MTDBundle 2

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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA

PQ LABS, INC.,

Plaintiff,

v.

YANG QI; ZAAGTECH, INC.; ANDY
NGUYEN; JINPENG LI; and HAIPENG
LI,

Defendants.

________________________________/
No. C 12-0450 CW

ORDER GRANTING IN
PART DEFENDANTS'
MOTIONS TO
DISMISS, GRANTING
DEFENDANTS' MOTION
TO STRIKE AND
GRANTING DEFENDANT
NGUYEN'S MOTION TO
DISMISS FOR
IMPROPER VENUE

This case arises from Defendants' alleged misappropriation
of trade secrets from Plaintiff. Defendants Yang Qi, Jinpeng Li
and ZaagTech, Inc. move to dismiss under Federal Rule of Civil
Procedure 12(b)(6) and to strike under Federal Rule of Civil
Procedure 12(f).
1
Defendant Andy Nguyen moves separately to
dismiss for improper venue under Federal Rule of Civil Procedure
12(b)(3). Plaintiff opposes both motions. The motions were taken
under submission and decided on the papers. Having considered all
of the papers filed by the parties, the Court grants in part the
motion to dismiss for failure to state a claim, grants the motion
to strike and grants the motion to dismiss for improper venue.

1
Defendant Haipeng Li has not been served.
Case4:12-cv-00450-CW Document36 Filed06/07/12 Page1 of 30

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BACKGROUND
The following facts are taken from Plaintiff's First Amended
Complaint (1AC). Plaintiff PQ Labs is a California corporation
with its principal place of business in San Jose, California,
which is engaged in the business of designing, developing,
manufacturing, and selling hardware and software for computer
touch screen products. Plaintiff "authored software and
registered with the United States Copyright Office the work
entitled PQ Labs MultiTouch System Software as Registration No.
TXu 1-620-335. The software embodied in this copyright
registration works with PQ Labs hardware circuitry and microchips
to produce the user interface of its touch screen products." 1AC.
14.
Defendant Yang Qi worked for Plaintiff as an account manager
from 2009 until he was terminated in April 2010. As an account
manager, Qi handled the sale of products to customers and was
privy to information about Plaintiff's products, customers and
policies on the secrecy of client lists and information.
Defendant Jinpeng Li was an engineer hired to design hardware for
Plaintiff's touch screen products. In May 2010, Defendant Andy
Nguyen was hired as a sales and account manager to replace Qi.
Qi developed a plan to use his access to Plaintiff's
confidential information about customers and the hardware and
software design of Plaintiff's products to create a directly
competing business, MultiTouch Group LLC. Qi eventually

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established ZaagTech in China as a direct competitor, using
Plaintiff's proprietary information to develop touch screen
products and Plaintiff's confidential customer lists to obtain
customers. To further his plan, Qi recruited help from Li, who
had designed Plaintiff's hardware products. Li had signed a
document for Plaintiff entitled, "Employee Rules and
Confidentiality Agreement," which alerted him to the
confidentiality of customer information, product information and
schematics and instructed that it be protected. While he was
employed by Plaintiff, Li shared confidential information with Qi.
When Nguyen was hired by Plaintiff to replace Qi in May 2010,
he signed an Employee Agreement and an Employee Confidentiality
Agreement. Before Nguyen left his employment with Plaintiff in
June 2011, he copied all accessible company files onto a personal
portable hard drive which he transferred to Qi, ZaagTech and Li in
exchange for compensation. Shortly after Nguyen left his job with
Plaintiff, ZaagTech began soliciting customers from Plaintiff's
confidential customer list.
Plaintiff was damaged by Defendants' improper acts and, as a
result, was forced to drop its prices to its customers in order to
compete with Defendants and ensure its viability as a business.
Plaintiff asserts the following causes of action:
(1) misappropriation of trade secrets against Qi, ZaagTech and
Nguyen; (2) misappropriation of trade secrets against Qi, ZaagTech
and Li; (3) copyright infringement against Qi, ZaagTech and Li;

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(4) unfair competition against Qi, ZaagTech and Nguyen;
(5) unfair competition against Qi, ZaagTech and Li; (6) unfair
competition against Qi and Haipeng Li; (7) violations of
California Penal Code section 502 against Qi, Jinpeng Li and
ZaagTech; (8) unfair competition against Qi and ZaagTech;
(9) fraud against Qi; (10) tortious interference with contract and
prospective economic advantage against Qi and Haipeng Li;
(11) tortious interference with prospective economic advantage
against Qi, ZaagTech and Nguyen; (12) breach of contract against
Nguyen; (13) breach of fiduciary duty against Qi and Nguyen;
(14) breach of contract against Jinpeng Li; (15) breach of
fiduciary duty against Qi and Jinpeng Li; (16) conversion against
Qi and Haipeng Li; (17) trespass against chattels against Qi,
ZaagTech and Jinpeng Li; (18) violation of the computer fraud and
abuse act against Qi and ZaagTech; (19) civil conspiracy against
all Defendants; and (20) aiding and abetting against all
Defendants.
LEGAL STANDARD
I. Motion to Dismiss

A complaint must contain a short and plain statement of the
claim showing that the pleader is entitled to relief. Fed. R.
Civ. P. 8(a). On a motion under Rule 12(b)(6) for failure to
state a claim, dismissal is appropriate only when the complaint
does not give the defendant fair notice of a legally cognizable
claim and the grounds on which it rests. Bell Atl. Corp. v.

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Twombly, 550 U.S. 544, 555 (2007). In considering whether the
complaint is sufficient to state a claim, the court will take all
material allegations as true and construe them in the light most
favorable to the plaintiff. NL Indus., Inc. v. Kaplan, 792 F.2d
896, 898 (9th Cir. 1986). However, this principle is inapplicable
to legal conclusions; threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, are not
taken as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Twombly, 550 U.S. at 555).
When granting a motion to dismiss, the court is generally
required to grant the plaintiff leave to amend, even if no request
to amend the pleading was made, unless amendment would be futile.
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911
F.2d 242, 246-47 (9th Cir. 1990). In determining whether
amendment would be futile, the court examines whether the
complaint could be amended to cure the defect requiring dismissal
"without contradicting any of the allegations of [the] original
complaint." Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th
Cir. 1990).
II. Motion to Strike

Pursuant to Federal Rule of Civil Procedure 12(f), the Court
may strike from a pleading Aany redundant, immaterial, impertinent
or scandalous matter.@ Fed. R. Civ. P. 12(f). The purpose of a
Rule 12(f) motion is to avoid spending time and money litigating
spurious issues. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527

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(9th Cir. 1993), reversed on other grounds, 510 U.S. 517 (1994).
Motions to strike are disfavored because they are often used as
delaying tactics and because of the limited importance of
pleadings in federal practice. Bureerong v. Uvawas, 922 F. Supp.
1450, 1478 (C.D. Cal. 1996). They should not be granted unless it
is clear that the matter to be stricken could have no possible
bearing on the subject matter of the litigation. Colaprico v. Sun
Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991).
III. Motion to Dismiss for Improper Venue

A defendant may raise a Rule 12(b)(3) motion to dismiss for
improper venue in its first responsive pleading or by a separate
pre-answer motion. Fed. R. Civ. P. 12(b)(3). Once the defendant
challenges venue, the plaintiff bears the burden of establishing
that venue is proper. Piedmont Label Co. v. Sun Garden Packing
Co., 598 F.2d 491, 496 (9th Cir. 1979).
When considering a Rule 12(b)(3) motion to dismiss, the
pleadings need not be accepted as true, and the court may
consider facts outside of the pleadings. Richards v. Lloyd's of
London, 135 F.3d 1289, 1292 (9th Cir. 1998). If the court
determines that venue is improper, it may dismiss the case, or, if
it is in the interest of justice, transfer it to any district in
which it properly could have been brought. 28 U.S.C. 1406(a);
Dist. No. 1, Pac. Coast Dist. v. State of Alaska, 682 F.2d 797,
799 (9th Cir. 1982). The decision to transfer rests in the
discretion of the court. 28 U.S.C. 1404(b); King v. Russell,

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963 F.2d 1301, 1304 (9th Cir. 1992)(holding that the trial court
did not abuse its discretion under 28 U.S.C. 1406(a) when it
chose to dismiss, and not transfer, the action because of improper
venue).
DISCUSSION
I. Motion to Dismiss
A. Claim 1 for Misappropriation of Trade Secrets Against Qi
and ZaagTech

In this cause of action, Plaintiff alleges that Qi and
ZaagTech misappropriated Plaintiff's trade secret customer
information by taking this information from Nguyen with knowledge
that he had acquired it by improper means, namely, by breaching
his duty as Plaintiff's employee to keep the customer lists
confidential.
To state a claim for misappropriation of trade secrets under
the California Uniform Trade Secrets Act (CUTSA), Cal. Civ. Code
3426 through 3426.11, the plaintiff must allege that (1) the
plaintiff owned a trade secret; (2) the defendant acquired,
disclosed, or used the plaintiff's trade secret through improper
means, and (3) the defendant's actions damaged the plaintiff.
Cytodyn, Inc. v. Amerimmune Pharmaceuticals, Inc., 160 Cal. App.
4th 288, 297 (2008). Under California Civil Code section
3426.1(b), misappropriation of a trade secret means
(1) Acquisition of a trade secret of another by a person who
knows or has reason to know that the trade secret was
acquired by improper means; or


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(2) Disclosure or use of a trade secret of another without
express or implied consent by a person who:

(A) Used improper means to acquire knowledge of the
trade secret; or

(B) At the time of disclosure or use, knew or had reason
to know that his or her knowledge of the trade secret
was:

(i) Derived from or through a person who had
utilized improper means to acquire it;

(ii) Acquired under circumstances giving rise to a
duty to maintain its secrecy or limit its use; or

(iii) Derived from or through a person who owed a
duty to the person seeking relief to maintain its
secrecy or limit its use; or

(C) Before a material change of his or her position,
knew or had reason to know that it was a trade secret
and that knowledge of it had been acquired by accident
or mistake.

Defendants Qi and ZaagTech argue that this claim against them
must be dismissed because the 1AC does not allege that they knew
that Nguyen obtained the alleged trade secrets by improper means
or that the customer information provided by Nguyen belonged to
Plaintiff.
The 1AC, taken as a whole, sufficiently alleges that Qi and
ZaagTech knew that the customer information they received from
Nguyen belonged to Plaintiff and that he obtained it through
improper means.
B. Claims 4, 5, 11 and 13 Preempted by CUTSA
Defendants Qi, ZaagTech and Li argue that Plaintiff's claims
against them for unfair competition, tortious interference with

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prospective economic advantage and breach of fiduciary duty are
preempted by CUTSA because they are based on the same nucleus of
facts as Plaintiff's claims for trade secret misappropriation.
Plaintiff responds that these claims are not preempted because
claims 11 and 13 are based on the additional factual element of
breach of contract by Nguyen and claims 4 and 5 are based on the
misappropriation of proprietary information in addition to trade
secrets.

CUTSA preempts common law claims that are based on
misappropriation of a trade secret. Ali v. Fasteners for Retail,
Inc., 544 F. Supp. 2d 1064, 1070 (E.D. Cal. 2008).
However, CUTSA
exempts certain claims from the scope of its pre-emption: it does
not affect (1) contractual remedies, whether or not based upon
misappropriation of a trade secret, (2) other civil remedies that
are not based upon misappropriation of a trade secret, or
(3) criminal remedies, whether or not based upon misappropriation
of a trade secret. Cal. Civ. Code 3426.7(b). CUTSA defines a
trade secret as
Information, including a formula, pattern, compilation,
program, device, method, technique, or process, that:

(1) Derives independent economic value, actual or potential,
from not being generally known to the public or to other
persons who can obtain economic value from its disclosure or
use; and

(2) Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

Cal. Civ. Code 3426.1(d).


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Courts have held that where a claim is based on the
identical nucleus of facts as a trade secrets misappropriation
claim, it is preempted by [C]UTSA. Silicon Image, Inc. v.
Analogix Semiconductor, Inc., 2007 WL 1455903, at *9 (N.D. Cal.).
The preemption inquiry for those causes of action not
specifically exempted by 3426.7(b) focuses on whether other
claims are no more than a restatement of the same operative facts
supporting trade secret misappropriation. . . . If there is no
material distinction between the wrongdoing alleged in a [C]UTSA
claim and that alleged in a different claim, the [C]UTSA preempts
the other claim. Convolve, Inc. v. Compaq Computer Corp., 2006
WL 839022, at *6 (S.D.N.Y.) (applying California law). If a claim
is based on confidential information other than a trade secret, as
that term is defined in CUTSA, it is not preempted. First
Advantage Background Servs. Corp. v. Private Eyes, Inc., 569 F.
Supp. 2d 929, 942 (N.D. Cal. 2008).
The Court must, therefore, compare Plaintiff's claims for
misappropriation of trade secrets with the claims Defendants argue
are preempted to determine if the latter are based on confidential
information other than a trade secret or if there is some material
distinction between the wrongdoing alleged in the claims.
Plaintiff's first and second causes of action are for
misappropriation of trade secrets. In the first cause of action,
Plaintiff defines its trade secret as "customer lists for its
products from which it obtained independent economic value from

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the fact that, among other things, said lists were not generally
known to the public or to the touch screen industry and PQ Labs
utilized this trade secret information to sell its products to
customers, generate revenues, and generate profits." 1AC 43.
In the second cause of action, Plaintiff defines its trade secrets
as "confidential designs and drawings for hardware, circuitry, and
FPGA microchip, as well as multi-touch software code for its touch
screen products." 1AC 51.
Plaintiff's fourth cause of action for unfair competition
alleges that Qi, ZaagTech and Nguyen "appropriated PQ Labs'
valuable business property in the form of PQ Labs' stable of
customers and information relating to customers . . ." 1AC 65.
Plaintiff also alleges that "there is a public policy against
third parties, particularly newly established competitors,
stealing another business's list of customers, rather than
developing customers themselves." 1AC 67. Thus, the fourth
cause of action is premised upon the same nucleus of facts as the
first cause of action for misappropriation of trade secrets, and
it must be dismissed as preempted by CUTSA. Dismissal is with
leave to amend if Plaintiff is able to add allegations that remedy
this deficiency.
Plaintiff's fifth cause of action for unfair competition
alleges that Qi, ZaagTech and Nguyen "appropriated PQ Labs'
valuable business property in the form of PQ Labs' proprietary
product designs for touch screens, including internal and external

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components and user interface . . ." 1AC 70. Thus, the fifth
cause of action is premised upon the same nucleus of facts as the
second cause of action for misappropriation of trade secrets and
must be dismissed as preempted by CUTSA. Dismissal is with leave
to amend if Plaintiff is able to add allegations that remedy this
deficiency.
The eleventh cause of action for tortious interference with
prospective economic advantage against Qi, ZaagTech and Nguyen
alleges that "Andy Nguyen intentionally disrupted PQ Labs'
business relationships with its customers and distributors by
collaborating with Yang Qi and ZaagTech to help them obtain that
business by disclosing PQ Labs' confidential customer lists to
them with knowledge that Yang Qi and ZaagTech would contact said
customers and distributors in an effort to poach sales from PQ
Labs." 1AC 114. Although Plaintiff argues that this claim is
also based on breach of contract by Nguyen, there is no allegation
in this cause of action addressing a contract or breach of
contract. Furthermore, this claim is brought against Qi and
ZaagTech as well as Nguyen. Qi and ZaagTech could not be liable
for the breach of Nguyen's contract with Plaintiff. Therefore,
this claim is dismissed as preempted by CUTSA. Dismissal is with
leave to amend if Plaintiff is able to add allegations that remedy
the deficiencies noted.
The thirteenth cause of action for breach of fiduciary duty
against Qi and Nguyen alleges that, as agents of PQ Labs, Qi and

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Nguyen were in fiduciary relationships with PQ Labs which they
breached by disclosing PQ Labs' trade secret confidential customer
lists to others. 1AC 126-27. Even though this cause of action
adds the element of breach of fiduciary duty, it is also based on
the same nucleus of facts as the misappropriation claim and is
preempted. See Farhang v. Indian Inst. of Tech., Kharagpur, 2010
WL 2228936, *11 (N.D. Cal.) (breach of fiduciary duty claim
preempted by misappropriation claim where conduct alleged in both
claims based on same nucleus of facts). Therefore, this claim is
dismissed, with leave to amend.
C. Claims 13 and 15
Defendants argue that the thirteenth and fifteenth causes of
action for breach of fiduciary duty should be dismissed against Qi
because the allegations in the 1AC do not indicate the existence
of a fiduciary relationship between Plaintiff and Qi.

The elements of a cause of action for breach of fiduciary
duty are the existence of a fiduciary relationship, its breach,
and damage proximately caused by that breach. City of Atascadero
v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 68 Cal. App. 4th
445, 483 (1998); Pierce v. Lyman, 1 Cal. App. 4th 1093, 1101
(1991). Under California law, a fiduciary relationship arises in
one of two ways. A party may be subject to fiduciary obligations
if that party knowingly undertake[s] to act on behalf and for the
benefit of another, or . . . enter[s] into a relationship which
imposes that undertaking as a matter of law. GAB Bus. Servs.

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Inc. v. Lindsey & Newsom Claim Servs., Inc. 83 Cal. App. 4th 409,
416 (2000) (There are two kinds of fiduciary duties-those
imposed by law, and those undertaken by agreement.), disapproved
on other grounds in Reeves v. Hanlon, 33 Cal. 4th 1140 (2004). A
fiduciary duty is undertaken by agreement when a confidence is
reposed by one party in the integrity of another, and the party in
whom the confidence is reposed voluntarily accepts or assumes to
accept the confidence. Id. at 417. The existence of the repose
and the acceptance of a confidence are questions of fact. Id.
Plaintiff acknowledges that the 1AC does not allege that Qi
was subject to fiduciary obligations as a matter of law, but
argues that the 1AC contains sufficient factual allegations of the
existence of a fiduciary relationship "so as to raise Plaintiff's
right to relief above the speculative level." Plaintiff points to
126 of the 1AC which alleges that, as Plaintiff's "workers with
access to and knowledge of confidential information including
customer lists, and as agents of PQ Labs, Yang Qi and Andy Nguyen
were in fiduciary relationships, respectively, with PQ Labs during
the period they worked for PQ Labs and, thus they owed PQ Labs
undivided loyalty." Paragraph 126, however, does not allege that
Qi knowingly undertook the responsibility to act on behalf and for
the benefit of Plaintiff. In other words, the paragraph alleges
that Plaintiff may have reposed its confidence in Qi, but nowhere
does it allege that Qi accepted that responsibility. In paragraph
138 of the 1AC, Plaintiff alleges that Qi "was in a fiduciary

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relationship with PQ Labs as its sales representative and agent."
However, this conclusory allegation is also insufficient to
establish that Qi entered into an agreement with Plaintiff to act
as its fiduciary.
Therefore, Defendants' motion to dismiss claims 13 and 15 as
to Qi is granted. Dismissal is with leave to amend.
D. Claim 9

Defendants argue that claim 9 for fraud against Qi for
failure to disclose the existence of competitor MultiTouch Group
and the alleged diversion of customer sales orders from Plaintiff
to MultiTouch Group should be dismissed for failure to allege a
duty for Qi to disclose such information. Plaintiff does not
respond to this argument and, therefore, concedes it. Defendants'
motion to dismiss this claim is granted, with leave to amend.
E. Claim 16
The sixteenth cause of action for conversion alleges that
Plaintiff owned and possessed a certain thirty-two inch touch
screen monitor entitled PQ Labs Multi-Touch 32 G3X32 Overlay which
was "involved in a sales transaction" with one of Plaintiff's
customers on February 10, 2010. 1AC 145. Qi, through his
company MultiTouch Group LLC, took possession of the monitor and
fulfilled an order request sent directly to Plaintiff. 1AC 146.
Plaintiff did not consent to Qi's taking possession of the monitor
and acting as its distributor, nor did Plaintiff have knowledge of
Qi's actions. 1AC 147. Plaintiff was harmed by Qi's actions

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because MultiTouch Group LLC took payment at the full retail price
of $3,300 and paid to Plaintiff the wholesale price of $2,650.
Plaintiff would have realized the full retail price of $3,300 but
for Qi's interference. 1AC 148.
Defendants argue that the cause of action for conversion must
be dismissed because the intangible right of a sales opportunity
cannot be converted and because Plaintiff admits that it was paid
for the touch screen monitor that it alleges was converted.

Under California law, a claim for conversion requires a
plaintiff to allege (1) ownership or right to possession of
property; (2) a defendants wrongful act toward the property,
causing interference with the plaintiffs possession; and
(3) damage to the plaintiff. PCO, Inc. v. Christensen, Miller,
Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 150 Cal. App. 4th 384,
394 (2007).
Plaintiff alleges all of the elements necessary to state a
claim for conversion. That Plaintiff was given partial payment
for the allegedly converted property does not negate the
allegations that Qi acted wrongfully in regard to it and that his
actions caused damage to Plaintiff. Therefore, the motion to
dismiss this claim is denied.
F. Claim 19 and 20
Defendants argue that the nineteenth and twentieth causes of
action for conspiracy and aiding and abetting should be dismissed
because they do not constitute independent causes of action.

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Plaintiff responds that, although conspiracy is not a cause of
action, it is a legal doctrine that imposes liability on persons
who have not actually committed a tort themselves, but shared with
the tortfeasors a common plan or design. Similarly, Plaintiff
argues that the aiding and abetting claim is sufficient to state a
claim because the 1AC alleges that each Defendant provided
substantial assistance and encouragement to the others in
perpetrating the alleged wrongs.
Civil conspiracy is not a cause of action, but a legal
doctrine that imposes liability on persons who, although not
actually committing a tort themselves, share with the immediate
tortfeasors a common plan or design in its perpetration. Applied
Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 510
(1994) (citing Wyatt v. Union Mortgage Co., 24 Cal. 3d 773, 784
(1979)). Standing alone, a conspiracy does no harm and engenders
no tort liability. It must be activated by the commission of an
actual tort. Applied Equipment Corp., 7 Cal. 4th at 511.
Civil conspiracy consists of three elements: (1) the
formation and operation of the conspiracy, (2) wrongful conduct in
furtherance of the conspiracy, and (3) damages arising from the
wrongful conduct. Kidron v. Movie Acquisition Corp., 40 Cal.
App. 4th 1571, 1581 (1995). The conspiring defendants must . . .
have actual knowledge that a tort is planned and concur in the
tortious scheme with knowledge of its unlawful purpose. Id. at
1582 (citing Wyatt, 24 Cal. 3d at 784-86). This knowledge must be

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combined with an intent to aid in achieving the objective of the
conspiracy. Kidron, 40 Cal. App. 4th at 1582; Schick v. Bach, 193
Cal. App. 3d 1321, 1328 (1987). A claim of unlawful conspiracy
must contain enough fact to raise a reasonable expectation that
discovery will reveal evidence of illegal agreement. Twombly,
550 U.S. at 556. A bare allegation that a conspiracy existed does
not suffice. Id.
Plaintiff's cause of action for conspiracy alleges that each
Defendant "did agree, conspire, plan and effectuate a common plan
and scheme to misappropriate PQ Labs proprietary information in
order to establish a new business to compete directly with PQ
Labs, poach PQ Labs customers, interfere with PQ Labs business and
divert the same to ZaagTech and otherwise for Defendants'
commercial gain. Defendants did the acts and things herein
alleged pursuant to, and furtherance [sic] of, the conspiracy and
above-alleged Plan. Each of the Defendants furthered the
conspiracy by cooperating with, lending aid and encouragement to,
and/or ratifying and adopting acts of other Defendants, as alleged
above." 1AC 162. These conclusory allegations are insufficient
to raise a reasonable expectation that discovery will reveal
evidence of an illegal agreement. Furthermore, Plaintiff has not
specified which alleged torts are the predicate for the conspiracy
claim. See Kelly v. Mortgage Electronic Registration Systs.,
Inc., 642 F. Supp. 2d 1048, 1058 (N.D. Cal. 2009). Therefore, the
claim of civil conspiracy is dismissed, with leave to amend.

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"Liability may also be imposed on one who aids and abets the
commission of an intentional tort if the person (a) knows the
other's conduct constitutes a breach of duty and gives substantial
assistance or encouragement to the other to so act or (b) gives
substantial assistance to the other in accomplishing a tortious
result and the person's own conduct, separately considered,
constitutes a breach of duty to the third person." Saunders v.
Sup. Ct., 27 Cal. App. 4th 832, 846 (1994). Aiding and abetting
does not require an agreement, but simply assistance. Janken v.
GM Hughes Elecs., 46 Cal. App. 4th 55, 78 (1996). Like
conspiracy, the basis for liability for aiding and abetting is
concerted wrongful action. Id.
Plaintiff's cause of action for aiding and abetting alleges
that Defendants "gave substantial assistance and encouragement to
one or more of the intentionally tortious actions of other
Defendants alleged hereinabove, with knowledge that the other
Defendants' conduct constitutes a wrongful action, and did so by,
inter alia, cooperating with each other, assisting each other,
and/or failing to conduct themselves in a fashion requisite to
protect Plaintiff's interests or to avoid any adverse effect on
Plaintiff where the other Defendants had a fiduciary duty to
Plaintiff." 1AC 167. These conclusory allegations fail to
indicate how or what Defendants aided and abetted. Therefore, the
claim of aiding and abetting is dismissed, with leave to amend.

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Defendants also argue that, because Plaintiff alleges that
all Defendants did all the wrongful acts, the concepts of
liability through conspiracy or aiding and abetting is
unnecessary. However, a complaint may contain alternative
theories of relief. Therefore, the conspiracy and aiding and
abetting allegations are not dismissed on this ground.
III. Motion to Strike
Defendants argue that the portions of Plaintiff's fifth cause
of action for unfair competition that are based on a copyrighted
work are preempted by the Copyright Act, 17 U.S.C. 301(a), and
should be stricken. They also argue that portions of the eighth
cause of action for unfair competition should be stricken because
they are preempted by CUTSA. Without addressing the merits of
Defendants' motion, Plaintiff argues that the motion should be
denied because striking these allegations would be tantamount to
dismissing the claims on which they are based. These allegations
are stricken, and Plaintiff is granted leave to amend to remedy
the noted deficiencies.
A. Preemption by Copyright Act
The Copyright Act protects original works of authorship
fixed in any tangible medium of expression, now known or later
developed, from which they can be perceived, reproduced, or
otherwise communicated, either directly or with the aid of a
machine or device. 17 U.S.C. 102(a). Two conditions must be
satisfied for the Copyright Act to preempt a state law cause of

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action: (1) the content of the protected right must fall within
the subject matter of copyright as described in 17 U.S.C. 102
and 103 and (2) the right asserted under state law must be
equivalent to the exclusive rights contained in section 106 of the
Copyright Act. Sybersound Records, Inc. v. UAV Corp., 517 F.3d
1137, 1150 (9th Cir. 2008) (quoting Downing & Abercrombie & Fitch,
265 F.3d 994, 1003 (9th Cir. 2001)).
The equivalent rights prong of the test requires a court to
consider whether the state claim asserts rights
within the general scope of copyright as specified by section
106 of the Copyright Act. Section 106 provides a copyright
owner with the exclusive rights of reproduction, preparation
of derivative works, distribution, and display. To survive
preemption, the state cause of action must protect rights
which are qualitatively different from the copyright rights.
The state claim must have an extra element which changes the
nature of the action.

Laws v. Sony Music Entmt, Inc., 448 F.3d 1134, 1143 (9th Cir.
2006).
In its third cause of action for copyright infringement,
Plaintiff alleges that it owns a copyright for software which
collaborates with its hardware circuitry and microchips to produce
the interface of its touch screen products. 1AC 59. Plaintiff
alleges that Qi, ZaagTech and Jinpeng Li infringed its copyright
by "copying, reproducing, adapting, distributing, and otherwise
using the copyrighted material of PQ Labs' multi-touch system
software in touch screen products developed and offered for sale
by ZaagTech." 1AC 60. Furthermore, this cause of action

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incorporates previous allegations of the 1AC, in particular
paragraph 23, which alleges that Qi and ZaagTech copied "PQ Labs'
FPGA software, driver code, and ARM processor code registered with
the Copyright Office in its touch screen products designed and
manufactured after the establishment of ZaagTech."
Plaintiff's fifth cause of action for unfair competition is
premised almost entirely on Defendants' misappropriation of
Plaintiff's trade secrets, and as such is preempted by CUTSA. One
sentence in paragraph 72 mentions infringement: "The motivation,
reasons, justifications, and actions behind said Defendants'
infringement and misappropriation evince a desire to develop a
business to compete in the touch screen business against PQ Labs
while not expending the work necessary to achieve independent
success lawfully and fairly." To the extent that Plaintiff is
alleging unfair competition based upon Defendants' infringement of
copyrighted material, the allegation meets the first requirement
for preemption in that it falls within the subject matter of the
Copyright Act. To the extent that it is without an extra element
that changes the nature of the action, it meets the second
requirement for copyright preemption.
Therefore, the allegation regarding infringement in the fifth
cause of action is preempted by the Copyright Act and is stricken.
Plaintiff is granted leave to amend to show that its allegation of
infringement does not meet the requirements for preemption, if it
truthfully can do so.

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B. Preemption by CUTSA
Paragraph 86 of Plaintiff's eighth cause of action for unfair
competition is based, in part, on the allegation that Jinpeng Li
wrongfully transmitted to Qi, at Qi's urging, "certain PQ Labs
confidential, trade secret computer files containing schematics
and design drawings for the newest circuitry and hardware and
software for PQ Labs touch screen prototypes." As discussed
previously, Plaintiff's second cause of action for
misappropriation of trade secrets alleges that Defendants
misappropriated its confidential designs and drawings for
hardware, circuitry and microchips as well as its multi-touch
software code for its touch screen products. 1AC 51. Thus, the
allegation in paragraph 86 is premised upon the same nucleus of
facts as the second cause of action for misappropriation of trade
secrets, and is stricken as preempted by CUTSA. Plaintiff is
granted leave to amend to remedy this deficiency, if it truthfully
can do so.
IV. Nguyen's Motion to Dismiss for Improper Venue
Nguyen moves to dismiss all the claims against him for
improper venue based on the fact that his written employment
agreement with Plaintiff promised that a California state court,
not a federal court in California, would be the only court to hear
disputes relative to the employment agreement. Plaintiff argues
that the forum selection clauses in the employment agreement and
the confidentiality agreement do not require it to bring suit

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against Nguyen in a California state court, but allows suit in a
federal court in California.
The facts that are relevant to this motion are as follows.
When Plaintiff hired Nguyen in May 2010 as a sales and account
manager in its San Jose, California office, he signed an
Employment Agreement and an Employee Confidentiality Agreement,
both dated May 28, 2010. The Employment Agreement specifies the
terms of Nguyen's employment with Plaintiff, such as his salary.
Paragraph D of the Employment Agreement provides that Nguyen must
keep confidential Plaintiff's proprietary information specified in
that paragraph. Section S of the Employment Agreement, entitled,
"Exclusive Jurisdiction for Suit in Case of Breach," provides:
The Parties, by entering into this agreement, submit to the
jurisdiction in the State of California for adjudication of
any disputes and/or claims between the parties under this
agreement. Furthermore, the parties hereby agree that the
courts of State of California shall have exclusive
jurisdiction over any disputes between the parties relative
to this agreement, whether said disputes sounds [sic] in
contract, tort, or other areas of the law.

The Employee Confidentiality Agreement also contains a forum
selection clause, entitled, "Jurisdiction and Venue," which
provides:
In case of any dispute hereunder, the parties will submit to
the exclusive jurisdiction and venue of any court of
competent jurisdiction sitting in Santa Clara County,
California, and will comply with all requirements necessary
to give such court jurisdiction over the parties and the
controversy.

Employee Confidentiality Agreement, 14.8.


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A contract must be interpreted to give effect to the mutual
intention of the parties as it existed at the time of contracting.
Cal. Civ. Code 1636. When interpreting a contract, the whole of
a contract is to be taken together, so as to give effect to every
part, each clause helping to interpret the other. Cal. Civ. Code
1641. "It is solely a judicial function to interpret a written

instrument unless the interpretation turns upon the credibility of
extrinsic evidence. De Guere v. Universal City Studios, Inc., 56
Cal. App. 4th 482, 501 (1997). First, the court provisionally
receives all credible evidence concerning the parties intentions
to determine if there is an ambiguity. Id. If, in light of the
extrinsic evidence, the court determines the language of the
contract is ambiguous, the extrinsic evidence is admitted to aid
in the second step: interpreting the contract. Id.

Here, the two forum selection clauses read together appear to
be ambiguous, but the parties do not submit extrinsic evidence to
aid in the determination of their intent at the time the
agreements were signed. Therefore, the Court must resolve the
ambiguity solely on the agreements themselves.
The parties agree that, in general, federal law governs the
interpretation of the forum selection clauses in the Employment
Agreement and the Employment Confidentiality Agreement because
this is a diversity case. See Manetti-Farrow, Inc. v. Gucci Am.,
Inc., 858 F.2d 509, 513 (9th Cir. 1988) (in diversity cases,

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federal procedural issues raised by forum selection clauses
significantly outweigh state interests). However, as
Plaintiff points out, both agreements contain provisions that
California law should govern the interpretation of the agreements.
Whether federal or California law applies here is not
determinative of the outcome because federal courts interpreting a
contract under federal law look for guidance to general principles
for interpreting contracts. Doe 1 v. AOL LLC, 552 F.3d 1077, 1081
(9th Cir. 2009).
The parties agree that the phrase, "the courts of State of
California," in the second sentence of Section 8 of the Employment
Agreement, provides that the forum for disputes shall be the state
courts of California. This is a correct interpretation of this
phrase; the Ninth Circuit has interpreted the language, "of the
court of a specific state," to mean that jurisdiction is proper in
the courts of the state specified, not in the federal courts
located in that state. Id. at 1082.
The parties also agree that the phrase, "any court of
competent jurisdiction in the county of Santa Clara," in the forum
selection clause in the Employee Confidentiality Agreement permits
venue in either state or federal courts located in Santa Clara
County. However, this case is pending in the Oakland division of
this Court, which is located in Alameda County; therefore, the
forum selection requirement of the Employee Confidentiality
Agreement is not satisfied.

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In
Simonoff v. Expedia, Inc., 643 F.3d 1202, 1206 (9th Cir.
2011), the court interpreted the phrase, "in the court in King
County," to refer to both federal as well as state courts located
in King County because, when a federal court sits in a particular
county, the district court is undoubtedly "in" that county. The
court explained that the preposition, "in," denoted geographic
limitation; thus, the phrase, "courts in" a particular state,
includes any court within the physical boundaries of the state,
which would include both state and federal courts located in that
state. Id.
Simonoff does not apply here because, for this intellectual
property case, there is no federal court that sits only in Santa
Clara County. The Northern District of California has three
divisions, but parties in intellectual property actions have no
right to venue in a particular division. See Local Civil Rule 3-
2(a) (actions in the excepted categories, including intellectual
property, shall be assigned on a district-wide basis). This case
is an example of the inter-district assignment of actions;
Plaintiff filed it in the San Jose division, which is located in
Santa Clara County, but it was assigned to the Oakland division of
the Court, which is located in Alameda County. Therefore, even
though Plaintiff filed this action in the San Jose division, it
has not been able to keep it there. Thus, there is no federal
court that can meet the forum selection requirements of the
Confidentiality Agreement.

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Further, the two forum selection clauses are not
inconsistent. If claims under the Employment Agreement can be
brought only in state court, even if claims under the
Confidentiality Agreement could be brought in state or federal
court, the forum selection clauses are in harmony when all the
claims are brought in state court. In addition, because the
Employment Agreement contains a confidentiality clause, all of
Plaintiff's causes of action against Nguyen are "relative" to that
agreement. In contrast, some of the causes of action, such as
breach of fiduciary duty, which relies upon the Employment
Agreement to create a duty, do not arise under the Employment
Confidentiality Agreement.

Relying on the statutory rule that the whole of a contract
should be taken together to give meaning to every part, the Court
concludes that the two agreements should be read together.
The forum selection clause in the Employment Agreement means that
the parties shall litigate claims relative to the Employment
Agreement in a California state court. The forum selection clause
in the Employee Confidentiality Agreement means that the parties
shall litigate claims under that agreement in a court of competent
jurisdiction located in Santa Clara County. Because there is no
federal court that is located solely in Santa Clara County, the
claims based on the Confidentiality Agreement must be litigated in
state court in Santa Clara County.

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Therefore, Nguyen's motion to dismiss is granted. Dismissal
is without prejudice for Plaintiff to re-file its claims against
Nguyen in Santa Clara County Superior Court.
CONCLUSION
For the foregoing reasons, Plaintiff's motion to dismiss
under Rule 12(b)(6) is granted, in part. The following claims are
dismissed, with leave to amend, based on CUTSA preemption: claims
4 and 5 for unfair competition; claim 11 for tortious interference
with prospective economic advantage; and claim 13 for breach of
fiduciary duty. Claims 13 and 15 for breach of fiduciary duty
against Qi are dismissed with leave to amend for failure to allege
a fiduciary relationship between Qi and Plaintiff. The
allegations of the claims of civil conspiracy and aiding and
abetting are dismissed with leave to amend. Claim 9 for fraud
against Qi is dismissed with leave to amend. The following claims
are not dismissed: claim 1 for misappropriation of trade secrets
against Qi and Zaagtech; claim 2 for misappropriation of trade
secrets against Qi, Zaagtech and Jinpeng Li; claim 3 for copyright
infringement against Qi, Zaagtech and Jinpeng Li; claim 6 for
unfair competition against Qi; claim 7 for violation of California
Penal Code section 502 against Qi, Zaagtech and Jinpeng Li; claim
8 for unfair competition against Qi and Zaagtech; claim 10 for
tortious interference with contract and prospective economic
advantage against Qi; claim 14 for breach of contract against
Jinpeng Li; claim 16 for conversion against Qi; claim 17 for

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trespass to chattels against Qi, Zaagtech and Jinpeng Li; and
claim 18 for violation of the computer fraud and abuse act against
Qi and Zaagtech. Defendants' motion to strike is granted in
regard to the specific allegations in claims 5 and 8 and Plaintiff
is granted leave to amend to remedy the deficiencies noted.
Nguyen's motion to dismiss for improper venue is granted.
Dismissal of the claims against Nguyen is without prejudice to re-
filing them in Santa Clara County Superior Court. Plaintiff may
wish to dismiss its claims against all Defendants so that it may
litigate all its claims together in state court.
IT IS SO ORDERED.

Dated:

CLAUDIA WILKEN
United States District Judge

6/7/2012

MTD-Improper Venue- Nguyen Reply CV 12-00450 CW -i-
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Robert R. Pierce, Jr. (CA Bar No. 175283)
Robert Pierce Tech Law
800 A Street
San Rafael, California 94901
Telephone: 415.685.3108
Facsimile: 415.883.7635
rpierce@piercespace.com

Attorney for Defendant
Andy Nguyen

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

PQ LABS, Inc., a California corporation,

Plaintiff,

v.

YANG QI, an individual, ZAAGTECH INC., a
Chinese corporation, ANDY NGUYEN, an
individual, JINPENG LI, an individual, and
HAIPENG LI, an individual,

Defendants.
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Case No.: CV 12-00450 CW

REPLY TO PLAINTIFFS
OPPOSITION TO ANDY NGUYENS
MOTION TO DISMISS FOR
IMPROPER VENUE

Date: May 31, 2012
Time: 2:00 p.m.
Judge: Claudia Wilken
Courtroom: 2

)

REPLY TO PLAINTIFFS OPPOSITION TO ANDY NGUYENS MOTION TO
DISMISS FOR IMPROPER VENUE

MTD-Improper Venue- Nguyen Reply CV 12-00450 CW -1-
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I. Introduction.
Plaintiff argues that two contracts it drafted are disharmonious and include a repugnancy. It
makes this uncomfortable argument because one of those contracts sinks this lawsuit and the other
offers no rescue. Since Plaintiff does not, and cannot, dispute that all of its causes of action are
relative to the Employment Agreement, Plaintiff maintains that the words of the second sentence
of the forum selection clause of the Employment Agreement do not capture the general intent of
the parties. To get to that general intent, Plaintiff asks this Court to forage through two contracts
and construct a justification for allowing this employment-related lawsuit to continue in this Court.
Plaintiffs arguments in opposition are unpersuasive and distracting.
II. Plaintiffs Arguments in Opposition Are Unpersuasive and Distracting.
A. Legal Standards.
1. Law of Int erpret at i on.
Plaintiff appears to argue that California state law is the applicable law for this Court to use
when construing the forum selection clauses relevant to this motion. This is incorrect. The Ninth
Circuit has ruled that deciding proper venue in light of a forum selection clause is a procedural
exercise that must be guided by federal law. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513
(9th Cir. 1988). That the relevant agreement includes a choice of law clause does not change the
answer. This Court may see Murphy v. Schneider Natl, Inc., 362 F.3d 1133 (9th Cir. 2004) as an
example of the Ninth Circuit applying federal law when construing a forum selection clause from an
agreement that also includes a choice of law provision designating state law.
2. Addressi ng Cont rovert ed Fac t s and Evi denc e .
Plaintiff argues that in considering a Fed. R. Civ. P. 12(b)(3) motion based upon a forum
selection clause, the trial court must draw all reasonable inferences in favor of the non-moving party
and resolve all factual conflicts in favor of the non-moving party. This is true. But it is irrelevant to
the motion at hand. To decide the motion at hand, this Court is not faced with any controverted

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facts. Ruling on this motion requires only interpretation of the validity and scope of two contract
provisions, which this Court is perfectly equipped to do. In making its point, Plaintiff cites Murphy v.
Schneider Natl, Inc., 362 F.3d 1133 (9th Cir. 2004). But in that case the court did face controverted
facts. Indeed, the question in Murphy was how the trial court should address the controverted facts
and evidence underlying a disabled employees attempt to resist the enforcement of a forum
selection clause because of what he claimed was an undue physical and financial burden. Murphy at
1138.
B. Andy Nguyen Signed Two Contracts.
Plaintiff urges that although it and Andy Nguyen signed two documents, they had only one
agreement. It does so in order to set up its sleight-of-hand argument that this uber agreement should
be harmonized. According to Plaintiff, during this harmonization magic act, the second sentence
of the forum selection clause of the Employment Agreement can be made to disappear. This Court
must not fall for this trick.
Each of the contracts at issue includes an integration clause that prevents the kind of
grouping of documents suggested by Plaintiff. (Section L of Ex. A to ECF 30 and Section 14.2 of
Exhibit B to ECF 30). In any event, as discussed in Section C below, the relevant sections of the
contracts signed by Andy Nguyen are not disharmonious. They do not conflict.
C. Plaintiff Urges Disharmony That Does Not Exist.
1. Two Harmoni ous Sent enc es.
Plaintiff argues that because the first sentence of the forum selection clause of the
Employment Agreement says that the parties submit to jurisdiction i n State of California, that the
intent of the parties was to set forum for this dispute in any court located in California. This is
incorrect. As discussed in Andy Nguyens moving papers, and as is obvious, the first sentence of this
provision identifies the location of the chosen court. The second sentence further refines that
geographic limitation by identifying the sovereignty of the chosen court. Use of the word

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furthermore makes this clear. This two-step provision is completely unambiguous and means that
this entire lawsuit must be brought in California state court.
2. Sec t i on 14. 8 of t he Conf i dent i al i t y Agreement Does Not Change t he Conc l usi on.
Plaintiff says little to support its argument that Section 14.8 of the Confidentiality Agreement
better expresses the intent of the parties as to not only the sub-category of claims brought under
the Confidentiality Agreement but also, incredibly, to the larger category of employment-related
claims. Plaintiff states that the section is applicable here because of its ordinary meaning.
According to Plaintiff, it seems, because this federal court is ordinarily of competent jurisdiction,
Andy Nguyen must submit to suit here. Plaintiff simply ignores the parties promise to one another
made in the Employment Agreement. A promise that the California state courts will have
exclusive jurisdiction over any dispute relative to the Employment Agreement. Which this
lawsuit certainly is and which Plaintiff does not dispute.
Even if Section 14.8 of the Confidentiality Agreement had not included an of competent
jurisdiction requirement, the result would be the same. There are numerous courts in Santa Clara
County that lack jurisdiction over Plaintiffs claim (e.g., family law court, small claims court) and that
would in no case be eligible to hear this dispute. By agreement, the parties made the federal courts
one of those ineligible courts for purposes of a broad category of disputes (i.e., employment-related
disputes). This motion seeks dismissal of an improperly brought lawsuit. Plaintiff must live with the
consequences of the Employment Agreement. The Confidentiality Agreement does not save
Plaintiffs suit.
III. If the Forum Selection Clauses of the Two Agreements Compete with
Themselves in this Multi-Faceted Litigation, then the Forum Selection Clause of the
Employment Agreement Should be Applied Generally.

If, against the urging of Andy Nguyen, this Court determines that Section 14.8 of the
Confidentiality Agreement is applicable to one or more of Plaintiffs claims because (a) those claims
are brought under the Confidentiality Agreement (in addition to being relative to the Employment

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Agreement) and (b) this Courts jurisdictional competency to hear employment-related disputes was
not prevented by agreement of the parties, then this Court will need to address an ambiguity.
The Employment Agreement chooses California state courts as the forum for disputes
relative to the Employment Agreement. The Confidentiality Agreement requires that a party
submit to both state and federal courts as the possible fora for disputes under the Confidentiality
Agreement. The provisions are not in conflict, but they are incomplete to handle the circumstances
at hand. They allow a gap, and are thereby ambiguous, as to which court is to hear claims that are
both related to the Employment Agreement and brought under the Confidentiality Agreement.
If the Court finds itself facing this ambiguity, the proper solution is to apply the
Employment Agreement globally to all causes of action and dismiss this entire federal lawsuit. This
Court should in no event adopt the approach urged by Plaintiff, which is to decide that all of
Plaintiffs claims more explicitly ari se out of the Confidentiality Agreement, and that, therefore,
that agreements forum selection provision, which allows federal lawsuits, should govern. Andy
Nguyens suggested approach is correct, and Plaintiffs approach is incorrect, for at least three
reasons.
First, Plaintiffs method is facially incorrect because it asks which agreement this dispute
more explicitly arises out of. The words arises out of are not used in either the Employment
Agreement or Confidentiality Agreement forum selection provision. So Plaintiff asks the wrong
question. If we adopt Plaintiffs framework, the two proper questions to ask are (1) How many of
Plaintiffs causes of action are relative to the Employment Agreement? and (2) How many of
Plaintiffs causes of action were brought under the Confidentiality Agreement? The answers are
all seven and no more than two, respectively. The answer to the first question is not disputed.
The second answer is correct because five of the seven causes of action could not have been
brought under the Confidentiality Agreement (including those of Unfair Competition, Tortious
Interference with Prospective Economic Advantage, Breach of Fiduciary Duty, Civil Conspiracy,

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and Aiding and Abetting). Mediterranean Enterprises, Inc. v. Ssangyong Corporation, 708 F.2d 1458, 1464
(9th Cir. 1983) (a forum selection clause in a contract calling for arbitration of disputes arising
hereunder is intended to cover a narrow scope of disputes relating to the interpretation and
performance of the contract itself); Cape Flattery Limited v. Titan Maritime, LLC, 647 F.3d 914, 922
(9th Cir. 2011) (following Mediterranean Enterprises). Since this is so, the forum selection clause of the
Employment Agreement is more applicable across this lawsuit generally and should be relied upon
to dismiss all causes of action brought against Andy Nguyen in this Court.
Second, and importantly, to apply Section 14.8 of the Confidentiality Agreement to causes of
action that are employment-related would be unsatisfactory because it so forcefully disrespects the
parties bargain that no employment-related lawsuit would be brought in federal court. The better
approach would be to apply the forum selection clause of the Employment Agreement to this entire
dispute and require that all causes of action be brought only in California state court. While this
solution admittedly requires Plaintiff to bring in the non-preferred (but not wholly unanticipated)
California state court the one or two causes of action that were arguably brought under the
Confidentiality Agreement, this solution does not thrust the parties into a wholly unanticipated court
to decide the many employment-related causes of action. Put another way, this Court must take
advantage of the asymmetry of the two provisions in order to minimize disruption of the parties
bargained-for expectations.
Third, application of Section 14.8 of the Confidentiality Agreement to any of the
employment-related causes of action in this dispute unfairly places the burden of ambiguity on Andy
Nguyen, the non-drafting employee party. The best solution is to resolve that ambiguity against the
employer drafting party, the Plaintiff, and, accordingly, to apply the forum selection clause of the
Employment Agreement to this dispute generally. This Court may see Bergt v. Retirement Plan for Pilots
Employed by MarkAir, Inc., 293 F.3d 1139 (9th Cir. 2002) as an example of the Ninth Circuit
resolving an ambiguity created by two separate employment documents against the drafting party,

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both because it was the drafting party and because it was the employer. In the words of that court,
Any burden of uncertainty created by careless or inaccurate drafting [of the documents] must be
placed on those who do the drafting, and who are most able to bear that burden, and not on the
individual employee, who is powerless to affect the drafting. Bergt at 1145 (citing Hansen v.
Continental Ins. Co., 940 F.2d 971, 982 (5th Cir.1991).
IV. Conclusion
Plaintiffs arguments in opposition fail to refute the conclusion that because this entire
lawsuit against Andy Nguyen relates to his Employment Agreement, it must be brought in California
state court. This Court need only read the contractual provisions at issue. If this Court finds
ambiguity, it must nonetheless rule in favor of Andy Nguyen and dismiss all claims made against
him.
Dated: May 3, 2012
By: ____/s/_____________________
Robert R. Pierce, Jr.
Andy Nguyen

Opposition to Motion to Dismiss for Improper Venue Case No. 12-cv-00450
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OTTO O. LEE, SBN 173987
olee@iplg.com
KEVIN VIAU, SBN 275556
kviau@iplg.com
INTELLECTUAL PROPERTY LAW GROUP LLP
12 South First Street, 12th Floor
San Jose, California 95113
Telephone: (408) 286-8933
Facsimile: (408) 286-8932

Attorneys for Plaintiff PQ LABS, INC.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA

PQ LABS, INC., a California Corporation,

Plaintiff,

v.


Defendants.

Case No.: 12-CV-00450-CW

PLAINTIFF PQ LABS, INC.S OPPOSITION
TO DEFENDANT ANDY NGUYENS
MOTION TO DISMISS FOR IMPROPER
VENUE

Date: May 31, 2012

Time: 2:00pm

Hon. Claudia Wilken

PLAINTIFFS OPPOSITION TO DEFENDANT ANDY NGUYENS
MOTION TO DISMISS FOR IMPROPER VENUE


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I. STATEMENT OF ISSUES
Whether Plaintiffs claims against Defendant Andy Nguyen are properly brought in this
Court, a federal district court, given the existence of two forum selection clauses contained in written
agreements detailing the terms of Defendants employment with Plaintiff.
II. INTRODUCTION
This Court should deny the Motion to Dismiss for Improper Venue filed pursuant to Fed. R.
Civ. P. 12(b)(3) by Defendant Andy Nguyen (Defendant) because venue is proper in this Court.
The relevant forum selection clauses do not require Plaintiff to bring suit against Defendant only in
the state courts of California, but also allow suit in federal court in California.
III. FACTUAL BACKGROUND
PQ Labs, Inc. (PQ Labs and Plaintiff), a California corporation, is engaged in the
business of designing, developing, manufacturing, and selling hardware and software for computer
touch screen products. First Amended Complaint (Complaint and Compl.) 13. In May 2010,
PQ Labs hired Andy Nguyen as a sales and account manager at its San Jose, California office. Id.
29. In joining PQ Labs, Andy Nguyen signed both an Employment Agreement and an Employee
Confidentiality Agreement, each dated May 28, 2010. Id. The Employment Agreement specifies the
terms of Andy Nguyens employment with PQ Labs, for instance setting salary and the services to be
provided by Andy Nguyen. Id. 29, Ex. D. Section S of the Employment Agreement contains a
forum selection clause stating that the parties submit to jurisdiction in California by entering into the
agreement, and that the courts of State of California shall have exclusive jurisdiction over any
disputes between the parties relative to this agreement, whether said disputes sounds (sic) in contract,
tort, or other areas of the law. Id. Ex. D. Section 14.8 of the Employee Confidentiality Agreement,
which was executed simultaneously to the Employment Agreement, also contains a forum selection
clause, stating that the parties will submit to the exclusive jurisdiction and venue of any (emphasis
added) court of competent jurisdiction sitting in Santa Clara County, California, and will comply with
all requirements necessary to give such court jurisdiction over the parties and the controversy.
Andy Nguyen left his employment with PQ Labs in June 2011. Id. 32. During his time as
sales and account manager, Andy Nguyen gained access to and knowledge of confidential,

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proprietary information regarding PQ Labs customers. Prior to leaving PQ Labs, Andy Nguyen
copied all accessible company files to a personal portable hard drive, and also became derelict in his
duties of fulfilling and reporting on sales orders of PQ Labs products. Id. 31. Beginning June 2011
around the time of Andy Nguyens departure, PQ Labs customers and key distributors were solicited
via email by ZaagTech Inc. in furtherance of the plan perpetrated by the Defendants in the present
suit to usurp PQ Labs business and establish a competing touch screen product without incurring the
effort of cost of achieving success fairly and independently. Id. 32. PQ Labs alleges that Andy
Nguyen disclosed PQ Labs trade secrets in the form of confidential customer lists to Yang Qi and
ZaagTech in exchange for compensation. Yang Qi and ZaagTech then used these customer lists to
directly contact PQ Labs customers in an effort to poach said customers from PQ Labs. Id. 37.
Section D the Employment Agreements provides that Andy Nguyen as employee shall not
disclose any confidential information of the employer PQ Labs during his employment or for a period
of three years after termination of employment. Id. Ex. D. Section D defines confidential
information as information regarding PQ Labs business methods and sales information of any kind,
including trade secrets such as customer lists and related customer information. Id. Section 1 of the
Employee Confidentiality Agreement states that Andy Nguyen shall not disclose any of PQ Labs
proprietary information and shall hold such information in strict confidence. Id. Proprietary
information is defined to include trade secrets and information regarding suppliers and customers. As
alleged in the Complaint, Andy Nguyen acted contrary to the requirements of his employment
contracts with PQ Labs and trade secret law in disclosing PQ Labs confidential customer
information to Yang Qi and ZaagTech in exchange for compensation. PQ Labs has now alleged
causes of action against Andy Nguyen for misappropriation of trade secrets, unfair competition,
tortious interference with prospective economic advantage, breach of contract, breach of fiduciary
duty, civil conspiracy, and aiding and abetting.
IV. ARGUMENT
The parties executed two agreements May 28, 2010 in specifying the terms of Andy Nguyens
employment with PQ Labs, the Employment Agreement and the Employee Confidentiality
Agreement. Each agreement contains a forum selection clause. Because these agreements were

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executed contemporaneously, the two agreements should be read as part of the same contract
detailing Andy Nguyens employment. Construed together, the two forum selection clauses should
be harmonized pursuant to principles of contract interpretation to allow a suit related to the
agreements to be brought in either federal or state court located in Santa Clara County.
A. Applicable Legal Standards for Forum Selection Clauses
Parties to a contract may designate a forum in which any litigation arising from or related to
the contract shall take place with a forum selection clause. Litigation commenced not in the specific
forum required by the forum selection clause may be subject to dismissal for improper venue.
Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991); TAAF Linhas Aereas de Angola v.
Transamerica Airlines, Inc., 915 F.2d 1351, 1353 (9th Cir. 1990). Under federal law, forum selection
causes are presumed valid, unless (1) inclusion of the clause was the product of fraud or
overreaching, (2) enforcement of the clause would be so fundamentally unfair as to effectively
deprive the party seeking repudiation of its day in court, or (3) enforcement would contravene a
strong public policy in the forum in which suit is brought. M/S Bremen v. Zapata Off-Shore Co., 407
U.S. 1, 12-13, 15, 18 (1972); Murphy v. Schneider Natl, Inc., 362 F.3d 1133, 1140 (9th Cir. 2004).
Aside from the issue of enforceability, to determine whether a suit has been brought in the
appropriate venue pursuant to a forum selection clause, a court must interpret the clause to determine
where the clause sets venue. Where, as here, the contract in question contains a choice of law
provision, the forum selection clause is construed under the law specified by the choice of law
provision as simplicity argues for determining the validity and meaning of the forum selection
clauseby reference to the law of the jurisdiction whose law governs the rest of the contract in
which the clause appears. Abbott Labs. v. Takeda Pharm. Co., 476 F.3d 421, 423 (7th Cir. 2007);
see Yavuz v. 61 MM, Ltd., 465 F.3d 418, 423-430 (10th Cir. 2006); Phillips v. Audio Active Ltd., 494
F.3d 378, 386 (2d Cir. 2007). Courts have held in federal question and diversity cases that the
validity and effect of a forum selection clause is governed by federal standards. Carnival Cruise
Lines, 499 U.S. at 588-589; Marnetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th
Cir. 1988). Section T of the Employment Agreement and Section 14.1 of the Employee
Confidentiality Agreement though set California law to govern interpretation of the respective

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contracts, indicating interpretation of the forum selection clauses should proceed according to
California contract law. See Compl. Ex. D. The analyses and outcomes though are largely the same
when interpreting under either federal law or state law as, when courts apply federal law to interpret a
contract they look for guidance to general principles for interpreting contracts. Doe 1 v. AOL
LLC, 552 F.3d 1077, 1081 (9th Cir. 2009) (quoting Klamath Water Users Protective Assn, 204 F.3d
1206, 1210 (9th Cir. 1999)). Certainly here the analysis does not differ as the contracts are assessed
according to general contract interpretation principles such as harmonizing contract provisions to
prevent conflict and construing terms to give effect to the intent of the parties.
In considering a Fed. R. Civ. P. 12(b)(3) motion to dismiss for improper venue based upon a
forum selection clause, the trial court must draw all reasonable inferences in favor of the non-
moving party and resolve all factual conflicts in favor of the non-moving party. Murphy, 362 F.3d
at 1138. With the potential dramatic effect of the plaintiff losing its forum of choice in the context of
a Fed. R. Civ. P. 12(b)(3) motion, the non-moving party is entitled to have the facts viewed in the
light most favorable to it. Id. at 1139 (quoting New Moon Shipping Co. v. MAN B&W Diesel AG,
121 F.3d 24, 29 (2d Cir. 1997). Thus, as non-moving party, Plaintiff is entitled to have all reasonable
inferences drawn in its favor with all facts viewed in the light most favorable to Plaintiff.
B. The Two Forum Selection Clauses Should Be Read as Part of the Same Contract
The Employment Agreement and Employee Confidentiality Agreement should be construed
together as part of the same contract, and the respective forum selection clauses should accordingly
be construed together. The agreements were executed by the parties contemporaneously on May 28,
2010. Compl. Ex. D. Several instruments covering the same subject matter and made as parts of
substantially one transaction are to be construed together, with the same effect as if all had been
incorporated into one document. Versaci v. Superior Court, 127 Cal. App. 4th 805, 814 (2005);
McAuliff v. McFadden, 42 Cal. App. 505, 511 (1919). The contract need not explicitly state that it
incorporates another document, but the terms of the incorporated document must be readily available
to the parties. See Shaw v. Regents of the University of California, 58 Cal. App. 4th 44, 54 (1997);
King v. Larsen Realty, Inc., 121 Cal. App. 3d 349, 357 (1981). This principle is most commonly

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applied to writings executed contemporaneously. Versaci, 127 Cal. App. 4th at 814 (quoting Body-
Steffner Co. v. Flotill Prods., 63 Cal. App. 2d 555, 560 (1944)).
Executed at the same time, the Employment Agreement and Employee Confidentiality
Agreement are part of the same contract between Andy Nguyen and PQ Labs detailing the terms of
Andy Nguyens employment. The Employment Agreement sets forth many of the specifics of Andy
Nguyens employment with PQ Labs, stating Andy Nguyens capacity of employment, that Andy
Nguyen is an at will employee, and Andy Nguyens compensation. Compl. Ex. D. The Employment
Agreement contains just one short section regarding required confidentiality at Section D, which
demands that Andy Nguyen not disclose certain Confidential Information of PQ Labs. The
Employee Confidentiality Agreement Expands on Section D of the Employment Agreement, fully
spelling out Andy Nguyens duties regarding confidentiality to PQ Labs. These two agreements refer
on their face to the same transaction and subject of Andy Nguyen being hired by PQ Labs and
illuminating the terms of Andy Nguyens new employment, and should thus be construed together.
See Western Helicopter Operations, Inc. v. Nelson, 118 Cal. App. 2d 359, 366 (1953). The intent of
the parties as existed at the time of contracting to form one agreement is evidenced by the
contemporaneous execution of the instruments, identity of subject matter, and availability of terms
contained in each instrument to each party. See Shaw, 58 Cal. App. 4th at 54. As asserted by
Defendant, Plaintiffs claims against Defendant flow from the central allegation that Defendant
obtained confidential information pursuant to his role as account manager and impermissibly
disclosed that information in breach of confidence to PQ Labs. Def. Mot. to Dismiss at 4 (ECF No.
30). As two parts of a whole, the Employment Agreement and Confidentiality Agreement define the
crux of Andys Nguyens role with PQ Labs as a sales and account manager with access to
confidential information and a duty to maintain confidentiality. Accordingly, the Employment
Agreement and Employee Confidentiality Agreement, and their respective forum selection clauses, as
parts of a whole, should be construed together.
Analyzing the agreements according to general and widely-used principles of contract
interpretation does not change the conclusion that the agreements and clauses should be interpreted
together. A writing is interpreted as a whole, and all writings that are part of the same transaction

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are interpreted together. Restatement (Second) of Contracts 202 (1981). As part of the same
transaction of establishing the terms of Andy Nguyens employment, the two agreements in the
present case should be interpreted together as a whole.
C. The Forum Selection Clauses Should Be Harmonized to Allow Suit in Federal or State
Court in Santa Clara County
1. Principles of contract interpretation require the Court to harmonize the forum
selection clauses rather than construing them as being in conflict
Both California contract law and general interpretation principles mandate that, in construing
an agreement, a court is to harmonize and reconcile apparent repugnancies in the agreement rather
than construe terms as being in conflict. It is the intention of the parties that controls in giving effect
to a contract, regardless of mere literal repugnancies in different clauses of an agreement. See
Western Camps, Inc. v. Riverway Ranch Enterprises, 70 Cal. App. 3d 714, 723 (1977). Where two
clauses of a contract are apparently in direct conflict, it is the duty of the court to reconcile the
conflicting clauses so as to give effect to the whole of the instrument. In re Marriage of Williams,
29 Cal. App. 368, 379 (1972) (citing Todd v. Superior Court, 181 Cal. 406, 418-419 (1919); Welk v.
Fainbarg, 255 Cal. App. 2d 269, 275 (1967)). Another way, the entire contract and each of its parts
must be given effect and must be construed so as to harmonize with one another. The
repugnancyto this construction must be reconciled, if possible, by such an interpretation as will
give some effect to the repugnant clauses, subordinate to the general intent and purpose of the whole
contract. Welk, 255 Cal. App. at 275 (quoting Cal. Civ. Code 1652); McCaskey v. California
State Auto. Assn, 189 Cal. App. 4th 947, 955 (2010). Only when parts of a contract are so radically
repugnant that it is impossible for them to stand together must any part perish. See McCaskey, 189
Cal. App. 4th at 955.
The Restatement of Contracts largely corresponds to California law regarding reconciliation
of conflicting terms in an agreement. Wherever reasonable, the manifestations of intention of the
parties to a promise or agreement are interpreted as consistent with each other and with any relevant
course of performance, course of dealing, or usage of trade. Restatement (Second) of Contracts 202

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(1981). An interpretation which gives a reasonable, lawful, and effective meaning to all the terms is
preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect. Id. 203.
Here, even with apparently conflicting forum selection clauses, the Court should harmonize
the respective provisions and construe the clauses to conform to the intent of the parties to set venue
in Santa Clara County in either federal or state court.
2. Courts of State of California
The forum selection clause contained in the Employment Agreement appears to set venue for
any suit arising from or related to the agreement in the state courts of California. The second
sentence of the relevant Section S states that the parties hereby agree that the courts of State of
California shall have exclusive jurisdiction over any disputes between the parties relative to this
agreement, whether said disputes sounds (sic) in contract, tort, or other areas of the law. Compl. Ex.
D. Courts have held that the critical language of, as in courts of State of California, sets forum
exclusively in the state courts of the state specified. See Doe 1 v. AOL, 552 F.3d at 1082; American
Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921, 926 (10th Cir. 2005); Dixon v. TSE
Intl Inc., 330 F.3d 396, 398 (5th Cir. 2003).
Defendant asserts that the second sentence of the Employment Agreement forum selection
clause is the controlling sentence of the provision without explanation or analysis. Defendant fails to
consider either the implication of the Employee Confidentiality Agreement forum selection clause, or
the sentence immediately preceding the Employment Agreements forum selection clause. The first
sentence of Section S of the Employment Agreement states that, The Parties, by entering into this
agreement, submit to jurisdiction in (emphasis added) State of California for adjudication of any
disputes and/or claims between the parties under this agreement. Compl. Ex. D. Defendant
correctly notes that the language in, as in courts in California, or jurisdiction in California,
establishes venue in either state or federal court in the state specified. See Doe 1 v. AOL, 552 F.3d at
1082. None of the cases cited by Defendant holding that the language courts of the relevant state in
a forum selection clause sets venue in only state court also contain in the forum selection clause
language setting jurisdiction in the relevant state generally, as occurs here. For instance, in Doe 1
v. AOL, the forum selection clause states you further agree and expressly consent to the exercise of

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personal jurisdiction in the courts of Virginia. Id. at 1080. While the Doe 1 v. AOL forum selection
clause maintains the of language throughout the clause, the forum selection clause in the
Employment Agreement contains two sentences, the first of which sets jurisdiction generally in
California. Taken with the provisions of the Employee Confidentiality Agreement forum selection
clause, the first sentence of Section S shows that the intent of the parties was to set forum for a
dispute merely in California, without regard to either state or federal court.
3. Any court of competent jurisdiction sitting in Santa Clara County
In contrast to the second sentence of the Employment Agreement forum selection clause, the
forum of selection clause in the Employee Confidentiality Agreement unequivocally permits venue in
either state or federal court in Santa Clara County. Where a forum selection clause requires venue in
a specific county within a state, and a federal courthouse is located in that county, venue properly lies
in either the state or federal court located within that county. Simonoff v. Expedia, 643 F.3d 1202,
1206 (9th Cir. 2011) (holding forum selection clause setting venue in courts in King County,
Washington allowed suit in state or federal court because federal courthouse located in King
County); Alliance Health Group, LLC v. Bridging Health Options, LLC, 553 F.3d 397, 399-400 (5th
Cir. 2008) (holding that clause requiring venue to occur in Harrison County, Mississippi permitted
suit in state or federal court because federal courthouse located in Harrison County).
In the case at bar, Section 14.8 of the Employee Confidentiality Agreement states, In case of
any dispute hereunder, the parties will submit to the exclusive jurisdiction and venue of any court of
competent jurisdiction sitting in Santa Clara County, California. Compl. Ex. D. There is a division
of the United States District Court of the Northern District of California located in Santa Clara
County at 280 South First Street, San Jose, CA 95113. In fact, this is precisely the courthouse where
Plaintiff filed its Complaint against Andy Nguyen and the other Defendants. Under clearly
established Ninth Circuit precedent, venue is proper in this Court because it is a court sitting in Santa
Clara County. See Simonoff, 643 F.3d at 1206. The language of competent jurisdiction in Section
14.8 does not change this conclusion as forum selection clauses should be construed first according to
their ordinary meaning, and the ordinary meaning of of competent jurisdiction is any court which
has authority to hear a dispute, for instance with regard to personal and subject matter jurisdiction.

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See Doe 1 v. AOL LLC, 552 F.3d at 1081. Further, it was not the intent of the parties to extinguish
venue in federal court.
4. Harmonization of the forum selection clauses to allow suit in this Court gives
effect to the general intent of the parties and meaning to each of the clauses
The intent of the parties is apparent on the face of the agreements construed together. When
construing the two forum selection clauses, the second sentence of Section S of the Employment
Agreement stands as an island, surrounded by a sea of indications of intent by the parties to allow suit
in federal as well as state court. The first sentence of Section S allows for jurisdiction generally in
California. The first sentence of Section 14.8 of the Employee Confidentiality Agreement plainly
allows venue in Santa Clara County, whether state or federal court. And the second sentence of
Section 14.8 states that the parties will comply with all requirements necessary to give such court
jurisdiction over the parties and controversy, Compl. Ex. D., evincing a wide latitude intended by
the parties regarding where suit may be brought. Drawing all reasonable inferences in favor of the
non-moving party PQ Labs, Murphy, 362 F.3d at 1138, the contract provisions contemplating and
allowing suit in federal court far outweigh those prohibiting and evidence the intent of the parties to
allow suit in federal court. The repugnancy among the forum selection clauses then is the second
sentence of Section S of the Employment Agreement, which the Court must reconcile with the rest of
the agreements and the intent of the parties. See McCaskey v. California State Auto. Assn, 189 Cal.
App. 4th at 955. The Court should give meaning to this provision in holding that the provision
allows for suit in California state court, but subordinate the provision to the intent of the parties and
all remaining provisions of the employment agreements in holding that venue is also proper in federal
court in Santa Clara County, to the exclusion of venue in any other county or state. See Welk, 255
Cal. App. at 275.
D. The Employee Confidentiality Agreements Forum Selection Clause Is the Applicable
Clause As the Present Dispute Arises Out of Andy Nguyens Breach of Duty to Maintain
Confidentiality and the Employee Confidentiality Agreement
Alternatively, if the Court determines the agreements should be construed separately, effect
should only be given to the forum selection clause contained in the Employee Confidentiality

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Agreement because Plaintiffs present dispute with Defendant sounds in Defendants breach of
confidentiality to Plaintiff. Applying said forum selection clause, venue is proper in this Court
because it is a court of competent jurisdiction in Santa Clara County. Where multiple contracts
containing forum selection clauses govern a relationship between parties, a court may give effect to a
certain contract out of which the dispute arises. See Adelson v. World Transp., Inc., 631 F. Supp.
504, 508 (S.D. Fla. 1986). The present case arises not just out of Andy Nguyens employment with
PQ Labs, but his duty to maintain confidentiality of trade secret customer lists and breach of that
duty. Thus, the Plaintiffs claims more explicitly arise out of the Employee Confidentiality
Agreement. The Employee Confidentiality Agreement is the controlling agreement governing Andy
Nguyens wrongdoing, and accordingly the forum selection clause contained in Section 14.8 should
govern in this case. Zamer v. DiLiddo, 1997 U.S. Dist. LEXIS 13887, *7 (W.D.N.Y. 1997).
V. CONCLUSION
Defendants Motion to Dismiss for Improper Venue should not be granted as this Court may
properly exercise venue over the present dispute pursuant to the relevant forum selection clauses.
Nor should the Court dismiss any cause of action against Defendant Andy Nguyen individually as
Defendant has asserted no basis for doing so and has not provided any notice why such claims should
be dismissed individually.

Dated: April 26, 2012 Respectfully submitted,

By: /s/ Kevin Viau
Otto O. Lee
Kevin Viau
INTELLECTUAL PROPERTY LAW GROUP LLP
12 South First Street, 12th Floor
San Jose, California 95113
Telephone: (408) 286-8933
Facsimile: (408) 286-8932

Attorneys for Plaintiff PQ LABS, INC.

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CERTIFICATE OF SERVICE
I certify that on April 26, 2012, I electronically filed the foregoing PLAINTIFFS
OPPOSITION TO MOTION TO DISMISS FOR IMPROPER VENUE using the CM/ECF system,
which will provide notice by email to the following parties:

Perry J. Narancic, Esq.
LEXANALYTICA, PC
1730 S El Camino Real, Suite 270
San Mateo, CA 94402
pjn@lexanalytica.com

Attorney for Defendants Yang Qi, ZaagTech Inc., and Jinpeng Li

Robert Pierce, Esq.
800 A Street
San Rafael, CA 94901

Attorney for Andy Nguyen

By: /s/ Kevin Viau
Kevin Viau


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800 A Street
Telephone: 415.685.3108
Facsimile: 415.883.7635

Andy Nguyen



OAKLAND DIVISION


Plaintiff,

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Defendants.
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NOTICE OF DEFENDANT ANDY
NGUYENS MOTION TO DISMISS
FOR IMPROPER VENUE
F.R.C.P. 12(b)(3)

Date: May 31, 2012
Time: 2:00 p.m.
Courtroom: 2

Filed herewith: Memorandum of Points
and Authorities; Proposed Order
)

Defendant Andy Nguyens Motion to Dismiss for Improper Venue made under Rule
12(b)(3), Federal Rules of Civil Procedure, will be heard on May 31, 2012 at 2:00 p.m., or as soon
thereafter as the parties may be heard, in Courtroom 2 of the Oakland Division of the United States
District Court, Northern District of California located at 1301 Clay Street, Oakland, California
94612.

Andy Nguyen moves for dismissal of all claims made against him.

Dated: April 12, 2012
By: ____/s/_____________________
Attorney for Defendant Andy Nguyen

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800 A Street
Telephone: 415.685.3108
Facsimile: 415.883.7635

Andy Nguyen



OAKLAND DIVISION


Plaintiff,

v.


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MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF
DEFENDANT ANDY NGUYENS
IMPROPER VENUE
F.R.C.P. 12(b)(3)

Date: May 31, 2012
Time: 2:00 p.m.
Courtroom: 2


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Table of Contents
I. Introduction .................................................................................................................................................... 1
II. Factual and Procedural History .................................................................................................................. 1
III. Argument ...................................................................................................................................................... 2
A. Interpreting Forum Selection Clauses. ......................................................................................... 2
B. Scope of the Forum Selection Clause Used in the Employment Agreement. ....................... 3
C. This Lawsuit is Relative To the Employment Agreement. ................................................... 3
1. Employment is a Cause of the Lawsuit. .................................................................................. 4
2. Plaintiffs Factual Allegations Center Upon Employment. ....................................................... 4
3. Plaintiffs Claims Require Analysis of the Employment Agreement. ........................................ 5
D. California State Courts were Chosen to Hear Disputes. .......................................................... 6
E. Confidentiality Agreement Does Not Change the Analysis or Conclusion. .......................... 7
IV. No Waiver .................................................................................................................................................... 8
V. Request for Dismissal ................................................................................................................................... 8

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Authority
Cases
Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921 (10th Cir. 2005) .................................. 6
Dixon v. TSE Intl Inc., 330 F.3d 396 (5th Cir. 2003) ..................................................................................... 6
Doe 1 v. AOL LLC, 552 F.3d 1077 (9th Cir. 2009) ................................................................................... 2, 6
LFC Lessors, Inc. v. Pac. Sewer Maint. Corp., 739 F.2d 4 (1st Cir. 1984) ........................................................ 7
M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) .................................................................................. 2
Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509 (9th Cir. 1988) ........................................................ 2, 5

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POINTS AND AUTHORITIES
I. Introduction
The claims made by PQ Labs, Inc. (Plaintiff) against Anh The Nguyen (a/k/a Andy
Nguyen) (Andy Nguyen) are improperly brought in this Court. In a written employment
agreement, Plaintiff promised Andy Nguyen that California state courts not a federal court in
California would be the only courts to hear disputes relative to that agreement. Because this lawsuit
against Andy Nguyen relates to that employment agreement, he moves under Rule 12(b)(3), Federal
Rules of Civil Procedure, for dismissal of all claims.
II. Factual and Procedural History
Plaintiff PQ Labs, Inc. is a California corporation doing business at its facility in San
Jose, California. (First Amended Complaint filed March 12, 2012, Document 21 (FAC or
Complaint) 1).
In May 2010, Andy Nguyen took a position with Plaintiff as a Sales and Account Manager
(FAC 29). As happens many times a day in the Silicon Valley, Plaintiff and Andy Nguyen, as
employer and employee, signed a written employment agreement (the Employment Agreement)
and a written Employee Confidentiality Agreement (the Confidentiality Agreement), copies of
which are attached to Plaintiffs Complaint and copies of which are attached hereto as Exhibit A and
Exhibit B, respectively. (FAC 29). The Employment Agreement, prepared by Plaintiff and signed
without modification by Andy Nguyen, includes many and various provisions protecting the
interests of Plaintiff as employer (Ex. C, Decl. of Nguyen). Importantly, the Employment
Agreement includes a forum selection clause that identifies the courts where any dispute relative
to the Employment Agreement is to be brought (Ex. A, Section S).
In June 2011, after only 13 months, Andy Nguyen voluntarily quit his position with Plaintiff
because he had become dissatisfied with his job and with Plaintiffs managers (Ex. C, Decl. of
Nguyen).

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On March 12, 2012, Plaintiff filed its Complaint against a ZaagTech, Inc., Andy Nguyen, and
various individuals who are not former employees of Plaintiff. The Complaint asks this Court to
hear claims against Andy Nguyen by way of its supplemental jurisdiction (FAC 9).
In its Complaint, Plaintiff alleges that, while employed by Plaintiff, Andy Nguyen improperly
collected confidential customer lists and other information belonging to Plaintiff and then disclosed
these lists and information to one of Plaintiffs competitors in exchange for payment. (FAC 37).
Plaintiff alleges that in doing so, Andy Nguyen acted in a grand scheme to not only steal from
Plaintiff but to illegally compete and interfere with Plaintiffs business. Plaintiff brings against Andy
Nguyen the following (and only the following) seven state law causes of action: Misappropriation of
Trade Secrets; Unfair Competition; Tortious Interference with Prospective Economic Advantage;
Breach of Contract; Breach of Fiduciary Duty; Civil Conspiracy; and Aiding and Abetting. (FAC
Claims 1, 4, 11, 12, 13, 19, 20).
III. Argument
A. Interpreting Forum Selection Clauses.
A forum selection clause is presumptively valid. Any party that seeks to avoid a forum
selection clause bears a heavy burden. Doe 1 v. AOL LLC, 552 F.3d 1077, 1083 (9th Cir. 2009)
(citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17 (1972) (forum selection clause of a
commercial agreement should control absent a strong showing that it should be set aside).
Federal law is used by federal courts when interpreting a forum selection clause. Doe 1 at 1081
(citing Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir. 1988)) (both validity and
scope of a forum selection clause is determined under federal law, not state law).

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B. Scope of the Forum Selection Clause Used in the Employment Agreement.
The Employment Agreement includes the following forum selection clause.
S. Exclusive Jurisdiction for Suit in Case of Breach. The Parties, by entering
into this agreement, submit to jurisdiction in State of California for adjudication
of any disputes and/or claims between the parties under this agreement.
Furthermore, the parties hereby agree that the courts of State of California shall
have exclusive jurisdiction over any disputes between the parties relative to this
agreement, whether said disputes sounds [sic] in contract, tort, or other areas of
the law.

(Emphasis in the original.) (Exhibit A, p. 4).
The forum selection clause used in the Employment Agreement is broadly worded. All
disputes that are relative to the Employment Agreement are captured within its scope. By the
words of the clause, this can include disputes sounding in contract, tort, or other areas of law. The
clause does not capture only disputes arising from or under the contract, and it is not so
narrowly written as to capture only disputes concerning breach, enforcement, or
interpretation of the contract.
C. This Lawsuit is Relative To the Employment Agreement.
In determining whether the present dispute between Plaintiff and Andy Nguyen is relative
to the Employment Agreement, this Court may use one or more of three analytical approaches.
First, it may analyze the causal relationship between Andy Nguyens employment and the lawsuit
against him. If Andy Nguyens employment can be said to be a cause of the lawsuit, then the dispute
must be relative to (or, alternatively, related to) the Employment Agreement. Second, this Court may
consider the facts alleged in Plaintiffs Complaint. If the core factual allegations relate to Andy
Nguyens employment, then it must be said that the dispute between him and Plaintiff is related to
the Employment Agreement. Third, this Court may ask whether the particular causes of action
brought by Plaintiff mean that this dispute relates to the Employment Agreement. Using any of
these three approaches, this Court must find that the entire lawsuit brought by Plaintiff against Andy
Nguyen falls within the scope of the forum selection clause and must be brought not in this Court

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but, rather, in the chosen forum.
1. Empl oyment i s a Cause of t he Lawsui t.
Was Andy Nguyens employment an actual cause (i.e., a but-for cause) of the lawsuit? The
answer to this simple question is yes. Had Andy Nguyen never been employed by Plaintiff, this
lawsuit against him would not have come to happen. But for his employment, he would not have
any relationship with Plaintiff. He would have had no access to any allegedly confidential
information, nor would he have had a duty to keep that information secret. He would never have
had an opportunity to deliver the information to any outside party. Plainly stated, Plaintiffs lawsuit
against Andy Nguyen results from his employment. And the terms of that employment are
memorialized in the Employment Agreement. On this basis alone, Plaintiffs entire lawsuit is relative
to (or, alternatively, related to) the Employment Agreement and subject to the forum selection
clause in that contract.
2. Pl ai nt i f f s Fac t ual Al l egat i ons Cent er Upon Empl oyment .
The analysis could fairly end here. But the strong nexus between Andy Nguyens
employment and this lawsuit can also be shown through a review of the Plaintiffs factual assertions
made in its Complaint.
In its Complaint, Plaintiff makes one core allegation of wrongdoing against Andy Nguyen.
Namely, that as a sales manager for Plaintiff, Andy Nguyen learned the identity of Plaintiffs
customers and had access to other confidential information, and that he disclosed that work-related
information to a competitor in exchange for payment. (FAC 37). Plaintiffs entire complaint
against Andy Nguyen flows from this central allegation of fact. And at the center of this allegation is
Andy Nguyens status as an employee of PQ Labs, Inc. A status created by the Employment
Agreement. This strong connection between the factual allegations of Plaintiffs complaint and the
employment relationship between the parties demands the conclusion that the dispute between the
parties is related to (or, alternatively, relative to) the Employment Agreement.

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3. Pl ai nt i f f s Cl ai ms Requi re Anal ysi s of t he Empl oyment Agreement .
Each of the causes of action brought by Plaintiff relate to (or, alternatively, are relative to)
the Employment Agreement because none of them can be adjudicated without analyzing the validity
and terms of that agreement, including the employment status and duties created by that agreement,
if any. This is obviously true with respect to Plaintiffs claims for breach of contract and
misappropriation of trade secrets. It is also true for the various other tort claims brought by Plaintiff.
In Manetti-Farrow the Ninth Circuit addressed a forum selection clause included in an exclusive
dealership contract. Unlike the extremely inclusive forum selection clause used in the Employment
Agreement which governs all disputes relative to the Employment Agreement the forum
selection clause interpreted in Manetti-Farrow governed only controvers[ies] regarding interpretation
or fulfillment of the [exclusive dealership contract]. Nonetheless, the court in Manetti-Farrow
dismissed the plaintiffs tort claims of conspiracy to interfere with contractual relations, conspiracy
to interfere with prospective economic advantage, tortious interference with contractual relations,
tortious interference with prospective economic advantage, breach of implied covenant of good
faith and fair dealing, and unfair trade practices. The court did so because each of the plaintiffs
claims related in some way to rights and duties enumerated in the exclusive dealership contract and
were therefore to be heard only in the chosen forum. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d
509, 514 (9th Cir. 1988). The same is true in this case. Plaintiffs claims of Unfair Competition;
Tortious Interference with Prospective Economic Advantage; Breach of Fiduciary Duty; Civil
Conspiracy; and Aiding and Abetting cannot be litigated without an examination of the status, rights,
duties, and privileges acquired by Andy Nguyen and Plaintiff under the Employment Agreement.
Furthermore, Plaintiffs arguments in its Complaint demonstrate that the lawsuit against
Andy Nguyen relates to the Employment Agreement. The Complaint, through and through, relies
upon and intertwines itself with the Employment Agreement and the employment relationship
created by that agreement. For example, Plaintiffs Complaint uses terms of the Employment

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Agreement to define the confidential information that Plaintiff claims Andy Nguyen has an
obligation to protect, but allegedly did not. (FAC 30). The Complaint uses employment status as
the basis for Andy Nguyens alleged fiduciary duty to Plaintiff. (FAC 126). The Employment
Agreement is also used by Plaintiff to define the obligation Andy Nguyen allegedly owed to Plaintiff
to keep its information secret. (FAC 48). The Employment Agreement is cited in the Complaint as
providing the basis for much of the relief Plaintiff seeks, including injunction, indemnities, and
attorneys fees. (FAC, Prayer for Relief, 12).
For these reasons, all causes of action against Andy Nguyen are relative to the
Employment Agreement and, as a result, must be heard only in the chosen forum.
D. California State Courts were Chosen to Hear Disputes.
In the Employment Agreement, Plaintiff promised that California state courts not the
federal courts would be the only courts to hear disputes between it and Andy Nguyen relative to
(or, alternatively, relating to) the Employment Agreement. In the words of the Employment
Agreement, state courts are to have exclusive jurisdiction.
The forum selection clause of the Employment Agreement uses a two-sentence
construction, moving from a geographic designation in the first sentence to a specific identification
of the sovereignty of the chosen court in the second sentence. The second sentence is the
controlling sentence of the provision.
As used in the Employment Agreements forum selection clause, the words courts of State
of California mean the state courts of California, not federal courts located in California. The
second sentences use of the preposition of, rather than in, is determinative. This is
unquestionably the law in the Ninth Circuit and many of its sister circuits. Doe 1 v. AOL LLC, 552
F.3d 1077, 1082 (9th Cir. 2009) (citing Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d
921, 926 (10th Cir. 2005) (interpreting Courts of the State of Colorado to mean Colorado state
courts; the clause refers to sovereignty rather than geography); Dixon v. TSE Intl Inc., 330 F.3d

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396, 398 (5th Cir. 2003) (interpreting Courts of Texas, U.S.A. to mean Texas state courts;
[f]ederal district courts may be in Texas, but they are not of Texas); LFC Lessors, Inc. v. Pac. Sewer
Maint. Corp., 739 F.2d 4, 7 (1st Cir. 1984) (interpreting forum selection and choice of law clause
stating the contract shall be interpreted according to the law, and in the courts, of the
Commonwealth of Massachusetts to designate the state courts of Massachusetts)). Consequently,
any dispute between Plaintiff and Andy Nguyen that is relative to the Employment Agreement
must be brought in a California state court.
As discussed in Section C above, each and every one of Plaintiffs causes of action in this
lawsuit are relative to Andy Nguyens employment under the Employment Agreement. The claims
are all, therefore, subject to the forum selection. The clause requires that these claims be brought
only in a California state court, not this or any other federal court.
E. Confidentiality Agreement Does Not Change the Analysis or Conclusion.
The terms of the Confidentiality Agreement that was signed by the parties alongside the
Employment Agreement do not conflict or compete with the forum selection clause used in the
Employment Agreement. Nor do the terms of the Confidentiality Agreement change the conclusion
that all claims against Andy Nguyen were improperly brought in this Court.
Section 14.8 of the Confidentiality Agreement states:
14.8 JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.
In case of any dispute hereunder, the parties will submit to the exclusive
jurisdiction and venue of any court of competent jurisdiction sitting in Santa Clara
County, California, and will comply with all requirements necessary to give such
court jurisdiction over the parties and controversy. EACH PARTY WAIVES
ANY RIGHT TO A JURY TRIAL AND TO CLAIM OR RECOVER
PUNITIVE DAMAGES WITH RESPECT TO THIS AGREEMENT.

(Exhibit B, page 4)

Under Section 14.8 of the Confidentiality Agreement, the parties agreed to allow any court
of c ompet ent j uri sdi c t i on sitting in Santa Clara County to hear disputes under the Confidentiality
Agreement (emphasis added). Accordingly, for disputes under the Confidentiality Agreement, each

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party must submit to any court in Santa Clara County even a federal court i f that court is of
competent jurisdiction. Importantly, however, with the forum selection clause of the Employment
Agreement, the parties extinguished the federal courts jurisdiction over this dispute. In the words of
the forum selection clause of the Employment Agreement, the California states courts have
exclusive jurisdiction. Thus, in this lawsuit, Andy Nguyen has no obligation under Section 14.8 of
the Confidentiality Agreement to submit to the jurisdiction of federal courts in Santa Clara County,
or any county, because those courts have no jurisdictional competency over disputes that are
relative to the Employment Agreement. Even if this lawsuit against Andy Nguyen is brought, in
part, under the Confidentiality Agreement, it must be brought in a California state court because it is
(also) relative to the Employment Agreement.
Under the terms of the Employment Agreement, presented to Andy Nguyen and signed
unchanged, Plaintiff sought to prevent one of its employees from ever filing an employment lawsuit
in federal court. Under those same terms, Plaintiff may not now haul Andy Nguyen into this Court.
IV. No Waiver
In its Complaint, Plaintiff alleges that the Employment Agreement and Confidentiality
Agreement are valid and binding against the parties (FAC 29). For the purpose of this motion, and
only for that purpose, Andy Nguyen relies upon that allegation. Andy Nguyen does not waive any
right to argue in the future that one or both of those documents is not binding against him, in whole
or in part.
V. Request for Dismissal
The Complaint against Andy Nguyen was improperly brought in this Court. Under Rule
12(b)(3) of the Federal Rules of Civil Procedure, Andy Nguyen requests immediate dismissal of each
and every cause of action brought against him in Plaintiffs FAC. Against the urging of Andy

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Nguyen, this Court may choose to dismiss some but not all of those causes of action.
Dated: April 12, 2012
By: ____/s/_____________________
Andy Nguyen


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EXHIBIT A
EMPLOYMENT AGREEMENT

Case4:12-cv-00450-CW Document21-4 Filed03/12/12 Page2 of 11
EMPLOYMENT AGREEMENT
This Employment Agreement is made for aU purposes and in all respects as of this 2.8 day of
,2010, by and between PQ LABS INC (hereinafter known "Employer") and
Andy Ng yen (heremafter known as "Employee") who shall collectIvely be known herem as "the
Parties".
RECITALS:
WHEREAS, Employer is engaged in the business of Computer hardware, software R&D and distribution;
WHEREAS, Employer wishes to employ Employee and Employee wishes to accept such employment on
the terms and under the conditions recited below;
The premises having been considered and with acknowledgment of the mutual promises and of other good
and valuable consideration herein contained, the Parties, intending to be legally bound, hereby agree as
follows:
A. Capacity of Employment. The duties to be perfom1ed by Employee for Employer are generally
described as follows: sales and marketing.
1. Employee shall have the following title: Inside Sales and Account Manager
B. Term of Employment-At Will Employee. Employer shall employ Employee in the capacity set
forth above commencing on May 28, 2010 (or such other date as the Parties may agree to) and continuing,
with no fixed termination date, until either Party shall give proper notice of termination of this
employment agreement to the other.
1. No fixed contract period. There shall be no fixed date for termination of this employment
agreement and it shall continue indefinitely until either Party gives proper notice to the other as
required in this paragraph. Furthermore, Employee specifically waives any rights he or she mayor
may not have under state law (such as the Model Employment Termination Act or like legislation)
requiring that any and all tennination of employment be "for good cause". This is an "at will"
employment arrangement and, as such, no cause is required by either party for tennination hereof.
2. Notice Peliod. Any Party wishing to give notice of termination of this agreement shall give the
other Party ten (10) days advance notice. The notice period does not commence until notice is
actually received by the other Party. Should state or federal law require a longer notice period, the
longer notice period required under the law shall be applicable to this contract.
3. Method of Notice. Notice oftermination shall be given in writing delivered by any method.
4. Notice To Employer. All notices under this contract to be given to Ell1ployer shall be
communicated to: Frank Lu at PQ Labs Inc, 2150 Trade Zone Blvd, Suite 104, San Jose, CA,
95131. The employer may amend the individual to receive notice andlor the location of notice to it
1
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elgreemelll exceqt Jor.' (ell eillZleb pli07 .""".
benefits Employee has accrued under any retirement or deferred compensation plan sponsored by
EmpIoyer, or (c) other benefits mandated under state or federai Caw for departed. Also, in the case of
termination for cause, Employer shall reimburse Employee for all appropriately documented expenses
incurred by Employee before the termination date that are otherwise reimbursable to Employee under this
contract. The "notice period" and "notice method'\ if any, contained in paragraph B above do not apply
to termination for cause. Employer must give actual notice to Employee of termination for cause but may
deliver said notice by any manner, either orally or in writing. Employer may make termination for cause
effective immediately. Should state or federal1aw require a notice period, the notice period so required
under the law shall be applicable to this contract. This is an "at will" employment contract wherein no
canse j'l reqnjred for terminatjon This paragraph concerning "for cause" termination, if triggered through
commission of the below acts by the Employee, merely allows the Employer to terminate without
complying with the notice provisions contained in the preceding paragraph.
Grounds For "Cause" Termination. Commission of any of the following acts by Employee constitute
grounds for the Employer to terminate Employee "for cause
n
under this paragraph:
1. Employee is charged with a felony crime;
2. Employee commits a crime of moral turpitude such as an act of fraud or other crime involving
dishonesty;
3. Employee uses illegal drugs;
4. Employee fails to perform his or her duties in a competent manner;
5. Employee violates his or her duties of confidentiality andlor non-competition under this
agreement;
6. Employee accepts an offer for future employment with a competitor of employer;
7. Employee fails to comply with directives from superiors, the company board of directors or
managing officers, or written company policies;
8. Employee commits any act or acts that harm the Company's reputation, standing, or credibility
within the community(ies)it operates or with its customers or suppliers;
9. Employee fails to perform the duties assigned to him or her for any reason;
D. Required Confidentiality. For so long as Employee shall remain employed by Employer and for a
period oft11ree years after termination of employment with Employer for any reason, Employee shall not
disclose or communicate any "Confidential Information" of Employer to any or entity other than
Employer nor use said "Confidential Infonnation II for any purpose or reason other than the benefit of
Employer. For purposes oftIle preceding sentence, "Confidential Information" means (but is not limited
to) any infonnation regarding Employer's business methods, business policies, procedures, techniques,
research or development projects or results, sales information of any kind, financial infonnation of any
kind, trade secrets or other knowledge possessed by Employer which isnot generally known by
individuals outside of the Employer (including Employer's employees, consultants, and advisors). Also,
"Confidential Information" shall additionally include, but not be limited to, the follow information of
Employer:
1 . Price lists or other pricing information;
2. Customer lists or other customer information;
2
3. Sales strategy, tactics, or methods;
4. Infonnation pertaining to products or services under development;
5. Internal company reports of any kind;
6. R&D roadmap, drawings, source code.
E. Noncompete Agreement. [This paragraph is not used in this agreement.]
F. Employee Compensation. For all services rendered by Employee under this agreement, Employee
shall be entitled to a salary and compensation of $4000 per month ($48,000 per year).
G. Employee Expenses to be Reimbursed by Employer. (This paragraph not used in this agreement.]
H. to be provided by Employer to Employee. (This paragraph not used in this agreement.]
I. Intellectual work product. Any writing, invention, process, creative mark or other work which
Employee may make or conceive of, either alone or with others, at any time while Employee is an
employee of Employer which in any way relates to the business of Employer, shall be the sole property of
Employer and Employee shall have no rights in nor claims thereto (including, but not limited to, rights or
claims accruing under the copyright, trademark, or patent laws of any country).
J. Remedies in Event of Breach of Paragraphs D, E, or I. Employee hereby recognizes that ineparable
damage will result to the Employer, and to the business of the Employer, in the event of breach by
Employee of any of the covenants and assurances contained in paragraphs D (Confidentiality), E
(Noncompetition), or I (Intellectual Work Product) above (should these paragraphs be used in this
contract). As such, in the event of breach of any of the covenants and assurances contained in paragraphs
D, E or I ofthis contract, Employer shall be entitled to enjoin and restrain Employee from any continued
violation of any term of paragraphs D, E and/or I hereof. This equitable remedy shaH be in addition to
(and not supersede) any action for damages Employer may have for breach of any part of this agreement.
a. Indemnification of Attorneys Fees and out-of-pocket costs. Should Employee breach this
agreement, Employer shall be indemnified by Employee for its reasonable attomeys fees and
out-of-pocket costs which in any way relate to, or were precipitated by, the breach ofthis
agreement.
K. Survival of Paragraphs D, E, and H through T. Should either party lawfully terminate this
agreement, paragraphs D, E, and H through T hereof shall survive any such termination and remain in full
force and effect until the expiration oftheir legal enforceability.
L. Integration. This Agreement sets forth the entire agreement between the Parties with regard to the
matter hereof. All prior agreements, and covenants, express or implied, oral or written, with
respect to the subject matter hereof, are hereby superseded by this agreement. This is an integrated
agreement. Should the language of this contract conflict with any Employer manual or memorandum, the
language ofthis contract shall control unless the external document specifically states that it shall act as a
niodification of company employment contracts and the Employee consents to this modification.
M. Non-Assignability by Employee. This is a personal service contract which must be performed by the
individual named herein as Employee and, as such, performance hereof may not be assigned or
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subcontracted without the express written consent of Employer. However, Employer retains the power to
assign or transfer its rights under this agreement.
N. Severability. In the event any provision of this Agreement is deemed to be void, invalid, or
unenforceable, that provision shall be severed from the remainder of this Agreement so as not to cause the
invalidity or unenforceability of the remainder of this Agreement. All remaining provisions of this
Agreement shall then continue in full force and effect. Ifany provision sha,ll be deemed invalid due to its
scope or breadth, such provision shall be deemed valid to the extent of the scope and breadth permitted by
law.
O. Modification. Except as otherwise provided in this document, this agreement may be modified,
superseded, or voided only upon the written and signed agreement of the Parties. Further, the physical
destruction or loss of this document shall not be construed as a modification or termination of the
agreement contained herein.
P. Acknowledgements. Each party acknowledges that he or she has had an adequate opportunity to read
and study this Agreement, to consider it, to consult with attomeys ifhe or she has so desired.
Q. Return of Materials. Employee agrees that upon the termination of his or her employment with
Employer for any reason whatsoever, Employee will promptly retunl to Employer all manuals, records, .
training materials, and other Confidential Information (described in paragraph D above) in his or her
possession as well as equipment, if any, given to Employee by Employer for use in performance of his or
her duties.
R. Effect of Waiver of Breach. The waiver by the Employer ofa breach of any of the provisions of this
agreement by the Employee shall not operate or be construed as a waiver of any subsequent breach by the
Employee.
S. Exclusive Jurisdiction for Suit in Case of Breach. The Parties, by entering into this agreement,
submit to jurisdiction in State of California for adjudication of any disputes and/or claims beh'Veen the
parties under this agreement. Furthermore, the parties hereby agree that the courts of State of California
shall have exclusive jurisdiction over any disputes betvveen the pruties relative to this agreement, whether
said disputes sounds in contract, tort, or other areas ofthe law.
T. State Law. It is intended that this Agreement be valid and enforceable wlder the laws ofthe state of
Califomia, and that the laws of this state shall govern the agreement's interpretation.
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IN WITNESS WHEREOF and acknowledging acceptance and agreement of the foregoing, Employer and
Employee affix their signatures hereto.
EMPLOYER
PQ Labs Inc
By: FrankLu
Title: CEO
Dated: _-,Mc.:....;.j""\--"- ?8 ,2010
EMPLOYEE
-
tr=
Dated: ,2010
5

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EXHIBIT B
CONFIDENTIALITY AGREEMENT

PQ Labs, INC.
EMPLOYEE CONFIDENTIALITY AGREEMENT
In consideration of my employment or continued employment by PQ Labs, Inc.
(together \'l/i th any subsidiary of PQ Labs, Inc., the "Company"), and the
compensation now and hereafter paid to mel I hereby agree as follows:
1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. '
At all times during the term of my employment and thereafter, I \1ill hold in
strictest confidence and will not disclose, use, lecture upon or publish any of the
Company's Proprietary Information (defined below), except as such disclosure, use
or publication may be required in connection with my work for the Company, or
unless an executive officer of the Company. expressly authorizes such in writing.
The term Proprietary Information" shall mean trade secrets, confidential knowledge,
data or any other information of the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) inventions, mask works, trade
secrets, ideas, processes, formulas, source and object codes, data, programs, other
",'orks of authorship, know-how, improvements, discoveries, developments, designs and
techniques (hereinafter collectively referred to as "Inventions"); and (b)
information regarding 'plans for research, development, new products, regulatory
matters, marketing and selling, business plans, budgets and unpublished financial
statements, licenses, prices and costs, suppliers and customers; and information
regarding the skiLls and compensation of other employees of the Company.
2. THIRD PARTY INFORMATION.
I understand, in addition, that the Company has received, and in the future will
receive, from third parties confidential or proprietary information ("Third Party
Information") subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
During the term of my employment and thereafter, I will hold Third Party
Information in the strictest confidence and will not disclose to anyone (except in
connection \'l/ith my work for the Company), unless expressly authorized by an
executive officer of the Company in writing.
3. ASSIGNMENT OF INVENTIONS.
3.1 ASSIGNMENT.
I hereby assign to the all my right, title and interest in and to
any and all Inventions (and all patent rights, copyrights, mask work rights,
trademarks, trade secret rights, all other rights throughout the world in
connection therewith, and the goodwill associate with all of the foregoing
(collectively, "Proprietary Rights"), whether or not patentable or registrable
under patent, copyright, trademark or similar statutes, made or conceived or
reduced to practice or learned by me, either alone or jointly with others, during
the period of my employment with the Company. Inventions assigned to, or as
directed by, the Company under this Paragraph 3 are hereinafter referred to as
"Company Inventions." I agree, upon request, to execute, verify and deliver
assignments of the Proprietary Rights to the Company or its designee and I h(.)reby
appoint the Company my attorney-in-fact with respect to the Proprietary Rights for
the purpose of effecting any or all of the Company's rights to and use of the
Proprietary Rights.
3 . 2 GOVERNMENT.
I also agree to assign to, or as directed by the Company, all my right,
title and interest in and to any and all Inventions, full title to which is
required to be assigned to the United States of America by a contract between the
Company and United States of America or any of its agencies.
3.3 WORKS FOR HIRE.
r acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of my employment and which are
protect.able by copyright are "works made for hire, I. as that term is defined in the
United States Copyright Act (17 U.S.C. Section 101).
4. ENFORCEMENT OF PROPRIETARY RIGHTS. r will assist the Company in every proper
way to obtain and enforce United States and foreign Proprietary Rights relating to
Inventions in any and all countries. My obligation to assist the COTItpany with
respect to Proprietary Rights relating to such Inventions in any andall countries
shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually spent
by me at the Company'S request on such assistance.
5. WAIVER OF CLAIMS
I hereby waive any and all claims, of any nature Whatsoever, which I nO,,1 or may
hereafter have for infringement of any Proprietary Rights assigned by me to the
Company pursuant to this pursuant to this Employee Confidentiality Agreement. (the
.
6. OBLIGATION TO KEEP COMPANY INFORMED.
During the period of my employment, I will promptly disclose all Inventions to the
Company fully and in writing and will hold such Inventions in trust for the sole .
right and benefit of the Company. In addition, after termination of my employment,
I will promptly disclose all patent applications filed by me within a year after
termination of my employment with the Company.
7. PRIOR INVENTIONS.
Inventions, if any, patented or unpatented, which I made prior to the commencement
of my employment with the Company are excluded from the scope of this Agreement. To
preclude any possible uncertainty, I have set forth on EXHIBIT A attached hereto a
complete list of all Inventions (i) that I have, alone or jointly with others,
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, (ii) that I consider to be my property or the property
of third parties and (iii) that I wish to have excluded from the scope of this
A,greement. If disclosure of any such Invention on EXHIBIT A would potentially cause
me to violate a priQr confidentiality agreement, I understand that I am obligated
only to describe such Invention in general terms in order to avoid such violation.
8. COVENANT NOT TO SOLICIT OR COMPETE.
8.1 RESTRICTIVE COVENANTS.
(a) I agree that during the period of my employment by the Company I will
not, without the Company's prior written consent, engage in any employment or
business activity other than for the Company. I further agree that during the term
of my employment with the Company and for a period of one (1) year thereafter, I
also shall not solicit, or arrange to have any other person or entity solicit, any
person or entity engaged by the Company as an employee, customer, supplier, or
consultant or advisor to the Company to terminate such party's relationship with
the Company. The time periods provided for in this Section $.l(a) shall be extended
for a period of time equal to any period of time in which I shall be in violation
of any provision of this Section 8.
(b) In view of the unique nature of the business of the Company and the
need of the Company to maintain its competitive advantage in the industry, I agree
and acknowledge that, in the event that I breach any other covenant or obligation
set forth herein, a court of competent jurlsdiction shall enjoin me for a period of
one (1) year following the issuance of such injunctive order from, directly or
indirectly, within the United States of Americaor'its Territories or Possessions,
or within any other country, (i) engaging in, '(ii)' owning an interest in, (iii)
being employed by; or consulting for, or acting as an advisor to, any person or
entity which engages in, or (iv) otherwise participating in any way in, any
activity which competes with the Business (as defined in Section 8.2 belovl) of the
Company ..
8.2 DEFINITION OF BUSINESS; COVENANT TO AGREE.
For purposes of Section 8.1 above, the term "Business" shall mean: (i) the
research, development, manufacture, distribution, license and commercialization OF
computer hardware and software.
9. NO IMPROPER USE OF MATERIALS.
During my employment by the Company, I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not bring
onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to v/hom I have an obligation
of confidentiality unless consented to,in writing by that former employer or person.
10. NO CONFLICTING OBLIGATION; NO MISREPRESENTATION
I represent that my performance of all the terms of this Agreement and my
performance of my duties as an employee of the Company do not and 'dill not breach
any agreement to keep in confidence information acquired by me in confidence or in
trust prior to my employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith. I
further agree that I 'dill not misrepresent :Ln any manner, my title or the nature of
my current role and responsibilities at Cubist to any potential or future employer.
11. RETURN OF COMPANY DOCUMENTS.
When I leave the employ of the Company, I Nill deliver to the Company any and all
drawings, notes, memoranda, specifications, devices, formulas, molecules, cells,
storage media, including software, documents and computer printouts, together with
all copies thereof, and any other material containing or disclosing any Inventions,
Third Party Information or Proprietary Information of the Company. I further agree
that any property sit\lated on the Company's premises and owned by the Company,
including disks and other storage media, filing cabinets or other work areas[ is
subject to inspection by Company personnel at any time with or without notice.
12. LEGl"L AND EQUITABLE REMEDIES.
Because my services are personal and unique and because I may have access to and
may become acquainted with the Proprieta:r:'y Informat.ion of the Company, the Company
shall have the right to enforce this Agreement and any of its provisions by
injunction, specific performance or other equitable relief, without bond, without
prejudice to any other rights and remedies that the Company lnay have for a breach
of this Agreement, and I waive the claim or defense that the Company has an
adequate remedy at law. I shall not, in any action or proceeding to enforce any of
the provisions of this Agreement, assert the claim or defense that such an adequate
remedy at law exists.
13. NOTICES.
Any notices required or permitted hereunder shall be given to me at the address
specified below or at such other address as I shall specify in writing. Such notice
shall be deemed given upon personal delivery to the appropriate address or' i= sent
by certified or registered mail, three days after the date of mailing.
14. GENERAL PROVISIONS.
14 . 1 GOVERNING LAW.
This Agreement is executed under seal and wi.ll be governed by and, construed
according to the laws of the Commonweal'th of California.
14.2 ENTIRE AGREEMENT.
This agreement is the final, complete and exclusive agreement of the parties with
respect to the subject matter hereof and supersedes and merges all prior
discussions between u s ~ No modification or amendment of this Agreement, nor any
waiver of any rights under this Agreement, will be effective unless in writing
signed by the party to be charged. Any subsequent change or changes in my duties,
salary or compensation will not affect the validity or scope of this Agreement. As
used in this Agreement, 'the period of my employment includes any time during which
I may be retained by the Company as a consultant.
14.3 SEVERABILITY.
If one or more of the provisions in this Agreement are deemed unenforceable by the
law, then the remaining provisions will continue in full force and effect.
14.4 SUCCESSORS AND ASSIGNS.
This Agreement will be binding upon my heirs, executors, administrators and other
legal representatives and will be for the benefit of the Company, its successors,
and its assigns. I may not assign any of my righ'ts, or delegate any of my
obligations, under this Agreement.
14.5 SURVIVAL.
The provisions of this Agreement shall survive the termination of my employment and
the assignment of this Agreement by the Company to any successor in interest or
other assignee.
14.6 EMPLOYMENT.
I agree and understand that nothing in this Agreement shall confer on me any right
with respect to conti.nuation of my employment with the Company, nor shall it
interfere in any way with my right or tbe Company's right to terminate my
employment at any time, with or without cause.
14.7 WAIVER
No waiver by the Company of any breach of thls Agreement shall be a waiver of any
prece,ding or succeeding breach. No waiver by the Company of any right under this
Agreement shall be construed as a waiver of any other right. The Company shall not
be required to give notice to enforce strict adherence to all terms of this
Agreement.
14.8 JURISDICTION AND VENUE; WAIVER -OF JURY TRIAL.
In case of any dispute hereunder, the parties will submit to the exclusive
jurisdiction and venue of any court of competent jurisdiction sitting in Santa
Clara County, California, and will comply with all requirements necessary to give
such court jurisdiction over the parties and the controversy_ EACH PARTY HEREBY
WAIVES ANY RIGHT TO A JURY TRIAL AND TO CLAIM OR RECOVER PUNITIVE DAMAGES WITH
RESPECT '1'0 THIS AGREEMENT.
14.9 DISCLOSURE.
I agree that the Company may, provide a copy of this Agreement to any business or
enterprise (i) which I may directly or indirectly own, manage, operate, fina.nce,
join, control or participate in the ownership, management, operation, financing, or
control of, or (ii) with which I may be connected with as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise, or in
connection with which I may use or permit my name to be used. I qgree that I will
provide the names and addresses of any such persons or entities as the Company may
from time to time reasonably request.
This Agreement shall be effective as of the first day of my employment .. lith the
Company.
I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE DURING MY
EMPLOYMENT, AND RESTRICTS MY RIGHTS TO DISCLOSE OR USE THE COMPANY'S CONFIDENTIAL
INFORMATION OR TO COMPETE WITH .THE COMPANY DURING OR SUBSEQUENT TO MY EMPLOYMENT.
I HAVE READ 'I'HIS AGREEI'1ENT CAREFULLY .AND UNDERSTAND ITS TERMS. I HAVE COMPLE':'ELY
FILLED OUT EXHIBIT A TO THIS AGREEMENT.
Dat.ed:
ACCEPTED AND AGREED TO:
PQ Labs, Inc.
By:
Name: Frank (Fei) Lu
Title: CEO

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EXHIBIT C
DECLARATIION OF ANDY NGUYEN


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800 A Street
Telephone: 415.685.3108
Facsimile: 415.883.7635

Andy Nguyen



OAKLAND DIVISION


Plaintiff,

v.


Defendants.
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[PROPOSED] ORDER GRANTING
DEFENDANT ANDY NGUYENS
IMPROPER VENUE
F.R.C.P. 12(b)(3)

Filed with Motion to Dismiss For
Improper Venue

Date: May 31, 2012
Time: 2:00 p.m.
Courtroom: 2


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[PROPOSED] ORDER
This Court, having read and considered the papers submitted by the parties, and finding
good cause therefor, orders that the motion to dismiss pursuant to Federal Rule of Civil Procedure
section 12(b)(3) made by Defendant Andy Nguyen is hereby GRANTED as to plaintiff PQ Labs,
Inc.s claims of Misappropriation of Trade Secrets, Unfair Competition, Tortious Interference with
Prospective Economic Advantage, Breach of Contract, Breach of Fiduciary Duty, Civil Conspiracy,
and Aiding and Abetting. Such claims are dismissed with prejudice against re-filing in any court
other than the California state courts.

IT IS SO ORDERED.

Dated: _______________, 2012

By: ________________________________
Claudia Wilken
U.S. District Judge

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