1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CONFLUENT, INC., Case No. 24-cv-04447-SVK
8 Plaintiff, ORDER ON DEFENDANT’S MOTION 9 v. TO DISMISS COMPLAINT
10 SLOWER, LLC, Re: Dkt. No. 21 11 Defendant.
12 Plaintiff Confluent, Inc. (“Plaintiff” or “Confluent”) develops and sells subscriptions to 13 cloud services and software data streaming products. Dkt. 1 (Complaint) ¶ 1. Defendant Slower, 14 LLC (“Defendant” or “Slower”) entered into a Reseller Agreement and a Partner Agreement with 15 Confluent. Id. ¶¶ 11-20. Confluent filed this lawsuit on July 23, 2024. Id. The Complaint 16 contains five causes of action: (1) breach of contract; (2) intentional interference with prospective 17 economic advantage; (3) violation of the California Uniform Trade Secrets Act (“CUTSA”); (4) 18 violation of California Business and Professions Code § 17200; and (5) federal unfair competition 19 under the Lanham Act, 15 U.S.C. § 1125(a). Id. All Parties have consented to the jurisdiction of a 20 magistrate judge. Dkt. 10, 19. 21 Now before the Court is Defendant’s motion to dismiss the second, third, and fourth causes 22 of action under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Dkt. 21. 23 Defendant’s motion to dismiss does not challenge the first or fifth causes of action in the 24 Complaint. Id. Plaintiff filed an opposition to the motion to dismiss (Dkt. 25), and Defendant 25 filed a reply (Dkt. 26). 26 This matter is suitable for determination without oral argument. Civ. L.R. 7-1(b). For the 27 reasons that follow, the motion to dismiss is GRANTED IN PART and DENIED IN PART. I. LEGAL STANDARD 1 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint 2 if it fails to state a claim upon which relief can be granted. In ruling on a motion to dismiss, courts 3 may consider only “the complaint, materials incorporated into the complaint by reference, and 4 matters of which the court may take judicial notice.” Metzler Inv. GmbH v. Corinthian Colls., 5 Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). In deciding whether the plaintiff has stated a claim, the 6 court must presume the plaintiff’s allegations are true and draw all reasonable inferences in the 7 plaintiff’s favor. Usher v. City of L.A., 828 F.2d 556, 561 (9th Cir. 1987). However, the court is 8 not required to accept as true “allegations that are merely conclusory, unwarranted deductions of 9 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 10 2008) (citation omitted). 11 To survive a motion to dismiss, the plaintiff must allege “enough facts to state a claim to 12 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This 13 “facial plausibility” standard requires the plaintiff to allege facts that add up to “more than a sheer 14 possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 668 (2009). 15 If a motion to dismiss is granted, the court must grant leave to amend unless it is clear that 16 the complaint’s deficiencies cannot be cured by amendment. Eminence Capital, LLC v. Aspeon, 17 Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 18 II. DISCUSSION 19 There is little material dispute between the Parties regarding the required elements of each 20 challenged cause of action; their dispute instead centers on whether Plaintiff has adequately 21 pleaded those elements. See generally Dkt. 21, 25. Accordingly, to promote judicial efficiency 22 and provide useful guidance to the Parties, this order focuses primarily on the deficiencies in the 23 Complaint. Because it is not clear that these deficiencies cannot be cured by amendment, Plaintiff 24 is GRANTED LEAVE TO AMEND the Complaint. 25 A. Second Cause of Action (Intentional Interference with Prospective Economic 26 Advantage) 27 Plaintiff’s second cause of action for intentional interference with prospective economic 1 1. The Complaint fails to adequately allege an independently wrongful act. 2 The Parties agree that an element of a claim for intentional interference with 3 prospective economic advantage is that the defendant engaged in an 4 “independently wrongful act.” See Dkt. 21 at 3; Dkt. 25 at 6. Confluent’s 5 interference claim is premised on the decision of “Customer C” to decline 6 to renew its Confluent subscription for the twelve-month period following 7 March 28, 2024. Dkt. 1 ¶ 47. 8
9 a. Confluent alleges on information and belief that “Slower 10 intentionally coordinated with Competitor A to poach Customer C.” 11 Dkt. 1 ¶ 49; see also id. ¶¶ 31-39. The Complaint also alleges that 12 Slower improperly disclosed Confluent’s confidential customer 13 information to “Competitor A,” which allowed Slower and 14 Competitor A “to work together to poach Confluent customers.” 15 Id. ¶¶ 37, 49. The Complaint fails to include sufficient factual 16 allegations regarding the mechanism by which Confluent alleges 17 Slower and Competitor A worked together to poach Customer C or 18 any other Confluent customer, or the way in which Slower “deal[t] 19 with third parties in a manner that was detrimental to Confluent.” 20 Id. 21 b. The Complaint alleges that Slower sent various emails to Customers 22 A and B. Id. ¶¶ 31-35.1 The Complaint further alleges on 23 information and belief that “Slower sent the same or similar 24 misleading emails to other Confluent customers” including 25 Customer C. Id. ¶ 35. The Complaint does not adequately allege 26 27 1 facts upon which Confluent’s “information and belief” that Slower 2 had misleading communications with Customer C is based. 3 2. Defendant’s argument that the claim for intentional interference with 4 prospective economic advantage should be dismissed because it is 5 preempted by CUTSA is DENIED WITHOUT PREJUDICE to 6 Defendant’s ability to make that argument later in the case. “California 7 courts have ruled that CUTSA’s comprehensive structure and breadth 8 suggests a legislative intent to occupy the field, and that CUTSA preempts 9 common law claims that are based on the same nucleus of facts as the 10 misappropriation of trade secrets claim for relief.” NetApp., Inc. v. Nimble 11 Storage, Inc., 41 F. Supp. 3d 816, 839 (N.D. Cal. 2014) (citing K.C. 12 13 Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal.App.4th 14 939, 954–58, 90 Cal.Rptr.3d 247 (2009).” The test for whether a claim 15 overlaps with the CUTSA involves “a factual inquiry, one that examines the 16 conduct alleged in the claim.” NetApp, 41 F. Supp. 3d at 839 (citing K.C. 17 Multimedia, 171 Cal. App.3d at 958). “At the pleadings stage, the 18 supersession analysis asks whether, stripped of facts supporting trade secret 19 misappropriation, the remaining factual allegation can be reassembled to 20 independently support other causes of action.” Auris Health, Inc. v. Noah 21 Med. Corp., No.220cv08073-AMO, 2023 WL 7284126, at *8 (N.D. Cal. 22 Nov. 3, 2023).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CONFLUENT, INC., Case No. 24-cv-04447-SVK
8 Plaintiff, ORDER ON DEFENDANT’S MOTION 9 v. TO DISMISS COMPLAINT
10 SLOWER, LLC, Re: Dkt. No. 21 11 Defendant.
12 Plaintiff Confluent, Inc. (“Plaintiff” or “Confluent”) develops and sells subscriptions to 13 cloud services and software data streaming products. Dkt. 1 (Complaint) ¶ 1. Defendant Slower, 14 LLC (“Defendant” or “Slower”) entered into a Reseller Agreement and a Partner Agreement with 15 Confluent. Id. ¶¶ 11-20. Confluent filed this lawsuit on July 23, 2024. Id. The Complaint 16 contains five causes of action: (1) breach of contract; (2) intentional interference with prospective 17 economic advantage; (3) violation of the California Uniform Trade Secrets Act (“CUTSA”); (4) 18 violation of California Business and Professions Code § 17200; and (5) federal unfair competition 19 under the Lanham Act, 15 U.S.C. § 1125(a). Id. All Parties have consented to the jurisdiction of a 20 magistrate judge. Dkt. 10, 19. 21 Now before the Court is Defendant’s motion to dismiss the second, third, and fourth causes 22 of action under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Dkt. 21. 23 Defendant’s motion to dismiss does not challenge the first or fifth causes of action in the 24 Complaint. Id. Plaintiff filed an opposition to the motion to dismiss (Dkt. 25), and Defendant 25 filed a reply (Dkt. 26). 26 This matter is suitable for determination without oral argument. Civ. L.R. 7-1(b). For the 27 reasons that follow, the motion to dismiss is GRANTED IN PART and DENIED IN PART. I. LEGAL STANDARD 1 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint 2 if it fails to state a claim upon which relief can be granted. In ruling on a motion to dismiss, courts 3 may consider only “the complaint, materials incorporated into the complaint by reference, and 4 matters of which the court may take judicial notice.” Metzler Inv. GmbH v. Corinthian Colls., 5 Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). In deciding whether the plaintiff has stated a claim, the 6 court must presume the plaintiff’s allegations are true and draw all reasonable inferences in the 7 plaintiff’s favor. Usher v. City of L.A., 828 F.2d 556, 561 (9th Cir. 1987). However, the court is 8 not required to accept as true “allegations that are merely conclusory, unwarranted deductions of 9 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 10 2008) (citation omitted). 11 To survive a motion to dismiss, the plaintiff must allege “enough facts to state a claim to 12 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This 13 “facial plausibility” standard requires the plaintiff to allege facts that add up to “more than a sheer 14 possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 668 (2009). 15 If a motion to dismiss is granted, the court must grant leave to amend unless it is clear that 16 the complaint’s deficiencies cannot be cured by amendment. Eminence Capital, LLC v. Aspeon, 17 Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 18 II. DISCUSSION 19 There is little material dispute between the Parties regarding the required elements of each 20 challenged cause of action; their dispute instead centers on whether Plaintiff has adequately 21 pleaded those elements. See generally Dkt. 21, 25. Accordingly, to promote judicial efficiency 22 and provide useful guidance to the Parties, this order focuses primarily on the deficiencies in the 23 Complaint. Because it is not clear that these deficiencies cannot be cured by amendment, Plaintiff 24 is GRANTED LEAVE TO AMEND the Complaint. 25 A. Second Cause of Action (Intentional Interference with Prospective Economic 26 Advantage) 27 Plaintiff’s second cause of action for intentional interference with prospective economic 1 1. The Complaint fails to adequately allege an independently wrongful act. 2 The Parties agree that an element of a claim for intentional interference with 3 prospective economic advantage is that the defendant engaged in an 4 “independently wrongful act.” See Dkt. 21 at 3; Dkt. 25 at 6. Confluent’s 5 interference claim is premised on the decision of “Customer C” to decline 6 to renew its Confluent subscription for the twelve-month period following 7 March 28, 2024. Dkt. 1 ¶ 47. 8
9 a. Confluent alleges on information and belief that “Slower 10 intentionally coordinated with Competitor A to poach Customer C.” 11 Dkt. 1 ¶ 49; see also id. ¶¶ 31-39. The Complaint also alleges that 12 Slower improperly disclosed Confluent’s confidential customer 13 information to “Competitor A,” which allowed Slower and 14 Competitor A “to work together to poach Confluent customers.” 15 Id. ¶¶ 37, 49. The Complaint fails to include sufficient factual 16 allegations regarding the mechanism by which Confluent alleges 17 Slower and Competitor A worked together to poach Customer C or 18 any other Confluent customer, or the way in which Slower “deal[t] 19 with third parties in a manner that was detrimental to Confluent.” 20 Id. 21 b. The Complaint alleges that Slower sent various emails to Customers 22 A and B. Id. ¶¶ 31-35.1 The Complaint further alleges on 23 information and belief that “Slower sent the same or similar 24 misleading emails to other Confluent customers” including 25 Customer C. Id. ¶ 35. The Complaint does not adequately allege 26 27 1 facts upon which Confluent’s “information and belief” that Slower 2 had misleading communications with Customer C is based. 3 2. Defendant’s argument that the claim for intentional interference with 4 prospective economic advantage should be dismissed because it is 5 preempted by CUTSA is DENIED WITHOUT PREJUDICE to 6 Defendant’s ability to make that argument later in the case. “California 7 courts have ruled that CUTSA’s comprehensive structure and breadth 8 suggests a legislative intent to occupy the field, and that CUTSA preempts 9 common law claims that are based on the same nucleus of facts as the 10 misappropriation of trade secrets claim for relief.” NetApp., Inc. v. Nimble 11 Storage, Inc., 41 F. Supp. 3d 816, 839 (N.D. Cal. 2014) (citing K.C. 12 13 Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal.App.4th 14 939, 954–58, 90 Cal.Rptr.3d 247 (2009).” The test for whether a claim 15 overlaps with the CUTSA involves “a factual inquiry, one that examines the 16 conduct alleged in the claim.” NetApp, 41 F. Supp. 3d at 839 (citing K.C. 17 Multimedia, 171 Cal. App.3d at 958). “At the pleadings stage, the 18 supersession analysis asks whether, stripped of facts supporting trade secret 19 misappropriation, the remaining factual allegation can be reassembled to 20 independently support other causes of action.” Auris Health, Inc. v. Noah 21 Med. Corp., No.220cv08073-AMO, 2023 WL 7284126, at *8 (N.D. Cal. 22 Nov. 3, 2023). Because in this section and in section II.B. below the Court 23 is granting Confluent leave to amend its claims for intentional interference 24 with prospective economic advantage and for trade secret misappropriation 25 26 to allege necessary facts, it would be premature to conduct a preemption 27 analysis based on the deficient allegations of the present Complaint. 1 2 3. Defendant’s motion to dismiss the second cause of action on grounds other 3 than those specified in the preceding paragraphs is DENIED. 4
5 B. Third Cause of Action (CUTSA) 6 Plaintiff’s third cause of action under CUTSA is DISMISSED WITH LEAVE TO 7 AMEND for the following reasons: 8 1. The Parties agree that under appropriate circumstances, a customer list may 9 be entitled to trade secret protection under California law. Dkt. 21 at 4-5; 10 Dkt. 25 at 8-9. However, to state a claim for misappropriation of trade 11 secrets, the plaintiff must “describe the subject matter of the trade secret 12 with sufficient particularity to separate it from matters of general 13 knowledge in the trade or of special persons who are skilled in the trade, 14 15 and to permit the defendant to ascertain at least the boundaries within which 16 the secret lies.” Calsoft Labs, Inc. v. Panchumarthi, No. 19-CV-04398-NC, 17 2020 WL 512123, at *6 (N.D. Cal. Jan. 31, 2020) (quoting Alta Devices, 18 Inc. v. LG Elecs., Inc., 343 F. Supp. 3d 868 881 (N.D. Cal. 2018)). The 19 Complaint in this case fails to do so in the following respects: 20 a. The Complaint fails to specify the information that comprises the 21 “customer lists.” See Calsoft, 2020 WL 512123, at *7 (contrasting 22 insufficient description of customer list trade secret to cases in 23 which plaintiffs explained the contents of the customer lists, such as 24 names, addresses, telephone numbers, and details of 25 products/services purchased by customers). 26 b. The allegations of the Complaint are conclusory in that they do not 27 provide any specifics regarding Confluent’s “extensive investment 1 develop the customer lists. See Dkt. 1 ¶ 52; see also CleanFish, 2 LLC v. Sims, No. 19-cv-03663-HSG, 2020 WL 1274991, at *10 3 (N.D. Cal. Mar. 17, 2020). 4 c. The allegations of the Complaint are also conclusory in that they do 5 not explain how the customer lists “derive value from not being 6 generally known to the public.” See Dkt. 1 ¶ 52. “Although the 7 standard to show that trade secrets derive independent economic 8 value is not a high standard’ … courts recognize that merely 9 reciting this element in a pleading is insufficient to state a claim for 10 trade secret misappropriation.” Cisco Sys., Inc. v. Chung, 462 F. 11 Supp. 3d 1024, 1052 (N.D. Cal. 2020) (internal punctuation marks 12 and citation omitted). 13 14 C. Fourth Cause of Action (Business & Professions Code § 17200) 15 Plaintiff’s sole argument for dismissal the fourth cause of action under California Business 16 & Professions Code § 17200 is that the claim is preempted by CUTSA. Dkt. 21 at 10-11. For the 17 same reasons discuss in Section II.A.2. above, Defendant’s motion to dismiss the section 17200 18 claim on this ground DENIED WITHOUT PREJUDICE to Defendant’s ability to make that 19 argument later in the case, after Confluent amends its claim for trade secret misappropriation. 20 21 III. CONCLUSION 22 For the reasons discussed above, the Court ORDERS as follows: 23 1. Defendant’s motion to dismiss the second, third, and fourth causes of action is 24 GRANTED WITH LEAVE TO AMEND. 25 2. If Plaintiff wishes to attempt to address the deficiencies identified in this order, it 26 may file a First Amended Complaint (“FAC”) no later than February 11, 2025. 27 3. Defendant must file a response no later than fourteen (14) days after the FAC is 1 4. If Defendant responds by filing a motion to dismiss the FAC, the normal briefing 2 schedule of Civil Local Rule 7-3 will apply. The Court will inform the parties if a 3 hearing is necessary. 4 5. An Initial Case Management Conference will be held on April 8, 2025 at 5 9:30 a.m., with a Joint Case Management Statement due on April 1, 2025. 6 SO ORDERED. 7 Dated: January 28, 2025 8 9 Season va I SUSAN VAN KEULEN 0 United States Magistrate Judge 11 12
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