Opinion
1684CV03949BLS2
07-25-2019
GOVERNO LAW FIRM, LLC v. CMBG3 LAW, LLC, et al.[1]
File Date: July 29, 2019
MEMORANDUM AND ORDER ON DEFENDANTS’ POST-TRIAL MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT AND OTHER RELIEF
Kenneth W. Salinger, Justice
The Governo Law Firm, LLC brought suit alleging that six of its former partners and their new law firm took and used copies of electronic files and databases that belong to the Governo Firm. A jury returned a verdict in the Governo Firm’s favor on some but not all of its claims. The jury found that Defendants converted some electronic files or information that belong to the Governo Firm, that the six individual Defendants breached their duty of loyalty by misusing some confidential information that belongs to the Governo Firm, and that all but one of the Defendants conspired to commit a tort. On the other hand, the jury also found that Defendants did not misappropriate any trade secrets and did commit any unfair or deceptive act or practice. It awarded $900,000 in unjust enrichment damages, which was not quite one-third of the $2.793 million sought by the Governo Firm. Final judgment entered against all Defendants jointly and severally for the $900,000 in damages, $267,082.20 in prejudgment interest, and $280.00 in costs, or a total of $1,167,362.20.
Defendants have moved for judgment in their favor notwithstanding the verdict on liability or just on damages, or to remit the jury’s damage award to $410.00, or for a new trial on damages, or to strike the award of prejudgment interest.
The Court will deny this motion to extent it challenges the jury’s findings of liability and damages or seeks a new trial on damages, because the jury’s verdict is consistent with a reasonable view of the evidence and with the jury instructions. However, the Court will allow the request to strike the award of prejudgment interest. An amended final judgment will enter in the amount of $900,280.
1. Legal Standards
"A jury verdict must be sustained," and a motion for judgment notwithstanding the verdict ("JNOV") must be denied, if the record contains "any evidence from which the jury reasonably could have arrived at that verdict." Labonte v. Hutchins & Wheeler, 424 Mass. 813, 820-21 (1997). In considering a JNOV motion, a court must "view the evidence in the light most favorable" to the nonmoving party "and disregard evidence favorable" to the moving party, as the jury was free to do at trial. Id.
The standard for deciding a new trial motion "is more favorable to the moving party because ‘the judge must necessarily consider the probative force of the evidence, ’ rather than performing only the quantitative analysis called for in a motion for a directed verdict." O’Brien v. Hanover, 449 Mass. 377, 384 (2007), quoting Hartmann v. Boston Herald-Traveler Corp., 323 Mass. 56, 60 (1948). Nonetheless, a party is entitled to a new trial only if "the verdict ‘is so greatly against the weight of the evidence as to induce ... the strong belief that it was not due to a careful consideration of the evidence, but that it was the product of bias, misapprehension, or prejudice.’" Turnpike Motors, Inc. v. Newbury Group, Inc., 413 Mass. 119, 127 (1992), quoting Scannell v. Boston Elev. Ry., 208 Mass. 513, 514 (1911). "The judge should only set aside a verdict as against the weight of the evidence when it is determined that the jury ‘failed to exercise an honest and reasonable judgment in accordance with the controlling principles of law.’" O’Brien, 449 Mass. at 384, quoting Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 520 (1989).
2. Liability
Defendants argue there was no lawful basis for the jury’s findings that Defendants converted documents, files, or information that belongs to the Governo Firm, that the six individual Defendants breached their duty of loyalty to the Governo Firm by misusing confidential information that belonged to the Firm, and that all but one of the Defendants conspired to commit the wrongful act of taking and using databases or files that belonged to the Governo Firm. The Court disagrees.
2.1. Conversion
2.1.1. Liability for Taking or Retaining Property
Defendants assert that Attorneys Carson, Bergeron, Goldman, Gaughan, and Gardella cannot be individually liable for conversion because there is no evidence that they personally copied any part of the Governo Firm’s so-called "8500 New Asbestos Litigation Files." This argument is without merit.
First of law, the jury could reasonably have credited Carson’s testimony that Misiura, Goldman, and Bergeron all participated in the copying.
Furthermore, the jury could reasonably have found that all of the Defendants were liable for conversion even though some of them did not personally copy and take files from the Governo Firm. Conversion can be proved either by showing wrongful acquisition of property or by showing a wrongful refusal to return the property upon demand. See Waxman v. Waxman, 84 Mass.App.Ct. 314, 321 (2013) (son who lawfully possessed parents’ car committed conversion when, after father’s death, son refused to return it after a valid demand by mother); see generally Atlantic Finance Corp. v. Galvam, 311 Mass. 49, 50 (1942).
The Court instructed the jury that a Defendant was liable for conversion if the Governo Firm proved that the Defendant exercised dominion or control over Governo property, had no right to possession of that property, did so intentionally, and unjustly profited as a result. It explained that the second element could be proved by showing that at some point the Defendant was not entitled to keep the property and refused to return it after being asked to do so. The jury could reasonably have found that all the Defendants exercised dominion or control over the 8500 New Asbestos Files that were taken from the Governo Firm, that the Governo Firm asked that these files be returned, that each Defendant refused to do so, and that Defendants obtained some unjust profit as a result. The Governo Firm was not required to prove that each Defendant participated in wrongfully taking property from the Firm; Defendants’ refusal to return the files was sufficient.
But the Governo Firm did not ask for a joint liability instruction and did not try its claims on a joint venture theory. Instead, the jury was instructed (without objection) that the Governo Firm had to prove that each Defendant exercised ownership, control, or dominion over documents, files, or information in a manner that was inconsistent with the Governo Firm’s rights. As a result the Court may not consider Plaintiff’s new theory of joint liability in deciding Defendants’ post-trial motion. Cf. DeRose v. Putnam Management Co., 398 Mass. 205, 212 (1986) (party may not defend or challenge jury verdict based on new theory of law that differs from theory on which case was tried). The Governo Firm correctly notes that multiple defendants may be held liable for conversion on a joint venture theory, even if not every participant personally committed every element of the tort of conversion. See Foreign Car Center, Inc. v. Essex Process Service, Inc. (No. 1), 62 Mass.App.Ct. 806, 813 (2005); see generally Chelsea Hous. Auth. v. McLaughlin, 482 Mass. 579, 586 n.10 (2019) (" ‘Massachusetts retains the traditional principle of joint and several liability in tort cases’ as part of the common law") (quoting Glannon, Liability of Multiple Tortfeasors in Massachusetts: The Related Doctrines of Joint and Several Liability, Comparative Negligence and Contribution, 85 Mass.L.Rev. 50, 50 (2000)). And the jury could have credited the testimony by Ms. Misiura that all of the individual Defendants agreed that she should copy and take large parts of the 8500 New Asbestos Files to their new firm, and told Ms. Misiura what parts of the files they wanted her to copy.
2.1.2. Liability for Copying Electronic Files
Defendants also argue that the copying of intangible electronic files containing valuable business information cannot give rise to a claim for conversion, because such property is not a physical chattel. The Court disagrees.
"If paper documents can be converted, as they no doubt can ... no reason appears that computer files cannot." Network Sys. Architects Corp. v. Dimitruk, Suffolk S.Ct. civ. action no. 06-4717-BLS2, 2007 WL 4442349, at *10 (Mass.Super. 2007) (Fabricant, J.) ; accord Integrated Direct Marketing, LLC v. May, 495 S.W.3d 73, 76 (Ark. 2016); Thompson v. UBS Fin. Servs., Inc., 115 A.3d 125, 132 (Md. 2015); Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272, 1278 (N.Y. 2007); E.I. DuPont de Nemours and Co. v. Kolon Industries, Inc., 688 F.Supp.2d 443, 454-54 (E.D.Va. 2009); see also Kremen v. Cohen, 337 F.3d 1024, 1029-36 (9th Cir. 2002) (internet domain name) (applying California law).
The related argument that there could be no conversion here because the Governo Firm retained copies of all the materials taken by Defendants is unavailing as well. See Datacomm Interface, Inc. v. Computerworld, Inc., 396 Mass. 760, 773-75 (1986) (defendant-in-counterclaim liable for conversion by retaining and using carbon copy of magazine circulation list, after returning original list to rightful owner). "Conversion is the ‘wrongful exercise of dominion or control over the personal property of another.’" Waxman, 84 Mass.App.Ct. at 321, quoting Cahaly v. Benistar Property Exch. Trust Co., 68 Mass.App.Ct. 668, 679 (2007). "There is no requirement that the one converting property be shown to have had the intent to deprive permanently the rightful owner of its use and enjoyment, as in stealing." In re Hilson, 448 Mass. 603, 611 (2007). One of the rights of ownership is the ability to decide who gets to use one’s property. The jury could reasonably have found, consistent with the jury instructions, that Defendants converted electronic files belonging to the Governo Firm by exercising dominion or control over them in a manner that was inconsistent with the Governo Firm’s rights.
2.1.3. Factual Issue about Client File Materials
Defendants reiterate their position that all of the materials they took with them belonged to their clients. Once again, this argument provides no basis for negating the jury’s verdict.
Whether the 8500 New Asbestos Files constituted or contained client file materials that Defendants’ clients were entitled to take with them when they transferred their legal representation from the Governo Law Firm to CMBG3 Law was a question of fact for the jury. The Court instructed the jury that if they were to find that the only documents, files, or information converted by a Defendant consisted of materials that a client was entitled to take with them, then the Governo Firm could not prove its conversion claim against that Defendant. Based on the evidence presented, the jury could reasonably have found that a substantial portion of the electronic files that Defendants copied and took with them did not belong to any of Defendants’ clients.
2.1.4. Unjust Enrichment Damages
Finally, Defendants’ argument that the Governo Firm could not seek unjust enrichment damages on its conversion claim is also without merit.
In a case involving the conversion of tangible physical property, where a plaintiff has been deprived of its ability to use its own property, "damages are measured by the value of the converted goods at the time of the conversion, with interest from that time." Welch v. Kosasky, 24 Mass.App.Ct. 402, 404 (1987). In such a case "[t]he owner is not bound to accept a return of his property, but if he retakes it he may recover as damages the difference between the value of the property when converted and when returned, plus damages for loss of use during the period of wrongful detention." George v. Coolidge Bank & Tr. Co., 360 Mass. 635, 641 (1971). In other words, "[w]here ... the rightful owner elects to receive back the converted goods, the rule of damages ... is still based on value at the time of the conversion, but the converter is (1) credited with the value of the returned goods at the time of their return, and (2) charged with damages for loss of use of the goods during the period of the detention." Welch, supra, at 404-05.
But this case is different. Defendants took copies of the disputed materials but left the original electronic files intact with the Governo Firm. As a result a different measure of damages applied here.
The Supreme Judicial Court "has recognized three acceptable methods of measuring damages in cases involving business torts such as the misappropriation of trade secrets" or other proprietary information or databases: "the defendant’s profits realized from his tortious conduct, the plaintiff’s lost profits, or a reasonable royalty." Curtiss-Wright Corp. v. Edel-Brown Tool & Die Co., 381 Mass. 1, 11 (1980). "[T]he ‘reasonable royalty’ measure of damages is only appropriate where the defendant has made no actual profits and the plaintiff is unable to prove a specific loss." Id. at 11 n.9, quoting Jet Spray Cooler, Inc. v. Crampton, 377 Mass. 159, 171 n.10 (1979) ("Jet Spray II "). Furthermore, "the value of the misappropriated trade secrets to the defendants is not the basis of the defendants’ liability, and the value of the misappropriated trade secrets should not form the basis of the plaintiffs’ recovery." Jet Spray II, 377 Mass. at 172. And, of course, if a successful plaintiff such a case obtains a permanent injunction barring any further use of the plaintiff’s trade secret, proprietary database, or other confidential information, then the plaintiff will not be entitled to any future damages because there cannot be any further misuse of the plaintiff’s property. See Curtis-Wright, supra, at 9-10 and 12.
The Governo Law Firm was entitled to seek disgorgement of any unjust profits earned by Defendants from using the Governo Firm’s property. The Court barred the Governo Law Firm from seeking royalty-based damages because Defendants had made actual profits. Id. at 11 n.9. The Governo Law Firm chose not to seek its own lost profits as damages. It was entitled to waive any damage claim based on its own losses and instead seek to recover any profits that Defendants realized from their allegedly tortious conduct. USM Corp. v. Marson Fastener Corp., 392 Mass. 334, 338 (1984) ("USM Corp. II "). "The guiding principle" of this measure of damages "is to order the wrongdoing defendant to give up all gain attributable to the misuse of the trade secret and to measure that gain as accurately as possible." Id. at 339-40.
The Governo Firm was similarly entitled to seek restitution of Defendants’ gain from misusing Plaintiff’s property, in order to prevent unjust enrichment, as a remedy for breach of Defendants’ duty of loyalty. See Demoulas v. Demoulas Supermarkets, Inc., 424 Mass. 501, 556 (1997).
It is too late in the case for Defendants to assert, as they do in their JNOV motion, that the only damages that the Governo Firm could seek on their conversion claim was the fair market value of the files or databases that were copied and taken by the Defendants. Before trial, the Defendants asked the Court to bar proposed expert testimony proffered by the Governo Firm on damages, including proposed testimony regarding the value of the copied databases measured by the alleged cost to recreate those databases. The Court allowed that motion in limine and barred any evidence of replacement cost on the ground that Governo Firm was not entitled to recover the value of the copied materials. See Jet Spray II, 377 Mass. at 172. Consistent with that ruling, the Court instructed the jury that to prove conversion against a Defendant the Governo Firm would have to prove, among other things, that the Defendant unjustly profited from the alleged conversion, and that any damages should equal net profits earned through the misuse of the Governo Firm’s property. Since Defendants did not object to those instructions, they are law of the case and Defendants may not challenge them. See Freeman v. Planning Bd. of W. Boylston, 419 Mass. 548, 559 (1995); accord Gendreau v. C.K. Smith & Co., Inc., 22 Mass.App.Ct. 989, 990 (1986) (unobjected-to instructions on damages were law of the case).
Having succeeded in barring the Governo Firm from offering evidence of fair market value before trial, Defendants cannot now assert that fair market value was the only acceptable measure of damages.
2.2. Duty of Loyalty
Defendants’ attacks on the jury’s findings that each individual Defendant breached their duty of loyalty to the Governo Firm are also unavailing. When the individual Defendants worked at the Governo Firm, they were non-equity partners with responsibility for key client relationships. Each of them therefore owed the Governo Firm a duty of loyalty. See Meehan v. Shaughnessy, 404 Mass. 419, 433-34, 438 (1989) (law firm partners, non-equity junior partner, and associates all owed duty of loyalty to firm). As the Court instructed the jury, Defendants were free to make secret plans to compete with the Governo Firm while still working there. See Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 172 (1991); Meehan, supra, at 435. But they could not take with them confidential information or other property that belonged to the Governo Firm and use it to their advantage, for example to compete against their old firm. See Augat, supra, at 172-73; Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 840 (1972) ("Jet Spray I ").
The jury could reasonably have found that the 8500 New Asbestos Files were a proprietary compilation of materials that gave the Governo Firm a competitive advantage, that material parts of that collection were not client file materials belonging to clients that transferred their representation to CMBG3 Law, that Defendants breached their duty of loyalty by taking proprietary materials that did not belong to Defendants’ clients, and that Defendants used those materials to compete against the Governo Firm. The fact that the jury found that these materials were not trade secrets, after the Court instructed that information in the public domain cannot be a trade secret, does not bar the claim for breach of duty of loyalty. See Warner-Lambert Co. v. Execuquest Corp., 427 Mass. 46, 49 (1998) ("[C]onfidential and proprietary business information may be entitled to protection, even if such information cannot claim trade secret protection"); Augat, 409 Mass. at 169 (information may be "protectible as confidential" even if it "would not be a ‘trade secret’ of the traditional kind").
Whether and to what extent the 8500 New Asbestos Files were confidential and proprietary were factual issues for the jury to resolve. Viewing the evidence in the light most favorable to the Governo Firm, the jury could reasonably have found that Defendants breached their duties of loyalty.
2.3. Conspiracy
Defendants argue that the conspiracy claims must be dismissed because no underlying tortious act was proved. Cf. Kurker v. Hill, 44 Mass.App.Ct. 184, 188-89 (1998) (civil conspiracy consists of a group of tortfeasors acting together pursuant to "a common plan to commit a tortious act").
But the jury reasonably found that each Defendant converted property that belonged to the Governo Firm and breached their duties of loyalty to the Plaintiff, as discussed above. It was similarly reasonable for the jury to find that the Defendants had and carried out a common plan to convert intangible property belonging to the Governo Firm and to breach their duties of loyalty.
3. Damages
Defendants argue that the jury’s award of $900,000 as compensation for Defendants’ misuse of documents or databases that belong to the Governo Firm should be vacated or remitted because it is not supported by the evidence. In particular, Defendants argue that there was no evidence to support a finding that Defendants earned $900,000 in net profit by using the 8500 New Asbestos Files on behalf of their clients. This argument fails because it mistakenly assumes that the Governo Firm had the burden of proving what part of Defendants’ profits was attributable to use of Plaintiffs’ database.
Although there is often "an element of uncertainty" in determining the appropriate compensation to an injured plaintiff in business tort cases, that is "not a bar" to the recovery of damages or restitution. See, e.g., Datacomm, 396 Mass. at 777, quoting National Merchandising Corp. v. Leyden, 370 Mass. 425, 430 (1976). So long as the evidence permits a "reasonable approximation" of appropriate damages or restitution, a verdict that is consistent with that evidence must be upheld. Targus Group Int’l v. Sherman, 76 Mass.App.Ct. 421, 437 (2010). "An award of damages can stand on less than substantial evidence ... particularly [in] the case of business torts, where the critical focus is on the wrongfulness of the defendant’s conduct." Zimmerman v. Bogoff, 402 Mass. 650, 662 (1988), quoting Datacomm, supra.
The jury could reasonably have found, in accord with the Court’s instructions, that the Governo Firm proved that Defendants earned net profits after leaving to start their own law firm and that at least part of Defendants’ net profits was attributable to Defendants’ misuse of the copied materials.
Per the Court’s instructions, the jury would therefore have found that the burden shifted to the Defendants to prove the costs or expenses that should be offset against their revenue to calculate net profit, and also to prove what part of their profits was not attributable to any misuse of the copied materials. See USM Corp. II, 392 Mass. at 338 & 339 n.3; accord Jet Spray II, 377 Mass. at 174 n.14.
The Governo Firm was not required to prove exactly what part of Defendants’ profit was attributable to misuse of materials taken from the Governo Firm. It only had to prove that some part of Defendants’ profits resulted from that misuse, which would then shift the burden of proof to the Defendants. Id.
"If a defendant cannot meet its burden as to costs and profits, the defendant must suffer the consequences." USM Corp. II, supra; accord Jet Spray II, 377 Mass. at 174 n.14. In other words, if a defendant in these circumstances fails "to segregate the portion of their profits which is attributable to the misappropriated trade secrets" or confidential information "from the portion of their profits which may be attributable to other factors," they cannot complain after the verdict that a jury’s award of some or all of the defendant’s net profits as compensation to the plaintiff is excessive. Jet Spray II, supra, at 183. Though Defendants testified that only a de minimis part of their total profits was attributable to misuse of any part of the 8500 New Asbestos Files, the jury was not required to credit that evidence and could reasonably have found that Defendants failed to prove that contention.
Defendants knew going into the trial that, depending on the jury’s findings, Defendants might face the burden of proving what costs and expenses should be deducted from the gross profits and of proving what part of their net profits was not attributable to any misuse of Governo Firm property. The Court reminded the parties of the case law discussed above in a pre-trial ruling on one of Defendant’s motions in limine. The Court issued that decision, in the form of a written memorandum, a month before opening statements to the jury.
The jury’s verdict demonstrates that they followed the Court’s instructions, considered the issue carefully, did not engage in speculation, and did not act out of bias or prejudice. The jury could reasonably have found, and indeed it was essentially undisputed at trial, that since leaving the Governo Firm the Defendants earned net profits of almost $2.8 million, including income that the Defendants paid to themselves as salary. The jury found that most of those profits were not attributable to Defendants’ misuse of the copied materials, because it found that Defendants earned $900,000 in net profits through the misuse of Governo Firm proprietary materials. Defendants’ disappointment that they failed to convince the jury to award a smaller amount of compensation is not a good reason to vacate the award, order a remittitur, or order a new trial on damages. See, e.g., Solimene v. B. Grauel & Co., KG, 399 Mass. 790, 803 (1987).
Prior to trial, the Court ruled that the Governo Firm could not present evidence regarding "reasonable royalty" damages if Defendants had earned profits since starting their own firm, that monies paid by CMBG3 to its partners as distributions of profit or as salaries all count as profit for this purpose, and the fact that the individual Defendants had paid themselves substantial salaries meant that their new firm was profitable and reasonable royalty damages were not available. See Curtiss-Wright, 381 Mass. at 11 n.9; Jet Spray II, 377 Mass. at 171 n.10. Defendants agreed with and benefitted from that ruling; they tried the case on that basis; and the Court then instructed the jury on that basis. Defendants may not now argue that their salaries should have been treated as a cost rather than as part of their new firm’s profit when the jury determined what portion of Defendants’ profits should be disgorged to the Governo Firm. Cf. DeRose, 398 Mass. at 212; Bisson v. Eck, 40 Mass.App.Ct. 942, 943 (1996) (rescript); Gendreau, 22 Mass.App.Ct. at 990.
4. Prejudgment Interest
The Court agrees with Defendants that the Governo Firm has no statutory right to recover prejudgment interest. In the exercise of its discretion, the Court declines to award such interest under its common-law powers.
A monetary award to disgorge profits earned by the misuse of trade secrets or confidential information is not "damages" within the meaning of the statutes that govern prejudgment interest, and thus is not the sort of recovery as to which prejudgment interest accrues as of right. USM Corp. II, 392 Mass. at 348-50 (plaintiff seeking disgorgement of profits for misuse of trade secrets not entitled to prejudgment interest under G.L.c. 231, § 6B, which governs prejudgment interest for tort claims); see also Jet Spray II, 377 Mass. at 183-84 (same under G.L.c. 235, § 8, which governs prejudgment interest where judgment is rendered upon the report of an auditor or master).
The Legislature did not "overrule [ ] the prejudgment analysis found in" USM Corp. II and Jet Spray II by enacting G.L.c. 231, § 6H, in late 1983, as the Governo Firm now argues. Section 6H "provides for the award of prejudgment interest whenever compensatory damages are awarded." George v. National Water Main Cleaning Co., 477 Mass. 371, 378 (2017). But not all verdicts that order a defendant to pay money to a successful plaintiff constitute an award of "damages" within the meaning of § 6H. For example, an action to recover monies owed for labor and materials by enforcing a mechanics lien is an in rem proceeding, and thus a prevailing plaintiff in such an action does not recover "damages" and is not entitled to prejudgment interest under § 6H. National Lumber Co. v. United Casualty and Surety Ins. Co., Inc., 440 Mass. 723, 729-30 (2004). Similarly, an award of restitution that requires a defendant to disgorge and pay plaintiff part or all of their profit or gain from certain conduct (as in this case) is an equitable remedy for unjust enrichment, not an award of "damages" to compensate a plaintiff for economic injury that it suffered. See Bonina v. Sheppard, 91 Mass.App.Ct. 622, 626-27 (2017); Santagate v. Tower, 64 Mass.App.Ct. 324, 336 (2005). If a judgment requiring disgorgement of profits to remedy unjust enrichment from misuse of business information is not an award of "damages" for the purposes of § 6B, as the Supreme Judicial Court held in USM Corp. II, then it cannot be an award of "damages" for the purposes of § 6H either.
Section 6H provides as follows: "In any action in which damages are awarded, but in which interest on said damages is not otherwise provided by law, there shall be added by the clerk of court to the amount of damages interest thereon at the rate provided by section six B to be determined from the date of commencement of the action even though such interest brings the amount of the verdict or finding beyond the maximum liability imposed by law."
Indeed, any action to enforce a lien is considered to be an in rem proceeding against particular property. See Chrisakis v. D’Arc, 471 Mass. 365, 367-68 (2015); National Lumber, supra; Howard v. Robinson, 59 Mass. (5 Cush.) 119, 121 (1849); Residences at Cape Ann Heights Condominium Ass’n v. Halupowski, 83 Mass.App.Ct. 332, 333-35 (2013).
The Court is not convinced by the contrary conclusion in Mill Pond Assocs., Inc. v. E & B Giftware, Inc., 751 F.Supp. 299, 301 (D.Mass. 1990) (Young, J.), which was decided before National Lumber, Bonina, and Santagate.
The Court nonetheless has the power to award prejudgment interest under common-law principles. See USM Corp. II, 392 Mass. at 350. Where to do so depends on a court’s balancing of the equities in a particular case. Id.
After balancing the equities, the Court concludes that no award of prejudgment interest is appropriate in this case.
There is no need to award prejudgment interest to make the Governo Firm whole. "Prejudgment interest on compensatory damages is designed to make a plaintiff whole for the loss of money during the time it was owed but not paid." Fontaine v. Ebtec Corp., 415 Mass. 309, 327 (1993) (emphasis added). That rationale does not apply here "because the monetary relief in this case is based on the defendants’ gain and not on [plaintiffs] losses." USM Corp. II, 392 Mass. at 350 n.14; accord Jet Spray II, 377 Mass. at 183-84 n.24.
Nor is there any reason to believe that Defendants will be unjustly enriched if they are not required to pay prejudgment interest on the $900,000 in profits that they must disgorge to the Governo Firm. That is so for several reasons. Most of Defendant’s profits were earned well after this lawsuit was filed, and much closer in time to the jury verdict and entry of judgment. See USM Corp. II, 392 Mass. at 349; Jet Spray II, 377 Mass. at 182 n.21. Prejudgment interest on disgorged profits should logically only run on after-tax profits, but the Governo Firm only presented evidence of Defendants’ pre-tax profits. See USM Corp. II, supra, at 351. And it seems quite likely that the jury awarded restitution damages of $900,000 because Defendants were unable fully to segregate the portion of their profits that was attributable to misuse of the Governo Firm’s proprietary information from the portion of their profits attributable to other factors. See Jet Spray II, supra, at 183. Many of the materials in the 8500 New Asbestos Files that would be most valuable to clients that left the Governo Firm and transferred their legal representation to the Defendants- such as information about job sites where the client products were present, the client’s settlement history, deposition transcripts from a client’s prior cases, and other parts of a client’s prior case files- would appear to be client file materials that the Governo Firm would have been required to send to the client or their new legal counsel if Defendants had not preemptively copied and taken those materials with them when they left. Given these circumstances, the Court concludes that no prejudgment interest should be awarded.
The Governo Firm’s assertion that it "was precluded from introducing evidence of its own loss," and therefore should be allowed to recover prejudgment interest, is incorrect. The Court never barred Plaintiff from presenting evidence that it suffered a loss as a result of Defendants’ alleged misconduct. Though the Court barred evidence of a reasonable royalty measure of damages, as discussed above, the Governo Firm was free to seek damages on the theory that alleged misconduct by the Defendants caused Plaintiff to lose profits. The Governo Firm opted not to do so, explaining (during the final trial conference) that it could not prove it had lost any profits. The Governo Firm’s inability to, or voluntary decision not to, offer evidence of its own lost profits cannot justify an award of prejudgment interest on the portion of Defendants’ profits that they jury found was attributable to the misuse of materials taken from the Governo Firm.
ORDER
Defendant’s motion for judgment notwithstanding the judgment is ALLOWED IN PART and DENIED IN PART. It is allowed to the extent that Defendants seek to strike the award of prejudgment interest. The motion is denied to the extent that Defendants seek any other relief. An amended judgment shall enter that awards Plaintiff $900,000 in damages plus $280 in costs, for a total of $900,280.00; the amended judgment shall not include any amount of prejudgment interest.