Also, Prevailing Defendant Did Not Get Fee Recovery For Texas Counsel Work In California Litigation Where No Pro Hac Vice Admission Was Obtained.
Dispatch & Tracking Solutions, LLC v. City of San Diego, Case Nos. D062426 et al. (4th Dist., Div. 1 Apr. 8, 2016) (unpublished; over 100 pages long) is quite the megillah of a trade secret litigation battle between various parties arising out of San Diego’s award of a contract to San Francisco AutoReturn (AutoReturn) for purposes of providing computerized systems for the dispatch of tow trucks. AutoReturn, in turn, used communicative software provided by Dispatch & Tracking Solutions (DTS). However, ACT claimed an exclusive license to use the DTS system, which caused AutoReturn to shift to Orion and then to eventually design its own software. ACT, claiming exclusive software rights, sued City, AutoReturn and others for breach of contract, interference, unfair business practices, and trade secret misappropriation, prompting DTS to cross-claim against ACT, City, AutoReturn, and Orion, inclusive of a trade secret misappropriation cross-claim. Eventually, ACT’s case was “defensed” and DTS’ cross-claims were “defensed,” triggering all kinds of attorney’s fees motions under Civil Code section 3426.4, the California Uniform Trade Secret Act’s fee-shifting provision.
Orion was awarded fees of $120,000 against DTS. AutoReturn and City moved for 3426.4 fees against both ACT and DTS, with the lower court (1) denying fees against ACT based upon its voluntary dismissal of its trade secret claim, and (2) granting fees against DTS in the aggregate sum of $450,000. The lower court also denied Orion some fees for work by its Texas counsel in the California litigation and disallowed some expert witness fees to AutoReturn.
All kind of parties appealed, although the trade secret claims were the focus of the fee appeals.
Fee awards against DTS. These were all affirmed because no admissible evidence of misappropriation was presented, satisfying both the objective and subjective prongs of the 3426.4 fee entitlement test. The fee claimants did a good job of presenting correspondence with opposing counsel asking for a resolution or dismissal based on the lack of proof of misappropriation. DTS argued that the settlement negotiations privilege precluded use of this course of conduct, but the appellate court disagreed—finding it was admissible to show bad faith on the fee entitlement prongs.
Fee denial against ACT. AutoReturn and City got another “bite” at the fee apple in this one. The reviewing court determined that the lower court incorrectly determined it lacked jurisdiction to entertain fees after ACT voluntarily dismissed its trade secret claims, finding the dismissal did not usurp fee entitlement (citing the SASCO and Cypress cases in support of its conclusion).
Denial of fees for Texas counsel work to Orion. The denied request for $45,536.82 in fees by Orion for work of its Texas counsel was sustained. The reason was that Texas counsel was not licensed to practice in California and did not seek pro hac vice admission in California, with the appellate court finding no reason why Orion (a non-California resident, but with California contacts) should not be subject to the same protective attorney licensing rules as applicable to all non-California attorneys providing litigation advice or litigating in California.
Denial of expert witness fees to AutoReturn. This one was affirmed because AutoReturn did not prove that the claimed expert’s fees were reasonably necessary to the litigation once the opposing party shifted the burden in the course of a motion to tax costs proceeding.