Rust-Oleum Corporation v. NIC Industries, Inc.

District Court, D. Oregon·Decided July 15, 2025·No. 1:18-cv-01655·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON MEDFORD DIVISION

RUST-OLEUM CORPORATION, Case No. 1:18-cv-01655-CL Plaintiff / Counter Defendant, OPINION AND ORDER

v. NIC INDUSTRIES, INC., □

Defendant / Counter Claimant. CLARKE, MagistrateJudge. Before the Court for consideration is NIC’s motion for attorney fees (#401). For the reasons below, NIC’s motion is GRANTED IN PART and DENIED IN PART. BACKGROUND The facts of this case have been thoroughly detailed in prior Opinion and Orders of this ‘Court and are well known to the parties. NIC has prevailed on all of the claims and the counterclaims in this case. NIC was granted summary judgment on the claims initially brought by Rust-Oleum, and, after a two-week trial that began on September 27, 2024, a jury found □□□□ Rust-Oleum breached its contract with NIC, willfully and maliciously misappropriated NIC’s trade secret, and committed fraud. The jury verdict awarded NIC nearly all of the damages that

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NIC requested and proved with expert testimony, and it awarded punitive damages as to the misappropriation and fraud claims. NIC accepted a remittitur as to the damages awarded for fraud, and the Court entered Judgment against Rust-Oleum in the amount of $40 million for the breach of contract claim, $20 million for the trade secret misappropriation, plus $40 million in punitive damages for willful and malicious conduct, and $3,610,814.00 for the fraud claim, plus $7,221,628.00 in punitive damages for willful and malicious conduct. The Court also awarded prejudgment interest as to the compensatory damages, and it determined that NIC was entitled to attorney fees and costs. DISCUSSION NIC moves for an award of its attorneys’ fees. While NIC is entitled to attorney fees and costs in this case, and the NIC attorneys did secure an exceptional and outstanding outcome, a multiplier of 2.0 is not appropriate. Therefore, this motion is granted, but the total sum of fees is reduced, as described below. I. NIC is entitled to attorneys’ fees and costs in a lodestar amount of $1,768,083.00, plus an upwards adjustment of 30%. NIC moves for an award of attorneys’ fees in a lodestar amount of $1,768,083.00, and an upward adjustment, or a “multiplier,” of 2.0, for a total amount of $3,536,166.00. For the reasons below, the Court grants the requested lodestar amount but awards an upwards adjustment of only 30%. a. Legal basis for awarding fees and costs. NIC is entitled to their attorneys’ fees under the Oregon Trade Secrets Act, ORS § 646.467. Under ORS § 646.467, a court “may award reasonable attorney fees to the prevailing party if ... [w]illful or malicious misappropriation is found by the court.” In determining the propriety of such an award, a court must weigh the factors set forth in ORS § 20.075. See ORS §

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20.075 (“A court shall consider the following factors in determining whether to award attorney fees in any case in which an award of attorney fees is authorized by statute and in which the court has discretion to decide whether to award attorney fees ....”); see also Precision Automation, Inc. v. Tech. Servs., Inc., No. CIV. 07-707—AC, 2010 WL 1051009, at *1 (D. Or. Feb. 16, 2010) (considering the factors contained in ORS § 20.075). NIC satisfies the facial requirements of ORS § 646.467. In particular, the evidence at trial fully supported the jury verdict, which clearly determined that Rust-Oleum’s misappropriation was willful and malicious. The Court credits such findings. The factors outlined in ORS § 20.075 also support an award of attorneys’ fees. The first factor, whether Rust-Oleum’s conduct was “willful or malicious,” ORS § 20.075(1)(a), is already established. The second, third, fourth, and fifth factors all speak to the reasonableness of a party’s litigation conduct and the impact of an award on future litigants. See ORS § 20.075(1)(b) (reasonableness of defenses); § 20.075(1)(c) (the extent to which award would deter others from asserting good faith defenses); § 20.075(1)(d) (the extent to which an award would deter others from asserting meritless defenses); § 20.075(1)(e) (the objective reasonableness of the parties and the diligence of the parties and the attorneys during the proceedings). Rust-Oleum’s conduct in this case was quite aggressive. Rust-Oleum initiated the suit against NIC, forcing NIC to defend against the claims in addition to filing its own counterclaims. As the litigation proceeded, Rust-Oleum forced NIC to litigate what should have been routine discovery issues and caused numerous delays with motions of their own. The case has been ongoing for nearly 7 years and more than 400 docket entries. The sixth factor, the “objective reasonableness of the parties in pursuing settlement.” is generally neutral, as the Court does not know the full extent of the parties’ settlement efforts. The

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manner in which Rust-Oleum has aggressively litigated this case, however, creates the implication that this factor should weigh in favor of NIC. This inference is supported by NIC’s statement in its motion for fees that, “The Friday before trial, RO made its first and only monetary settlement offer” (ECF #401 p.7). Rust-Oleum disputes this statement as untrue, but merely states that it made a prior offer, not that it offered any significant monetary settlement. Regardless, this factor is either neutral, or it weighs in favor of NIC. Taken together, the standard contained in ORS § 646.467 and the factors outlined in ORS § 20.075 both support an award of attorneys’ fees in this case. b. The scope of the fee recovery includes all claims and counterclaims except the counterclaim for fraud. NIC requests its attorneys’ fees for almost the entire litigation, including Rust-Oleum’s initial claims, which NIC prevailed upon at summary judgment, as well as NIC’s counterclaims of breach of contract and misappropriation, which NIC prevailed upon at trial. NIC does not seek fees as to NIC’s third counterclaim for fraud. The right to attorneys’ fees for the breach of contract counterclaim is contained in the

Exclusive Sales Agreement (Ex. 239, § 22) and the Settlement Agreement (Ex. 326, 7 6). Even without these two agreements, however, NIC would be entitled to attorney fees for the entire litigation, based on ORS 646.467. See OmniGen Rsch., LLC v. Yongqiang Wang, No. 6:16-CV- 268-MC, 2017 WL 5505041, at *28 (D. Or. Nov. 16, 2017) (The Court’s award of attorneys’ fees pursuant to the Oregon Trade Secrets Act “applies to the entire action and not just the individual claims under which the fees are authorized.”).

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