No One Prevailed in Noncompete Invalidation Battle.
Where more than monetary relief is involved or mixed results are reached, the trial court has substantial leeway in determining which litigant, if any, prevailed in litigation for routine costs purposes. (Code Civ. Proc., sec. 1032(a)(4).) The next case illustrates this well, and also shows that appellate courts will “sniff” through the end result in litigation to determine what was really at issue.
Dowell v. Pacesetter, Case Nos. B201439 & B203501 (2d Dist., Div. 2 Oct. 20, 2009) (unpublished) involved dueling actions by medical system competitors arising out of the plaintiff employers’ hiring of ex-employees of defendant/cross-complainant. Plaintiff wanted to invalidate noncompete provisions in its competitor’s former employment contracts on a California statewide basis, as well as declaratory relief that the employees’ restrictions were unenforceable. In turn, competitor cross-complained for injunctive relief under the noncompetes and sued plaintiff for unfair competition in “raiding” employees. Eventually, competitor lost to plaintiff under both the complaint and cross-complaint, except for the trial court’s refusal to enter the broad California-wide injunction of invalidity desired by plaintiff.
Plaintiff and its employees then filed a costs memorandum seeking $20.323 from competitor. The trial court struck the costs memo entirely, finding that there was no “prevailing party.” Plaintiff and employees appealed.
In a 3-0 unpublished decision, the appellate panel affirmed the costs denial decision. Because there were two operative pleadings, this made things much different than had plaintiff and employees simply “defensed” competitor’s cross-complaint. However, the trial court pragmatically assessed that plaintiff did not achieve a major objective to get a statewide injunction against competitor’s enforcement of noncompetes. Given that nonmonetary relief was at stake, this situation fell within the discretionary “prevailing party” decisionmaking calculus of section 1032(a)(4)—with the lower court correctly determining that competitor did not obtain its goal of much larger injunctive relief. Beyond that, the panel also cited to Texas Commerce Bank v. Garamendi, 28 Cal.App.4th 1234, 1249 (1994) for the proposition that the statute permits the trial court to order that each side bear its own costs even though one side was the prevailing party where the dispute involved nonmonetary (namely, declaratory) relief.
