Auris Health, Inc. v. Noah Medical Corporation

Background

Auris Health, Inc., Verb Surgical Inc., and Cilag GmbH International sued Noah Medical Corporation and several individual defendants. The plaintiffs alleged that former Auris employees took or retained confidential information and trade secrets involving medical-robotics technology, and that Noah and some former employees used that information. The amended complaint asserted:

- A federal trade-secret misappropriation claim under the Defend Trade Secrets Act against all defendants; - Contract claims against several former Auris employees; - A tortious-interference-with-contract claim against Noah; and - A California unfair-competition claim against Noah.

The defendants moved to dismiss selected claims under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim. The motion did not seek dismissal of every claim or every defendant.

Claims involving Tatarkhanov and Keshtgar

The defendants argued that the plaintiffs had not adequately alleged that Mouslim Tatarkhanov and Maziyar Keshtgar took documents away from Auris. The court disagreed. It found that the allegations about Tatarkhanov’s downloading more than 60 documents shortly after resigning, reformatting Auris hard drives, and later acknowledging that he had Auris documents on personal devices and cloud storage supported a reasonable inference of misappropriation.

The court likewise found the allegations against Keshtgar sufficient. The complaint alleged that he downloaded documents shortly before leaving Auris, emailed a photograph containing trade-secret information to his personal account, and later acknowledged retaining Auris materials in personal email and cloud storage. The court held that these allegations plausibly supported both trade-secret misappropriation and breach-of-contract claims. It therefore denied the motion to dismiss those claims.

Allegations involving Romo and Cardona

The defendants argued that claims involving Enrique Romo and Diana Cardona Ujueta failed because the plaintiffs alleged that some files had been returned. The court rejected that argument. It noted allegations that the devices used to store the files had not been returned, that the plaintiffs had not verified that all trade-secret information had been returned, and that Romo, Cardona, and Noah had allegedly used the information. The court concluded that returning files did not eliminate the alleged harm or make the claims implausible. It also found the supporting allegations based on information and belief sufficient at the pleading stage.

Requests for injunctive relief

The defendants argued that the plaintiffs’ requests for injunctions were improper because they concerned past conduct, sought vague orders requiring defendants to obey the law, or were otherwise insufficient. The court declined to dismiss the claims on those grounds. It held that defects in a request for a particular remedy do not necessarily make the underlying claim legally insufficient, and it found that the complaint included allegations of continuing use or retention of trade secrets that could support future-focused relief. The court also held that such injunctions are not categorically barred in the Ninth Circuit.

Claims by Verb and Cilag

Several defendants argued that Verb and Cilag had to identify a one-to-one connection between each trade secret and each defendant’s alleged act of misappropriation. The court found no authority requiring that level of detail at the pleading stage and denied the motion to dismiss those claims.

California trade-secret-law supersession

The defendants argued that the California Uniform Trade Secrets Act superseded Auris’s tortious-interference and unfair-competition claims against Noah. The court agreed. It concluded that Auris’s tortious-interference claim was based on the same underlying conduct as its trade-secret claim—Romo’s alleged taking of trade-secret material and Noah’s alleged use of it. Without the trade-secret allegations, the remaining facts did not show an independent injury. The court therefore dismissed the third cause of action, Auris’s tortious-interference-with-contract claim against Noah, as superseded by California trade-secret law.

The court also dismissed the sixth cause of action, Auris’s California unfair-competition claim against Noah, because it was entirely based on the dismissed tortious-interference claim. The court stated that both dismissed causes of action may not be amended.

Disposition

The court granted in part and denied in part the defendants’ motion to dismiss. The third and sixth causes of action were dismissed as superseded and may not be amended. Defendants were ordered to answer the remaining claims by December 4, 2023.