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Contract Law: Can You Shift a Burden of Proof Via Contractual Provision?
Contracts are essential to San Diego and California businesses. Generally, contracts are intended to simply facilitate operations such as purchasing supplies and services, making sales, and locking in employees.
Sometimes contracts can be used — and should be used — to protect your business in the event of litigation. We here at San Diego Corporate Law hope your business does not end up in litigation, but a well-crafted contract can help. See here and here. One interesting question that has recently arisen is whether a party can shift an evidentiary burden via a contractual provision. The answer is unclear, but we recommend giving it a try, and we can help.
San Diego Business Law: What is an Evidentiary Burden?
In general, when a party brings a lawsuit, he or she or the company has the burden under the law of proving certain elements. For example, the four necessary elements of a negligence/personal injury claim are duty, breach of that duty, causation, and injury/damage. The party suing might prove several facts to establish each element.
San Diego Business Law: Who Has the Burden?
As noted, the party suing has the burden of proving the various facts that establish the elements. This is codified in the California Evidence Code. Cal. Evid. Code, §§ 115, 500, 520. Evid. Code, § 500 states, for example, that “[e]xcept as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.” The burden of proof does not shift during the case; it remains with the party who originally bears it.
As another more detailed example, take a case in which your San Diego business needs to prove misappropriation of a trade secret. Under California law, misappropriation of trade secrets requires the plaintiff to demonstrate that the plaintiff owned a trade secret, the defendant acquired, disclosed, or used the plaintiff’s trade secret through improper means, and damage/injury to the plaintiff occurred. See Vescpvo v. Clark, No. G052716 (Cal. App. 4th Dist. April 7, 2017) and Cal. Civ. Code, § 3426.1. Under the normal rules, a plaintiff must show that some particular information or prototype or process or formula is a “trade secret.”
Increasingly, businesses are attempting to enhance their prospects during litigation by shifting evidentiary burdens to the other side. With respect to trade secrets, a non-disclosure or confidentiality agreement might include language similar to this:
“Burden Shifting: In the event of litigation or a dispute over misappropriation or wrongful disclosure of COMPANY’S Confidential Information and/or Trade Secrets, YOU, the receiving party, agree that YOU shall have the evidentiary burden of showing at trial that said Confidential Information and/or Trade Secret is, in fact, NOT confidential or a trade secret.”
In general, if the wording is unambiguous, California courts will enforce the language of contracts and give the words their ordinary and plain meanings unless the provision violates some law or public policy. Businesses are increasingly willing to test the question of whether evidentiary burdens can be shifted via contract.
San Diego Business Law: Contact San Diego Corporate Law
If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard has been named a “Rising Star” three years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Mr. Leonard can be reached at (858) 483-9200 or via email.
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