Sidley Secures Published California Court of Appeal Decision on Unsettled Question of Trade Secret Law

Sidley secured a significant, precedent-setting appellate victory for Guild Mortgage Company in the California Court of Appeal, which revived Guild’s claims against rival lender CrossCountry Mortgage arising from a coordinated raid of Guild’s mortgage lending branch.

This is the first decision of the California Court of Appeal to address the claimed displacement of the California Uniform Trade Secret Act (“CUTSA”) as to claims brought under California’s Comprehensive Computer Data Access and Fraud Act, Penal Code Section 502 (“Section 502”), following multiple conflicting federal decisions on the issue. It was a complete victory for our client.

Guild alleged that CrossCountry conspired with Guild employees while they were still employed to recruit staff away from Guild, divert customers, and improperly access and use Guild’s confidential business information, ultimately causing the collapse of the branch. The trial court dismissed Guild’s claims, concluding that CUTSA displaced Guild’s tortious interference claims and claims under Section 502 and that the employees owed no actionable duties that could support aiding-and-abetting liability. The Court of Appeal reversed in full, holding that Guild’s interference and Section 502 claims were not displaced by CUTSA, employees owe actionable duties of loyalty to their employers, and that branch managers may owe fiduciary duties as well, based on their responsibilities and discretion.

The Sidley team representing Guild Mortgage Company included Rollin Ransom, David Carpenter, Eric Schwartz, Nicole Baade, Renee Pesiri, and Leslie Ridings. All members of the Sidley team are based in the Los Angeles office.