May 19, 2019

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Court Concludes CUTSA Does Not Preempt Breach Of Fiduciary Duty Claim

The California Uniform Trade Secrets Act (CUTSA) provides various remedies for misappropriation of a trade secret (as defined).  The legislature, however, was "vexingly oblique" in prescribing the effect of CUTSA on common law claims, such as conversion, based on trade secret misappropriation.  Silvaco Data Systems v. Intel Corp., 184 Cal. App. 4th 210, 232 (2010) disapproved of on other grounds, Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011). Nonetheless, the Sixth District Court of Appeal in Silvaco divined a legislative intent to supersede other grounds of civil liability based on "statutory implication, context, legislative history, and general principles of statutory supersession".  

Recently, U.S. District Court Judge Cormac J. Carney ruled that CUTSA did not preempt a corporation's claims against a former officer and a competitor for breach of fiduciary duty and aiding and abetting a breach of fiduciary duty when those claims are not premised on the taking or use of confidential information.  Chromadex, Inc. v. Elysium Health, 2019 U.S. Dist. LEXIS 60732.  In refusing to dismiss the corporation's breach of fiduciary claims, Judge Carney found that the corporation had premised its claims that were broader and different than taking confidential information. 

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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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