Even Though Third Defendant Only Found Liable For $2,287, $100,000 Fee Award Proper Because He Was A Chief Actor In Trade Secret Bad Faith Misappropriation.
In Applied General Agency, Inc. v. Greenleaf Financial and Ins. Services, Inc., Case No. G055737 (4th Dist., Div. 3 Oct. 17, 2019) (unpublished), plaintiff won a trade secrets misappropriation case against three defendants, obtaining unjust enrichment awards of $1,026,419 against two defendants and $2,287 against a third defendant (although this third defendant was a chief actor with respect to the trade secrets misappropriation). The jury determined that the misappropriation was willful and malicious in nature with respect to all defendants. Later, the trial judge awarded Civil Code section 3426.4 trade secrets statutory fees of $1.1 million against the two defendants and $100,000 against the third defendant—much less than the $3.6 million requested (inclusive of a 1.5 positive multiplier), with reductions made for plaintiff filing the fee motion late and excessiveness of the fee request.
The 4/3 DCA, in a 3-0 opinion authored by Acting Presiding Justice Bedsworth, affirmed the fee awards.
Because the first two defendants were found to have willfully and maliciously misappropriated, the $1.1 million fee award was justified as to them.
That brought the appellate panel to the third defendant’s challenge, which boiled down to the contention that $100,000 was too much because he only was found liable for $2,287. The problem with this argument is that section 3426.4 is not a prevailing party statute, but one which focuses on bad faith conduct. Here, the third defendant was found to have willfully and maliciously misappropriated trade secrets given he was a chief actor in the overall conduct resulting in the adverse jury verdict. The trial judge only awarded 10% of the total fees found reasonable, such that third defendant’s financial condition was considered in fashioning the award.