govinfo:USCOURTS-cand-3_26-cv-01845-9

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United States District Court 
Northern District of California 
 
 
 
 
 
 
UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF CALIFORNIA 
 
UNITED FLOW TECHNOLOGIES 
INTERMEDIATE HOLDCO II, LLC, et al., 
Plaintiffs, 
v. 
 
SEAN COHOLAN, 
Defendant. 
 

 
 
ORDER GRANTING MOTION TO 
DISMISS 
 
 
I. INTRODUCTION 
In this bitter dispute between an employer and their former employee, Defendant Sean 
Colohan moves to dismiss Plaintiffs’ third, fourth, fifth, sixth, and seventh causes of action for 
interference with prospective economic advantage, interference with contract, defamation, trade 
libel, and unfair competition, respectively. Defendant argues Plaintiffs’ defamation and trade libel 
claims fail as a matter of law and Plaintiffs’ prospective advantage, interference with contract, and 
unfair competition claims fail for any of three separate reasons.1 As explained below, Plaintiffs’ 
defamation and trade libel causes of action depend on nonactionable statements and so must fail, 
and Plaintiffs’ interference with prospective advantage, interference with contract, and unfair 
competition fail because they are preempted by CUTSA to the extent they do not rely on the 
 
1 Those reasons are that the third, fourth, and seventh claims are preempted by the California 
Uniform Trade Secrets Act as arising from the same nucleus of facts as Plaintiffs’ trade secret 
claims, are impermissibly duplicative of Plaintiffs’ defamation and trade libel claims, and/or fail 
as a matter of law. 

 

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inadequate allegations of defamatory wrongdoing. Defendant’s motion is granted with leave to 
amend. 
II. BACKGROUND2 
Plaintiffs United Flow Technologies Intermediate HoldCo II, LLC (“UFT”) and TW 
Associates, LLC (d/b/a MISCOwater) filed this suit against their former employee Defendant Sean 
Coholan for alleged trade secret misappropriation and related tortious conduct in March 2026. 
Having discussed the factual background of this case at length in prior orders, see Dkts. 29, 49, it 
is not repeated here. 
On March 16 and April 20, 2026, respectively, Plaintiffs’ motions for a temporary 
restraining order and preliminary injunction were granted in part and denied in part. On May 11, 
2026, Defendant filed the present motion to dismiss Plaintiffs’ third, fourth, fifth, sixth, and 
seventh causes of action under Rule 12(b)(6). Plaintiffs oppose the motion. All the while, both 
parties have engaged also in an embattled series of discovery related disputes before the magistrate 
judge assigned to the case. For the reasons set forth below, the motion is granted with leave to 
amend. 
III. LEGAL STANDARD 
Rule 12(b)(6) governs motions to dismiss for failure to state a claim. A complaint must 
contain a short and plain statement of the claim showing the pleader is entitled to relief, Fed. R. 
Civ. P. 8(a), and “giv[ing] the defendant fair notice of what the… claim is and the grounds upon 
which it rests,” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (citing Conley v. Gibson, 355 
U.S. 41, 47 (1957)). While “detailed factual allegations” are not required, a complaint must have 
sufficient factual allegations to “state a claim to relief that is plausible on its face.” Ashcroft v. 
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic, 550 U.S. at 555). Dismissal under Rule 
12(b)(6) may be based on either the “lack of a cognizable legal theory” or on “the absence of 
sufficient facts alleged” under a cognizable legal theory. UMG Recordings, Inc. v. Shelter Capital 
 
2 Unless otherwise stated, this order accepts well-pled factual allegations made in the complaint as 
true. 

 

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Partners LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (internal quotation marks and citation 
omitted). When evaluating such a motion, courts “accept all factual allegations in the complaint as 
true and construe the pleadings in the light most favorable to the nonmoving party.” Knievel v. 
ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). 
In dismissing a complaint, leave to amend must be granted unless it is clear the 
complaint’s deficiencies cannot be cured by amendment. Lucas v. Dep’t of Corrections, 66 F.3d 
245, 248 (9th Cir.1995). When amendment would be futile, however, dismissal may be 
ordered with prejudice. Dumas v. Kipp, 90 F.3d 386, 393 (9th Cir.1996). 
IV. DISCUSSION 
A. Plaintiffs fail to state a claim for defamation and trade libel. 
Defendant argues Plaintiffs allegations as to defamation and trade libel fail because (1) the 
statements are not actionable; (2) they do not identify adequately the allegedly defamatory 
statements; and (3) they do not include special damages as required for commercial 
disparagement. Plaintiffs allege, on information and belief, Coholan falsely told Randy Zimmer, 
Sales Director of Poly Processing,3 that Coholan personally accounted for 92% of MISCOwater’s 
Chemfeed-related tank sales, Dkt. 1, Compl., ¶ 75; MISCOwater lacked Chemfeed expertise 
outside of Coholan, id. ¶ 80; MISCOwater withheld “ ‘meaningful authority’ ” from Coholan, 
refused to place him in a role to achieve real results, and constrained his ability to develop the 
Chemfeed business due to internal “ ‘red tape’ ” id. ¶¶ 72–74; and MISCOwater’s leadership 
reversed prior commitments to Poly Processing, id. ¶ 78. Plaintiffs also allege Coholan told former 
MISCOwater employee Cody Robinson that Plaintiffs slashed his “already earned or accrued” 
commissions “in half and then fired him,” id. ¶ 83. 
As to the first argument, both parties agree a publication must contain or reflect a “ ‘ “false 
 
3 As discussed in this Court’s prior Orders, Poly Processing used to be a supplier for Plaintiff 
MISCOwater, which is a manufacturer’s representative firm in the water treatment and chemical 
feed industries owned by Plaintiff UFT. MISCOwater purchases products from suppliers like Poly 
Processing and sells those products to customers, municipal water and wastewater treatment 
facilities, contractors who work on related projects, and industrial markets. 

 

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statement of fact” to give rise to liability for defamation.’ ” Campanelli v. Regents of Univ. of 
Cal., 44 Cal. App. 4th 572, 578 (1996) (quoting Jensen v. Hewlett-Packard Co., 14 Cal. App. 4th 
958, 970 (1993) (emphasis added here) (Gregory v. McDonnell Douglas Corp., 17 Cal. 3d 596, 
600 (1976)). This “critical determination” between fact and opinion is a question of law for the 
court. Id. The determination is made considering the totality of circumstances. Id. Factors 
considered include “the occasion of the utterance, the persons addressed, the purpose to be served, 
and ‘all of the circumstances attending the publication.’ ”Jensen, 14 Cal. App. 4th at 970 (internal 
citation omitted). 
 “[W]here potentially defamatory statements are published in… a heated labor dispute, or 
in another setting in which the audience may anticipate efforts by the parties to persuade others to 
their positions by use of epithets, fiery rhetoric or hyperbole, language which generally might be 
considered as statements of fact may well assume the character of statements of opinion.” 
Gregory, 17 Cal. 3d at 601. For example, in Emde v. San Joaquin County Central Labor Council, 
the California Supreme Court “characterized as opinion, statements by a union that an employer 
had hired nonunion workers and put them on a straight commission plan, that certain guarantees 
gained by the union had been wiped out, that the status of employees remained unchanged, and 
that the employer’s labor policy was destructive.” Gregory, 17 Cal. 3d at 602 (cleaned up) (citing 
Emde v. San Joaquin Cnty. Cent. Lab. Council, 23 Cal. 2d 146, 155–56 (1943)). See also Su v. 
World Kuk Sool Ass’n Inc., No. 23-CV-01570-JCS, 2023 WL 5498731, at *8 (N.D. Cal. Aug. 23, 
2023) (In a “bitter” dispute regarding a family business, the court found certain statements, 
although they could be considered fact, “simply too loose and figurative to be understood as 
anything but the opinion of a highly partisan individual who is seeking to persuade others of the 
correctness of his organization’s positions in the context of an organizational dispute in which 
emotions are evidently running high.”). 
 Here, the alleged statements were made as part of a contentious labor dispute and heated 
competition for business between employer and former employee. Much of the alleged statements 
were made to Zimmer, a Sales Director at Poly Processing. They were made after Poly Processing 
terminated its Colorado distributorship with MISCOwater, a distributorship which had been under 

 

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Defendant’s oversight at the time, after MISCOwater terminated Defendant, and before Poly 
Processing terminated two more MISCOwater distributorships. In this context, Zimmer would 
have “anticipate[d] efforts by the parties to persuade [him] to their positions by use of epithets, 
fiery rhetoric or hyperbole” and, accordingly, heard Coholan’s comments regarding MISCOwater 
in the context of a “heated labor” and business dispute in which Coholan and MISCOwater were 
competing for Poly Processing’s business. See Gregory, 17 Cal. 3d at 601. The specific alleged 
comments to Zimmer that MISCOwater lacked Chemfeed expertise outside of Coholan, withheld 
meaningful authority from Coholan, obstructed his success, and reversed prior commitments to 
Poly Processing are also “loose,” “undefined,” or “figurative.” See id. at 601–02. Even Coholan’s 
most concrete alleged statement to Zimmer, that Coholan personally accounted for 92% of 
MISCOwater’s Chemfeed-related tank sales, would not be heard as a provably false factual 
statement but rather rhetoric by a salesperson seeking to close business about their own prowess 
that was very likely exaggerated or manipulated.4 
Plaintiffs also allege that, after his termination, Coholan told former MISCOwater 
employee Robinson that Plaintiffs slashed his “already earned or accrued” commissions “in half 
and then fired him,” Dkt. 1, Compl., ¶ 83. Again, an employee speaking with a recently terminated 
employee would hear Coholan’s alleged comments about MISCOwater’s handling of his 
commissions as “fiery rhetoric” in a “heated labor dispute.” See Gregory, 17 Cal. 3d at 601. 
Moreover, the allegation that MISCOwater “slashed in half” his commissions uses hyperbolic 
rather than precise language. The comments to Robinson are also not actionable statements. 
In sum, the statements Plaintiffs allege that Coholan made are not actionable as a matter of 
law in defamation or trade libel claims. Since this is sufficient to dispose of these claims, 
Defendant’s other arguments need not be reached. Plaintiffs’ fifth and sixth claims for defamation 
and trade libel are dismissed with leave to amend.5 
 
4 A professional in the business of selling and being sold to would hear a statistic like this and 
know it was subject to exaggeration and manipulation depending on the accounting methodology, 
time period, etc. 
5 Finding these claims plead inadequately, the Court also need not reach the question whether parts 

 

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B. To the extent Plaintiffs’ claims for interference with prospective advantage and 
contract and for unfair competition allege non-defamatory wrongdoing, they are 
preempted by CUTSA. 
The California Uniform Trade Secrets Act (“CUTSA”) was intended “to occupy the field 
of trade secret liability to the exclusion of other civil remedies.” Five Star Gourmet Foods, Inc. v. 
Fresh Express, Inc., No. 19-CV-05611-PJH, 2020 WL 513287, at *14 (N.D. Cal. Jan. 31, 2020) 
(citing Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 234 (2010)). It “preempts common 
law claims that are ‘based on the same nucleus of facts as the misappropriation of trade secrets 
claim for relief.’ ” K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 
4th 939, 958 (2009) (citation omitted). 
CUTSA supersedes other claims even when they seek “something more” or “require[ ] 
proof of additional elements not necessary to a trade-secret misappropriation claim.” EchoSpan, 
Inc. v. Medallia, Inc., No. 22-CV-1732-NC, 2022 WL 18539352, at *2 (N.D. Cal. July 19, 2022) 
(citing K.C. Multimedia, Inc., 171 Cal. App. 4th at 958). “If there is no material distinction 
between the wrongdoing alleged in a [C]UTSA claim and that alleged in a different claim, the 
[C]UTSA claim preempts the other claim.” Arthur J. Gallagher & Co. v. Tarantino, 498 F. Supp. 
3d 1155, 1174 (N.D. Cal. 2020) (citation omitted). The “determination of whether a claim is based 
on trade secret misappropriation is largely factual.” K.C. Multimedia, 171 Cal. App. 4th at 954.2 
“Courts in this District have repeatedly found that they may decide the issue of 
supersession at the pleading stage.” See Implicit Conversions, Inc. v. Stine, No. 24-CV-03744-
WHO, 2025 WL 2323354, at *3 (N.D. Cal. Aug. 11, 2025) (collecting cases). “At the pleadings 
stage, the supersession analysis asks whether, stripped of facts supporting trade secret 
misappropriation, the remaining factual allegations can be reassembled to independently support 
other causes of action.” Waymo LLC v. Uber Techs., Inc., 256 F. Supp. 3d 1059, 1062 (N.D. Cal. 
2017). In other words, “[t]o survive preemption, [a plaintiff’s] claims must ‘allege wrongdoing 
that is materially distinct from the wrongdoing alleged in a CUTSA claim.’ ” Prostar Wireless 
Grp., LLC v. Domino's Pizza, Inc., 360 F. Supp. 3d 994, 1006 (N.D. Cal. 2018) (citation omitted). 
 
of Plaintiffs’ interference with prospective advantage, interference with contract, and unfair 
competition causes of action are impermissibly duplicative with Plaintiffs’ defamation and trade 
libel allegations. 

 

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1. Interference with Prospective Advantage 
The wrongdoing alleged with regard to Plaintiffs’ CUTSA claim is that Defendant 
“improperly retained” Plaintiffs’ confidential information and knowingly and intentionally 
disclosed “trade secrets to entice Plaintiffs’ competitor GSA to hire him and offer him an 
attractive compensation plan,” “to systematically target Plaintiffs’ most valuable suppliers and 
customers,” “to attract MISCOwater’s employees… away from the company, to work with him at 
GSA instead.” Dkt. 1, Compl., ¶ 114–16. As for interference with prospective advantage, 
Plaintiffs allege Defendant “intentionally engaged in a malicious misinformation campaign 
directed at MISCOwater’s employees and designed to persuade them to stop working for 
MISCOwater” regarding “the company’s financial stability, treatment of its employees, future 
prospects, and the competence of its leadership.” Id. at ¶ 130. The question is whether these claims 
“ ‘allege wrongdoing that is materially distinct.’ ” Prostar Wireless, 360 F. Supp. 3d at 1006 
(citation omitted). 
Courts in this district have found wrongdoing materially distinct from CUTSA-related 
wrongdoing where a tortious claim alleges defendant gained unauthorized computer access—
which was how defendant retained certain trade secrets— and exploited the fact of that security 
breach to poach business, Implicit Conversions, No. 24-CV-03744-WHO, at *3, and also where 
defendant inaccurately told customers plaintiff’s product infringed another party’s patent, Aavid 
Thermalloy LLC v. Cooler Master Co., Ltd., No. 17-CV-05363-JSW, 2018 WL 11348438, at *3 
(N.D. Cal. June 15, 2018). Similarly, here, Plaintiffs have alleged wrongdoing in the form of 
sharing allegedly false information with third parties to draw customers, suppliers, and employees 
away from Defendant. While materially distinct wrongdoing from trade secret misappropriation, 
Plaintiffs cannot rely on that defamation wrongdoing for the reasons discussed above. CUTSA 
preemption applies to Plaintiffs’ claim for interference with prospective advantage. 
2. Interference with Contract 
Plaintiffs’ allegations of wrongdoing with regard to alleged interference with contract are 
similar to those for alleged interference with prospective advantage. Plaintiffs allege Defendant 
engaged in a “deliberate misinformation scheme designed to induce a breach or disruption of 

 

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Plaintiffs’ contractual relationships.” Dkt. 1, Compl., ¶ 145. Again, although a deliberate 
campaign of misinformation is materially distinct wrongdoing from trade secret misappropriation, 
those allegations cannot be relied on here to avoid CUTSA preemption for the reasons discussed 
above. 
3. Unfair Competition 
Regarding their unfair competition claim, Plaintiffs allege the following wrongdoing: “lies, 
thefts, breaches of confidentiality, and interferences.” Id. ¶ 163. The alleged thefts and breaches of 
confidentiality do not reflect wrongdoing materially distinct from trade secret misappropriation. 
See SunPower Corp. v. SolarCity Corp., No. 12-CV-00694-LHK, 2012 WL 6160472, at *5 (N.D. 
Cal. Dec. 11, 2012) (“If the basis of the alleged property right is in essence that the information is 
that it is not generally known to the public then the claim is sufficiently close to a trade secret 
claim that it should be superseded[.]” (cleaned up)); K.C. Multimedia, 171 Cal. App. 4th at 960 
(“Appellant’s claim for breach of confidence… is based on the same nucleus of facts as the trade 
secret misappropriation claim” and thus preempted by CUTSA. (cleaned up)). As before, the 
wrongdoing related to lies is materially distinct wrongdoing from trade secret misappropriation 
but cannot be relied upon. 
In sum, Plaintiffs’ third, fourth, and seventh causes of action for interference with 
prospective economic advantage, interference with contract, and unfair competition, respectively, 
are preempted by CUTSA to the extent they do not fail with Plaintiffs’ defamation and trade libel 
claims. 
V. CONCLUSION 
For the foregoing reasons, Defendant’s motion to dismiss Plaintiffs’ third, fourth, fifth, 
sixth, and seventh causes of action is granted with leave to amend. Plaintiffs have until July 10, 
2026 to amend their allegations. 
 
 
 

 

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IT IS SO ORDERED. 
 
Dated: June 9, 2026 
 
______________________________________ 
RICHARD SEEBORG 
Chief United States District Judge 

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