Opinion
4:18CV00500 JM
06-15-2022
ZEST LABS, INC. and ECOARK HOLDINGS, INC. v. WALMART INC. DEFENDANT
ORDER
JAMES M. MOODY JR. DISTRICT JUDGE
At the conclusion of a ten-day trial, the jury found that Walmart willfully and maliciously misappropriated Zest's trade secrets, breached the 2015 Nondisclosure Agreement with Zest Labs, that Denise Sharpe had authority to bind Walmart to the 2015 Nondisclosure Agreement, and that Walmart fraudulently induced Zest Labs to enter into the 2018 Statement of Work.
Shortly after the verdict, the parties began filing post-trial motions. Walmart moved the Court to stay enforcement of the judgment pending appeal and renewed its motion for judgment as a matter of law under Rule 50, or in the alternative remittitur. Plaintiffs filed a motion for attorneys' fees and costs with billing records attached.
Walmart made a motion for judgment as a matter of law at the conclusion of Plaintiff's case on day 7 of trial.
After review of the Plaintiffs' billing records, Walmart filed a motion for limited posttrial discovery on the issue of the timing of Plaintiffs' knowledge of the Bohling patent application. Based upon certain billing entries, Walmart contends Plaintiffs knew Walmart filed the non-provisional Bohling patent application before the patent was published by the United States Patent and Trademark Office (“USPTO”) and took no action to stop it. Walmart contends that this evidence is contrary to statements made by Plaintiffs in response to motions and at trial. Walmart argues that this new evidence is critical because Plaintiffs had a duty to protect its trade secrets and did not notify Walmart or the USPTO prior to publication that it believed the Bohling patent application contained Zest's trade secrets. Further, Walmart argues that even if the evidence was not exculpatory, Walmart could have used it to argue for mitigation of damages.
On July 28, 2021, the Court heard arguments from the parties on Walmart's motion to conduct limited post-trial discovery. The motion was granted, and Plaintiffs' attorneys were directed to produce their documents and emails dated February 28, 2019 through May 16, 2019 which contained certain search terms. Plaintiffs provided the documents to the Court in camera. Over the course of several months, the Court reviewed the documents to determine whether they contained relevant information and the Court provided a list of relevant documents to Plaintiffs' counsel. Plaintiffs object to the production of the documents. However, if the Court orders Plaintiffs to produce the documents, Plaintiffs seek to redact its privileged work-product materials before producing the documents to Walmart. Plaintiffs have also requested that the Court certify the issues related to post-trial discovery for interlocutory appeal.
The Court has ordered the Clerk to file Plaintiffs' objections and request for certification under seal and ex parte.
At this point it is undisputed that Walmart provided the Bohling non-provisional patent application to Plaintiffs in a discovery production of 14, 649 pages on February 28, 2019. Plaintiffs admit that its counsel found the patent application no later than May 8, 2019. (ECF No. 460 at 4). Eight days later, the USPTO published the Bohling patent. The Court finds that the documents listed in the addendum to this Order are relevant to the issues of the timing of Plaintiffs' knowledge, the number of lawyers involved, and the significance that the lawyers placed on the information. This issue is before the Court due to a declaration filed by Plaintiffs in response to Walmart's motion for summary judgment. Specifically, Plaintiffs' counsel stated on March 27, 2020 that he had not seen Walmart's patent application. The emails produced by Plaintiffs show that they may have been aware of the patent application earlier than May 8, 2019. The Court declines to certify the issue for interlocutory appeal. (ECF No. 461)
The issues currently before the Court in Walmart's renewed motion for judgment as a matter of law are (1) Zest failed to sufficiently identify its purported trade secret; (2) Zest's damages theory lacked any relationship to the claimed misappropriation; (3) the jury's award of exemplary damages was advisory, precluded by contract, and unreasonable; (4) the damages awarded to Zest by the jury on Zest's contract claim are duplicative; (5) there was insufficient evidence that Walmart acted willfully and maliciously; and (6) there was insufficient evidence for the jury to rule against Walmart on Walmart's counterclaim for breach of contract. The Court grants Walmart's motion on issue four. The Court finds that the damages of $5,000,000 awarded to Zest by the jury on Zest's contract claim are duplicative of the damages awarded to Zest on the misappropriation claim. The Court denies the remainder of Walmart's arguments for judgment as a matter of law and remittitur.
Plaintiffs are directed to produce the documents listed on the addendum to this Order no later than June 21, 2022. Walmart's motion for judgment as a matter of law and remittitur (ECF No. 407) is GRANTED IN PART and DENIED IN PART.
IT IS ORDERED