Sequoia Benefits & Insurance Services LLC v. Costantini

Background

Sequoia Benefits & Insurance Services LLC sued Sageview Advisory Group, Inc., Luciano Costantini, Scott Ondek, and others. Sequoia alleged that Costantini and Ondek, former Sequoia employees who joined Sageview, downloaded or copied confidential business information before leaving Sequoia. Sequoia asserted claims under the federal Defend Trade Secrets Act, the California Uniform Trade Secrets Act, and California law concerning interference with prospective economic advantage, breach of contract, breach of loyalty, and interference with contractual relations.

Costantini and Ondek filed counterclaims. They alleged that employment-agreement provisions barring them for three years from soliciting Sequoia’s clients and employees were void under California Business and Professions Code § 16600. They also alleged that Sequoia told customers and employees that they had stolen sensitive information, committed criminal acts, and were dishonest. Their counterclaims included defamation and intentional interference with prospective economic advantage. Costantini separately alleged that Sequoia promised him a 30% commission but changed the rate to 25% and failed to pay compensation. He asserted claims for unpaid wages and waiting-time penalties under California Labor Code §§ 201 and 203. The counterclaimants also asserted a California Unfair Competition Law claim.

Sequoia moved to strike the defamation and intentional-interference counterclaims under California’s anti-SLAPP statute. An anti-SLAPP motion is a procedure intended to challenge claims based on protected speech or petitioning activity. Sequoia also moved to dismiss the counterclaims under Federal Rule of Civil Procedure 12(b)(6), which tests whether the pleadings state legally sufficient claims.

Court’s Analysis

The court denied the anti-SLAPP motion. At the pleading stage, the court treated the counterclaim’s factual allegations as true and viewed them favorably to Costantini and Ondek. The court concluded that Sequoia had not shown that the alleged accusations that the counterclaimants committed criminal acts were reasonably connected to Sequoia’s civil claims. The court also concluded that the alleged statements were not protected by California’s litigation privilege on the pleadings presented. The anti-SLAPP motion was denied without prejudice to renewing it in a summary-judgment motion after discovery into the statements’ content and context.

The court denied Sequoia’s motion to dismiss the defamation counterclaim. It concluded that the allegation that Costantini and Ondek criminally stole confidential information was an actionable factual assertion, even though other alleged statements—such as calling them dishonest or telling customers not to do business with them—were opinions that were not actionable on their own.

The court granted Sequoia’s motion to dismiss the counterclaim for intentional interference with prospective economic advantage. That claim requires, among other things, an economic relationship between the claimant and a third party, intentional wrongful conduct, actual disruption, and resulting economic harm. The court found that the counterclaim alleged Sequoia spoke negatively about Costantini and Ondek to Sequoia’s customers after they left, but did not allege that those customers were then-existing customers of Costantini or Ondek or that Sequoia interfered with an economic relationship the counterclaimants already had.

The court denied dismissal of the § 16600 counterclaim because it was not duplicative of Sequoia’s breach-of-contract claim. Sequoia’s claim concerned confidentiality, nondisclosure, and non-solicitation provisions, while the counterclaim challenged only the non-solicitation provisions.

The court denied dismissal of the Labor Code §§ 201 and 203 counterclaims. The alleged unpaid compensation for the last quarter of fiscal year 2019 and fiscal year 2020 fell within the three-year limitations period identified by the court. The court also denied dismissal of the Unfair Competition Law counterclaim, finding that the pleading stated theories under both the unfair and unlawful prongs and that Sequoia had not cited binding authority establishing that the alleged conduct could not cause the required loss of money or property.

Disposition

The counterclaim for intentional interference with prospective economic advantage was dismissed. Otherwise, Sequoia’s motion to dismiss was denied. Sequoia’s anti-SLAPP motion was denied without prejudice to renewal in a summary-judgment motion after discovery. Sequoia was ordered to serve its answer to the counterclaims within 14 days of the order.