Case Involved Applying DeSaulles Under Unusual Circumstances.
Ajaxo, Inc. v. E*Trade Financial Corp., Case No. H043530 (6th Dist. Apr. 23, 2020) (published) is must reading for practitioners in trade secret cases when it comes to royalty awards under California’s Uniform Trade Secret Act. It also has an interesting published discussion on who is the prevailing party under unusual circumstances where there were two several final judgments, the first of which was satisfied by the defendant claiming it was the prevailing party entitled to costs for defensing the misappropriation claims in a second judgment.
Because the opinion is 86 pages long, we summarize the highlights for purposes of this blog.
Defendant was found liable to plaintiff on a breach of contract trade misappropriation count but not a classic trade misappropriation count. Defendant satisfied the judgment under the contractual claim, including fees and interest. However, subsequent appeals revived the classic trade misappropriation count, remanding it to see if the trial judge was inclined to award a reasonable royalty—which he ultimately did not in the second phase of proceedings. He then awarded defendant around $214,000 in routine costs for prevailing under the second phase “several judgment.”
Unfair, claimed plaintiff, relying on the view that there can be only one prevailing in the entire action, based on reasoning in DeSaulles v. Community Hospital of Monterey Peninsula, 62 Cal.4th 1140, 1157 (2016) [reviewed in our March 19, 2016 post].
The appellate court affirmed the costs award to defendant.
Although acknowledging the general rule that one looks to the “action as a whole,” the odds defied that in this case because there was more than one final judgment given the unusual procedural posture of the case. Defendant had satisfied the first judgment in full such that it would be anomalous to decide plaintiff was the prevailing party under a second judgment by which it recovered nothing. So, despite discussing DeSaulles in depth, the particularized circumstance of this case resulted in affirming the substantial costs award in defendant’s favor.