Cal-Peculiarities: How California Employment Law is Different 2022 Edition

336 | 2022 Cal-Peculiarities ©2022 Seyfarth Shaw LLP  www.seyfarth.com got their CFAA convictions vacated on the ground that the CFAA addresses restrictions on access to information, not restrictions on use. But Christensen also analyzed Penal Code section 502, essentially the state law equivalent to the CFAA. The Ninth Circuit noted that Section 502 “does not require unauthorized access. It merely requires knowing access. ” 61 The Ninth Circuit noted that “the term access … includes logging into a database with a valid password and subsequently taking, copying, or using the information in the database improperly. ” 62 L ike the CFAA, Penal Code section 502 provides for a civil remedy . 63 1 Bus. & Prof. Code § 16600. The narrow statutory exceptions pertains to limited transactions described in Business & Profession Code sections 16601 (sale of a business), 16602 (departure of a partner from a partnership), and 16602.5 (termination of interest in a limited liability company). 2 Edwards v. Arthur Andersen LLP , 44 Cal. 4th 937 (2008) (invalidating provision in employer’s proposed separation agreement that would have prohibited former employee from performing services for certain clients, because that restraint—even though narrow and leaving a substantial portion of the market open to the former employee—exceeded statutory protections for trade secrets, and rejecting “narrow restraint” exception articulated by Ninth Circuit as a misreading of California law). 3 Bus. & Prof. Code §§ 16601 (corporations), 16602 (partnerships), 16602.5 (limited liability corporations). 4 Ixchel Pharma, LLC v. Biogen, Inc. , 9 Cal. 5th 1130 (2020). 5 Twentieth Century Fox Film Corp. v. Netflix, Inc. No. B304022, 2021 WL 5711822 (Cal. App. 5th Dec. 2, 2021) (unpolished and not citable in California courts). 6 Id . 7 Kolani v. Gluska , 64 Cal. App. 4th 402 (1998) (broad covenant not to compete cannot be saved from illegality by giving it a narrowed construction). 8 Dowell v. Biosense Webster, Inc. , 179 Cal. App. 4th 564 (2009). 9 The Retirement Grp. v. Galante , 176 Cal. App. 4th 1226, 1238 (2009) (relying on Bus. & Prof. Code § 16600). 10 Id. 11 Application Grp. Inc. v. Hunter Grp. Inc. , 61 Cal. App. 4th 881, 885 (1998) (permitting employee signing covenant in Maryland to challenge the covenant upon moving to California while working for same employer, because California’s strong policy in protecting movement of employees invalidates noncompete covenant even though it was valid under Maryland law). 12 See Advanced Bionics Corp. v. Medtronic, Inc. , 29 Cal. 4th 697 (2002) (former employee moved to California to work for California employer and sued in California court one day before former employer sued in Minnesota). 13 Application Grp., Inc. v. Hunter Grp., Inc. , 61 Cal. App. 4th 881 (1998) (California and Maryland litigants disputing whether noncompete covenant was valid). 14 See, e.g., Harstein v. Rembrandt IP Solutions , 2012 WL 3075084 (N.D. Cal. 2012) (granting defendant’s motion to dismiss for improper venue, even if the Pennsylvania forum called for in the employment agreement could cause a different legal outcome in the plaintiff’s action for declaratory relief to invalidate a covenant to compete); AJZN, Inc. v. Yu , 2013 WL 97916 (N.D. Cal. 2013). 15 Meras Eng’g, Inc., v. CH20, Inc. , 2013 WL 146341 (N.D. Cal. 2013) (locating the forum in the state of Washington would not dictate that Washington’s substantive law would apply). 16 Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Texas , 134 S. Ct. 568 (2013). 17 Id . at 583. 18 Bus. & Prof. Code § 16601 (“sale of a business” exception). 19 Fillpoint, LLC v. Maas , 208 Cal. App. 4th 1170 (2012). 20 Wanke, Indus., Commercial, Residential, Inc. v. Superior Court , 209 Cal. App. 4th 1151 (2012). 21 VL Sys., Inc. v. Unisen, Inc. , 152 Cal. App. 4th 708, 714 (2007). 22 Id. at 716. 23 Id. at 718. See also Siricom v. Ebislogic, Inc. , 2012 WL 4051222 (N.D. Cal. Sept. 13, 2012) (Section 16600 voids contract by which one company agreed not to solicit employees working for the other contracting company; Supreme Court’s Edwards decision forecloses continued reliance on Webb v. West Side Dist. Hosp. , 193 Cal. App. 3d 946, 951(1983), which upheld, under a “rule of reason,” an agreement that required a hospital to pay an additional fee it if directly hired any doctor originally placed there by a staffing company). 24 Walia v. Aetna, Inc., 93 Cal. App. 4th 1213 (2001) (upholding $1.26 million award for salesperson dismissed for refusing to sign agreement with noncompete covenant; “California public policy condemns non-compete agreements. Walia was presented with one, she refused to sign it and, as a consequence of this refusal, she was fired. A Tameny claim [for tortious dismissal in breach of public policy] occurs when an employer discharges an employee for refusing to do something that public policy condemns.”); see also Thompson v. Impaxx, Inc. , 113 Cal. App. 4th 1425 (2003); D’Sa v. Playhut, Inc. , 85 Cal. App. 4th 927 (2000) (non-solicitation clauses are allowable only when they protect trade secrets or confidential proprietary information); Siricom v. Ebislogic, Inc., 2012 WL 4051222 (N.D. Cal. 2012) (including invalid noncompete covenant in vendor contract was unfair business practice Business & Profession Code section 16600).