Metropolitan News-Enterprise


Wednesday, November 25, 2015


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C.A. Limits Use of Judicial Notice to Resolve Demurrer

Trial Judge Erred in Sustaining Demurrer Based on Allegations in Documents, Panel Says




A trial court may not use judicially noticed records to resolve a disputed factual issue on demurrer, the Sixth District Court of Appeal ruled yesterday.

The court reinstated an action by Richtek Technology, a Taiwanese maker of integrated circuit products, against uPI Semiconductor Corporation, a direct competitor which is also based in Taiwan, and the three former Richtek employees who started uPI.

The complaint alleges trade secret misappropriation. Richtek had previously filed criminal and civil complaints, against the same defendants and others, in Taiwan, alleging breach of employment agreements and misappropriation of confidential information.

Federal Claims

Richtek also brought an action before the U.S. International Trade Commission and sued in federal district court in Northern California. The U.S. District Court action, for patent infringement and trade secrets misappropriation, was stayed after the court dismissed the trade secrets claim for lack of subject matter jurisdiction and dismissed all claims against the individual defendants for lack of personal jurisdiction.

A Santa Clara Superior Court action, the subject of the appeal ruled on yesterday, was brought in 2011. The defendants demurred on the ground the claim was time-barred under Taiwanese law.

In addition, the individual defendants moved to dismiss on the basis of a clause in their employment contracts requiring that claims arising from those agreements be litigated in Taiwan.

Superior Court Judge James Kleinberg sustained the demurrer on the basis of Taiwan’s two-year statute of limitations for trade secrets claims. He took judicial notice of the complaints filed in Taiwan, which, as Kleinberg characterized it, established that if the defendants had misappropriated trade secrets, Richtek knew about it n 2007 when the Taiwanese complaints were filed.

C.A. Opinion

Presiding Justice Conrad Rushing, however, said the trial judge erred. While it was not improper to take judicial notice of the existence of the Taiwanese complaints, he said, Kleinberg went a step too far by relying on the contents of those documents to resolve the disputed issue as to when the limitations period in the pending action began to run.

Rushing explained:

“The allegations in the amended complaint, which we must accept as true for purposes of evaluating a demurrer, state that appellants learned of specific misappropriations in 2009, 2010 and 2011.  This is contrary to the allegations in the Taiwanese complaints.  In sustaining respondents’ demurrer, the trial court used the allegations in the Taiwan complaints to conclude that appellants had knowledge of respondents’ misappropriation in 2007, and as such, appellants’ claims in this case were time-barred.  This was improper.”

The court went on, however, to uphold the dismissal of the case against an individual defendant, J.C. Chen, saying both parties were bound by a provision in his employment contract providing that should he “violate the [disclosure of secrets] provisions,” he would be subject to suit in the Xinzhu Local Court of Taiwan.

The case is Richtek USA, Inc. v. uPI Semiconductor, Inc., H039519.


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