Uhlig, LLC v. Shirley

895 F. Supp. 2d 707, 2012 WL 4478365, 2012 U.S. Dist. LEXIS 137594
CourtDistrict Court, D. South Carolina
DecidedSeptember 25, 2012
DocketCivil Action No. 6:08-cv-01208-JMC
StatusPublished
Cited by2 cases

This text of 895 F. Supp. 2d 707 (Uhlig, LLC v. Shirley) is published on Counsel Stack Legal Research, covering District Court, D. South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Uhlig, LLC v. Shirley, 895 F. Supp. 2d 707, 2012 WL 4478365, 2012 U.S. Dist. LEXIS 137594 (D.S.C. 2012).

Opinion

OPINION AND ORDER

J. MICHELLE CHILDS, District Judge.

This matter is currently before the court on Plaintiff Uhlig, LLC’s (“Uhlig”) Motion for Award of Attorneys’ Fees and Exemplary Damages [Dkt. No. 1003] seeking $4,541,235.701 in attorney and paralegal fees and a punitive damages award of double the jury verdict on the claim for misappropriation of trade secrets. Having carefully considered this motion, the record in this case, and the applicable law, the court grants Uhlig’s request for legal fees as provided herein and denies Uhlig’s request for punitive damages.

FACTUAL AND PROCEDURAL BACKGROUND

Uhlig is in the business of designing and creating newsletters for residents of multiunit residential and apartment complexes and franchise businesses throughout the United States. On February 29, 2008, Uhlig acquired substantially all of the assets of Cox CustomMedia, Inc. (“CCM”) and CCM’s corporate parent, Cox Newspapers, Inc. Prior to Uhlig’s acquisition of CCM, Defendant John Adam Shirley (“Shirley”) was employed by CCM as its vice president and as CCM’s highest paid full-time employee. As a result of the acquisition, CCM ceased all active operations but agreed to retain all employees, including Shirley, for a period of up to four months to permit the orderly transition of its accounts to Uhlig. At the beginning of the transition period, Shirley continued acting as the vice president, with access to all CCM information. However, Shirley abruptly resigned in March 2008 and began a competing business, Defendant Prism Content Solutions, LLC (“Prism” and together with Shirley, “Defendants”). Shortly after Shirley’s resignation, Uhlig discovered that Shirley had copied certain customer information from company computer files.

On April 3, 2008, Uhlig filed suit against Defendants alleging that Shirley and Prism were using confidential and trade secret information of CCM to solicit CCM’s customers and unfairly compete against Uhlig. Uhlig twice amended its complaint and ultimately asserted causes of action for copyright infringement; violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030(g), and the Digital Millennium Copyright Act, 17 U.S.C. § 1201(a); conversion; passing off and trademark infringement; civil conspiracy; misappropriation of corporate opportunity; misappropriation of trade secrets; breach of employment agreement; tortious interference with employment agreements; breach of fiduciary duty and/or duty of loyalty; aiding and abetting a breach of fiduciary duty and/or duty of loyalty; and tortious interference with prospective contractual relationships against Shirley, Prism, and various other individual and corporate defendants. CCM also intervened in the action for the limited purpose [710]*710of ensuring that Uhlig had standing to seek effective relief for the alleged misconduct by Defendants regarding the employment agreement between CCM and Shirley (the “Employment Agreement”). In response to Uhlig’s complaint and CCM’s intervention in the action, Defendants asserted various counterclaims against Uhlig and CCM.2

The matter was tried by jury in December 2011. The jury returned a verdict in favor of Uhlig on all claims and awarded damages.

DISCUSSION

Uhlig’s Entitlement to Legal Fees

Under South Carolina law, “[ajttorney’s fees are not recoverable unless authorized by contract or statute.” See Jackson v. Speed, 326 S.C. 289, 307, 486 S.E.2d 750, 759 (1997). Uhlig asserts that it is entitled to attorney’s fees under: (1) the statutory provisions of the South Carolina Trade Secrets Act (“SCTSA”), S.C.Code Ann. § 39-8-10 (2012), et seq.; (2) an attorney’s fees provision in the Employment Agreement; and (3) the South Carolina Sanctions for Frivolous Proceedings Act (“SCSFPA”), S.C.Code Ann. § 15-36-10 (2012), et seq. The court finds that an award of reasonable attorney’s fees is warranted only under the statutory provisions of the SCTSA.

A. Attorney’s Fees Pursuant to the South Carolina Trade Secrets Act

The SCTSA provides that “the court may award reasonable attorney’s fees to the prevailing party” if “(1) a claim of misappropriation is made in bad faith, (2) a motion to terminate an injunction is made or resisted in bad faith, or (3) willful misappropriation exists.” S.C.Code Ann. § 39-8-80 (2012). The Supreme Court of South Carolina has previously found that a prevailing party is “one who successfully prosecutes an action or successfully defends against it, prevailing on the main issue, even though not to the extent of the original contention [and] is the one in whose favor the decision or verdict is rendered and judgment entered.” Sloan v. Friends of Hunley, Inc., 393 S.C. 152, 157, 711 S.E.2d 895, 897 (2011) (citing Heath v. Cnty. of Aiken, 302 S.C. 178, 182-83, 394 S.E.2d 709, 711 (1990)). “A court determines the prevailing party by evaluating the degree of success obtained.” Heath, 302 S.C. at 183, 394 S.E.2d at 711.

In this case, Uhlig was the prevailing party at trial as to each cause of action submitted to the jury, including claims for breach of employment agreement, tortious interference with employment agreements, breach of fiduciary duty and/or duty of loyalty, aiding and abetting a breach of fiduciary duty and/or a duty of loyalty, and tortious interference with prospective contractual relationships. Uhlig also survived summary judgment on a number of claims that were not pursued at trial for tactical reasons, including copyright infringement, violations of the Digital Millennium Copyright Act, conversion, passing off and trademark infringement, civil conspiracy, and misappropriation of corporate opportunity.

[711]*711Additionally, the evidence in the record supports a finding that Defendants’ actions were willful. Willfulness means “voluntary and intentional, but not necessarily malicious.” Black’s Law Dictionary (9th ed.2009). During trial, Uhlig presented a significant amount of evidence demonstrating that Shirley took a substantial amount of confidential and trade secret information with him upon his resignation from his employment with CCM. Uhlig also presented evidence through Amanda Dorsey’s testimony and expert testimony which showed that Shirley knowingly and intentionally took CCM information with him upon his resignation. In fact, Shirley himself admitted that he knowingly retained information in his possession after he resigned from CCM which Uhlig has categorized as trade secret information. Moreover, the evidence demonstrated that Shirley’s misappropriation was in violation and breach of his fiduciary responsibilities as a corporate officer of CCM. The court finds that this evidence, in addition to other evidence deduced at trial, adequately supports a finding of willfulness warranting an award of attorney’s fees under the statute.

B. Attorney’s Fees Pursuant to the Employment Agreement

Uhlig further asserts that it is entitled to attorney’s fees under Shirley’s Employment Agreement.

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Related

Warren v. Dill (In re Warren)
532 B.R. 655 (D. South Carolina, 2015)

Cite This Page — Counsel Stack

Bluebook (online)
895 F. Supp. 2d 707, 2012 WL 4478365, 2012 U.S. Dist. LEXIS 137594, Counsel Stack Legal Research, https://law.counselstack.com/opinion/uhlig-llc-v-shirley-scd-2012.