Cisco Sys., Inc. v. Chung

462 F.Supp.3d 1024

CISCO SYSTEMS, INC., et al., Plaintiffs,

v.Wilson CHUNG, et al., Defendants.

Case No. 19-cv-07562-PJH

United States District Court, N.D. California.

Signed May 26, 2020

Carson Olsheski, Pro Hac Vice, David Alexander Frey, Pro Hac Vice, Justin P.D. Wilcox, Pro Hac Vice, Steven Marc Balcof, Pro Hac Vice, Tamir Packin, Desmarais LLP, New York, NY, John M. Desmarais, Desmarais LLP, San Francisco, CA, for Plaintiffs.

Daniel Jerome Muller, Ventura Hersey & Muller, LLP, San Jose, CA, for Defendant Wilson Chung.

Jenny Hue Man Hong-Gonzalez, Kevin C. Viau, Leila N. Sockolov, Intellectual Property Law Group LLP, San Jose, CA, for Defendant James He.

Alison Lynn Plessman, Lauren McGrory Johnson, Hueston Hennigan LLP, Los Angeles, CA, Sara Maxine Banco, Hueston Hennigan LLP, Newport Beach, CA, for Defendant Jedd Williams.

Russell Hayman, Michelle S. Lowery, Jason David Strabo, Jon Stuart Dean, McDermott Will & Emery LLP, Los Angeles, CA, Daniel Jerome Muller, Ventura Hersey & Muller, LLP, San Jose, CA, for Defendant Plantronics, Inc.

Jon Stuart Dean, McDermott Will and Emery LLP, Los Angeles, CA, for Defendant Thomas Puorro.

ORDER RE MOTIONS TO COMPEL ARBITRATION, STAY THE CASE, AND DISMISS

Re: Dkt. Nos. 40, 41, 43, 45, 47, 54, 57, 80

PHYLLIS J. HAMILTON, United States District Judge

Before the court are defendant Jedd Williams’ ("Williams") motion to compel arbitration and stay the case or, in the alternative, motion to dismiss (Dkt. 41), defendant Wilson Chung Ph.D.’s ("Chung") motion to dismiss and joinder to Williams’ motions (Dkt. 43), defendant Plantronic Inc.’s ("Plantronics" or "Poly") motion to dismiss (Dkt. 40) and joinder to Williams’ and Chung's motions (Dkt. 47), defendant Thomas Puorro's ("Puorro") motion to dismiss and joinder to his co-defendants’ respective motions (Dkt. 45), and defendant James He's ("He") motion to dismiss and joinder to Williams’ motion to compel arbitration (Dkt. 54) (collectively, "defendants").

Having read the parties’ papers and carefully considered their argument and the relevant legal authority, and good cause appearing, the court hereby GRANTS Williams’ motion to compel arbitration and stay the instant litigation with respect to the claims against him, TERMINATES his alternative motion to dismiss, and DENIES his motion to stay with respect to the claims against the remaining defendants. Additionally, the court GRANTS Chung's and He's motions to dismiss and GRANTS IN PART and DENIES IN PART Puorro's and Plantronic's motions to dismiss.

BACKGROUND

This action concerns the alleged misappropriation of Cisco Systems, Inc.’s and Cisco Technology, Inc.’s (collectively, "plaintiff" or "Cisco") purported trade secrets.

At core, plaintiff alleges that its former employees schemed with a competitor, Plantronics, to improperly reveal a range of its purported trade secrets.

A. The Underlying Claims

Plaintiff filed its initial complaint on November 18, 2019. Dkt. 1. On December 17, 2019, plaintiff filed the operative pleading in this action, its First Amended Complaint ("FAC"). Dkt. 25. In it, plaintiff alleges claims for the following:

• Misappropriation of trade secrets under both federal ( Title 18 U.S.C. § 1836 ) and California state law ( Cal. Civ. Code § 3426 ) against Chung. FAC ¶¶ 197-226.

• Misappropriation of trade secrets under both federal and California state law against He. Id. ¶¶ 227-55.

• Misappropriation of trade secrets under both federal and California state law against Williams. Id. ¶¶ 256-82.

• Misappropriation of trade secrets under both federal and California state law against Puorro. Id. ¶¶ 283-306.

• Intentional interference with a contractual relationship under California state law against Puorro. Id. ¶¶ 307-313.

• Misappropriation of trade secrets under both federal and California state law against Plantronics. Id. ¶¶ 314-41.

• Intentional interference with a contractual relationship under California state law against Plantronics. Id. ¶¶ 342-44.

Except Chung, plaintiff seeks both monetary and injunctive relief against all defendants. FAC, Prayer for Relief. Plaintiff seeks only injunctive relief against Chung. Id. ¶¶ 220, 226.

B. Factual Background¹

1. The Parties and an Overview of Defendants’ Alleged Misconduct

a. Plaintiff

Plaintiff is a California corporation that designs, engineers, manufactures, and sells software, hardware, and other electronic devices. FAC ¶ 2.

b. Plantronics

Plantronics is a Delaware corporation with its principal place of business in Santa Cruz, California. Id. ¶ 12. Plantronics is "in the IP telephone, headset, video, and collaboration space" and is a market competitor to plaintiff. Id.

c. Chung

Chung served as a Principal Engineer in plaintiff's Unified Communications Technology Group ("UCTG"). Id. ¶ 26. Chung's responsibilities included developing plaintiff's collaboration products, including "IP telephony solutions and audio headsets." Id. Incidental to his role, Chung had access to "some of Cisco's most confidential trade secrets used within the UCTG, including design specifications, schematics, source code, product market analyses, and vendor contract details." Id.

Chung formally departed plaintiff's employment on February 28, 2019, id. ¶ 62, but began working for Plantronics on February 26, 2019, id. ¶ 69. As part of his employment with plaintiff, Chung received two laptops, a Lenovo and a MacBook. Chung returned his Lenovo laptop on February 27, 2019, id. ¶ 77, but, at least as of September 27, 2019, did not return his MacBook laptop, id. ¶ 95.

Plaintiff alleges a series of instances between February 3, 2019 and at least March 8, 2019 in which Chung downloaded, copied, or emailed various plaintiff's documents and files concerning certain technological and business subject matter to multiple external devices not owned by plaintiff. Id. ¶¶ 36-80. Such subject matter includes "Cisco's contribution to 5G technology ... and design specification of a pre-release video conferencing display prototype," id. ¶ 36, source code for debugging a user interface, id. ¶ 41, pre-release video conferencing display prototypes, id. ¶ 42, design details and specifications related to plaintiff's sound bar products, id. ¶ 45 (alleged on information and belief), over 100 webinar presentations relating to plaintiff's communications product portfolio, id. ¶ 65 (alleged on information and belief), a presentation detailing strategy and costs for a pre-release video conferencing display product, id. ¶ 51 (alleged on information and belief), plaintiff's marketing position in the collaboration space, id. ¶ 64, and "component specifications and competitive differentiators" for plaintiff's current and unreleased hardware products, id. ¶ 74.

Chung used at least six different external devices to improperly download or transfer the subject information. Id. ¶ 37 (First Seagate Drive), ¶ 42 (Second Seagate Drive), ¶ 44 (SanDisk Drive), ¶ 39 (Samsung Drive), Chung's personal email account, id. ¶¶ 64, 80, and his corporate email account at Plantronics, id. ¶ 80. At the time of his departure from plaintiff's employment, Chung did not provide plaintiff the four external drives. Id. ¶ 77. Chung accessed at least three specific documents (the "EA Document," the "Webex Vision Document," and the "Cisco collaboration roadmap document") during his employment at Plantronics. Id. ¶ 86.

As a condition of his employment, Chung signed a Proprietary Information and Inventions Agreement ("PIIA"), which, among other things, prohibited him from maintaining simultaneous employment with any industry competitor, barred him from removing any plaintiff information except as necessary to perform his employment duties, and required that he return all plaintiff information upon termination of his employment. Id. ¶ 93. Revealed in the parties’ briefing, Chung maintained an arbitration agreement ("Chung Arbitration Agreement") with plaintiff. Dkt. 50-3 at 2-5.

d. He

He served as an engineer. Id. ¶ 97. Incidental to his role, He had access to "some of Cisco's most confidential trade secrets used within Cisco's UCTG, including design specifications, schematics, source code, product market analyses, and vendor contract details." Id. As early as March 2019, Chung began to recruit He to join Plantronics. Id. ¶ 99-100. In June 2019, He departed plaintiff's employment, id. ¶ 114, and joined Plantronics on June 24, 2019. Id. ¶ 117 (alleged on information and belief).

Plaintiff alleges a series of instances between May 13, 2019 and June 20, 2019 in which He took photographs of or downloaded plaintiff's diagrams and documents concerning various technological and business subject matter to his iPhone and an external drive (the "LaCie drive"). Id. ¶¶ 102-114. Such subject matter includes an unreleased headset concept and like prototypes, FAC ¶¶ 103, 105, 109, "vendor roadmaps for Cisco's products," id. ¶ 109, "an unreleased IP telephone project," id. ¶¶ 112, 118, "full engineering specifications for a next-generation conference room collaboration device," id. ¶ 120, emerging business opportunities in the collaboration space, id. ¶ 106, and "Cisco's strategic product development decisions," id. ¶ 111.

At the time of his departure, He did not return the LaCie Drive. Id. ¶ 115. He accessed at least three specific documents (an unreleased IP telephone project schematic, a vendor roadmap update, and specification for a next-generation conference room collaboration device) during his employment at Plantronics. Id. ¶¶ 118-120.

He signed his own PIIA, which similarly barred him from removing certain plaintiff's information except as necessary to perform his employment duties and required that he return all such information upon termination of his employment. Id. ¶ 126. He did not maintain an arbitration agreement with plaintiff.

e. Puorro and Williams

Puorro is the Executive Vice President and General Manager of Products at Plantronics. Id. ¶ 128. Before joining Plantronics in early 2019, Puorro served as plaintiff's Vice...