Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 NEOLOGY, INC., Case No.: 3:25-cv-01744-JES-BJW 12 Plaintiff, ORDER: 13 v. (1) GRANTING IN PART AND 14 JOSEPH N. MULLIS; QORE4 LLC; and DENYING IN PART DEFENDANTS’ DOES 1 to 20, 15 MOTION TO STRIKE AND Defendants. 16 (2) DENYING DEFENDANTS’ 17 MOTION TO DISMISS 18 19 Before the Court is a motion to strike and motion to dismiss by Defendants Joseph 20 N. Mullis (“Mullis”) and QORE4 LLC (“QORE4”) (collectively, “Defendants”). ECF No. 21 34. Plaintiff Neology, Inc. (“Plaintiff” or “Neology”) alleges that Mullis, a former 22 employee, wrongfully obtained and used its trade secrets and confidential information to 23 benefit his new company QORE4, and made improper statements to Neology’s customers 24 to interfere with its business. ECF No. 31 (“FAC”) ¶ 1. Defendants argue that the claims 25 arise in part from protected speech that should be stricken under California’s anti-SLAPP 26 law, and that the claims are otherwise deficient. ECF No. 34-1 (“Mot.”) at 9. For the 27 reasons set forth below, the Court GRANTS in part and DENIES in part the motion to 28 strike and motion to dismiss. 1 I. BACKGROUND 2 Neology is a technology company that specializes in radio-frequency identification 3 (“RFID”) technology used in automobile toll systems around the world. FAC ¶ 22. In 4 August of 2003, Neology hired Mullis as an Operations Manager. Id. ¶ 27. He was 5 promoted to Director of Operations and then General Manger for the United States, a title 6 he held until he left the company on September 30, 2022. Id. 7 As General Manger, Mullis was responsible for high-level business management and 8 strategy functions, giving him access to confidential business information. Id. ¶¶ 28, 31. 9 He entered into an Employment Agreement (the “Employment Agreement”) with Neology 10 when he was appointed General Manager, which contained the following provisions 11 regarding confidentiality: 12 Section 9.2: Restrictions on Use or Disclosure of Confidential Information. Employee shall keep the Confidential Information in absolute confidence both 13 during the Employment Period and after the Termination Date, regardless of 14 the reason for such termination. Employee agrees that Employee will not, at any time, disclose to others, use for Employee’s benefit, or the benefit of any 15 other entity or person other than Company, or otherwise take or copy any such 16 Confidential Information, whether or not developed by Employee except as required in Employee’s duties to Employer. 17 18 Section 9.4: Return of Confidential Information and Property. When the Employment Period terminates, regardless of the reasons for such termination, 19 Employee will promptly turn over to Employer in good condition all 20 Company property in Employee’s possession, or control, including but not limited to all originals, copies of, or electronically stored documents or other 21 materials containing Confidential Information, regardless of who prepared 22 them. In the case of electronically stored information retained by Employee outside of Company’s electronic systems, Employee will promptly make a 23 hard copy of such information in paper, audio recording, disc format, or other 24 format requested by Employer, provide that copy to Employer, and then destroy all electronically stored information. Further, Employee agrees to 25 provide Employer with written confirmation that all Confidential Information 26 in the Employee’s possession, or to which the Employee has access, has been turned over to Employer. 27 28 1 Section 9.5: Confidential Information and Trade Secrets of Others. Employee agrees that he will not disclose or otherwise use the confidential information 2 or trade secrets of any third party which Employee learns of prior to or 3 otherwise outside the scope of his employment with Employer.

4 Id. ¶ 32. Section 9.1 of the Employment Agreement defined Confidential Information as 5 follows: 6 any information which Employee learns of or develops during the 7 Employment Period that derives independent economic value from being not generally known or readily ascertainable by other persons who could obtain 8 economic value from its disclosure or use, and includes, but is not limited to, 9 trade secrets, Inventions as defined in Section 10 below, financial information, personnel information, and information relating to such matters as existing or 10 contemplated products, services, profit margins, fee schedules, pricing, 11 design, processes, formulae, business plans, sales techniques, marketing techniques, training manuals and materials, policies or practices related to 12 Company’s business, personnel or other matters, computer databases, 13 computer programs, software and other technology, customer lists and requirements, vendor lists, or supply information. Confidential Information 14 includes such information of Company, its customers, vendors, and other third 15 parties or entities with whom Company does business.

16 Id. ¶ 33. Section 15.11 stated that all obligations under Section 9 of the Employment 17 Agreement would survive termination of the Agreement and termination of Mullis’ 18 employment of Neology, regardless of the reason for termination. Id. ¶ 34. Mullis was 19 terminated from Neology in September 2022. Id. ¶ 35. 20 Neology requires all new hires to sign confidentiality agreements, and requires 21 executives to sign employment agreements with confidentiality provisions. Id. ¶ 36. 22 Neology’s Employee Handbook also states that all information stored on, or received or 23 transmitted using, its computer systems are its sole and exclusive property. Id. ¶ 37. 24 Neology mandates use of passwords and other computer security measures on its devices, 25 and does not allow employees to use personal devices on its network without prior 26 approval. Id. Neology also requires its business partners to enter into non-disclosure 27 28 1 agreements, and monitors public records requests which may involve confidential 2 information. Id. ¶¶ 38-39. 3 Neology alleges that after Mullis left the company, it discovered that he had been 4 sending documents containing confidential and trade secret information from his Neology 5 email to his personal email account. Id. ¶ 40. Neology alleges that Mullis began sending 6 emails in March 2020 and continued until his departure in September 2022. Id. Neology 7 alleges that the emails included confidential and trade secret information regarding 8 Neology’s financials and business strategies, information related to its patented technology 9 and supply chain, information detailing its partnerships and work for end customers, and 10 information related to its opportunities for customer or partner relationships. Id. ¶¶ 41-67. 11 Neology alleges that Mullis’ activity of sending documents from his business email to his 12 personal email was unauthorized and served no business need. Id. ¶ 72. 13 On August 8, 2023, Neology sent Mullis a letter demanding that he identify and 14 return any confidential information he sent from his business email to his personal email, 15 destroy any such documents in his possession, and confirm whether he had used such 16 documents in connection with business activity outside Neology. Id. ¶ 77. Over the course 17 of several correspondences, Mullis responded that he only retained materials regarding a 18 legal dispute regarding equity, that he did not have some specific documents, and that other 19 documents were subject to public domain and not trade secret related. Id. ¶¶ 80-82. 20 Neology continued to seek further assurances regarding the documents and their deletion. 21 Id. ¶¶ 83-84. Mullis ultimately responded that he had met the obligations set forth in 22 Neology’s email, and that the documents Neology had identified were not confidential. Id. 23 ¶ 85. 24 On July 18, 2023, Mullis officially launched his new company QORE4. Id. ¶ 90. In 25 a press release, QORE4 described itself as a product and service provider focused on RFID 26 technology. Id. Former Neology Vice President of Sales and Strategy Manual Moreno, who 27 Neology alleges also sent confidential and trade secret information from his business email 28 to his personal email, joined QORE4 shortly after its launch. Id. ¶¶ 68, 91. 1 Neology alleges that QORE4 has used Neology’s confidential information and trade 2 secrets in entering into the market. Id. ¶ 93. Neology alleges that Mullis has submitted 3 proposals on behalf of QORE4 which deceptively present Neology’s work as QORE4’s. 4 Id. ¶ 95. Neology alleges that it became aware of these representations in July 2024 when 5 Mullis, on behalf of QORE4, submitted a proposal to a state agency claiming, among other 6 things, that QORE4 had a proven track record with that agency but referring to Neology’s 7 work. Id. ¶¶ 95-96. 8 Neology also alleges that beginning in September 2024, Mullis, on behalf of 9 QORE4, made numerous public records requests to agencies including at least nine of 10 Neology’s customers with the objective of obtaining confidential and trade secret 11 information. Id. ¶ 97. In April 2025, when an agency informed it that Mullis and QORE4 12 had requested documents and contested redactions for confidentiality. Id. ¶ 98. Neology 13 alleges that QORE4 intends to use the public records process to obtain information that it 14 will use alongside other wrongfully obtained information to undercut Neology in the 15 market. Id. ¶ 100. 16 Neology also alleges that Mullis sent emails from a fictitious entity calling itself 17 “Consumer Protection Advocates” (“CPA”) to Neology’s customers beginning in March 18 of 2025. Id. ¶ 102. Neology names the following customers as recipients of the emails: the 19 Los Angeles Department of Transportation, the Colorado Department of Transportation, 20 the Oklahoma Turnpike Authority, the Bay Area Rapid Transit, the Utah Department of 21 Transportation, the Riverside County Transportation Commission, the Northwest Parkway, 22 E-470 Public Highway Authority, the Orange County Transportation Authority, the North 23 Texas Tollway Authority, and the Kansas Turnpike Authority. Id. The CPA emails, which 24 Neology attached a sample of to the complaint, purport to highlight “critical technical flaws 25 affecting tolling and consumer billing across [the customer’s] toll road systems,” and claim 26 that Neology’s technology uses “an outdated RFID integrated circuit” and that “Neology 27 remains the only vendor still supplying this outdated technology.” FAC at 60-61, Exh. D 28 (“Sample email”). Neology alleges that the statements in the emails injured its reputation, 1 and required it to spend significant resources on public relations efforts. Id. ¶ 110. Neology 2 states that, through discovery in this action, it has learned that Mullis sent these emails 3 while acting as CEO and sole managing member of QORE4. Id. ¶ 108. Neology alleges 4 that Mullis knew of its contracts with the parties he emailed from his work at Neology and/ 5 or from public records requests. Id. ¶ 109. 6 Neology brings the following claims: (1) breach of contract, against Mullis; (2) 7 intentional interference with contractual relations regarding the contract between Neology 8 and Mullis, against QORE4; (3) misappropriation of trade secrets under California law, 9 against Mullis and QORE4; (4) misappropriation of trade secrets under federal law, against 10 Mullis and QORE4; (5) intentional interference with contractual relations regarding 11 contracts between Neology and its customers, against Mullis and QORE4; (6) trade libel 12 against Mullis and QORE4; and (7) unfair competition against Mullis and QORE4. Id. ¶¶ 13 111-168. 14 II. LEGAL STANDARD 15 A. Cal. Civ. Proc. § 425 16 California’s Anti-SLAPP statute states: “A cause of action against a person arising 17 from any act of that person in furtherance of the person’s right of petition or free speech 18 under the United States Constitution or the California Constitution in connection with a 19 public issue shall be subject to a special motion to strike, unless the court determines that 20 the plaintiff has established that there is a probability that the plaintiff will prevail on the 21 claim.” Cal. Civ. Proc. Code § 425.16(b)(1). 22 Federal courts use a two-step procedure in California Anti-SLAPP claims. Makaeff 23 v. Trump Univ., LLC, 715 F.3d 254, 261–63 (9th Cir. 2013) (en banc). First, the moving 24 defendant must show that the action arises from protected activity. Id. at 261. Second, the 25 burden shifts to the plaintiff to show a probability of prevailing on the claims at issue in 26 order to survive dismissal. Id. “Under this standard, the claim should be dismissed if the 27 plaintiff presents an insufficient legal basis for it, or if, on the basis of the facts shown by 28 1 the plaintiff, ‘no reasonable jury could find for the plaintiff.’” Id. (quoting Metabolife Int'l, 2 Inc. v. Wornick, 264 F.3d 832, 840 (9th Cir.2001)). 3 B. Federal Rule of Civil Procedure 12(b)(6) 4 A motion to dismiss under Federal Rule of Civil Procedure (“FRCP”) 12(b)(6) for 5 failure to state a claim tests the legal sufficiency of a plaintiff’s claim. Navarro v. Block, 6 250 F.3d 729, 732 (9th Cir. 2001). When considering the motion, the court must accept as 7 true all well-pleaded factual allegations in the complaint. Bell Atlantic Corp. v. Twombly, 8 550 U.S. 544, 555 (2007). The court need not accept as true legal conclusions cast as factual 9 allegations. Id.; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“[t]hreadbare recitals of the 10 elements of a cause of action, supported by mere conclusory statements” are insufficient). 11 A complaint must “state a claim for relief that is plausible on its face.” Twombly, 12 550 U.S. at 570. To survive a motion to dismiss, a complaint must include non-conclusory 13 factual content. Id. at 555; Iqbal, 556 U.S. at 679. The facts and the reasonable inferences 14 drawn from those facts must show a plausible—not just a possible—claim for relief. 15 Twombly, 550 U.S. at 556; Iqbal, 556 U.S. at 679; Moss v. U.S. Secret Service, 572 F.3d 16 962, 969 (9th Cir. 2009). The focus is on the complaint, as opposed to any new facts alleged 17 in, for example, the opposition to a defendant’s motion to dismiss. See Schneider v. 18 California Dep’t of Corrections, 151 F.3d 1194, 1197 n.1 (9th Cir. 1998), reversed and 19 remanded on other grounds as stated in 345 F.3d 716 (9th Cir. 2003). “Determining 20 whether a complaint states a plausible claim for relief [is] . . . a context-specific task that 21 requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 22 556 U.S. at 679. The “mere possibility of misconduct” or “unadorned, the defendant- 23 unlawfully-harmed me accusation[s]” fall short of meeting this plausibility standard. Id.; 24 see also Moss, 572 F.3d at 969. 25 III. DISCUSSION 26 A. Anti-SLAPP Motion 27 Defendants move to strike Counts III through VII under California’s anti-SLAPP 28 statute on the basis that the CPA emails and record requests are protected speech-based 1 activities.Mot. at 9. Plaintiff contests the motion. ECF No. 35 (“Opp’n.”) at 8. At the first 2 step of this motion, Defendant bears the burden of showing that the emails and records 3 requests (1) are protected activity under the statute, and (2) give rise to a claim for relief. 4 See Park v. Bd. of Trs. of California State Univ., 2 Cal. 5th 1057, 1062 (2017). At the 5 second step, the burden shifts to Plaintiff to show that it has a probability of prevailing on 6 its claims. See id. at 1061. 7 The anti-SLAPP issues are well briefed by the parties, and the Court agrees with 8 each in part but neither in whole. In the analysis that follows, the Court finds that the CPA 9 emails and record requests constitute protected speech under the statute, and that the 10 commercial speech exception argued by Plaintiff does not apply. Next, the Court finds that 11 Count V (intentional interference with contractual relations as to customers), Count VI 12 (trade libel), parts of Count VII (unfair competition under § 17200) arise from protected 13 activity, while Counts III (trade secret misappropriation under California law) does not, 14 and Count IV (trade secret misappropriation under federal law) is not subject to a motion 15 to strike. The Court also finds that only two challenged individual allegations in the body 16 of the complaint are subject to a motion to strike because they are alleged to justify a 17 remedy, while other challenged individual allegations are not because they are merely 18 alleged to provide context. At the second step, the Court finds that Plaintiff has not shown 19 a probability of prevailing on the claims for relief arising from protected conduct. Counts 20 V and VI, as well as several identified individual allegations, are thus stricken from the 21 complaint as detailed below. 22 1. Writing and Conduct in Furtherance of Speech on a Public Issue 23 The first issue is whether the records requests and CPA emails fall within the 24 purview of the anti-SLAPP statute. The anti-SLAPP statute applies to “any written or oral 25 statement or writing made in a place open to the public or a public forum in connection 26 with an issue of public interest” or “any other conduct in furtherance of the exercise of ... 27 the constitutional right of free speech in connection with a public issue or an issue of public 28 interest.” Cal. Civ. Proc. Code §§ 425.16(e)(3)–(e)(4). “California courts have broadly 1 construed public interest to include not only governmental matters, but also private conduct 2 that impacts a broad segment of society and/or that affects a community in a manner similar 3 to that of a governmental entity.” Resolute Forest Prods., Inc. v. Greenpeace Int'l, 302 F. 4 Supp. 3d 1005, 1025 (N.D. Cal. 2017) (cleaned up). 5 Here, the Court agrees with Defendants that both the CPA emails and public records 6 requests facially fall within the statute’s purview. See Mot. at 12-16. The emails and the 7 records requests concerned Neology’s business with its transportation agency customers. 8 FAC ¶¶ 97, 102. Neology produces technology that transportation entities use for “tolling, 9 automated vehicle identification and classification, data processing, and digital payment 10 systems” on public roads. Id. ¶¶ 22-26. Defendants sent the CPA emails and record requests 11 to customers that manage major public roadways and means of public transit. Id. ¶¶ 97, 12 102. Public road tolling systems are a public issue, and record requests and 13 communications to public emails are communications in public fora. See Cal. Civ. Proc. 14 Code §§ 425.16(e)(3)–(e)(4). The fact that the emails were sent in the name of a fake 15 organization and by email does not impact the analysis of their protection. See McIntyre v. 16 Ohio Elections Comm’n, 514 U.S. 334, 341-342 (holding that anonymous speech and use 17 of pseudonyms are protected “[w]hatever the motivation may be”); Packingham v. North 18 Carolina, 582 U.S. 98, 104, 137 (2017) (explaining that the internet is “the most important 19 place[] (in a spatial sense) for the exchange of views.”); see also Bassi v. Bassi, 101 Cal. 20 App. 5th 1080, 1098 (2024) (finding that emails even between private parties regarding a 21 public matter constituted protected speech). Thus, both the CPA emails and the record 22 requests fall within the statute’s definition of protected speech unless an exception applies. 23 2. The Commercial Speech Exception 24 Neology argues that the CPA emails are nonetheless actionable because they fit 25 within the commercial speech exception to the anti-SLAPP statute. Opp’n at 10-11. The 26 Court disagrees. 27 The commercial speech exception provides that the anti-SLAPP statute does not 28 apply to certain business-related speech. Cal. Civ. Proc. Code § 425.17(c). The purpose of 1 the commercial speech exception is to “exempt[] from the reach of the anti-SLAPP statute 2 cases involving comparative advertising by businesses.” Mendoza v. ADP Screening & 3 Selection Servs., Inc., 182 Cal. App. 4th 1644, 1652 (Ct. App. 2010). The exception is 4 “narrow” and only applies to “speech or conduct by a person engaged in the business of 5 selling or leasing goods or services when [...] that challenged conduct pertains to the 6 business of the speaker or his or her competitor.” Dean v. Friends of Pine Meadow 21 Cal. 7 App. 5th 91, 105 (2018). California courts construe the requirements of the statute strictly, 8 and have explained that an economic motivation alone is insufficient to remedy a deficient 9 showing of its application. See, e.g, Mendoza, 182 Cal. App. 4th at 1651 (strictly 10 interpreting the “competitor” requirement of the statute); Muddy Waters, LLC, v. Superior 11 Court, 62 Cal. App. 5th 905, 919 (2021) (holding that a defendant did not meet the 12 competitor requirement despite being supported and funded by the plaintiff’s direct 13 competitors). “The burden of proof as to the applicability of section 425.17's commercial 14 speech exemption falls on the party seeking the benefit of it.” Neurelis, Inc. v. Aquestive 15 Therapeutics, Inc., 71 Cal. App. 5th 769, 786 (Ct. App. 2021). 16 The issue in this case is whether the anonymous CPA emails fall under the 17 commercial speech exception without ever mentioning or promoting QORE4 or its 18 technology, or promoting a sale. See Opp’n at 10-11; ECF No. 36 (“Reply”) at 10-14. 19 Plaintiff argues that Mullis should not be allowed to escape liability through careful 20 wording when he was plainly motivated to send the emails by his business interests. Opp’n 21 at 13-14. However, as Defendants point out, economic motivation alone is insufficient to 22 show commercial speech. See Reply at 12; Muddy Waters, 62 Cal. App. 5th at 919; see 23 also Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 67 (1983) (holding held that a 24 party’s “economic motivation” for speech “would clearly be insufficient by itself to turn 25 the materials into commercial speech.”). Nor is it clear that a speaker is “engaged in the 26 business of selling or leasing goods or services” when he speaks anonymously on a public 27 issue, even if he is personally interested as a competitor. See Friends of Pine Meadow, 21 28 Cal. App. 5th 91 at 105. Additionally, the Court is unpersuaded that anonymous negative 1 speech in public fora on public issues is “comparative advertising” as contemplated by the 2 California legislature. Mendoza, 182 Cal. App. 4th at 1652. 3 Plaintiff’s argument that the exception applies relies on two federal district court 4 cases: Alfasigma and Hicks. Opp’n at 12-14 (citing Hicks v. Grimmway Enters., Inc., No. 5 22-CV-2038 JLS (DDL), 2023 WL 3829689 (S.D. Cal. June 5, 2023) and Alfasigma USA, 6 Inc. v. First Databank, Inc., 398 F. Supp. 3d 578, 586 (N.D. Cal. 2019). Hicks is not helpful 7 in deciding the determinative issue here, because the court in that case relied on a variety 8 of statements promoting the defendants’ own business to make its decision. See 2023 WL 9 3829689, at *3. This case is also distinct from Alfasigma (and its progenitor Exceltis) in 10 three key respects. See generally FAC; cf. Alfasigma, 298 F. Supp. 3d at 586; Exeltis USA 11 Inc. v. First Databank, Inc., No. 17-cv-04810-HSG, 2017 WL 6539909, at *13 (N.D. Cal. 12 Dec. 21, 2017) (expressing “concerns about expanding the commercial speech doctrine,” 13 but applying it to preferential database treatment). First, emails regarding public contracts 14 sent directly to a government agency are more akin to core petitioning activity than listings 15 on a commercial database, giving the Court greater pause in allowing them to give rise to 16 liability. See id. Second, product databases are comparative in nature, fitting Exeltis and 17 Alfasigma more squarely into California caselaw on comparative advertising than the 18 present case. See id. And third, unlike the plaintiffs in Exeltis and Alfasigma, Neology has 19 not alleged non-conclusory facts showing that customers have relied on the speech at issue 20 to make commercial decisions. See id. (highlighting the importance of customer reliance 21 to the fact-intensive analysis). The fact that Neology spent money on public relations work 22 to counteract the CPA emails does not fill this gap: by first amendment principles, a 23 company’s participation in the marketplace of ideas is distinct from commercial losses. See 24 FAC ¶ 110; see also Whitney v. California, 274 U.S. 357, 377 (1927) (J. Brandeis, 25 concurring), overruled on other grounds by Brandenburg v. Ohio, 395 U.S. 444 (1969) (“If 26 there be time to expose through discussion the falsehood and fallacies, to avert the evil by 27 the processes of education, the remedy to be applied is more speech, not enforced 28 silence.”). 1 Whether false statements about a business competitor without self-promotion 2 constitute commercial speech is a matter of explicitly unsettled law, which the Court does 3 not decide today. See Kasky v. Nike, Inc., 27 Cal. 4th 939, 962 (2002). Nonetheless, the 4 Court declines Plaintiff’s invitation to further expand the commercial speech exception to 5 the anti-SLAPP statute to speech concerning public contracts where no commercial 6 transaction was proposed. See Exeltis, 2017 WL 6539909 at *13 (expressing “concerns 7 about expanding the commercial speech doctrine”); Bolger, 463 U.S. at 66 (defining 8 commercial speech as “speech which does no more than propose a commercial 9 transaction.”) (cleaned up). Plaintiff has not met its burden to show that the exception 10 applies. The Court thus proceeds to the next step to determine which, if any, claims and 11 allegations arise from the CPA emails and record requests as protected speech. 12 3. “Arising from” 13 The parties disagree over which, if any, claims arise from the protected speech at 14 issue. Mot. at 17; Opp’n at 14-17. Defendants move to strike Plaintiff’s trade secret 15 misappropriation (Count III), intentional interference as to customers (Count V), trade libel 16 (Count VI), and UCL (Count VII) claims as arising from the protected speech discussed 17 above. Mot. at 12-14. In the alternative, Defendants move to strike individual allegations 18 which mention the protected activity. Id. at 17. 19 Protected conduct gives rise to a claim for relief when “that activity underlies or 20 forms the basis for the claim.” Park, 2 Cal. 5th at 1062. Therefore, “a claim may be struck 21 only if the speech or petitioning activity itself is the wrong complained of, and not just 22 evidence of liability or a step leading to some different act for which liability is asserted.” 23 Id. at 1060 (emphasis in original). “[A] defendant in an ordinary private dispute cannot 24 take advantage of the anti-SLAPP statute simply because the complaint contains some 25 references to speech or petitioning activity by the defendant.” Sansoe v. Ford Motor Co., 26 668 Fed. Appx. 718, 719 (9th Cir. 2016) (internal quotation and citation omitted). 27 Count III, misappropriation of trade secrets, is plainly not subject to this anti-SLAPP 28 motion because it does not mention or otherwise arise from either the CPA emails or the 1 public records requests. See FAC ¶¶ 126-136 (alleging that Mullis misappropriated trade 2 secrets by sending them to himself by personal email and using them for QORE4’s benefit). 3 Count IV, which arises under 18 U.S.C. §§ 1831-39, is not subject to a California anti- 4 SLAPP challenge because it is a federal law claim. See Hilton v. Hallmark Cards, 599 F.3d 5 894, 901 (9th Cir. 2010) (“[A] federal court can only entertain anti-SLAPP special motions 6 to strike in connection with state law claims.”). The Court thus DENIES the motion to 7 strike Counts III and IV of the FAC. 8 Counts V and VI both arise from the CPA emails. Count V, intentional interference 9 with contractual relations, alleges that Mullis provided false and misleading information 10 about Neology and its products to disparage Neology on behalf of QORE4, with the intent 11 of disrupting Neology’s contracts. FAC ¶¶ 151-152. Similarly, Count VI alleges that Mullis 12 made false disparaging statements about Neology to Neology’s customers on QORE4’s 13 behalf. Id. ¶¶ 156-168. While these claims do not explicitly name the CPA emails, the 14 Court finds no other non-conclusory allegations the claims could be referencing in the 15 complaint. See generally, FAC. The Court thus finds that Count V and Count VI arise from 16 protected speech. See X Corp. v. Center for Countering Digital Hate, Inc.,724 F. Supp. 3d 17 948, 965 (explaining that courts should look to the thrust of a claim rather than the manner 18 of pleading in assessing whether the claim arises from protected speech). 19 Count VII, Plaintiff’s UCL claim, contains some allegations which relate to 20 protected speech and some which do not. Plaintiff alleges that Defendants have committed 21 unlawful, unfair, and fraudulent business acts, and give the following list: “(1) misusing 22 Neology’s confidential and trade secret information; (2) tortiously interfering with 23 Neology’s contractual and prospective business relationships while pretending to be a 24 consumer protection agency; (3) disparaging and making false statements about Neology 25 to various state agencies while pretending to be a neutral consumer protection agency; (4) 26 leveraging Neology’s track record as their own in various proposals to Neology’s 27 customers and potential customers in misleading fashion; (5) misusing the purpose of 28 public records requests to try to obtain even more of Neology’s trade secrets and 1 confidential information; and (6) restructuring QORE4’s proposals to try to undercut 2 Neology in the market.” FAC ¶ 165 (numeration added for clarity of discussion). Sub- 3 allegations 2, 3, and 5 (as numbered by the Court) reference the CPA emails and records 4 requests, while sub-allegations 1, 4, and 6 do not. Because the claim arises from a mix of 5 protected and non-protected activity, the Court DENIES the motion to strike Count VII as 6 a whole. Instead, Defendant’s alternative request to strike individual mentions of protected 7 conduct within Count VII is analyzed below. 8 4. Individual Allegations 9 Defendants move to strike all mention of the public record requests from the 10 complaint, namely FAC paragraphs 97, 98, 99, 100, 101, 150, and 165. Mot. at 14. 11 While the public record requests were protected conduct as defined by the anti- 12 SLAPP statute, it does not follow that all mention of the requests in the FAC must be 13 stricken. See Cal. Civ. Proc. Code §§ 425.16(e)(3)–(e)(4). An anti-SLAPP motion to strike 14 may target specific allegations “[i]f the targeted claim amounts to a cause of action in the 15 sense that it is alleged to justify a remedy.” Newport Harbor Offs. & Marina, LLC v. Morris 16 Cerullo World Evangelism, 23 Cal. App. 5th 28, 43 (2018) (internal quotation omitted). In 17 analyzing motions to strike specific allegations, the key inquiry is whether some relief 18 arises from the allegations or whether they “are merely incidental or collateral to the cause 19 of action.” See Gamble v. Kaiser Found. Health Plan, Inc., 348 F. Supp. 3d 1003, 1024 20 (N.D. Cal. 2018) (internal quotations omitted). 21 The Court first addresses the mentions of the requests in the facts section of the 22 complaint, paragraphs 97-101, and the mention of the requests in Plaintiff’s Intentional 23 Interference with Contractual Relations claim, paragraph 150. FAC ¶¶ 97-101, 150. 24 Paragraphs 97, 98, and 99 lay out Mullis’ public record requests and how Neology 25 responded. As Neology correctly points out, these allegations contextualize the 26 relationships between the parties, Neology’s efforts to protect its trade secrets, and 27 Defendants’ interest in Neology’s business relations. See Opp’n at 15. They do not appear 28 to form the basis of any claim for relief. Similarly, Paragraph 150, although embedded in 1 Count V, states the records requests formed one basis for Defendants’ knowledge of 2 Neology’s business. In the context of the claim as a whole, this mention also does not give 3 rise to liability on the basis of speech as contemplated by the anti-SLAPP statute. The Court 4 thus DENIES the motion to strike paragraphs 97-99 and 150 because they merely state 5 background factual allegations and do not give rise to any claim. See Jordan-Benel v. 6 Universal City Studios, Inc., 859 F.3d 1184, 1190-91 (explaining that conduct which does 7 not constitute the specific act of wrongdoing complained of by a plaintiff is not subject to 8 an anti-SLAPP motion). 9 In contrast, paragraphs 100 and 101 allege, respectively, that Defendants used the 10 public records requests to unfairly compete and that Neology was forced to expend 11 significant resources to prevent the disclosure of confidential information. FAC ¶¶ 100, 12 101. These allegations go beyond mere incidental or collateral allegations, and in context 13 are clearly alleged to justify a remedy because they state elements of Plaintiff’s California 14 UCL claim and potential damages. See Gamble, 348 F. Supp. 3d at 1024; Bus. & Prof. 15 Code §§ 17200, et seq. Similarly, Paragraph 165, embedded within Plaintiff’s UCL claim, 16 alleges that “Defendants have committed business acts and practices that are unlawful […] 17 by, inter alia, […] tortiously interfering with Neology’s contractual and prospective 18 business relationships while pretending to be a consumer protection agency; disparaging 19 and making false statements about Neology to various state agencies while pretending to 20 be a neutral consumer protection agency; [… and] misusing the purpose of public records 21 requests to try to obtain even more of Neology’s trade secrets and confidential 22 information.” FAC ¶ 165. While the mentions of other bases for the UCL claim in 23 paragraph 165 are not subject to a motion to strike, as discussed above, the above quoted 24 mention clearly seeks to assign liability to protected conduct. See Gamble, 348 F. Supp. 3d 25 at 1024. The motion to strike paragraphs 100 and 101, and the mention of the public records 26 requests in paragraph 165, therefore continues to the second stage, where the Court will 27 evaluate Plaintiff’s likelihood of success on the claims arising from protected speech. 28 // 1 5. The Second Step: Probability of Prevailing 2 At the second step, Neology bears the burden of showing that the challenged claims 3 and allegations are legally sufficient and factually substantiated. See Baral v. Schnitt, 1 4 Cal. 5th 376, 396 (2016) (explaining that the key inquiry at the second stage is whether 5 “the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a 6 favorable judgment.”). At this stage, “the plaintiff cannot simply rely on the allegations in 7 the complaint but must provide the court with sufficient evidence to permit the court to 8 determine whether there is a probability that the plaintiff will prevail on the claim.” 9 ComputerXpress, Inc. v. Jackson, 93 Cal. App. 4th 993, 1010 (2001) (internal quotations 10 and citations omitted, emphasis in original). 11 a. Count VI: Trade Libel 12 Defendants argue that Plaintiff has not shown a probability of prevailing on its trade 13 libel claim because it has not identified an actionable statement and has not alleged special 14 damages. Mot. at 18-22. While the Court finds that Plaintiff has identified one actionable 15 statement, the Court agrees with Defendants that Plaintiff has not adequately shown special 16 damages caused by that statement as required by a trade libel claim. 17 “Trade libel is the publication of matter disparaging the quality of another's property, 18 which the publisher should recognize is likely to cause pecuniary loss to the owner.” 19 ComputerXpress, 93 Cal. App. 4th at 1010. “The elements of trade libel are (1) a false 20 publication, (2) which induces others not to deal with the party, and (3) special damages.” 21 Quidel Corp. v. Siemens Med. Sols. USA, Inc., 612 F. Supp. 3d 1131, 1138 (S.D. Cal. 2020) 22 (citing Aetna Cas. & Surety Co. v. Centennial Ins. Co., 838 F.2d 346, 351 (9th Cir. 1988)). 23 To make a prima facie showing of trade libel, a plaintiff must prove that the defendant 24 made a false statement of fact, not a statement of mere opinion, considering the context of 25 the communication. Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal. App. 4th 688, 26 701 (2007). 27 Here, Neology points to four statements that it argues are testable false statements 28 of fact: (1) that Neology’s transponders suffer from a “critical technical flaw,” (2) that 1 Neology uses “an outdated RFID integrated circuit (IC) developed in 2008,” (3) that 2 Neology “remains the only vendor still supplying this outdated technology,” (4) while 3 “[m]any agencies have since transitioned to modern RFID ICs that eliminate this problem.” 4 Opp’n at 19 (quoting ECF No. 35-2 at 2-3; Sample Email). Neology argues that these 5 statements were especially injurious because they were presented as if made by a third 6 party agency. Opp’n at 20. Defendant disagrees, arguing that the statements show opinion, 7 prediction, and evocative puffery not based in verifiable fact, and that the context helps 8 them because the public agencies were familiar with the issues in question. Mot. at 19-21. 9 The Court agrees with Defendants that most of these statements are not verifiable 10 factual assertions. The notion that a technology is flawed or outdated, or that a particular 11 flaw is critical, is generally a matter of opinion. The question of whether the number of 12 agencies that have transitioned to a different technology constitutes “many” is also a matter 13 of opinion, where no evidence before the Court indicates that the number of agencies at 14 issue is one or fewer. 15 However, one statement from the email stands out as asserting a verifiable fact: the 16 email’s assertion that “Neology remains the only vendor still supplying this outdated 17 technology.” See id. at 20. Neology argues that this statement is verifiably false because 18 several other businesses use the same base technology, as supported by a declaration by a 19 senior Neology employee. See ECF No. 35-1 (“Haddix Decl.”) ¶ 4; FAC ¶ 105. Defendants 20 do not compellingly refute this assertion, making only semantic arguments regarding the 21 difference between the words use and supply. See Mot. at 20-21 (arguing, in part, that the 22 assertion is “packed with interpretive variables”). The Court finds that Plaintiff has shown 23 a probability of prevailing on the false disparaging statement element of a trade libel claim 24 on the basis of this statement and the evidence provided. 25 Next, Defendants argue that Plaintiff has not adequately alleged damages and 26 causation. Mot. at 32. “A cause of action for trade libel requires pleading and showing 27 special damages.” Piping Rock Partners, Inc. v. David Lerner Associates, Inc., 946 F. 28 Supp. 2d 957, 981 (N.D. Cal. 2013). To prove the pecuniary damages element of a trade 1 libel claim, “[t]he plaintiff must prove in all cases that the publication has played a material 2 and substantial part in inducing others not to deal with him, and that as a result he has 3 suffered special damages.” Erlich v. Etner, 224 Cal. App. 2d 69, 73 (1964) (internal 4 quotation and citation omitted). “[U]nlike a claim for defamation, trade libel requires as an 5 essential element that the plaintiff suffered direct financial harm because someone else 6 acted in reliance on the defendant's statement.” Muddy Waters, LLC, 62 Cal. App. 5th at 7 925. 8 Plaintiff argues that it has met its burden on a theory of reputational damage. Opp’n 9 at 21. Neology cites two cases to support this theory: Neurulis and Swiss America Trading. 10 Id. (citing Swiss America Trading Corp. v. Regal Assets, LLC, No. CV 14-04960 DDP 11 (ASx), 2015 WL 631569, at *3 (C.D. Cal. Feb. 13, 2015) and Neurelis, 71 Cal. App. 5th 12 at 777. Neurelis is not helpful on the dispositive issue here, because it appears that the 13 parties did not argue, and the Court did not sua sponte discuss, whether a theory of 14 reputational harm could suffice to show special damages for trade libel. See Neurelis, 71 15 Cal. App. 5th at 777. While the Swiss America Trading case does stand for the proposition 16 that reputational harms can support a trade libel claim, it stands alone in a sea of cases 17 holding otherwise. See Quidel Corp., 612 F. Supp. 3d at 1138 (declining to follow Swiss 18 America Trading because “the breadth of the cases require much more,” and collecting 19 cases). 20 Indeed, “California district courts have consistently dismissed trade libel claims 21 when special damages are not pled specifically.” SB Diversified Prods., Inc. v. Murchison, 22 No. 12cv2328 JAH (MDD), 2014 WL 3894353, at *9 (S.D. Cal. July 28, 2014). The losses 23 Plaintiff describes are analogous to the losses described in Homeland Housewares, LLC v. 24 Euro-Pro Operating LLC as “general statements of economic loss,” because they are not 25 tied to one specific contract. No. CV 14-03954 DDP (MANx), 2014 WL 6892141, at *4 26 (C.D. Cal. Nov. 5, 2014). There, in an oft-quoted passage, the court explained that to state 27 a claim for trade libel on a theory of general loss the plaintiff “should have alleged facts 28 showing an established business, the amount of sales for a substantial period preceding the 1 publication, the amount of sales subsequent to the publication, and facts showing that such 2 loss in sales were the natural and probable result of such publication.” Id. (cleaned up, 3 internal quotation omitted). Plaintiff simply does not allege such facts here. 4 Plaintiff also faces a causation issue arising from the paucity of actionable statements 5 in the emails. Under the Court’s above analysis, Plaintiff would have to show that the 6 statement “Neology remains the only vendor still supplying this outdated technology” 7 played a material and substantial part in the events that led to its losses. See Erlich, 224 8 Cal. App. 2d at 73. Neology’s argument that it “cannot yet know the impact of Defendants’ 9 false and misleading statements on its future business,” but that it was nonetheless 10 necessary for it to expend some $90,000 to avoid potential losses, falls short. FAC ¶ 110. 11 The Haddix declaration further confuses causation by stating that CPA’s media contacts, 12 not any statement in the emails, led customers to reach out to Neology to correct the record 13 at great expense. Haddix Decl. ¶ 8. Because Plaintiff has not shown evidence that 14 actionable statements in the CPA emails induced actions leading to its losses, Plaintiff has 15 not shown a probability of prevailing on a trade libel claim based on that statement. See 16 ComputerXpress, 93 Cal. App. 4th at 1010 (explaining that “the plaintiff cannot simply 17 rely on the allegations in the complaint but must provide the court with sufficient evidence” 18 to decide in their favor at the second step of an anti-SLAPP motion). 19 In conclusion, on review of the record available at this stage of litigation, the Court 20 finds that Neology has not met its burden to show a probability of prevailing on its trade 21 libel claim. The motion to strike Neology’s trade libel claim is thus GRANTED. 22 b. Count V: Intentional Interference with Contract as to customers 23 Defendants argue that Plaintiff’s intentional interference with contract claim 24 regarding Neology’s customers fails if the trade libel claim fails. Mot. at 22-23. Plaintiff 25 appears to concede this point. Opp’n at 21-22. The Court thus GRANTS Defendants’ 26 motion to strike Plaintiff’s Intentional Interference with Contract claim. 27 // 28 // 1 c. Paragraphs 100, 101, and 165 sub-allegations 2, 3, and 5 2 Regarding the allegations related to the record request in paragraph 165, within 3 Plaintiff’s § 17200 federal unfair competition claim, Defendants argue that the record 4 requests should be stricken because they are core protected petitioning activity which 5 cannot give rise to liability. Mot. at 16. Indeed, the right of any party, including a 6 competitor, to request public records is codified by law. See Mot. at 15 (listing public 7 record laws relevant to agencies in question); Iloh v. Regents of Univ. of California, 94 Cal. 8 App. 5th 947, 959 (2023) (finding public records requests to be protected activity and 9 remanding a lower court’s denial of an anti-SLAPP motion). Plaintiff has not shown 10 evidence that it could succeed on a claim that seeks relief based upon the public record 11 requests, simply arguing that the allegations serve as background and context. See Opp’n 12 at 15-16. Plaintiff has therefore not met its burden to show a probability of prevailing on a 13 § 17200 claim arising from the record request allegations in paragraph 165. The Court thus 14 GRANTS Defendants’ motion to strike paragraph 165 in part, as follows: 15 165. Defendants have committed business acts and practices that are unlawful, unfair, and fraudulent in violation of California Unfair Competition Law 16 (“UCL,” Bus. & Prof. Code §§ 17200 et seq.) by engaging in a comprehensive 17 anti-competitive scheme to harm Neology by, inter alia, misusing Neology’s confidential and trade secret information; tortiously interfering with 18 Neology’s contractual and prospective business relationships while 19 pretending to be a consumer protection agency; disparaging and making false statements about Neology to various state agencies while pretending to be a 20 neutral consumer protection agency; leveraging Neology’s track record as 21 their own in various proposals to Neology’s customers and potential customers in misleading fashion; misusing the purpose of public records 22 requests to try to obtain even more of Neology’s trade secrets and confidential 23 information; and restructuring QORE4’s proposals to try to undercut Neology in the market. 24 25 See FAC ¶ 165; Baral, 1 Cal. 5th at 396; see also Newport Harbor, 23 Cal. App. 5th at 43 26 (explaining that individual allegations within a claim are subject to a motion to strike when 27 they are alleged to justify a remedy). 28 1 Having struck the above portions of Count VII, the Court evaluates paragraphs 100 2 and 101 to determine whether they (1) support the stricken claim and (2) do not support 3 any other claim upon which Plaintiff has shown a probability of prevailing. See Baral, 1 4 Cal. 5th at 396 (“Allegations of protected activity supporting the stricken claim are 5 eliminated from the complaint, unless they also support a distinct claim on which the 6 plaintiff has shown a probability of prevailing.”). Paragraph 101 alleges that “Neology has 7 been forced to expend significant resources to prevent Mullis and QORE4 from obtaining 8 the confidential and trade secret information contained in Neology’s proposals.” 9 FAC ¶ 101. In context, following a page of discussion of the record requests, this allegation 10 refers to the record requests and is pled to support the above stricken portion of Paragraph 11 165. It does not support any other surviving claim, because the surviving claims do not 12 require damages arising from the record requests but merely incorporate the records 13 requests as context, as explained above. The Court thus GRANTS the motion to strike 14 paragraph 101. 15 Paragraph 100 contains allegations supporting paragraph 165 and no other claims 16 for the same reasons discussed above, but also discusses Neology’s attempts to unfairly 17 compete in other ways. FAC ¶ 100. The discussion of other forms of competition in the 18 paragraph could support several of Plaintiff’s other claims, such as unfair competition and 19 breach of contract. The Court thus GRANTS Defendants’ motion to strike paragraph 100 20 in part, as follows: 21 100. On information and belief, QORE4 is attempting to use the public records request process to obtain information on Neology’s bids and then use that 22 information alongside the trade secrets and confidential information Mullis 23 stole from Neology to unfairly compete with Neology in the bidding process and in an attempt to undercut Neology in the market. 24 25 Based on the context of the FAC, the remaining claims, and the briefing of the parties, the 26 Court finds that eliminating those portions will prevent the harm anticipated by the anti- 27 SLAPP statute, and render the remaining mentions of the record requests background 28 1 information as intended by the Plaintiff per their briefing. See Baral, 1 Cal. 5th at 396; 2 Opp’n at 14-17. 3 d. Count VII: Unfair Competition under Section 17200 4 Defendant argues that Plaintiff cannot show a probability of prevailing on Count 5 VII, and later argues that Count VII is subject to CUTSA preemption. Mot. at 22-23, 32- 6 33. Following the above analysis of paragraph 165, which is part of Count VII, the Court 7 finds it appropriate to discuss CUTSA preemption as a determinative factor in Plaintiff’s 8 likelihood of success on this claim. 9 “Under California law, CUTSA provides the exclusive civil remedy for conduct 10 falling within its terms and supersedes other civil remedies based upon misappropriation 11 of a trade secret. It therefore supersedes claims—including Section 17200 claims—based 12 on the same nucleus of facts as trade secret misappropriation.” Waymo LLC v. Uber Tech., 13 Inc., 256 F. Supp. 3d 1059, 1062 (N.D. Cal. 2017) (citations omitted). 14 Because the Court has stricken the allegations related to protected speech from 15 paragraph 165, Count VII now relies solely on allegations related to the emails Mullis sent 16 himself and what he and QORE4 did with the information contained therein. FAC ¶¶ 164- 17 68. Plaintiff’s California trade secrets claim also relies on the emails and misappropriation 18 of the information contained therein. See id. ¶¶ 126-136. The claims thus arise from the 19 same nucleus of facts, subjecting Count VII, as a Section 17200 claim, to preemption under 20 CUTSA. See Waymo LLC, 256 F. Supp. 3d at 1062. Because it is preempted, Plaintiff 21 cannot show a probability of prevailing on this claim. The Court therefore GRANTS the 22 motion to strike Count VII. 23 B. Dismissal under 12(b)(6) 24 Defendants also argue that all counts of the complaint are subject to dismissal under 25 Rule 12(b)(6). Mot. at 24-33. Plaintiff disagrees. Opp’n at 23-32. The Court examines each 26 remaining claim in turn below, and finds that the remaining claims are adequately pled. 27 // 28 // 1 1. Count I: Breach of Contract 2 Defendants argue that Plaintiff’s breach of contract claim fails because Plaintiff has 3 not plausibly alleged damages caused by a breach, and because the claim is time-barred 4 under California law. Mot. at 25-26. Plaintiff argues that it has sufficiently pled damages 5 at this stage, and that the statute of limitations was tolled by the late discovery rule. Opp’n 6 at 23-25. The Court agrees with Plaintiff.1 7 Under California law, “the elements of a cause of action for breach of contract are 8 (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, 9 (3) defendant's breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty, 10 LLC v. Goldman, 51 Cal. 4th 811, 821 (2011). The damages requirement can be met at the 11 pleading stage with allegations that a defendant’s breach caused non-speculative lost sales 12 or profits. AlterG, Inc. v. Boost Treadmills LLC, 388 F. Supp. 3d 1133, 1148 (N.D. Cal. 13 2019). The statute of limitations for breach of contract is four years, but may be tolled by 14 the delayed discovery rule under California law. Cal. Civ. Proc. Code, § 337; Gryczman v. 15 4550 Pico Partners, Ltd., 107 Cal. App. 4th 1, 4 (2003). 16 Here, Plaintiff alleges that Mullis breached the confidentiality provisions of their 17 contract with him, in part by emailing confidential information to his personal email while 18 still employed and using it at QORE4 to unfairly compete with and harm Neology’s 19 business, causing general and special damages to be determined at trial. FAC ¶¶ 5, 94, 118. 20 While these allegations lack dollar amounts or names of specific lost opportunities, such 21 specificity is not required for general damages in breach of contract claims at the pleading 22 stage. See Sycks v. Transamerica Life Ins. Co., 643 F. Supp. 3d 959, 973 (D. Alaska 2022) 23 (“Plaintiffs do not plead in detail the damages they claim to have suffered from Defendant’s 24 breach, but they need not do so.”) The Court finds that Plaintiff has stated a claim for 25 breach of contract under federal pleading standards, and joins its sister courts in deferring 26 27 1 Defendants also argue that Count I is preempted by CUTSA. Mot. at 32-33. However, the statute itself states that it does not preempt contract remedies. Cal. Civ. Code § 28 1 the question of determining whether special damages are appropriate to the summary 2 judgment or trial stage of litigation. See StreamCast Networks, Inc. v. IBIS LLC, No. CV 3 05-04239 MMM (Ex), 2006 WL 5720345, at *5 (C.D. Cal. May 2, 2006) (denying the 4 motion to dismiss the plaintiff’s breach of contract claim but noting that special damages 5 may be denied at a later stage of litigation if not proven more specifically); City & Cnty. of 6 San Francisco v. Tutor-Saliba Corp., No. C 02-5286 CW, 2005 WL 645389, at *18 (N.D. 7 Cal. Mar. 17, 2005) (denying a motion to dismiss special damages because “[a]t this stage 8 in the proceeding, the Court cannot determine whether the damages sought in each claim 9 would inevitably follow” but holding that special damages may be later denied). 10 Regarding the statute of limitations, the delayed discovery rule applies here. To 11 benefit from the late discovery rule under California law, “[a] plaintiff whose complaint 12 shows on its face that his claim would be barred without the benefit of the discovery rule 13 must specifically plead facts to show (1) the time and manner of discovery and (2) the 14 inability to have made earlier discovery despite reasonable diligence.” Fox v. Ethicon 15 Endo–Surgery, Inc., 35 Cal. 4th 797, 808 (2005). Plaintiff pleads the time and manner of 16 discovery by alleging that it discovered the misconduct after Mullis was fired in September 17 2022. FAC ¶ 40. It also pleads that the use of personal email was unauthorized, and that 18 Mullis was a high-ranking executive, which show justification for not making the discovery 19 earlier. Id. ¶¶ 3, 72. The late discovery rule therefore applies. See Fox, 25 Cal. 4th at 808. 20 Because Mullis was fired in September of 2022, and this action was filed in July of 2025, 21 the breach of contract claim is not subject to dismissal based on the statute of limitations. 22 In conclusion, Defendants’ motion to dismiss Plaintiff’s breach of contract claim is 23 DENIED. 24 IV. Count II: Intentional interference as to Mullis’ contract 25 Under California law, a claim of intentional interference with contractual relations 26 claim requires “(1) a valid contract between plaintiff and another party, (2) defendant's 27 knowledge of the contract, (3) defendant's intentional acts designed to induce a breach or 28 disruption of the contractual relationship, (4) actual breach or disruption of the contractual 1 relationship, and (5) resulting damage.” Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 2 7 Cal. 4th 503, 514 n. 5 (1994). 3 Count II is pled against QORE4 and alleges that QORE4 induced Mullis to breach 4 his confidentiality agreement with Neology, which harmed Neology’s business. FAC ¶¶ 5 119-125. Defendants argue that this claim cannot stand because Mullis cannot interfere 6 with contracts to which he is a party. Mot. at 26-27. However, Plaintiff is correct that 7 QORE4 is a separate entity from Mullis and the target of this claim. Opp’n at 25. While 8 Defendants argue that QORE4 is interchangeable with Mullis in the complaint, the 9 complaint also alleges at least two other QORE4 employees acting on the part of the 10 company. FAC ¶¶ 91-92. The complaint also alleges QORE4’s ongoing conduct of trade 11 secret theft, relying on information Mullis sent to himself. Id. ¶¶ 3, 72. That theft would 12 interfere with Mullis’ ongoing obligations under his confidentiality agreement while he 13 was not the sole individual behind QORE4. See FAC ¶ 32. Thus, the Court finds that 14 Plaintiff has plausibly alleged its intentional interference claim. The motion to dismiss 15 Count II is DENIED. 16 V. Counts III and IV: Trade Secret Theft 17 Defendants argue that Plaintiff’s trade secret theft claims fail for not adequately 18 pleading the trade secrets at issue, their confidentiality, or the misappropriation. Mot. at 19 27. To determine whether a plaintiff has pled trade secrets, “the basic test is (1) whether 20 something beyond general knowledge [in the profession] is being claimed and (2) whether 21 there is enough specificity to put the defendant on notice of what the theft is about.” Arthur 22 J. Gallagher & Co. v. Tarantino, 498 F. Supp. 3d 1155, 1171 (N.D. Cal. 2020). 23 The complaint lists multiple emails Mullis sent to himself, and the contents of those 24 emails, including strategy and sales pipelines, financial goals, business plans, and 25 profitability. FAC ¶¶ 42-45. It sets out the measures Neology took to protect that 26 information, including confidentiality agreements with employees and technological 27 protections. Id. ¶¶ 36-39. It even alleges that some of the attachments Mullis forwarded to 28 himself were labeled “Company Proprietary” and “Confidential.” Id. ¶ 45. These 1 |;allegations are sufficiently particular to show confidential and not generally known 2 ||information, and to give notice to Defendants of the conduct alleged. See Arthur J. 3 || Gallagher, 498 F. Supp. 3d at 1171. 4 Defendants cite /max Corp. v. Cinema Technologies, Inc. to argue that a high level 5 specificity is needed to show trade secrets. See 152 F.3d 1161, 1164 (9th Cir. 1998). 6 || That case is not helpful in the present matter, because it was determined at the summary 7 |\|\judgment stage and analyzed whether the plaintiff has shown sufficient evidence of its 8 || trade secret. /d. at 1166-67 (explaining that “the issue turns on whether Imax identified the 9 || precise numerical dimensions and tolerances of its projector as trade secrets with sufficient 10 || particularity.”’). Here, the Court is called to evaluate a motion to dismiss, which tests only 11 allegations in the complaint and not the proof of each element put forth by the parties. 12 ||See Twombly, 550 U.S. at 556. Defendant’s argument that some of the information 13 || discussed, such as Neology’s business partnerships, is publicly available is also irrelevant 14 || at the motion to dismiss stage, where the Court must take allegations in the complaint as 15 || true in determining whether a cause of action is sufficiently pled. See Mot. at 29. The Court 16 DENIES the motion to dismiss Counts HI and IV of the complaint. 17 VI. CONCLUSION 18 For the reasons explained above, the Court GRANTS Defendants’ motion to strike 19 ||Counts V, VI, and VII of the complaint, as well as paragraph 100 and parts of paragraph 20 under California’s anti-SLAPP law. The Court DENIES the anti-SLAPP motion to 21 || strike as to all other claims, and DENIES the motion to dismiss. 22 IT IS SO ORDERED. 23 54 Dated: August 19, 2026 ee Sm. 25 Honorable James E. Sunmons Jr. United States District Judge 27 28