Joshua David Mellberg LLC v. Jovan Will

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 30, 2021
• Docket: 20-16215
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION SEP 30 2021 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOSHUA DAVID MELLBERG LLC, No. 20-16215 DBA JD Mellberg Financial, an Arizona limited liability company; JOSHUA D.C. No. DAVID MELLBERG, an individual, 4:14-cv-02025-CKJ-LCK

Plaintiffs-counter- defendants-Appellants, MEMORANDUM*

v.

JOVAN WILL, an individual; TREE FINE, an individual; FERNANDO GODINEZ; CARLY URETZ,

Defendants-Appellees,

IMPACT PARTNERSHIP LLC, a Georgia limited liability company,

Defendant-counter-claimant- Appellee,

and

JOHN STEVE ARECO; JANE DOE ARECO; JANE DOE GODINEZ; PATRICIA LATHAM; JOHN DOE LATHAM; JOHN DOE URETZ,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Defendants.

JOSHUA DAVID MELLBERG LLC, No. 20-16216 DBA JD Mellberg Financial, an Arizona limited liability company; JOSHUA D.C. No. DAVID MELLBERG, an individual, 4:14-cv-02025-CKJ-LCK

Plaintiffs-counter- defendants-Appellees,

JOVAN WILL, an individual; TREE FINE, an individual; FERNANDO GODINEZ; CARLY URETZ; JOHN STEVE ARECO; JANE DOE ARECO; JANE DOE GODINEZ; PATRICIA LATHAM; JOHN DOE LATHAM; JOHN DOE URETZ,

Defendants,

Defendant-counter-claimant- Appellant.

Appeal from the United States District Court for the District of Arizona Cindy K. Jorgenson, District Judge, Presiding

2 Argued and Submitted September 1, 2021 San Francisco, California

Before: SCHROEDER, RAWLINSON, and BYBEE, Circuit Judges.

Appellants Joshua Mellberg and his company, Joshua David Mellberg, LLC

(JDM) filed this action against former employees and their company, Impact, for

misappropriation of trade secrets, and unjust enrichment. The district court granted

summary judgment to defendants and we affirm. We also affirm the district

court’s grant of summary judgment to plaintiffs on defendants’ counterclaim.

Summary judgment was appropriate on the trade secret claim because

plaintiffs failed to establish defendants’ conduct caused any damages. To support

their claim of monetary loss in excess of $16 million from the loss of the trade

secrets, plaintiffs offered the expert opinion of Lynton Kotzin. His opinion

assumed liability on the part of the defendants and opined only on the amount of

damages. There was no evidence that defendants caused plaintiffs to lose

possession of their trade secrets, or indeed that the information was no longer

contained on plaintiffs’ server network. Moreover, there was undisputed evidence

that defendant Fine and one of plaintiffs’ employees uploaded the data on Fine’s

computer to the plaintiffs’ network in order to preserve it. There was thus no

showing that defendants caused plaintiffs monetary damages from the loss of

3 trade secret data and summary judgment for the defendants was appropriate. See

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

With respect to the claim of unjust enrichment, plaintiffs had offered no

damage calculation as of the time discovery closed. They offered a supplemental

declaration from Mellberg a year late, and it represented no more than his lay

opinion that defendants had been unjustly enriched by more than $27 million. The

district court sanctioned plaintiffs by excluding the late damage calculation. This

was within its discretion pursuant to FRCP 37 (c) (1), after it took into account the

length of the delay and the prejudice it would cause. Rule 26a (1)(A)(iii) requires a

computation of each category of damages and making available the supporting

evidentiary material. It is not enough to rely on general allegations of the

complaint, as plaintiffs attempt to argue on appeal. Fed. R. Civ. P. 26a(1)(A)(iii)

(requiring “a computation of each category of damages claimed”); see R & R Sails,

Inc. v. Ins. Co. of Pennsylvania, 673 F.3d 1240, 1243, 1246-47 (9th Cir. 2012).

There was also no abuse of discretion in the district court’s denial of

plaintiff’s motion for sanctions for spoliation of evidence relating to the

reformatting of defendants’ computers. Because the plaintiffs could not prove

damages in any event, the computers were no longer material and the spoliation

claim was moot. Similarly, without a showing of harm requisite for success on the

4 merits, the plaintiffs were not entitled to permanent injunctive relief. See Edmo v.

Corizon, Inc., 935 F.3d 757, 784 (9th Cir. 2019).

Mellberg’s claim against defendant Will relates to the alleged mishandling

of funds belonging to the LLC, and was appropriately dismissed for failure to

comply with the statutory requirements pertaining to derivative suits set forth in

A.R.S. § 29-831(2)-(3). The magistrate judge’s decision to raise this issue sua

sponte at summary judgment did not result in prejudice because Mellberg had the

opportunity to respond in his supplemental briefing before the magistrate judge.

See Rivera v. Anaya, 726 F.2d 564, 566 (9th Cir. 1984) (“[A]bsent prejudice to the

plaintiff, a defendant may raise an affirmative defense in a motion for summary

judgment for the first time”).

Defendant Impact’s counterclaim for false advertising under the Lanham

Act, 15 U.S.C. § 1125(a)(1)(B), was not supported by any sufficient showing of

materiality. See Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139

(9th Cir. 1997).

AFFIRMED.