Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. C-816422-9 (consolidated with Santa Clara County Super. Ct. Nos. CV782476, C99-01609.
OPINION
RIVERA, J.
These consolidated appeals arise out of a dispute regarding the use of formulas for skin-care products. Allure Cosmetic USA, Inc., (Allure) manufactured products for Jan Marini Skin Research, Inc. (JMSR). Allure sued Gurpreet S. Sangha, a former partner in Allure, and G. S. Cosmeceutical USA, Inc. (GSC), the company Sangha formed after leaving Allure, alleging Sangha recruited Allure’s clients, denigrated the company, and stole company secrets. In another action, JMSR sued Allure, its owner Sam Dhatt, Stephen Kohler (a former employee of JMSR), and several companies related to Allure, contending they had improperly appropriated and used the formulas for JMSR’s products to make products for other clients. Allure and Dhatt cross-complained against, among others, JMSR and Sangha. The actions were consolidated for trial. Kohler, Dhatt, Allure, and the related companies appeal the judgments entered against them in JMSR’s action. Sangha and GSC appeal the judgment against them in Allure’s and Dhatt’s actions. We affirm in part, reverse in part, and remand for further proceedings.
I. BACKGROUND
A. JMSR’s Business and Dealings with Allure
Jan Marini founded JMSR in 1994, and acts as its chief operating officer and president. Nancy Felker is its executive vice-president. The company manufactures nonprescription skin-care products and sells them to the “professional market,” including physicians and spas. Their products include the “bioglycolic” line, which includes glycolic and other acids for acne, lines and wrinkles, discoloration, and rosacea; the C-ESTA line, a product for lines and wrinkles; the Transformation or TGF Beta-1 line, which is used for skin rejuvenation; benzoyl peroxide products for acne; sunscreens; products for aging skin; and products with retinol, which are used for lines, wrinkles, acne, and discoloration. Marini had developed various formulas for skin-care products during the 1980’s and began marketing them through an earlier company she had owned, Janadyne Consulting, Inc. (Janadyne).
JMSR developed its customer list in part from the database that had been developed by Janadyne. After JMSR was formed, it hired a sales team and advertised in publications; representatives of JMSR also went to medical conferences and to aesthetician trade shows. JMSR’s database included information on the name of each customer, the contact person, the address and telephone number, billing arrangements, every item purchased, and the dates of the purchases. Access to the database was limited and required passwords, and some departments could only read the information, but not print it out or change it. Sales representatives who were assigned to geographic territories had access to information only about the customers in their territories. Each representative was required to sign an agreement providing that the customer lists were confidential and would not be disclosed to anyone outside the company.
Most of JMSR’s products were originally manufactured to its specifications by a contract manufacturer known as Columbia Cosmetics. Sam Dhatt was Columbia Cosmetics’ chemist at the time. Dhatt met with Marini when she first discussed the products she wanted Columbia Cosmetics to manufacture. Marini provided samples of some products and a list of ingredients and their amounts. During the time Columbia Cosmetics made products for JMSR, Marini asked Dhatt to duplicate other companies’ products.
In his capacity as a chemist, Dhatt often worked with customers who wanted Columbia Cosmetics to make a product similar to that of a competitor.
Dhatt left Columbia Cosmetics in 1994 or 1995; he and Sangha, along with a third “silent partner,” formed Allure. Early in 1995, Allure began making products for JMSR, initially using formulas that had been used to manufacture them at Columbia Cosmetics. By late 1995, Allure was making most of JMSR’s products. JMSR provided between 70 and 95 percent of Allure’s business from 1995 to 1997.
Marini asked Allure to sign a “Supplier Proprietary Information Agreement.” Allure raised no objections, and Sangha signed the agreement on behalf of the company in January 1996 (the 1996 agreement). The 1996 agreement recited that JMSR “is in the business of developing and distributing skin-care products;” that JMSR “has developed and will be developing proprietary skin-care products;” and that Allure along with any affiliates, Dhatt, and Sangha (referred to as the Allure parties) “are manufacturing skin-care products for JMSR and assisting JMSR in the formulation of such products.” Under the agreement, the Allure parties acknowledged that JMSR had “specified the principal ingredients and their proportions in the skin-care products manufactured by the Allure Parties for JMSR.” They also acknowledged that “JMSR’s C-ESTA and TGF Beta skin-care products are unique and proprietary to JMSR.” They agreed “to refrain from manufacturing or formulating for any other customer a skin-care product which (a) uses the same formula as a skin-care product that the Allure Parties manufacture or have manufactured in the past, present, or future for JMSR, or (b) contains ascorbyl palmitate (the primary ingredient of the C-ESTA line) or Transforming Growth Factor Beta-1 (‘TGF Beta-1’ – the key ingredient of the TGF Beta line).” The agreement defined as “confidential information” the “identity of the supplier of TGF Beta-1 for the TGF Beta product line, formulas of the JMSR skin-care products, and JMSR’s marketing and business plans, product sales data, strategies, forecasts[,] unannounced new products, and the identity, purchasing habits, and contact information of JMSR’s customers.” Under the agreement, the Allure parties agreed not to divulge any confidential information to anyone but JMSR and its affiliates and agents who needed to know the information, and not to use the confidential information except on behalf of JMSR. These restrictions would remain in effect perpetually.
Under the 1996 agreement, the Allure parties also agreed to contact JMSR and obtain its written consent before manufacturing skin-care products for anyone they knew to be a former JMSR employee or a company represented by a former JMSR employee, and not to solicit or sell skin-care products to anyone they knew to be a customer of JMSR. The restrictions on doing business with former JMSR employees or customers would remain in effect for two years after JMSR stopped buying skin-care products from Allure. The 1996 agreement contained both an attorney fee provision and an integration clause providing that it constituted the entire agreement between JMSR and the Allure parties, that any written or oral agreements on the same subject matter were cancelled, and that any modification to the agreement must be in writing.
Marini asked Allure to sign an updated supplier proprietary information agreement in 1998 (the 1998 agreement), and Dhatt and Sangha did so. The 1998 agreement was virtually identical to the 1996 agreement, but included JMSR’s “Bioclear” skin-care products in the products that were protected as proprietary to JMSR, and prohibited Allure from manufacturing or formulating for any other client products that contained a combination of salicylic acid, azelaic acid, and glycolic acid, the key combination of ingredients in Bioclear products.
B. Kohler and Skin Therapy
Kohler worked for JMSR from approximately 1994 or 1995 until 1997, carrying out duties in international marketing and managing the sales force. When he left JMSR in 1997, he signed a severance agreement in which he agreed to refrain from copying or removing from JMSR’s premises proprietary information, and agreed to keep confidential JMSR’s trade secrets and confidential information, including knowledge of ongoing sales activity. The severance agreement provided that in the event of a breach of the agreement, the prevailing party would be entitled to attorney fees.
After leaving JMSR, Kohler tried to develop a line of skin-care products that would be manufactured by Columbia Cosmetics. When that effort failed, he contacted Dhatt in October 1997 and asked him for bulk pricing on various products. The letter he sent contained a list of “the type of product” that he was looking for, and mentioned several JMSR products, including C-ESTA cream and TGF products, sunscreen, and acne gel. Dhatt gave price quotes to Kohler.
The reply facsimile transmission had the words C-ESTA and TGF crossed out. Dhatt testified that he crossed out the term C-ESTA in order to avoid jeopardizing his relationship with Marini and in order to avoid violating the proprietary information agreement.
Dhatt asked Sangha to take the ingredient listings for various JMSR products, change some of the ingredients, and remove JMSR’s name and formula numbers and replace them with the name “Skin Therapy.” Sangha did so, believing Skin Therapy was a JMSR private label venture. In late 1997, however, Sangha realized Kohler, not JMSR, owned the Skin Therapy line. He reminded Dhatt that Allure could not do business with a former employee of JMSR, and asked Dhatt to tell Marini of Allure’s dealings with Kohler. Dhatt met with Marini, and at her request sent a letter to Kohler, telling him Allure would not be able to do business with him, and notifying him that Allure had a “proprietary arrangement” with JMSR and that “[c]opying patented ingredients and formulas would place both Allure and you in a position of legal liability.”
In late 1998 or early 1999, Dhatt and Kohler once again began discussing doing business together, and agreed that Allure would manufacture products for the Skin Therapy brand. Allure began supplying products to Skin Therapy Inc. in early 1999. At first, Allure filled Skin Therapy Inc.’s orders by using products that had been made for JMSR. Soon afterward, Allure started making separate batches for Skin Therapy Inc. using a copy of master formulas for JMSR products with JMSR’s name “whit[ed] out” and the new client’s name inserted in its place, on Dhatt’s instructions. On other occasions, Allure duplicated or modified formulas for JMSR’s products to create products or formulas for other clients, or put excess JMSR products in other customers’ containers. Skin Therapy Inc. collected and used customer lists from its new sales representatives, including lists of JMSR customers, and the names of the customers were entered into Allure’s computer system. On at least one occasion, a Skin Therapy Inc. employee contacted a current JMSR salesperson to ask for her customer list.
Skin Therapy Inc. was incorporated around the end of 1998, owned by Kohler and two other people.
The “master formula” for a skin-care product manufactured by Allure includes the raw materials used, the percentage of each material, and the mixing instructions, including such information as instructions on sanitizing the equipment, the order in which ingredients are added, and the amount of time they are mixed.
According to Kohler’s testimony, Skin Therapy Inc. ran its operations out of Allure’s offices.
A meeting took place in Allure’s offices in April or May of 1999 to discuss Skin Therapy Inc. products and strategies for marketing them. Among the participants were Dhatt, Kohler, and several former JMSR employees who were working as sales managers for Skin Therapy Inc. Before and after the meeting, Dhatt and Kohler said they did not care if they had to compete with Marini, go after her clients, harm her financially or emotionally, ruin her reputation, or put her out of business. Dhatt said Marini would become a “nobody” in the business. Kohler and Dhatt said the Skin Therapy Inc. sales managers were to tell JMSR’s clients that they used to work for JMSR; that Skin Therapy Inc.’s products were the same as JMSR’s, or improved versions of the same products; that they were using the same chemist that JMSR had used; and that Skin Therapy Inc.’s products were cheaper than JMSR’s.
In June 1999, after Marini heard Dhatt was copying the JMSR product line, she sent Dhatt a letter designating JMSR products covered under the supplier proprietary information agreement. Marini and Dhatt had a conversation in which Marini told Dhatt she knew he and Kohler were hiring JMSR’s sales representatives and using their customer lists to solicit JMSR’s customers and to denigrate its products. Dhatt told her his actions were none of her business and that if she did not like the situation, she could sue him.
Dhatt stopped operating Allure around the end of 1999 because its debts made it difficult to get loans and credit lines, and began operating his business under the auspices of a new corporation, Allure Cosmetic, Inc.
In 1999 or 2000, after JMSR’s lawsuit was filed, Dhatt destroyed approximately 45 laboratory notebooks, which according to a former employee would have revealed whether the original formulations of the products Allure made were the same as those of JMSR’s products.
C. Sangha Leaves Allure and Forms GSC
The relationship between Sangha and Dhatt soured in 1998, and Dhatt’s wife began noticing that Sangha was spending more time than usual away from the office; he was seeing vendors or contractors in the production area of Allure’s facility; he was receiving telephone calls from commercial real estate agents; he was making telephone calls to Marini during evening and nighttime hours from a company line installed in his home; and JMSR had begun asking for Sangha, rather than Dhatt, when calling Allure. She also noticed that an unusual number of copies had been made on the company photocopy machine. In the last week of March 1998, Sangha told an employee of another cosmetic company, Amritpal Gill, that he intended to begin his own company, and asked Gill if he would like to work for him. Sangha told Gill he expected to open his business soon, and that he was only waiting for a commitment from Marini. When Gill asked how Sangha expected to get customers, Sangha replied that everything had been planned, that once the company was registered, the business would be there, and that he was already talking with Felker. Sangha spoke with Gill regularly about his plans over the next several weeks, and in late April urged Gill to resign his job and prepare to work for him.
In April 1998, after Dhatt bought the third partner’s interest in Allure, Sangha resigned from the board of directors of the company. Dhatt told Marini and Felker that Sangha would be leaving Allure. In response to their inquiry about what Sangha would be doing and their indication that they enjoyed working with Sangha, Dhatt suggested that JMSR divide its business between Allure and Sangha’s new company.
After Sangha left Allure, he formed GSC. Marini decided to have both Allure and GSC manufacture products for JMSR, thinking it would be to JMSR’s benefit to have two suppliers nearby. JMSR stopped doing business with Allure in early 1999, however, after Dhatt became difficult to work with and less responsive to JMSR’s needs, and after Marini and Felker heard that Allure was offering JMSR’s products to other customers.
Gill testified that Sangha had documents with Allure’s master formulas in his home; that at Sangha’s direction, Gill transferred these formulas to documents with GSC’s name on them; that Sangha said it was necessary to do so “to cover his tracks”; and that Sangha said he would give the formulas new numbers. Dhatt testified that after Sangha left Allure, he found that two laboratory notebooks, computer files, customer files, and raw materials were missing. After Allure’s attorneys demanded the return of the materials, Sangha returned the two laboratory notebooks.
Felker also testified that she learned in spring 1998 that Dhatt had misrepresented the price of an ingredient in their products. Dhatt had told them he was buying retinol for $30,000, and JMSR advanced Allure $15,000 to cover part of the cost of the ingredient. Sangha later told them the total cost of the retinol was approximately $14,000. In response, JMSR deducted $15,000 from an invoice.
Before leaving Allure, Sangha also met over dinner with Lee Tennigkeit, the owner of Penny Island Products, another customer for which Allure manufactured products. Tennigkeit was looking for a new manufacturer because he believed that Allure was not including a special oat product in the products it manufactured for him. He had also seen Dhatt deliberately use the wrong ingredient for another customer. Sangha told Tennigkeit he planned to leave Allure and start his own business. Sangha empathized with Tennigkeit’s concerns about Dhatt, told him other customers were not happy, and did not assure Tennigkeit that Allure would not substitute ingredients in his products. During the dinner, Tennigkeit and Sangha agreed that Sangha’s new company would manufacture products for Penny Island, but Tennigkeit did not recall whether he or Sangha made the initial suggestion. Tennigkeit transferred his business to GSC and did not use Allure again, despite being offered a 30 percent discount from Allure.
D. Skinquest and Dermaquest
In May or June 1999, Dhatt and his wife formed a company called Skinquest, Inc. Kohler left Skin Therapy Inc. in September 1999, and Skinquest took over its operations. For approximately a month, Skinquest bought Skin Therapy Inc. products from Allure and sold them to the aesthetician and physician market. Dhatt and his wife then formed another company called Dermaquest, Inc., which took over the operations of Skinquest.
E. The Lawsuits
Allure brought an action against Sangha and GSC (collectively the Sangha defendants) in May 1998, alleging the Sangha defendants had violated the Uniform Trade Secrets Act (UTSA) (Civ. Code, § 3426 et seq.) (Allure Cosmetics USA, Inc. v. Sangha (Super. Ct. Contra Costa County, 2004, No. C99-01609 (the Allure action).) The first amended complaint in the Allure action alleged causes of action for misappropriation of trade secrets, slander, conversion, interference with contractual relations, unfair trade practices, breach of fiduciary duty, fraud, and conspiracy.
JMSR filed an action in June 1999 (Jan Marini Skin Research, Inc. v. Skintherapy Co. (Super. Ct. Santa Clara County, 2004, No. CV782476 (the JMSR action)), naming as defendants Kohler, Allure, Dhatt, and others, alleging causes of action for misappropriation of trade secrets, unfair competition, trade libel, false representation and false designation of origin, breach of contract, inducing breach of contract, and intentional interference with economic advantage. JMSR later amended its complaint to name as defendants Skinquest, Dermaquest, and Allure Cosmetic, Inc. Allure, Dhatt, Skin Therapy Inc., and Kohler cross-complained against JMSR, Marini, Sangha, and the owner of Columbia Cosmetics alleging causes of action for unfair competition and misappropriation of trade secrets for removing master formulas and other documents from Allure’s premises, interference with economic relations, libel, trade libel, conversion, restraint of trade, and conspiracy.
Allure, Dhatt, Allure Cosmetic, Inc., Dermaquest, and Skinquest have filed joint briefs on appeal, and will be collectively referred to as the Allure defendants. Kohler has joined in their briefs, with the exception of the arguments relating to punitive damages and injunctive relief, and has also filed separate briefs on appeal.
A first amended cross-complaint, filed on June 7, 2000, listed only Allure and Dhatt as cross-complainants.
The Allure action and the JMSR action were consolidated for trial. At trial, citing the parol evidence rule, the court on January 5, 2004, precluded the parties from introducing evidence that would “add to, change, explain, contradict or interpret” the terms of the 1996 or 1998 agreements. The court supplemented that ruling on February 2, 2004, to preclude the Allure parties from introducing evidence that they “owned the formulas for the skin-care products they manufactured for [JMSR] or that the Allure Parties owned [JMSR] product formulas under some industry custom and practice or that the parties intended either the 1996 or the 1998 Agreement to have any meaning other than that set forth by its express terms.” According to the February 2, 2004, order, “[e]vidence of course of dealing or usage of trade or of the circumstances under which the agreement was made that contradicts [JMSR] ownership of all of the formula [sic] to its skin-care products is irrelevant and precluded.” In reaching this conclusion, the trial court interpreted the 1998 agreement to mean that the parties had agreed that JMSR owned all of the formulas to its skin-care products.
The February 2, 2004, order did not apply to Kohler.
F. Verdicts and Attorney Fees
Marini and JMSR moved for a directed verdict on the cross-complaint’s cause of action for misappropriation of trade secrets, based on the trial court’s rejection of the Allure parties’ claim of ownership of the master formulas pursuant to the 1998 agreement. The Sangha defendants similarly moved for a directed verdict on the misappropriation claims. The trial court granted these motions.
The jury returned verdicts in favor of JMSR and against Dhatt on JMSR’s claims for misappropriation of trade secrets, breach of contract, and intentional interference with prospective economic advantage. The jury awarded JMSR $40,000 for breach of contract, and $59,000 for misappropriation of trade secrets and/or intentional interference with prospective economic advantage. It found by clear and convincing evidence that Dhatt had acted with malice, oppression, or fraud. The jury found in favor of Dhatt on JMSR’s claim for inducing breach of contract.
Similarly, the jury found in favor of JMSR and against Allure on JMSR’s claims for misappropriation of trade secrets, breach of contract, and intentional interference with prospective economic advantage, and in favor of Allure in JMSR’s claim for inducing breach of contract. Damages to JMSR were $40,000 for breach of contract and $39,000 for misappropriation of trade secrets and/or intentional interference with prospective economic advantage. The jury found by clear and convincing evidence that Allure had acted with malice, oppression, or fraud.
On JMSR’s claims against Allure Cosmetic, Inc., the jury found in favor of JMSR on its claims for misappropriation of trade secrets and intentional interference with prospective economic advantage, and in favor of Allure Cosmetic, Inc., on JMSR’s claim for inducing breach of contract, and awarded JMSR $269,000 in damages. By clear and convincing evidence, the jury found Allure Cosmetic, Inc., to have acted with malice, oppression, or fraud.
Dermaquest was found liable on JMSR’s claims for misappropriation of trade secrets and intentional interference with prospective economic advantage, and not liable on the claim for inducing breach of contract. The jury awarded JMSR $439,000 in damages, and found Dermaquest had not acted with malice, oppression, or fraud.
The jury found in favor of JMSR on its claims against Kohler for misappropriation of trade secrets, breach of contract, inducing breach of contract, and intentional interference with prospective economic advantage. The jury awarded JMSR $40,000 for the contract claim and $76,000 for the other claims, and found Kohler had not acted with malice, oppression, or fraud.
On Allure’s claims against Sangha, the jury found in favor of Sangha on the claims for conversion and fraud, and in favor of Allure on the claims for breach of fiduciary duty and intentional interference with prospective economic advantage. The jury awarded Allure damages of $427,000, and found by clear and convincing evidence that Sangha had acted with malice, oppression, or fraud. The jury found for GSC on Allure’s claim for conversion and awarded no damages, but found GSC had acted with malice, oppression, or fraud.
Sangha later filed motions for judgment notwithstanding the verdict (JNOV) and for a new trial. The trial court denied both motions.
The jury awarded JMSR $1 million in punitive damages for Dhatt’s conduct, and no punitive damages for the conduct of Allure and Allure Cosmetic, Inc. It awarded Allure $210,000 in punitive damages for Sangha’s conduct, and no punitive damages for GSC’s conduct.
On JMSR’s motion for attorney fees, the trial court determined that JMSR was the prevailing party and should recover from Dhatt, Allure, and Skin Therapy Inc., jointly and severally, attorney fees in the amount of $3,001,268.50; and from Kohler a one-third portion of that amount, in the amount of $1,000,422.80. The court also awarded JMSR $211,679.58 in costs from Dhatt, Allure, Allure Cosmetics, Inc., Dermaquest, Skin Therapy Inc., and Skinquest; and $201,444.60 from Kohler.
G. Findings Against Skinquest
Skinquest was treated as a party during most of the trial. On March 17, 2004, however, after the close of evidence, JMSR informed the court that Skinquest’s corporate status had been suspended. The following day, counsel for Allure requested a continuance, informing the court that Allure’s attorneys had been unaware that Skinquest’s corporate status was suspended and that Skinquest was in the process of obtaining a revivor, which was expected within a day. JMSR’s attorney told the court she had received the certificate of suspension before trial began, and asked the court to treat Skinquest as a nonappearing defendant and enter judgment against it under Code of Civil Procedure section 594. The trial court denied the request for a continuance, concluding Skinquest had not been diligent in seeking a revivor of its corporate status, and took under submission Allure’s motion for judgment. The jury did not consider the claims against Skinquest.
On March 19, 2004, the day after the request for a continuance, a certificate of revivor was filed with the trial court, indicating that the Franchise Tax Board had relieved Skinquest of its suspension.
The trial court heard JMSR’s motion for judgment on June 30, 2004. On August 30, 2004, the court denied the motion and treated Skinquest’s revivor as effective on March 19, 2004. However, the court ruled that, due to its inactivity during the trial, Skinquest must accept the procedural posture of the case as of the date of the ruling, and deemed Skinquest to have waived trial by jury and the right to present further evidence. Accordingly, the trial court acted as the trier of fact on the claims against Skinquest, relying on the evidence that had been presented at trial. On the merits of JMSR’s claims against Skinquest, the court ruled in JMSR’s favor. The court awarded JMSR $2,120,779, finding that Skinquest had joined an ongoing conspiracy among the other defendants in or about September or October 1999, and was therefore liable for all damages flowing from the acts of its coconspirators.
H. Injunctive Relief
JMSR requested permanent injunctive relief, and the trial court granted an injunction against defendants Dhatt, Allure, Allure Cosmetic, Inc., Skinquest, Dermaquest, Skin Therapy Inc., and Kohler. The injunction prohibited them from: (1) using the formulas or the derivations of the formulas of any of a variety of JMSR skin-care products; (2) disclosing nonpublic information about the ingredients, components, ingredient combinations, proportions, or other formulation details of the JMSR products; (3) doing business with any customer whose identity or other information was obtained from the customer list or database of JMSR or Janadyne or from any current or former JMSR employee or sales representative; (4) doing business with any current or former JMSR customer whom the defendants had in the past solicited for the purpose of doing business; (5) doing business with any JMSR customer whose identity or other information was contained in JMSR or Janadyne’s customer list or database as of the date of entry of the judgment; and (6) soliciting any current or former sales representative of JMSR to leave or accept any position with defendants or their business entities or affiliates.
Although the trial court’s statement of decision explains that it does not apply to Kohler, the judgment filed on the same date includes Kohler among the parties enjoined. The court also issued a separate decision with respect to Kohler stating: “[JMSR’s] request for permanent injunctive relief against Stephen Kohler is granted only as provided for under Civil Code § 3426.2 regarding formulas and customer lists owned by [JMSR].”
II. DISCUSSION
A. Appeal in the JMSR Action
1. Exclusion of Parol Evidence
The Allure defendants contend the trial court erred in excluding evidence that Dhatt and Allure developed the formulas for JMSR’s products and that JMSR did not own the formulas. They argue that the evidence does not contradict the terms of the 1998 agreement and that, even if it is inadmissible in the contract causes of action, it is nevertheless admissible to show the Allure defendants did not misappropriate JMSR’s trade secrets.
Although the trial court excluded evidence to vary the terms of either the 1996 or the 1998 agreement, the focus of the Allure defendants’ argument is on the 1998 agreement. Because the pertinent language in the two agreements is virtually identical, our analysis applies equally to the 1996 agreement.
The parol evidence rule provides that evidence of a prior agreement or contemporaneous oral agreement may not be admitted to vary the terms of an integrated written contract. (Code Civ. Proc., § 1856.) The parol evidence rule is not merely a rule of evidence, but “ ‘a rule of substantive law making the integrated written agreement of the parties their exclusive and binding contract no matter how persuasive the evidence of additional oral understandings. Such evidence is legally irrelevant and cannot support a judgment.’ ” (Banco Do Brasil, S.A. v. Latian, Inc. (1991) 234 Cal.App.3d 973, 1000.) As our Supreme Court has explained, “ ‘[t]he test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.’ ” (City of Manhattan Beach v. Superior Court (1996) 13 Cal.4th 232, 246, quoting Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37; see also Software Design & Application, Ltd. v. Price Waterhouse (1996) 49 Cal.App.4th 464, 470.) If the evidence offered would not persuade a reasonable person that the agreement meant anything other than the ordinary meaning of its words, it is useless. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 913.)
In excluding the proffered evidence, the trial court also relied on Evidence Code section 622, which establishes a conclusive presumption that the facts recited in a written instrument are true as between the parties.
We first consider whether the 1998 agreement is reasonably susceptible to the interpretation that JMSR did not own the formulas to its products. The agreement provided that JMSR had developed proprietary skin-care products; that the Allure parties manufactured skin-care products for JMSR and assisted JMSR in their formulation; that JMSR “ha[d] specified the principal ingredients and their proportions in the skin-care products manufactured by the Allure Parties for JMSR,” and that certain products were “unique and proprietary to JMSR.” Moreover, the Allure parties agreed that certain information, including “formulas of the JMSR skin-care products . . . and the identity, purchasing habits, and contact information of JMSR’s customers” constituted confidential information, the use of which could cause competitive injury to JMSR, and agreed not to divulge such confidential information except to JMSR, its employees, and its agents, and not to use the confidential information except on behalf of JMSR.
The trial court concluded the contractual language unambiguously meant that JMSR owned all of the formulas to its skin-care products. The Allure defendants dispute this conclusion, pointing out that the 1996 and 1998 agreements did not expressly state that JMSR owned the formulas and that no written agreement was in effect when Allure began making products for JMSR. According to the Allure defendants, they would have shown that it is the custom and practice in the skin-care industry that the person who creates and develops a product formula owns the formula absent a contractual agreement stating otherwise.
Allure began manufacturing products for JMSR in early 1995, and the parties did not enter into a written supplier proprietary information agreement until January 1996.
Even bearing in mind the proffered evidence, we agree with the trial court that the contractual language cannot be reconciled with a conclusion that Allure owned the formulas to the products it manufactured for JMSR. It is impossible to understand the provisions that certain products were “unique and proprietary to JMSR,” and that the formulas were confidential information that Allure and Dhatt could not use on behalf of anyone but JMSR, as being reasonably susceptible to the interpretation that Dhatt or Allure, rather than JMSR, owned the formulas to those products. Whether or not it is the custom in the industry that the one who develops a formula owns it, the trial court properly excluded such evidence to construe or vary the terms of the 1998 agreement.
A more difficult question is presented, however, by the Allure defendants’ contention that even if extrinsic evidence was inadmissible to interpret the 1998 agreement, it should have been admitted for the limited purposes of considering the defenses to the noncontract causes of action—particularly the claim for misappropriation of trade secrets—and the claim for punitive damages.
The UTSA defines misappropriation as follows: “(1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or [¶] (2) Disclosure or use of a trade secret of another without express or implied consent by a person who: [¶] (A) Used improper means to acquire knowledge of the trade secret; or [¶] (B) at the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was: [¶] (i) Derived from or through a person who had utilized improper means to acquire it; [¶] (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or [¶] (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or [¶] (C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.” (Civ. Code, § 3426.1, subd. (b).)
The Allure defendants argue that the focus of this definition is their actions at the time they acquired the formulas; that at the time they did so, they had not yet entered into either the 1996 or the 1998 agreement; that they should have been allowed to present evidence that Dhatt developed the formulas independently; and that the industry practice was that the one who developed a formula owned it. They also argue that the excluded evidence was relevant to whether Dhatt used his own skill, experience, and knowledge—rather than JMSR trade secrets—to create formulas for other customers.
The Allure defendants rely for their position in particular on Futurecraft Corp. v. Clary Corp. (1962) 205 Cal.App.2d 279 (Futurecraft) and Rigging Internat. Maintenance Co. v. Gwin (1982) 128 Cal.App.3d 594 (Rigging International), which consider the right of a worker to continue to use his or her own expertise after leaving employment. These cases do not lead us to conclude that the trial court erred in excluding evidence that contradicted the 1998 agreement.
The plaintiff corporation in Futurecraft, a manufacturer of valves and valve components for guided missiles and rockets, brought an unfair competition action against a former employee, Roderick Koutnik, and his new employer, Clary Corporation, for the wrongful use and disclosure of certain valve designs that the plaintiff claimed were trade secrets. Koutnik had been employed by Futurecraft to invent, design, and develop the valves and components, and had done so using knowledge and skills gained in large part while working for a previous employer. (Futurecraft, supra, 205 Cal.App.2d at pp. 281-282.) The Court of Appeal stated: “A basis for the protection of trade secrets is that the recipient obtains through a confidential relationship something he did not previously know. [Citations.] [¶] . . . [¶] The court cannot compel a man who changes employers to wipe clean the slate of his memory. [Citations.] To grant plaintiff the relief prayed for would in effect restrain Koutnik from the pursuit of his profession. He would be deprived of the use of knowledge and skill which he gained which did not originate with plaintiff. [Citation.] If the foregoing is not soundly premised how could a former employee with Koutnik’s knowledge and skill obtain future employment?” (Id. at p. 288.) The Court of Appeal affirmed the trial court’s judgment in favor of the defendants, noting as it did so that Koutnik had no contractual obligation not to make competitive use of the valve designs. (Id. at pp. 291-292.)
Rigging International similarly considered the ability of a defendant to compete with a former employer. The respondent there, Steve Gwin, had worked for the plaintiff, Rigging International Maintenance Company (Rigging), which was in the business of providing repair and maintenance services for container cranes on shipping docks. At the time Gwin began working for Rigging, he had experience in crane maintenance. (Rigging International, supra, 128 Cal.App.3d at pp. 598, 599.) While he was working there, Rigging prepared a bid to take over maintenance work for four cranes at the facility of Marine Terminals Company (MTC), which had been Gwin’s former employer. Gwin was aware of the progress of the negotiations and helped estimate the cost of performing the work for MTC, but was not part of the negotiating team. (Id. at pp. 599-600, 609-610.) While the negotiations between Rigging and MTC were going on, Gwin signed an agreement not to disclose plaintiff’s trade secrets, and providing that any inventions or improvements made by Gwin during his employment should be the property of the plaintiff and that Gwin would not use them without Rigging’s consent. (Id. at pp. 600-601.) Several months later, Gwin formed a new corporation and left Rigging’s employ. Shortly thereafter, MTC told Rigging it was not pleased with the negotiations for the maintenance contract and would seek other bids. The following month, Gwin told MTC he was interested in preparing a bid. (Id. at pp. 602, 610.) Rigging brought an action alleging interference with business relationship, unfair competition, and breach of confidential information agreement. (Id. at p. 598.)
The trial court ruled for Gwin, and the Court of Appeal affirmed, concluding the judgment was supported by substantial evidence. (Rigging International, supra, 128 Cal.App.3d at pp. 598, 614.) The Court of Appeal noted there was evidence that Gwin had only minimal connection with Rigging’s negotiations with MTC; that any confidential information Gwin might have used in his own negotiations with MTC was not helpful; and that the methods he used to figure his costs were different from those used by Rigging and were based on his own extensive experience. (Id. at pp. 610-612.) Moreover, there was evidence that Gwin learned the principles of a safety device for lifting shipping containers, which was included in his proposal, before his employment with Rigging, and the court found that Gwin did not acquire any additional knowledge relating to that device from Rigging. (Id. at pp. 602, 613-614.) The court noted that “a ‘basis for the protection of trade secrets is that the recipient obtains through a confidential relationship something he did not previously know’ ” (id. at p. 613, quoting Futurecraft, supra, 205 Cal.App.2d at p. 288), and that an employee “is said to have acquired information amounting to a trade secret from his employer if the information is acquired during the course of his employment” (Rigging International, supra, 128 Cal.App.3d at p. 613). Since Gwin had learned nothing new about the safety system in the course of his employment, Rigging was not entitled to treat it as a trade secret in its action against him. (Id. at pp. 613-614.)
This case presents important differences from both Futurecraft and Rigging International. In Futurecraft, there was no contractual obligation not to disclose information developed in the course of the confidential relationship; here there was. And in Rigging International, there is no indication that the confidentiality agreement provided that the safety device was protected as Rigging’s proprietary information, leaving open to dispute whether Gwin had acquired any particularized knowledge in the course of his employment that was protected. Here, on the other hand, the agreement did spell out both the proprietary information to be protected and its source. There was, accordingly, no open question as to whether Dhatt and Allure had acquired protected information in the course of their confidential relationship. Under the circumstances, Futurecraft and Rigging International are not controlling.
Although this case does not involve a company’s relationship with a former employee, we believe the policies underlying Futurecraft and Rigging International would be applicable to the relationship with a supplier.
The Allure defendants also rely on Cadence Design Systems, Inc. v. Avant! Corp. (2002) 29 Cal.4th 215 (Cadence), to argue that the excluded evidence should have been admitted in connection with the misappropriation claim because the focus of such a claim is the relationship of the parties at the time of acquisition of the trade secret. Cadence does not support their position. The question in Cadence was when a claim for misappropriation arises for purposes of the statute of limitations. Our Supreme Court held that such a claim arises only once, when the trade secret is initially misappropriated, and that each subsequent use or disclosure of the secret augments the initial claim rather than arising as a separate claim. (Id. at p. 227.) In reaching this conclusion, the court stated: “A misappropriation within the meaning of the UTSA occurs not only at the time of the initial acquisition of the trade secret by wrongful means, but also with each misuse or wrongful disclosure of the secret [italics added].” (Id. at p. 223.) Thus, it appears that our focus is not only on whether the Allure defendants were under a contractual obligation of confidentiality at the time they assisted in developing JMSR’s formulas, but also on whether they made wrongful use of trade secrets. Here, the wrongful use took place well after the parties had entered into a confidentiality agreement.
The Allure defendants argue, however, that the excluded evidence was relevant to whether the disputed formulas were readily ascertainable by someone in their line of work. They rely on American Paper & Packaging Products, Inc. v. Kirgan (1986) 183 Cal.App.3d 1318, which considered whether the plaintiff’s customer lists were trade secrets that former salespeople could be enjoined from using. The Court of Appeal noted that the employee agreement provided that the lists were confidential, but stated that an agreement “defining a trade secret may not be decisive in determining whether the court will so regard it.” (Id. at p. 1325.) The court affirmed the judgment in the defendants’ favor, ruling that the evidence supported a conclusion there was no protectable trade secret because, although the information in question might not be generally known to the public, it was “known or readily ascertainable to other persons in the shipping business. The compilation process in this case is neither sophisticated nor difficult nor particularly time consuming.” (American Paper, at pp. 1326-1327.)
The court in Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1522 (Morlife), acknowledged that labeling information confidential or a trade secret does not conclusively establish that it meets that description, but went on to state that “it is nonetheless an important factor in establishing the value which was placed on the information and that it could not be readily derived from publicly available sources.”
The court in ABBA Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 21, disagreed with American Paper to the extent it suggested that information was not protectable if it was readily ascertainable, concluding that readily ascertainable information can be a trade secret so long as it has not yet been ascertained by others in the industry. However, the court went on to note that “ ‘the assertion that a matter is readily ascertainable by proper means remains available as a defense to a claim of misappropriation.’ (Legis. committee com., West’s Ann. Civ. Code, § 3426.1 (1991 pocket supp.) p. 111.)” (Id. at p. 21, fn. 9.) The question in ABBA was whether a former employee and his new employer were properly enjoined from soliciting the customers of the employee’s former employer, a manufacturer of rubber rollers. (Id. at p. 7.) The Court of Appeal stated the defendants could establish a defense to the misappropriation claim by convincing the fact finder it was a “ ‘virtual certainty’ ” that anyone who manufactured certain types of products used rubber rollers; that the manufacturers of those products were easily identifiable; and that the defendants’ knowledge of the plaintiff’s customers resulted from that identification process, rather than from the plaintiff’s records. That defense, however, would be based on an absence of misappropriation rather than the absence of a trade secret. (Id. at pp. 21-22, fn. 9.)
The Allure defendants argue Dhatt’s development of products for his customers falls within this rule. They point to evidence that chemists tend to develop a habit of using their own “style” in developing different products, and that Dhatt developed both JMSR and Skin Therapy products through trial and error. The question here, however, is not whether Dhatt had a particular style in developing products, it is whether he violated his agreement to keep confidential the formulas for JMSR’s products. We see no error in the trial court’s findings that the trade formulas were not generally known to the public or to other persons, that Dhatt and Allure had promised to keep them confidential, and that the confidentiality of the formulas gave them economic value and gave JMSR a commercial advantage in the skin-care market. (See Civ. Code, § 3426.1, subd. (d).) Moreover, the trial court’s ruling did not preclude the Allure defendants from presenting evidence that the Skin Therapy products were formulated independently, and were not based on JMSR’s products—although such evidence might have been difficult to produce after Dhatt destroyed the laboratory notebooks that could have revealed the origin of the products Allure made. In the circumstances, we agree the trial court properly excluded evidence that Dhatt had developed or owned the formulas to JMSR’s products.
Civil Code section 3426.1, subdivision (d) defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: [¶] (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and [¶] (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
At oral argument, the Allure defendants argued that they were precluded from introducing any evidence of independently developed formulations. But that is not the case. For example, they introduced evidence that in May 1999, Sheila Malmanis, a regional manager for Skin Therapy Inc., met for several hours with Dhatt, Kohler, and others to provide input on the products Allure was making for Skin Therapy Inc. According to Malmanis, the products did not feel or smell like JMSR products and no one compared the Skin Therapy products to those of JMSR.
We likewise reject the Allure defendants’ contention that the excluded evidence should have been admitted in the punitive damages phase to show that Dhatt’s behavior was not reprehensible because he believed in good faith that he could properly use the formulas in question for other customers. In their trial brief regarding punitive and exemplary damages, the Allure defendants argued that the parol evidence rule and Evidence Code section 622 should not apply to the punitive damages phase of the trial. They contended they should be allowed to introduce evidence that Dhatt developed the formulas for JMSR’s products, that Marini asked him to copy competitors’ products, that she did not provide him with any more input than any other customer, that Dhatt believed he owned the formulas because the industry standard and custom was that the chemist developing formulas in that manner owned them, that he believed the agreement with JMSR did not convey an ownership interest to JMSR, that he believed JMSR failed to fulfill its promises to continue to buy products from Allure, that Dhatt believed he had fulfilled his contract, and that the industry standard was that the chemist who created a product owned the formula. The trial court refused to allow the evidence, ruling that the parol evidence rule applied in the punitive damages phase.
We agree with the trial court that the same standards for the admissibility of evidence introduced to contradict the recitals in an integrated contract apply in the punitive damages phase of a trial as in the liability phase of the trial. All of the evidence the Allure defendants sought to introduce was designed to show that the 1998 agreement did not mean what we have already concluded it unambiguously said—that the formulas for JMSR’s products belonged to JMSR. Whatever the usual custom and practice in the skin-care industry, the parties overrode it through their contracts. The evidence was properly excluded.
2. Restraint of Trade
The Allure defendants contend the 1998 agreement is void under Business and Professions Code section 16600 (section 16600), which provides: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” They point to several provisions of the agreement that they contend violate this provision: the prohibitions on the Allure parties manufacturing or formulating for other customers products that contain ascorbyl palmitate, TGF Beta-1, or the combination of salicylic acid, azelaic acid, and glycolic acid; the prohibition on soliciting JMSR’s employees; and the bar on doing business with JMSR customers and former employees. JMSR defends the restrictions, arguing that they were necessary to protect trade secrets and that they left available to the Allure defendants a significant portion of the market for skin-care products.
Section 16600 expresses California’s policy in favor of open competition by providing that covenants not to compete are void. (Kelton v. Stravinski (2006) 138 Cal.App.4th 941, 946.) In enacting this provision, California rejected the rule that a restraint on trade is valid if reasonable. (Bosley Medical Group v. Abramson (1984) 161 Cal.App.3d 284, 288.) With the exception of certain statutory exceptions not at issue here, such agreements are void as unlawful “ ‘except where their enforcement is necessary to protect trade secrets’ ” or other confidential or proprietary information. (Thompson v. Impaxx, Inc. (2003) 113 Cal.App.4th 1425, 1429 (Thompson); see also Moss, Adams & Co. v. Shilling (1986) 179 Cal.App.3d 124, 130.) Put another way, contracts that restrain trade are unenforceable where the information sought to be protected is not a trade secret under the UTSA. (See Metro Traffic Control, Inc. v. Shadow Traffic Network (1994) 22 Cal.App.4th 853, 860-864 (Metro Traffic Control).) Thus, the focus of our inquiry is whether the restrictions on trade in the 1998 agreement were necessary to protect trade secrets.
While many cases applying section 16600 arise in the context of an employer-employee relationship, the statute also applies to other contracts, such as manufacture or distributorship agreements between businesses or individuals. (See, e.g., Hunter v. Superior Court (1939) 36 Cal.App.2d 100, 103-104, 113 (Hunter) [contract for manufacture of machine to make venetian blinds, construing former Civil Code § 1673]; Beatty Safway Scaffold, Inc. v. Skrable (1960) 180 Cal.App.2d 650, 651-652, 656 [distributorship of scaffolding and grandstand equipment].)
“The test for trade secrets is whether the matter sought to be protected is information (1) which is valuable because it is unknown to others and (2) which the owner has attempted to keep secret.” (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1454 (Whyte).) Trade secrets can include customer information, as long as the party seeking to protect the information has expended time and effort identifying customers with particular needs or characteristics, the secrecy of the information provides a substantial business advantage, and reasonable steps were taken to keep the information secret. (Morlife, supra, 56 Cal.App.4th at pp. 1521-1523.) Whether information constitutes a trade secret is a question of fact, the resolution of which will be upheld on appeal if supported by substantial evidence. (Thompson, supra, 113 Cal.App.4th at p. 1430; In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 300-301.)
The jury found in favor of JMSR on its causes of action for both misappropriation of trade secrets and breach of contract. Moreover, the trial court in its statement of decision found that JMSR’s product formulas and customer information were trade secrets under California law. These findings were based on evidence that Allure had access to JMSR’s confidential and proprietary formulas for the products it manufactured for JMSR; that JMSR owned the product formulas, as provided in the 1998 agreement; that JMSR owned by license the products in its “C-ESTA” line as well as other lines; that the product formulas were not generally known to the public or other persons; that Dhatt and Allure promised to keep the formulas confidential and not use them for anyone other than JMSR; that JMSR had developed a market for the products among skin-care professionals; that the confidentiality of its product formulas gave JMSR a commercial advantage, as demonstrated by the Allure parties’ use of the formulas to manufacture a successful line of competing products; that JMSR had maintained confidential customer databases and paper records of customer identities, contact information, purchasing histories, and other valuable sales information; that the substantial time, effort, and expense of building those customer relationships and maintaining sales information gave the customer records independent economic value; and that JMSR had made reasonable efforts to maintain the secrecy of its product formulas and customer information through the use of confidentiality and nondisclosure agreements, the restriction of access to formulas and customer information, and the requirement that departing salespeople return customer information. We agree the evidence supports the conclusion that JMSR’s formulas and customer information were trade secrets.
In reaching this conclusion, we reject the contention that the customer lists did not constitute trade secrets. “A reasonable agreement not to use confidential lists is valid and enforceable.” (Weissensee v. Chronicle Publishing Co. (1976) 59 Cal.App.3d 723, 728.) The Allure defendants point out that the customer lists contained the names of not only current and past customers but also of potential customers who were considering buying JMSR products, and that the names of customers who sold JMSR products was not secret, and indeed some customers advertised the fact that they sold the products. However, the customer lists in question contained more than the names of retailers or other information that might be readily available to anyone with a knowledge of the industry (see Avocado Sales Co. v. Wyse (1932) 122 Cal.App. 627, 633-634 [grocery stores and vegetable stands where avocados were sold was not trade secret]); they also contained information such as number of purchases and contact information. The finder of fact could reasonably find JMSR had tried to keep this information secret and that it was valuable because it was unknown to others. (See Scavengers P. Assn. v. Serv-U-Garbage Co. (1933) 218 Cal. 568, 573 [list of preferred customers properly treated as trade secret]; Reid v. Mass Co., Inc. (1957) 155 Cal.App.2d 293, 305-306 [customer list is trade secret if it contains confidential information which can include knowledge of buying habits].) Moreover, we are not persuaded that even the names of the customers, who are spread throughout the United States and include many physicians, could easily be duplicated by a competitor. Indeed, if they could have been, Allure would not have needed to ask JMSR’s sales representatives to provide copies of their customer lists. (See American Loan Corp. v. California Commercial Corp. (1963) 211 Cal.App.2d 515, 523.) Finally, the record contains evidence that the lists were the product of a substantial amount of time and effort on JMSR’s part, a factor that has been held to support the conclusion that a customer list was a trade secret even if the list contains information available to the public or competitors. (See ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1019-1020 (ReadyLink); Courtesy Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278, 1287-1288; Morlife, supra, 56 Cal.App.4th at p. 1522.)
Some of the restrictions in the 1998 agreement, however, were not necessary to protect trade secrets. JMSR makes no attempt to argue that the ingredients ascorbyl palmitate, TGF Beta-1, or the combination of salicylic acid, azelaic acid, and glycolic acid were its trade secrets. Indeed, JMSR’s own expert, Dr. Robert Saute, testified on cross-examination that the ingredients in JMSR’s products were not trade secrets; that glycolic acid was not a trade secret; that TGF beta was not a trade secret; and that ascorbyl palmitate was not a trade secret. As Saute stated, “when you put [an ingredient] on the label, it’s no longer a trade secret.”
Rather than arguing the restrictions on Dhatt and Allure’s use of key ingredients fall within the trade secret exception to section 16600, JMSR contends the restrictions are permissible because they leave a substantial portion of the market available to the Allure parties, and hence do not restrain them from carrying on their trade. In support of this contention, JMSR cites evidence that not all chemists who manufacture skin-care products use the ingredients in question and that it would be possible to carry on a profitable business while complying with the restrictions.
After briefing in this matter was complete, Division Three of the Second Appellate District ruled that “[n]oncompetition agreements are invalid under section 16600 even if narrowly drawn, unless they fall within the statutory or trade secret exceptions.” (Edwards v. Arthur Andersen LLP (2006) 142 Cal.App.4th 603, 624, review granted Nov. 29, 2006, S147190.) Our Supreme Court has granted review of Edwards.
The cases JMSR cites do not support its position. In King v. Gerold (1952) 109 Cal.App.2d 316, the court considered a provision restricting a manufacturer from making certain house trailers. The plaintiff in King invented a particular trailer and licensed the defendant to manufacture it for six months. The agreement between them provided that if the license was not renewed, the defendant would no longer produce it. (Id. at p. 317.) When the contract expired, the defendant continued to manufacture substantially similar trailers. (Ibid.) The Court of Appeal concluded the restriction did not restrain trade in violation of section 16600, reasoning that the defendant was not “prohibited from carrying on his lawful business of manufacturing trailers but is barred merely from manufacturing and selling trailers of the particular design and style invented by [the plaintiff] who in the first instance licensed [the defendant] to use such design for a limited time only.” (King, at p. 318.) The restriction, then, was narrowly drawn to protect the plaintiff’s invention. Here, on the other hand, there is no indication that JMSR was instrumental in devising the ingredients and ingredient combinations the Allure defendants were barred from using, and the restriction was broader than necessary to protect JMSR’s formulas.
Boughton v. Socony Mobil Oil Co. (1964) 231 Cal.App.2d 188 similarly involved a narrowly drawn restraint on trade. The defendant there was contractually barred from using a parcel of land as a gasoline service station for approximately 20 years. (Id. at p. 190.) The Court of Appeal concluded the restriction did not violate section 16600, noting that it merely restricted the use of land for a limited period, and that the landowner was not prevented from operating a service station at any other place. (Boughton, at pp. 190-191.) The court also relied on King for the rule that a contract restraining only a small or limited portion of a business may be upheld as valid. (Boughton, at p. 192.) Thus, not only was the restriction in Boughton narrow, but it did not prevent the defendant from carrying on his legitimate business on other property.
JMSR also relies on General Commercial Packaging v. TPS Package (9th Cir. 1997) 126 F.3d 1131, 1132-1134, which concluded that under California law, a contract is valid unless it “ ‘completely restrain[s]’ ” a party from carrying out a trade or business. Unlike the contract here, that at issue in General Commercial restrained the defendant not from carrying out portions of a particular business, but from soliciting or accepting business from particular clients of the company for which it had subcontracted, and only for one year following termination of the contract. (Id. at p. 1132.) In any case, the California state authorities upon which General Commercial relied for the narrow restraint doctrine were Boughton and King, and we have already concluded the restrictions in those cases are significantly narrower than those in the 1998 agreement. (General Commercial, at pp. 1132-1133.)
Bearing in mind both the narrowness of the restrictions in the cases upon which JMSR relies and the clear state policy that contracts in restraint of trade are void unless they are necessary to protect trade secrets or fall within certain statutory exceptions, we conclude that because the ingredient restrictions do not serve to protect trade secrets, they are void under section 16600.
We next consider the prohibition on selling products to JMSR’s customers. The 1998 agreement prohibits the Allure parties from “solicit[ing] or sell[ing] any skin-care products to any person or company that the Allure Parties know[] to be a customer of JMSR” for two years after JMSR stops doing business with Allure. As discussed above, the evidence supports the conclusion that JMSR’s customer lists are trade secrets, and the Allure parties could properly be prohibited from using them. The restriction in question, however, goes beyond prohibiting solicitation, but extends to any sales of skin-care products to known JMSR customers. The court in John F. Matull & Associates, Inc. v. Cloutier (1987) 194 Cal.App.3d 1049, 1051-1052, 1054-1056, considered the proper scope of a covenant not to compete made by an attorney, a former officer and shareholder of a labor relations consulting corporation, who had agreed not to “divert, take away, or solicit” any account of the corporation or the firm whose accounts it had acquired. The Court of Appeal concluded the antisolicitation covenant was not invalid under section 16600, but the covenant could not be applied to restrict the attorney’s right to perform legal services that required a license to practice law “or to serve [the corporation’s] customers, should they seek her services.” (John F. Matull, at p. 1055.) Similarly, the court in Golden State Linen Service, Inc. v. Vidalin (1977) 69 Cal.App.3d 1, 8, concluded that the proscriptions on an employee using trade secret customer information “reach only his use of such information, not to his mere possession or knowledge of it.” While the prohibition on soliciting JMSR’s customers may reasonably be seen as necessary to protect JMSR’s trade secret customer list, the complete prohibition on selling products to JMSR’s customers—which would extend even to customers who sought out the Allure defendants on their own—goes beyond the bounds allowed under section 16600, and is an illegal restraint of trade.
The Allure defendants also challenge the limitations on hiring former JMSR employees. The 1998 agreement required the Allure parties, “[d]ue to the substantial probability of trade-secrets issues or problems arising in conjunction with doing business with former JMSR employees,” to contact JMSR and obtain its written permission before manufacturing skin-care products for former JMSR employees or for a company represented by a former JMSR employee. It also barred both JMSR and the Allure parties from recruiting the other’s employees. These restrictions were to remain in force for two years after JMSR stopped buying skin-care products from the Allure parties.
We conclude the requirement that the Allure parties obtain JMSR’s permission before manufacturing skin-care products for former JMSR employees is not an invalid restraint of trade. By the terms of the contract, the Allure parties are not prohibited from doing such business, and there is no reason to conclude that JMSR would withhold its consent if no trade secrets were likely to be disclosed.
We agree with the Allure defendants, however, that the outright prohibition on recruiting JMSR’s employees is too broad. As they point out, “competitors may solicit another’s employees if they do not use unlawful means or engage in acts of unfair competition.” (Metro Traffic Control, supra, 22 Cal.App.4th at p. 859.) Although the evidence here might support the conclusion that the Allure defendants ultimately used unlawful or unfair tactics in hiring JMSR’s employees—and that a remedy for those actions was appropriate—the prohibition at the time the contract was formed was an unlawful restraint of trade because it restricted the mobility of JMSR’s employees. (See id. at p. 860; see also Whyte, supra, 101 Cal.App.4th at p. 1462 [California public policy and section 16600 favor employee mobility and a person’s right to pursue chosen business].)
3. Effect of Invalid Provisions
The Allure defendants contend the unenforceable provisions of the 1998 agreement render the entire contract void. As a result, they argue, the entire judgment against them should unwind because the court’s rulings on the admissibility of evidence of ownership of JMSR’s formulas were based on the recitals in the 1998 agreement.
We begin with the language of section 16600, which provides that a contract that restrains trade is “to that extentvoid.” From this statutory language, it appears that the Legislature did not intend unenforceable provisions in restraint of trade to render void an entire contract. In a case considering a predecessor to section 16600, the court in Hunter explained: “A contract in restraint of trade is entirely void where it is indivisible, but when divisible and severable, those provisions not in restraint of trade may be enforced.” (Hunter, supra, 36 Cal.App.2d at pp. 112, 113.)
This conclusion is in accord with the general rule on severance of unlawful provisions in contracts. Civil Code section 1599 provides: “Where a contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in whole or in part, the contract is void as to the latter and valid as to the rest.” As explained in Keene v. Harling (1964) 61 Cal.2d 318, 320-321: “ ‘Whether a contract is entire or separable depends upon its language and subject matter, and this question is one of construction to be determined by the court according to the intention of the parties. If the contract is divisible, the first part may stand, although the latter is illegal. [Citation.]’ [Citations.] It has long been the rule in this state that ‘ “When the transaction is of such a nature that the good part of the consideration can be separated from that which is bad, the Courts will make the distinction, for the . . . law . . . [divides] according to common reason; and having made that void that is against the law, lets the rest stand. . . .” ’ [Citation.] Thus, the rule relating to severability of partially illegal contracts is that a contract is severable if the court can, consistent with the intent of the parties, reasonably relate the illegal consideration on one side to some specified or determinable portion of the consideration on the other side.” (Fn. omitted.) Our Supreme Court explained in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 124, that to determine whether a contract is severable, “[c]ourts are to look to the various purposes of the contract. If the central purpose of the contract is tainted with illegality, then the contract as a whole cannot be enforced. If the illegality is collateral to the main purpose of the contract, and the illegal provision can be extirpated from the contract by means of severance or restriction, then such severance and restriction are appropriate.” The overarching inquiry, according to the court in Armendariz, was whether severance would further the interests of justice. (Ibid.)
Here, the main purpose of the 1998 agreement was to protect JMSR’s trade secrets and confidential information. Most of the restrictions in the agreement are calculated to protect such information; for instance, the agreement protects JMSR’s formulas, its marketing and business plans, product sales data, strategies, forecasts, unannounced new products, and customer information. The provisions that violate section 16600 can be deleted from the agreement. Furthermore, the 1998 agreement contains a severability provision, stating that if any provision of the contract “proves to be invalid, void, or illegal, that shall in no way affect, impair, or invalidate any other provision.” We conclude it is appropriate here to treat the illegal provisions as severable and to enforce the legal provisions.
4. Jury Instructions
The Allure defendants contend the jury was erroneously instructed on misappropriation of trade secrets. Concerning improvement or modification of a trade secret, the court instructed the jury as follows: “To establish the misappropriation of a product formula trade secret, [JMSR] is not required to establish that the defendant exactly copied [JMSR’s] confidential information in every respect. If the information was derived from [JMSR’s] trade secret product formula, the defendant . . . cannot escape responsibility for misappropriation of a trade secret product formula by showing that it has improved upon or modified [JMSR’s] process, as minor variations are to be expected. [¶] A defendant’s product formula or process should be considered derived from [JMSR’s] trade secret formula or process if the defendant had access to that formula or process and the defendant produced a formula or process which had the same essential characteristics as [JMSR’s] trade secret or process even if the proportions of ingredients were somewhat different or the defendant’s use of [JMSR’s] trade secret significantly reduced the time which it would have taken the defendant[] to independently develop the formula or process by, among other things, allowing the defendant to bypass experimenting with a broad range of formulas or processes to determine the proper starting point for the defendant’s development of the formula or process.” (Italics added.)
The Allure defendants contend the italicized portions of the instruction improperly implied that JMSR’s product formulas were trade secrets. However, the instruction on improvement or modification of trade secrets was given after the jury had been instructed on the facts the jury must find to determine that JMSR’s product formulas and customer lists were trade secrets. In the circumstances, the instruction did not assume that the formulas were trade secrets.
The Allure defendants also contend the court misstated the law on modification of a trade secret. The instruction was correct that, under California law, minor variations in a product do not negate a claim for misappropriation of trade secrets. (See Richardson v. Suzuki Motor Co., Ltd. (Fed.Cir. 1989) 868 F.2d 1226, 1244 [applying California law]; see also By-Buk Co. v. Printed Cellophane Tape Co. (1958) 163 Cal.App.2d 157, 168-169 (By-Buk); Sinclair v. Aquarius Electronics, Inc. (1974) 42 Cal.App.3d 216, 222 (Sinclair).) We are not persuaded by the Allure defendants’ contention that this principle is inappropriate because Dhatt developed formulas for JMSR before signing the 1996 and 1998 agreements. This is a variation on the argument that Dhatt owned the formulas because he developed them, an argument we have already rejected.
5. Skinquest’s Right to Jury Trial
Skinquest contends the trial court denied it the constitutional right to a jury trial and abused its discretion in denying its motion for a continuance of the trial to allow it to revive its corporate status.
A party may waive the right to a jury trial by failing to appear at trial. (Code Civ. Proc., § 631, subd. (d)(1).) A suspended corporation cannot appear at trial to defend an action in a California court. (Timberline, Inc. v. Jaisinghani (1997) 54 Cal.App.4th 1361, 1365-1366.) However, a party that pays its back taxes and obtains a certificate of revivor while an action is pending may be allowed to carry on litigation, “even to the extent of validating otherwise invalid prior proceedings.” (Benton v. County of Napa (1991) 226 Cal.App.3d 1485, 1490 (Benton); see also Peacock Hill Assn. v. Peacock Lagoon Constr. Co. (1972) 8 Cal.3d 369, 373-374 (Peacock Hill); Gar-Lo, Inc. v. Prudential Sav. & Loan Assn. (1974) 41 Cal.App.3d 242, 244.) That is because the purpose of suspension is to induce the payment of taxes, and there is little point to imposing additional penalties after the taxes have been paid. (Benton, at p. 1490; Peacock, at p. 371; Gar-Lo, at p. 244.) Thus, after correction, the corporation’s delinquencies are treated as “mere irregularities.” (A. E. Cook Co. v. K S Racing Enterprises, Inc. (1969) 274 Cal.App.2d 499, 501.)
Skinquest does not dispute that its corporate powers were suspended during the presentation of the evidence, and that during the time its corporate powers were suspended, it could not appear at trial. As discussed above, however, as soon as the suspension was called to the trial court’s attention, Skinquest took action with the Franchise Tax Board to revive its corporate status, and accomplished the revivor within two days.
Suspension of corporate powers results in a lack of capacity to come into court, not a lack of standing. (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1603-1604 (Color-Vue).) When considering the rights of Color-Vue, a party whose corporate status had been suspended, the court in Color-Vue stated that lack of corporate status is a plea in abatement, which “ ‘must be raised by [the] defendant at the earliest opportunity or it is waived.’ ” (Id. at pp. 1602, 1604.) The opposing parties had raised the issue of Color-Vue’s corporate suspension after the consolidated cases had been set for trial. Color-Vue stated its intention to pay its back taxes and requested a short continuance of the trial date to allow it to do so. The trial court denied the request. (Id. at p. 1602.) The Court of Appeal concluded the trial court had abused its discretion in denying the motion and granting the opponents’ motion to dismiss, noting that “Color-Vue in fact paid its taxes and obtained a certificate of revivor within two weeks of the issue first being raised,” and that Color-Vue was in good standing at the time the trial court entered judgment. (Id. at p. 1603.) By waiting to raise the issue until the eve of trial, the opposing parties showed a lack of diligence, and the trial court should have granted a continuance to allow Color-Vue pay its back taxes, then permitted it to prosecute its own action and defend the other actions. (Id. at p. 1606.)
The court in Duncan v. Sunset Agricultural Minerals (1969) 273 Cal.App.2d 489 similarly concluded the trial court had abused its discretion in denying a party the opportunity to continue with a case. The plaintiffs in a quiet title action introduced evidence during trial that the defendant’s corporate powers had been suspended for failure to pay taxes. The defendant did not move for a continuance, but informed the court that it was seeking reinstatement. The trial court allowed the presentation of evidence to continue and took the case under advisement. (Id. at p. 490.) After trial was complete, the defendant moved to file an amended answer, and attached a certificate of revivor. The trial court granted judgment to the plaintiff on the ground that defendant had no standing to defend the action due to the suspension of its corporate powers, and denied the defendant’s motion. (Id. at pp. 490-491.) The Court of Appeal reversed, concluding the trial court should have decided the case on the merits, rather than on the basis of a technicality that resulted in a forfeiture. (Id. at pp. 492-494.)
The facts here are analogous to those in Color-Vue and Duncan. Skinquest told the trial court it was taking steps to revive its corporate status, and requested a brief continuance. It filed a certificate of revivor within two days of the time the matter was drawn to the trial court’s attention. In fact, the certificate was filed before closing arguments began, belying JMSR’s contention that it would have been prejudiced or the jury delayed by a continuance.
In this context, JMSR’s conduct in withholding the information until the end of trial is troubling. Through its attorney, JMSR acknowledged that it had known of the suspension before trial began. Nevertheless, it waited several months before drawing the matter to the court’s attention. The court in Color-Vue noted that lack of corporate status, as a plea in abatement, is “ ‘not favored in law’ ” and must be raised at the earliest possible opportunity or it is waived. (Color-Vue, supra, 44 Cal.App.4th at p. 1604.) JMSR does not even attempt to argue that it raised the issue as soon as possible, contending instead that the Allure parties were on notice of the effect of a corporate suspension, since Allure (not Skinquest) had been notified before trial that its corporate powers were suspended and it therefore could not appear at pretrial proceedings during the suspension. The point here, however, is that JMSR knew of Skinquest’s suspension and failed to draw it to the attention of the court for months, until after the close of evidence.
JMSR argues that the rule of Color-Vue and Duncan does not apply because unlike the parties there, Skinquest received a trial on the merits by the court. Nothing in the revivor cases, according to JMSR, means that a corporation has a right to a jury trial after reinstatement. We reject this argument. A corporate revivor allows the court to validate procedural steps taking during the suspension. (Benton, supra, 226 Cal.App.3d at p. 1490; Peacock Hill, supra, 8 Cal.3d at pp. 373-374.) Among those procedural steps here was Skinquest’s participation in a jury trial in which causes of action against it were tried. Nor does JMSR persuade us that it made no difference whether the causes of action against Skinquest were tried to the court or to the jury. Denial of the right to a jury trial, where there is no prejudice to the other party or the court, is prejudicial as a matter of law. (See Byram v. Superior Court (1977) 74 Cal.App.3d 648, 654.)
JMSR cannot seriously assert that it made no difference to Skinquest that the causes of action against it were tried to the court, in light of the fact that the court awarded far greater compensatory damages against Skinquest—a minor player in the drama—than the jury awarded against all of the other defendants combined.
JMSR contended at oral argument that Skinquest has expressly waived its right to a jury trial, pointing out that after filing the certificate of revivor, Skinquest did not make a renewed request to have its liability decided by the jury. The record is clear, however, that Skinquest both requested a continuance to revive its corporate status and promptly filed the certificate of revivor. In the recently decided case of Cadle Co. v. World Wide Hospitality Furniture, Inc. (2006) 144 Cal.App.4th 504, 512-513, the Court of Appeal concluded that a trial court had abused its discretion in precluding a suspended corporate defendant from defending an action and entering judgment against it, rather than granting a brief continuance to allow the defendant to revive its corporate status; it reached this conclusion although the defendant neither requested a continuance nor notified the court of the revival of its corporate status. We recognize that in Cadle Co., the defendant was deprived not of a jury, but of the right to defend the action at all. However, in light of Skinquest’s prompt actions upon being informed of the corporate suspension, we conclude it did not waive its right to a jury trial by failing to raise the issue again with the trial court.
Therefore, we conclude that in the circumstances of this case, the trial court abused its discretion in denying Skinquest’s request for a brief continuance, and that Skinquest is entitled to a jury trial.
6. Compensatory Damages Awarded Against Kohler
Kohler contends the jury’s award of contract and tort damages against him was speculative and therefore must be set aside. After reviewing extensive documentation, including profit and loss statements, general ledgers, and sales reports, JMSR’s experts on damages calculated Allure’s total unjust enrichment as $1,312,881 and JMSR’s total lost profits as $807,848, for total damages of $2,120,729. The jury awarded damages of $40,000 for Kohler’s breach of contract and $76,000 for misappropriation of trade secrets, inducing breach of contract and/or intentional interference with prospective economic advantage. Kohler contends that there is no evidence to support these calculations and that they were based on impermissible speculation.
Kohler is correct that evidence of lost profits must not be uncertain or speculative. (Continental Car-Na-Var Corp. v. Moseley (1944) 24 Cal.2d 104, 113.) However, “[t]his rule does not apply to uncertainty as to the amount of the profits which would have been derived, but to uncertainty or speculation as to whether the loss of profits was the result of the wrong and whether any such profits would have been derived at all.” (Ibid.) As stated in Myers v. Stephens (1965) 233 Cal.App.2d 104, 118-119, where damages for lost profits are allowable, “a defendant cannot complain if the probable profits are, of necessity, estimated, since it was the defendant himself who prevented the plaintiff from realizing the profits.”
The evidence easily supports the conclusion that JMSR suffered lost profits as a result of Kohler’s tortious conduct and the breach of his severance agreement. JMSR presented extensive evidence of its damages, in the form of expert testimony and the documents upon which the experts relied. Although we cannot determine what method the jury used to fix the damages caused by Kohler’s conduct, the award is well within the amount suggested by JMSR’s experts, and we will not disturb it on appeal.
7. Attorney Fees
The Allure defendants contend the trial court erred in awarding attorney fees to JMSR. After trial, JMSR moved for attorney fees on three grounds: contractual attorney fees as the prevailing party pursuant to Civil Code section 1717, attorney fees under Civil Code section 3426.4 (section 3426.4) for the Allure parties’ willful and malicious misappropriation of trade secrets, and fees for the Allure parties’ bad faith prosecution of their misappropriation claim under section 3426.4. JMSR argued in the motion that all of its causes of action arose from the 1998 agreement or from Kohler’s severance agreement and were “on the contract” within the meaning of Civil Code section 1717. The trial court granted the motion, stating in its order: JMSR’s “Motion for an Award of Reasonable Attorney’s [Fees] is granted, in part, and the Court determines that Jan Marini Skin Research, Inc., is the prevailing party and should recover reasonable attorneys’ fees from Defendants Sam Dhatt, Allure Cosmetic USA, Inc., Skin Therapy, Inc., and Stephen Kohler. It is ordered that Jan Marini Skin Research, Inc., recover its reasonable attorneys’ [fees] in the amount of $3,001,268.50 . . . from Defendants Sam Dhatt, Allure Cosmetic USA, Inc., Skin Therapy, Inc., jointly and severally and from Stephen Kohler his one-third portion of that amount, in the amount of $1,000,422.80.”
At the time section 3426.4 provided: “If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney’s fees to the prevailing party.” (Stats. 1984, ch. 1724, § 1, p. 6254.) The jury was not asked to decide whether the misappropriation was willful and malicious. The Allure defendants argue that in the absence of such a finding, JMSR is limited to attorney fees expended in litigating those aspects of the breach of contract cause of action that were not attributable to misappropriation.
The general rule of apportionment was expressed in Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130 (Reynolds), in which our Supreme Court stated: “Attorney’s fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed.” This rule is not applied, however, when to do so would undermine a legislative policy. Such a situation existed in Carver v. Chevron U.S.A., Inc. (2004) 119 Cal.App.4th 498. There, the court considered the allocation of attorney fees between work attributable to claims under the Cartwright Antitrust Act (Bus. & Prof. Code, § 16750, subd. (a)), which allowed attorney fees to a prevailing plaintiff but not to a prevailing defendant, and those attributable to other causes of action, in which the prevailing defendant was entitled to attorney fees. The court concluded as a matter of law that the Cartwright Act’s unilateral fee-shifting provision precluded an award of attorney fees to a prevailing defendant for defending claims common to both the Cartwright Act and non-Cartwright Act causes of action, and that the trial court properly apportioned fees by disallowing those fees “related exclusively, or by inextricable overlap, to the Cartwright Act issues,” even though the work in question may have been relevant to other aspects of the case. (Carver, at pp. 501, 506.) Any other result, explained the court, would undermine the Cartwright Act’s policy of providing for a nonreciprocal fee to encourage plaintiffs in antitrust cases to enforce the state’s public policy. (Carver, at p. 504.) As the court stated, “The Legislature clearly intended to give special treatment to antitrust claims under the Cartwright Act by creating this one-way fee-shifting right for a successful plaintiff but not for a defendant who successfully defends such a claim.” (Ibid.; see also Covenant Mutual Ins. Co. v. Young (1986) 179 Cal.App.3d 318, 324-326 [unilateral fee-shifting statutes may show legislative intent to encourage injured parties to enforce public policy].)
The same cannot be said here. Nothing in the policy of section 3426.4 would be defeated by honoring a contractual attorney fee clause or by applying the general rule that attorney fees need not be apportioned when incurred in connection with causes of action common to one in which such fees are allowed and one in which they are not. (See Reynolds, supra, 25 Cal.3d at pp. 129-130.)
Thus, we conclude the trial court could properly award attorney fees for those aspects of the misappropriation causes of action that were common to JMSR’s successful causes of action for breach of contract. Because we reach this conclusion, we need not consider JMSR’s contention that we should assume the trial court implicitly found the fees met the requirements of section 3426.4. (See Horning v. Shilberg (2005) 130 Cal.App.4th 197, 210 [implying all necessary findings to support attorney fee award]; see also In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 [“[a] judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness”].)
The Allure parties do not demonstrate that any of the fees awarded were not attributable to such fees, and indeed appear to agree with JMSR that all of JMSR’s claims were based on the same set of operative facts and that apportionment was impossible.
The jury found Dhatt, Allure, and Allure Cosmetic, Inc., to have acted with malice, oppression, or fraud by clear and convincing evidence. The court in Vacco Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34, 54 (Vacco Industries), concluded a finding that acts of misappropriation were done with malice was sufficient to justify a fee award under section 3426.4. However, unlike the trial court in Vacco Industries, at page 46, the trial court here made no finding that the misappropriation was willful and malicious, noting during a discussion of punitive damages that the jury had not found willful and malicious misappropriation of trade secrets, apparently because the issue had not been submitted to it.
Kohler makes a separate argument that the trial court abused its discretion in concluding JMSR was the prevailing party in its claim against him. “[I]n deciding whether there is a ‘party prevailing on the contract,’ the trial court is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876.) If neither party in a case achieves a complete victory on all contract claims, “it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees.” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109.)
The jury awarded JMSR $40,000 against Kohler for breach of contract, in addition to the $76,000 it awarded for other claims. Although this is significantly less than the total amount sought against all defendants, JMSR succeeded in its claim that Kohler had breached his contract, and we see no abuse of discretion in the trial court’s conclusion that JMSR was the prevailing party.
Kohler also contends the trial court should have considered the attorney fee award against him separately from that against the other defendants, arguing that he was cooperative in discovery, that he did not cause any excessive attorney fees, and that the jury did not find a conspiracy between him and the Allure parties. In fact, the trial court did treat Kohler differently from the other defendants, making Dhatt, Allure, and Skin Therapy Inc. jointly and severally liable for the entire fee award and Kohler responsible for only a one-third portion of the award. Kohler has made no showing that the award was disproportionate to the fees incurred in connection with the causes of action against him. We see no abuse of discretion.
8. Punitive Damages
a. Preemption by UTSA
The Allure defendants contend the UTSA preempted JMSR’s claim for intentional interference with prospective economic advantage—the sole basis for the punitive damages awarded against Dhatt.
The UTSA allows an award of exemplary damages not to exceed twice the amount of compensatory damages “[i]f willful and malicious misappropriation exists.” (Civ. Code, § 3426.3, subd. (c).) The jury was not asked to decide whether the Allure parties’ misappropriation was willful and malicious, and the trial court ruled that punitive damages were therefore not available in connection with JMSR’s claim for misappropriation. The jury was allowed to award punitive damages only in connection with the claim for intentional interference with prospective economic advantage. (Civ. Code, § 3294, subd. (a).)
As noted earlier, the jury awarded punitive damages of $1 million against Dhatt, and no punitive damages against Allure or Allure Cosmetic, Inc.
Civil Code section 3426.7 (section 3426.7), part of the UTSA, provides in part: “(a) Except as otherwise expressly provided, this title does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets. [¶] (b) This title does not affect (1) contractual remedies, whether or not based upon misappropriation of a trade secret, (2) other civil remedies that are not based upon misappropriation of a trade secret, or (3) criminal remedies, whether or not based upon misappropriation of a trade secret.” The Allure defendants argue that JMSR’s claim for intentional interference with economic relations was predicated on misappropriation of trade secrets and therefore section 3426.7 preempts any remedies—including punitive damages under Civil Code section 3294—for that cause of action.
We have located no California state case squarely deciding what tort remedies other than common law misappropriation of trade secrets are preempted by the UTSA, although the question has been the subject of debate in other states and in the federal courts. The decisions of those California courts that have considered the question suggest that a common law cause of action for misappropriation of trade secrets does not survive the enactment of the UTSA. Our Supreme Court in Cadence concluded that if a continuing misappropriation otherwise covered by the UTSA began before the UTSA’s effective date of January 1, 1985, it “must be divided in two if the continuing misappropriation took place partly before January 1, 1985—one common law claim for misappropriation occurring before that date, and one UTSA claim for misappropriation occurring thereafter.” (Cadence, supra, 29 Cal.4th at p. 224; see also Vacco Industries, supra, 5 Cal.App.4th at p. 51 & fn. 17 [concluding the defendants had misappropriated trade secrets under either common law or UTSA, and that if there had been any conflict, UTSA would control].) Here, of course, the question is not whether the common law misappropriation cause of action is preempted, but whether other tort remedies connected with a misappropriation—such as JMSR’s claim for intentional interference with prospective economic advantage—survive the UTSA.
A recent federal decision considering preemption under California’s version of the UTSA, Airdefense, Inc. v. Airtight Networks, Inc. (N.D.Cal., Jul. 26, 2006, No. C 05-04615JF) 2006 U.S.Dist. Lexis 55364, *11), noted that, although no California decision has decided which claims are preempted by the UTSA, “multiple federal courts have determined that claims based on the same factual allegations as the claim for misappropriation of trade secrets are preempted.” The plaintiff in Airdefense, which developed and sold solutions for wireless fidelity networks, alleged in its complaint that a former salesperson had provided confidential customer lists and prospective customer lists to a salesperson for the defendant, and that the defendant solicited the customers on its lists, offered to replace the plaintiff’s products with those of the defendant, and told customers it was replacing the plaintiff as the supplier of wireless intrusion protection systems. The plaintiff also alleged that the former salesperson had provided the defendant’s employees with information on the plaintiff’s products, such as product functionality and performance. (Id. at pp. *2-5.) The plaintiff alleged several causes of action, including one for intentional interference with prospective economic advantage. The Northern District concluded the UTSA did not preempt this cause of action, noting the plaintiff alleged that the defendant knew of its economic relationship with its customers because it “ ‘had access to and used [the plaintiff’s] Customer Lists and other customer specific information that it wrongfully obtained,’ ” and that the defendant “ ‘made false representations to [the plaintiff’s] existing and potential customers concerning [the plaintiff’s] products and capabilities and . . . the capabilities of [the defendant’s] current and/or future products.’ ” (Id. at p. *17.) The court went on to conclude that, “[b]ecause these allegations are additional to the facts alleged with respect to the claim of misappropriation of trade secrets, the claim is not preempted by the [California ]UTSA.” (Ibid., italics added.)
“Opinions of the United States District Court that have not been published in the Federal Supplement are properly cited by this court as persuasive, although not precedential, authority.” (Schlessinger v. Holland America (2004) 120 Cal.App.4th 552, 559, fn. 4, citing Bowen v. Ziasun Technologies, Inc. (2004) 116 Cal.App.4th 777, 787, fn. 6, and City of Hawthorne ex rel. Wohlner v. H&C Disposal Co. (2003) 109 Cal.App.4th 1668, 1678, fn. 5.)
A detailed discussion of the preemptive effect of section 3426.7 is found in Callaway Golf v. Dunlop Slazenger Group Americas (D.Del. 2003) 295 F.Supp.2d 430 (Callaway Golf). The court there noted that the model Uniform Trade Secret Act, section 7(a), contains an express preemption provision that “ ‘displaces conflicting tort, restitutionary, and other law of this State providing civil remedies for misappropriation of a trade secret.’ ” (Callaway Golf, at p. 435.) When California adopted its version of the UTSA, it omitted this language and instead enacted section 3426.7, as quoted above. (Callaway Golf, at p. 435.) The court in Callaway Golf indicated its inclination to follow the ruling of Ernest Paper Products, Inc. v. Mobil Chemical Co., Inc. (C.D.Cal. Dec. 2, 1997, No. CV 95-7918 LGB (AJWx)) 1997 U.S.Dist. Lexis 21781, *2-3, *21-28 (Ernest Paper) that section 3426.7 should be construed to preempt common law causes of action that are based entirely on the same facts that form the basis of a statutory trade secret claim. (Callaway Golf, supra, 295 F.Supp.2d at pp. 435-436 & fn. 12.) In doing so, the court relied in part on Civil Code section 3426.8, which requires California’s UTSA to “be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this title among states enacting it.” (Callaway Golf, at p. 436.) Ernest Paper, discussed in Callaway Golf, concluded that causes of action for intentional interference with economic relations and unfair competition were preempted by California’s UTSA where they were based on misappropriation of a trade secret. (Ernest Paper, supra, 1997 U.S.Dist. Lexis, 21781 pp. *2-3, *21-28.)
Interpreting the law of jurisdictions that have adopted the language of the model UTSA and provided that the UTSA “ ‘displaces conflicting tort, restitutionary, and other law’ ” (Callaway Golf, supra, 295 F.Supp.2d at p. 435), the New Hampshire Supreme Court stated in Mortgage Specialists, Inc. v. Davey (N.H. 2006) 904 A.2d 652, 665: “In determining whether a claim ‘conflicts’ with the UTSA, we agree with the majority of courts, which have looked to the facts alleged or proved in support of the claim and have found that the claim is preempted when it is ‘based solely on, or to the extent [that it is] based on, the allegations or the factual showings of unauthorized use of . . . information or misappropriation of a trade secret. [Citations.] We also agree with courts that have concluded that a claim is not preempted where the elements of the claim require some allegation or factual showing in addition to that which forms the basis for a claim of misappropriation of a trade secret. [Citations.]”
Ultimately, however, the court concluded it did not need to reach the question of preemption. (Callaway Golf, supra, 295 F.Supp.2d at p. 437.)
Bearing these authorities in mind, we conclude that a claim for interference with prospective economic advantage is not preempted by the UTSA if it depends on factual allegations in addition to those that form the basis of the misappropriation claim. The question before us, then, is whether JMSR’s misappropriation claim meets this standard. The jury was instructed that to prove this claim, JMSR must prove (1) that JMSR and its customers were in an economic relationship that probably would have resulted in an economic benefit to JMSR; (2) that Kohler, Dhatt, Allure, Allure Cosmetic and/or Dermaquest knew about the relationship; (3) that those defendants intended to disrupt the relationship; (4) that the defendants “engaged in wrongful conduct through misappropriation of trade secrets, breach of contract, inducing breach of contract and/or intentional interference with any prospective economic relationship”; (5) that the relationship was disrupted; (6) that JMSR was harmed; and (7) that defendants’ wrongful conduct was a substantial factor in causing that harm. The wrongful conduct alleged in JMSR’s complaint included not only misappropriation of trade secrets, but also telling customers that the Skin Therapy line of products was the same as the JMSR line, telling customers that the JMSR line was ineffective and did not contain the ingredients represented, and attempting to induce JMSR’s sales force to stop working for JMSR and begin to work for Skin Therapy Inc. These allegations refer to wrongs that are independent of the Allure defendants’ misappropriation of JMSR’s trade secrets. At trial, JMSR introduced evidence that the Allure defendants told customers that Skin Therapy was a newer, more advanced version of JMSR products, and distributed fliers to sales representatives and customers disparaging JMSR’s products and wrongly accusing JMSR of making false statements about its products. We conclude the UTSA does not preempt JMSR’s claim for interference with prospective economic advantage.
b. Excessive Punitive Damages
The jury awarded JMSR $1 million in punitive damages against Dhatt based on intentional interference with prospective economic relations, and none against the other Allure defendants. As we have explained, before reaching the question of punitive damages, the jury had awarded JMSR $59,000 against Dhatt for his misappropriation of trade secrets and/or intentional interference with prospective economic advantage. The Allure defendants contend that, even if punitive damages could properly be awarded, the amount of the damages was constitutionally excessive. On this point, we agree with the Allure defendants.
The United States Supreme Court has determined that due process places limits on the permissible amounts of awards of punitive damages, and prohibits “grossly excessive or arbitrary punishments on a tortfeasor.” (State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408, 416-417 (State Farm); see also BMW of North America, Inc. v. Gore (1996) 517 U.S. 559, 574-575 (BMW); Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1171 (Simon). As our Supreme Court explained in Simon: “Eschewing both rigid numerical limits and a subjective inquiry into the jury’s motives, the [federal] high court . . . expounded in BMW and State Farm a three-factor weighing analysis looking to the nature and effects of the defendant’s tortious conduct and the state’s treatment of comparable conduct in other contexts. As articulated in State Farm, the constitutional ‘guideposts’ for reviewing courts are: ‘(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.’ (State Farm, supra, 538 U.S. at p. 418; see BMW, supra, 517 U.S. at p. 575.)” (Simon, supra, 35 Cal.4th at pp. 1171-1172.)
In deciding whether an award of punitive damages exceeds constitutional limits, we review the award de novo, “making an independent assessment of the reprehensibility of the defendant’s conduct, the relationship between the award and the harm done to the plaintiff, and the relationship between the award and civil penalties authorized for comparable conduct.” (Simon, supra, 35 Cal.4th at p. 1172.) The purpose of this “ ‘[e]xacting appellate review’ ” is to ensure that the award is not the result of the decision maker’s caprice, but rather of the application of law. (Ibid.)
(1) Degree of Reprehensibility
The most important guidepost in reviewing a punitive damages award is the degree of reprehensibility of the defendant’s conduct. (Simon, supra, 35 Cal.4th at p. 1180, citing State Farm, supra, 538 U.S. at p. 419 and BMW, supra, 517 U.S. at p. 575.) In connection with this factor, the United States Supreme Court has instructed courts to consider whether “[(1)] the harm caused was physical as opposed to economic; [(2)] the tortious conduct evinced an indifference to or a reckless disregard for the health or safety of others; [(3)] the target of the conduct had financial vulnerability; [(4)] the conduct involved repeated actions or was an isolated incident; and [(5)] the harm was the result of intentional malice, trickery, or deceit, or mere accident.” (State Farm, supra, 538 U.S. at p. 419.)
The first two factors do not weigh in favor of a high punitive damages award. Dhatt’s actions caused only economic harm and did not risk the health or safety of others. Nor does the third factor suggest a large award is appropriate. We are aware of no indication that JMSR was financially vulnerable in comparison to Dhatt, and JMSR does not make this argument. The fourth and fifth factors favor a higher award of punitive damages. Dhatt’s actions took place over a significant period of time, and the jury concluded by clear and convincing evidence that he had acted with malice, oppression, or fraud. Based on a similar balance of factors, the court in Bardis v. Oates (2004) 119 Cal.App.4th 1, 22 (Bardis), concluded the defendant’s conduct “was of high, but not extreme reprehensibility.”
(2) Ratio of Punitive Damages to Harm
The United States Supreme Court has not imposed a “bright-line ratio which a punitive damages award cannot exceed.” (State Farm, supra, 538 U.S. at p. 425.) However, it has made clear that “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” (Ibid.; see also Simon, supra, 35 Cal.4th at pp. 1182-1183 & fn. 7.) The United States Supreme Court recognized that previously upheld awards of up to four times compensatory damages are “not binding, [but] instructive,” but went on to state that “because there are no rigid benchmarks that a punitive damages award may not surpass, ratios greater than those we have previously upheld may comport with due process where ‘a particularly egregious act has resulted in only a small amount of economic damages.’ [Citations.] The converse is also true, however. When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. The precise award in any case, of course, must be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff.” (State Farm, supra, 538 U.S. at p. 425.)
The $1 million punitive damages award against Dhatt is nearly 17 times the $59,000 award for misappropriation and/or interference with prospective economic advantage. JMSR contends this award does not exceed constitutional limits, arguing that Dhatt owned and controlled Allure, Allure Cosmetic, Inc., and Dermaquest, and was therefore responsible for the more than $700,000 in compensatory damages awarded against those entities. We reject this argument. The jury found Dermaquest had not acted with malice, oppression, or fraud, and Dermaquest was therefore not liable for punitive damages. Although it found Allure and Allure Cosmetic, Inc., to have acted with malice, oppression, or fraud, it awarded no punitive damages against those entities. JMSR has cited no authority indicating that we should aggregate the awards against separate defendants in determining the constitutionally permissible award against a single defendant, and indeed, such a result would be unlikely to comport with due process. As the court recognized in Diamond Woodworks, Inc. v. Argonaut Ins. Co. (2003) 109 Cal.App.4th 1020, 1056 and footnote 35 (disapproved on another ground in Simon, supra, 35 Cal.4th at pp. 1182-1183), an evaluation of the ratio of punitive to compensatory damages must be based on the portion of the compensatory damages attributable to the cause of action that allows an award of punitive damages.
Nor did Dhatt’s behavior constitute the sort of “ ‘particularly egregious act’ ” resulting in only a small amount of compensatory damages that could justify an unusually high award of punitive damages. (State Farm, supra, 538 U.S. at p. 425.) The tort award was substantial, and we have already concluded that Dhatt’s behavior was not of “extreme reprehensibility.” (See Bardis, supra, 119 Cal.App.4th at p. 22.)
(3) Comparable Civil Penalties
The third guidepost we consider is the relationship between the punitive damages award and the civil penalties authorized for comparable conduct. (Simon, supra, 35 Cal.App.4th at p. 1172.) The most relevant statute is Civil Code section 3426.3, subdivision (c), part of the UTSA, which provides that “[i]f willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award” of compensatory damages. We have already concluded that the cause of action for intentional interference with prospective economic advantage does not rely only on the facts underlying the misappropriation claim. However, there is significant overlap in the facts on which the two causes of action are based, and section 3426.3 gives us some insight into the Legislature’s judgment of the appropriate sanction for at least some of the conduct at issue here. In light of the additional conduct involved in the interference claim, we are not bound by the two-to-one ratio allowed by the UTSA. However, the magnitude of the discrepancy between that ratio and the 17-to-one ratio of the jury award provides additional support for the conclusion that the punitive damages award against Dhatt was constitutionally excessive.
(4) The Maximum Constitutional Award
Our consideration of the BMW and State Farm guideposts persuades us that the $1 million punitive damages award against Dhatt was constitutionally excessive. This is a legal issue that we determine independently, and it is appropriate for us to determine a constitutional maximum on the basis of the record before us rather than remanding for a new trial on the issue of punitive damages. (Simon, supra, 35 Cal.4th at pp. 1187-1188.) Our role is “only to find a level higher than which an award may not go; it is not to find the ‘right’ level in the court’s own view.” (Id. at p. 1188.) We do “not sit as a replacement for the jury but only as a check on arbitrary awards.” (Ibid., citing BMW, supra, 517 U.S. at p. 568.)
We conclude the maximum award constitutionally permissible is five times the compensatory award, or $295,000. In reaching this conclusion, we are guided by the factors we have already discussed. The degree of reprehensibility of Dhatt’s behavior suggests an unusually large award is inappropriate. The award of compensatory damages by which punitive damages are measured was substantial. In considering related conduct, the Legislature has determined that the appropriate amount of exemplary damages is twice the amount of the compensatory damages. Moreover, there is no indication that a punitive damages award on the upper end of the scale is necessary to deter Dhatt from continuing his wrongful conduct or harming others. (Compare Johnson v. Ford Motor Co. (2005) 135 Cal.App.4th 137, 150 [noting state’s interest in seeking automotive company’s compliance with California’s consumer protection laws, where evidence showed course of conduct that could potentially injure a large number of consumers].) Taking these factors together, we conclude that while a significant punitive damages award may be appropriate and constitutionally permissible, an award above the middle range would violate due process.
9. Scope of Injunction
The Allure defendants contend the injunction was overbroad in several respects.
The trial court enjoined the Allure defendants from, among other things, (1) “[s]oliciting or accepting any business from, or initiating any further contact or communication with any customer whose identity or other information was obtained from Jan Marini Skin Research, Inc.’s customer list or database, Janadyne, Inc.’s customer list or database, and/or from any current or former Jan Marini Skin Research, Inc., employee or sales representative;” (2) “[s]oliciting or accepting any business from any current or former Jan Marini Skin Research, Inc., customer whom [the Allure defendants or anyone acting on their behalf] have solicited at any time in the past for the purpose of doing business with Defendants;” (3) “[s]oliciting or accepting any business from any Jan Marini Skin Research, Inc., customer whose identity and/or other information was contained in Jan Marini Skin Research, Inc.’s customer list or database, or Janadyne, Inc.’s customer list or database as of the date of entry of [the judgment, August 30, 2004];” and (4) “[s]oliciting any current or former employee or sales representative of Jan Marini Skin Research, Inc., to leave and/or to accept any position with Defendants, any of their business entities, predecessors or successors-in-interest, affiliates, agents, and/or representatives.”
The Allure defendants contend these restrictions restrain trade and are overbroad because they prevent them from doing business with “legitimately gained customers,” because they give inadequate notice of the behavior enjoined, and because they stay in effect indefinitely, despite the fact that the 1998 agreement barred Allure from doing business with JMSR’s customers for only two years after JMSR stopped buying products from Allure.
We agree with the Allure defendants that the injunction is overbroad. As we discussed above, prohibiting the Allure defendants from accepting orders from current or former JMSR customers who independently sought them out would restrain trade in violation of Business and Professions Code section 16600. JMSR has pointed us to no authority indicating that the court may do by injunction what the parties could not do by agreement; and in our view, such a result would contravene the public policy of this state. (See Hill Medical Corp. v. Wycoff (2001) 86 Cal.App.4th 895, 897-898 [trial court properly denied injunction enforcing noncompetition covenant that violated Bus. & Prof. Code, § 16600].)
We also agree that the injunction gives inadequate notice to the Allure defendants of the identity of the customers with whom they may not do business. There is evidence that Allure collected and used its new sales representatives’ customer lists, including lists of JMSR customers. However, the record does not indicate that Allure had access to JMSR’s complete customer list, or that it knew the identity of JMSR’s customers at the time of the judgment, several years after Allure and JMSR had severed their relationship.
“ ‘An injunction must be narrowly drawn to give the party enjoined reasonable notice of what conduct is prohibited.’ ” (Strategix, Ltd. v. Infocrossing West, Inc. (2006) 142 Cal.App.4th 1068, 1074.) In Strategix, the Court of Appeal disapproved as overbroad a nonsolicitation covenant forbidding the seller of a business from soliciting the buyer’s employees and customers, noting: “[P]ractical concerns militate against barring the seller from soliciting the buyer’s employees and customers, rather than the sold business’s employees and customers. The seller presumably is familiar with the sold business’s employees and customers as of the date of the sale. Thus, the seller has some basis for determining who it may and may not solicit pursuant to the nonsolicitation covenants. But the seller is far less likely to be familiar with the buyer’s employees and customers, especially as time passes. . . . Sellers would lack . . . reasonable notice if courts enforced nonsolicitation covenants directed at the buyer’s employees and customers.” (Ibid.) Similarly, the court in Morlife, in finding valid an injunction against soliciting the plaintiff’s customers or doing business with customers who had switched their business after being unlawfully solicited, reasoned in part that the injunction did not cover potential customers with whom the defendants had had no contact and as to whom they had acquired no information while in the plaintiff’s employ. (Morlife, supra, 56 Cal.App.4th at pp. 1527-1528.)
JMSR argues that the Allure defendants can comply with the injunction by asking potential customers whether they have done business with JMSR. As authority, they cite ReadyLink, in which the Court of Appeal upheld most of the provisions of a preliminary injunction prohibiting a former recruiting agent for a healthcare service provider from soliciting his former employer’s employees, agents, nurses, recruiters, or anyone under contract with the former employer. (ReadyLink, supra, 126 Cal.App.4th at pp. 1011-1014, 1026.) The former employee complained the language was vague and overbroad because it failed to specify the names of the people and institutions he was prohibited from soliciting. (Id. at p. 1026.) The Court of Appeal rejected this argument, noting that providing such a list would result in the disclosure of proprietary and confidential information, and concluding that if the former employee engaged in the nurse staffing business during the pendency of the lawsuit, he could “simply inquire as to whether such individual or entity is under contract with ReadyLink.” (Ibid.)
We find the reasoning of Strategix more persuasive in these circumstances. JMSR and Janadyne had extensive nationwide customer lists, and although there is evidence that the Allure defendants misappropriated “stacks” of customer lists, JMSR has not shown that they had a complete listing of its customers. Moreover, the Allure defendants were enjoined from doing business not only with customers of whom they might have gained knowledge improperly, but also with any customers JMSR may have gained in the years following the rupture of relations between JMSR and Allure. An injunction prohibiting the Allure defendants indefinitely from doing business with numerous unknown customers does not give them adequate notice of the behavior that is forbidden.
The Allure defendants also contend the injunction is overbroad because it has no time restrictions. As they point out, the 1998 agreement provided that the restrictions on soliciting or selling to JMSR customers and on soliciting JMSR employees would be in effect for two years after JMSR stopped buying products from the Allure parties. The Allure defendants contend the injunction against doing those acts could properly last no longer than the restrictions in the agreement.
“An injunction against misappropriation of trade secrets should ‘only last as long as is necessary to preserve the rights of the parties’ and ‘as long as is necessary to eliminate the commercial advantage that a person would obtain through misappropriation.’ ” (Whyte, supra, 101 Cal.App.4th at pp. 1451-1452.) As the court in Morlife noted in upholding an injunction of indefinite duration, “With regard to the duration of the injunctive relief, the UTSA provides that the injunction may be continued even after the trade secret has been lawfully disclosed ‘in order to eliminate commercial advantage that otherwise would be derived from misappropriation.’ ([Civ. Code,] § 3426.2, subd. (a).)” (Morlife, supra, 56 Cal.App.4th at p. 1528.)
Here, however, the agreement between the parties provided that the period during which the Allure parties could not do business with anyone they knew to be a JMSR customer and during which they could not solicit JMSR employees was limited to two years after JMSR stopped doing business with Allure. Our Supreme Court in Gordon v. Landau (1958) 49 Cal.2d 690, 692, considered a similar limitation against a former salesperson, providing that the former employee would not use or divulge names of the plaintiff’s customers for one year after termination of his employment. The court concluded that although the plaintiffs were entitled to damages for their former employee’s wrongful use of the plaintiffs’ trade secret customer lists, they were not entitled to an injunction. (Id. at pp. 694-695.) In reaching this conclusion, the court stated: “In view of the fact that more than a year has passed since defendant left plaintiffs’ employ, by the very terms of the contract the time has elapsed during which plaintiffs would be entitled to obtain an injunction against defendant restraining him from using the lists of their customers.” (Id. at p. 695.) We conclude that the rule of Gordon is controlling, and that the period during which JMSR could obtain an injunction against Allure’s soliciting its customers or employees—measured from the time JMSR stopped buying products from Allure—had already passed by the time the trial court enjoined those actions.
Finally, the Allure defendants challenge the injunction against using “the formulas, or any derivations thereof,” of some 53 JMSR products. They contend the prohibition is too broad both because it includes products they have not misappropriated and because it includes derivatives of JMSR formulas, rather than only the original formulas. We reject this contention. First, as JMSR points out, Allure manufactured most of JMSR’s products by 1995, and the trial court could properly enjoin the Allure defendants from using any of the formulas to which they had access. Second, as noted earlier, the law of trade secret misappropriation protects minor variations of a trade secret. (By-Buk, supra, 163 Cal.App.2d at pp. 168-169 [although the defendants may have made improvements and changes to trade secret machines, they had still wrongfully used the plaintiff’s property]; Sinclair, supra, 42 Cal.App.3d at pp. 219-220, 222 [although the defendant had made minor changes to the plaintiff’s devices, devices that functioned in substantially the same way and accomplished substantially same result as original trade secret devices were protected by contract providing for confidentiality].) The trial court could properly enjoin the use of formulas derived from JMSR’s confidential formulas.
The Allure defendants contend this result means they will be unable to manufacture or sell lotions, benzoyl peroxide products, sunscreens, or any other products with the same characteristics as JMSR’s. We do not read the injunction so broadly. The trial court did not enjoin the Allure defendants from using their own efforts to produce skin-care products, but instead prohibited them from using JMSR’s formulas to develop products.
10. Trial Court’s Finding of Conspiracy
The Allure defendants contend that in the absence of a jury finding of a conspiracy among them, the trial court erred in finding such a conspiracy in granting injunctive relief.
The jury was instructed that JMSR contended Dhatt, Kohler, Allure, Allure Cosmetic, Inc., and Dermaquest conspired to commit tortious conduct and were therefore each responsible for the harm caused; and that if it found Dhatt had misappropriated trade secrets, induced a breach of contract, or intentionally interfered with prospective economic advantage, then it must determine whether Kohler, Allure, Allure Cosmetic, Inc., and Dermaquest were also responsible for the harm; a showing of responsibility would have been made if JMSR proved that the defendants knew of the plan to commit tortious conduct and agreed and intended that the conduct should be committed. The verdict forms did not ask the jury to make specific findings as to whether the Allure defendants had engaged in a conspiracy. The jury awarded tort damages against Dhatt, Allure, Allure Cosmetic, Inc., Dermaquest, and Kohler in different amounts. Later, in granting injunctive relief and ruling against Skinquest, the trial court found there was a conspiracy among the Allure defendants.
In light of our conclusion that the judgment against Skinquest must be reversed because it was deprived of its right to a jury trial, we need not address the question of whether the trial court could properly make this finding with respect to Skinquest.
The Allure defendants contend the lack of a jury finding on the question of conspiracy barred the trial court from finding such a conspiracy in ruling on the equitable remedy of injunction. We see no inconsistency between the jury’s findings and those of the court, and none of the authorities the Allure defendants cite support the proposition that a trial court may not make consistent factual findings in awarding equitable relief. There was no error.
B. Appeal in the Allure Action
1. Substantial Evidence to Support Judgment Against Sangha
Sangha contends the evidence does not support the jury’s findings that he interfered with Allure’s prospective economic advantage and breached his fiduciary duty to Allure. In reviewing a claim of insufficiency of the evidence, “we are bound by the rule that when ‘a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.’ ” (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 503; see also Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053.) In making this claim, the appellant assumes a “ ‘daunting burden.’ ” (Whiteley v. Philip Morris, Inc. (2004) 117 Cal.App.4th 635, 678.) However, substantial evidence is not synonymous with any evidence. It must be “ ‘ “reasonable in nature, credible, and of solid value; it must actually be ‘substantial’ proof of the essential which the law requires in a particular case.” ’ ” (DiMartino v. City of Orinda (2000) 80 Cal.App.4th 329, 336.) In determining whether such evidence exists, “ ‘we may not confine our consideration to isolated bits of evidence, but must view the whole record in a light most favorable to the judgment, resolving all evidentiary conflicts and drawing all reasonable inferences in favor of the decision of the trial court.’ ” (Ibid.) We may not substitute our view of the credibility of witnesses for that of the trier of fact, and may only reject testimony “ ‘when it is inherently improbable or incredible, i.e., “ ‘unbelievable per se,’ ” physically impossible or “ ‘wholly unacceptable to reasonable minds.’ ” ’ ” (Lenk v. Total-Western, Inc. (2001) 89 Cal.App.4th 959, 968 (Lenk).)
The first amended complaint in the Allure action alleged that Sangha was an officer, director, and employee of Allure. Sangha does not dispute that he owed a fiduciary duty to Allure.
Bearing these principles in mind, we conclude that substantial evidence supports the jury’s verdict against Sangha. An officer who participates in the management of a corporation is a fiduciary whose obligations remain until the officer’s resignation or removal from office. (GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 409, 420-421, disapproved on another ground in Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1154.) “The mere fact that the officer makes preparations to compete before he resigns his office is not sufficient to constitute a breach of duty. It is the nature of his preparations which is significant. No ironclad rules as to the type of conduct which is permissible can be stated, since the spectrum of activities in this regard is as broad as the ingenuity of man itself.” (Bancroft-Whitney Co. v. Glen (1966) 64 Cal.2d 327, 346.) In Bancroft-Whitney, our Supreme Court concluded that the president of Bancroft-Whitney, who was planning to work for a competitor, Matthew Bender & Co. (Bender Co.), violated his fiduciary duties when he took action to obtain for Bender Co. the services of some of Bancroft-Whitney’s employees; those actions included telling Bancroft-Whitney that there was no danger Bender Co. would try to hire Bancroft-Whitney’s employees, suggesting to Bancroft-Whitney a two-step salary increase, with the second step to be announced after Bender Co. had offered jobs to the employees, and disclosing confidential salary information to Bender Co. (Id. at pp. 330, 346, 349-351.) Similarly, while an employee may announce his plans to leave a company and form a new enterprise, he may not solicit his company’s customers. (Southern Cal. Disinfecting Co. v. Lomkin (1960) 183 Cal.App.2d 431, 444-445.)
The evidence of breach of fiduciary duty here, while not as clear as that in Bancroft-Whitney, is sufficient to support the jury’s verdict. Sangha left Allure in April 1998. There is evidence that in the preceding month, Sangha had offered Gill a job, and that he told Gill he had plans to get customers for the new enterprise, that he was talking with JMSR, and that he was only waiting for a commitment from Marini before opening his business. From this evidence, the jury could reasonably conclude that Sangha not only made plans to leave Allure, but actively solicited its main customer while still an officer of the company.
Sangha asks us to discount Gill’s testimony, pointing out that he had a personal grudge against Sangha. The credibility of witnesses is a matter for the trier of fact, not for the appellate court, and Gill’s testimony was not impossible or unbelievable. (Lenk, supra, 89 Cal.App.4th at p. 968.) We will not disturb the jury’s credibility determination on appeal.
We also conclude that the evidence is sufficient to support the conclusion that Sangha violated his fiduciary duty to Allure in his dealings with Penny Island. Allure argues that Sangha violated his duty in failing to reassure Tennigkeit, Penny Island’s owner, that Allure—through Dhatt—would not continue the practice of substituting ingredients in his products. In light of the fact that Sangha was planning to leave Allure in the near future, he was in no position to offer that assurance. Nor do we see any violation of duty in Sangha’s informing JMSR, accurately, that the retinol for which JMSR had paid in advance had cost less than Dhatt had represented, or in his having Dhatt inform JMSR about Allure’s dealings with Kohler. However, there is also evidence that, while still an officer of Allure, Sangha told Tennigkeit that he planned to leave Allure and start his own business and arranged to manufacture Penny Island’s products. This evidence, while not overwhelming, is sufficient to allow a jury to conclude Sangha breached his fiduciary duty to Allure.
Sangha argues that because there is no evidence he breached his fiduciary duty, there is therefore no evidence of an independently wrongful act to support a claim that he interfered with prospective economic advantage. (See Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392-393 [to be actionable, interference must be “wrongful by some legal measure other than the fact of interference itself”].) Because we have already concluded the evidence supports the conclusion Sangha breached his fiduciary duty to Allure, we reject this contention.
2. Denial of Motions for New Trial and JNOV
Sangha contends that the trial court’s actions in denying his motions for a new trial and JNOV were inconsistent with the court’s own findings. Allure and Dhatt sought injunctive relief against Sangha. After the jury had rendered its verdicts, the trial court denied the requested relief, finding there was “no evidence that Gurpreet S. Sangha improperly interfered with economic relations between Allure Cosmetic USA, Inc. and Penny Island.” In support of this conclusion, the trial court noted that Tennigkeit testified that he decided to stop doing business with Allure before he learned Sangha would be leaving Allure, because he heard Dhatt authorize the substitution of an ingredient in a product for another customer, and because he believed Dhatt had lied to him about including a key ingredient in his product.
The trial court also found “[t]here was no evidence that Gurpreet S. Sangha improperly interfered with economic relations between Allure Cosmetic USA, Inc. and Jan Marini Skin Research, Inc.” In support of this conclusion, the trial court referred to the evidence that Marini’s attitude toward Dhatt changed when she found he was making products for Kohler, that frictions developed between Dhatt and JMSR after Marini and Felker began to hear rumors that Dhatt and Kohler were using JMSR’s formulas and trade secrets in order to compete with JMSR, that Felker and Marini learned for the first time in mid-April 1998 that Dhatt and Sangha were going their separate ways, and that Dhatt suggested that JMSR divide its business between him and Sangha. In addition, the court stated there was uncontradicted evidence that Felker and Marini stopped doing business with Allure because they were increasingly displeased with the service and products they received and because they continued to hear rumors that Dhatt was going into competition with JMSR, trying to take its customers, and using its trade secrets. The court also noted the evidence that Marini decided to give Sangha business in late April 1998, only after Dhatt had suggested that the business be split between Allure and Sangha. Based on these findings, the court concluded there were no grounds to issue an injunction against Sangha under Business and Professions Code section 17200.
Sangha contends that, having found no interference with Allure’s prospective economic advantage, the trial court was bound to grant his motions for a new trial and JNOV, which were brought in part on the ground that there was no substantial evidence he had breached his fiduciary duty or interfered with Allure’s prospective economic advantage.
In reviewing an order denying a motion for JNOV, the standard of review is whether any substantial evidence, contradicted or uncontradicted, supports the jury’s conclusion. (Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68.) As we have already rejected Sangha’s arguments that the jury’s verdicts were not supported by substantial evidence, we cannot rule that the trial court erred in denying the motion for JNOV.
We reach a different conclusion, however, in considering the denial of the new trial motion. We review a ruling on a motion for a new trial for abuse of discretion. (Schelbauer v. Butler Manufacturing Co. (1984) 35 Cal.3d 442, 452.) In considering such a motion made on the ground of insufficiency of the evidence, the trial court is required to weigh the evidence, judge the credibility of witnesses, and satisfy itself that the evidence as a whole is sufficient to sustain the verdict. (Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397, 413 (Kelly-Zurian); see also People v Robarge (1953) 41 Cal.2d 628, 633 (Robarge); Locksley v. Ungureanu (1986) 178 Cal.App.3d 457, 463.) A judge who does not believe the evidence justifies the verdict has not only a right but also a duty to grant a new trial. (Weinman v. Gray (1962) 206 Cal.App.2d 817, 819; see also Code Civ. Proc., § 657.) Thus, in Robarge, where the trial court had misconceived its duty and as a result had failed to give the defendant the benefit of a proper review of the evidence, our Supreme Court reversed the order denying the motion for a new trial. (Robarge, supra, 41 Cal.2d at pp. 633-635.)
Here, the statement of decision indicates that the trial court had reviewed the evidence and concluded there was “no evidence” that Sangha improperly interfered with Allure’s economic relations with JMSR or Penny Island. Although this statement was made in the context of denying Allure and Dhatt’s request for an injunction, it can only be read to mean that the trial court was convinced the jury clearly should have reached a different determination when it found Sangha had intentionally interfered with Allure’s economic relations. (See Code Civ. Proc., § 657.)
We recognize there is at least a surface incongruity between our rejection of Sangha’s insufficiency of the evidence claims and our conclusion that the trial court abused its discretion in denying the motion for new trial. But we are constricted by our standards of review. Our substantial evidence determination is limited to the cold record. While the trial court has the authority and duty to weigh the evidence and consider the credibility of witnesses in assessing the jury’s verdict, we do not. It is therefore not necessarily inconsistent for us to conclude that, although we find substantial evidence to support the verdict, a motion for new trial should nevertheless have been granted.
This is not a case in which the trial court merely questioned the quality of the evidence supporting the verdict (Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 725-726) or noted that it might have decided the case differently (Kelly-Zurian, supra, 22 Cal.App.4th at p. 414). Under those circumstances, a denial of a motion for new trial would not be an abuse of discretion. Here, however, the court explicitly stated there was no evidence that Sangha had interfered with Allure’s economic relations. Sangha was entitled to the benefit of the trial court’s weighing of the evidence. In the admittedly unusual circumstances of this case, the trial court abused its discretion in denying the motion for new trial on the issue of intentional interference with prospective economic advantage.
3. Excessive Damages
There is also merit in Sangha’s contention that the evidence does not support the amount of damages awarded. Allure’s expert on the issue of damages calculated the company’s lost profits by determining the sales GSC made to JMSR and Penny Island after Sangha left Allure, and assuming that Allure would have made those sales instead. Based on these assumptions, he calculated that Allure lost $4,669 in profits from lost sales to Penny Island between 1998 and 2003, and $959,165 in profits from lost sales to JMSR between 1998 and 2002. The jury awarded Allure $427,000 in compensatory damages for Sangha’s conduct.
Where the operation of an established business is interrupted by a tort, “ ‘damages for the loss of prospective profits that otherwise might have been made from its operation are generally recoverable for the reason that their occurrence and extent may be ascertained with reasonable certainty from the past volume of business and other provable data relevant to the probable future sales. . . . [A]lthough generally objectionable for the reason that their estimation is conjectural and speculative, anticipated profits dependent upon future events are allowed where their nature and occurrence can be shown by evidence of reasonable reliability.’ ” (Kids’ Universe v. In2Labs (2002) 95 Cal.App.4th 870, 883.) Thus, an award of damages for lost profits “ ‘depends upon whether there is a satisfactory basis for estimating what the probable earnings would have been had there been no tort.’ ” (Ibid.) If a plaintiff can demonstrate a reasonable probability that profits would have been earned absent the defendant’s tortious conduct, damages for lost prospective profits may be awarded; the plaintiff need not establish the amount of damages with absolute precision, but only with reasonable certainty. (Id. at p. 884.) In calculating damages, an expert may not rely on speculative or conjectural data. If the opinion “is not based upon facts otherwise proved or assumes facts contrary to the only proof, it cannot rise to the dignity of substantial evidence.” (Toscano v. Greene Music (2004) 124 Cal.App.4th 685, 696 (Toscano); see also Pacific Gas & Electric Co. v. Zuckerman (1987) 189 Cal.App.3d 1113, 1135-1136 [“[w]here an expert bases his conclusion upon assumptions which are not supported by the record, . . . or upon factors which are speculative, remote or conjectural, then his conclusion has no evidentiary value”].) The amount of damages is a question of fact that is reviewed for substantial evidence. (Toscano, supra, 124 Cal.App.4th at p. 691.)
Sangha argues, and we agree, that the damages award was based on assumptions not supported by the record. In calculating the award for Allure’s loss of Penny Island’s business, Allure’s expert failed to take into account Tennigkeit’s dissatisfaction with Allure, assuming instead that absent Sangha’s conduct, Penny Island would have continued buying products from Allure through 2003. The evidence does not support this assumption. Tennigkeit testified that he decided to find a different manufacturer for Penny Island’s products because he no longer trusted Dhatt. He had cause to believe Allure was omitting a key ingredient from his products; and he had seen Dhatt tell an employee to substitute a less expensive ingredient in another customer’s products, which led him to be concerned Allure might substitute ingredients in his products. These incidents happened before Tennigkeit had his dinner meeting with Sangha, and by the time of the meeting he had already decided to stop using Allure to manufacture his products. The record provides no basis for a trier of fact to conclude Penny Island would have continued ordering products from Allure absent Sangha’s conduct, and there is therefore no substantial evidence to support damages based on Penny Island’s sales. This conclusion is reinforced by evidence that Penny Island declined to resume doing business with Allure even after being offered a 30 percent discount.
Indeed, Allure’s own expert admitted that his damages calculations would be undermined by the information that Penny Island would not buy products from Allure because Tennigkeit believed Dhatt was dishonest and unethical.
We also conclude that, although some damages with respect to JMSR’s sales may have been proper, those awarded were excessive. Allure’s expert calculated lost sales from JMSR through mid-October 2002. The damages included net lost profits of $43,553 for 1998, $200,054 for 1999, $214,419 for 2000, $248,897 for 2001, and $252,243 for 2002, for total lost profits of $959,165. JMSR continued buying some of its products from Allure through early 1999; and a trier of fact might infer that during this period, it would have continued to buy more of its products from Allure absent Sangha’s tortious conduct. However, the record indicates that Dhatt himself suggested that JMSR divide its business between Allure and GSC. Moreover, the testimony of Marini and Felker indicates that JMSR stopped doing business with Allure because of its increasing dissatisfaction after Dhatt had become difficult to work with and less responsive to JMSR’s needs, because they were unhappy about Dhatt’s action in misrepresenting the cost of an order of retinol, and because they had heard that Allure was offering JMSR’s products to other customers. There is no evidence in the record to support an inference that JMSR would have continued buying products from Allure after this time. And it would be inconceivable to infer that JMSR would have done business with Allure after June 1999—that is, after Marini had told Dhatt that she knew he and Kohler were denigrating JMSR’s products and trying to hire JMSR’s sales force and persuade JMSR’s customers to switch to Skin Therapy Inc., after Dhatt told her his actions were none of her business, and after she had filed suit against him.
There appears to be a discrepancy of $1 in the expert’s calculations.
We cannot determine how the jury calculated its award of damages. It is clear, however, that $427,000 is far greater than any amount supported by the evidence. The matter must be remanded for a new trial on the issue of damages.
Having concluded that Sangha is entitled to a new trial, we also conclude that there must be a new determination of whether punitive damages should be awarded. Punitive damages, if any, must bear a reasonable relationship and be proportionate to the amount of compensatory damages. (Marron v. Superior Court (2003) 108 Cal.App.4th 1049, 1059-1060.)
4. Attorney Fees
Finally, Sangha and GSC contend the trial court abused its discretion in denying their request for attorney fees. In the first amended complaint in the Allure action, Allure alleged that Sangha and GSC had misappropriated its trade secret customer lists, formulations of cosmetics and skin-care products, and other confidential information. Allure and Dhatt’s first amended cross-complaint in the JMSR action also included a cause of action for misappropriation of trade secret formulas and related documents. After the close of evidence, Sangha and GSC moved successfully for a directed verdict on the causes of action for misappropriation of formulas, arguing that the claims must fail as a matter of law because the court had rejected Allure’s contention that it owned the formulas at issue. Sangha and GSC sought the attorney fees they incurred defending these claims, contending they were made in bad faith. The trial court denied the motion.
Allure announced before trial that it was withdrawing the claim for misappropriation of customer lists, and the cause of action was dismissed.
At the time, Civil Code section 3426.4 provided: “If a claim for misappropriation [of a trade secret] is made in bad faith, . . . the court may award reasonable attorney’s fees to the prevailing party.” (Stats. 1984, ch. 1724, § 1, p. 6254.) To find bad faith, the court must conclude both that the plaintiff’s claim was objectively specious and that the plaintiff subjectively brought or maintained it in bad faith. (Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1261-1262.) The trial court has broad discretion in ruling on a motion for attorney fees. In reviewing the trial court’s ruling, we indulge all inferences that support the findings, and will not disturb the trial court’s exercise of discretion unless there is no evidence to support it or it exceeds the bounds of reason. (Id. at pp. 1262-1263.) Thus, the question before us is not whether the trial court could properly have ordered attorney fees, but whether it was obliged to do so on the evidence before it.
Sangha and GSC argue that Allure and Dhatt’s misappropriation claims were objectively specious and made in subjective bad faith and that the trial court abused its discretion in denying attorney fees. In particular, they rely on the 1998 agreement, under which the Allure parties agreed that JMSR’s product formulations were confidential and that some of them were proprietary to JMSR. According to Sangha and GSC, this ruling, coupled with the jury’s vindication of JMSR’s claim for misappropriation of trade secrets, indicates that Allure and Dhatt must have maintained their claim for misappropriation of the formulas in bad faith, and their failure to pursue the claim for misappropriation of customer lists indicated the claim must have been filed in bad faith.
We cannot conclude the trial court’s ruling exceeds the bounds of reason. Although the trial court concluded—correctly, as we have discussed above—that the 1998 agreement was unambiguous, it could also reasonably conclude that Allure and Dhatt acted in subjective good faith in attempting to persuade the court that it was unenforceable or that pursuant to industry custom, Dhatt owned the formulas to the products he had developed. Nor do we conclude that Allure’s action in dismissing before trial the cause of action for misappropriation of customer lists shows that the claim had been maintained in bad faith. Its action is equally consistent with acting in good faith by deciding not to waste the court’s time pursuing a claim that discovery had shown to have no merit.
III. DISPOSITION
The judgment against Skinquest is reversed, and the matter is remanded to the trial court. On remand, the trial court is directed to modify the injunction in accordance with the views expressed herein. The court is also directed to set a new trial on the amounts of compensatory and punitive damages to be awarded against Sangha and GSC. The award of punitive damages against Dhatt is vacated and the judgment is modified to reduce the punitive damages award to $295,000. In all other respects, the judgment is affirmed.
The parties shall bear their own costs on appeal.
We concur: RUVOLO, P.J., SEPULVEDA, J.