Other Defendant Denied Fees For Not Providing Sufficient Substantiation Of Claimed Fees.
In Environmental Logistics, Inc. v. Hayward, Case No. D080515, and Environmental Logistics, Inc. v. Tabush, Case No. D080516 (4th Dist., Div. 1 Aug. 25, 2023) (unpublished), two companion cases, Plaintiffs sued multiple defendants, including three former employees, for interference and trade secret misappropriation, seeking $37.55 million in damages. After weeks of trial, including an Evidence Code section 402 hearing, the lower court granted a nonsuit on all Plaintiffs’ claims after excluding the opinions of two experts, one because he did not make himself available for deposition until one week before trial and another because his opinions lacked causal foundational links. Defendants Hayward and Tabush moved for attorney’s fees under Civil Code section 3426.4, which allows for fee awards in the lower court’s discretion in a trade secrets misappropriate case where both objective speciousness and bad faith in commencing/prosecuting a trade secrets case exists. The lower court granted Hayward’s fee motion, awarding $254,147.40 against Plaintiffs, but it denied Tabush’s fee motion for lack of sufficient fee substantiation. Defendant Tabush requested expert witness fees of $13,535.60 for a consulting forensic accountant’s expert witness fees given that Tabush successfully made a CCP § 998 offer to waive costs in exchange for a dismissal with prejudice (a 998 offer which he upheld through the non-suit order). The lower court granted Tabush’s expert fees as costs, striking only $440 of the request because it represented work for a deposition which never went forward. Plaintiffs appealed the Hayward fee and expert fee award in Case No. D080515, while Tabush appealed the fee denial in Case No. D080516.
With respect to the appeal involving the Hayward attorney’s and expert’s fees awards, the 4/1 DCA affirmed. Plaintiffs’ main challenge was that subjective bad faith was not shown, but this was dispatched based on opposing counsel showing deficiencies in Plaintiffs’ theories at an injunction hearing which persisted through the trial. Although Tabush’s expert never testified at trial, it was reasonable for this defendant to consult with a forensics accountant given the substantial damages claim by Plaintiffs.
On the fee denial appeal by Tabush, there was no abuse of discretion by the lower court in reaching its conclusion given that Tabush submitted a conclusory attorney declaration with ultimate conclusions and no supporting documents for a $188,168 fee request. The appellate court endorsed the view that, in a complicated litigation matter, more detail is better and that a lead attorney declaration on reasonableness does not allow a lower court to make its own determination of the same without detailed substantiation. Plaintiffs argued that the billing contained attorney-client information, but the defense at a motion hearing diffused this well by indicating that the information could be redacted, filed under seal, or remedied by more detail in the lead attorney declaration.