9th Circuit Allows Former Employee to Potentially Dodge Trade Secret Case Under California Anti-SLAPP Statute
In Anheuser-Busch Companies, LLC v. James Alan Clark (Case No. 13-16527, 9th Cir. Nov. 2015), the Ninth Circuit vacated the lower’s district court’s ruling denying an Anti-SLAPP motion brought by Defendant Clark (“Clark”).
In this matter, Plaintiff Anheuser-Busch Companies, LLC (“A-B Co.”) filed a lawsuit against Clark in Eastern District of California (United States District Court) for several claims including misappropriation of trade secrets and breach of a confidentiality agreement. A-B Co. alleged Clark, who worked for the Company as a Director of Operators, obtained and disclosed a document related to the company’s brewing process after his employment had ended with A-B Co. Clark claimed during his employment he complained to management that the company was watering down its beers in order to manufacture more units of beer.
After Clark stopped working for the company, he retained a law firm over the alleged manufacturing of watered-down beer. This law firm sent a notice to A-B Co. asking the company correct his action, and requested relief on behalf of California purchasers of the beer. Similar demand letters were sent by attorneys in other states. Months later, class action lawsuits were filed in several lawsuits related to these claims.
A-B Co. then initiated its suit against Clark alleging Clark provided confidential information to assist with the bringing of these class action lawsuits and was the person who generated the class action cases against it.
In response to the lawsuit, Clark moved to strike A-B Co.’s claims for breach of the confidentiality agreement and misappropriation of trade secrets under the California anti-SLAPP statute. The anti-SLAPP statute can be invoked in order to prevent the pursuit of meritless lawsuits brought primarily by plaintiffs to “chill” the exercise of free speech or petitions rights exercised by persons. Clark brought his motion to strike arguing A-B Co’s claims were an attempt to “punish” him for exercising his constitutional rights of petition and free speech with respect to the class action litigation filed against A-B Co.
To prevail on an anti-SLAPP motion, a defendant must make a threshold showing each of the plaintiff’s claims arise from the defendant’s protected activity. If this threshold showing is met, then the court must grant the motion unless “the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”
While the district court found Clark had engaged in protected activity, it ruled Clark had not demonstrated that A-B Co.’s claims had arisen from his protected activity. In reaching this ruling, the court noted just because there was evidence that A-B Co. was motivated to file its claims against Clark due to his protected activity did not establish A-B Co.’s claims arose from the protected activity. The court further stated Clark’s protected activity, “unmentioned in the complaint and, referenced only as evidence of Defendant’s nonprotected wrongdoing, is ‘merely incidental’ to each of Plaintiffs’ claims, making Plaintiff’s claims beyond the scope of the anti-SLAPP motion to strike.”
On appeal, the Ninth Circuit found A-B Co. had in fact sued Clark “for acts taken ‘in furtherance of” a protected activity indicating it was suing Clark for obtaining and sharing information with the class action attorneys in order to further the class action. Furthermore, Clark’s preparation for litigation was not activity that was “merely incidental” to A-B Co.’s lawsuit. The Court further noted that whether A-B Co. could establish Clark violated the confidentiality provision or misappropriated trade secrets was an issue that went to the probability of success on the merits, and was not an issue to be decided when considering whether the threshold showing had been met.
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Ms. Silva is a graduate of University of the Pacific. She is the head of the firm’s Employment Practices Group. She is a former prosecutor and has considerable trial experience. Contact her at email@example.com.
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