BRESCIA v. ANGELIN








Filed 3/17/09


CERTIFIED FOR PARTIAL PUBLICATION*






IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

WILLIAM BRESCIA, Cross-complainant and Appellant, v. KEITH ANGELIN et al., Cross-defendants and Respondents.

B204003 (Los Angeles County Super. Ct. No. BC324320)

APPEAL from a judgment of the Superior Court of Los Angeles County, William F. Highberger, Judge. Reversed.
Manning & Marder, Kass, Ellrod, Ramirez, John A. Marder, Kevin H. Louth and Sylvia Havens for Cross-complainant and Appellant.
Epport, Richman & Robbins, Mark Robbins, Christopher Nelson and Laura E. McSwiggin for Cross-defendants and Respondents.
Code of Civil Procedure section 2019.210 (hereafter section 2019.210) provides: “In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act (Title 5 (commencing with Section 3426) of Part 1 of Division 4 of the Civil Code), before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.” (Italics added.) In the published portion of our opinion, we hold that section 2019.210 does not require in every case that a trade secret claimant explain how the alleged trade secret differs from the general knowledge of skilled persons in the field to which the secret relates. Rather, such an explanation is required only when, given the nature of the alleged secret or the technological field in which it arises, the details provided by the claimant to identify the secret are themselves inadequate to permit the defendant to learn the boundaries of the secret and investigate defenses or to permit the court to understand the designation and fashion discovery. Further, the trade secret designation is to be liberally construed, and reasonable doubts regarding its adequacy are to be resolved in favor of allowing discovery to go forward.

BACKGROUND
William Brescia appeals from the judgment of dismissal entered in favor of respondents Sylvester Stallone and John Arnold after the trial court sustained, without leave to amend, respondents’ demurrer to Brescia’s third amended cross-complaint. (For ease of reference, we refer to the operative pleading simply as the cross-complaint.) Brescia alleges that respondents participated with other cross-defendants in misappropriating Brescia’s trade secrets, which he describes in the cross-complaint as follows: “a formula, manufacturing process, marketing plan, funding plan and a distribution and sales plan for a high protein, low carbohydrate pudding with an extended shelf life and a stable and appealing consistency and most important, when mass produced, an appetizing flavor.”
Briefly, the background to this appeal is as follows. After a dispute at a trade show at which Brescia accused Keith Angelin and his company, Freedom Foods, LLC, of stealing his ideas, Angelin and Freedom Foods sued Brescia for trade libel and other claims. In response, Brescia filed his cross-complaint. Brescia alleges that he developed his pudding product, called Pro Pudding Pak, with the assistance of Christopher Scinto, a food scientist, who worked directly for Brescia. The high protein, low carbohydrate qualities of the pudding were unique, unlike any other pudding on the market. Brescia contracted with two companies, Performance Worldwide USA, Inc. (Performance) and Instone, LLC, for the sale and distribution of the pudding, subject to confidentiality and nondisclosure provisions. Thereafter, Keith Angelin, who had been Vice President of Marketing for Performance, left that company and formed his own, Freedom Foods, Inc. Angelin, Freedom Foods, Instone, and Christopher Scinto then conspired to steal Brescia’s ideas, and Freedom Foods and Instone began producing and selling a pudding based on Brescia’s formula and business plan.
Brescia named as cross-defendants, among others, Angelin, Freedom Foods, Scinto, and Instone. He added respondents as individual cross-defendants in November 2006, more than two years after the cross-complaint was initially filed. He alleges that respondent Stallone is Chairman of the Board of Instone, and respondent Arnold is Chief Executive Officer. Of the named cross-defendants, only respondents are parties to this appeal. Moreover, although Brescia’s cross-complaint alleged several causes of action, the only one relevant here is his statutory claim against respondents under the Uniform Trade Secrets Act (Civ. Code, § 3426, et seq.) for misappropriation of trade secrets.
In April 2007, respondents filed motions for a protective order regarding Brescia’s noticing their depositions and requesting production of documents relating to their finances. The motions argued, inter alia, that Brescia refused to identify his alleged trade secrets with the reasonable particularity required by section 2019.210, and that, therefore, he was not entitled to discovery in his trade secret action. (Respondents were the only cross-defendants to seek a protective order for Brescia’s failure to comply with section 2019.210. Discovery had long ago commenced as to the other cross-defendants.)
In opposing respondents’ motions, Brescia argued that he had adequately described his trade secrets in his cross-complaint, and also that he had produced documents in discovery (identified by Bates stamp number) that would “reveal evidence [of the] formula and manufacturing process.” At a hearing in May 2007, the court ruled that Brescia had not yet adequately identified the trade secret. The court continued the protective order motions to July 2007, and ordered Brescia to make a further disclosure.
The next day, Brescia filed a notice of compliance with the court’s order. This May 2007 trade secret designation, filed under seal, grouped the alleged secrets into the categories of “Marketing Strategies,” “Budget and Finance,” “Formula,” and “Manufacturing Process.” Each classification referred to attached documents (305 pages in all) that, according to Brescia, “specifically detail[ed] each and every trade secret misappropriated.”
In response to Brescia’s trade secret designation, respondents filed a supplemental motion for a protective order regarding the initial round of discovery, and another separate protective order motion directed against a second round of discovery. Respondents argued that Brescia still had not identified his alleged trade secrets with the reasonable particularity required by section 2019.210. Instead, he had provided 305 pages of previously-disclosed, non-confidential documents that failed to distinguish what the purported trade secrets were. Further, relying on Advanced Modular Sputtering, Inc .v. Superior Court (2005) 132 Cal.App.4th 826, 835 (Advanced Modular) respondents argued that Brescia failed to distinguish the purported trade secrets from matters generally known to skilled persons in the commercial food science industry.
In opposition, Brescia argued that, by citing to specific pages in the documents attached to his trade secret designation, he had adequately specified his trade secrets. He also noted that he had detailed the formula for his pudding in discovery responses.
Hearing respondents’ motions in July 2007, the court ruled that Brescia’s trade secret description was inadequate because, by citing to voluminous documents, it obscured rather than refined the description. The court continued respondents’ protective order motions, and invited Brescia’s counsel to “succinctly and with particularity lay out the trade secrets without surplusage,” instead of “essentially hiding the alleged trade secret in plain view by putting lots of clutter around it.”
In August 2007, Brescia filed under seal the trade secret designation that is at issue in this appeal. In it, he identified two alleged trade secrets: his pudding formula and his manufacturing process. He described his pudding formula, as follows: “Attached under seal as exhibit 1 is a single page, containing a list of the 15 specific ingredients that constituted Brescia’s pudding formula in the last quarter of 2003. The list identifies each ingredient by its common name and the percentage it constitutes of the total pudding. The second list identifies the same 15 ingredients listed by their supplier and brand name. Brescia alleges that this formula is a trade secret.” As promised, exhibit 1 contained two lists, one of which gave the common name of 15 ingredients and their respective percentages in the final product ranging from 82.6 percent to .03 percent, and the other of which gave the brand name and supplier.
The trade secret designation described Brescia’s manufacturing process as follows: “Attached under seal as exhibit 2 is a single page description of the manufacturing process for pudding described above as of the last quarter of 2003. Brescia alleges that this manufacturing process is a trade secret.” The attached exhibit listed each step in the mixing, testing, and code marking of the pudding.
Respondents filed additional briefing, arguing that Brescia’s new trade secret designation was insufficient because neither the formula nor the manufacturing process was distinguished from matters within the general knowledge of persons skilled in the commercial food science field. Respondents requested that the court take judicial notice of certain documents from the United States Patent and Trademark Office. The documents related to a patent application made by cross-defendant Christopher Scinto, who (according to Brescia’s cross-complaint) allegedly helped Brescia develop his formula, and who claimed to have developed the formula for the pudding sold by Freedom Foods and distributed by Instone. The documents showed that the Patent and Trademark Office rejected Scinto’s patent application, concluding that the high protein, low carbohydrate pudding formula submitted by Scinto and its ingredients would have been “obvious” to persons of “ordinary skill” in the food science industry when the formula was developed. Respondents argued that, because Scinto’s pudding formula and ingredients were obvious to persons of ordinary skill in the industry, Brescia “should be required, as part of his designation, to describe what it is about his formula that distinguishes it from matters of general knowledge within the food science industry, and thus makes it a trade secret.”
On September 20, 2007, the court once again heard argument on the sufficiency of the section 2019.210 designation in connection with respondents’ motions for a protective order. In the meantime, respondents had filed a demurrer to Brescia’s cross-complaint, along with a motion to strike, which were also scheduled for hearing the same day.
At the September 2007 hearing, the court granted the respondents’ request for judicial notice of the Patent and Trademark Office records, and stated that its tentative ruling was that Brescia’s trade secret designation was inadequate. Relying on Advanced Modular, the court reasoned that Brescia’s trade secret designation was defective, because it made “no attempt . . . to identify why certain aspects or all of the aspects of the manufacturing process are anything other than matters generally known to persons skilled in the field,” and “no attempt . . . to indicate why the peculiar product formulation here that is stated with precision is a trade secret, as opposed to the typical ingredients involved in formulating other low-calorie, low-fat puddings.” As we explain below in connection with Brescia’s contention that the court’s procedure was unauthorized, the parties, in an attempt to expedite any appeal, stipulated that if the court determined the trade secret designation insufficient, it could use respondents’ demurrer to the cross-complaint as a procedural device to dismiss Brescia’s trade secret misappropriation claim for failure to comply with section 2019.210.
The court then heard argument from Brescia’s attorney, who contended that the trade secret designation was adequate. He distinguished Advanced Modular, on which the court relied in its tentative ruling, on the ground that it dealt with a very complicated technical area in which it would be difficult for a court to determine whether the designation was sufficient. Brescia, however, stated a precise formula and manufacturing process for a pudding. Further, the law did not require that information be patentable in order to constitute a trade secret.
The court commented that Brescia’s submission was silent on the question whether his alleged trade secrets were known to skilled persons in the field. The court explained: “So by its silence it’s doomed to failure, because there’s no attempt even to commence to describe why this formula is unique and not known to others. [¶] It just is a formula. Likewise, it is a cooking or manufacturing process of many steps. Some of which apparently, according to matters of which I believe I can take judicial notice are actually fairly familiar when you are trying to make a comparable product.” The court ruled that the trade secret designation was inadequate, and stated: “[P]ursuant to the advance stipulation of the parties, the demurrer [to the cross-complaint] is deemed sustained as to [respondents] without leave to amend.” The court later entered a judgment of dismissal, and, following denial of his motion for reconsideration, Brescia appealed.

DISCUSSION
I. Sustaining the Demurrer for Failure to Comply with Section 2019.210
Brescia contends that the trial court improperly used respondents’ demurrer to his cross-complaint as a procedural device to dismiss his trade secret misappropriation claim for failure to comply with section 2019.210. We agree that the court’s ruling on Brescia’s section 2019.210 designation was not a proper ground on which to sustain respondents’ demurrer to the cross-complaint without leave to amend. Further, we do not recommend the use of such a procedure to obtain appellate review of a trade secret designation. Brescia, however, agreed to the procedure in order obtain appellate review. Thus, under the doctrine of invited error, he cannot be heard to complain.
Direct review of discovery rulings is available only by petition for extraordinary writ, and should occur only “to review questions of first impression that are of general importance to the trial courts and to the profession, and where general guidelines can be laid down for future cases.” (Oceanside Union School Dist. v. Superior Court (1962) 58 Cal.2d 180, 185-186, fn. 4.) Because rulings on discovery motions are not immediately appealable (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1421), any appeal awaits a final judgment in the action.
Here, the court and the parties apparently did not want the sufficiency of Brescia’s section 2019.210 designation tested by writ review. Instead, they crafted an ad hoc procedure to obtain direct appellate review. Under that procedure, the court purported to sustain respondents’ demurrer to the cross-complaint without leave to amend on the ground that Brescia’s trade secret designation was inadequate. This ruling then resulted in an appealable judgment of dismissal.
The circumstances surrounding this stipulation are as follows. At the September 2007 hearing, after stating its tentative ruling that the August 2007 trade secret designation was insufficient, the court inquired whether, even though the pending demurrer raised different issues, “a ruling about the trade secret, practically speaking, resolve[s] the demurrer and . . . moots the motion to strike‌” Brescia’s attorney replied, “It would resolve the case.” Brescia’s attorney clarified that although he did not concede that the trade secret designation was inadequate, if the court so determined the court need not separately address the demurrer. “This is our trade secret. This recipe is a trade secret. The manufacturing process was a trade secret. . . . [¶] If the court finds that that’s not . . . sufficient for a trade secret, I think the court is approaching this as a summary judgment, not as a 2019. It is certainly sufficient to identify what we say the trade secret is, whether it’s one or not, I think the court can hear that in [a] motion for summary judgment.”
The court stated that it was dealing “with the discovery motion in the first instance, because . . . a ruling about the sufficiency of the designation would resolve the continued discovery motions that are on also on calendar today.” Brescia’s attorney then stated that “[i]t would resolve the entire case.” The court noted that such a result might “flow as a practical matter, but it’s not because I’m trying to do a bootleg summary judgment.” Brescia’s attorney replied that “every motion before the court becomes moot if the court finds that what we have designated is not a sufficient trade secret.” The court again noted that “it might flow that way, but I just want to emphasize that I am not purporting to rule on [a] motion for summary judgment, although this ruling may be case dispositive as a practical matter.”
When respondents’ counsel expressed perplexity “as to why the demurrer would be irrelevant,” the court explained that it did not intend to give Brescia another opportunity to amend his trade secret designation, that the issue whether Brescia’s designation was sufficient presented “a legitimate question for our appellate courts,” and that consideration of the demurrer was not necessary if Brescia’s attorney chose “to stipulate as a practical matter that this becomes case dispositive, because the rest of the demurrer practice is close to pointless formality.” Brescia’s attorney stated: “[I]f you find as a matter of law that what we’ve designated as a trade secret is not a trade secret, then that, as a matter of law . . . for this case . . . the court on its own motion can dismiss the case under the demurrer because we pled the same trade secret in the demurrer.” (Italics added.) The court expressed its belief that “for efficiency we ought to get . . . a resolution so the issue can ripen for appeal.” Brescia’s attorney agreed (“Right, yes, Your Honor”.
The court stated: “So you would essentially stipulate that the demurrer could be deemed amended to include this mode of attack, so that the ruling on the sufficiency of the designation, even though you don’t agree with it, could be resolved by the demurrer presented today, preserving all your rights on appeal.” Brescia’s attorney phrased the proposed stipulation “a little bit differently. . . . [S]ince this court has found as a matter of law that the trade secret we are referring to in the complaint, because it’s the same trade secret, I will stipulate to that, it’s the same trade secret, is not a sufficient trade secret.” The court interrupted: “At least as presented, it is not stated with sufficient specificity and particularity for the standards set forth in CCP 2019.210.” (Italics added.) Brescia’s attorney continued: “Right. And . . . since it’s our position that that formula, that recipe is exactly the kind of recipe or formula contemplated by the statute, and the manufacturing process is exactly the kind of process contemplated by the statute, if the court finds those as a matter of law to not be, then they are the same trade secrets referred to . . . in the [cross-]complaint, and therefore the [cross-]complaint would be . . . inadequate.” (Italics added.)
The court then stated that it presumed respondents’ counsel had “no quarrel with trying to handle this aspect of the case with efficiency by accepting his stipulation as to what the consequence of the ruling would be, which would become case dispositive.” Respondents’ counsel stated, “Certainly, Your Honor.”
After hearing argument and finding the trade secret designation inadequate, the court ruled that “pursuant to the advance stipulation of the parties, the demurrer [to the cross-complaint] is deemed sustained as to [respondents] without leave to amend.” Brescia’s attorney did not object that the court mischaracterized the nature of his stipulation.
On this record, it is clear that Brescia’s attorney understood and agreed: (1) that the court would rule on the adequacy of the section 2019.210 designation; (2) that the alleged trade secrets described in the designation were the same ones alleged in the cross-complaint; and (3) that, if the court determined the trade secret designation inadequate, the court would incorporate that ruling into a ruling on the demurrer and find the cross-complaint fatally defective for failing to allege the existence of a trade secret. The purpose of the procedure was to expedite any appeal of the section 2019.210 issue.
The procedure was unorthodox, and even though we are sympathetic to the court and parties’ desire for guidance on the reasonable particularity standard of section 2019.210, we do not recommend it in the future. The appeal is nominally taken from a judgment entered on an order sustaining a demurrer to the cross-complaint without leave to amend. The ruling at issue, however, does not actually involve the sufficiency of the cross-complaint to plead a claim for misappropriation of trade secrets. It involves, rather, a discovery issue: whether Brescia’s alleged trade secrets have been identified with reasonable particularity such that Brescia is entitled to proceed with trade secret discovery against respondents. Thus, there is an analytical lapse, for purposes of appeal, between the procedural device of the demurrer and the ruling under review. Most significantly, the court sustained the demurrer to the cross-complaint without leave to amend. The question whether leave to amend should be granted depends on whether the cross-complaint can be amended to state a cause of action. Yet the ruling here did not truly find the cross-complaint defective.
The awkwardness is complicated by the fact that, on appeal, Brescia challenges the procedure in its entirety, and respondents suggest (as we discuss in the unpublished portion of our opinion) that the grounds actually stated in their demurrer constitute alternative grounds on which to affirm the judgment, even though the court never ruled on them. (As we explain in the unpublished portion of our opinion, we decline to address these issues.)
Nonetheless, despite these inherent problems, Brescia stipulated to the procedure used by the court, as did respondents. Indeed, the trial court would not have used this procedure but for Brescia’s express consent. Brescia is in the procedural posture he sought. To the extent he now challenges that posture as improper and awkward, he effectively misled the trial court into believing the procedure was acceptable to him as a means to secure immediate appellate review of the sufficiency of his section 2019.210 designation. Thus, he cannot contend on appeal that the termination of his action against respondents was procedurally defective. (See Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403 [doctrine of invited error applies where party induces error and, in doing so, misleads court].)

II. The Adequacy of Brescia’s August 2007 Trade Secret Designation
Brescia contends that the trial court erred in finding his trade secret designation inadequate for failing to explain how his alleged trade secrets differ from matters within the general knowledge of skilled persons in the field of commercial food science. In the unusual procedural posture of this case, we deem this issue to be one of law which we review de novo, depending on undisputed facts (the contents of Brescia’s August 2007 trade secret designation) and the interpretation of section 2019.210.
Although we do not agree with Brescia’s contention that a trade secret claimant can never be required to particularize how the alleged trade secret differs from prior products, we agree that the trial court erred in imposing such a requirement here. We conclude that whether a trade secret designation adequately distinguishes the allegedly protected information from the general knowledge of skilled persons in the field is a function of the particularity of the designation – that is, a function of whether the stated details themselves are sufficient, given the nature of the alleged secret and the technology in which it arises, to permit the defendant to ascertain whether and in what way the information is distinguished from matters already known, and to permit the court to fashion appropriate discovery. Absent a showing that the details alone, without further explanation, are inadequate to permit the defendant to discern the boundaries of the trade secret so as to prepare available defenses, or to permit the court to understand the identification so as to craft discovery, the trade secret claimant need not particularize how the alleged secret differs from matters already known to skilled persons in the field. Further, consistent with precedent, the trade secret designation is to be liberally construed, and reasonable doubts regarding its adequacy are to be resolved in favor allowing discovery to go forward.

A. Section 2019.210 and Advanced Modular

TO BE CONTINUED AS PART II….
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