Mass, Inc. v. Hughes

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 11, 2021
• Docket: 19-55489
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 11 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

MANUFACTURING AUTOMATION Nos. 19-55489 AND SOFTWARE SYSTEMS, INC., 19-55766

Plaintiff-Appellant, D.C. No. 2:16-cv-08962-CAS-KS v.

KRISTOPHER HUGHES; et al., MEMORANDUM*

Defendants-Appellees.

MANUFACTURING AUTOMATION No. 19-55691 AND SOFTWARE SYSTEMS, INC., D.C. No. Plaintiff-Appellee, 2:16-cv-08962-CAS-KS

v.

KRISTOPHER HUGHES; et al.,

Defendants-Appellants,

and

PCVUE, INC.; EDWARD NUGENT,

Defendants.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Page 2 of 5

Appeals from the United States District Court for the Central District of California Christina A. Snyder, District Judge, Presiding

Argued and Submitted December 10, 2020 Pasadena, California

Before: WATFORD, THAPAR,** and COLLINS, Circuit Judges.

Manufacturing Automation & Software Systems, Inc. (MASS, Inc.) sued

two former employees, Kristopher Hughes and James Huysentruyt, along with

other defendants, for allegedly stealing proprietary information to start a new,

competing business. After trial, a jury returned a verdict for defendants on some

claims and partly in MASS, Inc.’s favor on other claims, including claims for

misappropriation of trade secrets and breach of contract. After the parties

exchanged proposed judgments and submitted them to the district court, the court

entered judgment for defendants on all claims. MASS, Inc. appeals from the

judgment as well as a subsequent order declining to award MASS, Inc. attorney’s

fees and costs. Huysentruyt cross-appeals from the district court’s order denying

his “motion for attorney’s fees, without prejudice to Huysentruyt’s making a

showing of fees expended only in defending the breach of contract claim.” We

affirm.

** The Honorable Amul R. Thapar, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. Page 3 of 5

1. The district court permissibly exercised its discretion by entering

judgment for defendants. See Zhang v. American Gem Seafoods, Inc., 339 F.3d

1020, 1038 (9th Cir. 2003). With the exception of the claim for misappropriation

of trade secrets, each of the claims on which MASS, Inc. ostensibly prevailed

required proof of damages as an essential element of the claim. See 18 U.S.C.

§ 1030(c)(4)(A)(i)(I) and (g) (Computer Fraud and Abuse Act); Cal. Penal Code

§ 502(e)(1) (California Comprehensive Computer Data Access and Fraud Act);

Engalla v. Permanente Medical Group, Inc., 15 Cal. 4th 951, 974 (1997) (fraud);

Youst v. Longo, 43 Cal. 3d 64, 71 (1987) (interference with prospective economic

advantage); Richman v. Hartley, 224 Cal. App. 4th 1182, 1186 (2014) (breach of

contract); Teselle v. McLoughlin, 173 Cal. App. 4th 156, 179 (2009) (accounting);

Mosier v. Southern California Physicians Insurance Exchange, 63 Cal. App. 4th

1022, 1044 (1998) (breach of fiduciary duty). On each of these claims, however,

the jury awarded zero damages. Because MASS, Inc. failed to prove an essential

element of these claims, the district court properly entered judgment for

With respect to the claim for misappropriation of trade secrets, the jury also

awarded zero damages. Even though it failed to prove damages (or unjust

enrichment), MASS, Inc. could have prevailed on this claim by proving its

entitlement to a reasonable royalty, see Cal. Civ. Code § 3426.3(b), or injunctive Page 4 of 5

relief. It failed to do so. The district court properly refused to allow MASS, Inc. to

submit evidence as to its entitlement to either a reasonable royalty or a permanent

injunction, given that MASS, Inc. never filed a motion seeking either form of

relief. The first point at which MASS, Inc. indicated its intent to seek equitable

relief was in its briefing on the form of the proposed judgment, and even then it

made no showing in support of any such relief. At that point, the trial had

concluded, and nothing in the Federal Rules of Civil Procedure required the court

to reopen proceedings so that additional evidence could be introduced.

Accordingly, the district court properly entered judgment for defendants on this

claim as well.

Because MASS, Inc. recovered nothing on any of its claims, the district

court permissibly deemed defendants the prevailing parties for purposes of

awarding attorney’s fees and costs. See Hsu v. Abbara, 9 Cal. 4th 863, 875–76

(1995).

2. As to Huysentruyt’s cross-appeal, the district court appropriately

exercised its discretion in denying Huysentruyt’s motion for attorney’s fees based

on his failure to apportion fees related to the breach-of-contract claim. See El

Escorial Owners’ Association v. DLC Plastering, Inc., 154 Cal. App. 4th 1337,

1365 (2007). Although Huysentruyt asserts that it was impossible to apportion

fees, defending against the fifteen other claims in the case surely required counsel Page 5 of 5

to spend at least some additional time beyond what was required to defend against

the breach-of-contract claim.

When Huysentruyt was offered an opportunity to apportion fees in the

district court, he declined to do so. Accordingly, there is no need to remand for

further proceedings with respect to the issue of attorney’s fees.

MASS, Inc.’s July 29, 2020, motion for judicial notice is DENIED.

AFFIRMED.