1017-00004 · Entities. Aurelius Global Media Group · Pleadings/Aldrich

mpa-opposition-motion-to-strike.docx DOCUMENT Finance & Banking

117 / 150 ← → ✕

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES — CENTRAL DISTRICT

CALDERWOOD & HARKNESS LLP Renata Vasquez (SBN 224578) Devon Archer (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201

Attorneys for Defendant and Cross-Complainant AURELIUS MEDIA AMERICAS INC.

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES — CENTRAL DISTRICT

TABLE OF AUTHORITIES

Cases

Statutes

MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION

Plaintiff Gavin Aldrich ("Aldrich") moves to strike from the Cross-Complaint filed by Defendant and Cross-Complainant Aurelius Media Americas Inc. ("AMA") on January 20, 2023, all references to and allegations based upon Section 9.1 of the Employment Agreement dated September 5, 2017 (as amended August 1, 2020) — an eighteen-month non-competition clause prohibiting Aldrich from working for any "Competing Enterprise." That term is defined in the Employment Agreement as any entity deriving twenty-five percent (25%) or more of its revenue from the production, licensing, or distribution of unscripted or reality television content in North America. Aldrich contends that because Section 9.1 is void under California Business and Professions Code section 16600, any reference to it in the Cross-Complaint constitutes "irrelevant" or "improper" matter that must be stricken under Code of Civil Procedure section 436.

AMA opposes the Motion to Strike in its entirety. Aldrich's motion rests on a fundamental mischaracterization of AMA's Cross-Complaint and the role that Section 9.1 plays within it. While AMA acknowledges that the enforceability of Section 9.1 as a standalone post-employment restriction is subject to serious challenge under California law — and, indeed, AMA has never contended otherwise in this litigation — AMA's Cross-Complaint does not seek to enforce Section 9.1 as an independent cause of action. AMA does not seek injunctive relief to prevent Aldrich from competing in the unscripted television industry, nor does AMA seek monetary damages measured by Aldrich's competitive activities. Rather, the references to Section 9.1 in the Cross-Complaint serve as essential factual context relevant to AMA's properly pled causes of action for breach of the confidentiality provision (Section 9.4 of the Employment Agreement), misappropriation of trade secrets under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code section 3426 et seq., breach of fiduciary duty, and conversion.

AMA's Cross-Complaint asserts four causes of action: (1) Breach of Employment Agreement (Sections 9.1, 9.2, 9.3, and 9.4), with the operative breach being Section 9.4's confidentiality obligations, which Aldrich violated by transmitting approximately 340 emails containing proprietary information to his personal email account and by forwarding confidential show format bibles, pilot sizzle reels, and revenue models to Halcyon Creek Productions LLC, a competing production company formed by a former AMA executive; (2) Misappropriation of Trade Secrets under CUTSA; (3) Breach of Fiduciary Duty; and (4) Conversion. None of these causes of action depends upon enforcement of the non-competition clause for its operative relief. The references to Section 9.1 are relevant to Aldrich's knowledge and intent, to AMA's reasonable efforts to maintain trade secret secrecy (a required element of AMA's CUTSA claim), and to Aldrich's own declaratory relief cause of action, in which Aldrich himself placed the enforceability of Section 9.1 squarely at issue.

In the spirit of cooperation and judicial efficiency, AMA has offered to file an Amended Cross-Complaint that (a) removes Section 9.1 from the caption of the First Cause of Action and (b) clarifies that AMA does not seek injunctive or monetary relief based on enforcement of Section 9.1, while retaining references to Section 9.1 solely as factual context relevant to AMA's remaining claims. AMA's counsel communicated this proposal in writing to Aldrich's counsel, Cameron Whitfield of Whitfield & Associates, 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212, on February 15, 2023. As of the date of this filing, Aldrich's counsel has not responded to this proposal.

For the reasons set forth below, the Court should deny Aldrich's Motion to Strike in its entirety. In the alternative, AMA respectfully requests leave to amend the Cross-Complaint as described herein.

II. STATEMENT OF RELEVANT FACTS

A. Aldrich's Employment and the Employment Agreement

Gavin Aldrich was employed by AMA as Senior Vice President of Original Content and Executive Producer from September 5, 2017, through October 14, 2022. (Cross-Complaint ("CC") ¶ 8.) During his tenure at AMA, Aldrich occupied a senior leadership role within the company's content development and production division, overseeing the creation and management of unscripted and reality television programming across multiple domestic and international platforms. (CC ¶ 9.) By the time of his termination, Aldrich earned a base salary of $485,000 per year. (CC ¶ 10.) His last annual bonus, for fiscal year 2021, was $225,000. (CC ¶ 10.) In addition, Aldrich held 42,500 AGMG restricted stock units ("RSUs"), of which 15,300 remained unvested at the time of his termination. (CC ¶ 11.)

The terms and conditions of Aldrich's employment were governed by a written Employment Agreement dated September 5, 2017 (the "Employment Agreement"), which was subsequently amended on August 1, 2020. (CC ¶ 12; Exh. A to CC.) The Employment Agreement is a comprehensive document that addresses, among other things, Aldrich's duties, compensation, benefits, grounds for termination, and post-employment restrictive covenants.

Section 9 of the Employment Agreement contains four distinct restrictive covenant provisions, each serving a different protective purpose:

Section 9.1 — Non-Competition. This provision prohibits Aldrich, for a period of eighteen (18) months following the termination of his employment for any reason, from accepting employment with, consulting for, or otherwise providing services to any "Competing Enterprise." The Employment Agreement defines "Competing Enterprise" as any entity deriving twenty-five percent (25%) or more of its revenue from the production, licensing, or distribution of unscripted or reality television content in North America. (CC ¶ 14(a); Exh. A to CC, § 9.1.)

Section 9.2 — Non-Solicitation of Employees. This provision prohibits Aldrich, for a period of twenty-four (24) months following the termination of his employment, from directly or indirectly soliciting, recruiting, or inducing any employee of AMA to leave AMA's employ. (CC ¶ 14(b); Exh. A to CC, § 9.2.)

Section 9.3 — Non-Solicitation of Business Relationships. This provision prohibits Aldrich, for a period of twenty-four (24) months following the termination of his employment, from soliciting or interfering with AMA's business relationships with its clients, vendors, talent, distributors, or network partners. (CC ¶ 14(c); Exh. A to CC, § 9.3.)

Section 9.4 — Confidentiality. This provision imposes an indefinite obligation on Aldrich to maintain the confidentiality of all proprietary and confidential information of AMA, including but not limited to proprietary content, show formats, format bibles, pilot materials, sizzle reels, revenue data, financial projections, talent agreements, distribution agreements, and strategic plans. Section 9.4 expressly prohibits Aldrich from disclosing, transmitting, copying, or using any such confidential information for any purpose other than the performance of his duties at AMA. The obligation survives termination of employment without limitation as to time. (CC ¶ 14(d); Exh. A to CC, § 9.4.)

In addition, the Employment Agreement contains a New York choice-of-law clause at Section 14.3, providing that the agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-laws principles. (CC ¶ 15; Exh. A to CC, § 14.3.) AMA notes the existence of this provision for completeness but acknowledges that the enforceability of this provision, as applied to the restrictive covenant provisions, is itself subject to dispute and is not the focus of the instant motion.

B. Aldrich's Conduct and AMA's Cross-Claims

The factual basis for AMA's Cross-Complaint arises from a pattern of conduct by Aldrich that AMA discovered in September 2022. In September 2022, AMA's Information Technology security team, under the direction of Vice President of Legal and Compliance Gregory Tanaka, conducted a routine data loss prevention ("DLP") audit of AMA's email systems. (CC ¶ 18.) That audit revealed that Aldrich had forwarded approximately 340 emails containing proprietary and confidential information from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal email account (galdrich.private@Northgate Software.com) over a fourteen-month period spanning from July 2021 through September 2022. (CC ¶ 19.) The contents of these emails included internal development memoranda, production budgets, talent compensation data, distribution deal terms, and strategic planning documents — all of which constituted confidential information under both Section 9.4 of the Employment Agreement and AMA's Acceptable Use and Confidentiality Policy. (CC ¶ 20.)

Further forensic analysis of Aldrich's AMA-issued laptop, conducted by AMA's retained digital forensics firm, Nexus Digital Partners, Inc., revealed an even more troubling pattern of conduct. (CC ¶ 21.) The forensic analysis established that Aldrich had transmitted proprietary materials — specifically, three unscripted show format bibles for concepts titled "Apex Endurance," "The Remix," and "Untamed West," along with two pilot sizzle reels and a detailed revenue model for AMA's top-performing franchise "Summit Challenge," which generates approximately $42 million in annual revenue — to Halcyon Creek Productions LLC, at the email address info@halcyoncreekprod.com. (CC ¶ 22.) These transmissions occurred between March 2022 and September 2022, while Aldrich was still employed by AMA and owed duties of loyalty and confidentiality to AMA. (CC ¶ 23.)

Halcyon Creek Productions LLC is a California limited liability company that was formed on February 14, 2022, by Nina Castellanos, a former AMA development executive who had left AMA's employ in January 2022. (CC ¶ 24.) Halcyon Creek Productions is a production company in the unscripted and reality television space — the same industry in which AMA operates — and upon information and belief, it was formed for the purpose of developing and producing unscripted programming in direct competition with AMA. (CC ¶ 25.)

Aldrich's transmissions of confidential materials to his personal email account and to Halcyon Creek Productions violated Section 9.4 of the Employment Agreement. (CC ¶ 26.) They also violated AMA's Acceptable Use and Confidentiality Policy, which was last revised in March 2021 and which Aldrich personally acknowledged by signed acknowledgment dated April 12, 2021. (CC ¶ 27; Exh. B to CC.) That policy expressly prohibits the transmission of proprietary information to personal email accounts, external parties, or any recipient not authorized to receive such information in connection with AMA business. (CC ¶ 28.)

Upon discovery of Aldrich's conduct, AMA terminated Aldrich's employment "for cause" on October 14, 2022, pursuant to Section 7.2(b) of the Employment Agreement. (CC ¶ 29.) Section 7.2(b) authorizes termination for cause upon, among other grounds, the employee's material breach of any provision of the Employment Agreement, including without limitation the restrictive covenant provisions set forth in Section 9. (CC ¶ 30.)

C. AMA's Cross-Complaint (Filed January 20, 2023)

AMA filed its Cross-Complaint on January 20, 2023, asserting four causes of action arising from Aldrich's unauthorized appropriation and transmission of AMA's confidential and proprietary information:

First Cause of Action — Breach of Employment Agreement (Sections 9.1, 9.2, 9.3, and 9.4). The operative factual basis for this cause of action is Aldrich's unauthorized transmission of confidential information to his personal email account and to Halcyon Creek Productions LLC, in violation of Section 9.4 of the Employment Agreement. (CC ¶¶ 33–42.) While the caption of the First Cause of Action references Sections 9.1, 9.2, 9.3, and 9.4, the factual allegations underlying the breach claim focus on the confidentiality violations and the unauthorized disclosure of proprietary materials. AMA does not allege, as part of the breach of contract cause of action, that Aldrich's mere act of accepting employment with a competitor constitutes a breach for which AMA seeks independent relief.

Second Cause of Action — Misappropriation of Trade Secrets under CUTSA (Cal. Civ. Code § 3426 et seq.). This cause of action alleges that the show format bibles, pilot sizzle reels, revenue model, and other proprietary materials transmitted by Aldrich constitute trade secrets within the meaning of CUTSA; that AMA took reasonable efforts to maintain their secrecy; and that Aldrich acquired and disclosed these trade secrets by improper means or in breach of his duty to maintain their secrecy. (CC ¶¶ 43–56.)

Third Cause of Action — Breach of Fiduciary Duty. This cause of action alleges that Aldrich, as a Senior Vice President and Executive Producer, owed fiduciary duties of loyalty and care to AMA, and that he breached those duties by appropriating AMA's confidential information for his personal benefit and for the benefit of a competing entity while still employed by AMA. (CC ¶¶ 57–65.)

Fourth Cause of Action — Conversion. This cause of action alleges that AMA's proprietary digital files — including the format bibles, sizzle reels, and revenue model — are the property of AMA, and that Aldrich wrongfully exercised dominion and control over those files by copying, transmitting, and retaining them without AMA's authorization. (CC ¶¶ 66–73.)

Critically, AMA does not seek injunctive relief preventing Aldrich from competing or working in the unscripted television industry. (See CC, Prayer for Relief.) The relief sought in the Cross-Complaint consists of: (1) compensatory damages for breach of contract; (2) compensatory damages, exemplary damages, and reasonable royalty under CUTSA; (3) injunctive relief limited to preventing further disclosure or use of AMA's trade secrets; (4) damages for breach of fiduciary duty; (5) damages for conversion; and (6) attorneys' fees and costs. (CC, Prayer for Relief ¶¶ 1–8.) At no point does AMA request that the Court enjoin Aldrich from accepting employment in the entertainment industry or from working for any particular entity.

D. Aldrich's Complaint and Declaratory Relief Claim

Aldrich initiated this action by filing his Complaint on December 9, 2022, bearing Case No. 22STCV41087. (See generally, Complaint.) Aldrich asserts five causes of action: (1) Wrongful Termination in Violation of Public Policy; (2) Breach of Contract (contesting the "for cause" designation and seeking severance pay in the amount of $970,000, representing two years of base salary); (3) Breach of the Implied Covenant of Good Faith and Fair Dealing; (4) Declaratory Relief Regarding the Restrictive Covenant Provisions; and (5) Violation of California Labor Code section 2802 (failure to reimburse expenses in the amount of $28,400). (Complaint ¶¶ 25–78.)

Of particular relevance to the instant motion is Aldrich's Fourth Cause of Action for declaratory relief. In that cause of action, Aldrich seeks a judicial declaration that the non-competition clause (Section 9.1), the non-solicitation of employees clause (Section 9.2), and the non-solicitation of business relationships clause (Section 9.3) are void and unenforceable under California Business and Professions Code section 16600. (Complaint ¶¶ 60–68.) Aldrich alleges that these provisions "restrain [him] from engaging in a lawful profession, trade, or business" and are "to that extent void" under the express terms of section 16600. (Complaint ¶ 62.) Aldrich further alleges that an "actual controversy" exists between the parties regarding the enforceability of these provisions and that a judicial declaration is necessary to "resolve the controversy and uncertainty" surrounding his post-employment obligations. (Complaint ¶¶ 63–65.)

Thus, Aldrich himself has placed the enforceability of the restrictive covenant provisions — including Section 9.1 — Squarely at issue in this litigation. He has affirmatively asked this Court to adjudicate the validity of Section 9.1. It is against this backdrop that Aldrich now asks the Court to strike all references to Section 9.1 from AMA's Cross-Complaint — the very provision whose enforceability Aldrich has himself put before the Court.

Aldrich is represented by Cameron Whitfield (SBN 187623) and Julia Nazarian (SBN 298401) of Whitfield & Associates, 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212.

III. LEGAL STANDARD FOR A MOTION TO STRIKE

A motion to strike is governed by Code of Civil Procedure sections 435 and 436. Section 435 authorizes a party to move to strike "any irrelevant, false, or improper matter inserted in any pleading" or to strike "all or any part of any pleading not drawn or filed in conformity with the laws of this state." (Code Civ. Proc. § 435, subd. (b)(1).)

Section 436 provides the court's authority to act on such a motion:

"The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:

(a) Strike out any irrelevant, false, or improper matter inserted in any pleading.

(b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court."

(Code Civ. Proc. § 436.)

The scope of a motion to strike is narrow. It reaches only matter that is "irrelevant, false, or improper" within the meaning of the statute. It does not reach matter that is merely disputed, or matter that the moving party contends is legally incorrect on the merits. As the Court of Appeal explained in PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683, a motion to strike is "not a substitute for a demurrer" and "should not be used to test the merits of individual factual allegations that provide context for properly pled causes of action." The purpose of a motion to strike is to eliminate surplusage, scandalous matter, or matter that is wholly unrelated to the issues in the case — not to adjudicate whether a particular legal theory is ultimately viable.

The court should deny a motion to strike where the challenged allegations "relate to" or "bear upon" a properly pled cause of action, even if the allegations, standing alone, might not support an independent cause of action. (Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1281.) Factual allegations that provide background, context, or evidentiary support for a claim that is otherwise properly stated are not "irrelevant" within the meaning of section 436, even if the moving party disagrees with the allegations or believes that the legal theory they reference is flawed.

Furthermore, on a motion to strike, the court must construe the pleading in the light most favorable to the non-moving party. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) All reasonable inferences must be drawn in favor of the pleader, and any doubts as to the propriety of striking particular allegations should be resolved against granting the motion.

IV. ARGUMENT

A. AMA's Cross-Complaint Does Not Seek to Enforce the Non-Competition Clause as an Independent Cause of Action

Aldrich's motion rests on a fundamental conflation of two distinct concepts: references to a contractual provision and enforcement of that provision. These are not the same thing, and Aldrich's failure to distinguish between them is fatal to his motion.

AMA's Cross-Complaint contains four causes of action. Not one of them seeks to enjoin Aldrich from competing in the unscripted television industry. Not one of them seeks monetary damages measured by Aldrich's competitive activities. Not one of them asks this Court to issue an order enforcing the non-competition clause contained in Section 9.1 of the Employment Agreement. To the contrary, the relief sought in the Cross-Complaint is entirely directed at Aldrich's unauthorized appropriation and disclosure of AMA's confidential information — conduct that is independently actionable under the confidentiality provision (Section 9.4), under CUTSA, under fiduciary duty principles, and under conversion law, without any reference to the non-competition clause.

The First Cause of Action for breach of the Employment Agreement does reference Section 9.1 in its caption, alongside Sections 9.2, 9.3, and 9.4. AMA acknowledges that the inclusion of Section 9.1 in the caption of the First Cause of Action could create the impression — albeit an inaccurate one — that AMA is seeking to enforce the non-compete as a standalone contractual obligation. AMA is not. The operative factual basis for the First Cause of Action is Aldrich's violation of Section 9.4 — the confidentiality provision — through the unauthorized transmission of proprietary materials to his personal email account and to Halcyon Creek Productions LLC. The references to Sections 9.1, 9.2, and 9.3 in the caption of the First Cause of Action reflect the interrelated nature of the restrictive covenant provisions contained in Section 9 of the Employment Agreement, which were designed as an integrated contractual framework for the protection of AMA's proprietary interests.

The relief sought in the Cross-Complaint confirms that AMA is not seeking enforcement of the non-compete. AMA seeks compensatory damages for breach of the confidentiality provision; compensatory and exemplary damages under CUTSA; injunctive relief limited to preventing further disclosure of trade secrets; and damages for breach of fiduciary duty and conversion. (CC, Prayer for Relief ¶¶ 1–8.) None of these categories of relief requires or depends upon the enforcement of Section 9.1.

AMA has acted in good faith to address Aldrich's concerns. On February 15, 2023, AMA's counsel transmitted a written proposal to Aldrich's counsel offering to file an Amended Cross-Complaint that would (a) remove Section 9.1 from the caption of the First Cause of Action and (b) add an express disclaimer clarifying that AMA does not seek injunctive or monetary relief based on enforcement of Section 9.1, while retaining references to Section 9.1 solely as factual context relevant to AMA's remaining claims. (Vasquez Decl. ¶ 5, Exh. 1.) As of the date of this filing, Aldrich's counsel has not responded to this proposal, choosing instead to proceed with the instant motion. (Vasquez Decl. ¶ 6.)

Because AMA is not seeking to enforce the non-competition clause, the fundamental premise of Aldrich's motion is incorrect. Aldrich asks the Court to strike references to a provision that AMA is not attempting to enforce. The motion should be denied on this basis alone.

B. References to § 9.1 Are Relevant to AMA's Properly Pled Causes of Action

Even if the Court concludes that AMA's Cross-Complaint could be read as attempting to enforce Section 9.1 — which it cannot — the references to Section 9.1 are independently relevant to AMA's properly pled causes of action and therefore are not "irrelevant, false, or improper matter" subject to a motion to strike under Code of Civil Procedure section 436. The relevance of Section 9.1 operates on at least three distinct levels.

1. Relevance to Aldrich's Knowledge and Intent. The existence and scope of the restrictive covenant provisions in Section 9 of the Employment Agreement — including the non-competition clause — are directly relevant to demonstrate Aldrich's awareness that his Employment Agreement contained broad restrictions on his post-employment conduct, including restrictions on the disclosure of confidential information.

Aldrich was not a low-level employee who might plausibly claim ignorance of the contractual restrictions governing his conduct. He was a Senior Vice President earning $485,000 per year, with a $225,000 annual bonus and 42,500 RSUs. He negotiated and signed a comprehensive Employment Agreement. He acknowledged AMA's Acceptable Use and Confidentiality Policy by signed acknowledgment dated April 12, 2021. And critically, he was bound by the restrictive covenant provisions of Section 9 — which include not only the non-competition clause (Section 9.1), but also two non-solicitation provisions (Sections 9.2 and 9.3) and the confidentiality provision (Section 9.4).

The fact that Aldrich was aware of the full scope of Section 9's restrictions — including the non-compete — is probative of his state of mind at the time he transmitted proprietary materials to Halcyon Creek Productions. Aldrich knew that his Employment Agreement prohibited him from competing with AMA (Section 9.1), from soliciting AMA's employees (Section 9.2), from soliciting AMA's business relationships (Section 9.3), and from disclosing AMA's confidential information (Section 9.4). Armed with that knowledge, he chose to transmit three show format bibles, two pilot sizzle reels, and a detailed revenue model to a competing production company formed by a former AMA executive. This pattern of conduct supports an inference that Aldrich acted deliberately and with full knowledge that his actions violated his contractual obligations — not inadvertently or innocently.

This evidence of knowledge and intent is relevant to all four of AMA's causes of action, but it is particularly important for purposes of exemplary damages under CUTSA. California Civil Code section 3426.3 authorizes the award of exemplary damages in an amount not exceeding twice any award of compensatory damages where the court finds that the misappropriation was "willful and malicious." Proof of willfulness and malice requires evidence that the defendant acted with knowledge that his conduct was wrongful and with the intent to cause harm. The existence of the comprehensive restrictive covenant framework in Section 9 — including the non-competition clause that Aldrich knew would be implicated by his decision to transmit proprietary materials to a competitor — is directly probative of the "willful and malicious" standard.

This evidentiary principle is well established. In Ajaxo Inc. v. ETrade Group, Inc.* (2005) 135 Cal.App.4th 21, 66, the Court of Appeal recognized that evidence of contractual restrictions — including the scope and nature of restrictive covenants between an employer and employee — is relevant to establishing scienter in a trade secret misappropriation case. The court explained that a defendant's awareness of contractual obligations to protect confidential information is probative of the defendant's knowledge that the appropriation of such information was wrongful. The same principle applies here. Aldrich's awareness of the full scope of Section 9's restrictions — including the non-competition clause — is probative of his knowledge that his transmission of proprietary materials to a competing entity was wrongful and violated his contractual obligations.

Striking all references to Section 9.1 would deprive AMA of the ability to present evidence of the comprehensive contractual framework under which Aldrich operated, and would artificially restrict AMA's ability to prove the "willful and malicious" element of its CUTSA claim. The Court should not permit Aldrich to sanitize the factual record by excising references to a provision that, while potentially unenforceable on its own terms, is directly relevant to establishing his state of mind.

2. Relevance to AMA's Trade Secret Protections (CUTSA). Under CUTSA, a "trade secret" is defined, in relevant part, as information that "[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy." (Cal. Civ. Code § 3426.1, subd. (d)(2).) The "reasonable efforts" element is a required component of AMA's CUTSA claim, and the burden of establishing it rests on AMA as the party asserting trade secret protection.

The restrictive covenant provisions in Section 9 of the Employment Agreement — including the non-competition clause — constitute an integral part of AMA's overall program of trade secret protection. AMA implemented a multi-layered approach to safeguarding its proprietary information, which includes: (1) the Acceptable Use and Confidentiality Policy (requiring annual employee acknowledgment); (2) the DLP audit system within the IT security infrastructure; (3) access controls and permissions limiting employee access to confidential materials on a need-to-know basis; and (4) the comprehensive restrictive covenant provisions of Section 9, which address competition, solicitation, and confidentiality in an integrated framework.

The non-compete provision (Section 9.1), the non-solicitation provisions (Sections 9.2 and 9.3), and the confidentiality provision (Section 9.4) were not drafted or implemented in isolation. They were designed as complementary components of AMA's trade secret protection strategy. The non-compete, in particular, reflects AMA's recognition that employees in senior positions — such as Aldrich, who had access to AMA's most valuable proprietary content, including show format bibles, revenue models, and talent agreements — pose a heightened risk of trade secret misappropriation if they depart to work for a competing enterprise. The existence of the non-compete, even if unenforceable as a standalone restriction under California law, is probative of AMA's intent and efforts to protect its confidential information through every available contractual mechanism.

The Court of Appeal has recognized this principle. In FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1278, the court held that the existence of restrictive covenants — including non-competition agreements — is relevant to demonstrate that an employer took reasonable efforts to maintain the secrecy of its trade secrets. The court reasoned that an employer's decision to include restrictive covenants in employment agreements reflects a conscious effort to protect proprietary information and is evidence that the employer did not treat that information carelessly or casually. This reasoning applies with equal force here. AMA's decision to include a non-competition clause in Aldrich's Employment Agreement — alongside the non-solicitation and confidentiality provisions — demonstrates that AMA took comprehensive contractual measures to protect its proprietary content and other confidential information.

Similarly, in Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1522, the court considered an employer's use of both confidentiality agreements and non-competition agreements as evidence of reasonable secrecy measures in the context of a CUTSA claim. The court recognized that the existence of multiple, overlapping contractual protections — even if some of those protections might be unenforceable in isolation — is relevant to the overall assessment of whether the employer took "reasonable efforts" to maintain the secrecy of its trade secrets.

Striking all references to Section 9.1 from the Cross-Complaint would deprive AMA of the ability to present the full picture of its trade secret protection program. If AMA is prohibited from even mentioning the non-competition clause in its pleading, it will be unable to demonstrate to the trier of fact the comprehensive nature of the contractual protections it implemented — protections that include, but are not limited to, the confidentiality provision upon which AMA's breach of contract claim is based. The result would be an artificially incomplete picture of AMA's secrecy measures, potentially undermining AMA's ability to establish the "reasonable efforts" element of its CUTSA claim at trial. Such a result is not warranted by the statute, the case law, or principles of fairness.

3. Relevance to Aldrich's Own Declaratory Relief Claim. Aldrich has placed the enforceability of the restrictive covenant provisions — including Section 9.1 — Squarely at issue in this litigation by asserting a cause of action for declaratory relief in his own Complaint. Aldrich's Fourth Cause of Action expressly seeks a judicial declaration that the non-competition clause (Section 9.1), the non-solicitation of employees clause (Section 9.2), and the non-solicitation of business relationships clause (Section 9.3) are void and unenforceable under California Business and Professions Code section 16600. (Complaint ¶¶ 60–68.)

AMA is entitled to reference and respond to the very provisions that Aldrich himself has challenged. It would be anomalous — and indeed fundamentally unfair — to permit Aldrich to seek declaratory relief regarding Section 9.1 in his own Complaint while simultaneously preventing AMA from referencing Section 9.1 in its Cross-Complaint. The enforceability of Section 9.1 is a live issue in this case, placed there by Aldrich himself. AMA's Cross-Complaint is, in part, a responsive pleading that addresses the same contractual provisions that Aldrich has put before the Court. Striking AMA's references to Section 9.1 would leave AMA unable to present its side of a dispute that Aldrich initiated.

Under Code of Civil Procedure section 1060, "any person interested under a written instrument . . . who desires a declaration of his or her rights or duties with respect to another" may bring an action for declaratory relief. The scope of Aldrich's declaratory relief claim necessarily encompasses the challenged provisions — Sections 9.1, 9.2, and 9.3 — and the factual and contractual context in which those provisions operate. AMA, as the party on the other side of that declaratory relief claim, must be permitted to reference those same provisions in its responsive pleading and in its own cross-claims.

To strike AMA's references to Section 9.1 while leaving Aldrich's declaratory relief claim intact would create an asymmetry that prejudices AMA and distorts the pleadings. The Court should not countenance such an outcome.

C. Cal. Bus. & Prof. Code § 16600 Does Not Prohibit All References to Non-Competition Agreements in Pleadings

Section 16600 of the California Business and Professions Code provides: "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." (Bus. & Prof. Code § 16600.)

The statute renders non-competition agreements unenforceable as restrictions on an individual's ability to engage in his or her chosen profession. It does not render non-competition agreements irrelevant for all purposes, nor does it prohibit their mention in litigation. Section 16600 is a substantive provision that invalidates a particular type of contractual restraint; it is not a pleading rule that dictates what factual allegations may or may not appear in a cross-complaint.

The California Supreme Court's decision in Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, the leading case on Section 16600, confirms this understanding. In Edwards, the court held that non-competition agreements are invalid under California law, rejecting the "narrow restraint" exception that some courts had previously applied. (Id. at pp. 945–946.) The court reaffirmed that Section 16600 protects "the important legal right of persons to engage in businesses and occupations of their choosing." (Id. at p. 946.)

But nothing in Edwards holds that a party may not reference a non-competition agreement in the context of establishing related, enforceable claims — such as trade secret misappropriation, breach of a confidentiality provision, or breach of fiduciary duty. The court in Edwards addressed the enforceability of a non-competition agreement as a standalone restriction on employment; it did not address the separate question of whether references to a non-competition agreement may be included in a pleading as factual context for other claims. Aldrich's attempt to extend Edwards beyond its holding — to transform it from a rule of substantive unenforceability into a pleading prohibition — is unsupported by the text of the opinion or any subsequent authority.

Aldrich cites no authority — none — for the proposition that the mere mention of a non-competition clause in a pleading violates Section 16600 or constitutes "irrelevant, false, or improper matter" under Code of Civil Procedure section 436. This is not surprising, because no such authority exists. The question of whether a non-competition agreement is enforceable as a standalone restriction is wholly distinct from the question of whether references to that agreement are relevant in the context of other claims. Section 16600 answers the first question; it does not answer the second.

AMA further notes that the recently enacted legislation — Assembly Bill 1076, codified as California Business and Professions Code section 16600.5 (effective January 1, 2024), and Senate Bill 699, codified as California Business and Professions Code section 16600.7 (effective January 1, 2024) — addresses the enforcement of non-competition agreements with heightened protections for employees. Section 16600.5 provides that any contract that is void under Section 16600 "is unenforceable regardless of where and when the contract was signed." Section 16600.7 prohibits an employer from "entering into or attempting to enforce a noncompete agreement" that is void under Section 16600 and establishes a private right of action for violations.

These statutes, however, do not support Aldrich's motion for two independent reasons. First, AMA is not "attempting to enforce" Section 9.1 within the meaning of these statutes. References to Section 9.1 as factual context in support of separate, independently actionable causes of action do not constitute "enforcement" or "attempted enforcement" of the non-competition clause. AMA is not asking the Court to order Aldrich to comply with Section 9.1; it is referencing Section 9.1 to provide background and evidentiary context for its confidentiality, trade secret, fiduciary duty, and conversion claims. Second, and in any event, these statutes are not yet in effect and do not apply retroactively to pleadings filed before January 1, 2024. AMA's Cross-Complaint was filed on January 20, 2023. Neither Section 16600.5 nor Section 16600.7 has any bearing on the propriety of allegations contained in a pleading filed nearly a year before their effective date.

D. A Motion to Strike Is Not the Appropriate Vehicle for Aldrich's Challenge

Setting aside the merits of Aldrich's arguments, the procedural vehicle he has chosen — a motion to strike under Code of Civil Procedure section 436 — is not the appropriate mechanism for the challenge he seeks to mount. A motion to strike is a narrow procedural device designed to excise matter that is "irrelevant, false, or improper" within the meaning of the statute. It is not a substitute for a demurrer, which tests whether a cause of action is adequately stated, or a motion for judgment on the pleadings, which tests whether the allegations, taken as true, entitle the pleading party to relief.

The Court of Appeal has repeatedly cautioned against the use of motions to strike as a backdoor means of challenging the legal sufficiency of a cause of action. In PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683, the court held that a motion to strike "should not be used to test the merits of individual allegations" and that the "proper vehicle" for such a challenge is "a demurrer or summary judgment." The court emphasized that a motion to strike is directed at the form and content of a pleading — specifically, at matter that does not belong in the pleading at all — not at the legal viability of the claims or theories that the pleading advances.

Similarly, in Pierson v. Sharp Memorial Hospital, Inc. (1989) 216 Cal.App.3d 340, 342, the court held that a motion to strike "is not appropriate to challenge the legal sufficiency of a claim" and that "that challenge is properly raised by demurrer." The court explained that the function of a motion to strike is to eliminate matter that is extraneous to the issues in the case — not to adjudicate disputed questions of law or to determine whether a particular contractual provision is enforceable.

Aldrich's motion to strike is, at its core, an attempt to obtain a judicial ruling on the enforceability of Section 9.1 of the Employment Agreement through the procedural mechanism of a motion to strike. But the question of whether Section 9.1 is enforceable as a standalone restriction is a merits question — one that involves the interpretation and application of Section 16600, the New York choice-of-law clause in Section 14.3, and potentially the recent legislative developments in Sections 16600.5 and 16600.7. These are complex legal issues that are not appropriately resolved on a motion to strike, particularly where, as here, the challenged allegations are not "irrelevant" in the first instance but rather serve as factual context for properly pled causes of action.

Factual allegations that provide context for properly pled causes of action are not "irrelevant" merely because they reference a contractual provision whose standalone enforceability is disputed. The question of whether Section 9.1 is enforceable on its own terms is fundamentally distinct from the question of whether its existence is relevant to other claims in the Cross-Complaint. The former is a merits question that goes to the viability of any claim based on enforcement of the non-compete; the latter is a relevance question that goes to whether references to the non-compete properly appear in the pleading. As demonstrated in Section IV.B above, AMA has established that Section 9.1 is relevant to Aldrich's knowledge and intent, to AMA's CUTSA claim regarding reasonable secrecy measures, and to Aldrich's own declaratory relief claim. On the relevance question, the references to Section 9.1 plainly satisfy the standard.

If Aldrich believes that AMA's Cross-Complaint fails to state a cause of action for breach of Section 9.1 — or that any cause of action predicated on the enforcement of Section 9.1 is legally deficient — the proper procedure is to file a demurrer directed at that specific cause of action. Aldrich has not done so. Instead, he has filed a motion to strike that seeks to excise factual allegations from an otherwise properly pled pleading. This is procedurally improper, and the motion should be denied on this basis as well.

E. In the Alternative, AMA Requests Leave to Amend

In the event the Court is inclined to grant the Motion to Strike in whole or in part, AMA respectfully requests leave to amend the Cross-Complaint pursuant to Code of Civil Procedure section 473. AMA seeks leave to file an Amended Cross-Complaint that addresses any concerns the Court may have regarding the references to Section 9.1, while preserving AMA's ability to present its claims in their full factual context.

Specifically, AMA proposes to file an Amended Cross-Complaint that makes the following modifications:

1. Removal of Section 9.1 from the Caption of the First Cause of Action. The First Cause of Action would be re-captioned as "Breach of Employment Agreement (Sections 9.2, 9.3, and 9.4)" or, alternatively, "Breach of Employment Agreement (Section 9.4 — Confidentiality)," eliminating any suggestion that AMA is seeking to enforce Section 9.1 as a standalone basis for its breach of contract claim.

2. Express Disclaimer of Relief Based on Enforcement of Section 9.1. The Amended Cross-Complaint would include an express statement — in the First Cause of Action and in the Prayer for Relief — that AMA does not seek injunctive or monetary relief based on enforcement of the non-competition clause set forth in Section 9.1 of the Employment Agreement.

3. Retention of References to Section 9.1 as Factual Context. The Amended Cross-Complaint would retain references to Section 9.1 solely as factual context relevant to AMA's claims under Section 9.4, CUTSA, and fiduciary duty — specifically, to demonstrate Aldrich's awareness of the comprehensive restrictive covenant framework, AMA's reasonable efforts to maintain trade secret secrecy, and the scope of the contractual provisions that Aldrich himself has placed at issue through his declaratory relief claim.

This proposed amendment is consistent with AMA's offer communicated to Aldrich's counsel on February 15, 2023, which Aldrich's counsel has not acknowledged or responded to.

Leave to amend should be "liberally allowed." (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.) California's policy of liberality in permitting amendments to pleadings reflects the strong preference for resolving disputes on the merits rather than on procedural technicalities. AMA has demonstrated a willingness to address Aldrich's concerns through amendment, and granting leave to amend would serve the interests of judicial economy by resolving the dispute without the need for judicial excision of factual allegations, while preserving AMA's ability to present the full scope of its trade secret protection program and to respond to Aldrich's own declaratory relief claim.

V. CONCLUSION

AMA's Cross-Complaint does not seek to enforce the non-competition clause (Section 9.1) as an independent basis for relief. AMA does not seek to enjoin Aldrich from competing or working in the unscripted television industry. AMA does not seek monetary damages measured by Aldrich's competitive activities. The references to Section 9.1 in the Cross-Complaint are included as relevant factual context for AMA's properly pled claims for breach of the confidentiality provision (Section 9.4), misappropriation of trade secrets (CUTSA), breach of fiduciary duty, and conversion. These references are relevant to Aldrich's knowledge and intent, to AMA's reasonable efforts to maintain trade secret secrecy, and to Aldrich's own declaratory relief claim, in which he has placed the enforceability of Section 9.1 squarely at issue before this Court.

Aldrich's motion to strike is procedurally improper, substantively unfounded, and premised on a mischaracterization of AMA's Cross-Complaint. A motion to strike is not the appropriate vehicle for challenging the enforceability of a contractual provision, and Section 16600 does not prohibit the mention of a non-competition agreement in a pleading that asserts separate, independently actionable claims. The motion should be denied.

For the foregoing reasons, Defendant and Cross-Complainant Aurelius Media Americas Inc. respectfully requests that the Court deny Plaintiff's Motion to Strike in its entirety. In the alternative, AMA respectfully requests that the Court grant AMA leave to file an Amended Cross-Complaint as described in Section IV.E above.

Dated: March 1, 2023

CALDERWOOD & HARKNESS LLP

By: ________

Renata Vasquez (SBN 224578)

Renata Vasquez (SBN 224578) Devon Archer (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201

Attorneys for Defendant and Cross-Complainant Aurelius Media Americas Inc.

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

I am employed in the County of Los Angeles, State of California. I am over the age of eighteen (18) years and not a party to the within action. My business address is 777 South Flower Street, Suite 4200, Los Angeles, California 90017.

On March 1, 2023, I served the foregoing document described as MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT AURELIUS MEDIA AMERICAS INC.'S OPPOSITION TO PLAINTIFF'S MOTION TO STRIKE ALLEGATIONS RELATING TO NON-COMPETITION CLAUSE FROM CROSS-COMPLAINT on the interested parties in this action by serving:

Cameron Whitfield (SBN 187623) Julia Nazarian (SBN 298401) WHITFIELD & ASSOCIATES 9465 Wilshire Boulevard, Suite 320 Beverly Hills, California 90212 Telephone: (310) 555-4100 Facsimile: (310) 555-4101

Attorneys for Plaintiff Gavin Aldrich

BY ELECTRONIC SERVICE: Based on a court order or an agreement of the parties to accept service by electronic transmission, I caused the above-referenced document(s) to be sent to the person(s) at the electronic service address(es) listed above via the Court's approved electronic filing service provider. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on March 1, 2023, at Los Angeles, California.

________________________________________

Jessica M. Harrington

GAVIN ALDRICH,	Case No. 22STCV41087
Plaintiff,	Assigned for All Purposes to

Hon. Catherine Villanueva, Dept. 52

MEMORANDUM OF POINTS AND

AURELIUS MEDIA AMERICAS INC.,

DEFENDANT AURELIUS MEDIA

Defendant and Cross-Complainant.

PLAINTIFF'S MOTION TO STRIKE

ALLEGATIONS RELATING TO

NON-COMPETITION CLAUSE FROM

CROSS-COMPLAINT

Hearing Date: March 22, 2023

Time: 8:30 a.m.

Dept.: 52

Filed: March 1, 2023

Page

I. INTRODUCTION	1
II. STATEMENT OF RELEVANT FACTS	3
A. Aldrich's Employment and the Employment Agreement	3
B. Aldrich's Conduct and AMA's Cross-Claims	5
C. AMA's Cross-Complaint (Filed January 20, 2023)	7
D. Aldrich's Complaint and Declaratory Relief Claim	8
III. LEGAL STANDARD FOR A MOTION TO STRIKE	9
IV. ARGUMENT	10
A. AMA's Cross-Complaint Does Not Seek to Enforce the Non-Competition Clause as an Independent Cause of Action	10
B. References to § 9.1 Are Relevant to AMA's Properly Pled Causes of Action	12
1. Relevance to Aldrich's Knowledge and Intent	12
2. Relevance to AMA's Trade Secret Protections (CUTSA)	14
3. Relevance to Aldrich's Own Declaratory Relief Claim	16
C. Cal. Bus. & Prof. Code § 16600 Does Not Prohibit All References to Non-Competition Agreements in Pleadings	17
D. A Motion to Strike Is Not the Appropriate Vehicle for Aldrich's Challenge	19
E. In the Alternative, AMA Requests Leave to Amend	21
V. CONCLUSION	22

Page(s)

Ajaxo Inc. v. ETrade Group, Inc.* (2005) 135 Cal.App.4th 21	13
Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739	21
Clauson v. Superior Court (1998) 67 Cal.App.4th 1253	10
Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937	17, 18
FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270	14, 15
Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514	15
PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680	9, 19
Pierson v. Sharp Memorial Hospital, Inc. (1989) 216 Cal.App.3d 340	20
Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256	10

Page(s)

Cal. Bus. & Prof. Code § 16600	passim
Cal. Bus. & Prof. Code § 16600.5 (eff. Jan. 1, 2024)	18
Cal. Bus. & Prof. Code § 16600.7 (eff. Jan. 1, 2024)	18
Cal. Civ. Code § 3426 et seq. (CUTSA)	passim
Cal. Civ. Code § 3426.1(d)(2)	14
Cal. Civ. Code § 3426.3	11, 13
Cal. Code Civ. Proc. § 435	9
Cal. Code Civ. Proc. § 436	passim
Cal. Code Civ. Proc. § 473	21
Cal. Code Civ. Proc. § 1060	16

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES — CENTRAL DISTRICT
CALDERWOOD & HARKNESS LLP Renata Vasquez (SBN 224578) Devon Archer (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201
Attorneys for Defendant and Cross-Complainant AURELIUS MEDIA AMERICAS INC.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES — CENTRAL DISTRICT
TABLE OF CONTENTS
TABLE OF AUTHORITIES
Cases
Statutes
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiff Gavin Aldrich ("Aldrich") moves to strike from the Cross-Complaint filed by Defendant and Cross-Complainant Aurelius Media Americas Inc. ("AMA") on January 20, 2023, all references to and allegations based upon Section 9.1 of the Employment Agreement dated September 5, 2017 (as amended August 1, 2020) — an eighteen-month non-competition clause prohibiting Aldrich from working for any "Competing Enterprise." That term is defined in the Employment Agreement as any entity deriving twenty-five percent (25%) or more of its revenue from the production, licensing, or distribution of unscripted or reality television content in North America. Aldrich contends that because Section 9.1 is void under California Business and Professions Code section 16600, any reference to it in the Cross-Complaint constitutes "irrelevant" or "improper" matter that must be stricken under Code of Civil Procedure section 436.
AMA opposes the Motion to Strike in its entirety. Aldrich's motion rests on a fundamental mischaracterization of AMA's Cross-Complaint and the role that Section 9.1 plays within it. While AMA acknowledges that the enforceability of Section 9.1 as a standalone post-employment restriction is subject to serious challenge under California law — and, indeed, AMA has never contended otherwise in this litigation — AMA's Cross-Complaint does not seek to enforce Section 9.1 as an independent cause of action. AMA does not seek injunctive relief to prevent Aldrich from competing in the unscripted television industry, nor does AMA seek monetary damages measured by Aldrich's competitive activities. Rather, the references to Section 9.1 in the Cross-Complaint serve as essential factual context relevant to AMA's properly pled causes of action for breach of the confidentiality provision (Section 9.4 of the Employment Agreement), misappropriation of trade secrets under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code section 3426 et seq., breach of fiduciary duty, and conversion.
AMA's Cross-Complaint asserts four causes of action: (1) Breach of Employment Agreement (Sections 9.1, 9.2, 9.3, and 9.4), with the operative breach being Section 9.4's confidentiality obligations, which Aldrich violated by transmitting approximately 340 emails containing proprietary information to his personal email account and by forwarding confidential show format bibles, pilot sizzle reels, and revenue models to Halcyon Creek Productions LLC, a competing production company formed by a former AMA executive; (2) Misappropriation of Trade Secrets under CUTSA; (3) Breach of Fiduciary Duty; and (4) Conversion. None of these causes of action depends upon enforcement of the non-competition clause for its operative relief. The references to Section 9.1 are relevant to Aldrich's knowledge and intent, to AMA's reasonable efforts to maintain trade secret secrecy (a required element of AMA's CUTSA claim), and to Aldrich's own declaratory relief cause of action, in which Aldrich himself placed the enforceability of Section 9.1 squarely at issue.
In the spirit of cooperation and judicial efficiency, AMA has offered to file an Amended Cross-Complaint that (a) removes Section 9.1 from the caption of the First Cause of Action and (b) clarifies that AMA does not seek injunctive or monetary relief based on enforcement of Section 9.1, while retaining references to Section 9.1 solely as factual context relevant to AMA's remaining claims. AMA's counsel communicated this proposal in writing to Aldrich's counsel, Cameron Whitfield of Whitfield & Associates, 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212, on February 15, 2023. As of the date of this filing, Aldrich's counsel has not responded to this proposal.
For the reasons set forth below, the Court should deny Aldrich's Motion to Strike in its entirety. In the alternative, AMA respectfully requests leave to amend the Cross-Complaint as described herein.
II. STATEMENT OF RELEVANT FACTS
A. Aldrich's Employment and the Employment Agreement
Gavin Aldrich was employed by AMA as Senior Vice President of Original Content and Executive Producer from September 5, 2017, through October 14, 2022. (Cross-Complaint ("CC") ¶ 8.) During his tenure at AMA, Aldrich occupied a senior leadership role within the company's content development and production division, overseeing the creation and management of unscripted and reality television programming across multiple domestic and international platforms. (CC ¶ 9.) By the time of his termination, Aldrich earned a base salary of $485,000 per year. (CC ¶ 10.) His last annual bonus, for fiscal year 2021, was $225,000. (CC ¶ 10.) In addition, Aldrich held 42,500 AGMG restricted stock units ("RSUs"), of which 15,300 remained unvested at the time of his termination. (CC ¶ 11.)
The terms and conditions of Aldrich's employment were governed by a written Employment Agreement dated September 5, 2017 (the "Employment Agreement"), which was subsequently amended on August 1, 2020. (CC ¶ 12; Exh. A to CC.) The Employment Agreement is a comprehensive document that addresses, among other things, Aldrich's duties, compensation, benefits, grounds for termination, and post-employment restrictive covenants.
Section 9 of the Employment Agreement contains four distinct restrictive covenant provisions, each serving a different protective purpose:
Section 9.1 — Non-Competition. This provision prohibits Aldrich, for a period of eighteen (18) months following the termination of his employment for any reason, from accepting employment with, consulting for, or otherwise providing services to any "Competing Enterprise." The Employment Agreement defines "Competing Enterprise" as any entity deriving twenty-five percent (25%) or more of its revenue from the production, licensing, or distribution of unscripted or reality television content in North America. (CC ¶ 14(a); Exh. A to CC, § 9.1.)
Section 9.2 — Non-Solicitation of Employees. This provision prohibits Aldrich, for a period of twenty-four (24) months following the termination of his employment, from directly or indirectly soliciting, recruiting, or inducing any employee of AMA to leave AMA's employ. (CC ¶ 14(b); Exh. A to CC, § 9.2.)
Section 9.3 — Non-Solicitation of Business Relationships. This provision prohibits Aldrich, for a period of twenty-four (24) months following the termination of his employment, from soliciting or interfering with AMA's business relationships with its clients, vendors, talent, distributors, or network partners. (CC ¶ 14(c); Exh. A to CC, § 9.3.)
Section 9.4 — Confidentiality. This provision imposes an indefinite obligation on Aldrich to maintain the confidentiality of all proprietary and confidential information of AMA, including but not limited to proprietary content, show formats, format bibles, pilot materials, sizzle reels, revenue data, financial projections, talent agreements, distribution agreements, and strategic plans. Section 9.4 expressly prohibits Aldrich from disclosing, transmitting, copying, or using any such confidential information for any purpose other than the performance of his duties at AMA. The obligation survives termination of employment without limitation as to time. (CC ¶ 14(d); Exh. A to CC, § 9.4.)
In addition, the Employment Agreement contains a New York choice-of-law clause at Section 14.3, providing that the agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-laws principles. (CC ¶ 15; Exh. A to CC, § 14.3.) AMA notes the existence of this provision for completeness but acknowledges that the enforceability of this provision, as applied to the restrictive covenant provisions, is itself subject to dispute and is not the focus of the instant motion.
B. Aldrich's Conduct and AMA's Cross-Claims
The factual basis for AMA's Cross-Complaint arises from a pattern of conduct by Aldrich that AMA discovered in September 2022. In September 2022, AMA's Information Technology security team, under the direction of Vice President of Legal and Compliance Gregory Tanaka, conducted a routine data loss prevention ("DLP") audit of AMA's email systems. (CC ¶ 18.) That audit revealed that Aldrich had forwarded approximately 340 emails containing proprietary and confidential information from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal email account (galdrich.private@Northgate Software.com) over a fourteen-month period spanning from July 2021 through September 2022. (CC ¶ 19.) The contents of these emails included internal development memoranda, production budgets, talent compensation data, distribution deal terms, and strategic planning documents — all of which constituted confidential information under both Section 9.4 of the Employment Agreement and AMA's Acceptable Use and Confidentiality Policy. (CC ¶ 20.)
Further forensic analysis of Aldrich's AMA-issued laptop, conducted by AMA's retained digital forensics firm, Nexus Digital Partners, Inc., revealed an even more troubling pattern of conduct. (CC ¶ 21.) The forensic analysis established that Aldrich had transmitted proprietary materials — specifically, three unscripted show format bibles for concepts titled "Apex Endurance," "The Remix," and "Untamed West," along with two pilot sizzle reels and a detailed revenue model for AMA's top-performing franchise "Summit Challenge," which generates approximately $42 million in annual revenue — to Halcyon Creek Productions LLC, at the email address info@halcyoncreekprod.com. (CC ¶ 22.) These transmissions occurred between March 2022 and September 2022, while Aldrich was still employed by AMA and owed duties of loyalty and confidentiality to AMA. (CC ¶ 23.)
Halcyon Creek Productions LLC is a California limited liability company that was formed on February 14, 2022, by Nina Castellanos, a former AMA development executive who had left AMA's employ in January 2022. (CC ¶ 24.) Halcyon Creek Productions is a production company in the unscripted and reality television space — the same industry in which AMA operates — and upon information and belief, it was formed for the purpose of developing and producing unscripted programming in direct competition with AMA. (CC ¶ 25.)
Aldrich's transmissions of confidential materials to his personal email account and to Halcyon Creek Productions violated Section 9.4 of the Employment Agreement. (CC ¶ 26.) They also violated AMA's Acceptable Use and Confidentiality Policy, which was last revised in March 2021 and which Aldrich personally acknowledged by signed acknowledgment dated April 12, 2021. (CC ¶ 27; Exh. B to CC.) That policy expressly prohibits the transmission of proprietary information to personal email accounts, external parties, or any recipient not authorized to receive such information in connection with AMA business. (CC ¶ 28.)
Upon discovery of Aldrich's conduct, AMA terminated Aldrich's employment "for cause" on October 14, 2022, pursuant to Section 7.2(b) of the Employment Agreement. (CC ¶ 29.) Section 7.2(b) authorizes termination for cause upon, among other grounds, the employee's material breach of any provision of the Employment Agreement, including without limitation the restrictive covenant provisions set forth in Section 9. (CC ¶ 30.)
C. AMA's Cross-Complaint (Filed January 20, 2023)
AMA filed its Cross-Complaint on January 20, 2023, asserting four causes of action arising from Aldrich's unauthorized appropriation and transmission of AMA's confidential and proprietary information:
First Cause of Action — Breach of Employment Agreement (Sections 9.1, 9.2, 9.3, and 9.4). The operative factual basis for this cause of action is Aldrich's unauthorized transmission of confidential information to his personal email account and to Halcyon Creek Productions LLC, in violation of Section 9.4 of the Employment Agreement. (CC ¶¶ 33–42.) While the caption of the First Cause of Action references Sections 9.1, 9.2, 9.3, and 9.4, the factual allegations underlying the breach claim focus on the confidentiality violations and the unauthorized disclosure of proprietary materials. AMA does not allege, as part of the breach of contract cause of action, that Aldrich's mere act of accepting employment with a competitor constitutes a breach for which AMA seeks independent relief.
Second Cause of Action — Misappropriation of Trade Secrets under CUTSA (Cal. Civ. Code § 3426 et seq.). This cause of action alleges that the show format bibles, pilot sizzle reels, revenue model, and other proprietary materials transmitted by Aldrich constitute trade secrets within the meaning of CUTSA; that AMA took reasonable efforts to maintain their secrecy; and that Aldrich acquired and disclosed these trade secrets by improper means or in breach of his duty to maintain their secrecy. (CC ¶¶ 43–56.)
Third Cause of Action — Breach of Fiduciary Duty. This cause of action alleges that Aldrich, as a Senior Vice President and Executive Producer, owed fiduciary duties of loyalty and care to AMA, and that he breached those duties by appropriating AMA's confidential information for his personal benefit and for the benefit of a competing entity while still employed by AMA. (CC ¶¶ 57–65.)
Fourth Cause of Action — Conversion. This cause of action alleges that AMA's proprietary digital files — including the format bibles, sizzle reels, and revenue model — are the property of AMA, and that Aldrich wrongfully exercised dominion and control over those files by copying, transmitting, and retaining them without AMA's authorization. (CC ¶¶ 66–73.)
Critically, AMA does not seek injunctive relief preventing Aldrich from competing or working in the unscripted television industry. (See CC, Prayer for Relief.) The relief sought in the Cross-Complaint consists of: (1) compensatory damages for breach of contract; (2) compensatory damages, exemplary damages, and reasonable royalty under CUTSA; (3) injunctive relief limited to preventing further disclosure or use of AMA's trade secrets; (4) damages for breach of fiduciary duty; (5) damages for conversion; and (6) attorneys' fees and costs. (CC, Prayer for Relief ¶¶ 1–8.) At no point does AMA request that the Court enjoin Aldrich from accepting employment in the entertainment industry or from working for any particular entity.
D. Aldrich's Complaint and Declaratory Relief Claim
Aldrich initiated this action by filing his Complaint on December 9, 2022, bearing Case No. 22STCV41087. (See generally, Complaint.) Aldrich asserts five causes of action: (1) Wrongful Termination in Violation of Public Policy; (2) Breach of Contract (contesting the "for cause" designation and seeking severance pay in the amount of $970,000, representing two years of base salary); (3) Breach of the Implied Covenant of Good Faith and Fair Dealing; (4) Declaratory Relief Regarding the Restrictive Covenant Provisions; and (5) Violation of California Labor Code section 2802 (failure to reimburse expenses in the amount of $28,400). (Complaint ¶¶ 25–78.)
Of particular relevance to the instant motion is Aldrich's Fourth Cause of Action for declaratory relief. In that cause of action, Aldrich seeks a judicial declaration that the non-competition clause (Section 9.1), the non-solicitation of employees clause (Section 9.2), and the non-solicitation of business relationships clause (Section 9.3) are void and unenforceable under California Business and Professions Code section 16600. (Complaint ¶¶ 60–68.) Aldrich alleges that these provisions "restrain [him] from engaging in a lawful profession, trade, or business" and are "to that extent void" under the express terms of section 16600. (Complaint ¶ 62.) Aldrich further alleges that an "actual controversy" exists between the parties regarding the enforceability of these provisions and that a judicial declaration is necessary to "resolve the controversy and uncertainty" surrounding his post-employment obligations. (Complaint ¶¶ 63–65.)
Thus, Aldrich himself has placed the enforceability of the restrictive covenant provisions — including Section 9.1 — Squarely at issue in this litigation. He has affirmatively asked this Court to adjudicate the validity of Section 9.1. It is against this backdrop that Aldrich now asks the Court to strike all references to Section 9.1 from AMA's Cross-Complaint — the very provision whose enforceability Aldrich has himself put before the Court.
Aldrich is represented by Cameron Whitfield (SBN 187623) and Julia Nazarian (SBN 298401) of Whitfield & Associates, 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212.
III. LEGAL STANDARD FOR A MOTION TO STRIKE
A motion to strike is governed by Code of Civil Procedure sections 435 and 436. Section 435 authorizes a party to move to strike "any irrelevant, false, or improper matter inserted in any pleading" or to strike "all or any part of any pleading not drawn or filed in conformity with the laws of this state." (Code Civ. Proc. § 435, subd. (b)(1).)
Section 436 provides the court's authority to act on such a motion:
"The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:
(a) Strike out any irrelevant, false, or improper matter inserted in any pleading.
(b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court."
(Code Civ. Proc. § 436.)
The scope of a motion to strike is narrow. It reaches only matter that is "irrelevant, false, or improper" within the meaning of the statute. It does not reach matter that is merely disputed, or matter that the moving party contends is legally incorrect on the merits. As the Court of Appeal explained in PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683, a motion to strike is "not a substitute for a demurrer" and "should not be used to test the merits of individual factual allegations that provide context for properly pled causes of action." The purpose of a motion to strike is to eliminate surplusage, scandalous matter, or matter that is wholly unrelated to the issues in the case — not to adjudicate whether a particular legal theory is ultimately viable.
The court should deny a motion to strike where the challenged allegations "relate to" or "bear upon" a properly pled cause of action, even if the allegations, standing alone, might not support an independent cause of action. (Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1281.) Factual allegations that provide background, context, or evidentiary support for a claim that is otherwise properly stated are not "irrelevant" within the meaning of section 436, even if the moving party disagrees with the allegations or believes that the legal theory they reference is flawed.
Furthermore, on a motion to strike, the court must construe the pleading in the light most favorable to the non-moving party. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) All reasonable inferences must be drawn in favor of the pleader, and any doubts as to the propriety of striking particular allegations should be resolved against granting the motion.
IV. ARGUMENT
A. AMA's Cross-Complaint Does Not Seek to Enforce the Non-Competition Clause as an Independent Cause of Action
Aldrich's motion rests on a fundamental conflation of two distinct concepts: references to a contractual provision and enforcement of that provision. These are not the same thing, and Aldrich's failure to distinguish between them is fatal to his motion.
AMA's Cross-Complaint contains four causes of action. Not one of them seeks to enjoin Aldrich from competing in the unscripted television industry. Not one of them seeks monetary damages measured by Aldrich's competitive activities. Not one of them asks this Court to issue an order enforcing the non-competition clause contained in Section 9.1 of the Employment Agreement. To the contrary, the relief sought in the Cross-Complaint is entirely directed at Aldrich's unauthorized appropriation and disclosure of AMA's confidential information — conduct that is independently actionable under the confidentiality provision (Section 9.4), under CUTSA, under fiduciary duty principles, and under conversion law, without any reference to the non-competition clause.
The First Cause of Action for breach of the Employment Agreement does reference Section 9.1 in its caption, alongside Sections 9.2, 9.3, and 9.4. AMA acknowledges that the inclusion of Section 9.1 in the caption of the First Cause of Action could create the impression — albeit an inaccurate one — that AMA is seeking to enforce the non-compete as a standalone contractual obligation. AMA is not. The operative factual basis for the First Cause of Action is Aldrich's violation of Section 9.4 — the confidentiality provision — through the unauthorized transmission of proprietary materials to his personal email account and to Halcyon Creek Productions LLC. The references to Sections 9.1, 9.2, and 9.3 in the caption of the First Cause of Action reflect the interrelated nature of the restrictive covenant provisions contained in Section 9 of the Employment Agreement, which were designed as an integrated contractual framework for the protection of AMA's proprietary interests.
The relief sought in the Cross-Complaint confirms that AMA is not seeking enforcement of the non-compete. AMA seeks compensatory damages for breach of the confidentiality provision; compensatory and exemplary damages under CUTSA; injunctive relief limited to preventing further disclosure of trade secrets; and damages for breach of fiduciary duty and conversion. (CC, Prayer for Relief ¶¶ 1–8.) None of these categories of relief requires or depends upon the enforcement of Section 9.1.
AMA has acted in good faith to address Aldrich's concerns. On February 15, 2023, AMA's counsel transmitted a written proposal to Aldrich's counsel offering to file an Amended Cross-Complaint that would (a) remove Section 9.1 from the caption of the First Cause of Action and (b) add an express disclaimer clarifying that AMA does not seek injunctive or monetary relief based on enforcement of Section 9.1, while retaining references to Section 9.1 solely as factual context relevant to AMA's remaining claims. (Vasquez Decl. ¶ 5, Exh. 1.) As of the date of this filing, Aldrich's counsel has not responded to this proposal, choosing instead to proceed with the instant motion. (Vasquez Decl. ¶ 6.)
Because AMA is not seeking to enforce the non-competition clause, the fundamental premise of Aldrich's motion is incorrect. Aldrich asks the Court to strike references to a provision that AMA is not attempting to enforce. The motion should be denied on this basis alone.
B. References to § 9.1 Are Relevant to AMA's Properly Pled Causes of Action
Even if the Court concludes that AMA's Cross-Complaint could be read as attempting to enforce Section 9.1 — which it cannot — the references to Section 9.1 are independently relevant to AMA's properly pled causes of action and therefore are not "irrelevant, false, or improper matter" subject to a motion to strike under Code of Civil Procedure section 436. The relevance of Section 9.1 operates on at least three distinct levels.
1. Relevance to Aldrich's Knowledge and Intent. The existence and scope of the restrictive covenant provisions in Section 9 of the Employment Agreement — including the non-competition clause — are directly relevant to demonstrate Aldrich's awareness that his Employment Agreement contained broad restrictions on his post-employment conduct, including restrictions on the disclosure of confidential information.
Aldrich was not a low-level employee who might plausibly claim ignorance of the contractual restrictions governing his conduct. He was a Senior Vice President earning $485,000 per year, with a $225,000 annual bonus and 42,500 RSUs. He negotiated and signed a comprehensive Employment Agreement. He acknowledged AMA's Acceptable Use and Confidentiality Policy by signed acknowledgment dated April 12, 2021. And critically, he was bound by the restrictive covenant provisions of Section 9 — which include not only the non-competition clause (Section 9.1), but also two non-solicitation provisions (Sections 9.2 and 9.3) and the confidentiality provision (Section 9.4).
The fact that Aldrich was aware of the full scope of Section 9's restrictions — including the non-compete — is probative of his state of mind at the time he transmitted proprietary materials to Halcyon Creek Productions. Aldrich knew that his Employment Agreement prohibited him from competing with AMA (Section 9.1), from soliciting AMA's employees (Section 9.2), from soliciting AMA's business relationships (Section 9.3), and from disclosing AMA's confidential information (Section 9.4). Armed with that knowledge, he chose to transmit three show format bibles, two pilot sizzle reels, and a detailed revenue model to a competing production company formed by a former AMA executive. This pattern of conduct supports an inference that Aldrich acted deliberately and with full knowledge that his actions violated his contractual obligations — not inadvertently or innocently.
This evidence of knowledge and intent is relevant to all four of AMA's causes of action, but it is particularly important for purposes of exemplary damages under CUTSA. California Civil Code section 3426.3 authorizes the award of exemplary damages in an amount not exceeding twice any award of compensatory damages where the court finds that the misappropriation was "willful and malicious." Proof of willfulness and malice requires evidence that the defendant acted with knowledge that his conduct was wrongful and with the intent to cause harm. The existence of the comprehensive restrictive covenant framework in Section 9 — including the non-competition clause that Aldrich knew would be implicated by his decision to transmit proprietary materials to a competitor — is directly probative of the "willful and malicious" standard.
This evidentiary principle is well established. In Ajaxo Inc. v. ETrade Group, Inc.* (2005) 135 Cal.App.4th 21, 66, the Court of Appeal recognized that evidence of contractual restrictions — including the scope and nature of restrictive covenants between an employer and employee — is relevant to establishing scienter in a trade secret misappropriation case. The court explained that a defendant's awareness of contractual obligations to protect confidential information is probative of the defendant's knowledge that the appropriation of such information was wrongful. The same principle applies here. Aldrich's awareness of the full scope of Section 9's restrictions — including the non-competition clause — is probative of his knowledge that his transmission of proprietary materials to a competing entity was wrongful and violated his contractual obligations.
Striking all references to Section 9.1 would deprive AMA of the ability to present evidence of the comprehensive contractual framework under which Aldrich operated, and would artificially restrict AMA's ability to prove the "willful and malicious" element of its CUTSA claim. The Court should not permit Aldrich to sanitize the factual record by excising references to a provision that, while potentially unenforceable on its own terms, is directly relevant to establishing his state of mind.
2. Relevance to AMA's Trade Secret Protections (CUTSA). Under CUTSA, a "trade secret" is defined, in relevant part, as information that "[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy." (Cal. Civ. Code § 3426.1, subd. (d)(2).) The "reasonable efforts" element is a required component of AMA's CUTSA claim, and the burden of establishing it rests on AMA as the party asserting trade secret protection.
The restrictive covenant provisions in Section 9 of the Employment Agreement — including the non-competition clause — constitute an integral part of AMA's overall program of trade secret protection. AMA implemented a multi-layered approach to safeguarding its proprietary information, which includes: (1) the Acceptable Use and Confidentiality Policy (requiring annual employee acknowledgment); (2) the DLP audit system within the IT security infrastructure; (3) access controls and permissions limiting employee access to confidential materials on a need-to-know basis; and (4) the comprehensive restrictive covenant provisions of Section 9, which address competition, solicitation, and confidentiality in an integrated framework.
The non-compete provision (Section 9.1), the non-solicitation provisions (Sections 9.2 and 9.3), and the confidentiality provision (Section 9.4) were not drafted or implemented in isolation. They were designed as complementary components of AMA's trade secret protection strategy. The non-compete, in particular, reflects AMA's recognition that employees in senior positions — such as Aldrich, who had access to AMA's most valuable proprietary content, including show format bibles, revenue models, and talent agreements — pose a heightened risk of trade secret misappropriation if they depart to work for a competing enterprise. The existence of the non-compete, even if unenforceable as a standalone restriction under California law, is probative of AMA's intent and efforts to protect its confidential information through every available contractual mechanism.
The Court of Appeal has recognized this principle. In FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1278, the court held that the existence of restrictive covenants — including non-competition agreements — is relevant to demonstrate that an employer took reasonable efforts to maintain the secrecy of its trade secrets. The court reasoned that an employer's decision to include restrictive covenants in employment agreements reflects a conscious effort to protect proprietary information and is evidence that the employer did not treat that information carelessly or casually. This reasoning applies with equal force here. AMA's decision to include a non-competition clause in Aldrich's Employment Agreement — alongside the non-solicitation and confidentiality provisions — demonstrates that AMA took comprehensive contractual measures to protect its proprietary content and other confidential information.
Similarly, in Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1522, the court considered an employer's use of both confidentiality agreements and non-competition agreements as evidence of reasonable secrecy measures in the context of a CUTSA claim. The court recognized that the existence of multiple, overlapping contractual protections — even if some of those protections might be unenforceable in isolation — is relevant to the overall assessment of whether the employer took "reasonable efforts" to maintain the secrecy of its trade secrets.
Striking all references to Section 9.1 from the Cross-Complaint would deprive AMA of the ability to present the full picture of its trade secret protection program. If AMA is prohibited from even mentioning the non-competition clause in its pleading, it will be unable to demonstrate to the trier of fact the comprehensive nature of the contractual protections it implemented — protections that include, but are not limited to, the confidentiality provision upon which AMA's breach of contract claim is based. The result would be an artificially incomplete picture of AMA's secrecy measures, potentially undermining AMA's ability to establish the "reasonable efforts" element of its CUTSA claim at trial. Such a result is not warranted by the statute, the case law, or principles of fairness.
3. Relevance to Aldrich's Own Declaratory Relief Claim. Aldrich has placed the enforceability of the restrictive covenant provisions — including Section 9.1 — Squarely at issue in this litigation by asserting a cause of action for declaratory relief in his own Complaint. Aldrich's Fourth Cause of Action expressly seeks a judicial declaration that the non-competition clause (Section 9.1), the non-solicitation of employees clause (Section 9.2), and the non-solicitation of business relationships clause (Section 9.3) are void and unenforceable under California Business and Professions Code section 16600. (Complaint ¶¶ 60–68.)
AMA is entitled to reference and respond to the very provisions that Aldrich himself has challenged. It would be anomalous — and indeed fundamentally unfair — to permit Aldrich to seek declaratory relief regarding Section 9.1 in his own Complaint while simultaneously preventing AMA from referencing Section 9.1 in its Cross-Complaint. The enforceability of Section 9.1 is a live issue in this case, placed there by Aldrich himself. AMA's Cross-Complaint is, in part, a responsive pleading that addresses the same contractual provisions that Aldrich has put before the Court. Striking AMA's references to Section 9.1 would leave AMA unable to present its side of a dispute that Aldrich initiated.
Under Code of Civil Procedure section 1060, "any person interested under a written instrument . . . who desires a declaration of his or her rights or duties with respect to another" may bring an action for declaratory relief. The scope of Aldrich's declaratory relief claim necessarily encompasses the challenged provisions — Sections 9.1, 9.2, and 9.3 — and the factual and contractual context in which those provisions operate. AMA, as the party on the other side of that declaratory relief claim, must be permitted to reference those same provisions in its responsive pleading and in its own cross-claims.
To strike AMA's references to Section 9.1 while leaving Aldrich's declaratory relief claim intact would create an asymmetry that prejudices AMA and distorts the pleadings. The Court should not countenance such an outcome.
C. Cal. Bus. & Prof. Code § 16600 Does Not Prohibit All References to Non-Competition Agreements in Pleadings
Section 16600 of the California Business and Professions Code provides: "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." (Bus. & Prof. Code § 16600.)
The statute renders non-competition agreements unenforceable as restrictions on an individual's ability to engage in his or her chosen profession. It does not render non-competition agreements irrelevant for all purposes, nor does it prohibit their mention in litigation. Section 16600 is a substantive provision that invalidates a particular type of contractual restraint; it is not a pleading rule that dictates what factual allegations may or may not appear in a cross-complaint.
The California Supreme Court's decision in Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, the leading case on Section 16600, confirms this understanding. In Edwards, the court held that non-competition agreements are invalid under California law, rejecting the "narrow restraint" exception that some courts had previously applied. (Id. at pp. 945–946.) The court reaffirmed that Section 16600 protects "the important legal right of persons to engage in businesses and occupations of their choosing." (Id. at p. 946.)
But nothing in Edwards holds that a party may not reference a non-competition agreement in the context of establishing related, enforceable claims — such as trade secret misappropriation, breach of a confidentiality provision, or breach of fiduciary duty. The court in Edwards addressed the enforceability of a non-competition agreement as a standalone restriction on employment; it did not address the separate question of whether references to a non-competition agreement may be included in a pleading as factual context for other claims. Aldrich's attempt to extend Edwards beyond its holding — to transform it from a rule of substantive unenforceability into a pleading prohibition — is unsupported by the text of the opinion or any subsequent authority.
Aldrich cites no authority — none — for the proposition that the mere mention of a non-competition clause in a pleading violates Section 16600 or constitutes "irrelevant, false, or improper matter" under Code of Civil Procedure section 436. This is not surprising, because no such authority exists. The question of whether a non-competition agreement is enforceable as a standalone restriction is wholly distinct from the question of whether references to that agreement are relevant in the context of other claims. Section 16600 answers the first question; it does not answer the second.
AMA further notes that the recently enacted legislation — Assembly Bill 1076, codified as California Business and Professions Code section 16600.5 (effective January 1, 2024), and Senate Bill 699, codified as California Business and Professions Code section 16600.7 (effective January 1, 2024) — addresses the enforcement of non-competition agreements with heightened protections for employees. Section 16600.5 provides that any contract that is void under Section 16600 "is unenforceable regardless of where and when the contract was signed." Section 16600.7 prohibits an employer from "entering into or attempting to enforce a noncompete agreement" that is void under Section 16600 and establishes a private right of action for violations.
These statutes, however, do not support Aldrich's motion for two independent reasons. First, AMA is not "attempting to enforce" Section 9.1 within the meaning of these statutes. References to Section 9.1 as factual context in support of separate, independently actionable causes of action do not constitute "enforcement" or "attempted enforcement" of the non-competition clause. AMA is not asking the Court to order Aldrich to comply with Section 9.1; it is referencing Section 9.1 to provide background and evidentiary context for its confidentiality, trade secret, fiduciary duty, and conversion claims. Second, and in any event, these statutes are not yet in effect and do not apply retroactively to pleadings filed before January 1, 2024. AMA's Cross-Complaint was filed on January 20, 2023. Neither Section 16600.5 nor Section 16600.7 has any bearing on the propriety of allegations contained in a pleading filed nearly a year before their effective date.
D. A Motion to Strike Is Not the Appropriate Vehicle for Aldrich's Challenge
Setting aside the merits of Aldrich's arguments, the procedural vehicle he has chosen — a motion to strike under Code of Civil Procedure section 436 — is not the appropriate mechanism for the challenge he seeks to mount. A motion to strike is a narrow procedural device designed to excise matter that is "irrelevant, false, or improper" within the meaning of the statute. It is not a substitute for a demurrer, which tests whether a cause of action is adequately stated, or a motion for judgment on the pleadings, which tests whether the allegations, taken as true, entitle the pleading party to relief.
The Court of Appeal has repeatedly cautioned against the use of motions to strike as a backdoor means of challenging the legal sufficiency of a cause of action. In PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683, the court held that a motion to strike "should not be used to test the merits of individual allegations" and that the "proper vehicle" for such a challenge is "a demurrer or summary judgment." The court emphasized that a motion to strike is directed at the form and content of a pleading — specifically, at matter that does not belong in the pleading at all — not at the legal viability of the claims or theories that the pleading advances.
Similarly, in Pierson v. Sharp Memorial Hospital, Inc. (1989) 216 Cal.App.3d 340, 342, the court held that a motion to strike "is not appropriate to challenge the legal sufficiency of a claim" and that "that challenge is properly raised by demurrer." The court explained that the function of a motion to strike is to eliminate matter that is extraneous to the issues in the case — not to adjudicate disputed questions of law or to determine whether a particular contractual provision is enforceable.
Aldrich's motion to strike is, at its core, an attempt to obtain a judicial ruling on the enforceability of Section 9.1 of the Employment Agreement through the procedural mechanism of a motion to strike. But the question of whether Section 9.1 is enforceable as a standalone restriction is a merits question — one that involves the interpretation and application of Section 16600, the New York choice-of-law clause in Section 14.3, and potentially the recent legislative developments in Sections 16600.5 and 16600.7. These are complex legal issues that are not appropriately resolved on a motion to strike, particularly where, as here, the challenged allegations are not "irrelevant" in the first instance but rather serve as factual context for properly pled causes of action.
Factual allegations that provide context for properly pled causes of action are not "irrelevant" merely because they reference a contractual provision whose standalone enforceability is disputed. The question of whether Section 9.1 is enforceable on its own terms is fundamentally distinct from the question of whether its existence is relevant to other claims in the Cross-Complaint. The former is a merits question that goes to the viability of any claim based on enforcement of the non-compete; the latter is a relevance question that goes to whether references to the non-compete properly appear in the pleading. As demonstrated in Section IV.B above, AMA has established that Section 9.1 is relevant to Aldrich's knowledge and intent, to AMA's CUTSA claim regarding reasonable secrecy measures, and to Aldrich's own declaratory relief claim. On the relevance question, the references to Section 9.1 plainly satisfy the standard.
If Aldrich believes that AMA's Cross-Complaint fails to state a cause of action for breach of Section 9.1 — or that any cause of action predicated on the enforcement of Section 9.1 is legally deficient — the proper procedure is to file a demurrer directed at that specific cause of action. Aldrich has not done so. Instead, he has filed a motion to strike that seeks to excise factual allegations from an otherwise properly pled pleading. This is procedurally improper, and the motion should be denied on this basis as well.
E. In the Alternative, AMA Requests Leave to Amend
In the event the Court is inclined to grant the Motion to Strike in whole or in part, AMA respectfully requests leave to amend the Cross-Complaint pursuant to Code of Civil Procedure section 473. AMA seeks leave to file an Amended Cross-Complaint that addresses any concerns the Court may have regarding the references to Section 9.1, while preserving AMA's ability to present its claims in their full factual context.
Specifically, AMA proposes to file an Amended Cross-Complaint that makes the following modifications:
1. Removal of Section 9.1 from the Caption of the First Cause of Action. The First Cause of Action would be re-captioned as "Breach of Employment Agreement (Sections 9.2, 9.3, and 9.4)" or, alternatively, "Breach of Employment Agreement (Section 9.4 — Confidentiality)," eliminating any suggestion that AMA is seeking to enforce Section 9.1 as a standalone basis for its breach of contract claim.
2. Express Disclaimer of Relief Based on Enforcement of Section 9.1. The Amended Cross-Complaint would include an express statement — in the First Cause of Action and in the Prayer for Relief — that AMA does not seek injunctive or monetary relief based on enforcement of the non-competition clause set forth in Section 9.1 of the Employment Agreement.
3. Retention of References to Section 9.1 as Factual Context. The Amended Cross-Complaint would retain references to Section 9.1 solely as factual context relevant to AMA's claims under Section 9.4, CUTSA, and fiduciary duty — specifically, to demonstrate Aldrich's awareness of the comprehensive restrictive covenant framework, AMA's reasonable efforts to maintain trade secret secrecy, and the scope of the contractual provisions that Aldrich himself has placed at issue through his declaratory relief claim.
This proposed amendment is consistent with AMA's offer communicated to Aldrich's counsel on February 15, 2023, which Aldrich's counsel has not acknowledged or responded to.
Leave to amend should be "liberally allowed." (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.) California's policy of liberality in permitting amendments to pleadings reflects the strong preference for resolving disputes on the merits rather than on procedural technicalities. AMA has demonstrated a willingness to address Aldrich's concerns through amendment, and granting leave to amend would serve the interests of judicial economy by resolving the dispute without the need for judicial excision of factual allegations, while preserving AMA's ability to present the full scope of its trade secret protection program and to respond to Aldrich's own declaratory relief claim.
V. CONCLUSION
AMA's Cross-Complaint does not seek to enforce the non-competition clause (Section 9.1) as an independent basis for relief. AMA does not seek to enjoin Aldrich from competing or working in the unscripted television industry. AMA does not seek monetary damages measured by Aldrich's competitive activities. The references to Section 9.1 in the Cross-Complaint are included as relevant factual context for AMA's properly pled claims for breach of the confidentiality provision (Section 9.4), misappropriation of trade secrets (CUTSA), breach of fiduciary duty, and conversion. These references are relevant to Aldrich's knowledge and intent, to AMA's reasonable efforts to maintain trade secret secrecy, and to Aldrich's own declaratory relief claim, in which he has placed the enforceability of Section 9.1 squarely at issue before this Court.
Aldrich's motion to strike is procedurally improper, substantively unfounded, and premised on a mischaracterization of AMA's Cross-Complaint. A motion to strike is not the appropriate vehicle for challenging the enforceability of a contractual provision, and Section 16600 does not prohibit the mention of a non-competition agreement in a pleading that asserts separate, independently actionable claims. The motion should be denied.
For the foregoing reasons, Defendant and Cross-Complainant Aurelius Media Americas Inc. respectfully requests that the Court deny Plaintiff's Motion to Strike in its entirety. In the alternative, AMA respectfully requests that the Court grant AMA leave to file an Amended Cross-Complaint as described in Section IV.E above.
Dated: March 1, 2023
CALDERWOOD & HARKNESS LLP
By: ________
Renata Vasquez (SBN 224578)
Renata Vasquez (SBN 224578) Devon Archer (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201
Attorneys for Defendant and Cross-Complainant Aurelius Media Americas Inc.
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
I am employed in the County of Los Angeles, State of California. I am over the age of eighteen (18) years and not a party to the within action. My business address is 777 South Flower Street, Suite 4200, Los Angeles, California 90017.
On March 1, 2023, I served the foregoing document described as MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT AURELIUS MEDIA AMERICAS INC.'S OPPOSITION TO PLAINTIFF'S MOTION TO STRIKE ALLEGATIONS RELATING TO NON-COMPETITION CLAUSE FROM CROSS-COMPLAINT on the interested parties in this action by serving:
Cameron Whitfield (SBN 187623) Julia Nazarian (SBN 298401) WHITFIELD & ASSOCIATES 9465 Wilshire Boulevard, Suite 320 Beverly Hills, California 90212 Telephone: (310) 555-4100 Facsimile: (310) 555-4101
Attorneys for Plaintiff Gavin Aldrich
BY ELECTRONIC SERVICE: Based on a court order or an agreement of the parties to accept service by electronic transmission, I caused the above-referenced document(s) to be sent to the person(s) at the electronic service address(es) listed above via the Court's approved electronic filing service provider. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed on March 1, 2023, at Los Angeles, California.
________________________________________
Jessica M. Harrington
GAVIN ALDRICH, | Case No. 22STCV41087
Plaintiff, | Assigned for All Purposes to
Hon. Catherine Villanueva, Dept. 52
v.
MEMORANDUM OF POINTS AND
AURELIUS MEDIA AMERICAS INC., | AUTHORITIES IN SUPPORT OF
DEFENDANT AURELIUS MEDIA
Defendant and Cross-Complainant. | AMERICAS INC.'S OPPOSITION TO
PLAINTIFF'S MOTION TO STRIKE
ALLEGATIONS RELATING TO
NON-COMPETITION CLAUSE FROM
CROSS-COMPLAINT
Hearing Date: March 22, 2023
Time: 8:30 a.m.
Dept.: 52
Filed: March 1, 2023
Page
I. INTRODUCTION | 1
II. STATEMENT OF RELEVANT FACTS | 3
A. Aldrich's Employment and the Employment Agreement | 3
B. Aldrich's Conduct and AMA's Cross-Claims | 5
C. AMA's Cross-Complaint (Filed January 20, 2023) | 7
D. Aldrich's Complaint and Declaratory Relief Claim | 8
III. LEGAL STANDARD FOR A MOTION TO STRIKE | 9
IV. ARGUMENT | 10
A. AMA's Cross-Complaint Does Not Seek to Enforce the Non-Competition Clause as an Independent Cause of Action | 10
B. References to § 9.1 Are Relevant to AMA's Properly Pled Causes of Action | 12
1. Relevance to Aldrich's Knowledge and Intent | 12
2. Relevance to AMA's Trade Secret Protections (CUTSA) | 14
3. Relevance to Aldrich's Own Declaratory Relief Claim | 16
C. Cal. Bus. & Prof. Code § 16600 Does Not Prohibit All References to Non-Competition Agreements in Pleadings | 17
D. A Motion to Strike Is Not the Appropriate Vehicle for Aldrich's Challenge | 19
E. In the Alternative, AMA Requests Leave to Amend | 21
V. CONCLUSION | 22
Page(s)
Ajaxo Inc. v. ETrade Group, Inc.* (2005) 135 Cal.App.4th 21 | 13
Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739 | 21
Clauson v. Superior Court (1998) 67 Cal.App.4th 1253 | 10
Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937 | 17, 18
FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270 | 14, 15
Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514 | 15
PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680 | 9, 19
Pierson v. Sharp Memorial Hospital, Inc. (1989) 216 Cal.App.3d 340 | 20
Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256 | 10
Page(s)
Cal. Bus. & Prof. Code § 16600 | passim
Cal. Bus. & Prof. Code § 16600.5 (eff. Jan. 1, 2024) | 18
Cal. Bus. & Prof. Code § 16600.7 (eff. Jan. 1, 2024) | 18
Cal. Civ. Code § 3426 et seq. (CUTSA) | passim
Cal. Civ. Code § 3426.1(d)(2) | 14
Cal. Civ. Code § 3426.3 | 11, 13
Cal. Code Civ. Proc. § 435 | 9
Cal. Code Civ. Proc. § 436 | passim
Cal. Code Civ. Proc. § 473 | 21
Cal. Code Civ. Proc. § 1060 | 16

SUPERIOR COURT OF THE STATE OF CALIFORNIA

SUPERIOR COURT OF THE STATE OF CALIFORNIA

TABLE OF CONTENTS

TABLE OF AUTHORITIES

MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION

II. STATEMENT OF RELEVANT FACTS

III. LEGAL STANDARD FOR A MOTION TO STRIKE

IV. ARGUMENT

V. CONCLUSION

CALDERWOOD & HARKNESS LLP

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

MEMORANDUM OF POINTS AND

DEFENDANT AURELIUS MEDIA

PLAINTIFF'S MOTION TO STRIKE

ALLEGATIONS RELATING TO

NON-COMPETITION CLAUSE FROM

CROSS-COMPLAINT

Record

Parties

Dates

Amounts