Court Opinion

ID: 5122779
Source: CourtListenerOpinion
Date Created: 2021-11-02 22:02:19.732164+00
Date Added: 2024-06-11T08:22:29.990942
License: Public Domain

Filed 11/2/21 SwedelsonGottlieb v. Noland CA1/3
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

         IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FIRST APPELLATE DISTRICT

                                                DIVISION THREE

    SWEDELSONGOTTLIEB,
           Plaintiff and Appellant,
                                                                        A156334, A156766
    v.
    WILLIAM ALEXANDER NOLAND,                                           (City & County of San Francisco
                                                                        Super. Ct. No. CGC 16-555026)
           Defendant and Respondent.

         Plaintiff SwedelsonGottlieb sued its former employee, defendant
William Alexander Noland, for misappropriation of trade secrets and breach
of a nondisclosure agreement (NDA) after he left plaintiff’s law firm to begin
his own law practice. The trial court entered judgment in favor of defendant
and awarded defendant his attorney fees and costs upon finding that plaintiff
pursued its trade secrets claim in “bad faith.” (Civ. Code, § 3426.4.)1
Plaintiff argues that the court abused its discretion in awarding attorney fees
and that it committed legal error by failing to give effect to enforceable
provisions of the NDA. We affirm.

1    Further section references are to the Civil Code unless indicated
otherwise.
                 FACTUAL AND PROCEDURAL BACKGROUND
      Plaintiff is a law firm based in Los Angeles that services community
and homeowner associations throughout California. Sandra Gottlieb is one of
the firm’s two founding partners.
      Plaintiff possesses a library of forms, checklists, and templates for
creating governing documents and agreements that its attorneys have
developed over many years in representing homeowner association clients.
The forms and templates contain notes to the drafter, embedded questions for
clients to address when reviewing drafts, and instructions on how changes to
certain items require corresponding changes elsewhere in the documents.
The library is plaintiff’s proprietary work product, and Gottlieb describes it
as a “law firm in a box” that someone with experience in the homeowner
association industry could use “from day one of a law practice.”
      In March 2008, plaintiff hired defendant as a transactional attorney.
After several years, defendant relocated to San Francisco to establish a
satellite office for plaintiff. In May 2016, defendant told Gottlieb he would
not become an equity partner, intending instead to stay at the firm as a
nonequity partner. However, defendant had already begun preparations to
leave, including leasing office space.
      In August 2016, defendant announced his resignation from the firm.
During his last days of employment, defendant deleted any of plaintiff’s
documents that he could find on his home computer and mobile phone, moved
any work in progress to an online storage folder, and deleted personal files,
duplicate files, and the internet browsing history from his firm-issued laptop.
      During defendant’s exit interview, Gottlieb asked him to sign a
“Partner Statement Regarding SwedelsonGottlieb Property and Trade
Secrets” (partner statement). The partner statement required defendant to

                                         2
declare under penalty of perjury that (1) he had “deleted from all electronic
devices” any of plaintiff’s email accounts, communications, attachments, and
any firm communications with clients and prospective clients as of the date of
his termination and (2) he did not have any “governing document form files,”
“contract form files,” correspondence with the firm’s clients, client files, or
firm-related documents in his possession. Defendant told Gottlieb he would
remove information from his personal devices and send her the signed
partner statement. Gottlieb also asked defendant to relinquish any company
documents and hardware, such as computers, cell phones, flash memory
(thumb) drives, and hard drives if he had been using them. Defendant
returned the firm laptop, but not a signed partner statement.
      Defendant began operating his law practice in late August 2016. He
obtained a few clients “within the first few days” of opening, and by the end of
October 2016 had retained 23 of plaintiff’s former clients.
      After defendant’s departure from the firm, Gottlieb became concerned
about defendant’s failure to sign the partner statement. Plaintiff’s controller,
Aram Homampour, checked the firm’s server and information governance
portal and found several emails with attachments that defendant had sent to
himself and then deleted.
      In October 2016, plaintiff filed a complaint asserting 11 causes of action
against defendant including misappropriation of trade secrets under the
California Uniform Trade Secret Act (UTSA) (§ 3426 et seq.), breach of
contract, and injunctive relief.2 The complaint defined plaintiff’s trade secret

2     Plaintiff also alleged causes of action for intentional interference with
prospective economic advantage; intentional interference with contractual
relations; violation of Business and Professions Code section 17200; breach of
fiduciary duty; violation of Labor Code section 2860; breach of duty of loyalty;
conversion; and accounting.

                                         3
as “consisting of proprietary forms, business plans, work processes and
procedures, customer and client lists and information . . . including, but not
limited to, the names, addresses, non-published mobile telephone numbers
and email addresses for board members and managing agents, other contact
information of potential and actual board members, association staff and/or
management, personal information about their businesses, family
information . . . how the board and management prefer the work product to
be sent or delivered to them, fees and hourly rates charged, client data bases,
and contract terms[.]”
      Plaintiff alleged, on information and belief, that “prior to the cessation
of his employment with Plaintiff and/or sometime thereafter,” defendant
“contacted and solicited Plaintiff’s existing clients and management contacts,
asking them to cancel their existing contracts and/or relationships with
Plaintiff, and enter into new contracts with him.” Plaintiff further alleged
that defendant “misappropriated Plaintiff’s Confidential Information by
downloading and/or copying it, leaving Plaintiff’s employment, working for
himself in competition with Plaintiff, soliciting business from those clients on
Plaintiff’s customer and client lists, and attempting to persuade and
importune them to become his clients.”
      The complaint attached a copy of the parties’ NDA. Paragraph 3.a
(“Non-Competition During Term of Employment”) prohibited defendant from
engaging in any business in competition with the firm during his
employment. Paragraph 4.c (“Unfair Competition After Termination of
Employment”) provided, in relevant part, that defendant was prohibited for a
period of one year “or for that period of time allowed by law immediately
following” employment with plaintiff from soliciting any of the firm’s
customers or clients with whom defendant had contact during his

                                        4
employment. Paragraph 7 (“Severability”) provided that if any provision of
the NDA was found to be unenforceable, it would be “deemed deleted” and
would not affect the remainder of the NDA.
      In December 2016, plaintiff filed a first amended complaint (FAC)
asserting two causes of action for misappropriation of trade secrets and
breach of contract. The FAC provided the same description of plaintiff’s
alleged trade secrets and the same allegations of misappropriation as in the
original complaint.3
      In April 2017, plaintiff served its Code of Civil Procedure section
2019.210 trade secret statement, which provided substantially the same
description as in plaintiff’s complaints and concluded: “In short, said trade
secrets include, but are not limited to, non-public client contact information
and are contained in Plaintiff’s data base, Plaintiff’s forms, and Plaintiff’s
emails.” A year later, however, on the eve of trial, plaintiff filed a trial brief
identifying the trade secret at issue as a “ ‘compilation’ ” of its work product
documents and forms contained in trial exhibits 201–525. Acknowledging the
exhibits contained public domain elements, plaintiff argued the compilation
“[t]aken as a whole” would provide someone starting a new law practice “a
competitive advantage, i.e., ‘a law firm in a box.’ ”
      A bench trial was held over the course of several days in April, May,
and June 2018. We summarize the relevant testimony.
      Plaintiff’s computer forensics expert Matthew Albee testified that in
the days leading up to defendant’s departure from the firm, two external
devices—a flash memory drive by Emtec named “Hufflepuff” and an external

3     During trial, plaintiff was granted leave to file a second amended
complaint, which added a prayer for injunctive relief on the breach of contract
claim.

                                         5
hard drive by Western Digital named “My Passport”—had been attached to
the laptop and used to copy files in bulk. Comparing the contents of the firm
laptop used by defendant with a list of “hash matches” 4 of files on defendant’s
personal laptop and Hufflepuff drive, Albee identified the documents in trial
exhibits 201–525 as those that were found on defendant’s personal devices.
      Gottlieb testified about several exhibits among plaintiff’s trade secret
compilation, explaining the documents and their usefulness to plaintiff. She
described some of the exhibits as the firm’s “secret” or “internal” forms and
templates, while others were final documents prepared from templates or
documents created by third parties. According to Gottlieb, the firm’s
modifiable forms “never leave[]” the office, and she and Homampour stated it
was the firm’s policy that documents should be saved on the firm’s secured
and password-protected server rather than on computer hard drives.
Gottlieb admitted she had no proof that defendant was using any of the firm’s
forms with his clients, but she was “concern[ed] he would use them in the
future.”
      Defendant admitted he had used external devices as well as a home
desktop computer during his employment with plaintiff, but upon leaving the
firm he had deleted all of plaintiff’s materials that he could find from his
personal electronic devices, including his home laptop, home desktop
computer, and cell phone. He also deleted personal files, old drafts, and
duplicate files from the firm-issued laptop, and moved other files to an online
storage folder. Defendant testified that he was unable to locate the alleged

4     As Albee explained, his forensic procedure involved “hashing” the
contents of the firm laptop’s hard drive by using a mathematical algorithm to
create a 32 digit “fingerprint identifying [each file] against any other file in
existence.”

                                        6
trade secret documents on his old home desktop computer and that file paths
for the documents did not exist.
      Defendant was questioned regarding each and every individual exhibit
claimed as plaintiff’s trade secrets. He identified many items with no
apparent trade secret value, e.g., a flight receipt; a coloring book; publicly
recorded documents; articles he wrote for third party publications; an
application he submitted to a third party organization; and “a picture of a sad
face.” He also identified many documents, including plaintiff’s work product,
that he believed were not plaintiff’s trade secrets because they were either
created by or disclosed to third parties, or contained public information.
Defendant testified that plaintiff’s contracts and governing documents in
modifiable form were “frequently” and “on multiple occasions” sent to clients
“and other parties.” He denied having solicited any of plaintiff’s clients for
his new practice.
      Plaintiff’s former employee Mary Peterson offered testimony that after
leaving her employment with plaintiff, she was never asked to remove and
she never deleted any of plaintiff’s information, emails, or contact
information from her computer. Additionally, plaintiff did not disconnect
Peterson from one of its servers after her resignation, though she herself
eventually disconnected her online storage folder connection with plaintiff.
      The trial court issued a detailed, 18-page statement of decision finding
in favor of defendant. The court rejected the claim for misappropriation of
trade secrets, finding that plaintiff had failed to establish that trial exhibits
201–525 constituted a trade secret under UTSA.5 According to the court,

5      UTSA defines a trade secret as “information, including a formula,
pattern, compilation, program, device, method, technique, or process that:
[¶] (1) Derives independent economic value, actual or potential, from not
being generally known to the public or to other persons who can obtain

                                        7
plaintiff “did not attempt to demonstrate how” the set of documents in trial
exhibits 201–525 “constitutes a protectable compilation or combination of
information with independent economic value due to secrecy from
competitors.” The court noted that Gottlieb testified only as to “the content of
ten (10) of the 325 documents,” and that plaintiff presented no other evidence
regarding the content of the remaining 315 documents. In the court’s words,
“the documents and forms appear only to reflect an ad hoc accumulation of
unrelated attorney work-product, personal documents, and public
information that Defendant had personally accessed, used or created on his
personal electronic devices in the regular course of his work during his eight-
year term of employment by Plaintiff.”
      The trial court further found that the documents at issue were not kept
secret because they were shared with clients and third parties, including
public agencies, homeowner association board members and community
managers, vendors, contractors, and third party counsel. Plaintiff also failed
to demonstrate that it employed reasonable and adequate measures to keep
the documents secret. Specifically, plaintiff did not maintain detailed written
policies or procedures to identify and protect its trade secret information
(despite other policies expressly contemplating that employees would save
documents and forms on their personal electronic devices), and former
employees remained in possession of firm-issued computers and client data.
      The trial court also determined that plaintiff had failed to demonstrate
misappropriation.6 The court found that defendant was authorized to use

economic value from its disclosure or use; and [¶] (2) Is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.”
(§ 3426.1, subd. (d).)
6    “Misappropriation” is defined, in relevant part, as the acquisition of
another’s trade secret by a person who knows or has reason to know that the

                                        8
and possess plaintiff’s documents and forms while he was working for
plaintiff, and that the vast majority of the claimed trade secret documents
was work product from 2010 through 2012—a period during which defendant
had not been issued a firm laptop. The court further found that plaintiff had
presented no direct or substantial evidence showing defendant’s actual or
threatened use or disclosure of any of the documents and forms since his
departure from the firm.
      The trial court noted that “[d]ue to discovery limitations, no documents
were ever retrieved from defendant’s electronic devices.” 7 However, the court
found that defendant was still an employee when work product materials
were placed on his personal devices, and, consistent with defendant’s
testimony, most of the claimed trade secret documents traced to defendant’s
devices had been deleted.
      Finally, the trial court found no causal link between the alleged
misappropriation and any alleged harm to plaintiff. Plaintiff had not
demonstrated how defendant’s possession of any of its claimed trade secret

trade secret was acquired by improper means; or use of another’s trade secret
without express or implied consent by a person who either used improper
means to acquire it or knew or had reason to know that his or her knowledge
of the trade secret was derived from improper means or acquisition, and was
acquired under circumstances giving rise to a duty to maintain its secrecy or
limit its use. (§ 3426.1, subd. (b).)
7     This statement appears to be in reference to plaintiff’s unsuccessful
attempts, after the continuance of the initial trial date, to obtain discovery of
electronically stored information (ESI) on defendant’s personal devices. At an
April 2018 hearing on plaintiff’s objections to the discovery referee’s
recommendations, the trial court remarked that it was “mind-boggling” the
ESI discovery was being sought so late in the case, as it was “obvious” and
“competition case 101” that a former employer would want to know what
information was taken and deleted by a former employee. Plaintiff raises no
claim of error in the discovery rulings below.

                                       9
documents, either individually or collectively, resulted in loss of current or
prospective clients or business advantages over competitors.
      Regarding the breach of contract cause of action, the trial court found
that paragraph 4 of the NDA was void and unenforceable under Business and
Professions Code section 16600 as an illegal restraint of trade. The court also
found that defendant had not violated paragraph 3 because he was not
prohibited from making preparations for his solo practice during his
employment with plaintiff, and plaintiff “offered no testimony or evidence”
that defendant had solicited any of plaintiff’s clients to terminate their
relationship with plaintiff. Furthermore, plaintiff “stipulated on the record
that it was not seeking any damages based upon client solicitation.”
      The trial court entered judgment in defendant’s favor. Defendant filed
a postjudgment motion for attorney fees and costs under section 3426.4. The
trial court granted the motion based on the following findings: (1) plaintiff
brought its claim for misappropriation of trade secrets in bad faith; (2) the
claim “was objectively specious for the reasons set forth in the Statement of
Decision”; and (3) plaintiff acted in subjective bad faith because it “did not
prove [that] any claimed trade secret documents met the requisite trade
secret definition under the [UTSA]”; it “did not provide any evidence to show
that it had attempted to keep secret many of the documents that it claimed
were trade secret”; and it “did not provide any evidence to show that any of
the alleged trade secret information had been used by Defendant to
improperly solicit clients.” The court awarded defendant $51,477.44 in costs
and $714,382.50 in attorney fees.
      Plaintiff timely filed notices of appeal from the judgment and the
postjudgment order awarding attorney fees. The appeals were consolidated
for briefing, oral argument, and decision.

                                       10
                                  DISCUSSION
      A.    Section 3426.4 Attorney Fees
      A trial court may award reasonable attorney fees and costs to the
prevailing defendant in a UTSA action where “a claim of misappropriation is
made in bad faith[.]” (§ 3426.4.) Although the statute does not define “bad
faith,” a line of cases beginning with Gemini Aluminum Corp. v. California
Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249 (Gemini) holds that “ ‘bad
faith’ for purposes of section 3426.4 requires objective speciousness of the
plaintiff’s claim, as opposed to frivolousness, and its subjective bad faith in
bringing or maintaining the claim.” (Gemini, at p. 1262; see SASCO v.
Rosendin Electric, Inc. (2012) 207 Cal.App.4th 837, 845–846 (SASCO); FLIR
Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1275 (FLIR); Yield
Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 578 (Yield
Dynamics).) “Objective speciousness exists where the action superficially
appears to have merit but there is a complete lack of evidence to support the
claim.” (FLIR, at p. 1276, relying on Gemini, at p. 1261.)
      Here, the trial court specifically found that plaintiff “did not attempt to
demonstrate” how trial exhibits 201–525 constituted a protectable trade
secret compilation and that plaintiff presented “[n]o evidence—direct or
circumstantial” to prove defendant’s postemployment use or disclosure of
plaintiff’s documents and forms. These findings, plus plaintiff’s stipulation
“on the record that it was not seeking any damages based upon client
solicitation,” supported the objective speciousness of plaintiff’s claim. (See
SASCO, supra, 207 Cal.App.4th at pp. 848–849 [claim was objectively
specious due to absence of evidence of misappropriation].)
      In seeking reversal of the attorney fee award, plaintiff contends we are
not bound by Gemini and its progeny. Plaintiff urges that we reject Gemini’s

                                       11
definition of objective speciousness and adopt the more demanding standard
of “frivolousness.” (E.g., Code Civ. Proc., § 128.5, subd. (b)(2) [“totally and
completely without merit”]; In re Marriage of Flaherty (1982) 31 Cal.3d 637,
650 [frivolous appeals].) We decline plaintiff’s invitation. As Gemini
observed, “section 3426.4 does not contain the word ‘frivolous.’ Moreover, in
enacting section 3426.4 the Legislature was concerned with curbing ‘specious’
actions for misappropriation of trade secrets, and such actions may
superficially appear to have merit.” (Gemini, supra, 95 Cal.App.4th at
p. 1262.)
      Plaintiff nevertheless contends the “objective speciousness” standard is
too vague and leads to the award of attorney fees based on hindsight, as
demonstrated here by the trial court’s reliance on “the reasons set forth in the
Statement of Decision” to support its finding of objective speciousness.
Without a frivolousness standard, plaintiffs argue, litigants claiming trade
secrets misappropriation “will never know until the case has gone to trial
whether it is objectively specious.” We are not persuaded. A full trial on the
merits is not required for a litigant to know whether there is a complete lack
of evidence supporting its claim for misappropriation of trade secrets. (FLIR,
supra, 174 Cal.App.4th at p. 1276.)
      Finally, plaintiff argues the trial court conflated objective speciousness
with plaintiff’s mere loss on the merits. We disagree. As recounted above,
the fee award was premised on the court’s particularized findings that
plaintiff’s trade secret misappropriation claim suffered more fundamentally
from a lack of critical evidence on the elements of the claim.
      B.    Other Claimed Errors
      Plaintiff contends the trial court made several other errors in finding
objective speciousness. We review an award of section 3426.4 attorney fees

                                        12
for abuse of discretion, accepting the version of facts that supports the trial
court’s determination and indulging in every inference that favors its
findings. (Gemini, supra, 95 Cal.App.4th at pp. 1262–1263.)
            1. Description of Gottlieb’s Testimony
      Plaintiff first argues the trial court “erred as a matter of law” in finding
plaintiff did not present evidence about the contents of all but 10 of the
documents in trial exhibits 201–525. According to plaintiff, Gottlieb testified
not only about the 10 identified exhibits, but also about the firm’s checklists
and color-coded templates containing notes to the drafter and embedded
questions for clients.
      Plaintiff cites no authority indicating the trial court’s description of
Gottlieb’s testimony constituted legal error.8 Indeed, the trial court was not
required to make such evidentiary findings, only ultimate findings of fact on
principal controverted issues. (Yield Dynamics, supra, 154 Cal.App.4th at
p. 559, citing Code Civ. Proc., § 632.) Here, the principal controverted issue
was whether trial exhibits 201–525 constituted a protectable trade secret
compilation.
      On that score, the trial court found that plaintiff did not even “attempt
to demonstrate how” trial exhibits 201–525 were integrated in a unique way
to create a discrete and protectable trade secret. (See Altavion, Inc. v. Konica
Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 48 (Altavion)
[trade secret can include “effective, successful and valuable integration” of
public domain elements]; 3M v. Pribyl (7th Cir. 2001) 259 F.3d 587, 595–596
[trade secret exists where “unique combination” of public domain elements
affords competitive advantage and is secret].) Rather, the court found that

8     Notably, plaintiff did not object to the same description of Gottlieb’s
testimony in the proposed statement of decision.

                                       13
trial exhibits 201–525 were an ad hoc collection of defendant’s work product
and personal and public documents—a finding that was supported by
substantial evidence as recounted above. Plaintiff does not explain how a
fuller description of Gottlieb’s testimony that included a few more exhibits
would have compelled a contrary finding as to the objective speciousness of
the trade secrets compilation claim.
            2. Secrecy of Plaintiff’s Modifiable Documents
      Plaintiff next argues the trial court erred as a matter of law in
concluding that secrecy was not maintained as to plaintiff’s forms, checklists,
and templates. According to plaintiff, the evidence at trial showed that only
finished documents—not the modifiable versions used to create them—were
transmitted to clients and third parties.
      “Secrecy is an essential characteristic of information that is protectable
as a trade secret.” (Altavion, supra, 226 Cal.App.4th at p. 57.) In finding
that secrecy was lacking, the trial court referred to the “documents at issue”
and did not limit its finding to finished documents. The court also noted that
plaintiff’s “forms [were] distributed to [homeowner association] Boards,
homeowners, and managers. For example in the case of the Green Street
Homeowners’ Association, the modifiable version of Plaintiff’s [homeowner
association] governing document form was, upon request, provided to the
client.” (Italics added.) These findings were supported by substantial
evidence, including defendant’s testimony that contracts and governing
documents in modifiable form were “frequently sent out to clients and other
parties.”
      Plaintiff attempts to minimize defendant’s evidence regarding the
modifiable documents sent to clients. Specifically, plaintiff argues that
defendant could identify only one such instance (Green Street Homeowners

                                       14
Association) in which the client was sent a document containing a disclaimer
restricting the document’s use or distribution. This argument ignores the
applicable standard of review. (Ewald v. Nationstar Mortgage, LLC (2017) 13
Cal.App.5th 947, 948 [failure to tailor argument to applicable standard of
appellate review is concession of lack of merit].) On review for abuse of
discretion, we accept the version of facts that supports the trial court’s
determination and indulge in every inference that favors its findings.
(Gemini, supra, 95 Cal.App.4th at pp. 1262–1263.) Thus, we infer the trial
court credited defendant’s testimony that modifiable documents were
“frequently” sent to plaintiff’s clients and other parties, with Green Street
Homeowners Association constituting only one example of this practice.
Indulging all inferences in favor of the trial court’s findings, we conclude
there was substantial evidence supporting its conclusion that secrecy was
lacking as to the modifiable documents.
            3. Attorney Work Product Protection
      Plaintiff takes issue with the trial court’s conclusion that work product
transmitted to plaintiff’s clients is no longer owned by the law firm. Citing
Tucker Ellis LLP v. Superior Court (2017) 12 Cal.App.5th 1233, plaintiff
contends the firm holds the “privilege” as to its work product, even if the firm
is no longer in possession of the documents or their contents have been
communicated to clients. But even if we accept that legal conclusion, plaintiff
provides no meaningful argument or authority indicating that attorney work
product protection necessarily overlaps with secrecy for purposes of UTSA.
Since we are not required to develop plaintiff’s arguments, we treat the
contention as waived. (See Cahill v. San Diego Gas & Electric Co. (2011) 194
Cal.App.4th 939, 956 (Cahill).) In any event, as discussed, substantial

                                       15
evidence supports the conclusion that the modifiable forms were sent not only
to clients but to third parties.
             4. Subjective Bad Faith
      Section 3426.4 also requires a showing of the plaintiff’s subjective bad
faith in bringing or maintaining a UTSA claim. (Gemini, supra, 95
Cal.App.4th at p. 1262.) “Subjective bad faith under section 3426.4 means
the action was commenced or continued for an improper purpose, such as
harassment, delay, or to thwart competition. [Citations.] The absence of
evidence alone, even after discovery, does not support a finding of subjective
bad faith.” (SASCO, supra, 207 Cal.App.4th at p. 847.) A finding of
subjective bad faith under section 3426.4 must be supported by evidence that
plaintiff knowingly and intentionally prosecuted a specious claim. (Gemini,
supra, 95 Cal.App.4th at p. 1262.)
      Plaintiff contends the trial court’s finding of subjective bad faith was
“defective as a matter of law” because the court erroneously relied on a
hindsight view of the case’s merits rather than evidence of plaintiff’s motive.
Plaintiff then proceeds to outline, in considerable detail, evidence in the
record supporting the reasonableness of its beliefs that trial exhibits 201–525
were protectable trade secrets, that the secrecy of these documents were
adequately protected, and that defendant improperly acquired, used, and
benefited from them.
      These contentions misapprehend the applicable legal standard as well
as the standard of review. As explained in Cypress Semiconductor Corp. v.
Maxim Integrated Products, Inc. (2015) 236 Cal.App.4th 243 (Cypress
Semiconductor), a plaintiff’s “ ‘subjective belief in the merits of its case’ ” is
immaterial, “because the test is not what the plaintiff believed about its
objectively specious claim, but for what purpose it pursued such a claim.

                                         16
[Citations.] If the court finds that a claim is objectively specious, and that
the plaintiff made it for an improper purpose, there is no further requirement
that the court also find a lack of ‘subjective belief in the merits of its case.’ ”
(Id. at p. 267.) Likewise, because the applicable standard of review requires
us to accept the version of facts that supports the trial court’s determinations
(Gemini, supra, 95 Cal.App.4th at pp. 1262–1263), it is immaterial that
plaintiff can point to evidence suggesting its good faith belief, so long as
substantial evidence supports the trial court’s finding of subjective bad faith.
We conclude there was ample evidence to support such a finding.
      “The timing of the action may raise an inference of bad faith.
[Citation.] Similar inferences may be made where the plaintiff proceeds to
trial after the action’s fatal shortcomings are revealed by opposing counsel.”
(FLIR, supra, 174 Cal.App.4th at p. 1278.) Here, plaintiff filed suit within
weeks of defendant opening his own law practice, claiming he had illegally
solicited plaintiff’s clients using confidential client information—a theory
that, as far as we can tell from the record, was never shown to have merit in
this case. (See Courtesy Temp. Serv. v. Camacho (1990) 222 Cal.App.3d 1278
[criteria for trade secret protection of client lists].) Though alleging its
entitlement to injunctive relief, plaintiff never sought a preliminary
injunction to stop the alleged ongoing client solicitations. (See FLIR, at
p. 1280 [subjective bad faith where plaintiff never sought order compelling
defendants to return claimed trade secrets].) Furthermore, the record
indicates that plaintiff was made aware of the lack of merit in its client
solicitation theory in or around September 2017 (more than six months before
trial began).9

9     Specifically, in September 2017, defendant moved to quash subpoenas
duces tecum served on defendant’s clients. In support, defendant submitted

                                         17
      Plaintiff nevertheless continued to prosecute its claim, shifting its
theory to misappropriation of its library of documents and forms even though
plaintiff never had proof of defendant’s actual or threatened use of those
documents, as Gottlieb later admitted at trial. (FLIR, supra, 174 Cal.App.4th
at p. 1279 [UTSA requires an actual or threatened misappropriation].)
Moreover, plaintiff did not seek ESI discovery regarding the contents of
defendant’s personal devices until after the initial trial date was continued—
a “mind-boggling” delay in the view of the trial court—and plaintiff never
sought preliminary injunctive relief against defendant’s use of plaintiff’s
documents and forms. (FLIR, at p. 1280.) Viewing this record favorably to
the judgment, we conclude substantial evidence supported the conclusion
that plaintiff brought and maintained its flawed trade secret claim despite
knowledge of its many shortcomings. (FLIR, at p. 1278.)
      The record also supports an implied finding that plaintiff’s motive in
bringing and maintaining the action was for the improper purpose of
pursuing an “inevitable disclosure” theory against defendant. (FLIR, supra,
174 Cal.App.4th at pp. 1278–1280 [affirming bad faith finding based on
plaintiff’s reliance on inevitable disclosure theory].) The inevitable disclosure
doctrine, by which a plaintiff may prove a claim of trade secret
misappropriation by demonstrating that a defendant’s new employment will

several declarations from board members and community managers for the
homeowner association clients denying that he had solicited them either
before or after he left plaintiff’s employment. Although defendant’s motion
was denied, plaintiff ultimately did not take the depositions of
representatives of the homeowner associations, citing business reasons.
Indulging all inferences in defendant’s favor, the trial court could reasonably
have concluded that defendant’s declarations made plaintiff aware of the
fatal shortcomings of its client solicitation theory. (FLIR, supra, 174
Cal.App.4th at p. 1278.)

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inevitably lead the defendant to rely on the plaintiff’s trade secrets, has been
rejected in California as creating “an after-the-fact covenant not to compete.”
(Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1447.) As one court
recognized, speculation that an employee must have taken trade secrets
based on success in new employment does not constitute evidence of
misappropriation. (SASCO, supra, 207 Cal.App.4th at pp. 848–849.)
Plaintiff’s consistent reliance on a theory of inevitable disclosure, from its
pleadings through trial, supported a finding that plaintiff prosecuted this
action with an improper, anticompetitive purpose. (SASCO, supra, 207
Cal.App.4th at p. 847 [thwarting competition is improper purpose under
section 3426.4].)10
      In sum, we conclude the trial court did not abuse its discretion in
awarding attorney fees under section 3426.4.
      C.    Breach of the NDA
      Plaintiff argues the trial court erred in finding in favor of defendant on
the breach of contract claim because, notwithstanding the void and severable
provisions, the court “ignore[d] the other promises contained in the NDA”
such as paragraph 2, which required defendant to return all of plaintiff’s
property, and paragraph 6, which required defendant to maintain
confidentiality as to all information learned by him concerning plaintiff’s
operation and customers.
      We are not persuaded. Plaintiff provides no cogent argument or
citation to the record demonstrating that defendant failed to maintain the
confidentiality of plaintiff’s information or return plaintiff’s property. Thus,

10    Plaintiff’s reliance on the inevitable disclosure doctrine also provides
support for the objective speciousness of its claim. (See Cypress
Semiconductor, supra, 236 Cal.App.4th at p. 268 [theory based on inevitable
disclosure doctrine did not state grounds for relief under California law].)

                                        19
we treat the contentions as waived. (Cahill, supra, 194 Cal.App.4th at p.
956.) Indeed, the evidence showed, quite to the contrary, that defendant
deleted and never used plaintiff’s documents and forms after his departure
from the firm.
      Plaintiff also provides no argument or analysis as to how it was
damaged by defendant’s alleged breaches of NDA paragraphs 2 or 6. (See
Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 921
[elements of breach of contract include damages resulting from breach].) As
discussed, the trial court found that plaintiff presented no evidence of any
losses of current or prospective clients or business advantages resulting from
defendant’s alleged possession of plaintiff’s documents and forms.
                                DISPOSITION
      The judgment is affirmed. Defendant is entitled to his costs on appeal.

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                                           _________________________
                                           Fujisaki, Acting P. J.

WE CONCUR:

_________________________
Petrou, J.

_________________________
Chou, J.*

A156334/SwedelsonGottlieb v. Noland

*Judge of the Superior Court of San Mateo County, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.

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