Zitan Technologies, LLC v. Yu

District Court, D. Nevada·Decided July 16, 2021·No. 3:18-cv-00395·Unknown

Opinion

ZITAN TECHNOLOGIES, LLC, a Nevada limited liability company; and GINKGO LLC, a Nevada limited liability company,

Plaintiffs, Case No. 3:18-cv-00395-RJC-WGC vs. ORDER LIANG YU, an individual, Defendant.

Plaintiffs seek to confirm an arbitration award and move for attorney fees and costs incurred in the process of acquiring preliminary and permanent injunctions. Defendant does not challenge the confirmation of the award but contends the Arbitrator foreclosed attorney fees and costs related to the permanent injunction acquired in that forum. Defendant further argues that the attorney fees sought for the preliminary injunction are unreasonable on more than a dozen grounds. The Court agrees the Arbitrator ruled against Plaintiffs on the issue of whether they are entitled to fees incurred seeking a permanent injunction and some of the requested fees stemming from the motion for a preliminary injunction are unreasonable. The Court accordingly grants the motion to confirm the award and grants in part and denies in part the motion for attorney fees. In 2015, Plaintiffs hired Defendant to assist them in their business of developing trading signals and strategies. (Final Award of Arbitrator, ECF No. 71 Ex. A.) At this time, the parties executed four agreements, including the “Confidentiality Agreement.” (Id.) In 2018, Defendant resigned from Plaintiffs’ employment. Shortly before his resignation, he downloaded multiple files containing Plaintiffs’ trade secrets from Plaintiffs’ accounts to his personal computer and potentially to other electronic devices, storage units, or mediums. (Id.) On August 17, 2018, Plaintiffs filed this case in this Court. (ECF No. 1.) A week later, Plaintiffs moved for a temporary restraining order and a preliminary injunction, which became fully briefed on September 17, 2018. (ECF Nos. 14, 15.) On October 17, 2018, this Court declined to issue a temporary restraining order and set an oral argument but not an evidentiary hearing for the preliminary injunction. (ECF Nos. 31, 32.) This Court held oral arguments on November 13, 2018 and granted the preliminary

injunction. (ECF No. 58.) Meanwhile, Plaintiffs began to prosecute their case in arbitration, and discovery in this case was stayed. (See ECF No. 43.) Between September 2018 and December 2019, Plaintiffs and Defendant engaged in considerable discovery and preparation in the arbitral forum. Such efforts included extensive written discovery, the production of thousands of pages of documents and data, forensic analysis of some of Dr. Yu’s devices (resulting in the production of nearly 50,000 ESI documents), the engagement of six distinct expert witnesses, multiple party and third-party depositions, and several pre-arbitration discovery and substantive motions and argument. Beginning in February 2019 and continuing for several months thereafter (due to the interposition of the Covid pandemic), the Arbitrator heard multiple days of testimony (including that of expert witnesses), received hundreds

of exhibits and demonstrative presentations, received the argument of counsel, and received considerable post-arbitration briefing from the parties. The Arbitration closed on October 23, 2020. On December 22, 2020, the Arbitrator issued his Final Award of Arbitrator in which he largely ruled in favor of Plaintiffs, concluding that Plaintiffs were the prevailing party on most of their asserted claims and that Defendant did not prevail on his single asserted counterclaim. (ECF No. 71 Ex. A.) The Arbitrator also ruled against Plaintiffs on the issue of whether Defendant acted “maliciously.” (Id.) Plaintiffs filed a motion for the Arbitrator to fix “technical errors”1 in the final order, where they sought to reverse the finding on maliciousness and to remedy a computational error. (ECF No. 71 Ex. B.) The Arbitrator found that it was inappropriate to revisit the issue of maliciousness as a technical error but did find that he failed to include a request for $10,320, which the Arbitrator therefore added to the costs award to Plaintiffs. In sum, the Arbitrator awarded the following uncontested items to Plaintiffs: 1. An award of damages, including investigative costs, in the aggregate amount of $315,642.00. (ECF No. 71 Ex. A.) 2. An award of costs in the aggregate amount of $364,282. (ECF No. 71 Exs. A, B.) 3. A conclusion that permanent injunctive relief should issue pursuant to NRS 600A.040(1) and 18 U.S.C. § 1836(b)(3), and consistent with this Court’s prior issuance of preliminary injunctive relief. (ECF No. 71 Ex. A.) The parties disputed the extent to which Plaintiffs are entitled to attorney fees in accordance with the Confidentiality Agreement and the Arbitration award. The agreement contains two provisions regarding attorney fees. Section 11 of the agreement, which is titled “Arbitration,” states the following in pertinent part: [A]ny controversy or claim between [Defendant] and [Plaintiffs] arising out of or relating to [Defendant’s] employment or termination of employment or any other dispute between the parties, whether arising in tort, contract, or pursuant to a statute, regulation, or ordinance now in existence or which may in the future be enacted or recognized, will be settled and determined by a single arbitrator whose award will be accepted as final and binding upon the parties. The arbitration will be conducted in Washoe County, Nevada and in accordance with the American Arbitration Association (“AAA”) Employment Arbitration Rules in effect at the time such 1 The applicable arbitration rules generally do not allow the arbitrator “to redetermine the merits of a any claim already decided,” but do allow him “to correct any clerical, typographical, technical, arbitration is properly initiated, except in the event of any conflict with applicable law or the terms of this Section 11, in which case applicable law will take precedence under all circumstances and the terms of this Agreement will take precedence over the AAA rules. The arbitrator will render a written decision to the parties setting forth the rationale for any award. The costs of the arbitration, including administrative fees and fees charged by the arbitrator, will be allocated pursuant to the AAA rules or, in the absence of any rules governing such costs, will be shared equally between the parties. Each party will bear its or his own travel expenses and attorneys’ fees. . . . A judgment may be entered upon the arbitrator’s decision and the decision will be enforceable by any court having jurisdiction thereof. (ECF No. 7, Ex. A.) Section 12 of the agreement, which is titled “Injunctive Relief,” states the following in pertinent part: Because money damages for the breach or threatened breach of [Defendant’s] obligations under this Agreement may be inadequate to compensate [Plaintiffs] fully for the harm it has suffered or will suffer, [Plaintiffs] may seek and obtain injunctive relief (a court or arbitrator’s order preventing me from doing something) or specific performance (a court or arbitrator’s order compelling me to do something) or other remedies in equity, in court or before an arbitrator . . . , without being obligated to show actual damages. In addition, [Plaintiffs] may obtain any other remedies available at law, in equity or under this Agreement. In connection with any claim based on a breach or threatened breach of this Agreement, the prevailing party shall be entitled to payment of its reasonable attorneys’ fees and costs by the non-prevailing party. [Defendant waives] any requirement for the posting of a bond in connection with any injunctive relief sought or obtained by [Plaintiffs]. (Id.) Plaintiffs moved for attorney fees pursuant to the Agreement before the Arbitrator on which

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Zitan Technologies, LLC v. Yu, (D. Nev. 2021).

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