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HCC Insurance Holdings, Inc. v. Flowers

United States District Court, N.D. Georgia, Atlanta Division

November 6, 2017

HCC INSURANCE HOLDINGS, INC., Plaintiff,
v.
VALDA FLOWERS, MICHAEL REMEIKA, and CREATIVE RISK UNDERWRITERS, LLC, Defendants.

          OPINION AND ORDER

          WILLIAM S. DUFFEY, JR. UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendants' Valda Flowers ("Flowers"), Michael Remeika ("Remeika"), and Creative Risk Underwriters, LLC ("CRU") (collectively, the "Defendants") Motion for Attorney's Fees and Expenses [124] ("Motion").

         I. BACKGROUND

         On September 16, 2015, HCC Insurance Holdings, Inc. ("Plaintiff) initiated this action alleging that Flowers, at the direction of Remeika, misappropriated Plaintiffs trade secrets to establish CRU and compete with Plaintiff.[1] Plaintiff claimed Flowers engaged in a variety of activities that indicated that she misappropriated Plaintiff's trade secrets. On July 29, 2016, Defendants moved for summary judgment [87], and on February 22, 2017, the Court granted the motion and dismissed the action with prejudice [122] ("Summary Judgment Order").

         On March 8, 2017, Defendants filed their Motion requesting the Court find that Plaintiff HCC brought and maintained in bad faith its claim for misappropriation of trade secrets pursuant to the Georgia Trade Secrets Act, O.C.G.A. § 10-1-760.

         II. DISCUSSION

         A. Legal Standard

         Defendants seek attorney's fees pursuant to the Georgia Trade Secrets Act, which provides that "[i]f a claim of misappropriation [of trade secrets] is made in bad faith ... the court may award reasonable attorney's fees to the prevailing party." See O.C.G.A. § 10-1-764. "Whether to grant attorney's fees is firmly within the discretion of the [c]ourt." Greenberg Farrow Architecture, Inc. v. Perkins Eastman Architects, P.C., No. 1:12-cv-1435-ODE, 2014 WL 12694260, at *6 (N.D.Ga. July 1, 2014); see also Brandenburg v. All-Fleet Refinishing, Inc., 252 Ga.App. 40, 43 (Ga.Ct.App. 2001) (finding "the court may award reasonable attorney fees to the prevailing party" pursuant to O.C.G.A. § 10-1-764).

         The statute, which is based on the Uniform Trade Secrets Act, does not define "bad faith, " and Georgia authority applying O.C.G.A. § 10-1-764 is almost nonexistent. Greenberg, 2014 WL 12694260 at *6. The one decision in this district considering the issue applied the authority of other circuits interpreting the bad faith language used in the Georgia trade secrets statute or other state laws patterned after the Uniform Trade Secrets Act. Id. at *6.

         That authority dictates a two-prong approach to determine whether (1) the plaintiffs claim was "objectively specious" and (2) the plaintiff exhibited "subjective misconduct" in bringing or maintaining the claim. Rent Info. Tech., Inc. v. Home Depot U.S.A., Inc., 268 Fed.Appx. 555, 560 (9th Cir. 2008) (interpreting the "bad faith" requirement of O.C.G.A. § 10-1-764). "Objective speciousness exists where there is a complete lack of evidence supporting plaintiff's claim." Id. (citing Computer Econ., Inc. v. Gartner Group, Inc., No. 98- cv-312 TW(CGA), 1999 WL 33178020, at *6 (S.D. Cal. Dec. 14, 1999). "Subjective misconduct [or bad faith] exists where a plaintiff knows or is reckless in not knowing that its claim for trade secret misappropriation has no merit." Id.

         B. Analysis

         1. Objective Speciousness

         Defendants argue that Plaintiff's trade secrets claim [2]is objectively specious "because there is a complete lack of evidence as to every element of a misappropriation of trade secrets claim." ([124.1] at 7). Defendants, to support their argument, rely on Hill v. Best Medical Intern, Inc., which found objective speciousness where "[the defendant] failed entirely to come forth at summary judgment with evidence to support any of its misappropriation claims." 2011 WL 6749036, at *8 (W.D. Pa. Dec. 22, 2011).[3] The facts here reveal, however, that Plaintiff did not "fail[] entirely" to provide evidence to support its claim. Instead, Plaintiff provided some evidence, albeit circumstantial, to support at least some elements of its misappropriation claim.[4] The Court in the Summary Judgment Order noted that Plaintiff "present[ed] circumstantial evidence that Flowers or Mr. Flowers may have transferred documents to Flowers' home computer." ([122] at 20). The Court also observed that Plaintiff provided some circumstantial evidence that Defendants may have used or disclosed its alleged trade secrets to acquire customers from Plaintiff, including evidence that

1. CRU was formed from the ground up in approximately two months, and "stole" its first account from HCC one month after ...

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