The plaintiff, Angelica Textile Services (Angelica), sued Jay Park, its employee since 1982, who helped found Emerald Textiles (Emerald) beginning in 2008 and left Angelica in 2010. Emerald won the business of two key Angelica customers, Sharp Healthcare and Scripps Health. The trial court dismissed the case, and the appellate court remanded non-trade secrets claims on appeal, awarding costs to Angelica. This case is important to practitioners in California because of its discussion of state law claims.
First, it found that California’s Business and Professions Code section 16600, which forbids restrictive covenants (subject to enumerated exceptions), did not apply where the employee violated the employer’s trust during employment instead of after employment.
Second, it found that California’s Uniform Trade Secrets Act (CUTSA) did not pre-empt claims that were based on contract, not trade secrets. Thus, the lower court was wrong to dismiss Angelica’s claims for breach of contract, breach of fiduciary duty, unfair competition, interference with business relations, and conversion because they “each have a basis independent of any misappropriation of a trade secret.” In footnote three, the appellate court admitted that Angelica initially only asserted trade secret claims but noted that after Emerald filed a motion for summary judgment, Angelica asserted additional claims about Park’s conduct while Park was still an employee of Angelica. The appellate court said that the trial court was wrong to “simply ignore the additional theories of liability advanced by Angelica and the additional evidence it produced.”