Plaintiff Was Victorious In Its Other Claims And Trial Court Was Allowed To Consider Equitable Concerns – Such As Attorneys’ Fees Plaintiff Incurred To Preserve Its Business Against Defendants’ “Unscrupulous Behavior.”
In Techno Lite, Inc. v. Emcod, LLC, Case Nos. B284989 and B289486 (2d Dist., Div. 4 January 21, 2020) (partially published), two partners in a company that sold lighting transformers were also employed – under the promises that they would run their company on their own time and not compete – by Techno Lite which also sold lighting transformers.
When one of Techno Lite’s three owners died, the remaining two owners offered to gift the deceased owner’s Techno Lite shares to one of the employees. He refused the shares, but he and other employee offered to purchase Techno Lite. The purchase never came to fruition and the two employees quit.
About a month later, based on breach of the employees’ promises, Techno Lite sued the two former employees, their company and one of its sales employees for breach of fiduciary duty, misappropriation of trade secrets, interference with contractual relationships, fraud, unfair business practices, interference with prospective economic advantage, conversion, injunctive relief, and constructive trust. The two former employees and their company cross-complained – alleging interference with contract, interference with prospective economic relations, California unfair competition law and Cartwright Act violations, violation of the unfair business practices act, defamation and injunctive relief.
The trial court dismissed the cross-complaint, found in favor of Defendants’ summary judgment motion against Plaintiffs’ trade secret claim, and ruled against Defendants on Plaintiffs’ other causes of action. Defendants then unsuccessfully moved for attorneys’ fees for their summary judgment defeat of Plaintiffs’ misappropriation of trade secrets claim.
Defendants appealed, and the 2/4 DCA affirmed in a partially published opinion. As to the denial of attorneys’ fees – addressed in the unpublished portion of the opinion – the 2/4 DCA found no abuse of discretion in the trial court’s finding that Plaintiff had not brought the trade secrets claim in bad faith. Civ. Code section 3426.4 provides that if a claim of misappropriation of trade secrets is made in bad faith, “the court may award reasonable attorney’s fees and costs to the prevailing party.” The fee-shifting statute gives the discretion to award fees to the trial court – expressly stating the trial court “may,” not that it “shall” award fees.
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