Atabek & Co. Achieves Grant of New Trial in Never Ending Trade Secrets Dispute:

Team Members Involved: Jon A. Atabek

Atabek & Co. commends attorneys Jon Atabek in his recent post-trial motion victory, convincing the Court to grant a new trial following a largely successful jury trial!

This case is a saga. The lawsuit was originally filed in September 2012—more than eleven (11) years ago.  Jon Atabek served as defense counsel for one of the defendants since the beginning, and was lead trial counsel at each trial.

In summary, Plaintiffs, a group of affiliated dentistry offices and their captive marketing agency, accused Defendants of conspiring to steal a trade secret and use it to compete unfairly against them. Plaintiffs alleged that prior to leaving and competing, they were on one profit trajectory, and that Defendants’ use of the trade secret sent them on a downward trajectory. Plaintiffs initially asked for approximately $75,000,000, alleging Defendants were the sole and only cause of their losses during that time.

One of the Defendants did not deny taking the list. But she denied the contents were a trade secret. Rather, the contents of what she took was merely a compilation of contact information for more than twelve thousand southern California employers, which could be purchased for just a couple hundred dollars from sources like Hoovers.com. She also argued that any economic harm suffered by Plaintiffs was their own doing—that for years, the company had engaged in unethical and unwise conduct harming its own operations and reputation, and that was what caused Plaintiffs’ harm—not the list.

The first jury trial commenced approximately seven (7) years later, in 2018.  Trial was first delayed because Plaintiffs failed to produce critical financial documents in discovery. The Court vacated the trial date, ordering further depositions, and forcing Plaintiffs to pay the costs of the depositions and expert fees. Then, Plaintiffs moved to have the matter moved to another department where the case was eventually tried, delaying trial by three more years.

The trial lasted nearly a month in July, in Downtown Los Angeles. The air conditioning in the courtroom was not working correctly. And Plaintiffs spent nearly fifteen days putting on their case, while Defendants spent approximately three dismantling it.

Defendants won the first trial in a resounding victory. First, the Court dismissed a number of Plaintiffs and Defendants on both technical and factual grounds. In essence, the Court found that only the marketing company owned the trade secret at issue, that the California Uniform Trade Secrets Act (“CUTSA”) preempted all of the other claims in the case, and that Plaintiffs failed to present sufficient evidence of wrongdoing to go to the jury as to anybody other than two of the Defendants. Then, the jury found Plaintiffs failed to prove the remaining two Defendants were a substantial factor in causing harm to the marketing company. As a result, the jury gave Plaintiffs zero dollars ($0.00) in damages. And while the jury found the list was a trade secret, and the Court awarded an injunction prohibiting Defendants from using it, the Court refused to award Plaintiffs an equitable “royalty” because it found Plaintiffs failed to prove what the list was worth, and also denied Plaintiffs’ request for their attorneys’ fees. This was a resounding win for the Defendants.

Plaintiffs appealed the judgment. Plaintiffs argued the Court erred by dismissing the affiliated dental offices’ claims for breach of contract on CUTSA preemption grounds. Defendants did not disagree that the CUTSA preemption ruling was in error, but argued there was no harm, as the jury’s finding of “no harm no foul” applied equally to the dental offices. The Court of Appeals disagreed, reversing the judgment only as to the dental offices, and setting the case up for a second trial.

At the second trial, Jon Atabek again acted as lead trial counsel. This time around, the results were mixed. Plaintiffs only asked for $12,000,000, though they had asked for much more the first time. After nine days of trial, the jury awarded approximately $1,100,000 of the damages requested—thereby rejecting the vast bulk of the damages requested, granting the vast bulk of that to only one of the companies, and giving very little to the two others. Simply put, the jury did not find Plaintiffs’ case credible.

And while the result was much better than it could have been, there were irregularities that rendered the result questionable. Those irregularities included trial misconduct by Plaintiffs’ counsel, a total lack of admissible evidence of damages or any reasonable means of calculating damages for the Plaintiffs. To compound matters, Plaintiffs convinced the Court to multiply the judgment to more than $7,000,000 by improperly triple-counting the verdict, and adding unwarranted prejudgment interest.

Atabek & Co. asked the Court to intervene by filing three post-trial motions: (1) Motion for New Trial; (2) Motion for Judgment Notwithstanding the Verdict (“JNOV”); and (3) Motion to Vacate Judgment. Atabek & Co. attorneys worked tirelessly together reviewing the trial record and briefing the issues. The moving briefs, various interim ex parte applications on scheduling matters, and reply briefs alone, not counting the exhibits, exceeded one hundred pages.

After a lengthy oral argument, the Court granted the Motion for New Trial, but denied the other two motions. As grounds, the Court found the verdict to be impossibly vague. Thus, the Court threw out the judgment of more than seven million dollars!

While the new trial order was, no doubt, a great result and the culmination of very good work by Atabek & Co.’s attorneys, the result could and should have been better. Atabek & Co. believes the Court should have gone further, and not permitted Plaintiffs a second bite at the apple on some or all of their claims. Thus, Atabek & Co. has now filed an appeal, hoping to either obtain a dismissal outright based on Defendants’ failure to submit critical evidence, or further narrow the issues on retrial.

For now, the never-ending saga of this case goes on. The Courts have given us another opportunity to do what we do best! Wish us luck!