Lodestar Plus 1.3 Positive Multiplier for Defense Work Sustained on Appeal.
Aerotek, Inc. v. The Johnson Group Staffing Co., Inc., Case No. C070832 (3d Dist. May 13, 2014) (unpublished) was somewhat of a train wreck from the suing plaintiff’s perspective.
Train wrecked by Zapata. Library of Congress.
Plaintiff company sued a former employee and his new employer for trade secret (customer list) misappropriation. Plaintiff didn’t do very well in a second trial where these events, among others, occurred: (1) out of 65 customers alleged to have been improperly solicited by former employee, only 3 customers were the subject of the trial; (2) evidence showed the former employee spent a lot of time, before leaving plaintiff, in transitioning clients to other employees of plaintiff; (3) former employee only made an announcement of change in employment or had lunch with ex-colleagues still working for plaintiff, but never solicited work; (4) former employee’s replacement at plaintiff was not liked by any of the 3 customers at issue and was not going to get their business based on his personality; (5) two of the 3 customers closed down so there were no damages; (6) plaintiff never called any one from the 3 customers, but tried to impermissibly rely on hearsay testimony to establish its case; (7) plaintiff’s experts relied only on the sole opinion of one of plaintiff’s employee and never did any double checking; and (8) plaintiff had an improper motive of wanting to drive new employer out of business, just as it did other competitors.
Well, plaintiff was defensed by former employee and new employer at the second trial. However, the defense firm actually continued to represent their clients even though they ran out of money, under a defense pro bono arrangement which would allow the law firm to share in any fee recovery, if any was obtained.
The lower court, based on Civil Code section 3426.4 (allowing fee-shifting to a prevailing party if a trade secret claim of misappropriation is made in bad faith), awarded $735,781.27 in fees to defendants—comprised of a $535,215 lodestar augmented by a 1.3 positive enhancement for excellent defense work.
Plaintiff’s appeal did not alter things at all. In fact, the Third District found the record to overwhelmingly show both objective speciousness and subjective bad faith, with improper motive providing an inference on the subjective prong. The lodestar and multiplier were hardly surprising, especially given defense counsel’s largess in taking the case on a pro bono basis. Plaintiff argued that defense counsel was not really altruistic, because they continued representation of defendants based on malpractice threats. The appellate court not only found no evidence to support this argument, but observed that the firm still incurred risk—malpractice threats or not—and did obtain a successful result. Fee award affirmed, plus a remand to fix defense attorney’s fees for prevailing on appeal.
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