Farmers Ins. Exchange v. Steele Ins. Agency, 2013 WL 3872950 (ED Ca. July 25, 2013)

Farmers Ins. Exchange v. Steele Ins. Agency, 2013 WL 3872950 (ED Ca. July 25, 2013) (9th Cir)

Plaintiffs asserted nine state and federal causes of action against Defendants, including the Computer Fraud and Abuse Act (CFAA) and California’s Uniform Trade Secrets Act (CUTSA). The Defendants argued that CUTSA preempts the other eightclaims.Defendants were former agents of Plaintiff who had access to Plaintiff’s proprietary computer system and database containing valuable trade secrets. Each of the Defendants ultimately ceased their relationship with Plaintiff and began working on behalf of another competing agency. The gravamen of Plaintiffs’ complaint is that the Defendants obtained Plaintiffs’ trade secret information and used that information to switch Plaintiff’s customers to the new agency.The California Uniform Trade Secrets Act implicitly preempts alternative civil remedies based on trade secret misappropriation. The issue before the court was whether the wrongdoing alleged in Plaintiffs’ claims for violating the CFAA can be materially distinguished from the wrongdoing alleged in Plaintiffs’ trade secret misappropriation claim. The court found it could and denied Defendants’ Motion to Dismiss.The court looked to the Ninth Circuit’s CFAA access jurisprudence and found that, because it follows the Strict Access Theory which focuses only on the access of computer information—not use of that information, what is prohibited by the CFAA is not the same as what is prohibited by CUTSA: “The Ninth Circuit has stated that ‘the plain language of the CFAA targets the unauthorized procurement or alteration of information, not its misuse or misappropriation.” Accordingly, CUTSA does not preempt the CFAA.

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