Court Opinion

ID: 222162
Source: CourtListenerOpinion
Date Created: 2011-07-29 17:17:12+00
Date Added: 2024-06-11T17:28:53.508643
License: Public Domain

FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit

                                                                       July 29, 2011
                      UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
                                                                       Clerk of Court
                                  TENTH CIRCUIT

 ICE CORPORATION,

          Plaintiff - Appellee,
                                                   No. 10-3104 and 10-3328
 v.                                              (D.C. No. 05-CV-04135-JAR)
                                                           (D. Kan.)
 HAMILTON SUNDSTRAND
 CORPORATION; RATIER-FIGEAC,
 S.A.S.,

          Defendants - Appellants.

                              ORDER AND JUDGMENT *

Before KELLY, ANDERSON, and LUCERO, Circuit Judges.

      In this consolidated appeal, Defendants-Appellants Ratier-Figeac, S.A.S.

(“Ratier”) and Hamilton Sundstrand Corporation (“Hamilton”) appeal from the

district court’s denial of their Rule 50(b), Fed. R. Civ. P., motion for judgment as

a matter of law (case number 10-3104) and award of attorney’s fees (case number

10-3328). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm in part,

reverse in part, and remand for a determination of punitive damages.

      *
        This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
                                    Background

      In 2003, Airbus Military selected Ratier, an affiliate of United

Technologies Corporation, to supply propellers for a proposed military transport

aircraft. Aplt. App. 593-94, 637-38. Hamilton, a subsidiary of United

Technologies, worked with Ratier to develop the propellers. Id. at 593-94, 656-

67. Ratier and Hamilton (“Defendants”) in turn chose Plaintiff-Appellee ICE

Corporation (“ICE”) as an independent contractor to supply a deicing controller

for the propellers.

      During negotiations, Ratier sent ICE a form Master Terms Agreement

(“MTA”) and form Purchase Agreement (“PA”). Id. at 761, 791, 804. ICE

responded with a Supplier Quotation, which expressly stated, “CONFIDENTIAL:

Information contained in this document is Competition Sensitive and is privileged

and/or proprietary.” Id. at 676. The parties never executed the MTA or the PA

because they disagreed on a pricing issue.

      In November 2004, Ratier and ICE entered into a Memorandum of

Understanding (“MOU”) whereby ICE would design and develop the deicing

controller for the propellers, and Ratier would pay ICE for reaching certain

milestones. Id. at 706-09. The parties began performance under the contract.

Due to changes in design specification, however, the parties later engaged in new

price negotiations, and were unable to agree to new terms. Id. at 609-18. Ratier

reopened bidding and selected Artus, a French company, to replace ICE in

                                        -2-
September 2005. Id. at 645-46.

      In October 2005, ICE sent Ratier a letter demanding payment for an

outstanding invoice of $153,708. Id. at 720-21, 757; Aplt. Br. 21. Ratier refused,

and ICE sued, alleging claims for breach of express and implied contract,

negligent misrepresentation, unfair competition, misappropriation of trade secrets

under the Kansas Uniform Trade Secrets Act (“KUTSA”), unjust enrichment,

fraud, and fraudulent concealment. Aplt. App. 162. Relevant to this appeal, ICE

alleged that the Defendants misappropriated the following trade secrets by

passing them on to Artus: (1) the communication method between the stationary

and rotating elements of the controller, (2) a table of fault codes used to

communicate deicing problems to the plane’s computer, and (3) a built-in test

(“BIT”) system for detecting problems with the deicing system. Id. at 513-15,

1099-111.

      Defendants moved for summary judgment on, among other things, the

misappropriation of trade secrets claims, arguing that Ratier owned the trade

secrets, and thus, the Defendants could not have misappropriated them.

Specifically, they argued that the MOU was silent on the issue of ownership but

that Ratier owned the trade secrets under the common-law “hired-to-invent”

doctrine. Id. at 1221-22; Aplee. Supp. App. 160. The district court denied

Defendants’ motion on this issue, apparently of the view that the evidence was

controverted, and stated that “the parties’ conduct, as well as their written

                                         -3-
agreements, is sufficient for a reasonable jury to conclude that ICE owns the

alleged trade secrets in this matter.” Aplt. App. 1513 (emphasis added). The case

proceeded to trial on ICE’s breach of duty of good faith and fair dealing, fraud,

and misappropriation of trade secrets claims against Ratier and unjust enrichment

and misappropriation of trade secrets claims against Hamilton. ICE Corp. v.

Hamilton Sundstrand Corp., 615 F. Supp. 2d 1256, 1258 (D. Kan. 2009).

      At the close of evidence, Defendants made an oral Rule 50(a), Fed. R. Civ.

P., motion for judgment as a matter of law. Defendants sought to incorporate by

reference all arguments they submitted in their voluminous summary judgment

briefs but made specific arguments concerning only the breach of duty of good

faith and fair dealing, fraud, and negligent misrepresentation claims. Aplt. App.

1548. The court took the motion under advisement at the time and ultimately

denied the motion. Id. at 1540; ICE Corp. v. Hamilton Sundstrand Corp., No. 05-

4135-JAR, 2009 WL 1116319 (D. Kan. Apr. 22, 2009).

      The jury found that Ratier willfully, wantonly, or maliciously

misappropriated all three trade secrets and awarded ICE $4,795,300 in

compensatory damages. Aplt. App. 315C. The jury also made an advisory award

of $10,000,000 in punitive damages against Ratier. Id. In addition, the jury

found that Hamilton willfully, wantonly, or maliciously misappropriated the BIT

system and table of fault codes, but did not award compensatory damages because

of an error in the verdict form. Id. at 314-15; ICE Corp., 615 F. Supp. 2d at

                                        -4-
1258-59. The jury rendered an advisory award of $2,500,000 in punitive damages

against Hamilton. Aplt. App. 315. The court then held a separate bench trial on

the compensatory damages against Hamilton and a hearing on the punitive

damages against both Defendants. ICE Corp., 615 F. Supp. 2d at 1257-58; ICE

Corp. v. Hamilton Sundstrand Corp., 615 F. Supp. 2d 1266, 1267-68 (D. Kan.

2009). The court awarded lost profits compensatory damages of $4,795,300 and

punitive damages of $2,397,650 against Hamilton and punitive damages, under

KUTSA, of $9,590,600 against Ratier.

      After judgment was entered, Defendants filed a renewed motion for

judgment as a matter of law pursuant to Rule 50(b), Fed. R. Civ. P., seeking,

among other things, to renew their summary judgment argument that Ratier

owned the trade secrets. Aplt. App. 350, 359-65. In addition, they filed a Rule

52(b), Fed. R. Civ. P., motion asking the court to amend the judgment against

Ratier, arguing that punitive damages cannot exceed $5 million under Kan. Stat.

Ann. § 60-3702. Id. at 453, 461, 493-96.

      The district court denied Defendants’ post-trial motions on these issues. At

the outset, the court concluded that, given the number of claims and issues

presented by both parties, Defendants’ reference to their summary judgment

briefs in their oral Rule 50(a) motion did not preserve all sufficiency-of-the-

evidence arguments for their Rule 50(b) motion. Id. at 1549-51. Rather, the

court held that Defendants had preserved the sufficiency-of-the-evidence

                                        -5-
arguments concerning only the breach of contract, fraud, and negligent

misrepresentation claims—the arguments that Defendants expressly argued in

their Rule 50(a) motion. Id. The court then rejected Defendants’ arguments that

Ratier owned the trade secrets. Id. at 1557-59. In addition, the court concluded

that it properly awarded punitive damages against Ratier under KUTSA, which

permits punitive damages up to twice the amount of compensatory damages. Id. at

1605-08; Kan. Stat. Ann. § 60-3322.

      While the post-trial motions were pending, ICE filed a motion for

attorney’s fees, and the court ultimately awarded $1,138,013.25 in fees. ICE

Corp. v. Hamilton Sundstrand Corp., No 05-4135-JAR, 2010 WL 4683981, at *14

(D. Kan. Nov. 12, 2010).

      In case number 10-3104, Defendants appeal the denial of their post-trial

motions, arguing that (1) they owned the trade secrets under the “hired-to-invent”

doctrine or as a matter of contract and (2) the district court erred in awarding

punitive damages in excess of the $5 million cap imposed by Kan. Stat. Ann.

§ 60-3702. In case number 10-3328, they contend that the district court

improperly awarded attorney’s fees.

                                     Discussion

A.    Ownership of Trade Secrets

      Defendants first argue that the district court erred in denying its Rule 50(b)

                                        -6-
motion on ownership because Ratier owns the trade secrets either under the

common-law hired-to-invent doctrine or as a matter of contract. Aplt. Br. 38-53.

ICE contends that ownership was a factual issue that was submitted to the jury

and that Defendants have not preserved for appeal any sufficiency-of-the-

evidence argument regarding ownership because they did not raise it in their Rule

50(a) motion. Aplee. Br. 18-19. Defendants disagree, arguing that the district

court denied summary judgment on ownership as a purely legal matter. Aplt.

Reply Br. 5-6.

      After reviewing the record, we agree with ICE that ownership was a factual

issue submitted to the jury and that Defendants did not preserve the issue for

appeal. Before discussion, we explain in further detail how the ownership issue

was raised and addressed in the district court.

      1.     Procedural History

      Defendants moved for summary judgment on the issue of ownership,

arguing that Ratier owned all the trade secrets under the common-law hired-to-

invent doctrine. Aplt. App. 1221-22; Aplee. Supp. App. 160. Specifically,

Defendants argued that the MOU was silent on the issue of ownership, and thus,

the court should look to common law to determine ownership. Under the

common-law hired-to-invent doctrine, Defendants argued, “[i]f an employer pays

you to design, the employer owns the fruit of your labor.” Aplt. App. 1221

(quotation marks and citation omitted). Thus, they asserted that Ratier owned the

                                        -7-
results of ICE’s work because Ratier hired ICE to design and develop the

propeller deicing controller. Id. at 1222.

      In response, ICE argued that the intent of the contracting parties is a

question of fact for the jury and that “[all] of the evidence in this case proves that

the parties intended, understood and agreed that ICE owned its proprietary and

trade secret design work.” Id. at 1087-88, 1090. ICE argued that the MOU

incorporated by reference ICE’s Supplier Quotation—which expressly states that

ICE’s design information was confidential and proprietary to ICE—and noted that

every witness addressing ownership during discovery understood that ICE owned

the trade secrets. Id. at 1088-89. In addition, ICE argued that the hired-to-invent

authority cited by Ratier did not apply. Id. at 1090-92.

      Defendants responded, again arguing that the MOU was silent on

ownership and that the hired-to-invent doctrine should control. Id. at 1402-03. In

addition, Defendants argued that the evidence presented at summary judgment

confirmed the parties’ understanding that Ratier owned any trade secrets

developed in connection with the deicing controller. Id.

      In its decision denying summary judgment, the court engaged in two

separate analyses regarding the issue of ownership: (1) ownership under the hired-

to-invent doctrine and (2) ownership based on the parties’ conduct and written

agreements. Id. at 1508-13. The court distinguished the authority cited by

Defendants concerning the hired-to-invent doctrine and concluded that the

                                          -8-
doctrine does not apply to independent contractors hired to specifically design a

product, such as ICE. Id. at 1508-12.

      After addressing the hired-to-invent doctrine, the court then addressed

ownership based on the parties’ conduct and written agreements. Initially, the

court stated that “[u]nder the facts and circumstances of this case, it is clear that

ICE owns the alleged trade secrets.” Id. at 1512 (footnote omitted). In reaching

this conclusion, the court relied on EDO Corp. v. Beech Aircraft Corp., 715 F.

Supp. 990, 995 (D. Kan. 1988) for the proposition that a contract between parties

can dictate which party owns technology developed pursuant to the contract. The

court then explained that the MOU incorporated by reference the Supplier

Quotation and that the language of the Supplier Quotation—as well as the

language of another agreement entered into by ICE and Hamilton—supported the

contention that ICE owned the trade secrets. Aplt. App. 1512-13. In conclusion,

the court stated that “the parties’ conduct, as well as their written agreements, is

sufficient for a reasonable jury to conclude that ICE owns the alleged trade

secrets in this matter.” Id. at 1513 (emphasis added). We read this conclusion to

mean that the district court determined there were genuine disputes as to material

fact regarding ownership, despite its original presupposition.

      What’s more, Defendants agreed to the following jury instruction

explaining the elements of ICE’s misappropriation claim:

      ICE asserts a claim against both Hamilton and Ratier for violation of

                                          -9-
        the Kansas Trade Secrets Act. In order to prevail on this claim, ICE
        must prove each of the following essential elements: . . .

        2. ICE is the owner of the information.

Aplt. App. 298. Thus, ownership was treated as a factual issue submitted to the

jury.

        ICE’s conduct at trial bolsters this conclusion. ICE presented the Supplier

Quotation and other documents exchanged between the parties indicating that all

information contained within the documents was confidential and proprietary.

See, e.g., Aplt. App. 675-709; Aplee. Supp. App. 739, 767, 802, 1450, 1467,

1608, 1802-04. Witnesses for ICE testified that Defendants never expressed any

concern or disagreement with the legends on the documents. See, e.g., Aplee.

Supp. App. 1450-51, 1467, 1601-02. In addition, ICE presented emails from

Hamilton representatives stating that “[w]e have a lot of detailed design

information from ICE on what they were doing and it is not right for this

information to be shared with their potential competitors,” id. at 976, 1552, 1557,

and “I am very concerned about how much and what kind of technical information

has been transferred to these guys by [Ratier] . . . I just want to be sure that we

are not violating any proprietary agreement with ICE,” id. at 1005, 1558.

        On appeal, Defendants argue that in denying summary judgment the district

court incorrectly decided as a matter of law that ICE owned the trade secrets.

Aplt. Br. 44-45; Aplt. Reply Br. 9. However, the court expressly stated that the

                                         - 10 -
parties’ conduct and their written agreements were sufficient for a reasonable jury

to conclude that ICE owns the trade secrets. Aplt. App. 1513. Thus, the district

court did not decide that ICE, as a matter of law, owned the trade secrets. Rather,

the district court denied Defendants’ motion for summary judgment on the issue

and submitted it to the jury because a reasonable jury could conclude that ICE

owned the trade secrets under the agreements between the parties.

      2.     Analysis

      “‘The denial of summary judgment based on factual disputes is not properly

reviewable on an appeal from a final judgment entered after trial.’” Copar

Pumice Co., Inc. v. Morris, 639 F.3d 1025, 1031 (10th Cir. 2011) (quoting

Haberman v. The Hartford Ins. Group, 443 F.3d 1257, 1264 (10th Cir. 2006)).

Rather, the way to contest evidentiary sufficiency at trial is through subsequent

motions for judgment as a matter of law pursuant to Rules 50(a) and (b) and

appellate review of the motions if denied. See Ortiz v. Jordan, 131 S. Ct. 884,

893 (2011); Kelley v. City of Albuquerque, 542 F.3d 802, 820 (10th Cir. 2008)

(citation omitted). And ordinarily, a party cannot raise an argument in a Rule

50(b) motion that it did not raise in its Rule 50(a) motion. See Therrien v. Target

Corp., 617 F.3d 1242, 1250 n.2 (10th Cir. 2010) (citations omitted). We

recognize Defendants’ argument that a legal issue decided on summary judgment

need not be raised through Rule 50 motions, see Aplt. Reply Br. 6 (citing Ruyle v.

Cont’l Oil Co., 44 F.3d 837, 841 (10th Cir. 1994)), but we simply cannot agree

                                        - 11 -
that the district court decided the ownership issue as a matter of law.

      Thus, for us to review a sufficiency-of-the-evidence argument regarding

ownership, Defendants were required to make the argument in their Rule 50(a)

and 50(b) motions. Defendants have done neither. The district court held that

Defendants failed to make such an argument in their Rule 50(a) motion, and

Defendants have not challenged that point here. In addition, Defendants never

made a sufficiency-of-the-evidence argument regarding ownership in their Rule

50(b) motion. See Aplt. App. 361-65. Nor do they make that argument here.

Rather, they argued in their Rule 50(b) motion and before us that, as purely legal

matters, Ratier owned the trade secrets under the hired-to-invent doctrine or as a

matter of contract. Because Defendants failed to raise a sufficiency-of-the-

evidence argument on ownership in their Rule 50(a) and 50(b) motions, we cannot

review the jury’s decision on ownership. Defendants’ failure to object to the jury

instruction on ownership further supports this conclusion of waiver. See Miller v.

Eby Realty Group LLC, 396 F.3d 1105, 1115 (10th Cir. 2005) (citing Atchley v.

Nordam Group, Inc., 180 F.3d 1143, 1147-48 (10th Cir. 1999)).

      Defendants contend that the jury decided a different ownership issue than

the one they present here, namely, whether the parties jointly developed the table

of fault codes. Aplt. Reply Br. 6 n.1. In seeking summary judgment, Defendants

argued—separately from their general ownership argument—that there was

insufficient evidence to establish that they misappropriated the table of fault

                                        - 12 -
codes because ICE did not own the fault codes. Aplt. App. 1240. The district

court disagreed, concluding that there was a genuine issue of material fact

regarding this issue. Id. at 1521. Although this issue was submitted to the jury,

there is no indication that it was the only ownership issue submitted for the jury

to decide. See id. at 298. In addition, Defendants’ argument ignores the district

court’s express statement that a reasonable jury could conclude the ICE owned all

the trade secrets pursuant to their conduct and agreements. Id. at 1513.

      Defendants also contend that the court’s conclusion at summary judgment

that the hired-to-invent doctrine did not apply to ICE because ICE was an

independent contractor was decided as a matter of law and can be reviewed on

appeal. Aplt. Reply Br. 8-9. Regardless of the court’s ruling on the hired-to-

invent doctrine, the court concluded that a reasonable jury could determine

ownership based on the parties’ conduct and written agreements. Thus, there is

no need to look to the common-law hired-to-invent doctrine. 1 Indeed, Defendants

have repeatedly argued that the hired-to-invent doctrine does not apply if the

agreement between the parties dictates otherwise. See, e.g., Aplt. Br. 44; Aplt.

Reply Br. 8; Aplt. App. 360, 1221-22. See also 27 Am. Jur. 2d Employment

Relationship § 182 (2011) (hired-to-invent doctrine applies only absent an

agreement to the contrary). The jury necessarily found that the ICE owned the

      1
         Because the issue submitted to the jury was whether ICE owned the trade
secrets based on the agreements and conduct between the parties, we need not
opine on the district court’s analysis of the hired-to-invent doctrine.

                                        - 13 -
trade secrets by agreement.

       Accordingly, ownership of the trade secrets was submitted to the jury, and

Defendants have not preserved a sufficiency-of-the-evidence argument regarding

this issue.

B.     Punitive Damages

       Defendants contend that the district court erred in awarding punitive

damages of nearly $10 million against Ratier under KUTSA, arguing that the

court’s award exceeds the $5 million cap imposed by Kan. Stat. Ann. § 60-3702.

Aplt. Br. 53-59. We review the district court’s interpretation of state law de

novo. Cooper v. Cent. & Sw. Servs., 271 F.3d 1247, 1251 (10th Cir. 2001).

       Section 60-3702 of Kansas’s general punitive damages statute governs “any

civil action in which exemplary or punitive damages are recoverable” and

provides that no award shall exceed the lesser of (1) the annual gross income

earned by the defendant or (2) $5 million. Kan. Stat. Ann. § 60-3702(a), (e). The

lesser amount here is $5 million. Section 60-3702(f) allows a court to exceed the

cap upon a finding that profitability of a defendant’s misconduct exceeds or is

expected to exceed the cap, and award up to one-and-a-half times the amount of

such profit. Kan. Stat. Ann. § 60-3702(f).

       The punitive damages provision of KUTSA provides that “[i]f willful and

malicious misappropriation exists, the court may award exemplary damages in an

amount not exceeding twice any award [of compensatory damages].” Kan. Stat.

                                        - 14 -
Ann. § 60-3322(b). Finding that the two statutes conflict and that KUTSA was

the more specific of the two, the district court applied KUTSA and awarded

$9,590,600 in punitive damages against Ratier. ICE Corp., 615 F. Supp. 2d at

1270-71, 1277. We cannot agree with this analysis.

      At the outset, we reject ICE’s argument that § 60-3702 does not apply

because it applies only to punitive damages awarded “pursuant to this section”

apparently referencing § 60-3702(e). Aplee. Br. 54. As stated above, § 60-

3702(a) references “any civil action.” Notably, the district court relied upon the

factors set forth in § 60-3702(b) (which contains identical “pursuant to this

section” language) in awarding punitive damages. ICE Corp., 615 F. Supp. 2d at

1271. Indeed, ICE argued in the district court that reliance upon these factors

supported the punitive damages award. Aplt. Supp. App. 1741.

      Under Kansas law, “[g]eneral and special statutes should be read together

and harmonized whenever possible, but to the extent a conflict between them

exists, the special statute will prevail unless it appears the legislature intended to

make the general statute controlling.” State v. Le, 926 P.2d 638, 640 (Kan. 1996)

(internal quotation marks and citation omitted). Kan. Stat. Ann. §§ 60-3702(e)

and 3322(b) can be read together and harmonized such that in a trade secret

misappropriation action, punitive damages are limited to twice the amount of

compensatory damages up to $5 million. See Meitler Consulting, Inc. v. Dooley,

No. 05-2126-DJW, 2007 WL 1834008, at *14 (D. Kan. 2007) (“Any award of

                                         - 15 -
exemplary damages under the Kansas Trade Secrets Act is governed by the

limitations imposed by K.S.A. 60-3702 . . . .”). Thus, although we recognize

ICE’s argument that KUTSA “displaces conflicting tort, restitutionary and other

law of this state providing civil remedies for misappropriation of a trade secret,”

see Kan. Stat. Ann. § 60-3326(a), we do not see a conflict here.

      Even if we perceived a conflict, the more general statutory cap applies here

because it appears the Kansas legislature intended the more general cap to

control. Under Kansas law, “older statutes . . . are subordinate to new enactments

. . . as the newer statute is the later expression of the legislative intent and so will

control if there is a possible conflict between the two.” Jones v. Cont’l Can Co.,

920 P.2d 939, 945 (Kan. 1996) (citation omitted). The Kansas legislature passed

§ 60-3702 in 1988, seven years after enacting KUTSA. Compare Kan. Stat. Ann.

§ 60-3702 with Kan. Stat. Ann. § 60-3322. Accordingly, § 60-3702 governs. 2

      ICE argues that if § 60-3702 governs, then § 60-3702(f) justifies the

punitive damages award over $5 million because Ratier is expected to realize

      2
         Following disposition of this issue in the district court, another Kansas
federal district court concluded that § 60-3702(a)’s bifurcated system of allowing
the jury to determine whether punitive damages can be recovered and then
allowing the court to determine the amount of damages violates the Seventh
Amendment because the Seventh Amendment requires that the jury be allowed to
determine the amount of punitive damages. See Capital Solutions, LLC v. Konica
Minolta Bus. Solutions, USA, Inc., 695 F. Supp. 2d 1149, 1152, 1155-56 (D. Kan.
2010). The district court in this case held otherwise. See ICE Corp., 615 F.
Supp. 2d at 1269-70. The parties do not make any arguments on this issue on
appeal, and we have no need to address it.

                                          - 16 -
profits of between $85 and $139.5 million on the entire project. Aplee. Br. at 57-

59; see also Aplt. Supp. App. 1746-47 (making same argument before district

court). In order to award over $5 million dollars under § 60-3702 in this case,

however, the court needed to make a finding that “the profitability of the

defendant’s misconduct exceeds or is expected to exceed” the $5 million cap. See

Kan. Stat. Ann. § 60-3702(f). The district court made no such finding because it

applied the punitive damages provision in KUTSA. We therefore remand for the

district court to apply § 60-3702 and to consider whether the $5 million cap under

§ 60-3072(e) or the larger cap under § 60-3702(f) applies. We note that to apply

subsection (f), the court must find that the profitability of Ratier’s

misconduct—not profitability from the entire project—exceeds or is expected to

exceed $5 million.

C.    Attorney’s Fees

      In case number 10-3328, Defendants appeal the district court’s award of

attorney’s fees under KUTSA. 3

      In its initial request for attorney’s fees, ICE requested $1,625,620.75 for

8,843.65 hours of billable time. Aplt. App. 420. The district court granted in part

and denied in part ICE’s motion, concluding that ICE could receive fees incurred

prosecuting the misappropriation claims, but ordering ICE to segregate the time

      3
        The citations to the parties’ briefs and Appendices in this section refer to
those submitted for case 10-3328.

                                         - 17 -
spent on the misappropriation claims from the time spent on other, non-

compensable claims, and to then resubmit its request. Id. at 427-28.

      ICE segregated its fee statements, eliminating any easily identifiable non-

compensable time entries and applying an across the board 30% reduction in

hours to entries containing compensable and non-compensable claims where it

could not otherwise allocate time. Id. at 433-34. ICE also removed all time for

the first week of trial and eliminated six entries that it determined were

duplications. Id. at 690. ICE subsequently requested $1,257,704.00 for 6,512.75

hours of billable time. Id. at 434-35. The district court reduced the requested

amount by 880.85 hours—the time claimed by timekeepers for which ICE could

not establish a reasonable hourly rate—and awarded $1,134,438.25 in attorney’s

fees. ICE Corp., 2010 WL 4683981, at *6, *14.

      On appeal, Defendants argue that the district court erred because (1) the

court did not consider the punitive damages award in determining whether, as a

threshold matter, ICE could receive attorney’s fees under KUTSA, and (2) ICE

failed to submit meticulous, contemporaneous billing records. We review the

legal principles underlying an award of attorney’s fees de novo, but the actual

award of fees is reviewed for an abuse of discretion. Combs v. Shelter Mut. Ins.

Co., 551 F.3d 991, 1001 (10th Cir. 2008). In diversity cases, attorney’s fees are

controlled by state law. Id. (citation omitted).

       Under Kansas law, a court may award attorney fees if they are specifically

                                         - 18 -
allowed by statute. Hodges v. Johnson, 199 P.3d 1251, 1262 (Kan. 2009)

(citation omitted). A provision of KUTSA, which is identical to Section 4 of the

Uniform Trade Secrets Act (“UTSA”) provides that if “willful and malicious

misappropriation exists, the court may award reasonable attorney’s fees to the

prevailing party.” Kan. Stat. Ann. § 60-3323; see Unif. Trade Secrets Act § 4

(2005). The jury found that the misappropriation was willful and malicious; thus,

the court had the discretion to award reasonable attorney’s fees. See Aplt. App.

329-33.

      Relying on a comment to Section 4 of UTSA which states that a court

“should take into consideration the extent to which a complainant will recover

exemplary damages in determining whether additional attorney’s fees should be

awarded,” Defendants argue that the district court erred by not considering the

punitive damages award when determining whether it could award attorney’s fees.

See Aplt. Br. 24-25; Unif. Trade Secrets Act § 4, cmt. They insist that a court

must make an express consideration and cite to Progressive Prods., Inc. v. Swartz,

205 P.3d 766, 777-78 (Kan. App. 2009), where the Court of Appeals of Kansas

looked to the comments of UTSA to interpret a different provision of KUTSA.

Aplt. Br. 24-25. Even if a court should consider punitive damages in determining

attorney’s fees, the district court did.

      In its initial order addressing attorney’s fees, the district court concluded

that it could make such an award because the jury found that the misappropriation

                                           - 19 -
in this case was willful and malicious. Aplt. App. 419. The court also stated that

it would consider the punitive damages award in its determination of

reasonableness of fees, but not in its initial determination of whether it could

award the fees under KUTSA. See id. at 420 n.10.

      In a later order addressing the reasonableness of fees, however, the court

paraphrased the Defendants’ argument and rejected it:

      B. Defendants’ Request that the Court Deny Any Award of
      Attorneys’ Fees

             As an initial matter, the Court considers defendants’ argument
      that the Court should altogether deny plaintiff reasonable attorneys’
      fees because plaintiff already received a significant recovery in
      compensatory and punitive damages. Since plaintiff’s counsel is
      compensated in this case through a contingency fee arrangement,
      defendants urge that the significant punitive damages award ensures
      that plaintiff’s attorneys’ fees would not diminish its compensatory
      damages award. To the extent defendants ask this Court to reconsider
      its determination on plaintiff’s entitlement to reasonable attorneys’ fees
      in this matter, the Court declines.

ICE Corp., 2010 WL 4683981, at *2. We read the district court’s order as having

expressly rejected the Defendants’ argument.

      Defendants argue that the district court awarded attorney’s fees based

solely upon the finding that the misappropriation was willful and malicious, but

such a reading is contrary to the district court’s statement that it considered the

argument and declined to change its mind. To be sure, more analysis would have

been helpful, but we cannot say that the district court abused its discretion—the

comment is general and the district court apparently thought that the conduct at

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issue justified an award of attorney’s fees notwithstanding the general enrichment

of ICE.

      Defendants also challenge the court’s reasonable fee determination. “In

Kansas, ‘[t]he reasonable value of attorney fees lies within the sound discretion of

the district court.’” Beck v. N. Natural Gas Co., 170 F.3d 1018, 1025 (10th Cir.

1999) (quoting Hawkins v. Dennis, 905 P.2d 678, 692 (Kan.1995)). In

determining a reasonable fee, Kansas courts multiply a reasonable number of

hours worked by a reasonable hourly rate. Sheldon v. Vermonty, 237 F. Supp. 2d

1270, 1274 (D. Kan. 2002) (citation omitted). The applicant bears the burden of

supporting its fee request with “‘meticulous, contemporaneous time records’ that

show the specific tasks being billed.” Davis v. Miller, 7 P.3d 1223, 1235 (Kan.

2000) (quoting Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243, 1250 (10th

Cir. 1998)). The court should consider the eight factors set forth in Rule 1.5 of

the Kansas Rules of Professional Conduct in determining the reasonableness of a

fee. Id. at 751.

      Defendants argue that ICE’s use of block billing—the practice of “lumping

multiple tasks into a single entry of time”—prevented it from submitting

meticulous, contemporaneous records of its attorney’s time. See Aplt. Br. 35;

Hamilton v. Boise Cascade Exp., 519 F.3d 1197, 1207 (10th Cir. 2008) (internal

quotation marks and citation omitted).

      There is no per se rule in this circuit mandating a reduction or denial of a

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fee request based on block billing. Cadena v. Pacesetter Corp., 224 F.3d 1203,

1215 (10th Cir. 2000) (citation omitted). The district court concluded that the

block billing did not prevent it from determining the reasonableness of the fee

request, finding instead that it could “easily” review the entries for

reasonableness. ICE Corp., 2010 WL 4683981, at *6. Based on its intimate

familiarity with the case, the case’s complexity, the number of reasonable

strategies pursued, the responses necessitated by the maneuvering of the other

side, and any potential duplication of services, the court concluded that ICE

maintained meticulous and contemporaneous time records and that the revised fee

request was reasonable. Id. at *7-8, *11; Case, 157 F.3d at 1250 (listing

reasonableness factors). In addition, the court considered the factors set forth in

Rule 1.5 of the Kansas Rules of Professional Conduct. See ICE Corp., 2010 WL

4683981, at *11. We are unable to say that the court abused its discretion.

      AFFIRMED in part, REVERSED in part and REMANDED for a

determination of a punitive damages award under Kan. Stat. Ann. § 60-3702.

                                        Entered for the Court

                                        Paul J. Kelly, Jr.
                                        Circuit Judge

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