Skillset Group, LLC vs. Samuel Hale, LLC

1. Further acquiring, disclosing, or using any of Plaintiffs’ trade secrets; and

2. Interfering with Plaintiffs’ current contractual and prospective economic relationships by unwanted contacts with Plaintiffs’ employees and workforce.

Defendants may contact any workers as necessary for the purpose of continuing insurance or benefits-administration obligations owed to workers already enrolled in Defendants' programs, or to respond to those workers' own inquiries about their own coverage. However, Defendants and their agents shall not disparage Plaintiffs in any such communications.

The court sets an Order to Show Cause re: Issuance of Preliminary Injunction for September 9, 2026, at 9:00 a.m. in Department N15. The parties shall show cause why a preliminary injunction should not issue restraining and enjoining Defendants Samuel Hale, LLC; Samuel Hale 2, LLC; Samuel Hale 3, LLC; Samuel Hale 4, LLC; and their agents from the following:

1. Further acquiring, disclosing, or using any of Plaintiffs’ trade secrets; and

2. Interfering with Plaintiffs’ current contractual and prospective economic relationships by unwanted contacts with Plaintiffs’ employees and workforce.

This Temporary Restraining Order and Order to Show Cause re: Preliminary Injunction shall not be effective until served on Defendants Samuel Hale, LLC; Samuel Hale 2, LLC; Samuel Hale 3, LLC; and Samuel Hale 4, LLC.

Pending Motion

Plaintiffs Skillset Group, LLC and Skillset Group, Inc. move for a temporary restraining order:

1. to enjoin Defendants Samuel Hale, LLC; Samuel Hale 2, LLC; Samuel Hale 3, LLC; and Samuel Hale 4, LLC (Samuel Hale Defendants) from further acquiring, disclosing, or using any of Plaintiffs’ trade secrets;

2. to enjoin Samuel Hale Defendants from contacting any of Plaintiffs’ current and future employees and workforce, or otherwise interfering with Plaintiffs’ current contractual and prospective economic relationships by interfering with Plaintiffs’ employees and workforce;

3. to enjoin Samuel Hale Defendants from contacting any of Plaintiffs’ current and future clients and from conducting any further business with any of Plaintiffs’ current or future clients, or otherwise interfering with Plaintiffs’ current contractual and prospective economic relationships.

Plaintiffs also move for an Order to Show Cause why a preliminary injunction should not issue restraining and enjoining Samuel Hale Defendants and their agents.

Standard for Temporary Restraining Order and Preliminary Injunction

Section 526 of the Civil Procedure Code authorizes a court to grant injunctive relief before judgment in the following cases:

(1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.

(2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.

(3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.

(4) When pecuniary compensation would not afford adequate relief.

(5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief.

(6) Where the restraint is necessary to prevent a multiplicity of judicial proceedings.

(Code Civ. Proc., § 526, subd. (a).)

The Court also may grant injunctive relief “at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exists therefor.” (Code Civ. Proc., § 527, subd. (a).)

Temporary restraining orders and preliminary injunctions are court orders that enjoin the parties in a similar manner. (See San Diego Water Co. v. Pacific Coast S.S. Co. (1894) 101 Cal. 216, 218 [“The restraining order is a restraint, of the same nature as an injunction . . . .”].)

Thus, in determining whether to issue either form of relief, the court evaluates the same two interrelated factors: “1) the likelihood that the plaintiff will prevail on the merits, and (2) the relative balance of harms that is likely to result from the granting or denial of interim injunctive relief.” (White v. Davis (2003) 30 Cal.4th 528, 554; see also Church of Christ in Hollywood v. Superior Court (2002) 99 Cal.App.4th 1244, 1251.)

“The trial court's determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff's showing on one, the less must be shown on the other to support an injunction.” (Butt v. State of California (1992) 4 Cal.4th 668, 678.)

At the same time, “[t]he scope of available preliminary relief is necessarily limited by the scope of the relief likely to be obtained at trial on the merits.” (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 441-442.) Therefore, “[a] trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.” (Butt v. State of California, supra, 4 Cal.4th at p. 678.)

The purpose of a preliminary injunction is to preserve the status quo until a final determination following a trial. (Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, 1542, overruled in part on other grounds, Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345, 353.)

The primary difference between a temporary restraining order and a preliminary injunction is that the former may be sought on an ex parte basis, and in fact, may be obtained in certain circumstances without notice to the non-moving party. (See Code Civ. Proc., § 527, subd. (c).)

However, as the Court of Appeal has explained:

The ex parte hearing concerning a TRO is no more than a review of the conflicting contentions to determine whether there is a sufficiency of evidence to support the issuance of an interlocutory order to keep the subject of litigation in status quo pending a full hearing to determine whether the applicant is entitled to a preliminary injunction. The issuance of a TRO is not a determination of the merits of the controversy. All that is determined is whether the TRO is necessary to maintain the status quo pending the noticed hearing on the application for preliminary injunction.

(Landmark Holding Group, Inc. v. Superior Court (1987) 193 Cal.App.3d 525, 528).

The burden is on the party seeking injunctive relief to show all elements necessary to support its issuance. (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) Thus, if the moving party fails to establish either requirement, a preliminary injunction should be denied. (See Jessen v. Keystone Savings and Loan Assoc. (1983) 142

Cal.App.3d 454, 459.)

Trade Secret Misappropriation

First, Plaintiffs seek a TRO based on the Samuel Hale Defendants’ alleged misappropriation of trade secrets.

The Civil Code states that:

“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

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

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

(Civ. Code, § 3426.1, subd. (d).)

“ ‘[T]he test for a trade secret is whether the matter sought to be protected is information (1) that is valuable because it is unknown to others and (2) that the owner has attempted to keep secret.’ [Citation.]” (Amgen Inc. v. Health Care Services (2020) 47 Cal.App.5th 716, 734.) “[T]he ‘intrinsic value’” of a trade secret ‘is based upon, or at least preserved by, being safeguarded from disclosure.’ [Citations.]” (Ibid.) However, “limited disclosure to noncompetitors does not result in loss of trade secret privilege where ... the holder of the privilege made reasonable efforts to maintain secrecy.” (Masonite Corp. v. County of Mendocino Air Quality Management Dist. (1996) 42 Cal.App.4th 436, 451, fn. 11.)

“[T]he owner of a trade secret has a privilege to refuse to disclose the secret, and to prevent another from disclosing it, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.” (Evid. Code, § 1060.)

The information at issue here is the database of temporary and direct-for-hire employees across multiple industries and client-specific information, including operational needs, contacts, and pricing.

In support of their contention that this constitutes trade secret information, Plaintiffs present the declaration of Abigail Saenz, the Director of Human Resources & Legal Claims with Skillset Group, who declares as follows:

“Skillset Group has invested a great deal of time, money, and effort developing its database of temporary and direct-for-hire employees across multiple industries. This information is used to recruit qualified candidates and service Skillset Group clientele. Further, Skillset Group has invested a great deal of time, money, and effort developing an extensive client list with client specific information, contracts, pricing, and services. The databases of Skillset Group temporary and directhire workers, the information regarding these Skillset Group employees, and the clients they are assigned to, have economic value because they are the result of extensive expenditures of time, effort, and money, and the materials contain information not generally known within the trade.

Further, the materials represent substantial research and compilation of existing and prospective customer data and existing and prospective temporary and direct-hire workers.” (Decl. of Saenz, ¶ 4).

“Skillset Group has invested significant time, money, and resources to develop and maintain client-specific information, including operational needs, contacts, and pricing. Further, Skillset Group has invested significant time, money, and resources to identify qualified temporary and direct-hire candidates for roles across multiple industries, and the financial and compensation plans based on Skillset Group employees’ qualifications and availability are developed and created by Skillset Group at significant costs and time. Moreover, Skillset Group has invested a great deal of employee time in developing and making these databases and information useful.” (Decl. of Saenz, ¶ 5).

“Skillset Group expends significant costs and resources to employ over 50 full time employees to develop and maintain Skillset Group’s databases and proprietary information, including to recruit temporary and direct-hire candidates and employees, secure new business, and service existing customers. Developing and maintaining an ongoing database of Skillset Group’s roster of over 1,700 temporary and direct-hire employees and providing workforce solutions to clients is the

lifeblood of Skillset Group’s business model.” (Decl. of Saenz, ¶ 6). “On or around January 18, 2023, Skillset Group and Defendant, Samuel Hale, LLC entered into a business relationship wherein Samuel Hale provided Workers Compensation Insurance coverage. Further, Samel Hale required all Skillset Group employees’ information and required Skillset Group employees’ send a signed form from Defendant, The PACT Life (“The PACT”). Finally, the information Skillset Group provided to Samuel Hale and The PACT included Skillset Group’s client information and employee assignments.” (Decl. of Saenz, ¶ 7).

Pursuant to the above, Plaintiffs have provided evidence demonstrating that Plaintiffs’ temporary and direct-for-hire employee database, which also identifies qualified temporary and direct-hire candidates for roles across multiple industries, and the financial and compensation plans based on Skillset Group employees’ qualifications and availability, is trade secret information that is not generally known within the trade and derives independent economic value. Plaintiffs also contend that this information is confidential and proprietary, and was only provided to Defendants because of the Client Services Agreement.

In ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, the court found that there was “sufficient evidence establishing that ReadyLink is likely to prevail on its trade secret misappropriation claims” where “there existed a threat that Cotton would use misappropriated trade secret information to solicit ReadyLink's employees and customers who had contracts with ReadyLink.” (Id. at 1019).

Here, Plaintiffs have provided evidence showing that Defendants, who were formerly the vendor of Plaintiffs, contacted Plaintiffs’ employees after Plaintiffs terminated their Client Services Agreement with Defendants and attempted to persuade these employees to find a new employer who worked with Samuel Hale and PACT.

Plaintiffs provided evidence that an individual calling from a Samuel Hale phone number sent a voicemail to Plaintiffs’ employee Diego Vargas which stated, in part: “Skillset is committing fraud...and it is very important that you get in touch with us ASAP so you can keep your benefits...the only way to keep your benefits it is to work with a staff company that is part of the PACT...” (Decl. of Saenz, ¶ 9; Decl. of

Romero, ¶ 7; Decl. of Decl. of Valiente, ¶ 13). Plaintiffs provided evidence that their employee by the name of Maria De Los Angeles Rodriguez received a voicemail from a woman named Gloria with The PACT who said that she would be losing her benefits, that Skillset “has committed fraud”, and said “if you need help finding another employer affiliated with PAC or have any questions about how to maintain your benefits, call us at ... We look forward to your call.” (Decl. of Saenz, ¶ 17; Decl. of Mora, ¶ 9; Decl. of Valiente, ¶ 4).

Plaintiffs’ Account Manager, Marc Kroll received a text message from Plaintiffs’ temporary employee Loreto Grimaldo who informed Kroll that Samuel Hale contacted Grimaldo and stated that Plaintiffs are being charged with fraud. (Decl. of Kroll, ¶¶ 4- 6, Exh. 1).

The PACT also sent a letter to employees stating “Skillset has ended its relationship with Samuel Hale and as a result our PACT membership is impacted....You have the right to seek employment with another PACT-affiliated employer to maintain your uninterrupted benefits....If you need help identifying a different PACT-affiliated employer or have questions about maintaining your benefits, please contact the PACT Membership Team...” (Decl. of Saenz, ¶ 23, Exh. B).

Defendants contend that they were required to communicate with the workers about their insurance benefits, and that they were not soliciting employees to work for any competitor. However, the evidence of these communications establishes more than just status updates of workers’ benefits. According to the declarations, Defendants informed workers that Plaintiffs were committing fraud, and that the employees should switch to employers who had agreements with Samuel Hale/PACT.

Separately, however, Plaintiffs contend that Defendants misappropriated trade secrets regarding Plaintiffs’ clientele.

Plaintiffs have not set forth any specific instance of client list misappropriation. Nor have Plaintiffs provided evidence showing any communication between Defendants and anyone other than the employees/workers. Accordingly, the court will not issue a temporary restraining order with regard to Plaintiffs’ clients.

Unfair Competition and Intentional Interference with Prospective Economic Relations

The elements of intentional interference with prospective economic advantage are: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. (Youst v. Longo (1987) 43 Cal.3d 64, 71, fn.6.)

Additionally, courts have held that “a former employee's use of confidential information obtained from his former employer to compete with him and to solicit the business of his former employer's customers, is regarded as unfair competition.” (Courtesy Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278, 1292 [citing Greenly v. Cooper (1978) 77 Cal.App.3d 382, 394]).

Pursuant to the declarations discussed above, Plaintiffs provided evidence showing that they have a relationship with their employees (the third party), the Samuel Hale Defendants knew of this relationship, and that the Samuel Hale Defendants intentionally communicated with the employees to accuse Plaintiffs of fraud and told the employees they should find a new employer to keep their benefits. With regards to the element of “actual disruption of the relationship”, Plaintiffs provide the declaration of Ms.

Saenz who declares: “Based on my interactions and communications with Skillset Group employees and managers at client sites, Skillset Group temporary employees were feeling anxious, concerned, and worried and needed upper management to speak with them to provide assurances that Skillset Group was not committing fraud and that employees were not owed money. The unsolicited communications with Skillset Group employees created unnecessary difficulties for Skillset Group to provide workforce solutions to its contracted clients and continues to do so.” (Decl. of Saenz, ¶ 24).

Defendants contend that Plaintiffs have not provided actual evidence of any harm caused by their actions, as there is no evidence of an employee or client leaving because of Defendants’ communications. However, Plaintiffs have provided

evidence that their workplace has been disrupted because the workers’ concerns and the statements that Plaintiffs have committed fraud. Furthermore, “the threat of committing an act in violation of the rights of another party respecting the subject of the action” may be sufficient. (ReadyLink Healthcare, supra, 126 Cal.App.4th at 1023 [emphasis added]).

Again, however, Plaintiffs did not provide any specific instance or evidence showing that Defendants interrupted the relationship between Plaintiffs and Plaintiffs’ clients. The only evidence of communication provided by Plaintiffs was that of Defendants and Plaintiffs’ employees/workers. To the extent Plaintiffs are contending that Defendants interfered with Plaintiffs’ relationships with the client companies whom Plaintiffs service, Plaintiffs failed to show this.

Accordingly, the court will not issue a TRO with regard to Plaintiffs’ clients.

Irreparable Harm

The Civil Procedure Code provides that

No temporary restraining order shall be granted without notice to the opposing party, unless both of the following requirements are satisfied:

(1) It appears from facts shown by affidavit or by the verified complaint that great or irreparable injury will result to the applicant before the matter can be heard on notice.

(Code Civ. Proc. § 527, subd. (c)(1).)

Here, Plaintiffs have set forth evidence that Defendants contacted Plaintiffs’ employees to accuse Plaintiffs of committing fraud, and told Plaintiffs’ employees to find alternate employers who work with Defendants. Accordingly, Plaintiffs suffer the threat of harm caused by losing their direct-for-hire workers and their temporary employees. However, the court also considers Defendants’ contention that the proposed order, as worded, would impact Defendants’ ability to perform their job and obligations owed to workers enrolled in Defendants’ programs, who they must contact regarding their benefits.

Accordingly, Defendants may still communicate with workers for the limited purpose as specified in this court’s ruling above.

Undertaking

The court declines to impose an undertaking. (See Wallace v. Miller (1983) 140 Cal.App.3d 636, 645 [“The posting of security is not a prerequisite to the issuance of a valid temporary restraining order.”]).

The Samuel Hale Defendants have not shown any amount of damages that they would sustain by imposition of a Temporary Restraining Order.

Order to Show Cause Re: Issuance of Preliminary Injunction

If the court grans a temporary restraining order, the court must expeditiously set the matter for a hearing on a preliminary injunction. (See, e.g., Code Civ. Proc., § 527, subd. (d).)

This gives the parties time to give proper notice and more fully brief the issues, and gives the court more time to consider the issue. (See Code Civ. Proc., § 527, subd. (a).)

Therefore, the court will set an Order to Show Cause re: Issuance of Preliminary Injunction to allow the parties time to address the issue of a preliminary injunction.

Plaintiffs shall give notice of this ruling.

7 Cliq, Inc. vs. Capital Motions for Attorney’s Fees and Motions to Strike Managers, LLC and/or Tax Costs

The court will hear from the parties regarding the 30-2021-01220754 selection of a referee to prepare a report and make recommendations on the parties’ respective motions for attorney’s fees and motions to strike and/or tax costs.