650 F. App'x 372
9th Cir.2016Background
- Santini (former employee) left DBA Distribution Services/Radiant Logistics and started a competing freight-forwarding business; her husband Pollara had a non‑compete (Merger Agreement) with Counterclaimants.
- Santini sued in California state court for a declaratory judgment that she was not bound by Pollara’s non‑compete; Counterclaimants removed to federal court and filed counterclaims for trade‑secret misappropriation (customer information) and for Oceanair inducing Pollara’s breach.
- At trial, after Counterclaimants rested, the district court granted Oceanair’s Rule 50(a) JMOL on the inducement claim; the jury later returned a verdict for Counterclaimants on trade‑secrets.
- The district court then granted Counterdefendants’ Rule 50(b) renewed JMOL, vacating the trade‑secrets verdict; Counterclaimants appealed both JMOL rulings and Oceanair appealed denial of attorneys’ fees.
- The Ninth Circuit reviewed the Rule 50 rulings de novo and the fee denial for abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Oceanair induced Pollara to breach the Merger Agreement | Oceanair caused Pollara’s September 2011 breach and is liable for inducement | Pollara had already breached earlier; Counterclaimants failed to prove causation for the September act | JMOL for Oceanair affirmed; no sufficient proof of causation for inducement |
| Whether customer lists constituted trade secrets under CUTSA | Customer lists compiled by Santini contained nonpublic, competitively valuable information (trade secrets) | Lists contained publicly available contact info and lacked nonpublic details that give a substantial advantage | JMOL for Counterdefendants affirmed; lists not proven trade secrets |
| Whether Counterclaimants are entitled to attorneys’ fees for trade‑secrets suit | Counterclaimants’ case was not specious or in bad faith; fees unwarranted by defendants | Counterdefendants argued plaintiff acted in objective bad faith and the suit was specious | Denial of fees affirmed; district court did not abuse discretion in finding no subjective bad faith |
Key Cases Cited
- Harper v. City of Los Angeles, 533 F.3d 1010 (9th Cir. 2008) (standard of review for Rule 50 JMOL)
- Hahn v. Diaz‑Barba, 125 Cal. Rptr. 3d 242 (Cal. Ct. App. 2011) (causation element for inducement to breach)
- Morlife, Inc. v. Perry, 66 Cal. Rptr. 2d 731 (Cal. Ct. App. 1997) (customer lists may be trade secrets only if they include nonpublic, competitively useful details)
- Sea Coast Foods, Inc. v. Lu‑Mar Lobster & Shrimp, Inc., 260 F.3d 1054 (9th Cir. 2001) (abuse‑of‑discretion standard for fee denials)
- Gemini Aluminum Corp. v. Cal. Custom Shapes, Inc., 116 Cal. Rptr. 2d 358 (Cal. Ct. App. 2002) (objective speciousness plus subjective bad faith required for statutory trade‑secret fee awards)