Evans v. Presidio Trust

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ROBERT EVANS, Case No. 19-cv-08025-HSG

8 Plaintiff, ORDER GRANTING MOTION TO DISMISS AND DENYING MOTION TO 9 v. FILE THIRD AMENDED COMPLAINT

10 PRESIDIO TRUST, Re: Dkt. Nos. 30, 43 11 Defendant.

12 13 Pending before the Court are Defendant Presidio Trust’s motion to dismiss the second 14 amended complaint and Plaintiff Robert Evans’ motion for leave to file a third amended 15 complaint. Dkt. Nos. 30, 43. The Court held a telephonic hearing on November 12, 2020. See 16 Dkt. No. 48. For the reasons detailed below, the Court GRANTS the motion to dismiss and 17 DENIES the motion for leave to file an amended complaint. 18 I. BACKGROUND 19 On December 9, 2019, Plaintiff, representing himself, filed a complaint against Defendant 20 for trade secret misappropriation in violation of the Defense of Trade Secrets Act (“DTSA”), 18 21 U.S.C. § 1836, and the California Uniform Trade Secrets Act (“CUTSA”), California Civil Code 22 § 3426. See Dkt. No. 1. That same day, Plaintiff filed a motion to proceed in forma pauperis. See 23 Dkt. No. 3. On December 23, 2019, the Court denied the motion, but granted Plaintiff the 24 opportunity to amend the complaint to cure the deficiencies that the Court identified. See Dkt. No. 25 9. Plaintiff timely filed a first amended complaint (“FAC”). See Dkt. No. 10. The Court 26 reconsidered the motion to proceed in forma pauperis in light of the FAC, and again denied 27 Plaintiff’s motion, finding that Plaintiff still failed to provide sufficient detail regarding the subject 1 distinguishable from matters of general knowledge. See Dkt. No. 13. Rather than curing the 2 deficiencies in the FAC, Plaintiff paid the required filing fee, Dkt. No. 14, and served Defendant, 3 Dkt. Nos. 17–19. 4 On August 14, 2020, Defendant filed a motion to dismiss the FAC. See Dkt. No. 23. 5 However, rather than oppose the motion, Plaintiff filed his second amended complaint (“SAC”). 6 Dkt. No. 26. The Court terminated the motion to dismiss as moot in light of the SAC. Dkt. No. 7 29. Defendant then filed the instant motion to dismiss the SAC. Dkt. No. 30. Plaintiff did not 8 initially file an opposition to the motion. Instead, he filed an administrative motion to file under 9 seal documents that purportedly contain the trade secrets at issue in this case. See Dkt. No. 36. 10 Plaintiff also filed a third amended complaint (“TAC”). Dkt. No. 40. On October 6, 2020, the 11 Court provisionally granted the administrative motion to file under seal. See Dkt. No. 39. And on 12 October 19, 2020, the Court struck the TAC as improper. See Dkt. No. 41. As the Court 13 explained, under Federal Rule of Civil Procedure 15(a)(2), Plaintiff may not amend his complaint 14 without either Defendant’s written consent or leave of the Court. Id. Plaintiff subsequently filed 15 an opposition to the motion to dismiss as well as a motion for leave to file the TAC. See Dkt. Nos. 16 42, 43. The Court now considers both the motion to dismiss as well as Plaintiff’s motion for leave 17 to file an amended complaint. 18 II. LEGAL STANDARD 19 Federal Rule of Civil Procedure 12(b)(1) 20 Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss based on the 21 court’s lack of subject matter jurisdiction. The plaintiff has the burden to establish that subject 22 matter jurisdiction is proper. See Ass’n of Am. Med. Colls. v. United States, 217 F.3d 770, 778–79 23 (9th Cir. 2000); see also Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994) 24 (noting that “[i]t is to be presumed that a cause lies outside . . . [a federal court’s] jurisdiction, and 25 the burden of establishing the contrary rests upon the party asserting jurisdiction”). To meet this 26 burden, the pleading party must show “affirmatively and distinctly the existence of whatever is 27 essential to federal jurisdiction.” Tosco Corp. v. Cmtys. for a Better Env’t, 236 F.3d 495, 499 (9th 1 Federal Rule of Civil Procedure 12(b)(6) 2 To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead “enough facts to state 3 a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 4 (2007). A claim is facially plausible when a plaintiff pleads “factual content that allows the court 5 to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft 6 v. Iqbal, 556 U.S. 662, 678 (2009). In reviewing the plausibility of a complaint, courts “accept 7 factual allegations in the complaint as true and construe the pleadings in the light most favorable 8 to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th 9 Cir. 2008). Nevertheless, courts do not “accept as true allegations that are merely conclusory, 10 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 11 F.3d 1049, 1055 (9th Cir. 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 12 (9th Cir. 2001)). 13 Additionally, “[p]leadings must be construed so as to do justice.” Fed. R. Civ. P. 8(e). 14 “[A] pro se complaint, however inartfully pleaded, must be held to less stringent standards than 15 formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quotation 16 omitted). However, even a “liberal interpretation of a . . . complaint may not supply essential 17 elements of the claim that were not initially pled.” See Ivey v. Bd. of Regents of Univ. of Alaska, 18 673 F.2d 266, 268 (9th Cir. 1982). “[P]ro se litigants are bound by the rules of procedure,” 19 Ghazali v. Moran, 46 F.3d 52, 54 (9th Cir. 1995), which require “a short and plain statement of 20 the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a). 21 III. DISCUSSION 22 As with Plaintiff’s initial complaint and FAC, the SAC asserts two causes of action: the 23 first for violation of the DTSA, and the second for violation of the CUTSA. See SAC at ¶¶ 29–34. 24 Both claims arise from the alleged misappropriation of trade secrets disclosed by Plaintiff to 25 Defendant on two occasions in 1998. See SAC at ¶ 8. Plaintiff alleges that his “misappropriated 26 trade secrets were the most important factor that the Presidio Trust needed to accomplish its 27 Congressional mandate to become financially self-sufficient by 2013” and that “[t]he Presidio 1 Id. at ¶ 11. Plaintiff describes these purported trade secrets as “method(s), pattern(s), process(es), 2 and/or techniques” to assist Defendant in “obtain[ing] financial self-sufficiency.” Id. at ¶ 18; see 3 also Dkt. No. 36-3 at 5. 4 Sovereign Immunity 5 As a threshold matter, Defendant argues that Plaintiff’s DTSA claim is barred by sovereign 6 immunity. See Dkt. No. 30 at 4–6. A Rule 12(b)(1) motion is appropriate where a claim is barred 7 by the doctrine of sovereign immunity. “It is axiomatic that the United States may not be sued 8 without its consent and that the existence of consent is a prerequisite for jurisdiction.” United 9 States v. Mitchell, 463 U.S. 206, 212 (1983); see also Consejo de Desarrollo Economico de 10 Mexicali, A.C. v. United States, 482 F.3d 1157, 1173 (9th Cir. 2007) (“The United States, as a 11 sovereign, is immune from suit unless it has waived its immunity.”). In addition, “[t]he United 12 States must waive its sovereign immunity before a federal court may adjudicate a claim brought 13 against a federal agency.” Rattlesnake Coal. v. U.S. EPA, 509 F.3d 1095, 1103 (9th Cir. 2007). 14 Otherwise, the court lacks subject matter jurisdiction over the claims. Id. A waiver of sovereign 15 immunity “must be unequivocally expressed in the statutory text.” Lane v. Pena, 518 U.S. 187, 16 192 (1996). The party bringing suit has the burden of directing a court to the unmistakable 17 waiver. See Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 1187, 1189 (9th Cir. 1970) (“A 18 plaintiff suing in a federal court must show in his pleading, affirmatively and distinctly, the 19 existence of whatever is essential to federal jurisdiction, and, if he does not do so, the court, on 20 having the defect called to its attention or on discovering the same, must dismiss the case, unless 21 the defect be corrected by amendment.”). 22 The DTSA authorizes the “owner of a trade secret that is misappropriated” to bring a civil 23 action, 18 U.S.C. § 1836(b)(1), and grants district courts original jurisdiction over such cases. See 24 18 U.S.C. §§ 1836(b)(1), (c). The DTSA also contains a limitation that it “does not prohibit or 25 create a private right of action” with regard to “any otherwise lawful activity conducted by a 26 governmental entity of the United States, a State, or a political subdivision of a State . . . .” See 27 18 U.S.C. § 1833(a)(1). In the SAC, Plaintiff points to this provision and suggests that the statute 1 Even assuming this interpretation is correct, Plaintiff does not explain why sovereign immunity 2 would not still preclude suit against Defendant, “a wholly owned government corporation.” See 3 16 U.S.C. §§ 460bb et seq.; see also Omnibus Parks and Public Lands Management Act of 1996, 4 Pub. L. 104–333, § 103(c)(10), 110 Stat 4093 (1996). Plaintiff has not identified and the Court 5 has not found a provision in the DTSA that contains any unequivocal waiver of the federal 6 government’s sovereign immunity. Cf. MedSense, LLC v. Univ. Sys. of Maryland, 420 F. Supp. 7 3d 382, 392 (D. Md. 2019) (“[A] review of the DTSA does not indicate that it was Congress’ 8 intent to abrogate a state’s Eleventh Amendment immunity by permitting a private party to bring 9 forth a civil suit in federal court”); Fast Enterprises, LLC v. Pollack, No. 16-CV-12149-ADB, 10 2018 WL 4539685, at *4 (D. Mass. Sept. 21, 2018) (“[I]t is entirely reasonable to read the statute 11 as demonstrating that Congress did not intend for the DTSA to abrogate state sovereign immunity 12 or to otherwise interfere with lawful policy decisions made by state legislatures concerning the 13 activities of the state.”). 14 Plaintiff suggests instead that the Federal Tort Claims Act (“FTCA”) somehow provides 15 the jurisdictional vehicle necessary to sue Defendant under the DTSA. See SAC at § 21. The 16 FTCA, however, is a limited waiver of sovereign immunity. Under the FTCA, the United States 17 has only consented to be sued for tort damages “caused by the negligent or wrongful act or 18 omission of any employee of the Government . . . .” 28 U.S.C. § 1346(b)(1). It does not provide 19 recourse against the United States for violations of a federal statute. See Jachetta v. United States, 20 653 F.3d 898, 904 (9th Cir. 2011) (holding that causes of action “are not actionable under the 21 FTCA” where “liability would arise under federal rather than state law”); Love v. United States, 60 22 F.3d 642, 644 (9th Cir. 1995) (“The breach of a duty created by federal law is not, by itself, 23 actionable under the FTCA.”); accord Zelaya v. United States, 781 F.3d 1315, 1324 (11th Cir. 24 2015). The Court therefore lacks subject matter jurisdiction over Plaintiff’s DTSA claim.1 25

26 1 Defendant also urges that the Court lacks jurisdiction over Plaintiff’s CUTSA claim because Plaintiff erroneously brought the claim against the Presidio Trust rather than against the United 27 States. See Dkt. No. 30 at 6. The Court need not determine whether this is fatal to Plaintiff’s 1 Failure to State a Claim 2 The Court further finds that Plaintiff’s allegations in the complaint and in the materials 3 under seal are still conclusory and speculative, and insufficient to state a claim on which relief can 4 be granted even liberally construed and viewed in their entirety. See Iqbal, 556 U.S. at 678 (“A 5 claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw 6 the reasonable inference that the defendant is liable for the misconduct alleged.”). 7 As the Court has previously noted, the elements of trade secret misappropriation under the 8 DTSA and the CUTSA are essentially the same. See Becton, Dickinson & Co. v. Cytek 9 Biosciences Inc., No. 18-CV-00933-MMC, 2018 WL 2298500, at *2 (N.D. Cal. May 21, 2018). 10 To state a claim under these statutes, a plaintiff “must identify the trade secrets and carry the 11 burden of showing that they exist,” and “should describe the subject matter of the trade secret with 12 sufficient particularity to separate it from matters of general knowledge in the trade or of special 13 knowledge of those persons . . . skilled in the trade.” See Imax Corp. v. Cinema Techs., Inc., 152 14 F.3d 1161, 1164-65 (9th Cir. 1998) (quotation omitted) (emphasis in original). However, the 15 SAC, like Plaintiff’s previous complaints, does not sufficiently describe the subject matter of any 16 trade secrets. To the extent Plaintiff urges that he has detailed these alleged trade secrets in his 17 filings under seal, see Dkt. No. 36-4, this information is similarly deficient. Plaintiff merely 18 describes a high-level scheme through which Defendant could obtain money by allowing people to 19 reside and work in the Presidio. Id. The Court finds that this broad description of Plaintiff’s 20 purported “trade secrets” is indistinguishable from matters of general knowledge, such that 21 Plaintiff has not met his burden to identify protectable trade secrets. “Although a pro se 22 litigant . . . may be entitled to great leeway when the court construes his pleadings, those pleadings 23 nonetheless must meet some minimum threshold in providing a defendant with notice of what it is 24 that it allegedly did wrong.” Brazil v. United States Dep’t of Navy, 66 F.3d 193, 199 (9th Cir. 25 1995). Plaintiff has again failed to allege the level of factual detail necessary to survive a motion 26 to dismiss. 27 IV. CONCLUSION 1 opportunity to address the deficiencies that the Court identified but has been unable to do so. 2 || Plaintiff's proposed TAC continues to suffer from the same deficiencies as his prior complaints 3 and relies on the same documentation that the Court has found insufficient here. See Dkt. No. 43- 4 1. The Court therefore finds at this stage that even if it provided Plaintiff the opportunity to 5 amend the complaint again, Plaintiff could not provide the detail necessary to state a claim. The 6 Court, therefore, dismisses this action without leave to amend. Plaintiffs motion to file a third 7 amended complaint is DENIED. The Clerk is directed to close the case. 8 IT IS SO ORDERED. 9 || Dated: 11/19/2020 10 Abspured 3 bbl) HAYWOOD S. GILLIAM, JR. I United States District Judge 12

15 16

= 17

Z 18 19 20 21 22 23 24 25 26 27 28