Quintara Biosciences, Inc. v. Ruifeng Biztech Inc.

Background

Quintara Biosciences, Inc. brought this action for alleged misappropriation of trade secrets. The opinion states that Rui Shao and Alex Wong had previously worked for Quintara before taking jobs with Ruifeng Biztech Inc. Quintara alleged that defendants, led by Ruifeng’s CEO Gangyou Wang, misappropriated Quintara trade secrets when they took over Quintara’s laboratory and equipment.

The opinion states that Shao appeared to have had little involvement in the conduct at issue. He had worked for Ruifeng as a technician and declared that he had no contact with vendors or customers and did not know about the alleged trade secrets. Wong had overseen day-to-day sequencing operations at Quintara and also declared that he did not know about the alleged trade secrets.

Settlement

In October 2021, Shao and Wong entered into a settlement agreement and mutual general release with Quintara. The agreement required each of them to pay Quintara $1,000, without admitting wrongdoing or liability, and to testify truthfully at trial in this case and the related state action if called. In return, Quintara dismissed this action and the state action against them. The court had previously adopted the parties’ stipulated entry of judgment subject to the settlement agreement, and Quintara later filed a notice stating that the judgment had been satisfied.

Shao and Wong then sought a determination that their settlement was made in good faith under California Code of Civil Procedure section 877.6. A good-faith determination generally bars other joint tortfeasors or co-obligors from seeking contribution or comparative indemnity from the settling defendants based on comparative fault. It also reduces claims against nonsettling parties by the amount specified by the release, dismissal, or settlement consideration, whichever is greater, unless the settlement provides otherwise.

Court’s Analysis

The court explained that California’s settlement statute seeks to encourage settlements and allocate costs fairly among multiple tortfeasors. When a settlement’s good faith is disputed, courts may consider factors identified in Tech-Bilt, including the approximate total recovery, the settling parties’ proportionate liability, the settlement amount, their financial condition and insurance limits, and possible collusion, fraud, or conduct intended to harm nonsettling defendants.

The court found that Shao and Wong had established the existence of their settlement. Because no party opposed the motion or objected at the hearing, the court held that it was unnecessary to weigh the Tech-Bilt factors. The court nevertheless stated that those factors supported the settlement: it found no indication of collusion, fraud, or conduct intended to injure nonsettling defendants; the settling defendants’ financial conditions were modest; and their proportionate liability appeared marginal at most, making the $1,000 payments satisfactory.

Disposition

The court granted Wong and Shao’s motion for a good-faith settlement determination as to all parties that received timely notice and an opportunity to appear. It ruled that all claims for contribution, indemnity, or other claims barred under California Code of Civil Procedure sections 877 and 877.6 were barred against Rui Shao and Alex Wong.