RoadRunner Recycling, Inc. v. Recycle Track Systems, Inc.

Opinion

1 2 3 4 5 7 NORTHERN DISTRICT OF CALIFORNIA 8

11 Plaintiff, No. C 23-04804 WHA

12 v.

13 RECYCLE TRACK SYSTEMS, INC. and ORDER GRANTING LEAVE RECYCLESMART SOLUTIONS, INC., TO AMEND 14 Defendants. 15

16 17 In this breach-of-contract action, plaintiff moves for leave to amend its complaint to take 18 another pass at pleading trade secret misappropriation claims under the Defense of Trade 19 Secrets Act (“DTSA”) and the California Uniform Trade Secrets Act (“CUTSA”). 20 The underlying facts were detailed in the order granting defendants’ motion to dismiss 21 the trade secret misappropriation claims (Dkt. No. 43). That order found the trade secrets 22 alleged — as well as the trade secrets merely alluded to — were overly general and/or already 23 disclosed, so plaintiff did not show possession of anything qualifying for trade secret 24 protection. But that order expressly allowed plaintiff to seek leave to file an amended 25 complaint by motion, which it has now done (Dkt. No. 45). To assist the undersigned, 26 plaintiff also filed a very detailed explanation of these alleged trade secrets under seal (Dkt. 27 No. 46). This order follows full briefing and oral argument. 1 The judge is wary of prematurely sacking the trade secret misappropriation claims at this 2 early stage without a better handle on the facts at hand. Plaintiff has plausibly pleaded at least 3 some material qualifying for trade secret protection. And, plaintiff has plausibly pleaded that 4 the reverse engineering at issue may have been done by way of improper means, not fair and 5 honest ones, such that trade secrets were misappropriated. See Aqua Connect, Inc. v. Code 6 Rebel, LLC, No. C 11-05764 RSWL, 2012 WL 469737, at *2 (C.D. Cal. Feb. 13, 2012) (Judge 7 Ronald S.W. Lew); Khoros, LLC v. Lenovo (United States), Inc., No. C 20-03399 WHO, 8 2020 WL 12655516, at *9 (N.D. Cal. Oct. 5, 2020) (Judge William H. Orrick). Out of an 9 abundance of caution, plaintiff's motion is GRANTED, subject to paring down these amended 10 allegations during discovery and subsequent motion practice with the benefit of a better 11 record. The answer is due in FOURTEEN DAYS.

14 Dated: February 29, 2024.

5 ILLIAM ALSUP NITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28