Decided: April 2, 2021
• Docket: 5:19-cv-02112
• Status: Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9

10 CITCON USA, LLC, Case No. 19-cv-02112-NC 11 Plaintiff, ORDER GRANTING IN PART 12 AND DENYING IN PART v. MOTION TO DISMISS 13 MAPLEPAY INC., et al., Re: Dkt. No. 44 14 Defendants. 15 16 17 Plaintiff Citcon brings two claims for trade secret misappropriation against four 18 individuals — Hang “Hank” Miao, Ran “Ryan” Zheng, Fangwei “Simon” Han, and 19 Angela Wang — and two corporations, MaplePay, Inc., and Dino Lab, Inc. See Dkt. No. 20 16 Second Amended Complaint (“SAC”). Citcon amended its original Complaint to add 21 defendants Zheng, Han, and Dino Lab. See Dkt. No. 12. Later, Citcon amended the 22 complaint a second time to include Wang as a defendant. See SAC. The Second Amended 23 Complaint now faces a motion to dismiss on multiple grounds. Dkt. No. 44 (“MTD”). 24 The central issues are (1) whether this Court has personal jurisdiction over 25 MaplePay, Zheng, Han, and Wang, (2) whether Citcon’s claims against all defendants are 26 barred by res judicata, and (3) whether the Second Amended Complaint fails to allege 27 sufficient facts to state a claim for relief as to its two trade secret claims. The Court finds 1 California sufficient for the Court to assert personal jurisdiction over them. As it pertains 2 to the remaining two defendants, Miao and Dino Lab, the Court finds that Citcon’s claims 3 are not barred by res judicata. Citcon’s claims against the remaining defendants, however, 4 are not sufficient to state a claim in their current form. The motion is therefore 5 GRANTED as to personal jurisdiction. The motion is DENIED on res judicata grounds. 6 Finally, the motion to dismiss the two claims against Miao and Dino Lab is GRANTED 7 with LEAVE TO AMEND. 8 I. BACKGROUND 9 A. MaplePay and RiverPay 10 In early 2017, defendant Ran “Ryan” Zheng and Fangwei “Simon” Han discussed 11 creating a business to provide services to merchants to facilitate customer payments using 12 the Chinese mobile payment systems WeChat Pay and Alipay. Dkt. No. 44-1 Declaration 13 of Ryan Zheng (“Zheng Decl.”) ¶ 2. In February 2017, they initially registered the 14 corporation MaplePay, Inc. (“MaplePay”) in Canada for the purpose of conducting that 15 business. Id. Within two months, however, Zheng and Han decided they preferred the 16 name “RiverPay” instead of MaplePay, so they registered a new corporation in March 17 2017 under the name “RiverPay Canada.” Id. ¶ 3. RiverPay provides payment services in 18 Canada and the United States, and it uses MaplePay’s license with WeChat Pay to provide 19 WeChat Pay services in Canada. Id. ¶ 7. As a result, the entities under the names 20 MaplePay Canada and MaplePay Delaware do not have an active business. Id. ¶ 3. 21 MaplePay has never provided any services, never had any software or employees, and has 22 never had any income or customers. Id. ¶ 5. In August 2017, Zheng and Han turned 23 MaplePay Canada, MaplePay Delaware, and RiverPay Canada into wholly owned 24 subsidiaries of RiverPay Delaware. Id. ¶ 4. 25 B. Prior Lawsuit 26 Citcon sued RiverPay Delaware, RiverPay Canada (collectively “RiverPay”), York 27 Hua (“Hua”), and Kenny Shi (“Shi”) on May 2, 2018, for trade secret misappropriation, 1 contract and prospective economic relations, and unfair competition. See Citcon USA LLC 2 v. RiverPay Inc. et al., Case No. 5:18-cv-02585-NC (N.D. Cal.) (“RiverPay”) at Dkt. No. 3 1. Shortly thereafter, Citcon amended its complaint to add Hang “Hank” Miao as a 4 defendant in the RiverPay Case for the defamation claim, based on an online article he 5 allegedly wrote. RiverPay, Dkt. No. 8 ¶¶ 68–73. After this Court dismissed Citcon’s 6 claims with leave to amend twice, on December 27, 2018, the Court dismissed Citcon’s 7 defamation claim against Miao without leave to amend, thereby leaving no claims 8 remaining against Miao. See RiverPay, Dkt. No. 98 at 20–21. 9 Citcon filed a third amended complaint in RiverPay alleging that Hua and Shi, who 10 are not defendants in the instant case, left Citcon to work for RiverPay and took Citcon’s 11 source code with them for use in RiverPay’s products. See RiverPay, Dkt. No. 103 ¶¶ 18– 12 19, 61–64. At the time, Dino Lab, Inc. employed Miao as a software contractor, and 13 Citcon hired Miao to program its source code. Id. ¶ 26. Citcon also alleged that Shi 14 conspired with RiverPay to recruit Miao to come work for RiverPay. Id. ¶¶ 113–14. 15 At a case management conference on April 10, 2019, Citcon’s counsel asked this 16 Court for leave to amend its complaint to add Miao back into the case based on new 17 evidence it revealed about Miao in discovery. See Dkt. No. 44-2 Declaration of Edward 18 Naidich (“Naidich Decl.”), Ex. A at 4. Because the deadline for amending pleadings had 19 passed by approximately five months, this Court denied Citcon’s oral request to amend but 20 instructed Citcon’s counsel to file a written brief demonstrating good cause to amend. See 21 RiverPay Dkt. No. 170. In response, Citcon’s counsel said that they did not want to delay, 22 so Citcon would file a new case instead. Id. 23 After Citcon filed a new lawsuit against MaplePay and Miao, see Dkt. No. 1, 24 RiverPay moved for sanctions and argued that Citcon violated the Protective Order by 25 using information it learned in discovery to file the new case. See RiverPay Dkt. No. 220. 26 In response, Citcon argued that it had not violated the Protective Order because “[t]he 27 Maple [sic] Case is the same general litigation as the RiverPay Case. The MaplePay case 1 also relies on Hua’s misappropriation of Citcon’s source code.” RiverPay Dkt. No. 227 at 2 3. 3 The RiverPay case went to trial where a jury awarded Citcon $1.5 million based on 4 RiverPay’s unjust enrichment from misappropriation of Citcon’s source code. RiverPay 5 Dkt. No. 487 (“Verdict”) at 4. The jury did not find any liability against Hua and Shi. Id. 6 The Court entered final judgment on Citcon’s trade secret misappropriation claims in favor 7 of Citcon and against RiverPay in the amount of $1.5 million, and against Citcon and in 8 favor of Hua and Shi. RiverPay Dkt. No. 552 (“Judgment”) at 3. The Court also entered 9 judgment in favor of Miao and against Citcon on its defamation claims. Id. at 2–3. The 10 parties engaged in post-verdict briefing regarding whether the defendants should be held 11 jointly and severally liable for trade secret misappropriation. RiverPay Dkt. No 550 12 (“Order on Post-Verdict Briefing”) at 13. The Court denied Citcon’s request to give a jury 13 instruction on joint and several liability because none of the evidence at trial had been 14 presented under a theory of joint and several liability. See id. On October 2, 2020, Citcon 15 filed a notice of appeal to the Ninth Circuit. RiverPay Dkt. No. 553. 16 C. Current Lawsuit 17 On April 18, 2019, Citcon filed the instant case against MaplePay and Miao for 18 misappropriation of trade secrets under federal and state law. See Dkt. No. 1. Citcon later 19 amended its complaint to add Zheng, Han, Wang, and Dino Lab, Inc. as defendants. See 20 SAC. 21 Defendants MaplePay, Miao, Zheng, Han, Wang, and Dino Lab, Inc. filed a motion 22 to dismiss, arguing (1) that this Court lacks personal jurisdiction over MaplePay, Zheng, 23 Han, and Wang, (2) that res judicata bars the complaint, and (3) that Citcon’s complaint 24 fails to state a claim. MTD. This Court held a hearing on the motion to dismiss on 25 December 16, 2020. Dkt. No. 51. All parties have consented to the jurisdiction of a 26 magistrate judge. Dkt. Nos. 6, 43. 27 II. LEGAL STANDARD 1 the party seeking to invoke the jurisdiction of the federal court, has the burden of 2 establishing that jurisdiction exists. See Schwarzenegger v. Fred Martin Motor Co., 374 3 F.3d 797, 800 (9th Cir. 2004). When the motion to dismiss constitutes a defendant’s initial 4 response to the complaint, the plaintiff need only make a prima facie showing that personal 5 jurisdiction exists. See Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 6 (9th Cir. 1977). While a plaintiff cannot “‘simply rest on the bare allegations of its 7 complaint,’ uncontroverted allegations in the complaint must be taken as true [and] 8 [c]onflicts between parties over statements contained in affidavits must be resolved in the 9 plaintiff’s favor.” Schwarzenegger, 374 F.3d at 800 (quoting Amba Mktg. Sys., Inc. v. 10 Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977), and citing AT&T v. Compagnie 11 Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)). 12 A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal 13 sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Under 14 Rule 8(a), a complaint must include a short and plain statement showing that the pleader is 15 entitled to relief. See Fed. R. Civ. P. 8(a). Although a complaint need not allege detailed 16 factual allegations, it must contain sufficient factual matter, accepted as true, to “state a 17 claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 18 (2007). The Court need not accept as true “allegations that are merely conclusory, 19 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. 20 Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). A claim is facially plausible when it “allows 21 the court to draw the reasonable inference that the defendant is liable for the misconduct 22 alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The claim also “must contain 23 sufficient allegations of underlying facts to give fair notice and to enable the opposing 24 party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 25 If a court grants a motion to dismiss, leave to amend should be granted unless the 26 pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 27 F.3d 1122, 1127 (9th Cir. 2000). 1 III. DISCUSSION 2 Defendants move to dismiss Citcon’s complaint on the following grounds: (1) this 3 Court lacks personal jurisdiction over defendants MaplePay, Zheng, Han, and Wang; (2) 4 res judicata bars Citcon’s claims against all defendants; and (3) Citcon’s claims against all 5 defendants fail to state a claim under Rule 12(b)(6). See MTD. 6 The narrow issues before the court are (1) whether the personal jurisdiction “effects 7 test” from Calder v. Jones, 465 U.S. 783 (1984) is satisfied as to MaplePay, (2) whether 8 the fiduciary shield doctrine divests this Court of personal jurisdiction over Zheng, Han, 9 and Wang, (3) establishing the proper test for privity as part of the res judicata analysis, 10 and (4) after implementing the proper test, whether there is privity between Dino Lab and 11 the RiverPay defendants, thereby precluding Citcon’s claims against Dino Lab. 12 A. Personal Jurisdiction 13 Defendants move to dismiss the second amended complaint under Federal Rule of 14 Civil Procedure 12(b)(2) for lack of personal jurisdiction. See MTD. Defendants contend 15 that this Court lacks personal jurisdiction over MaplePay, Zheng, Han, and Wang because 16 they are neither residents of California, nor do they have minimum contacts with 17 California. See MTD at 6, 8. 18 Where, as here, there is no applicable federal statute governing personal 19 jurisdiction, a district court must apply the law of the state in which it sits, upon 20 determining whether the exercise of personal jurisdiction over a nonresident defendant is 21 proper. Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). District 22 courts in California may exercise personal jurisdiction over a nonresident defendant to the 23 extent permitted by the Due Process Clause of the Constitution. Cal. Civ. Proc. Code § 24 410.10. Absent one of the traditional bases for jurisdiction, the Due Process Clause 25 requires that the defendant have “certain minimum contacts” with the forum “such that the 26 maintenance of the suit does not offend traditional notions of fair play and substantial 27 justice.” Int’l Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945) (citations and internal 1 When the nonresident defendant’s contacts with the forum are insufficiently 2 pervasive to subject him to general personal jurisdiction, the court must ask whether the 3 “nature and quality” of his contacts are sufficient to exercise specific personal jurisdiction 4 over him. Data Disc, 557 F.2d at 1287. A court may exercise specific personal 5 jurisdiction over a nonresident defendant if (1) the nonresident defendant purposefully 6 directs his activities at the forum or performs some act by which he purposefully avails 7 himself of the privilege of conducting activities in the forum, thereby invoking the benefits 8 and protections of its laws; (2) the plaintiff’s claim arises out of the forum-related activities 9 of the nonresident defendant; and (3) the exercise of jurisdiction over the nonresident 10 defendant is reasonable. Schwarzenegger, 374 F.3d at 802. The plaintiff bears the burden 11 of satisfying the first two of these three elements; if the plaintiff fails to establish either of 12 them, specific personal jurisdiction over the nonresident defendant is improper. Id. 13 (citations omitted). If the plaintiff satisfies the first two prongs, the burden then shifts to 14 the defendant to “present a compelling case” that the exercise of jurisdiction would not be 15 reasonable. Id. (citations and internal quotation marks omitted). 16 The first prong of the specific jurisdiction test is satisfied by either “purposeful 17 availment” or “purposeful direction” by the defendant. Brayton Purcell LLP v. Recordon 18 & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010); see also Yahoo! Inc. v. La Ligue Contre 19 Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (noting that the first 20 step “may be satisfied by purposeful availment of the privilege of doing business in the 21 forum; by purposeful direction of activities at the forum; or by some combination 22 thereof.”). “A purposeful availment analysis is most often used in suits sounding in 23 contract. A purposeful direction analysis, on the other hand, is most often used in suits 24 sounding in tort.” Schwarzenegger, 374 F.3d at 802 (internal citations omitted). 25 Here, the issues sound in tort, so the purposeful direction analysis applies. A 26 plaintiff can satisfy the first prong by showing that the defendant purposefully directed his 27 activities at the forum. The Court evaluates purposeful direction by using the three-part 1 defendant must have “(1) committed an intentional act, (2) expressly aimed at the forum 2 state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” 3 Schwarzenegger, 374 F.3d at 805 (internal quotation marks and citation omitted). The 4 Court first addresses the effects test analysis for MaplePay, then addresses the fiduciary 5 shield doctrine for Zheng, Han, and Wang. 6 1. The Claims Against Defendant MaplePay Are Dismissed for Lack of Personal Jurisdiction 7 8 The Court finds that it lacks personal jurisdiction over MaplePay. Citcon has not 9 shown that MaplePay purposefully directed its activities at the forum state. Because the 10 Court finds that the first two prongs of the effects test are not satisfied, the Court need not 11 reach the third prong. 12 a. Intentional Act 13 Regarding the first element of the effects test, Citcon argues that MaplePay’s 14 intentional act was its acquisition of Citcon’s source code from RiverPay, and its 15 misappropriation of that source code into its own products. SAC ¶¶ 43–44; Dkt. No. 48 16 (“Opp’n”) at 7. Defendants argue that MaplePay did not commit the intentional act in 17 question, and defendant Zheng submitted a declaration to that effect. See Dkt. No. 49 18 (“Reply”) at 4; see also Dkt. No. 44-1 Zheng Declaration (“Zheng Decl.”) ¶ 1–5. 19 The first part of the effects test requires “an intent to perform an actual physical act 20 in the real world, rather than an intent to accomplish a result or consequence of that act.” 21 Schwarzenegger, 374 F.3d at 806. Here, Citcon does not advance any sufficient facts that 22 MaplePay committed any intentional action. In its amended complaint, Citcon alleges that 23 RiverPay and MaplePay were formed for the purpose of competing with Citcon. See SAC. 24 ¶27. The amended complaint, however, does not indicate that MaplePay took any action 25 independent of RiverPay. The only allegation unique to MaplePay, and one which is 26 uncontroverted by defendants in Zheng’s declaration, is that it held the WeChat Pay 27 license that RiverPay used. See SAC ¶ 48; see also Zheng Decl. ¶ 7. Otherwise, Zheng’s 1 MaplePay has never had an active business or operation, let alone engaged in intentional 2 actions. 3 Even by looking at MaplePay’s actions through the actions of its directors (Zheng, 4 Han, Wang), the allegations are too conclusory and vague to establish the intentional acts 5 prong of the effects test. Citcon alleges “[o]n information and belief, Hua, Zheng, Han, 6 and Wang started to conspire to misappropriate Citcon’s trade secrets to start a new 7 company sometimes [sic] in early 2017 when MaplePay was formed.” SAC ¶ 30. “Hua 8 would quit Citcon in June 2017 and immediately go to work for Zheng at MaplePay/ 9 RiverPay, bringing Citcon’s trade secret source code to RiverPay and using it as the 10 foundation for RiverPay’s products and services.” SAC ¶ 31. These allegations show that 11 Citcon fails to recognize a distinction between MaplePay and RiverPay. Thus, if any 12 intentional acts were taken, they were taken by RiverPay and its officers rather than by 13 MaplePay. Therefore, the intentional acts prong of the effects test is not satisfied as to 14 MaplePay. 15 b. Express Aiming 16 For the express aiming prong of the effects test, even if Citcon adequately alleged 17 an intentional act, Citcon similarly has not shown that MaplePay’s actions were expressly 18 aimed at California. 19 “The ‘express aiming’ analysis depends, to a significant degree, on the specific type 20 of tort at issue.” Schwarzenegger, 374 F.3d at 807. The alleged torts in the complaint here 21 center on the improper access to and misuse of Citcon’s trade secret source codes. In trade 22 secret misappropriation actions, courts have routinely rejected arguments that express 23 aiming is satisfied where defendants targeted a plaintiff whom they knew to be a resident 24 of California. See e.g. E*Healthline.com, Inc. v. Pharmaniaga Berhad, No. 18-cv-1069- 25 MCE-EFB, 2018 WL 5296291, *5 (E.D. Cal. Oct. 23, 2018) (“while it is clear that [the 26 defendant] knew [the plaintiff] was a business in California, Plaintiff has not put forth 27 sufficient information to show that [the defendant] expressly aimed their conduct related to 1 Healthcare Systems, Inc. v. IQVIA Holdings Inc., No. 19-cv-1865-GPC (LL), 2020 WL 2 143327, *10 (S.D. Cal. Mar. 24, 2020); Serenium v. Zhou, No. 20-cv-02132-BLF, 2020 3 WL 6275025, *6 (N.D. Cal. Oct. 26, 2020). Citcon argues that the defendants’ intentional 4 action is expressly aimed at California because the defendants conspired to compete with 5 Citcon, who is a California corporate resident. See Opp’n at 7. 6 Specific personal jurisdiction focuses on the relationship between the defendant, the 7 forum, and the litigation. See Walden v. Fiore, 571 U.S. 277, 283–84 (2014). “Prior to 8 Walden v. Fiore, courts in this circuit found the express aiming element to be satisfied 9 where a defendant knew of the plaintiff's connection to the forum and there was a 10 foreseeable harm to the plaintiff.” WhatsApp Inc. v. NSO Grp. Techs. Ltd., 472 F. Supp. 11 3d 649, 673 (N.D. Cal. 2020) appeal docketed, No. 20-16408 (9th Cir. Jul. 22, 2020); see, 12 e.g., Amini Innovation Corp. v. JS Imports, Inc., 497 F. Supp. 2d 1093, 1105 (C.D. Cal. 13 2007). 14 Later, the Ninth Circuit held in Axiom Foods, Inc. v. Acerchem International, Inc., 15 874 F.3d 1064, 1069–70 (9th Cir. 2017), that Walden requires more than knowledge of a 16 plaintiff's forum connections combined with the foreseeable harm that plaintiffs suffered in 17 the forum. “This holding effectively abrogated any individualized targeting theory.” 18 WhatsApp Inc., 472 F. Supp. 3d at 673. Instead, a defendant’s conduct remains the 19 touchstone of specific jurisdiction. Walden, 571 U.S. at 290. A court “must look to the 20 defendant's ‘own contacts’ with the forum, not to the defendant's knowledge of a plaintiff's 21 connections to a forum.” Axiom Foods, 874 F.3d at 1070 (quoting Walden, 571 U.S. at 22 289). “Calder made clear that mere injury to a forum resident is not a sufficient 23 connection to the forum . . . The proper question is not where the plaintiff experienced a 24 particular injury or effect but whether the defendant's conduct connects him to the forum in 25 a meaningful way.” Walden, 571 U.S. at 290. 26 Here, Citcon erroneously applies an individualized targeting theory, because it 27 argues that the defendants’ connection to California is based upon their knowledge of 1 Citcon’s opposition provide information about the forum in which the alleged 2 misappropriation had the most impact. For example, the complaint does not allege which 3 ultimate products and services are affected, and where the defendants targeted them, or 4 where the data was used or circulated. Similarly, the complaint does not allege facts 5 indicating whether it was in a California, China, or Canada location where Miao and Hua 6 worked for Citcon and gained access to the source code at issue. There are also no facts 7 indicating that the defendants sought out and accessed Citcon’s servers or storage locations 8 in California. See WhatsApp Inc., 472 F. Supp. 3d at 672. Citcon only contends that the 9 defendants expressly aimed their intentional conduct at California because Citcon is a 10 resident of California. The Court is not convinced that Citcon’s alleged injury, the 11 misappropriated trade secrets, is “tethered to [California] in any meaningful way.” Walden 12 571 U.S. at 290. Therefore, the Court concludes that defendants’ alleged actions were not 13 expressly aimed at California. 14 Because the Court does not find the first two prongs of the effects test satisfied, the 15 Court need not reach the third prong analyzing whether the defendants knew that the harm 16 resulting from their actions would likely be suffered in California. 17 c. The Controverted Facts Should Not Be Resolved in Citcon’s Favor 18 The Court finds that Citcon’s arguments for asserting personal jurisdiction over 19 MaplePay fail. The second amended complaint alleges that the employee defendants are 20 citizens of Canada and China. SAC ¶¶ 2–7. Zheng’s declaration demonstrates that 21 MaplePay does not: (1) have an office or place of business in California; (2) have any 22 income or customers in California; (3) provide any services or have any software or 23 employees in California; (4) or have an active business. Zheng Decl. ¶ 5. Additionally, 24 Zheng avers that MaplePay is a wholly owned subsidiary of RiverPay Delaware, but 25 RiverPay has never transferred any contracts, money, or assets to MaplePay, and RiverPay 26 only uses MaplePay’s license with WeChat Pay to provide those services in Canada. Id. ¶¶ 27 6–7. 1 Citcon has not offered any facts to rebut this showing. In fact, Citcon does not 2 provide any declarations based on personal knowledge. Instead, Citcon provides a 3 declaration from plaintiff’s counsel J. James Li which provides the procedural history of 4 the RiverPay case, and additional information about Han and Wang’s roles that were 5 notably absent from the second amended complaint. See Dkt. No. 48-1 Declaration of J. 6 James Li (“Li Decl.”). 7 Instead, Citcon argues that the purposeful direction prong of the personal 8 jurisdiction analysis is nonetheless satisfied because (1) “Defendants have committed an 9 intentional action of trade secret [misappropriation]”; (2) “the intentional action is 10 expressly aimed at Citcon, a California corporate resident, based on Defendants’ 11 conspiracy to take Citcon’s source code to compete with Citcon”; and (3) “the 12 misappropriation has caused Citcon significant harm.” Opp’n at 7. Citcon erroneously 13 contends that the allegations in the complaint are uncontroverted, and as such, it has 14 satisfied its prima facie case for personal jurisdiction over Defendants under the effects 15 test. Opp’n at 7. 16 “[U]ncontroverted allegations in [plaintiff’s] complaint must be taken as true, and 17 conflicts between the facts contained in the parties’ affidavits must be resolved in 18 [plaintiff’s] favor.” Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th Cir. 19 2002) (emphasis added). Nonetheless, “mere ‘bare bones’ assertions of minimum contacts 20 with the forum or legal conclusions unsupported by specific factual allegations will not 21 satisfy a plaintiff’s pleading burden.” Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 22 2007). The defendants argue that Plaintiff’s counsel’s declaration does not actually 23 establish a prima facie case of personal jurisdiction, see Reply at 2, n.1, and that Citcon 24 cites to irrelevant allegations, allegations in its complaint that are mere legal conclusions 25 unsupported by specific factual allegations, and allegations contradicted by the Zheng 26 declaration, see Reply at 2. 27 “An affidavit or declarations may contain only facts, must conform as much as 1 argument. Any statement made upon information or belief must specify the basis therefor. 2 An affidavit or declaration not in compliance with this rule may be stricken in whole or in 3 part.” Mulato v. Wells Fargo Bank, N.A., 76 F. Supp. 3d 929, 946 (N.D. Cal. 2014) 4 (quoting Civ. L.R. 7–5(b)). Federal Rule of Civil Procedure 56(c)(4) (previously in 5 subdivision (e)) provides that “[a]n affidavit or declaration used to support or oppose a 6 motion must be made on personal knowledge, set out facts that would be admissible in 7 evidence, and show that the affiant or declarant is competent to testify on the matters 8 stated.” Id. 9 Citcon, however, has not offered any facts to rebut the defendants’ showing that 10 MaplePay did not have an active business, and that RiverPay never transferred any assets 11 to MaplePay — including any source codes RiverPay may have acquired. See MTD at 7– 12 8. In considering whether personal jurisdiction is proper, the court “may not assume the 13 truth of allegations in a pleading which are contradicted by affidavit.” Mavrix Photo, Inc. 14 v. Brand Technologies, Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) (citing Data Disc, Inc., 15 557 F.2d at 1284). Here, Defendants successfully contradict the allegations of the 16 amended complaint via affidavit. See Zheng Decl. And because Citcon did not rebut 17 Defendants’ showing by declaration or affidavit, Citcon did not create a conflict between 18 the facts at issue. Thus, the Court cannot assume the truth of Citcon’s conclusory 19 allegations. 20 Citcon has not met its burden in making a prima facie showing that MaplePay has 21 sufficient contacts with California that would support the exercise of specific personal 22 jurisdiction over it. Because Citcon did not satisfy its burden under the effects test, and 23 because the Court cannot resolve the controverted facts in Citcon’s favor, the Court finds 24 that MaplePay did not purposefully direct its activities in California. Therefore, the claims 25 against MaplePay are dismissed without prejudice for lack of personal jurisdiction. 26 // 27 // 2. The Claims Against Defendants Zheng, Han, and Wang Are Dismissed 1 for Lack of Personal Jurisdiction 2 Defendants argue that the fiduciary shield doctrine applies, and that it divests this 3 Court of personal jurisdiction over Zheng, Han, and Wang. MTD at 8. Citcon fails to 4 address the fiduciary shield doctrine in its opposition brief. See generally Opp’n. 5 Under the fiduciary shield doctrine, “a person’s mere association with a corporation 6 that causes injury in the forum state is not sufficient in itself to permit that forum to assert 7 jurisdiction over the person.” Davis v. Metro Prods., Inc., 885 F.2d 515, 520 (9th Cir. 8 1989). “The fiduciary shield doctrine may be ignored in two circumstances: (1) where the 9 corporation is the agent or alter ego of the individual defendant; or (2) by virtue of the 10 individual’s control of, and direct participation in the alleged activities.” j2 Global 11 Commc’ns, Inc. v. Blue Jay, Inc., No. 08-cv-4254 PJH, 2009 WL 29905, at *5 (N.D. Cal. 12 Jan. 5, 2009). 13 As to the first circumstance, the parties agree that neither RiverPay nor MaplePay 14 are the agents or alter ego of the officer defendants. See Reply at 5. As to the second 15 circumstance, courts should disregard the fiduciary shield doctrine upon finding that the 16 corporate officers were typically involved in instances where the defendants were the 17 primary participants or the “guiding spirit behind the wrongful conduct,” or the “central 18 figure” in the challenged corporate activity. See Wolf Designs, Inc. v. DHR & Co., 322 F. 19 Supp. 2d 1065, 1072 (C.D. Cal. 2004) (quoting Davis v. Metro Prods., Inc., 885 F.2d 515, 20 524 n.10. 21 Here, although employee defendants Zheng, Han, and Wang are corporate directors 22 of MaplePay, see Zheng Decl. ¶ 8, the amended complaint does not allege facts showing 23 that those defendants were the “guiding spirits” in the alleged trade secret 24 misappropriation. In fact, the complaint is devoid of facts regarding Zheng, Han, or 25 Wang’s involvements at all. The complaint only alleges that “[former Dino Lab contractor 26 Yue “York”] Hua reached out to [Zheng], a successful yogurt [sic] businessman, and Hua 27 convinced Zheng to partner with him in competing directly with Citcon in the growing 1 companies to compete with Citcon, RiverPay and MaplePay, with Zheng serving as CEO 2 for both RiverPay and MaplePay,” SAC ¶ 27; “On information and belief, Hua, Zheng, 3 Han and Wang started to conspire to misappropriate Citcon’s trade secrets to start a new 4 company sometimes [sic] in early 2017 when MaplePay was formed,” SAC ¶ 30; and 5 “Hua would quit Citcon in June 2017 and immediately go to work for Zheng at 6 MaplePay/RiverPay, bringing Citcon’s trade secret source code to RiverPay and using it as 7 the foundation for RiverPay’s products and services,” SAC ¶ 31. The remainder of the 8 allegations in the complaint focus on Miao’s employment with Citcon and Dino Lab. See 9 SAC ¶¶ 32–48. Those remaining allegations do not involve Zheng, who serves as the 10 figurehead for MaplePay and RiverPay. Id. 11 Meanwhile, Han and Wang are not referenced in the complaint at all aside from the 12 single conclusory allegation that they “started to conspire,” see id. ¶ 30, and aside from 13 identifying that they are officers of RiverPay, see id. ¶ 18. Citcon only references Han and 14 Wang’s roles in its opposition brief, and in Li’s declaration. See Opp’n at 6, 11, 23; see 15 also Li Decl. ¶¶ 11, 12, 14. Citcon has failed to rebut the employee defendants’ showing 16 that they did not have the requisite control of, or direct participation in the alleged 17 activities to support the exercise of personal jurisdiction against them. Therefore, Citcon 18 has failed to provide any basis that would support disregarding the fiduciary shield 19 doctrine. 20 Citcon has failed to properly allege that this Court has personal jurisdiction over 21 MaplePay, and it failed to properly rebut controverted allegations via declaration or 22 affidavit. Furthermore, the Court finds that there is not personal jurisdiction over 23 employee defendants Zheng, Han, and Wang because they are protected by the fiduciary 24 shield doctrine. Accordingly, the Court GRANTS Defendants’ motion to dismiss Citcon’s 25 trade secret misappropriation claims against MaplePay, Zheng, Han, and Wang without 26 prejudice for lack of personal jurisdiction. 27 3. Jurisdictional Discovery 1 allegations insufficient, then it would like the opportunity for jurisdictional discovery. See 2 Dkt. No. 51. Citcon did not request jurisdictional discovery prior to the hearing. 3 Here, the Court finds that jurisdictional discovery would not be useful in this 4 instance. In the prior case, Citcon presented three complaints and ten causes of action to 5 assert trade secret misappropriation relating to the same nucleus of facts. See RiverPay 6 Dkt. No. 103. Citcon had ample opportunity, and the benefit of the prior case going to 7 trial, to adequately allege personal jurisdiction and present a viable claim against the 8 defendants here. After the hearing on the motion to dismiss, the Court does not find that 9 jurisdictional discovery would ameliorate these deficiencies. Therefore, the Court 10 DENIES any requests for jurisdictional discovery. 11 B. Res Judicata 12 Based on this Court’s conclusions above regarding personal jurisdiction, the 13 following analyses only pertain to the remaining defendants, Miao and Dino Lab. In the 14 instant case, Defendants contend that the claims raised in this lawsuit are barred because 15 they were raised, or could have been raised, in RiverPay. 16 Res judicata, also known as claim preclusion, bars litigation in a subsequent action 17 of any claims that were raised or could have been raised in the prior action. W. Radio 18 Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997). “Res judicata prevents 19 litigation of all grounds for, or defenses to, recovery that were previously available to the 20 parties, regardless of whether they were asserted or determined in the prior proceeding.” 21 Brown v. Felsen, 442 U.S. 127, 131 (1979). Res judicata, “has the dual purpose of 22 protecting litigants from the burden of relitigating an identical issue with the same party or 23 his privy and of promoting judicial economy by preventing needless litigation.” Parklane 24 Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979). 25 In order for res judicata to apply there must be (1) an identity of claims, (2) a final 26 judgment on the merits, and (3) identity or privity between parties. W. Radio Servs. Co., 27 123 F.3d at 1192. Here, the prior case resulted in a jury trial, and the Court entered final 1 against RiverPay in the amount of $1.5 million, and (b) against Citcon and in favor of Hua 2 and Shi. MTD at 5; see also RiverPay Dkt. No. 552. Thus, the final judgment on the 3 merits element is satisfied so the Court’s analysis focuses on the remaining two elements. 4 1. Citcon’s Claims Against Miao Are Not Barred by Res Judicata 5 a. Same Parties or Privity 6 The Court must consider whether there is identity or privity of parties in the two 7 actions. Here, there is no dispute that Miao was an identical party in the two lawsuits. 8 Citcon named Miao as a defendant in both cases and as such, this element of the res 9 judicata inquiry is satisfied. 10 b. Identity of Claims 11 In determining whether successive claims constitute the same cause of action, the 12 Court considers (1) whether rights or interests established in the prior judgment would be 13 destroyed or impaired by prosecution of the second action; (2) whether substantially the 14 same evidence is presented in the two actions; (3) whether the two suits involve 15 infringement of the same right; and (4) whether the two suits arise out of the same 16 transactional nucleus of facts. Costantini v. Trans World Airlines, 681 F.2d 1199, 1201–02 17 (9th Cir. 1982). “The last of these criteria is the most important.” Id. at 1202. The Ninth 18 Circuit has found that satisfaction of the fourth factor alone is sufficient to establish an 19 identity of claims. See Int’l Union of Operating Eng’rs-Employers Constr. Indus. Pension, 20 Welfare and Training Trust Funds v. Karr, 944 F.2d 1426, 1430 (9th Cir. 1993) (citing 21 cases finding successive claims barred by res judicata based only on analysis of the fourth 22 factor). 23 The two cases can have the same transactional nucleus of facts even if the second 24 lawsuit identifies new claims. “Newly articulated claims based on the same nucleus of 25 facts may still be subject to a res judicata finding if the claims could have been brought in 26 the earlier action.” Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 322 27 F.3d 1064, 1078 (9th Cir. 2003). If claims are related to the same set of facts and could be 1 also Durney v. WaveCrest Laboratories, LLC, 441 F. Supp. 2d 1055, 10601 (N.D. Cal. 2 2005) (where the prior breach of contract action involved plaintiff’s performance and 3 defendant’s failure to pay, the court found that the second action for quantum meruit was 4 merely an alternative legal theory based on the same conduct, and the two actions arose 5 from the same transactional nucleus of facts). 6 “In determining whether the same transactional nucleus of facts are involved, the 7 courts have focused on whether the two causes of action allege the same conduct and 8 whether the two causes of action allege conduct which is contemporaneous.” Durney, 441 9 F. Supp. 2d at 1060 (emphasis added). The elements necessary to prove each cause of 10 action drive the determination of whether the underlying conduct is sufficiently similar or 11 different. See id. at 1061; see also Fund for Animals, Inc. v. Lujan, 962 F.2d 1391, 1399 12 (9th Cir. 1992) (even though both suits related to an Environmental Impact Statement, the 13 two claims in each action alleged different governmental conduct, and thus there was not 14 an identity of claims). Here, Citcon argues that the defamation cause of action against 15 Miao in RiverPay is not the same as the trade secret misappropriation cause of action 16 against him here. See Opp’n at 14. Defendants argue that the causes of action are the 17 same because they are based on the same common nucleus of operative facts (the 18 misappropriation of Citcon’s source code), and because those claims share a factual 19 foundation, they could have been brought together in the RiverPay case. See MTD at 10– 20 11. 21 After considering the Ninth Circuit’s four-factor analysis, the Court agrees with 22 Citcon. The claims against Miao in RiverPay were completely different from the claims at 23 issue here. And although the general universe of facts involves access to Citcon’s source 24 code, the conduct involved in the defamation claims differ from those alleged for 25 improperly acquiring trade secrets. First, the dismissal of the defamation claim in 26 RiverPay would not be affected by the prosecution of trade secret misappropriation claims 27 in this action because the inquiries center on different actions allegedly undertaken by 1 Second, in RiverPay, Citcon brought defamation claims against Miao arising out of 2 statements he made in an article about Citcon and its CEO. See RiverPay Dkt. No. 103; 3 see also SAC ¶ 39. But Citcon did not have any evidence of Miao’s involvement in the 4 alleged misappropriation until well after this Court dismissed the defamation claims 5 against Miao. See Li Decl. ¶ 7. Although it is unclear whether a temporal distinction exists 6 between the prior and subsequent claims, the harms arose from different facts. See Media 7 Rights Technologies, Inc. v. Microsoft Corporation, 922 F.3d 1014, 1027 (9th Cir. 2019) 8 (“‘If the harm[s] arose at the same time, then there was no reason why the plaintiff could 9 not have brought [both] claim[s] in the first action. The plaintiff simply could have added a 10 claim to the complaint.’. . . In contrast, ‘[i]f the harm[s] arose from different facts,’ then a 11 party is not obligated to bring both claims on pain of preclusion.” (internal citations 12 omitted)). Thus, any evidence presented in this action for misappropriation would be 13 unrelated and wholly separate from evidence presented in the prior action for defamation. 14 Third, the two claims involve infringement of different rights. The defamation 15 claim involves reputational harm, while the trade secret claim involves intellectual 16 property damages. See Opp’n at 14. Finally, although the defamation claim involved an 17 online article related to the events at issue in this case, at that time Citcon had no facts 18 supporting the misappropriation claim against Miao, and the elements of each cause of 19 action involve completely different underlying facts. Therefore, these do not constitute the 20 same cause of action, and res judicata does not bar the trade secret misappropriation claim 21 against Miao. 22 Further, Defendants argue that the claims against Miao are barred by res judicata 23 because the claims “could have been brought” in the RiverPay case. Reply at 13. Citcon 24 contends that Defendants distort this statement of law, and the Court agrees. The “could 25 have been brought” standard guides a court in determining whether there is an identity of 26 claims. See Tahoe-Sierra, 322 F.3d at 1078 (“Newly articulated claims based on the same 27 nucleus of facts may still be subject to a res judicata finding if the claims could have been 1 that the two claims at issue are not substantially the same. Although Citcon theoretically 2 could have alleged misappropriation claims against Miao at the outset of the RiverPay 3 case, it did not. By the time Citcon discovered evidence necessary to bring a 4 misappropriation claim against Miao in RiverPay, the opportunity for amendment had 5 lapsed. See Herrera v. Countrywide KB Home Loans, No. 11-cv-03591-LHK, 2012 WL 6 901340, at *4 (N.D. Cal. Mar. 15, 2012) (finding that if plaintiff could have amended the 7 prior complaint to allege the successive claims, then identity of claims exists). The parties 8 did not have an opportunity to fully litigate trade secret misappropriation claims against 9 Miao. Therefore, the claims against Maio are not barred by res judicata.

10 2. Citcon’s Claims Against Dino Lab, Inc. Are Not Barred by Res Judicata 11 a. Identity of Claims 12 13 The Court must consider whether there is identity of claims in the two actions as it 14 pertains to Dino Lab, Inc. Here, there is no dispute that trade secret misappropriation is 15 the cause of action at issue in the instant case and in RiverPay. Because that is the only 16 cause of action in the amended complaint asserted against Dino Lab, Inc., this element of 17 the res judicata inquiry is satisfied. The issue in dispute is whether Dino Lab is a party or 18 privy of a party in the RiverPay case. 19 b. Same Parties or Privity 20 Finally, the Court looks to whether RiverPay and the current lawsuit involve parties 21 in privity with each other. Specifically, whether Dino Lab is in privity with a RiverPay 22 defendant. The Ninth Circuit has defined privity as when a party is “so identified in 23 interest with a party to former litigation that he represents precisely the same right in 24 respect to the subject matter involved.” Stratosphere Litig. LLC v. Grand Casinos, Inc., 25 298 F.3d 1137, 1142 n.3 (9th Cir. 2002). Privity exists if there is sufficient commonality 26 of interests between the parties. Tahoe-Sierra, 322 F.3d at 1081. The parties here disagree 27 on the proper test for privity since the Supreme Court’s decision in Taylor v. Sturgell, 553 1 Adams v. Cal. Dep’t of Health Servs., 487 F.3d 684, 688 (9th Cir. 2007) governs, whereas 2 Citcon argues that Taylor governs.1 3 The Supreme Court in Taylor clarified the scope of “[t]he preclusive effect of a 4 federal-court judgment” on a nonparty to the case in which the judgment was issued. 553 5 U.S. at 891. “A person who was not a party to a suit generally has not had a ‘full and fair 6 opportunity to litigate’ the claims and issues settled in that suit.” Taylor, 553 U.S. at 892. 7 The Supreme Court explained how generally, claim and issue preclusion do not apply to 8 nonparties, but that there were six categories of exceptions to this general rule. Id. at 893. 9 While no bright-line definition governs the framework for privity, the Supreme Court 10 identified these general categories, explaining that they did not serve as a “definitive 11 taxonomy.” Id. at 893 n.6. Privity may exist between a party and a nonparty where: (1) 12 the nonparty agrees to be bound by the determination in the first action; (2) the nonparty 13 has a pre-existing substantive legal relationship with a party to the judgment, such as 14 preceding and succeeding owners of property, bailee and bailor, or assignee and assignor; 15 (3) the nonparty was adequately represented in the first action by someone with the same 16 interests; (4) the nonparty assumed control over the litigation in which the judgment was 17 rendered; (5) the nonparty is bringing suit as a representative, or proxy, of a person who 18 was a party to the previous action; and (6) the nonparty is barred by statute from 19 relitigating an issue already adjudicated. Id. at 893–95. 20 The Supreme Court in Taylor disapproved of the more expansive doctrine of 21 “virtual representation,” in which “a person may be bound by a judgment if she was 22 adequately represented by a party to the proceeding yielding that judgment.” Id. at 896. 23 Furthermore, the Ninth Circuit and courts in this district have recognized Taylor’s effect in 24

25 1 To advance their proposition that federal courts still use Adams to establish privity, Defendants cite to Pinnacle Great Plains Operating Co., LLC v. Swenson, No. 1:17-cv- 26 00120-DCN, 2017 WL 4855846, at * 9–11 (D. Idaho Oct. 26, 2017). Although the Pinnacle court employed both the Adams and Taylor frameworks, this Court is not 27 persuaded by this out-of-district case because it is not controlling and stands in contrast 1 abrogating the “virtual representation” doctrine in Adams. See e.g., Owens v. Braithwaite, 2 812 F. App’x 577, 578 (9th Cir. 2020); Rivera v. Am. Fed’n of State, Cty., & Mun. 3 Employees, AFL-CIO, Local 444, No. 3:16-CV-04959-WHO, 2017 WL 3021038, at *3 n.2 4 (N.D. Cal. July 17, 2017); Alphaville Design, Inc. v. Knoll, Inc., 627 F. Supp. 2d 1121, 5 1136 (N.D. Cal. 2009). 6 For the second category, however, the Taylor Court left untouched the scope of 7 other substantive legal relationships that pre-Taylor courts found gave rise to privity. See 8 Taylor, 553 U.S. at 894; see e.g. W. Radio Servs. Co., Inc. v. Glickman, 123 F.3d 1189, 9 1196 (9th Cir. 1997) (officer-corporation); In re Gottheiner, 703 F.2d 1136, 1140 (9th Cir. 10 1983) (same); Spector v. El Ranco, Inc., 263 F.2d 143, 145 (9th Cir. 1959) (principal- 11 agent). This may explain why Defendants still rely on Adams to establish privity for 12 substantive legal relationships such as officer and corporation, principal and agent, or 13 employer and employee. Even if the Taylor court left this aspect of the second category 14 untouched, those substantive legal relationships do not come into play here for Dino Lab. 15 Because the Supreme Court clearly denounced use of the virtual representation doctrine, 16 this Court will analyze the privity exception to non-party claim preclusion under Taylor’s 17 categories. 18 c. Under Taylor, Dino Lab Is Not in Privity with the RiverPay Defendants, Thus the Claims Against Dino Lab Are Not Barred 19 by Res Judicata. 20 Dino Lab was not a party in the RiverPay case. Defendants argue that Dino Lab is 21 in privity with the RiverPay defendants, thereby barring all claims against Dino Lab under 22 res judicata, but Citcon argues that they are not in privity. The defendants focus only on 23 the second and third Taylor categories — a pre-existing substantive legal relationship 24 specifically through succession of property, and a non-party’s adequate representation in 25 the first action by someone with the same interests. See Reply at 12. The Court will focus 26 primarily on those two categories because they are most relevant to this analysis. The 27 Court finds that neither is sufficient to establish privity here. 1 i. Second Category: Substantive Legal Relationship 2 Taylor’s second category establishes a limited exception to the rule against non- 3 party claim preclusion where the nonparty has a pre-existing substantive legal relationship 4 with a party to the judgment, such as preceding and succeeding owners of property. 5 Taylor 553 U.S. at 894. The Supreme Court in Taylor cited the Second Restatement of 6 Judgments and Wright and Miller in its discussion of the second ground for privity. Id. 7 The Restatement and Wright and Miller both make clear that privity follows the property 8 acquired. See 2 Rest. of Judgments § 43; see also 18A Fed. Prac. & Proc. Juris. § 4462. 9 As such, Taylor contemplates a property-based legal relationship, and that type of 10 relationship does not exist here. 11 Defendants assert that there is a substantive legal relationship between Dino Lab 12 and the previous defendants in RiverPay because Dino Lab employed Miao and Hua, who 13 were defendants in the previous case. See Reply at 12; see also SAC ¶¶ 21–24. They 14 argue that privity exists because of Dino Lab’s “affiliations” with the defendants in the 15 RiverPay case. MTD at 13. Further, Defendants argue that the connection between Dino 16 Lab and Miao and Hua is important because Hua (a non-party here, but a defendant in 17 RiverPay) was accused by Citcon of “mastermind[ing] the misappropriation of Citcon’s 18 source code.” RiverPay Dkt. No. 227 at 5. Even if the defendants’ argument assumes that 19 the source code is property for purposes of Taylor’s second privity category, Dino Lab still 20 did not engage in the type of property-based legal relationship required. Dino Lab was not 21 in an assignee-assignor or bailee-bailor relationship, and the facts of the amended 22 complaint do not indicate that it was either a preceding or succeeding owner of property.2 23 The defendants’ reliance on an employer-employee relationship is unsupported and 24 insufficient to establish the required privity here. Therefore, under the second Taylor 25

26 2 Defendants note that a major issue in the RiverPay case was whether Dino Lab “was the actual owner of the source code that Citcon claimed was misappropriated by RiverPay and 27 Hua.” Reply at 12. For purposes of determining privity, it is irrelevant whether or not 1 category, Dino Lab is not in privity with the parties in the prior case. 2 ii. Third Category: Adequate Representation 3 Taylor’s third category establishes privity in “limited circumstances” where the 4 nonparty was adequately represented in the first action by someone with the same interests. 5 Taylor 553 U.S. at 894–95. Here, Defendants argue that “Dino Lab is controlled by the 6 same people who control RiverPay” — Hua, Han, and Zheng. See Reply at 12; see also 7 RiverPay Dkt. No. 473 Trial Testimony 12/18/19. Thus, the defendants assert that Dino 8 Lab was adequately represented by Hua, Han, and Zheng in RiverPay. 9 Dino Lab was never represented in RiverPay. Zheng and Han, defendants here, 10 provided witness testimony in RiverPay, but did not represent Dino Lab’s interests in the 11 prior lawsuit. Although a major issue litigated in RiverPay was whether Dino Lab was the 12 actual owner of the source code, see RiverPay Dkt. No. 237, that issue was part of a factual 13 dispute on summary judgment and the inquiry was into whether Hua (a defendant and 14 partial owner of Dino Lab) was the owner of the source code, id. Thus, Taylor’s third 15 category similarly does not establish privity here. 16 iii. Remaining Taylor Categories 17 The remaining Taylor categories fail to establish Dino Lab’s privity with any of the 18 prior defendants in RiverPay. Under the first category, Dino Lab entered no such 19 agreement to be bound by the determination in the first action. See Opp’n at 11. Under 20 the fourth category, there are no facts to establish that Dino Lab was in control of the 21 RiverPay litigation. Zheng and Han’s witness testimony in RiverPay did not confer 22 control over the litigation to Dino Lab, nor did they testify on Dino Lab’s behalf. The fifth 23 category is irrelevant here because Dino Lab is not bringing suit, and it is not acting as a 24 proxy or representative for any previous parties. Finally, the sixth category, which bars 25 nonparties by statute from relitigating an issue already adjudicated, is irrelevant here 26 because no statute applies. 27 Under the above analysis, the Court finds that none of the six Taylor categories 1 words, Dino Lab is not in privity with the previous defendants in RiverPay. Without 2 satisfying the privity element of res judicata, the claims against Dino Lab here are not 3 barred. Accordingly, the Court DENIES Defendants’ motion to dismiss the claims against 4 Dino Lab on these grounds. 5 3. The Claims Do Not Involve Claim-Splitting 6 The defendants secondarily argue that Citcon’s claims against all defendants should 7 be dismissed as duplicative of the RiverPay case. See MTD at 13. “Plaintiffs generally 8 have no right to maintain two separate actions involving the same subject matter at the 9 same time in the same court and against the same defendant.” Adams, 487 F.3d at 688 10 (quotation marks and citation omitted). A court has discretion to dismiss a later-filed 11 complaint for being duplicative of one previously filed, it may stay that action pending 12 resolution of the previously filed action, it may enjoin the parties from proceeding with it, 13 or it may consolidate both actions. Id. Although Adams’ holding on the virtual 14 representation doctrine has since been overruled, “the Adams court’s discussion of 15 impermissible claim-splitting remains precedential.” Lennar Mare Island, LLC v. Steadfast 16 Ins. Co., 2016 WL 3197390, at *2 n.1 (E.D. Cal. June 8, 2016). The purpose behind the 17 duplicative litigation doctrine (otherwise known as claim-splitting) is to prevent a 18 plaintiff’s attempt to avoid the consequences of the court’s prior ruling. See Adams, 487 19 F.3d at 688. “[T]he fact that plaintiff was denied leave to amend does not give h[er] the 20 right to file a second lawsuit based on the same facts.” Id. (internal citations omitted). 21 Here, Defendants argue that Citcon’s claims are duplicative of its claims in 22 RiverPay because “the Court denied Citcon’s oral motion to amend its complaint . . . and 23 Citcon instead granted itself a ‘back door’ motion to amend by filing a new lawsuit.” 24 MTD at 13. In fact, this Court did not flatly deny Citcon leave to amend its complaint in 25 RiverPay. See Li Decl., Ex. H “CMC Hearing Transcript.” This Court did not find good 26 cause to amend or add a new party to the RiverPay case, so the Court ordered Citcon to 27 show cause and proffer with the defendants if it chose to pursue an amendment. Id. Thus, 1 order. Accordingly, the Court DENIES Defendants’ request to dismiss this case as 2 duplicative for improper claim-splitting. 3 C. Collateral Estoppel 4 In their next argument for dismissal, Defendants argue that Citcon should be 5 collaterally estopped from relitigating the issue of joint and several liability. MTD at 14. 6 Collateral estoppel applies to a question, issue, or fact when four conditions are met: (1) 7 the issue at stake was identical in both proceedings; (2) the issue was actually litigated and 8 decided in the prior proceedings; (3) there was a full and fair opportunity to litigate the 9 issue; and (4) the issue was necessary to decide the merits. Oyeniran v. Holder, 672 F.3d 10 800, 806 (9th Cir. 2012), as amended (May 3, 2012). Only the most relevant factor, the 11 full and fair opportunity to litigate, is the Court’s focus here. 12 In RiverPay, Citcon raised the issue of joint and several liability for the first time in 13 its post-verdict briefing. See RiverPay Order on Post-Verdict Briefing at 13. Although 14 this Court denied Citcon’s post-verdict request, it did so because the evidence presented at 15 trial had never been under a theory of joint and several liability. See id. Thus, the 16 defendants there — RiverPay, Hua, and Shi — did not actually litigate the issue of joint 17 and several liability. 18 Here, Citcon seeks to litigate the issue of joint and several liability against all 19 defendants.3 Dino Lab was not a defendant in the RiverPay case. So, even if the issue at 20 stake had actually been litigated in RiverPay, Dino Lab was not given a full and fair 21 opportunity to litigate the joint and several liability issue. For Miao, although he was a 22 defendant in the prior action, Miao was dismissed from the case before trial. Thus, Miao 23 did not have an opportunity to litigate the joint and several liability issue in RiverPay 24 either, or the facts as they pertain to him. Accordingly, the Court finds that the issue of 25 joint and several liability is not barred by the doctrine of collateral estoppel, and the Court 26

27 3 In lieu of the above analyses for personal jurisdiction and res judicata, the joint and 1 DENIES Defendants’ request for dismissal on those grounds. 2 D. The Second Amended Complaint Fails to State a Claim for Misappropriation of Trade Secrets Under the DTSA and CUTSA 3 1. Judicial Notice 4 5 The Court first addresses Citcon’s request for judicial notice. Although a district 6 court generally may not consider any material beyond the pleadings in ruling on a 12(b)(6) 7 motion, the Court may take judicial notice of documents referenced in the complaint, as 8 well as matters in the public record, without converting a motion to dismiss into one for 9 summary judgment. See Lee v. City of L.A., 250 F.3d 668, 688–89 (9th Cir. 2001) 10 overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119, 1125– 11 26 (9th Cir. 2002). Additionally, the Court may take judicial notice of matters that are 12 either “generally known within the trial court’s territorial jurisdiction” or “can be 13 accurately and readily determined from sources whose accuracy cannot reasonably be 14 questioned.” Fed. R. Evid. 201(b). Public records, including judgments and other court 15 documents, are proper subjects of judicial notice. See, United States v. Black, 482 F.3d 16 1035, 1041 (9th Cir. 2007). 17 Here, Citcon requests judicial notice of the RiverPay Judgment. See Opp’n at 23. 18 The Court entered judgment against RiverPay for trade secret misappropriation of source 19 code, but in favor of Hua and Shi. See RiverPay Dkt. Judgment at 3. The Court GRANTS 20 this request for judicial notice as to ECF No. 552, as this judgment is a public document 21 filed during federal court proceedings. See Black, 482 F.3d at 1041. 22 2. Failure to State a Claim for Trade Secret Misappropriation 23 The Court now addresses the sufficiency of Citcon’s two claims against Miao and 24 Dino Lab, as the claims against these two defendants are not barred by res judicata. Citcon 25 alleges that the defendants misappropriated its trade secrets under both 18 U.S.C. § 1836 26 (the Defend Trade Secrets Act, or DTSA) and California Civil Code § 3426.1 (the 27 California Uniform Trade Secrets Act, or CUTSA). See SAC. To plead trade secret 1 ownership of the trade secret, (2) that the defendant acquired it through improper means, 2 and (3) that the defendants’ actions damaged the plaintiff. See Rockwell Collins Inc. v. 3 Wallace, Case No. 17-cv-1369-AG, 2017 WL 5502775, at *2 (C.D. Cal. Nov. 10, 2017). 4 As a preliminary matter, Defendants move to dismiss Citcon’s amended complaint 5 on the grounds that it is “at least as deficient — if not more so — than its allegations 6 against RiverPay that were dismissed in its second amended complaint in the RiverPay 7 case.” MTD at 16. Additionally, Defendants assert that the amended complaint is “filled 8 with vague, conclusory allegations made on ‘information and belief.’” Id. at 17. A 9 plaintiff must plead a claim with “facial plausibility” that allow[s] the court to draw the 10 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 11 U.S. at 663 (emphasis added). Additionally, the Federal Rules of Civil Procedure require a 12 pleading to give a defendant “fair notice” of the claim being asserted and the “grounds 13 upon which it rests.” Yamaguchi v. United States Dept. of Air Force, 109 F.3d 1475, 1481 14 (9th Cir. 1997); Fed. R. Civ. P. 8(a)(2) (requiring that a complaint provide a “short and 15 plain statement of the claim showing that the pleader is entitled to relief.”). Furthermore, 16 where “all defendants are lumped together in a single, broad allegation,” without “any 17 specificity [of] how each . . . defendant allegedly” committed illegal acts, the plaintiff’s 18 complaint fails to put defendants on notice of the claims asserted against them. Gauvin v. 19 Trombatore, 682 F. Supp. 1067, 1071 (N.D. Cal. 1988). 20 A trade secret misappropriation claim requires pleading that the defendants 21 misappropriated the trade secrets; that is, acquired them through improper means. See 18 22 U.S.C. § 1839(3); see also Cal. Civ. Code § 3426.1(2); see also Rockwell, 2017 WL 23 5502775 at *2. Here, the Court addresses the claims for both defendants because Citcon 24 pleads the same facts for each of the remaining defendants regarding misappropriation. 25 Citcon pleads that “[o]n information and belief, Dino Lab and Miao, in conspiracy 26 with the other Defendants, misappropriated Citcon’s source code on which Dino Lab and 27 Miao worked as Citcon’s contractors.” SAC ¶ 47. This is a legal conclusion with no 1 give Miao an opportunity to leave Citcon without undue suspicion of Miao’s true goal of 2 leaving to work for Citcon’s competitor, RiverPay.” SAC ¶ 32. But it is unclear what that 3 “incident” entailed or what the defendants’ roles were in creating it. Similarly, Citcon 4 alleges “Defendants acquired Citcon’s trade secret information in the improper and 5 unlawful manner as stated in the Chronology of Events. On information and belief, Miao 6 and Citcon [sic] 4 wrongfully acquired the Source Code from Citcon and disclosed it to 7 MaplePay, Zheng and Han.” SAC ¶ 56. This too is a conclusory allegation that fails to 8 provide notice to the defendants. 9 The only factual basis supporting these vague allegations is this Court’s judgment in 10 favor of Citcon in the RiverPay case. Regardless of whether this Court takes judicial 11 notice of the RiverPay Judgment, Citcon’s complaint still needs to establish that the 12 existing defendants in the instant case actually had something to do with RiverPay’s 13 wrongful acts. Citcon’s legal conclusions assume that RiverPay’s liability in the prior case 14 transfers liability to the other defendants here. Like in RiverPay, Citcon alludes to a 15 conspiracy theory for the trade secret claims. See SAC ¶¶ 32, 47. Here too, this attempt at 16 a conspiracy theory fails because Citcon does not plead the necessary element of a 17 conspiracy claim — that any agreement existed between Miao, Dino Lab, and the other 18 defendants for trade secret misappropriation of the source code. See Applied Equip. Corp. 19 v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 511 (1994). Further, it is unclear how Miao 20 and Dino Lab have any connection to MaplePay. That Miao was a contractor for RiverPay 21 does not mean that he improperly acquired trade secrets, transmitted them to his employer 22 (Dino Lab), or that they were transmitted to RiverPay’s wholly owned subsidiary 23 MaplePay. Citcon must plead some facts to support actual misappropriation by Miao and 24 Dino Lab, because the current allegations, as pled, are insufficient. 25 // 26 // 27 1 3. Leave to Amend 2 Generally, a Court must grant leave to amend freely. Fed. R. Civ. P. 15(a). 3 However, in granting leave to amend, the Court considers: (1) undue delay; (2) bad faith; 4 (3) prejudice to the opponent; and/or (4) futility of the proposed amendment. Loehr v. 5 Ventura County Community College District, 743 F.2d 1310, 1319 (9th Cir. 1984) (citing 6 Foman v. Davis, 371 U.S. 178, 182 (1962)). Here, amendment of the claims against Miao 7 and Dino Lab is appropriate. Thus, the Court GRANTS the defendants’ motion to dismiss 8 under 12(b)(6) with LEAVE TO AMEND. 9 IV. CONCLUSION 10 For the reasons stated above, the motion to dismiss the Second Amended Complaint 11 is GRANTED without leave to amend for lack of personal jurisdiction over MaplePay, 12 Zheng, Han, and Wang. No claims remain against MaplePay, Zheng, Han, and Wang. 13 The motion to dismiss the Second Amended Complaint for res judicata and claim- 14 splitting is DENIED as to all claims against defendants Miao and Dino Lab, Inc. Citcon’s 15 DTSA and CUTSA claims against Miao and Dino Lab, Inc. are not barred by the res 16 judicata or claim-splitting doctrines. 17 The motion to dismiss the Second Amended Complaint for collateral estoppel is 18 DENIED as to all claims made under joint and several liability theories against Miao and 19 Dino Lab, Inc. 20 The motion to dismiss the Second Amended Complaint is GRANTED WITH 21 LEAVE TO AMEND as to all claims against Miao and Dino Lab, Inc., for failure to state a 22 claim upon which relief can be granted. 23 All claims against MaplePay, Zheng, Wang, and Han have been dismissed. The 24 Clerk of Court is asked to terminate them as defendants. Citcon may file its Third 25 Amended Complaint by April 16, 2021, but may not add additional defendants or claims 26 to that complaint without advance leave of Court. Defendants Miao and Dino Lab, Inc. 27 may wait to file their Answer or Motion to Dismiss until 14 days after the Third Amended 1 2 IT IS SO ORDERED. 3 4 || Dated: April 2, 2021 □□□ _ NATHANAEL M. COUSINS 5 United States Magistrate Judge 6 7 8 9 10 11 12

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