Cangrade, Inc. v. Synopsys, Inc.

Summary

The United States District Court for the Northern District of California grants in part and denies in part Synopsys, Inc.'s motion to dismiss or strike Cangrade, Inc.'s second amended complaint. The court strikes the professional negligence and negligent interference claims, dismisses the requests for exemplary damages and relief for willful trade secret misappropriation with leave to amend, and denies the motion in all other respects. The court permits amendment limited to allegations concerning an officer, director, or managing agent's oppressive, fraudulent, or malicious conduct.

Holdings

1. Claims for professional negligence and negligent interference with economic relations that had previously been dismissed without leave to amend may not appear in the second amended complaint and were properly stricken.
2. To seek exemplary damages or redress for willful and malicious trade-secret misappropriation against a corporate defendant, the plaintiff must plead that an officer, director, or managing agent of the corporation committed an act of oppression, fraud, or malice.
3. Cangrade adequately pleaded unjust-enrichment damages by alleging that Synopsys retained a substantial auditing fee while publishing the source code and that Cangrade was entitled to disgorgement of fees received from Paylocity.
4. The court declined to dismiss the trade-secret claims on the grounds that the parties' agreement precluded them or that the economic-loss rule barred them, because those arguments presented factual issues or had already been rejected.

Questions Presented

1. Whether the professional-negligence and negligent-interference claims should remain in the second amended complaint after having been dismissed without leave to amend.
2. Whether the claims for exemplary damages or redress for willful trade-secret misappropriation were adequately pleaded under the DTSA and CUTSA.
3. Whether Cangrade adequately pleaded entitlement to unjust-enrichment damages for trade-secret misappropriation.
4. Whether the trade-secret claims were barred by the parties' agreement or the economic-loss rule at the motion-to-dismiss stage.

Disposition

other