Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 SMARTER HOA SOLUTIONS INC., Case No. 24-cv-01781-JAH-MMP 10 Plaintiff, 11 ORDER DENYING MOTION FOR v. GOOD FAITH SETTLEMENT 12 DETERMINATION 13 CARMEN PEÑA; CASANET PROPERTY MANAGEMENT LLC, 14 [ECF No. 35] Defendants. 15 16 Before the Court is Defendant Casanet Property Management LLC’s (“Casanet”) 17 Motion for Good Faith Settlement Determination between Defendant Casanet and 18 Plaintiff Smarter HOA Solutions Inc. (“HOA”) (collectively, the “Settling Parties”) 19 pursuant to Cal. Code of Civ. Proc. § 877.6. ECF No. 35-1 (“Motion”). 20 Defendant Carmen Peña, proceeding pro se, opposes the motion and Defendant 21 Casanet has filed a reply. ECF Nos. 44 (“Response”), 46 (“Reply”). Plaintiff HOA 22 separately filed a declaration in response to Defendant Peña’s opposition. ECF No. 45. 23 For the reasons discussed below, the Motion is DENIED. 24 I. BACKGROUND 25 This action arises from Plaintiff HOA’s suit to enforce a Non-Competition and 26 Non-Disclosure Agreement (the “Agreement”) between Plaintiff HOA and Defendant 27 Peña, the former co-owner and a former employee of HOA, based on allegations that 1 information to Defendant Casanet. Plaintiff HOA also seeks damages based on 2 allegations that, following the termination of Defendant Peña employment with HOA, 3 Defendant Peña unlawfully retained HOA’s company property. 4 On October 4, 2024, Plaintiff HOA filed suit against Defendant Peña and 5 Defendant Casanet asserting claims for (1) Breach of Written Non-Competition and 6 Non-Disclosure Agreement; (2) Conversion; (3) Intentional Interference with 7 Contractual Relations; (4) Intentional Interference with Prospective Economic 8 Advantage; (5) Trade Secret Misappropriation Under the Defend Trade Secrets Act 9 under18 U.S.C. § 1836; and, (6) Misappropriation of Trade Secrets under Cal. Civ. 10 Code §3426. Plaintiff HOA alleges all six causes of action against Defendant Peña and 11 Counts 3-6 against Defendant Casanet. 12 On May 6, 2025, Defendant Peña moved for judgment on the pleadings arguing, 13 inter alia, the Agreement is void and unenforceable under California state law. ECF 14 No. 20. On July 21, 2025, this Court stayed all proceedings in this case, except for the 15 deadline for Defendant Peña to respond to Plaintiff HOA and Defendant Casanet’s 16 pending discovery requests, pending this Court’s determination of Defendant Peña’s 17 pending motion for judgement on the pleadings. ECF No. 33 (“Order”).1 18 On July 24, 2025, the Settling Parties filed the instant Motion. On August 29, 19 2025, this Court set a briefing schedule requiring Defendant Peña to respond by 20 September 10, 2025, and Defendant Casanet to reply by September 17, 2025. ECF No. 21 43.2 Both Defendant Peña and Defendant Casanet timely filed their briefs by their 22 respective deadlines. ECF Nos. 44, 46. Plaintiff HOA filed a declaration in response 23 to Defendant Peña’s opposition on September 11, 2025. ECF No. 45. 24 25 1 The Court also construed the motion, which was originally styled as a motion to 26 dismiss, as a motion for judgment on the pleadings. ECF No. 33. 27 2 The Motion was originally filed with a hearing date that was not confirmed by the Court as required under Civil Local Rule 7.1(b). ECF No. 43. 1 On October 23, 2025, Defendant Casanet and Plaintiff HOA filed a Stipulation 2 Regarding Confidential Client List informing the Court that Plaintiff HOA will provide 3 counsel for Casanet a list of “Do Not Call” clients, consisting of HOA’s existing clients, 4 and which counsel for Casanet shall not share with Casanet, so that the parties may 5 proceed under the tentative terms of the proposed good faith settlement filed pursuant 6 to the instant Motion. ECF No. 48. 7 On March 27, 2026, this Court issued an order granting in part and denying in 8 part Defendant Peña’s motion for judgment on the pleadings and lifting the stay on 9 proceedings in this case. ECF No. 51. 10 II. DISCUSSION 11 Defendant Casanet argues the proposed settlement is fair, reasonable, and made 12 in good faith pursuant to California Code of Civil Procedure § 877.6. Mot. at 5. 13 Defendant Peña opposes the Motion, arguing the settlement 1) improperly attempts to 14 enforce the Agreement, which is void and unenforceable under Cal. Bus. & Prof. Code 15 §16600, 2) is frivolous, in bad faith, and causes harm to Defendant Peña, and 3) 16 improperly binds non-parties, including Defendant Peña and her immediate family 17 members. Resp. at 2. 18 In response, Defendant Casanet argues that 1) section 16600 is inapplicable to 19 the determination of good faith settlements under section 877.6, but even if it was, the 20 Settlement does not violate section 16600; 2) Defendant Peña fails to articulate a 21 sufficient legal basis in support of her opposition under the applicable standard; 3) the 22 Settlement is only enforceable against the Settling Parties and does not bind non-parties; 23 and, 4) the Settlement is based on good faith negotiations and promotes judicial 24 economy and California public policy. 25 A. Defective Notice Under Fed. R. Civ. P. 7(B)(1) 26 In response to Defendant Peña’s opposition to the instant Motion, Plaintiff HOA 27 filed a declaration requesting that, should the Court consider the merits of Defendant 1 comply with this Court’s Order ordering Defendant Peña to respond to the pending 2 discovery requests or, in the alternative, to lift the stay so that Plaintiff HOA can file a 3 motion for sanctions to help the Court evaluate Defendant Peña’s opposition. Decl. ¶ 4 10. Plaintiff HOA explains that it filed the declaration rather than a noticed motion due 5 to the Court’s stay of all proceedings in this matter, Decl. ¶ 9, and that such relief is 6 necessary to avoid prejudice to the Settling Parties from Defendant Peña’s “refusal to 7 respond to discovery in opposing the motion herein,” Decl. ¶¶ 8, 10. 8 As an initial matter, the Court notes that it can properly consider the merits of 9 Defendant Peña’s opposition without taking further action as requested by Plaintiff 10 HOA given that Defendant Peña filed her opposition pursuant to the briefing schedule 11 set by this Court. ECF No. 43. The Court further reiterates its September 23, 2025, 12 order taking the Motion under submission and deeming the Motion suitable for 13 adjudication without oral argument. ECF No. 47. Accordingly, the Court rejects 14 Plaintiff HOA’s argument that further action is needed to properly consider Defendant 15 Peña’s opposition to the instant Motion. 16 Second, and more importantly, the Court holds that a declaration is not the proper 17 medium for Plaintiff HOA’s requested relief. See Fed. R. Civ. P. 7(B)(1) (“A request 18 for a court order must be made by motion.”). Notwithstanding the stay issued by the 19 Court, which was lifted on March 27, 2026, Plaintiff HOA could have joined Defendant 20 Casanet in replying to Defendant Peña’s opposition or separately filed a noticed motion 21 seeking leave to properly file a motion for the requested relief. 22 As filed, Plaintiff HOA’s request is not properly pled because it does not provide 23 sufficient legal or factual support necessary for the Court to evaluate Plaintiff HOA’s 24 requested relief. For example, in requesting that this Court enforce its Order compelling 25 Defendant Peña to respond to the pending discovery requests, Plaintiff HOA 26 simultaneously alleges that Defendant Peña “refuses to comply with the discovery 27 requests” and that she has “provided incomplete responses” and “boilerplate objections” 1 to allege a challenge to the sufficiency of Defendant Peña’s responses rather than relief 2 for Defendant Peña’s failure to comply with this Court’s order in toto, such a challenge 3 to the sufficiency of Defendant Peña’s responses requires Plaintiff HOA to follow the 4 proper procedures, pursuant to Rule 37 and CivLR 26.1, requiring Plaintiff HOA to file 5 a noticed motion following a good faith effort to meet and confer with Defendant Peña 6 and affording Defendant Peña the proper opportunity to respond. See Fed. R. Civ. P. 7 7(B)(1), 37; CivLR 26.1. 8 In light of the foregoing, including that the stay of proceedings has been lifted 9 and Plaintiff HOA is not precluded from filing the appropriate motion, the Court finds 10 it inappropriate to construe Plaintiff HOA’s declaration as a motion for purposes of 11 assessing the merits thereto. The Court shall consider the merits of any such motion 12 when properly filed according to the appropriate legal standards and offers of proof. 13 Thus, to the extent Plaintiff HOA moves for an order as requested in its 14 declaration, the request is DENIED for failure to comply with the federal rules and this 15 Court’s local rules. Fed. R. Civ. P. 7(B)(1); CivLR 26.1. 16 For the same reasons, the Court shall not consider the substance of Plaintiff 17 HOA’s declaration in assessing the merits of the instant Motion. 18 B. Legal Standard 19 Section 877 of the California Code of Civil Procedure permits a court to approve 20 a settlement if it determines the settlement was made in good faith. Cal. Civ. Proc. 21 Code § 877. The statute provides, in pertinent part: 22 Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or 23 judgment to one or more of a number of tortfeasors claimed to be liable for 24 the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: 25 (a) It shall not discharge any other such party from liability unless 26 its terms so provide, but it shall reduce the claims against the others 27 in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it whichever 1 is the greater. (b) It shall discharge the party to whom it is given from all liability 2 for any contribution to any other parties. 3 4 Id. A determination that the settlement was made in good faith bars any other joint 5 tortfeasor from any further claims against the settling tortfeasor for equitable 6 comparative contribution or partial or comparative indemnity. Section 877.6 7 establishes the process by which a party may move for a determination of good faith 8 settlement. Cal. Civ. Proc. Code. § 877.6. 9 Given that Defendant Peña is appearing pro se, the Court will “liberally construe” 10 Defendant Peña’s pleadings. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“[a] 11 document filed pro se is ‘to be liberally construed’”); see also Fed. R. Civ. P. 8(f) (“All 12 pleadings shall be so construed as to do substantial justice”). 13 1. Federal Court Jurisdiction 14 The Ninth Circuit has held that, even where a settlement agreement provides that 15 California law applies, substantive, but not procedural, provisions of section 877.6 16 apply in federal court to determine whether a party entered into a settlement agreement 17 governed by California law in good faith. Fed. Sav. & Loans Ins. Corp. v. Butler, 904 18 F.2d 505, 511 (9th Cir. 1990) (citing Tech-Bilt, Inc. v. Woodward-Clyde & Assoc,. 698 19 P.2d 159, 166-167 (Cal. 1985)). Here, the Settling Parties move for a good faith 20 determination pursuant to California law. Cal. Code of Civ. Proc. § 877.6. 21 Accordingly, the Court finds it has jurisdiction to review the proposed settlement at 22 issue here to determine whether it was made in good faith. 23 2. Cal. Civ. Proc. Code. § 877.6 24 In Tech-Bilt, Inc. v. Woodward-Clyde & Associates, the California Supreme 25 Court established that a settlement is made in “good faith” under section 877.6 if “the 26 amount of the settlement is within the reasonable range of the settling tortfeasor’s 27 proportional share of comparative liability for the plaintiff’s injuries.” 698 P.2d 159, 1 166-167 (Cal. 1985). The court enumerated six factors courts should consider in 2 determining whether a settlement was made in good faith: 3 1) A rough approximation of the plaintiff's total recovery and the settlor's 4 proportionate liability; 5 2) The amount paid in settlement; 6 3) The allocation of settlement proceeds among plaintiffs; 7 4) A recognition that a settlor should pay less in settlement than if found liable 8 after trial; 9 5) The financial conditions and insurance policy limits of settling defendants; 10 and, 11 6) Whether there is evidence of collusion, fraud, or tortious conduct aimed to 12 injure the interests of nonsettling defendants. 13 Id. According to the court, the “reasonable range” test “leaves substantial latitude to 14 the parties and to the discretion of the trial court” to determine whether a settlement is 15 made in good faith. Id. 16 A good faith determination under section 877.6 is both “fact-sensitive and 17 discretionary,” Shawmut Bank, N.A. v. Kress Assoc., 33 F.3d 1477, 1504 (9th Cir. 1994), 18 and must be made “on the basis of information available at the time of settlement.” 19 Tech-Bilt, 698 P.2d at 166-167 (“[A] defendant’s settlement figure must not be grossly 20 disproportionate to what a reasonable person, at the time of the settlement, would 21 estimate the settling defendant’s liability to be.”). A party objecting to a determination 22 of good faith settlement under section 877.6 has the burden of proof to demonstrate “the 23 settlement is so far ‘out of the ballpark’ . . . as to be inconsistent with the equitable 24 objectives of the statute,” which are “the encouragement of settlements and the 25 equitable allocation of costs among multiple tortfeasors.” Id. (rejecting a definition of 26 “good faith” premised on “the absence of tortious conduct”). 27 3. Cal. Bus. & Prof. Code § 16600 1 valid under Tech-Bilt, the Court must first consider whether the terms of the proposed 2 Settlement render it void under California law. Reply at 2. Defendant Casanet argues 3 that Defendant Peña’s reliance on section 16600 is misplaced because the statute has no 4 bearing on the determination of good faith settlements under section 877.6. 5 As an initial matter, the Court agrees with Defendant Peña that the Court must 6 begin by considering whether the no-hire provisions are enforceable under Cal. Bus. & 7 Prof. Code §16600. The Court finds they are not. 8 As previously explained by this Court, the prohibitions established by section 9 16600 are not limited to noncompetition agreements or covenants not to compete 10 located in employment agreements. See ECF No. 51 at 7 (citing Golden v. Cal. Emerg. 11 Physicians Med. Grp. (Golden I), 782 F.3d 1083, 1092 (9th Cir. 2015) (holding that 12 section 16600 extends to contracts beyond noncompetition agreements). Rather, they 13 “extend[] to any ‘restraint of a substantial character,’ no matter its form or scope.” 14 Golden I, 782 F.3d at 1092. In fact, in Golden I, the Ninth Circuit reversed the district 15 court’s order enforcing a settlement agreement in an employment discrimination action, 16 holding that the district court abused its discretion by categorically excluding the 17 settlement agreement from the ambit of § 16600 solely on the ground that it did not 18 constitute a covenant not to compete. Id. at 1093. Outside of an employment context, 19 both the California Supreme Court and the Ninth Circuit have confirmed that section 20 16600 applies to contractual restraints on business operations and commercial dealings, 21 subject to review under a “rule of reason” standard. See Ixchel Pharma, LLC v. Biogen, 22 Inc., 470 P.3d 571, 582 (Cal. 2020); see also Ixchel Pharma, LLC v. Biogen, Inc., 930 23 F.3d 1031, 1035-37 (9th Cir. 2019), cert. question answered, 470 P.3d 571 (Cal. 2020). 24 Accordingly, the Court rejects Defendant Casanet’s argument that section 16600 has no 25 bearing on this Court’s determination that the settlement was made in good faith. 26 Relevant here, the Settlement agreement contains the following provisions: 27 (E) CASANET will not solicit or enter into contracts with a SMARTER HOA customer for the period of Carmen Peña’s non-compete term in 1 Riverside County or San Diego County (through 11:59 p.m. on June 23, 2028). Should any SMARTER HOA inquire or contact CASANET for 2 HOA management services prior to June 23, 2028, then CASANET will reply that it is unable to assist [the Customer] at this time. This applies to 3 CASANET and/or any other company owned and operated by 4 CASANET’s owners, officers, members, shareholders to prevent “going around” the settlement agreement and competing by using another 5 company name to do the work CASANET is currently performing. 6 (F) SMARTER HOS will provide a “no call list” of clients which will be 7 provided confidentially to CASANET. Counsel will add terms to the settlement agreement that will protect the list of clients from being used 8 for any purpose other than for use of complying with the settlement 9 agreement. This will involve signature on the settlement agreement or confidentiality Agreements by any person who will be referring to the list. 10 Any future disclosure of said list to third parties will not be covered by the 11 Civil Code §1542 waiver and may be subject to a separate legal action. 12 (G) CASANET will not hire or retain Carmen Peña or any of her immediate family members in any capacity (spouse, domestic partner, 13 siblings, parents, children, if any) or take any action which causes 14 Carmen Peña to violate the terms of the non-competition agreement between Carmen Peña and SMARTER HOA. 15 (H) CASANET will not provide funding to Carmen Peña for any 16 reason related to work in HOA. 17 (I) CASANET may retain its existing HOA customers, Verona 18 Homeowners’ Association, Arboretum Homeowners’ Association, and Orangewood Villas Homeowners’ Association. 19 ECF No. 35 at 3 (“Settlement”) (emphasis added). 20 Defendant Casanet admits that “the proposed settlement agreement contains a 21 no-hire provision,” but argues “this term is not illegal” because the “no-employment 22 term in the settlement agreement does not restrict Peña from practicing her profession 23 generally” or “impose any restrictions on Peña’s ability to engage in her profession with 24 other competitors” and “is solely a resolution of the claims between Smarter HOA and 25 Casanet.” Reply at 3. Defendant Casanet further argues that the “proposed Settlement 26 Agreement does not restrict Peña, her family members, or any other non-party from 27 competing or conducting business in their chosen fields,” “does not enforce a non- 1 compete or non-solicitation provisions between Defendant Casanet and Defendant 2 Peña,” and does not “attempt[] to bind non-parties, including [Defendant Peña’s] family 3 members,” including because Defendant Peña has failed to present evidence regarding 4 any impacts of the Settlement on her current or future employment. Reply at 3, 5. 5 By their plain terms, the Court finds that, contrary to Defendant Casanet’s 6 arguments, these provisions of the proposed Settlement categorically fall under the 7 purview of section 16600 given that, at a minimum, they affect Defendant Peña and her 8 family’s rights to be employed in the future and thereby implicate “policy 9 considerations specific to employment mobility and competition.” Ixchel, 470 P.3d at 10 587 (citing Edwards v. Arthur Andersen LLP, 189 P.3d 285, 292 (Cal. 2008)). 11 Accordingly, the Court must now consider whether the terms of the Settlement should 12 be reviewed under the “substantial restraint” standard, which governs employee 13 noncompete agreements, or the “rule of reason” standard governing business 14 operations. Golden v. Cal. Emerg. Physicians Med. Grp. (Golden II), 896 F.3d 1018, 15 1026 (9th Cir. 2018); Ixchel, 470 P.3d at 587. 16 In Ixchel Pharma, LLC v. Biogen, Inc., as a matter of first impression, the 17 California Supreme Court considered whether section 16600 applied to evaluate the 18 validity of a corporate defendant’s settlement provision requiring another company to 19 terminate its existing collaboration agreement with the corporate plaintiff. 470 P.3d at 20 573. The court found that it did, holding that the court’s existing precedent supports a 21 reading of section 16600 that “applie[s] a reasonableness standard to contractual 22 restraints on business operations and commercial dealings,” notwithstanding the court’s 23 landmark ruling in Edwards v. Arthur Andersen LLP “strictly interpreting section 16600 24 to invalidate noncompetition agreements following the termination of employment or 25 sale of interest in a business.” 470 P.3d at 588 (citing Edwards, 189 P.3d at 292). The 26 Ixchel court explained: 27 [T]he rationale in Edwards focused on policy considerations specific to employment mobility and competition: The law protects Californians and 1 ensures that every citizen shall retain the right to pursue any lawful employment and enterprise of their choice. It protects the important legal 2 right of persons to engage in businesses and occupations of their choosing. 3 Id. at 587 (internal citations and quotations omitted). Accordingly, the court concluded 4 that “[w]e do not disturb the holding in Edwards and other decisions strictly interpreting 5 section 16600 to invalidate noncompetition agreements following the termination of 6 employment or sale of interest in a business.” Id. at 588 (emphasis added). 7 Here, Defendant Casanet admits that the Settlement contains a no-hire provision 8 as to Defendant Peña and that the purpose of the Settlement is to resolve “the claims 9 between Smarter HOA and Casanet,” some of which stem from allegations that 10 Defendant Peña breached the noncompetition and nonsolicitation clauses of the 11 Agreement by working with or providing services to Defendant Casanet. The proposed 12 Settlement expressly states that “CASANET will not . . . take any action which causes 13 Carmen Peña to violate the terms of the non-competition agreement between Carmen 14 Peña and SMARTER HOA” and that “CASANET will not solicit or enter into contracts 15 with a SMARTER HOA customer for the period of Carmen Peña’s non-compete term.” 16 Moreover, Defendant Casanet admits that, although Defendant Peña was previously 17 employed by Plaintiff HOA, neither she nor her immediate family members have ever 18 been employed by Defendant Casanet. Reply at 3, 5. 19 Taking these facts as true, it follows that the terms of the proposed Settlement 20 directly foreclose Defendant Peña and her immediate family members’ future 21 employment opportunities with Defendant Casanet “in any capacity” and without any 22 limitations, and indirectly through its application to “any other company owned and 23 operated by CASANET’s owners, officers, members, shareholders to prevent “going 24 around” the settlement agreement and competing by using another company name to do 25 the work CASANET is currently performing.” Thus, although the Settlement impacts 26 the commercial dealings between Defendant Casanet and Plaintiff HOA, the challenged 27 terms of the proposed Settlement stem from and seek to implement the terms of “[the 1 Agreement] following the termination of employment or sale of interest in a business.” 2 Independently from the Agreement, the Court also finds the challenged terms of the 3 proposed Settlement also implicate the policies of open competition and employee 4 mobility because they impact the present and future employment opportunities of 5 Defendant Peña and her immediate family members. Golden II, 896 F.3d at 1024 (citing 6 Edwards, 189 P.3d at 291). Accordingly, the Court finds the challenged terms of the 7 proposed Settlement must therefore be reviewed under the “substantial restraint” 8 standard of Edwards rather than the rule of reason standard in Ixchel. 9 As previously discussed by this Court, a contractual restraint qualifies as a 10 “restraint of substantial character” if the restraint “significantly or materially impedes a 11 person’s lawful profession, trade, or business.” ECF No. 51 at 7 (quoting Golden II, 12 896 F.3d at 1024); see also Int’l Bus. Machs. Corp. v. Bajorek, 191 F.3d 1033, 1041 13 (9th Cir. 1999) (“We are not free to read California law without deferring to our own 14 precedent on how to construe it.”). “To meet this standard, a provision need not 15 completely prohibit the business or professional activity at issue, nor does it need to be 16 sufficient to dissuade a reasonable person from engaging in that activity.” Golden II, 17 896 F.3d at 1024 (citing Edwards, 189 P.3d at 292). Rather, “its restraining effect must 18 be significant enough that its enforcement would implicate the policies of open 19 competition and employee mobility that animate section 16600.” Id. (citing Edwards, 20 189 P.3d at 291). Because “a restraint can be ‘substantial’ even if it is reasonable and 21 even if it is narrow,” a contractual restraint will rarely be “so insubstantial that it escapes 22 scrutiny under section 16600.” Id. at 1023-24 (citing Edwards, 189 P.3d at 290-293). 23 As discussed, here, Defendant Casanet argues that even though the Settlement 24 contains a no-hire provision, the term is not “illegal” under section 16600 because it 25 falls within the exception of section 16601, is solely a resolution of the claims between 26 the Settling Parties, and does not impose restrictions on Defendant Peña or her family 27 member’s ability to engage in their profession with other competitors. Reply at 2-3. 1 and finds that the “restraining effect” of the challenged provisions is “significant enough 2 that its enforcement would implicate the policies of open competition and employee 3 mobility that animate section 16600.” Edwards, 189 P.3d at 291; see also VL Sys., Inc. 4 v. Unisen, Inc., 61 Cal. Rptr. 3d 818, 825 (Cal. Ct. App. 2007) (finding a no-hire 5 provision between two businesses void because the “no-hire provision goes far beyond 6 what is necessary to protect [the business’s] legitimate interests and results in a situation 7 where the opportunities of employees are restricted without their knowledge and 8 consent”). Given that the proposed Settlement is not related to the sale of a business as 9 required under section 16601, the Court finds the proposed Settlement violates section 10 16600 without exception. See Edwards, 189 P.3d at 297; see also ECF No. 51 at 9–16 11 (analyzing § 16601 and discussing Fillpoint, LLC v. Maas, 146 Cal. Rptr. 3d 194, 204 12 (Cal. Ct. App. 2012) which found a noncompetition covenant made pursuant to the sale 13 of a business was void as inconsistent with the terms and purposes of § 16601). 14 In addition, to the extent the proposed Settlement enforces the terms of the 15 Agreement, the Court adopts the holding in its previous order in finding that the 16 proposed Settlement is void under § 16600. ECF No. 51 at 18; see also Silguero v. 17 Creteguard, Inc., 113 Cal. Rptr. 3d 653, 660-661 (Cal. Ct. App. 2010), as modified on 18 denial of reh’g (Aug. 16, 2010) (holding “[a business] should not be allowed to 19 accomplish by indirection that which it cannot accomplish directly” upon finding an 20 “understanding” between two businesses “tantamount to a no-hire agreement” and 21 therefore unenforceable because it “unfairly limit[s] the mobility of an employee,” as 22 prohibited under section 16600) (internal citations and quotations omitted). 23 In sum, although Defendant Peña fails to argue why the proposed Settlement is 24 not made in “good faith” under the Tech-Bilt factors, the Court finds it unnecessary to 25 evaluate those factors at this time in light of the Court’s holding that, even if the 26 proposed Settlement was made in “good faith” pursuant to Cal. Civ. Proc. Code. § 27 877.6, the proposed Settlement is unenforceable under Cal. Bus. & Prof. Code § 16600. 1 || settlements, as well as this Court’s interest in judicial economy, the Court finds 2 || California’s strong public policy of permitting employees the right to pursue a lawful 3 ||occupation of their own choice outweighs any policy considerations in favor of 4 || promoting settlements and judicial economy. 5 IN. CONCLUSION 6 Defendant Pefia has met her burden to demonstrate that, in its current form, the 7 || proposed Settlement is unenforceable under California state law and public policy. 8 Accordingly, the Court HEREBY ORDERS the Settlement is VOID and 9 || UNENFORCEABLE pursuant to Cal. Bus. & Prof. Code § 16600. IT IS FURTHER 10 || ORDERED the motion for good faith settlement is DENIED.

12 || DATED: March 27, 2026 13 JQHN A. HOUSTON SNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14