JOHNSON MATTHEY PROCESS TECHNOLOGIES, INC, Plaintiff, v. G.W. ARU LLC, Defendant.
CASE NO. CV420-322
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA SAVANNAH DIVISION
March 31, 2022
WILLIAM T. MOORE, JR.
Before the Court is Defendant G.W. Aru, LLC‘s, Motion for Attorney‘s Fees (Doc. 29), which Plaintiff Johnson Matthey Process Technologies, Inc., (“JMPTI“) has opposed (Doc. 32).
BACKGROUND
JMPTI brought this action against Defendant G.W. Aru and JMPTI‘s former employee1 Katherine J.M. Hovey2 asserting claims against both for misappropriation of trade secrets under the Defend Trade Secrets Act (“DTSA“) and the Georgia Trade Secrets Act (“GTSA“). (Doc. 1.) In summary, JMPTI alleged that Ms. Hovey downloaded JMPTI‘s trade secrets two days prior to resigning and
Now, G.W. Aru moves for attorney‘s fees pursuant to
LEGAL STANDARD
ANALYSIS
G.W. Aru, in its motion, claims it is entitled to attorney‘s fees pursuant to
Neither statute defines “bad faith,” and the Court is not aware of any Georgia state court decisions interpreting
The Stilwell test is a two-pronged analysis that has been generally adopted to evaluate claims of bad faith in the context of trade secret misappropriation. Farmers Edge Inc. v. Farmobile, LLC, No. 8:16CV191, 2018 WL 3747833, at *6 (D. Neb. Aug. 7, 2018) (citing Gabriel Techs. Corp. v. Qualcomm Inc., No. 08CV1992 AJB (MOD), 2013 WL 410103, at *7 (S.D. Cal. Feb. 1, 2013), aff‘d, 560 F. App‘x 966 (Fed. Cir. 2014) (per curiam)). That is, “[t]he party seeking an award of attorney‘s fees must show (1) the objective speciousness of [an] opposing party‘s claim, and (2) the subjective bad faith of the opposing party in bringing or maintaining the action for an improper purpose.” Id. (first citing Gabriel Techs. Corp., 2013 WL 410103, at *7; and then citing CRST Van Expedited, Inc. v. Werner Enters., Inc., 479 F.3d 1099, 1111 (9th Cir. 2007)); Kipu Sys. LLC v. Zencharts LLC, No. 17-24733-Civ-WILLIAMS/TORRES, 2021 WL 1891710, at *7 (S.D. Fla. Apr. 6, 2021). However, the failure to properly state a claim, by itself, will not warrant an inference of bad faith justifying an award of attorney‘s fees. See Temurain v. Piccolo, No. 18-62733-CIV-SMITH/VALLE, 2021 WL 1121003, at *6 (S.D. Fla. Mar. 24, 2021) (citing Heald v. Ocwen Servicing, LLC, No. 3:13-cv-993-J-34JRK, 2014 WL 4639410, at *6 n.16 (M.D. Fla. Sept. 16, 2014)); see also
In its motion, G.W. Aru first argues that JMPTI‘s claims were objectively specious because JMPTI possessed no proof that G.W. Aru acquired, used, or disclosed the trade secrets from Ms. Hovey, making it impossible for JMPTI to state a claim for misappropriation. (Doc. 29, Attach. 1 at 12-14.) Second, G.W. Aru argues that JMPTI‘s acrimonious relationship with G.W. Aru‘s founder, Guido Aru, and its failure to complete the agreed upon remediation process with Ms. Hovey demonstrates subjective bad faith on the part of JMPTI. (Id. at 15-17.) To support its claims, G.W. Aru provided the court with several attachments: A declaration of Guido Aru stating that he reported unethical conduct on the part of Johnson Matthey PLC after leaving and starting a competing business (Doc. 29, Attach. 2 at 3-4); declarations of two former JMPTI and Johnson Matthey PLC employees7 who attended a company
In response, JMPTI claims that the fact that Ms. Hovey admittedly stole JMPTI‘s trade secrets prior to going to work for G.W. Aru shows that its misappropriation claims had evidentiary support. (Doc. 32 at 10-14.) JMPTI further contends that Mr. Dailey misrepresents the circumstances of the remediation process and that it was the suspicious conduct of Mr. Dailey and Ms. Hovey that led JMPTI to bring this suit. (Id. at 4-5, 12-14.) JMPTI also rejects as speculative G.W. Aru‘s theory that the decision to sue G.W. Aru had any connection to the “bury him in legal fees” comment allegedly made in 2018. (Doc. 32 at 15-16.) JMPTI provided the Court with the declarations of John T. Gordon, JMPTI‘s managing director, and Barbara Rittinger Rigo, the lawyer who represented JMPTI in the pre-litigation negotiations between JMPTI and Ms. Hovey. (Doc. 32, Attach. 1; Doc. 32, Attach. 2.) Having described the parties’ arguments and supporting exhibits, the Court will now
I. OBJECTIVE SPECIOUSNESS
A prevailing party can establish that the claim against it was objectively specious by demonstrating “that there was no misappropriation or threatened misappropriation or that the opposing party could not have suffered any economic harm.” Kipu, 2021 WL 1891710, at *8 (citing Gabriel Techs. Corp., 2013 WL 410103, at *7). “Objective speciousness exists where ‘there is a complete lack of evidence as to every element of a misappropriation of trade secrets claim.’ ” Northstar, 2020 WL 10486256, at *30 (first quoting HCC Ins., 2017 WL 5118224, at *2; and then citing Hill v. Best Med. Int‘l, Inc., Nos. 07-1709, 08-1404, 09-1194, 2011 WL 6749036, at *4 (W.D. Pa. Dec. 22, 2011)). Courts in this circuit have found that “[a] plaintiff can overcome the question of objective speciousness by presenting any evidence to support at least some elements of its misappropriation claim.” Id. (citing HCC Ins., 2017 WL 5118224, at *2). Thus, the Court must consider whether JMPTI introduced some evidence to support its misappropriation claim under the DTSA and GTSA. Id.
To prove a claim for misappropriation of trade secrets under both the GTSA and DTSA, a Plaintiff must show that (1) it had a trade secret; and (2) the opposing party misappropriated the trade secret. (Doc. 26 at 8); see also United States Sec. Assocs., Inc. v. Lumby, No. 1:18-CV-5331-TWT, 2019 WL 8277263, at *10 (N.D. Ga. Sept. 25, 2019) (“To state plausible claims under both the GTSA and DTSA, the Plaintiff must assert that (1) it had a trade secret; and (2) the opposing party misappropriated that trade secret.“). Here, the Court agrees that JMPTI lacked evidence to satisfy the second element of a misappropriation claim against G.W. Aru because JMPTI still has not alleged facts which demonstrate G.W. Aru acquired, used, disclosed, or threatened to use or disclose the documents obtained by Ms. Hovey. (See Doc. 26, at 14, 19.) Instead, JMPTI‘s evidence shows only that Ms. Hovey misappropriated the documents in question, not that G.W. Aru participated in the misappropriation. However, the Court‘s determination that “there was lack of evidence as to part of [JMPTI‘s] misappropriation claim does not support that [JMPTI‘s] claim was [] objectively specious.” HCC Ins., 2017 WL 5118224, at *2 n.4. The Court must also inquire whether JMPTI could have satisfied the first element of its claims—that the stolen documents were in fact trade secrets.
The GTSA defines trade secrets as information not commonly known by or available to the public that:
- Derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
- Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically or in writing[.]
The majority of G.W. Aru‘s brief is focused on whether JMPTI had evidence to support the second element of a misappropriation claim; however, G.W. Aru argues in a footnote that JMPTI also failed to plausibly allege that the documents in question were trade secrets. (Doc. 29, Attach. 1 at 13 n.4.) The Court disagrees. Although not addressed in the order granting G.W. Aru‘s motion to dismiss, the Court finds that the complaint adequately alleged the type of information Ms. Hovey downloaded, the confidential nature of the information, and steps taken to ensure the secrecy of the information, including requiring employees to sign confidentiality agreements. (Doc. 1 at ¶¶ 20-25.) The
II. SUBJECTIVE BAD FAITH
Even if the Court found that JMPTI‘s claims were objectively specious, the Court does not find that JMPTI brought this action with subjective bad faith. “Subjective misconduct exists if ‘a plaintiff knows or is reckless in not knowing that its claim for trade secret misappropriation has no merit.’ ” Northstar, 2020 WL 10486256, at *33 (quoting Greenberg, 2014 WL 12694260, at *6). Subjective bad faith may be inferred from “evidence that a party ‘intended to cause unnecessary delay, filed the action to harass [the opposing party], or harbored an improper motive.’ ” Gabriel Techs. Corp., 2013 WL 410103, at *7 (quotation omitted). To prove
Based on the evidence before the Court, it does not appear that JMPTI brought this action with an intent to harass or any other improper motive. The “bury him in legal fees” comment that G.W. Aru references was made over two years before the institution of this action; further, there is no indication Mr. Gordon, who decided that JMPTI should bring this action, had any knowledge of the comment. (Doc. 32, Attach. 1 at 6.) Additionally, despite G.W. Aru‘s assertions, JMPTI did not sue G.W. Aru as soon as an opportunity arose. Rather, upon learning that Ms. Hovey had improperly downloaded the trade secret information, JMPTI began a remediation process through which it sought assurances that Ms. Hovey would not share the trade secret information with anyone else, especially G.W. Aru. (Doc. 32, Attach. 1 at 3; Doc. 32, Attach. 2 at 1-2.)
To show JMPTI knew that its misappropriation claims were meritless, G.W. Aru relies on the fact that Ms. Hovey provided sworn assurances that she did not disclose the trade secret information with G.W. Aru and that JMPTI filed this lawsuit after being notified that Grant Thornton had destroyed Ms. Hovey‘s
The fact that JMPTI did not file suit until after Ms. Hovey proceeded, without JMPTI‘s approval, to have Grant Thornton destroy the Toshiba Drive supports JMPTI‘s claims that it did not sue Ms. Hovey or G.W. Aru until after it became clear that the parties would be unable to resolve their dispute through remediation. Additionally, there appears to have been legitimate concern on JMPTI‘s part as to whether Ms. Hovey was or was not providing work for G.W. Aru. (Doc. 32, Attach. 1 at 5-6.) In light of these facts, the Court concludes that JMPTI, after failing to come to an agreement regarding the protocol for the return or destruction of its trade secret information, believed in good faith that it was necessary to bring its misappropriation claims against both Ms. Hovey and G.W. Aru in order to protect its confidential information. Notably, no discovery has been conducted in this case,
CONCLUSION
Based on the foregoing, G.W. Aru‘s motion for attorney‘s fees (Doc. 29) is DENIED. As a result, JMPTI‘s motion for extension of
SO ORDERED this 31st day of March 2022.
WILLIAM T. MOORE, JR.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA