Opinion ID: 2310639
Heading Depth: 1
Heading Rank: 4

Heading: Punitive Damages and Attorneys Fees

Text: Next, plaintiffs contended that the trial justice erred in applying our common law standard for the imposition of punitive damages, conduct amounting to criminality, rather than determining whether defendants had engaged in willful and malicious misappropriation of trade secrets, a finding that would allow for exemplary damages and attorneys fees for a violation of the Trade Secrets Act. [5] The trial justice, citing Palmisano v. Toth, 624 A.2d 314, 318 (R.I.1993), stated that the standard for imposing punitive damages is rigorous and will be satisfied only in instances wherein the defendants' conduct requires deterrence and punishment over and above that provided in an award of compensatory damages. She went on to explain that although the defendants' conduct was reprehensible, it did not rise to the level of the egregious conduct required for an award of punitive damages, and concluded that the amount of compensatory damages was sufficient punishment for defendants' behavior. Although the trial justice correctly referenced the common law rule, we are satisfied that in the case of a violation of the Trade Secrets Act, punitive damages are available for conduct that is willful and malicious and need not rise to the level of criminality. This Court has held that punitive damages are significantly restricted under Rhode Island law. Johnson v. Johnson, 654 A.2d 1212, 1217 (R.I.1995) (citing Palmisano, 624 A.2d at 314. In such a case, the party seeking punitive damages has the burden of producing `evidence of such willfulness, recklessness or wickedness, on the part of the party at fault, as amount[s] to criminality, which for the good of society and warning to the individual, ought to be punished.' Id. at 1217 (citing Palmisano, 624 A.2d at 318). In the instant case, however, we are dealing with a violation of the Uniform Trade Secrets Act, which expressly provides for exemplary damages for willful and malicious appropriation. [6] The standard to be used for awarding punitive damages is set forth in § 6-41-3(b) and does not require a showing of misconduct amounting to criminality. Upon a careful review of § 6-41-3, it is clear that the Legislature intended to relax this stringent common law standard to deal with the intentional and egregious misconduct found in this case. Although punitive damages are usually left to the discretion of the finder of fact, Scully v. Matarese, 422 A.2d 740, 741 (R.I.1980), in this instance the denial of punitive damages constituted an error in law. The Legislature was clear when it stated that [i]f willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice an award made under subsection (a). Section 6-41-3(b). (Emphasis added.) Under the facts of this case, we are satisfied that if ever egregious misconduct deserving of punitive damages has occurred, this is such a case. Indeed, the conduct in this case cries out for punishment. Michael Brier was a licensed accountant who, through Brier and Company, used a client's confidential information obtained within the context of a fiduciary relationship, to profit himself and at the same time harm his client. [7] The trial justice found that Brier had disclosed trade secrets to CSI.Knowing that what he was doing was wrong, Brier also lied to potential employees by urging them to lie about Bibeau's presence at meetings in direct violation of Bibeau's noncompetition agreement with R & L. Brier's actions were by definition willful and malicious, such that a failure to award punitive damages under the facts would amount to an abuse of discretion. Thus, we reverse the trial justice's finding that compensatory damages were sufficient punishment for defendant's behavior and, as contemplated by § 6-41-3(b), direct that an award of punitive damages enter in the amount of twice the total award for compensatory damages. Lastly, an award of attorneys fees is specifically provided in § 6-41-4. [8] As stated above, it is clear that willful and malicious misappropriation of important trade secrets occurred in this case. Refusal to award attorneys fees for such willful and deliberate misconduct would result in far less than full compensation for plaintiffs' injuries, because attorneys fees are restitutionary in nature and are designed to make a party whole. Therefore, we remand this case to the Superior Court for a calculation of the amount of attorneys fees to be awarded to plaintiffs in accordance with this decision.