California Court of Appeal, 3 Stonedeggs, Inc. v. Workers’ Compensation Appeals Board and Braden Nanez, C098711

Workers’ Compensation Law

 

Commercial Traveler Rule

 

California Law

 

 

 

Under the “commercial traveler” rule in workers’ compensation law, an employee traveling on the employer’s business is regarded as acting within the course of employment during the entire period of travel. (LaTourette v. Workers’ Comp. Appeals Bd. (1998) 17 Cal.4th 644, 652 (LaTourette).) As a result, workers’ compensation coverage applies to injuries the employee sustains during the travel itself and during the course of other personal activities “reasonably necessary for the sustenance, comfort, and safety of the employee,” such as procuring food and shelter. (Ibid.) However, personal activity not reasonably contemplated by the employer may constitute a material departure from the course of employment. (Ibid.)

 

 

In this matter, respondent Workers’ Compensation Appeals Board (the Board) determined that under the commercial traveler rule, workers’ compensation coverage applied to injuries respondent Braden Nanez sustained in an auto accident while he was off work and away from his job at a remote fire base camp. The employer, petitioner 3 Stonedeggs, Inc., expected employees not to leave the job site and to notify a manager if they did. Nanez did not notify a manager he was leaving camp. Rescinding the findings of the administrative law judge, the Board found that Nanez’s use of his own car while off work to drive approximately 70 miles away from camp purportedly to obtain cellular service was conduct reasonably expected by his employer to be incident to its requirement that Nanez spend time away from home where cellular service was not adequately provided at the camp. The Board concluded that Nanez’s travel was for comfort and leisure and was not a distinct departure from his employment.

 

 

The employer is a mobile food service that contracts with the U.S. Forest Service to provide meals for firefighters and supporting personnel. Nanez, 19 years of age, began working for the employer as a food service worker on September 11, 2020, at a fire camp in Brownsville, California.

 

 

The Board agreed with Nanez and rescinded the ALJ’s opinion. In an opinion and decision dated February 15, 2023, the Board determined that the commercial traveler rule applied to Nanez’s claim. The Board explained, “Because the employer (1) allowed applicant to travel by his own car from the Brownsville camp to his Chico home and then return to continue his work there; (2) sought and obtained applicant’s agreement to travel to Happy Camp on its business; (3) authorized applicant to travel to Happy Camp using his own car; and (4) did not instruct applicant to refrain from using his own car during his off hours or for personal reasons, applicant’s conduct in using his own car during his off hours to drive from Happy Camp to Yreka was conduct reasonably expected by the employer to be incidental to its requirement that he spend time away from home.” Also, because the record did not disclose Nanez’s reasons for traveling to Yreka other than, in the Board’s words, Todd’s “surmise” that it was to use his cell phone, and because Nanez traveled during his off hours and between shifts, the record suggested that Nanez’s travel was for comfort or leisure and was not a distinct departure from his employment. The Board also found that the evidence did not establish that Nanez’s claim was barred by the defense of intoxication.

 

 

To receive workers’ compensation, the injured employee must prove by a preponderance of the evidence that his injury arose out of and was in the course of employment. (LaTourette, supra, 17 Cal.4th at p.650; Lab. Code, §3600.) In applying this two-pronged requirement, we are to construe it liberally in favor of awarding benefits. (LaTourette, at pp.650-651.)

 

 

The first prong, “in the course of employment,” ordinarily refers to the time, place, and circumstances under which the injury occurred. (LaTourette, supra, 17 Cal.4th at p.651.) “Thus ‘“an employee is in the ‘course of his employment’ when he does those reasonable things which his contract with his employment expressly or impliedly permits him to do.”’” (Ibid.) The second prong, “arising out of employment,” concerns whether the injury occurred by reason of a condition or incident of the employment. (LaTourette, supra, 17 Cal.4th at p.651.) In other words, “‘the employment and the injury must be linked in some causal fashion.’” (Ibid.) This causation element requires only “‘“that the employment be one of the contributing causes without which the injury would not have occurred.”’” (Id., at fn.1.) The mere fact an employee during working hours is performing a personal act when injured does not per se preclude him from compensation. (LaTourette, supra, 17 Cal.4th at p.651.) If the particular act is reasonably contemplated by the employment, injuries received while performing that act arise out of the employment and are compensable. (Ibid.) Generally, an employee commuting to and from a fixed place of business at fixed hours is not considered to be acting within the scope of his employment. Under the so-called going and coming rule, injuries suffered during the ordinary local commute are not compensable. (Hinojosa v. Workmen’s Comp. Appeals Bd. (1972) 8 Cal.3d 150, 157.) That is because the employment plays no special role in the need for transportation other than the normal need of the employees’ presence to perform their work. (Ibid.) The commercial traveler rule is an exception to the going and coming rule. (Jeewarat v. Warner Bros. Entertainment Inc. (2009) 177 Cal.App.4th 427, 437.) Under the rule, employees “‘whose work entails travel away from the employer’s premises are held ... to be within the course of their employment continuously during the trip, except when a distinct departure on a personal errand is shown.’” (IBM Corp. v. Workers’ Comp. Appeals Bd. (1978) 77 Cal.App.3d 279, 282 (IBM Corp.).) Workers’ compensation coverage “applies to the travel itself and also to other aspects of the trip reasonably necessary for the sustenance, comfort, and safety of the employee.” (LaTourette, supra, 17 Cal.4th. at p.652.) A traveling employee “could hardly be expected to remain holed up in his hotel room.” (Fleetwood Enterprises, Inc. v. Workers’ Comp. Appeals Bd. (2005) 134 Cal.App.4th 1316, 1327.) The commercial traveler rule “does not, however, apply to any and all activities. ‘Personal activity not contemplated by the employer may constitute a material departure from the course of employment.’” (LaTourette, supra, 17 Cal.4th. at p.652.) The activity must bear some relation to the purposes of the employment. (Id. at p.653.)

 

 

No party cites to reported case law or other Board decisions that explain how to determine whether the employee is a commercial traveler or is rather on a “quasi-permanent” assignment, and we have found none. To us, a useful approach arises by recognizing that the commercial traveler rule is an exception to the going and coming rule. That rule precludes compensation where the injury occurs during the employee’s ordinary, daily, local commute to and from his fixed place of employment at fixed hours and in the absence of special or extraordinary circumstances. (Hinojosa, supra, 8 Cal.3d at p.157.) It excludes from coverage “the ordinary, local commute that marks the daily transit of the mass of workers to and from their jobs; the employment, there, plays no special role in the requisites of portage except the normal need of the presence of the person for the performance of the work.” (Ibid.)

 

 

(…) Even intentional or criminal misconduct that occurs within the course of one’s employment and causes injury does not necessarily preclude recovering benefits. (Westbrooks, supra, 203 Cal.App.3d at p.254.) “Any employer could argue that reckless, intentional, or criminal conduct is not part of any job description and therefore not within the scope of employment. This argument, however, if permitted to succeed, would totally undermine the no-fault foundation of workers’ compensation law.” (Ibid.)

 

 

 

 

 

 

(California Court of Appeal, May 24, 2024, 3 Stonedeggs, Inc. v. Workers’ Compensation Appeals Board and Braden Nanez, C098711, Certified for Publication)

U.S. Court of Appeals for the Ninth Circuit, Corby Kuciemba v. Victory Woodworks, Inc., Docket No. 21-15963

Labor Law

 

Tort Law

 

Negligence

 

Duty of Care

 

Failure to Protect Employees

 

California’s Derivative Injury Doctrine

 

California Workers’ Compensation Act

 

California Law

 

 

If an employee contracts COVID-19 at his workplace and brings the virus home to his spouse, does California’s derivative injury doctrine bar the spouse’s claim against the employer?

 

Under California law, does an employer owe a duty to the households of its employees to exercise ordinary care to prevent the spread of COVID-19?

 

 

 

 

Appeal from the United States District Court for the Northern District of California.

 

 

 

 

The panel affirmed the district court’s dismissal of a diversity action brought by Robert Kuciemba and his wife Corby Kuciemba against Mr. Kuciemba’s employer Victory Woodworks, alleging that Mrs. Kuciemba contracted a severe case of COVID-19 from Mr. Kuciemba as a result of Victory’s negligent failure to protect its employees from the virus. The panel certified two questions to the Supreme Court of California, which accepted certification and held that (1) California’s derivative injury doctrine—under which workers’ compensation benefits generally provide the exclusive remedy for third party claims if the asserted claims are collateral to or derivative of the employee’s workplace injury—did not bar Mrs. Kuciemba’s tort claims against Victory; but (2) an employer does not owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members. Because Victory owed no duty of care to Mrs. Kuciemba, the panel affirmed the district court’s order dismissing the complaint.

 

 

The Kuciembas sued Victory in Superior Court in California. They alleged that Victory’s violations of federal, state, and municipal regulations and its failure to protect its employees from COVID-19 substantially caused Mrs. Kuciemba’s severe infection. Mrs. Kuciemba brought claims for negligence, negligence per se, and premises liability, and Mr. Kuciemba brought a claim for loss of consortium. Victory removed the case to federal court and filed a motion to dismiss. The district court granted Victory’s motion, holding that California’s derivative injury doctrine barred the Kuciembas’ claims and that an employer’s duty to provide a safe workplace to employees does not extend to nonemployees sickened by a virus outside of the employer’s premises.

 

 

Following briefing and argument, we concluded that no controlling precedent resolved whether the derivative injury doctrine barred Mrs. Kuciemba’s claims and whether Victory owed Mrs. Kuciemba a duty of care. We further determined that a decision by the Supreme Court of California could control the outcome and that this appeal presents issues of significant importance for the State of California, including the scope of an employer’s tort liability for the spread of COVID-19. We requested that the Supreme Court of California decide two certified questions:

 

If an employee contracts COVID-19 at his workplace and brings the virus home to his spouse, does California’s derivative injury doctrine bar the spouse’s claim against the employer?

 

Under California law, does an employer owe a duty to the households of its employees to exercise ordinary care to prevent the spread of COVID-19? 

 

 

The Supreme Court of California granted our request and has now issued its decision.

 

 

As to the first question, the Supreme Court of California held that California’s derivative injury doctrine—under which workers’ compensation benefits generally “provide the exclusive remedy for third party claims if the asserted claims are ‘collateral to or derivative of’ the employee’s workplace injury”—does not bar Mrs. Kuciemba’s tort claims. Kuciemba v. Victory Woodworks, Inc., No. S274191, 2023 WL 4360826, at *3– 9 (Cal. July 6, 2023). The court explained that most derivative injury claims seek recovery for losses sustained because of “a loved one’s disability or death, rather than for the plaintiff’s own physical injuries or death.” Id. at *6. Mrs. Kuciemba’s negligence claims, however, “are not legally or logically dependent” on an injury Mr. Kuciemba sustained at work. Id. at *9. The “‘but for’ causal link” between Mrs. Kuciemba’s injury and Mr. Kuciemba’s COVID-19 exposure is therefore “insufficient, on its own, to render the claims derivative.” Id. Thus, the claims are not barred by the exclusivity provisions of the California Workers’ Compensation Act. Id. The Supreme Court of California held as to the second question that “an employer does not owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members.” Id. at *21. The analysis of the court is detailed and bears reading with respect to California tort law. To begin, the court held that “the default rule of duty applies in the COVID-19 context as well where plaintiffs have alleged that the defendant, through its own actions, created an unreasonable risk of the disease’s transmission.” Id. at *12.

 

 

Although California “Civil Code section 1714 articulates a general duty of care,” compelling policy considerations can support exceptions. Id. at *13. The court pointed to Rowland v. Christian, 443 P.2d 561 (1968), as identifying “several considerations that may, on balance, justify a departure from Civil Code section 1714’s default rule of duty.” Id. Such considerations include, among others, the foreseeability of harm to the plaintiff, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, and the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach. Id. The court identified foreseeability as “the most important factor to consider in determining whether to create an exception to the general duty to exercise ordinary care” under section 1714. Id. at *14 (quoting Kesner v. Superior Court, 384 P.3d 283, 291 (Cal. 2016)). On this point, the court concluded that “it is plainly foreseeable that an employee who is exposed to the virus through his employer’s negligence will pass the virus to a household member.” Id. at *16. The court also concluded that the “moral blame factor weighs in favor of establishing a duty” primarily because Victory had greater access to knowledge and control to prevent the spread of COVID-19 on its premises than did the plaintiffs. Id. at *17. Despite its conclusions with respect to foreseeability and moral blame, the court wrote that “while the foreseeability factors and the policy factor of moral blame largely tilt in favor of finding a duty of care, the policy factors of preventing future harm and the anticipated burdens on defendants and the community weigh against imposing such a duty.” Id. at *20. Important to this analysis of the Rowland factors was the recognition that “some factors may be so weighty as to tip the balance one way or the other.” Id. The court went on to conclude: Here, the significant and unpredictable burden that recognizing a duty of care would impose on California businesses, the court system, and the community at large counsels in favor of an exception to the general rule of Civil Code section 1714. Imposing on employers a tort duty to each employee’s household members to prevent the spread of this highly transmissible virus would throw open the courthouse doors to a deluge of lawsuits that would be both hard to prove and difficult to cull early in the proceedings. Id. With these considerations in mind, the court concluded that “‘the burden to the defendant and consequences to the community’ weigh against imposing a duty of care” here. Id. at *19. As a consequence, because Victory owed no duty to Mrs. Kuciemba, we affirm the district court’s dismissal of the Kuciembas’ First Amended Complaint.

 

 

 

 

(U.S. Court of Appeals for the Ninth Circuit, July 25, 2023, Corby Kuciemba v. Victory Woodworks, Inc., Docket No. 21-15963, For Publication)

California Court of Appeal, Gregg v. Uber Technologies, Inc., Docket No. B302925

Labor Law

 

Arbitration

 

Independent Contractor v. Employee

 

Uber

 

Private Attorneys General Act of 2004 (PAGA)

 

Non-Individual PAGA Claims And Individual PAGA Claims

 

PAGA Waiver

 

California Law

 

 

 

Johnathon Gregg sued Uber Technologies, Inc., and Rasier-CA, LLC (collectively, “Uber”), under the Private Attorneys General Act of 2004 (PAGA), Labor Code section 2698 et seq. He alleged Uber willfully misclassified him as an independent contractor rather than an employee, which led to numerous other Labor Code violations. In response, Uber moved to compel arbitration under the “Arbitration Provision” in the “Technology Services Agreement” (“TSA”), which Gregg accepted to use Uber’s smartphone application and become an Uber driver.

 

 

The trial court denied Uber’s motion and, in April 2021, this court affirmed. The United States Supreme Court vacated the affirmance in June 2022, when it granted Uber’s petition for writ of certiorari and remanded the case for further consideration in light of Viking River Cruises, Inc. v. Moriana (2022) ___U.S. ___ [142 S.Ct. 1906, 213 L.Ed.2d 179] (Viking River). In light of Viking River, we first determine the TSA’s PAGA Waiver is invalid and must be severed from the Arbitration Provision. We then conclude that under the Arbitration Provision’s remaining terms, Gregg must resolve his claim for civil penalties based on Labor Code violations he allegedly suffered (i.e., his individual PAGA claim) in arbitration, and that his claims for penalties based on violations allegedly suffered by other current and former employees (i.e., his non-individual PAGA claims) must be litigated in court. Lastly, we conclude that under California law, Gregg is not stripped of standing to pursue his non-individual claims in court simply because his individual claim must be arbitrated. Consequently, his non-individual claims are not subject to dismissal at this time. Instead, under the Arbitration Provision, they must be stayed pending completion of arbitration. Accordingly, we affirm in part and reverse in part the order denying Uber’s motion to compel arbitration. We remand the case to the trial court with directions to: (1) enter an order compelling Gregg to arbitrate his individual PAGA claim; and (2) stay his non-individual claims pending completion of arbitration.

 

 

PAGA authorizes an “aggrieved employee” to initiate a civil action “on behalf of himself or herself and other current or former employees” to recover civil penalties for violations of the Labor Code ordinarily “assessed and collected by the Labor and Workforce Development Agency.” (§ 2699, subd. (a).)

 

 

(…) Under Viking River, employers may enforce an agreement mandating arbitration of a plaintiff’s individual PAGA claim, even if the agreement does not require arbitration of the plaintiff’s non-individual claims. (See id. at p. 1925.)

 

 

(…) We begin our analysis by addressing whether the PAGA Waiver is enforceable under Viking River. We conclude it is not.

 

 

(…) We decline to follow Olabi for a few reasons. As an initial matter, the opinion was filed before Viking River was decided. (See Olabi, supra, 50 Cal.App.5th 1017; Viking River, supra, 142 S.Ct. 1906.) Therefore, the Olabi court did not interpret the agreement before it in the context of current law, which, as discussed above, now permits a PAGA lawsuit to be split into arbitrable and non-arbitrable components, and does not require it to be treated as an indivisible unit for purposes of arbitration.

 

 

(…) We hold that under California law, an alleged “aggrieved employee” (§ 2699, subd. (c)) is not stripped of standing to assert non-individual PAGA claims in court simply because he or she has been compelled to arbitrate his or her individual PAGA claim. (See Kim, supra, 9 Cal.5th at pp. 83-85; see also Johnson, supra, 66 Cal.App.5th at p. 930; Rocha v. U-Haul Co. of California (2023) 88Cal.App.5th 65, 77(Rocha).

 

 

(…) Uber appears to assume that even if Gregg’s non-individual claims are stayed pending completion of arbitration on his individual claim, he will be allowed to relitigate whether he is an “aggrieved employee” in court because the doctrine of issue preclusion will not apply to the arbitrator’s finding on the issue. This assumption is premature at best, and incorrect at worst. A split in authority has recently developed on this issue (compare Rocha, supra, 88Cal.App.5 that pp. 78-82 with Gavriiloglou v. Prime Healthcare Management, Inc. (2022) 83 Cal.App.5th 595, 602-607), and the parties have not asked to brief it. In any event, we express no opinion on the matter and need not address it. As discussed above, Kim and Johnson establish that regardless of its resolution, Gregg has not lost standing to assert his non-individual claims in court merely because he has agreed to arbitrate his individual claim.

 

 

Having concluded Gregg’s non-individual claims are not subject to dismissal at this time, we agree with the parties that under the Arbitration Provision, they should be stayed pending completion of arbitration on his individual claim. On this point, the Arbitration Provision states: “To the extent that there are any claims to be litigated in a civil court of competent jurisdiction because a civil court of competent jurisdiction determines that the PAGA Waiver is unenforceable with respect to those claims, the parties agree that litigation of those claims shall be stayed pending the outcome of any individual claims in arbitration.”

 

 

 

(California Court of Appeal, March 24, 2023, Gregg v. Uber Technologies, Inc., Docket No. B302925, Certified for Publication)

U.S. Court of Appeals for the Seventh Circuit, REXA, Inc. v. Mark V. Chester and MEA, Inc., Docket No. 20-2953

Assignment

Breach of an Implied Contractual Obligation (of Employee) to Assign Patent Rights (to Employer, Then to Successor Corporation)

 

May Employer’s Rights Under a Written Employment Agreement Be Assigned Without the Employee’s Consent?

 

May an Implied-In-Fact Contractual Obligation Regarding Intellectual-Property Rights Be So Assigned?

 

Successor Corporation

 

Patent Law

 

Illinois Law

 

Wisconsin Law

 

Common Law of Massachusetts (Contract Formation)

 

 

 

 

(…) REXA also challenges the district court’s grant of summary judgment to Chester on Count IV, REXA’s claim for breach of an implied-in-fact contractual obligation to assign any patent rights in connection with the patent application. In evaluating such a claim, federal courts “apply state-law principles of contract formation to determine whether an implied contract existed.” Farmers Edge Inc. v. Farmobile, LLC, 970 F.3d 1027, 1031 (8th Cir. 2020) (citing Teets v. Chromalloy Gas Turbine Corp., 83 F.3d 403, 407 (Fed. Cir. 1996)). The parties agree that REXA’s claim for breach of an implied-in-fact contract arises under the common law of Massachusetts, where Koso employed Chester.

 

 

Massachusetts law provides that if an employer “contemplates the discovery of an invention” and contracts with an employee to build it such that the employee “must have reasonably understood that such inventions as resulted from his performance of the contract should belong to the employer,” the employee has “an implied obligation to assign any patents ... for said inventions to his employer.” Nat’l Dev. Co. v. Gray, 55 N.E.2d 783, 787 (Mass. 1944) (citations omitted). Subsequent cases have extended that proposition. When an employee—even if hired in a general capacity—is specifically “directed during the course of his employment to develop or perfect new or existing machinery or processes, his employer becomes the owner of resulting inventions and may compel the assignment of patents taken in the employee’s name.” Steranko v. Inforex, Inc., 362 N.E.2d 222, 233–34 (Mass. App. Ct. 1977); see also Silica Tech, L.L.C. v. J-Fiber, GmbH, 2009 WL 2579432, at *13 (D. Mass. Aug. 19, 2009) (same).

 

 

REXA is correct that the question of whether an employer’s rights under a written employment agreement may be assigned without the employee’s consent is materially distinct from whether an implied-in-fact contractual obligation regarding intellectual-property rights may be so assigned. The concerns that weigh against permitting a successor corporation to enforce a contract for employment, a personal service, do not necessarily apply to an implied contractual right to assign intellectual property. Chester and MEA do not sufficiently account for the differences between employment and intellectual-property rights. Notably, in other cases involving similar allegations, courts and parties have assumed that successors-in-interest may enforce the type of implied-in-fact contractual right at issue here.

 

 

Yet, we decline to hold that as a matter of Massachusetts law, an implied-in-fact obligation to assign patent rights may be transferred to a successor-in-interest. After all, state courts are the “ultimate expositors” of their own laws. Smart Oil, LLC v. DW Mazel, LLC, 970 F.3d 856, 863 (7th Cir. 2020) (citation omitted). “A federal court sitting in diversity must proceed with caution in making pronouncements about state law,” especially given that such pronouncements “inherently involve a significant intrusion on the prerogative of the state courts to control that development.” Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1092 (7th Cir. 1999) (citations omitted). Here, there is no need to resolve the Massachusetts state-law issue concerning the transferability of implied-in-fact obligations to assign patents. Instead, we adjudicate REXA’s implied-in-fact contractual claim by applying a requirement common to all such claims.

 

 

As a general rule, “an individual owns the patent rights to the subject matter of which he is an inventor, even though he conceived it or reduced it to practice in the course of his employment.” Banks, 228 F.3d at 1359. But there are exceptions. In the archetypal case involving an inventor’s breach of an implied-in-fact contractual obligation, an employer may be entitled to ownership rights associated with “the inventions of employees hired to direct or to engage in inventive research.” Steranko, 362 N.E.2d at 233 (citations omitted). Also, when an employee is specifically “directed during the course of his employment to develop or perfect new or existing machinery or processes, his employer becomes the owner of resulting inventions and may compel the assignment of patents taken in the employee’s name.” Id. at 233–34. By adhering to this rule, Massachusetts follows the law of many other states. See, e.g., Teets, 83 F.3d at 408 (“Even if hired for a general purpose, an employee with the specific task of developing a device or process may cede ownership of the invention from that task to the employer.”) (applying Florida law); Goodyear Tire & Rubber Co. v. Miller, 22 F.2d 353, 356 (9th Cir. 1927) (applying federal common law).

 

 

The pertinent question is whether the employer “specifically directed” the employee to create the invention at issue. Farmers Edge, 970 F.3d at 1032; Teets, 83 F.3d at 408. “The primary factor courts consider in determining whether an employed to invent agreement exists is the specificity of the task assigned to the employee.” Farmers Edge, 970 F.3d at 1032 (quoting Skycam LLC v. Bennett, 900 F. Supp. 2d 1264, 1276 (N.D. Okla. 2012)). In Skycam, the court correctly reasoned that if the employee was not employed or specifically directed “to invent the entirety” of the system described in a claim of the patent application for which assignment is sought, the employer “is not entitled to ownership of the invention described therein.” 900 F. Supp. 2d at 1277.

 

 

 

(U.S. Court of Appeals for the Seventh Circuit, July 28, 2022, REXA, Inc. v. Mark V. Chester and MEA, Inc., Docket Nos. 20-2953, 20-3213, 21-2033)

 

 

Computer Fraud and Abuse Act - Former Employee

Computer Fraud and Abuse Act

 

Former Employee

 

 

Nosal II, 844 F.3d 1024

 

Nosal II held that a former employee who used current employees’ login credentials to access company computers and collect confidential information had acted “‘without authorization’ in violation of the CFAA.” 844 F.3d at 1038. The computer information the defendant accessed in Nosal II was thus plainly one which no one could access without authorization.

 

 

 

(U.S. Court of Appeals for the Ninth Circuit, April 18, 2022, HIQ Labs, Inc. v. LinkedIn Corp., Docket No. 17-16783, for Publication, p. 36)

 

 

California Court of Appeal, Swenberg v. Dmarcian, Inc., Docket No. A159148

 

Personal Jurisdiction

Purposeful Availment

Labor Law

California Law

 

 

Charles Swenberg brought this action against dmarcian, Inc., Timothy Draegen, and Martijn Groeneweg, alleging various claims related to his ownership interest in and employment with the company. This appeal is from the trial court’s order granting Groeneweg’s motion to quash service for lack of personal jurisdiction. For the reasons explained herein, we reverse and remand.

 

Dmarcian, Inc. (“dmarcian”) was incorporated in Delaware in 2014, and, in 2017, registered with the California Secretary of State as a foreign corporation with its “principal executive office” in Burlingame, California.

 

Draegen is a co- founder of the company, its chief executive officer (CEO) and majority shareholder, and resides and works in North Carolina. Groeneweg, who resides in the Netherlands, is alleged to be a chief executive of, and have an ownership interest in, “a company whose true name is unknown to Swenberg, but which was a European affiliate entity of dmarcian” and “was referred to colloquially as dmarcian EU.” The complaint alleges on information and belief that Groeneweg is presently a shareholder or beneficial owner of dmarcian. Swenberg, who resides in California, is a co-founder of dmarcian and worked for the company as a consultant in 2016, then as chief revenue officer (CRO) and finally as chief operating officer (COO) until his termination on May 31, 2018.

 

Groeneweg’s declaration states he is a 25 percent shareholder in dmarcian Europe BV, which he described as (in the same terms Draegen described dmarcian) as selling and marketing “an email authentication protocol specification (called ‘DMARC’) that assists customers in streamlining email communications by filtering out spam, malware, and phishing emails from email inboxes.” Groeneweg stated that the company provides these services “throughout Europe, Russia, and Africa.”

 

“California courts may exercise jurisdiction over nonresidents ‘on any basis not inconsistent with the Constitution of this state or of the United States.’ (Code Civ. Proc., § 410.10.) The statute ‘manifests an intent to exercise the broadest possible jurisdiction, limited only by constitutional considerations. [Citations.]’ (Sibley v. Superior Court [(1976)] 16 Cal.3d [442,] 445.) A state may constitutionally exercise personal jurisdiction over a nonresident as long as he or she has ‘minimum contacts’ with that forum such that ‘maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” [Citations.]’ (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316.)” (Taylor-Rush v. Multitech
Corp. (1990) 217 Cal.App.3d 103, 112 (Taylor-Rush); Pavlovich v. Superior Court (2002) 29 Cal.4th 262 (Pavlovich.)

 

“When jurisdiction is challenged by a nonresident defendant, the burden of proof is on the plaintiff to demonstrate that sufficient ‘minimum contacts’ exist between the defendant and the forum state to justify imposition of personal jurisdiction.” (Taylor-Rush, supra, 217 Cal.App.3d at p. 112, quoting Sibley v. Superior Court, supra, 16 Cal.3d at p. 445.) The plaintiff must prove the factual basis justifying exercise of jurisdiction by a preponderance of the evidence. (BBA Aviation PLC v. Superior Court (2010) 190 Cal.App.4th 421, 428 (BBA Aviation).) “The plaintiff must provide specific evidentiary facts, through affidavits and other authenticated documents, sufficient to allow the court to independently conclude whether jurisdiction is appropriate” and “cannot rely on allegations in an unverified complaint or vague and conclusory assertions of ultimate facts.” (Strasner v. Touchstone Wireless Repair & Logistics, LP (2016) 5 Cal.App.5th 215, 222; BBA Aviation, at p. 428; In re Automobile Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 110.)

 

“ ‘Under the minimum contacts test, “an essential criterion in all cases is whether the ‘quality and nature’ of the defendant’s activity is such that it is ‘reasonable’ and ‘fair’ to require him to conduct his defense in that
State.” ’ ” (Epic Communications, Inc. v. Richwave Technology, Inc. (2009) 179 Cal.App.4th 314, 327 (Epic Communications), quoting Pavlovich, supra, 29 Cal.4th at p. 268.) “ ‘The “substantial connection” [citations] between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State. [Citations.]’ (Asahi Metal Industry Co. v. Superior Court (1987) 480 U.S. 102, 112.) A defendant’s physical presence in the state is not required, as long as his or her efforts were “ ‘purposely directed’ ” toward residents of that state. (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 476; St. Joe Paper Co. v. Superior Court (1981) 120 Cal.App.3d 991, 997.) Thus, personal jurisdiction may be exercised over a defendant who has caused an effect in the forum state by an act or omission occurring elsewhere. (McGee v. International Life Ins. Co. (1957) 355 U.S. 220, 223–224; Sibley v. Superior Court, supra, 16 Cal.3d at pp. 445–446; Buckeye Boiler Co. v. Superior Court (1969) 71 Cal.2d 893, 898–899.)” (Taylor-Rush, supra, 217 Cal.App.3d at p. 112.) But there must be evidence the nonresident defendant intentionally targeted his or her conduct at the forum state and not just at a plaintiff who lives in that state. (Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 13, 25 (Burdick); Walden v. Fiore (2014) 571 U.S. 277, 288 (Walden).)

 

Personal jurisdiction may be general or specific. (Epic Communications, supra, 179 Cal.App.4th at p. 327.) “General jurisdiction exists where the defendant has such pervasive contacts with the forum state that it is fair to subject it to jurisdiction for all purposes. (DVI, Inc. v. Superior Court [(2002)] 104 Cal.App.4th [1080,] 1090, 1097.) . . . Specific jurisdiction exists when, though the defendant lacks such pervasive forum contacts that he may be treated as present for all purposes, it is nonetheless proper to subject him to the forum state’s jurisdiction in connection with a particular controversy.” (Epic Communications, supra, 179 Cal.App.4th at p. 327.) “ ‘When determining whether specific jurisdiction exists, courts consider the “ ‘relationship among the defendant, the forum, and the litigation.’ ” [Citations.] A court may exercise specific jurisdiction over a nonresident defendant only if: (1) “the defendant has purposefully availed himself or herself of forum benefits” [citation]; (2) “the ‘controversy is related to or “arises out of” the defendant’s contacts with the forum’ ” [citations]; and (3) “ ‘the assertion of personal jurisdiction would comport with “fair play and substantial justice” ’ ” [citations].’ ” (Snowney, supra, 35 Cal.4th 1054, 1062, quoting Pavlovich, supra, 29 Cal.4th at p. 269.)

 

“ ‘ “The purposeful availment inquiry . . . focuses on the defendant’s intentionality. [Citation.] This prong is only satisfied when the defendant purposefully and voluntarily directs its activities toward the forum so that it should expect, by virtue of the benefit it receives, to be subject to the court’s jurisdiction based on” its contacts with the forum.’ (Pavlovich, supra, 29 Cal.4th at p. 269, quoting U.S. v. Swiss American Bank, Ltd. (1st Cir. 2001) 274 F.3d 610, 623–624.) Thus, purposeful availment occurs where a nonresident defendant ‘ “purposefully directs” its activities at residents of the forum’ (Burger King [Corp. v. Rudzewicz], supra, 471 U.S. at p. 472), ‘ “purposefully derives benefit” from’ its activities in the forum (id. at p. 473,), ‘creates a “substantial connection” with the forum’ (id. at p. 475), ‘ “deliberately” has engaged in significant activities within’ the forum (id. at pp. 475–476), or ‘has created “continuing obligations” between itself and residents of the forum’ (id. at p. 476). By limiting the scope of a forum’s jurisdiction in this manner, the ‘ “purposeful availment” requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of “random,” “fortuitous,” or “attenuated” contacts. . . .’ (Id. at p. 475.) Instead, the defendant will only be subject to personal jurisdiction if ‘ “it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the state.” ’ (Pavlovich, supra, 29 Cal.4th at p. 269, quoting World-Wide Volkswagen, supra, 444 U.S. at p. 297.)” (Snowney, supra, 35 Cal.4th at pp. 1062–1063.)

The “ ‘minimum contacts’ analysis looks to the defendant’s contacts with the forum state itself, not the defendant’s contacts with persons who reside there.’ ” (Zehia v. Superior Court (2020) 45 Cal.App.5th 543, 554–555, quoting Walden, supra, 571 U.S. at p. 285.) “ ‘The plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant’s conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him.’ ” (David L. v. Superior Court (2018) 29 Cal.App.5th 359, 372, quoting Walden, at p. 285.) “To find specific jurisdiction, a court must look to the defendant’s ‘own’ suit-related contacts with the forum to see if they create a ‘substantial connection with the forum State,’ not just ‘with persons who reside there.’ ” (David L., at p. 372, quoting Walden, at pp. 284–285.)

 

Swenberg presented compelling evidence that Groeneweg publicly presented himself as one of the leaders of dmarcian, with no hint there was a distinction between dmarcian and any other entity Groeneweg was associated with. It is undisputed that dmarcian and dmarcian EU shared a Web site; accordingly, anyone who attempted to access a Web site for dmarcian EU would be redirected to the dmarcian Web site. On the dmarcian Web site, Groeneweg appears immediately below Draegen, the CEO (identified by name and location in the United States) and above two individuals identified as “General Manager APAC Melbourne, Australia” and “General Manager Americas Asheville, USA.” Although the exhibit in the record on appeal is incomplete, in that the text beneath Groeneweg’s name is obscured by what appears to be a pop-up message on the computer screen, it is obvious from the format of this section of the Web site that the hidden information would read—as Swenberg’s attorney indicated in his declaration—“General Manager Europe.” Other employees are similarly presented with photographs, names, and locations in various parts of the world. The obvious impression imparted by the Web site is a company with operations run by regional managers in different geographic areas.

 

The same impression is conveyed by Groeneweg’s LinkedIn profile, which describes him as “General Manager Europe at dmarcian” and, under “Experience,” “Co-Founder and General Manager Europe.” The accompanying text describes “dmarcian” and its business without reference to dmarcian EU or any other entity: “Companies use dmarcian to rapidly and accurately deploy DMARC . . .”; “The mission of dmarcian is to fix the email ecosystem”; “dmarcian has 19,000 customers . . . .” Other dmarcian EU employees’ LinkedIn pages similarly describe the business of “dmarcian” and provide as examples of dmarcian’s customers a world-wide list including companies headquartered and doing business in California, such as AirBnb and GAP.

 

That dmarcian EU’s Internet presence was a shared Web site, administered by dmarcian in California, where a dmarcian employee would assign prospective customers to dmarcian EU, indicates at the very least a strong business association between dmarcian EU and dmarcian: dmarcian was dmarcian EU’s source for customers contacting the company through the Web site.

 

By publicly presenting himself as a leader of dmarcian, a company headquartered in California, having dmarcian EU’s web address automatically route to dmarcian’s Web site, administered in California, and receiving prospective customers directed to dmarcian EU by a dmarcian employee in California, Groeneweg “ ‘ “purposely availed himself . . . of forum benefits” ’ ” and “ ‘ “purposefully derived benefit” from’ his activities in the forum.” (Snowney, supra, 35 Cal.4th at pp. 1062–1063.) A California court’s exercise of jurisdiction over Groeneweg in litigation related to his role in dmarcian can hardly be seen as based on “ ‘ “random,” “fortuitous,” or “attenuated” contacts.’ ” (Ibid.) Having established and made economic use of a relationship with a California company and its employees, Groeneweg could reasonably expect to be subject to the jurisdiction of California courts in litigation connected to this relationship.

 

Swenberg’s claims clearly relate to Groeneweg’s business relationship with dmarcian: The gist of Swenberg’s complaint is that he had an agreement with Draegen for dmarcian to acquire an ownership share in dmarcian EU that was violated by Draegen and Groeneweg secretly negotiating a deal for Draegen to acquire the interest personally, thereby defeating Swenberg’s expectation of an ownership interest in dmarcian EU. He further alleged that his complaints about this situation resulted in retaliation including termination of his position at dmarcian.

 

“A state may exercise specific jurisdiction over a nonresident who purposefully avails himself or herself of forum benefits, because the state has ‘a “manifest interest” in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors. [Citations.] Moreover, where individuals “purposefully derive benefit” from their interstate activities [citation] it may well be unfair to allow them to escape having to account in other States for consequences that arise proximately from such activities.’ ” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 447, quoting Burger King Corp. v. Rudzewicz, supra, 471 U.S. at pp. 473–474.)

 

(California Court of Appeal, July 30, 2021, Swenberg v. Dmarcian, Inc., Docket No. A159148, Certified for Publication)

 

 

 

Application for Employment Authorization - Update

I-765, Application for Employment Authorization

Republication from USCIS Website

https://www.uscis.gov/i-765?utm_source=rss-feed&utm_campaign=Forms%20Updates

Certain aliens who are in the United States may file Form I-765, Application for Employment Authorization, to request employment authorization and an Employment Authorization Document (EAD).  Other aliens whose immigration status authorizes them to work in the United States without restrictions may also use Form I-765 to apply to U.S. Citizenship and Immigration Services (USCIS) for an EAD that shows such authorization.

Form I-765 (PDF, 426 KB)

Instructions for Form I-765 (PDF, 390 KB)

I-765 Worksheet (PDF, 239 KB)

Form G-1145, E-Notification of Application/Petition Acceptance (PDF, 238 KB)

Court of Appeal of the State of California, Second Appellate District, Techno Lite, Inc., v. Emcod, LLC, Docket No. B284989 c/w B289486

Labor Law

Agreement Not to Compete

Contract Drafting

Preparations to Compete Before Resigning

Solicitation of An Employer’s Customers

Interference with Prospective Economic Advantage

Cause of Action for Breach of Contract

California Law

Business and Professions Code section 16600 has consistently been interpreted as invalidating any employment agreement that unreasonably interferes with an employee’s ability to compete with an employer after his or her employment ends. (See Muggill v. Reuben H. Donnelley Corp. (1965) 62 Cal.2d 239, 242 [42 Cal. Rptr. 107, 398 P.2d 147].) However, the statute does not affect limitations on an employee’s conduct or duties while employed. ‘While California law does permit an employee to seek other employment and even to make some “preparations to compete” before resigning [citation], California law does not authorize an employee to transfer his loyalty to a competitor. During the term of employment, an employer is entitled to its employees’ “undivided loyalty.” [Citation.]’ (Fowler v. Varian Associates, Inc. (1987) 196 Cal.App.3d 34, 41 [241 Cal. Rptr. 539].) (Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 509 (Angelica).)

In Mamou, (Mamou v. Trendwest Resorts, Inc. (2008) 165 Cal.App.4th 686 (Mamou)) the court found employees could prepare to compete with their employer “‘so long as they do so on their own time and with their own resources.’” (Mamou, supra, 165 Cal.App.4th at 719.) But the court recognized “‘while an employee may secretly incorporate a competing business prior to departing, the employee may not use his or her principal’s time, facilities or proprietary secrets to build the competing business.’” (Ibid., quoting Chemfab Corp. v. Integrated Liner Tech. Inc. (N.Y. App. Div. 1999) 263 A.D. 2d 788, 790.) As particularly relevant here, the court noted that “‘solicitation of an employer’s customers likely will constitute a violation of the duty of loyalty in almost every case . . . .’” (Ibid., quoting Futch v. McAllister Towing of Georgetown (1999) 335 S.C. 598, 609-610.)

Appellants do not cite -- and we have not found -- a single case in which Section 16600 was held to invalidate an agreement not to compete with one’s current employer while employed by that employer. The public policy behind Section 16600 is to ensure “that every citizen shall retain the right to pursue any lawful employment and enterprise of their choice” (Metro Traffic Control, Inc. v. Shadow Traffic Network (1994) 22 Cal.App.4th 853, 859) and to encourage “open competition and employee mobility” (Edwards, supra, 44 Cal.4th at p. 946); it is not to immunize employees who undermine their employer by competing with it while still employed. “We state the obvious in observing that no ‘firmly established principle of public policy’ [citation] authorizes an employee to assist his employer’s competitors.” (Fowler v. Varian Associates, Inc., supra, 196 Cal.App.3d at p. 43; see also ibid. [a company has good cause to terminate an employee who helped “in obtaining financing for an enterprise organized to become [his employer]’s direct competitor”].) It should be even more obvious that no firmly established principle of public policy authorizes an employee to become his employer’s competitor while still employed. Section 16600 is not an invitation to employees to bite the hand that feeds them.

Interference with Prospective Economic Advantage:

Substantial evidence supports the trial court’s finding that Techno Lite likely would have realized an economic benefit if not for appellants’ wrongful actions. It is undisputed that the customers in question had all previously purchased product from Techno Lite. This fact alone supported the inference that Techno Lite’s relationship with such customers would have continued, thus providing it with an economic benefit. Indeed, appellants admit Village View Lighting was an account Techno Lite would not have lost, absent Emcod’s actions. The sole evidence to challenge this inference came from Drucker, whom the court expressly found to be not credible.

Cause of action for breach of contract:

“The elements of a cause of action for breach of contract are ‘“(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.”’” (Tribeca Companies, LLC v. First American Title Ins. Co. (2015) 239 Cal. App.4th 1088, 1109.) “Mutual assent or consent is necessary to the formation of a contract.” (Alexander v. Codemasters Group Limited (2002) 104 Cal.App.4th 129, 141.)

(Court of Appeal of the State of California, Second Appellate District, January 21, 2020, Techno Lite, Inc., v. Emcod, LLC, Docket No. B284989 c/w B289486, Certified for Partial Publication)