IP Law Daily, TRADE SECRETS—Cal. App.: Dismissal of trade secrets claims over client lists affirmed, (Jul 27, 2026)

By Jonathan Anderson

The appeals court found that the plaintiff-appellant failed to show error by the lower court, and that other claims were time-barred.

The California Court of Appeal affirmed a lower court judgment dismissing allegations that a former employee and shareholder of a business misappropriated trade secrets by allegedly retaining client lists and information about staff hiring and training. In an unpublished opinion, a three-judge appellate panel found that the plaintiff-appellant failed to show error by the lower court, namely in the lower court’s findings that the operative complaint did not sufficiently allege the existence of a trade secret, and in determining the Uniform Trade Secrets Act (UTSA) displaced claims alleging unfair competition law and interference with prospective economic relationship. Further, the appeals court held that some claims were time-barred (Maroon Society, Inc. v. Shah, No. B348165 (Cal. App. Jul. 21, 2026)).

Background. In March 2020, plaintiff-appellant, Maroon Society, Inc., filed a complaint against defendant-respondent, Nisha Shah, in the Superior Court of Los Angeles County. Maroon’s operative second amended complaint (SAC) asserted claims for (1) misappropriation of trade secrets; (2) intentional interference with prospective economic relationship; (3) violation of Business and Professions Code section 17200; and (4) breach of contract.

Maroon alleged that Shah, a former employee and shareholder, retained its trade secrets after resigning and used them to compete with Maroon in public bidding projects. Maroon identified the following as its trade secrets: (1) “Unique and novel compilation of client lists which includes client names, pricing data, information on contract negotiation and client history,” and (2) “[u]nique methods and processes for... hiring, training and managing survey staff, including specific client preferences.” Maroon alleged it maintained the information’s confidentiality and used it to bid on public projects.

The Superior Court granted summary judgment in favor of Shah. On the misappropriation claim, the court concluded that the SAC failed to state a claim for trade secret misappropriation. The court stated the SAC failed to describe the subject matter of the trade secrets with sufficient particularity and to allege any specific confidential information that would not be disclosed as part of a public bidding process. The court concluded that Maroon’s remaining claims were displaced by the UTSA because the conduct at the heart of the claims was the alleged acquisition and misappropriation of Maroon’s trade secrets. Further, the court found Maroon’s claims were time-barred. As to the breach of contract claim, the court determined that Maroon’s complaint was filed about five years after an underlying partnership agreement was terminated and there was no basis for tolling the four-year statute of limitations. Maroon appealed.

Standard of review. The appeals court reviewed the trial court’s decision de novo. The appeals court observed that it is “a fundamental principle of appellate procedure that the judgment is presumed correct, and the appellant bears the burden to affirmatively show reversible error by citation to the record and supporting authority.”

Existence of trade secret. First, the appeals court held that Maroon failed to demonstrate that the trial court erred in determining the SAC did not sufficiently allege the existence of a trade secret. The appeals court reasoned that Maroon did not challenge the trial court’s determination that the SAC failed to state a claim for trade secret misappropriation in its opening brief, which forfeited any challenge to the lower court’s ruling. The appeals court said it was Maroon’s burden to provide an adequate record to assess any claim of error concerning the sufficiency of the SAC, but the record contained an incomplete copy of the pleading. The appeals court also found that Maroon failed to support its “conclusory assertion, made for the first time in its reply brief, that its SAC” was sufficiently particularized in describing the asserted trade secrets. Maroon did not identify any facts supporting a finding that its client lists and hiring practices constitute trade secrets.

UTSA. Second, the appeals court held that Maroon failed to demonstrate that the trial court erred in determining the UTSA displaced Maroon’s second and third causes of action, namely the unfair competition law and interference with prospective economic relationship claims. The trial court found that the second and third causes of action did not sufficiently allege wrongdoing distinct from Maroon’s trade secret misappropriation claim, concluding that the conduct at the heart of the second and third causes of action was Shah’s alleged improper acquisition and use of Maroon’s trade secrets. But because the SAC in the record was incomplete, the appeals court said it could not determine whether the second and third causes of action allege alternative legal theories or attempt to evade the UTSA by restating a trade secrets claim as something else.

Breach of contract. Third, the appeals court held that Maroon’s breach of contract claim is time-barred. The statute of limitations for a breach of contract claim is four years under Calif. Code Civ. Proc. § 337. The trial court concluded that the partnership agreement that Shah allegedly breached terminated pursuant to its own terms on Dec. 31, 2014, when Shah exited the partnership and sold her shares. No breach could have occurred after the agreement ended on that date, which the appeals court observed was more than five years before the case was filed. Maroon did not show the court erred and did not identify any authority or provision in the contract to show that its terms continued past termination.

Maroon argued that all its claims were timely under the delayed discovery, equitable estoppel, and continuing violation doctrines. However, Maroon did not identify any alleged wrongdoing that occurred before Shah’s partnership agreement was terminated in December 2014 to which these doctrines would apply. Maroon did not explain how any wrongful conduct that occurred after termination of the agreement would revive the agreement.

The Case is No. B348165.

Judge: Sepe-Wiesenfeld, L.

Attorneys: Dionisios Marinos (Law Office of Dionisios Marinos) for Maroon Society, Inc. D. Jay Ritt (Ritt Hodges) for Nisha Shah.

Companies: Maroon Society, Inc.

Cases: TradeSecrets CaliforniaNews