Both Objective And Subjective Bad Faith Prongs Supported By Substantial Evidence.
The substantial evidence/abuse-of-discretion standards generally are hard to surmount. No the less so in Jafari v. Gastelum, Case No. B293034 (2d Dist., Div. 7 July 21, 2020) (unpublished).
What happened here is that defendant prevailed in an action for breach of contract/trade secret misappropriation after plaintiffs voluntarily dismissed their action without prejudice just before their opposition was due to an adverse summary judgment motion. Defendant moved to recover attorney’s fees of no less than $198,380 under Civil Code section 1717 (the contract fee-shifting statute) and Civil Code section 3426.4 (the trade secret misappropriation fee-shifting provision). The lower court awarded $65,000 under the trade secret fee-shifting statute, although there was some confusing language that defendant prevailed on the contract claim.
The 2/7 DCA affirmed. After construing the fee award to indicate that it was really hinged to section 3426.4, the appellate court affirmed on the basis that substantial evidence supported that there was objective speciousness and subjective bad faith as required under the trade secret misappropriation statute. (FLIR Systems, Inc. v. Parrish, 174 Cal.App.4th 1270, 1275 (2009).) To some extent, the objective prong was satisfied not only upon the lack of evidence, but plaintiffs’ admission in their opening appellate brief that they “did not have proper ammunition to win anything.” On the subjective prong, defendant was able to show there might have been some retaliation for his cooperation with former employees in Department of Labor Standards Enforcement (DLSE) proceedings as far as bringing this dismissed suit—certainly enough under a substantial evidence review standard to justify affirmance of the fee award.