$1.5 Million Award Went POOF!
Earlier, in Angelica Textile Services, Inc. v. Park, Case No. D063027 (4th Dist., Div. 1 Aug. 19, 2014) (unpublished), the appellate court overturned a lower court dismissal of certain tort claims based on the notion that the Uniform Trade Secrets Act (UTSA), which has a fee-shifting provision if the defense can show the plaintiff prosecuted a trade secret action in bad faith, displaced the tort claims, although a jury found there was no “trade secret” on the UTSA claim. However, the lower court had awarded the defense $1.5 million in attorney’s fees for bad faith trade secrets prosecution (yep, no typo here), which led plaintiff to appeal the fee award.
Plaintiff was successful …. at least at this point in the litigation.
The fee award at this stage had to be reversed for two reasons.
First, given that the prevailing party under the UTSA fee-shifting statute is a pragmatically-driven decision, the appellate court was unable to determine who really “won” given the pendency of related tort claims, including one for breach of loyalty based on defendants officers’ setting up of a competing business.
Second, it was no “slam dunk” that subjective bad faith was shown, one of the prongs of the USTA fee-shifting statute. Obviously, if plaintiff were to prevail on the tort claims, it would be difficult to find bad faith. So, the future is what will determine the result in this one. Stay tuned, maybe or maybe not—depending if a settlement can be had in the meantime.