Trade Secrets: Plaintiff’s Dismissal Of One Defendant In Trade Secrets Case Did Not Justify Award Of Prevailing Party Fees Under The California Uniform Trade Secrets Act Fee-Shifting Provision As To Dismissed Defendant

Even Though The Dismissal Was Strategic, Defendant Did Not Demonstrate Plaintiff’s Claim Was Objectively Specious.

               The California Uniform Trade Secrets Act does have a fee-shifting provision if a court finds a plaintiff’s trade secret misappropriation claim was made in bad faith (Civ. Code, § 3426.1), which requires a finding of both objective speciousness and a subjective component showing the claim was commenced or prosecuted for an improper purpose (SASCO v. Rosendin Electric, Inc., 207 Cal.App.4^th 837, 845-847 (2012)).  Dismissed defendant, in Broker Solutions, Inc. v. Pina, Case No. G062212 (4^th Dist., Div. 3 Apr. 30, 2024) (unpublished), did not have the “goods” on objective speciousness such that a substantial fee request was correctly denied in a 3-0 opinion authored by Justice Sanchez.

               What happened here is that plaintiff dismissed one defendant from a trade secrets misappropriation case because defendant’s attorney was driving up costs and impeding resolution of the case according to plaintiff’s counsel, even though plaintiff believed the dismissed defendant had liability.  In fact, the state of evidence adduced during discovery tended to show that dismissed defendant admitted he took plaintiff’s customer lists which were not generally available and that the lists had economic value.  After the dismissal, defendant sought section 3426.1 attorney’s fees/costs in the amount of $594,185.70, a request denied by the trial judge and triggering an appeal by dismissed defendant.

               The 4/3 DCA panel affirmed the fee denial.  Based on the discovery evidence showing that dismissed defendant took the customer lists and those lists had value so that defendant was unjustly enriched, the case was not objectively specious.  Fee denial affirmed.