IP Law Daily, TRADE SECRETS—Cal. App.: Trial court’s decision affirmed in Pacific Valley Bank trade secrets misappropriation dispute, (Aug 25, 2026)

By Carolin Dennis, B.Sc., LL.B., LL.M.

The appeals court found that the trial court’s findings were supported by substantial evidence.

In a trade secret misappropriation case, the California Court of Appeal affirmed the trial court’s judgment finding that Pacific Valley Bank’s former employee misappropriated trade secrets because the customer lists were trade secrets and he misappropriated them by sending them to his personal e-mail address without authorization. The appellate court also determined that the trial court did not err in concluding that Pinnacle Bank was not liable for Pacific Valley’s former employee’s misappropriation of trade secrets because it prohibited its new employees from bringing with them “confidential or proprietary material of former employers” and disciplined him for his noncompliance with its confidentiality policy (Pacific Valley Bank v. Servi, No. H052965 (Cal. App. Aug. 19, 2026)).

Background. Pacific Valley Bank (Pacific Valley) and Pinnacle Bank (Pinnacle) are banks in Monterey County. They are competitors for customers in the Monterey County banking market. Pacific Valley hired Servi as a senior vice president and senior business banker in December 2015. On March 21, 2022, Servi resigned from Pacific Valley. At the time of his resignation from Pacific Valley, Servi was a senior relationship manager. Servi began his employment at Pinnacle in April 2022. On April 14, 2022, Servi sent two e-mails (the April 2022 e-mails) from his Pinnacle e-mail address to Pacific Valley customers listed on the Pacific Valley customer lists to convince those customers to follow him to Pinnacle. Pacific Valley became aware of the April 2022 e-mails when Pacific Valley customers notified Pacific Valley that Servi had contacted them. Pacific Valley took steps to address Servi’s misappropriation of the customer lists, correlated data breach, and sent cease-and-desist letters to Servi and Pinnacle. In response, Pinnacle verbally counseled Servi against sending such e-mails. Pinnacle did not conduct an investigation into the scope of Servi’s actions and use of Pacific Valley’s customer lists, including whether he saved them on Pinnacle’s computer system.

Pacific Valley filed a complaint alleging that Servi and Pinnacle misappropriated Pacific Valley’s trade secrets (first cause of action), Servi breached his employment contract with Pacific Valley (second cause of action), Servi and Pinnacle intentionally interfered with Pacific Valley’s contractual relations with its customers (third cause of action), Servi and Pinnacle intentionally interfered with Pacific Valley’s prospective economic relations with customers and other third parties (fourth cause of action), Servi and Pinnacle engaged in unfair business practices in violation of Business and Professions Code section 17200 (fifth cause of action), and Servi and Pinnacle committed trade libel against Pacific Valley (sixth cause of action). The trial court entered judgment in favor of Pacific Valley on the first cause of action, in favor of Servi on the second through sixth causes of action, and in favor of Pinnacle on the first and third through sixth causes of action. The trial court awarded Pacific Valley $228,339.47 in damages. Both Servi and Pacific Valley appealed the judgment.

Trade secret misappropriation. Servi challenged the trial court’s decision on Pacific Valley’s trade secret misappropriation claim on the ground that the customer lists are not trade secrets, and he did not misappropriate them. Servi contended that the customer lists are not trade secrets because (1) components of the lists are publicly available and readily ascertainable, (2) the lists do not provide a “substantial competitive advantage” because the information in the lists “was long since stale and out of date” when he sent the April 2022 e-mails, and (3) Pacific Valley did not take reasonable measures to protect them. Servi also asserted that Pacific Valley failed to adduce evidence establishing that he improperly obtained, retained, used, and/or disclosed the customer lists.

The appellate court found that Pacific Valley presented undisputed evidence that compiling the customer lists was a lengthy process that required the expenditure of a significant amount of its employees’ time and resources and required the collection of information from multiple databases. Additionally, Pacific Valley presented evidence of the ways in which it sought to protect its confidential information and trade secrets, including restrictions on access and export, regular security audits, annual employee training on preserving the confidentiality of its data and protecting against unauthorized disclosure, and repeated reminders (in its offer letters, employee handbooks, login pop-ups, and exit interview process) to its employees of the importance of protecting Pacific Valley’s data and using such data only for purposes of performing their job duties. Moreover, substantial evidence in the record supported the trial court’s finding of misappropriation. Pacific Valley did not authorize Servi to send the customer lists to his personal e-mail address or to a location outside of the bank’s computer system, and Servi admits that he received no such authorization. Although Servi also testified that he sent the customer lists to his personal e-mail address because of difficulties he had accessing Pacific Valley’s system while working remotely, Pacific Valley proffered testimony that none of its employees, including Servi, complained of any such access issues.

Therefore, the appellate court disagreed with the Servi’s assertions that the trial court erred in its conclusions that Pacific Valley’s customer lists were trade secrets and that Servi misappropriated them.

Damages. The appellate court was also not persuaded by Servi’s contention that, because Pacific Valley was not required under either the California Uniform Trade Secrets Act (UTSA) or the California Consumer Privacy Act (CCPA) to notify its customers of Servi’s misappropriation, Pacific Valley was not entitled to recover damages under section 3426.3, subdivision (a) for the costs of doing so. The appellate court found no such prerequisite for a damages award in the UTSA, and Servi cited no legal authority to support his contention. In addition, contrary to Servi’s assertion, the trial court did not base its award of damages on the CCPA. The trial court found that Pacific Valley was entitled to damages because it “reasonably took steps to protect the private financial information of its customers by notifying regulators and its customers of the breach” and “to protect its reputation.” Moreover, the record contained substantial evidence supporting the trial court’s award of damages for actual losses. Therefore, the appellate court found no error in the trial court’s award of damages to Pacific Valley.

Respondeat superior and ratification. On appeal, Pacific Valley contended the trial court erred in concluding Pinnacle was not liable for Servi’s misappropriation of Pacific Valley’s trade secrets. Pacific Valley asserted that Pinnacle was liable under the respondeat superior theory because Servi used Pacific Valley’s trade secrets in the course and scope of his employment at Pinnacle. In the alternative, Pacific Valley asserted Pinnacle was liable because it ratified Servi’s actions by failing to investigate his actions or “sincerely discipline” him.

The appellate court noted that although Pinnacle expected Servi to bring in business and Servi sent the April 2022 e-mails with the intention of obtaining business from the customers targeted, the record indicated that Pinnacle prohibited new employees from bringing with them “confidential or proprietary material of former employers” and disciplined Servi for his noncompliance with Pinnacle’s confidentiality policy. Moreover, Pacific Valley failed to persuade the appellate court that the trial court erred in concluding Pinnacle was not liable under the doctrine of respondeat superior.

Additionally, the appellate court noted that the fact that Pinnacle verbally reprimanded Servi provided substantial evidence supporting the trial court’s finding that Pinnacle did not approve of or ratify Servi’s act.

Accordingly, the appellate court affirmed the trial court’s judgment.

The Case is No. H052965.

Judge: Danner, A.

Attorneys: Stephen Craig Cox (JRG Attorneys at Law) for Pacific Valley Bank. Benjamin Alexander Emmert (Littler Mendelson, P.C.) for Joseph S. Servi and Pinnacle Bank.

Companies: Pacific Valley Bank; Pinnacle Bank

Cases: TradeSecrets CaliforniaNews