Cases from United States District Court for the Southern District of California

United States District Court for the Southern District of California
Trump University Playbooks Not Trade Secret

A federal district court in California granted the Washington Post’s motion to intervene in the case to request the immediate unsealing of court documents relating to Trump University “Playbooks.” These items had been filed as sealed exhibits by Plaintiff Art Cohen (“Plaintiff”) as part of his Class Certification Motion against Defendants Trump University, LLC and Donald J. Trump (“Defendant”).

Plaintiff brings litigation individually and on behalf of others who enrolled in Trump University, a for profit education company teaching real estate tips and practices. Plaintiff alleges that Defendant misrepresented his role in curating Trump University curricula and instructors, and that Defendant is liable for mail and wire fraud. This initial matter was allowed to proceed under the court’s February 21, 2014 ruling, denying Defendant's motion to dismiss the complaint as time-barred under the Clayton Act. At issue now is whether 153 particular pages, from four different documents, contain Defendant’s trade secrets and should therefore remain sealed.

The court granted the Post’s motion to intervene because much of the contested information was duplicative of a 2010 Playbook which had previously been posted online in full by the political news website, Politico, thereby destroying Defendant’s trade secret and confidentiality claims. The Court further found that the Playbooks contained "very routine and commonplace information.” The Court therefore dismissed as moot Defendant’s claims that the special compilation of information itself constituted an “arguable” trade secret (see August 28, 2014 Order, aka "Gallo Order,” in the related case Low v. Trump University, LLC., No. 3:10-cv-00940-GPC-WVG, ECF No. 343). The Court also recognized the public’s strong interest in accessing court materials related to Defendant, who is the presumptive Republican nominee in the 2016 presidential race.

Plaintiff was ordered to file unsealed versions of most playbooks, with only phone numbers and non-corporate e-mail addresses redacted. A sampling of these documents can be found here: http://www.npr.org/sections/thetwo-way/2016/05/31/480214102/trump-university-playbooks-released-by-court-advise-being-courteous-to-media

Check back for updates on this case.

United States District Court for the Southern District of California
Court dismisses Tablet Maker Fraud Claims, Trade Secret Missapropriation Claims Remain

Popular children’s toy purveyor “Toys ‘R’ Us” (TRU) recently turned tech, having introduced its “Nabi” children’s electronic tablet device in late 2011 and “Nabi 2” in summer 2012. With TRU’s announcement of its own “Tabeo” tablet set for October 2012, the company was set to enter into its “first move into house-brand electronics.” (WSJ; Complaint Exhibit A). However, according to a September 24, 2012 filing, TRU is now being sued by Nabi maker FUHU in the United States District Court for the Southern District of California. In FUHU v. Toys R Us, No 3:12-cv-02308, electronics manufacturer FUHU claimed breach of contract, unfair competition, breach of implied covenant of good faith, and alleged misappropriation of its trade secrets by Toys R Us in its development of the TRU Tabeo tablet. The Tabeo was designed by TRU to progress upon and replace the original Nabi devices created by FUHU, and formerly sold in TRU stores. These devices were the subject of an exclusive distribution license between FUHU and TRU, terminated in 2011 for alleged under-performance and frustration to market on the part of TRU. The current lawsuit claims that TRU is seeking to capitalize on the Tabeo device by breaching its non-disclosure agreement with FUHU, executed during production of Nabi 1, and by subsequently misappropriating FUHU ’s trade secrets for use in the creation of the Tabeo tablet.

While most of FUHU ’s pleadings address the breach of contract and unfair competition claims, the fourth claim alleges TRU’s trade secret misappropriation stemming from earlier disclosures by FUHU of proprietary information about its “FOOZ KIDS” device and software interface, the prototype for what eventual became the Nabi devices. While this disclosure was made in the context of a prior exclusive distribution agreement between FUHU and TRU for Nabi products, FUHU asserts that upon the agreement’s termination TRU continued to utilize FUHU trade secret materials. The FUHU trade secret information surrounding the Nabi “user interface” was only made available to TRU upon execution of a non-disclosure agreement prior to entering into the exclusive agreement. FUHU claims that TRU subsequently used FUHU ’s trade secret information to develop and manufacture its latest Tabeo tablet for commercial gain.

FUHU ’s complaint was immediately followed by motions for a temporary restraining order (TRO) against TRU, and to expedite discovery in order to preliminarily enjoin TRU from its upcoming release and sale of the Tabeo tablet. On October 19, 2012 Judge Hayes of the District Court denied all three FUHU claims supporting their application for a TRO, including TRU's alleged trade secret misappropriation. The court first reasoned that temporary restraining orders are an extreme remedy fashioned only where the plaintiff is likely to succeed on the merits and is likely to suffer harm in the absence of preliminary relief. See Winter v. NRDC 555 US 7, 20 (2008). However, FUHU's pleadings did not demonstrate a likelihood of irreparable harm because the information identified by FUHU as trade secret was considered "general business concepts and broad marketing ideas that do not fit within the definition of trade secret under New Jersey Law (note that the existing NDA between the parties stipulated to NJ law). Order at 6. Denial of Fuhu's application for a temporary restraining order is a setback for the technology company, as the Toys R' Us Tabeo tablet was recently released in Mid-September.

After TRU's answer and subsequent FRE 12b6 motion to dismiss, the District Court issued an order on March 4th 2013 granting part of TRU's motion to dismiss six of FUHU's claims. fraud. However, the court left ten of the sixteen claims intact, including those for breach of contract and misappropriation of Trade Secrets. View the order by clicking the link below.

United States District Court for the Southern District of California
Due to policy concerns, the Southern District of California required pre-discovery identification of trade secrets despite finding California Code of Civil Procedure §2910.210 inapplicable in federal court

     In Jardin v. DATAllegro, Inc., No. 10-CV-2552-IEG (WVG), 2011 WL 3299395 (S.D. Cal. July 29, 2011), the United States District Court for the Southern District of California considered whether the pre-discovery trade secret identification requirement of California Code of Civil Procedure §2019.210 also applies in California federal court. Section 2019.210 requires that trade secrets be identified with reasonable particularity before discovery commences, in an effort to prevent abuse of discovery and to enable defendants to form complete and well-reasoned defenses.

     Jardin concerns a patent dispute, in which plaintiff Cary Jardin alleged that defendant Stuart Frost stole nonpublic information while employed by Jardin. Frost then formed his own company, defendant DATAllegro, Inc., and allegedly used the misappropriated information to file for a patent. Although Jardin involves patent claims, the case implicates trade secrets law because Jardin’s patent claims were based upon the misappropriation of nonpublic information. Therefore, DATAllegro argued that discovery could not be conducted until Jardin identified the allegedly misappropriated information with reasonable particularity, pursuant to §2019.210.

     Magistrate Judge Gallo ultimately declined to apply §2019.210 in federal court. However, Judge Gallo was influenced by the policy concerns underlying §2019.210 and used his discretion under the Federal Rules of Civil Procedure to, nevertheless, order Jardin to identify the allegedly misappropriated information prior to discovery. Jardin objected to this order, but it was upheld by District Judge Irma Gonzalez on July 29, 2011. Judge Gonzalez held that Judge Gallo had committed no error in requiring pre-discovery identification and that he had broad discretion under the Federal Rules to consider policy concerns when granting his order.