Joshua David Mellberg LLC v. Jovan Will
20-16215
9th Cir.Sep 30, 2021Background
- Plaintiff Joshua Mellberg and his company JDM sued former employees and Impact for trade-secret misappropriation and unjust enrichment; defendants moved for summary judgment.
- Plaintiffs’ damages theory for trade-secret loss relied on expert Lynton Kotzin, who assumed liability and quantified losses (claimed >$16M).
- There was no evidence defendants caused loss of possession of the data; evidence showed defendant Fine and a JDM employee uploaded the data back to JDM’s network.
- Plaintiffs failed to provide a timely, substantiated damages computation for unjust enrichment; Mellberg submitted a late supplemental declaration claiming >$27M.
- Plaintiffs sought sanctions for alleged spoliation (computer reformatting) and permanent injunctive relief; defendants counterclaimed under the Lanham Act.
- The district court granted summary judgment to defendants on plaintiffs’ claims, excluded plaintiffs’ late damages disclosure, denied spoliation sanctions and injunctive relief, dismissed a derivative claim for failure to meet Arizona statutory requirements, and rejected Impact’s Lanham Act counterclaim for lack of materiality.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trade-secret damages / causation | Mellberg: defendants misappropriated trade secrets causing >$16M loss (Kotzin report) | Defendants: no evidence they caused loss or removed data; data remained / was preserved | Summary judgment for defendants — plaintiffs failed to show causation or monetary damages (no admissible evidence tying loss to defendants) |
| Unjust enrichment — damages disclosure | Mellberg: entitled to >$27M; submitted supplemental damages declaration late | Defendants: damages disclosure was untimely and prejudicial; should be excluded | Court excluded late damages under Rule 37(c)(1) for failure to comply with Rule 26(a)(1)(A)(iii); summary judgment for defendants on unjust enrichment |
| Spoliation sanctions & injunctive relief | Plaintiffs: defendants reformatted computers; seek sanctions and permanent injunction | Defendants: spoliation not material; plaintiffs show no resulting harm | Denied sanctions and injunctive relief — spoliation claim moot or irrelevant absent showing of harm required for merits/injunction |
| Derivative claim (LLC funds) | Mellberg: alleged mishandling of LLC funds by Will | Defendants: claim fails because Mellberg did not satisfy A.R.S. derivative-suit prerequisites | Dismissed for failure to comply with statutory derivative-suit requirements; sua sponte raising caused no prejudice (plaintiff had opportunity to respond) |
| Lanham Act counterclaim (Impact) | Impact: false advertising under 15 U.S.C. §1125(a)(1)(B) | Mellberg: lacked proof of materiality | Summary judgment for Mellberg — insufficient showing of materiality for false-advertising claim |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden and appropriateness of granting where no triable issue of material fact)
- R & R Sails, Inc. v. Ins. Co. of Pennsylvania, 673 F.3d 1240 (Rule 26(a) damages-disclosure requirements and exclusion of late evidence)
- Edmo v. Corizon, Inc., 935 F.3d 757 (injunctive relief requires showing of harm; relevance to permanent injunctive relief)
- Rivera v. Anaya, 726 F.2d 564 (affirmative defenses may be raised at summary judgment if no prejudice to plaintiff)
- Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (materiality requirement for Lanham Act false-advertising claims)