Over the last couple of months there has been a fair amount of press given to the California Appellate Court decision in SASCO v. Rosendin Electric, Inc., 207 Cal. App. 4th 837 (2012). As is typical with cases brought under the Uniform Trade Secrets Act, the SASCO dispute began when three senior level employees left to work for a competitor. When the competitor won a bid on a project that had been targeted by SASCO prior to the employees’ departure, SASCO claimed the employees had misappropriated trade secrets. After a number of discovery disputes, and in the face of a summary judgment motion, SASCO voluntarily dismissed its lawsuit. The employees then brought a motion for attorneys’ fees claiming that the lawsuit had been brought in bad faith without sufficient factual support. The trial court granted the employees an award of attorneys’ fees which was upheld on appeal by the Court of Appeals which held that the trade secret claims were “objectively specious” as there was a complete lack of evidence to support the claims.
Although an interesting reminder of the possibility of an attorneys’ fees award under the Uniform Trade Secrets Act, the SASCO case really isn’t anything new. The possibility of an award of attorneys’ fees and costs to the prevailing party was already well established and set forth in section 3426.4 of the California Civil Code. It also isn’t news that plaintiffs too frequently bring claims of misappropriation under the Uniform Trade Secrets Act in an effort to harass a competitor, often a start-up or fledgling competitor that has hired former employees of the plaintiff employer. These plaintiffs would be well advised to do their homework before filing such a claim as meeting the standard to qualify as a trade secret under the Uniform Trade Secrets Act is quite difficult and proving misappropriation is even harder. And while it may seem difficult to contemplate proving a trade secret and misappropriation before a case even begins, it will seem even more difficult contemplating paying your competitor its attorneys’ fees because you failed to make the effort.