The Ninth Circuit recently issued an opinion that serves as a reminder of the importance of developing robust affirmative evidence of damages suffered as a consequence of trade secret misappropriation, including the causation of those damages. In Joshua David Mellberg LLC v. Will, the plaintiffs filed an action against its former employees and their new company for misappropriation of trade secrets and unjust enrichment. The district court granted summary judgment to defendants and the Ninth Circuit affirmed.

The Court’s decision on the trade secret misappropriation claim was based on its assessment that the plaintiffs failed to provide sufficient evidence that the defendants caused the damages. Although the plaintiffs submitted an expert report supporting their claim to more than $16 million in monetary damages from the loss of trade secrets, the Court observed that the expert’s opinion was insufficient because it “assumed liability on the part of the defendants and opined only on the amount of damages.”

The Court also affirmed the district court’s grant of summary judgment to the defendants on the plaintiffs’ unjust enrichment claim. Despite the plaintiffs’ citation to disclosed financial documents and deposition testimony that millions of dollars had been spent by plaintiffs on developing the trade secrets in question, the Court dismissed the testimony as “lay opinion” and “general allegations.” The Court excluded the plaintiffs’ later supplemental declaration concerning a theory of unjust enrichment based on development costs as untimely, and accordingly found that the plaintiffs had failed to satisfy Rule 26a (1)(A)(iii), which requires a computation of each category of damages and making available the supporting evidentiary material.

The Court’s decision reminds plaintiffs of the rigorous standard of proof they will be tested against with respect to proof of damages and causation when pursuing misappropriated information.

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Photo of Christine B. Hawes Christine B. Hawes

Christine B. Hawes is a counsel in Crowell & Moring’s Labor & Employment Group. Christine’s practice focuses on litigation of individual and class actions arising in all areas of labor and employment law, including:

  • Wage-and-hour laws, including the Fair Labor Standards Act, the

Christine B. Hawes is a counsel in Crowell & Moring’s Labor & Employment Group. Christine’s practice focuses on litigation of individual and class actions arising in all areas of labor and employment law, including:

  • Wage-and-hour laws, including the Fair Labor Standards Act, the Service Contract Act, and state and local laws
  • Title VII and state anti-discrimination laws
  • Americans with Disabilities Act
  • Family and Medical Leave Act and related state statutes
  • Federal and state whistleblower statutes, including the False Claims Act
  • Alleged wrongful termination
  • Non-competition agreements and other employee contracts
  • Misappropriation of trade secrets claims

Christine also provides counseling to clients on a wide variety of employment issues, including personnel policies, non-competition/non-solicitation agreements, employee discipline, contract disputes, and alleged retaliation under the False Claims Act, Title VII, the FLSA, and state whistleblower statutes. Christine frequently advises clients on and conducts internal investigations that frequently address employment, ethics, and compliance issues.  Additionally, Christine assists clients with affirmative action compliance, preparing affirmative action plans, analyzing compensation practices, and providing counseling in connection with Office of Federal Contract Compliance Programs audits.

Photo of Thomas P. Gies Thomas P. Gies

Thomas P. Gies is a founding member of Crowell & Moring’s Labor & Employment Group. Tom has more than 35 years of experience in litigating employment disputes. Tom’s litigation experience includes five jury trials, two U.S. Supreme Court arguments, 18 federal appellate court…

Thomas P. Gies is a founding member of Crowell & Moring’s Labor & Employment Group. Tom has more than 35 years of experience in litigating employment disputes. Tom’s litigation experience includes five jury trials, two U.S. Supreme Court arguments, 18 federal appellate court arguments, and more than a hundred trial court and arbitration matters involving a wide range of labor and employment law issues, including traditional labor law, whistleblower retaliation, EEO claims and wage & hour class and collective actions. Tom also maintains an active compliance counseling practice, involving the full range of employment law issues facing U.S. employers. Tom’s traditional labor counseling practice has focused on helping companies develop and implement strategies in situations involving operational restructurings, facility closures, subcontracting of bargaining unit work, and work stoppages.