Summary
noting that California courts "recognized a protectable trade secret may include a data compilation consisting of publically available information"
Summary of this case from Netapp Inc. v. Nimble Storage, Inc.Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 05CC08803, James Gray, Judge.
Jon R. Williams for Plaintiff, Cross-defendant and Appellant and for Cross-defendants and Appellants.
Haberbush & Associates and Robert I. Brayer for Defendant and Cross-complainant and Respondent and for Defendants and Respondents.
OPINION.
ARONSON, J.
Plaintiff and cross-defendant Primetech Corporation (Primetech), and cross-defendants Robert Prestwood (Prestwood), Colleen Prestwood, and Lauren Financial Services, Inc., challenge the judgment entered after a bench trial on Primetech’s complaint and the cross-complaint of defendant and cross-complainant Jonathan S. Cohen. Primetech contends the trial court erred in granting nonsuit on its cause of action for breach of loyalty and in limiting the damage award on its other causes of action to $10,000, despite the opinion of its expert witness that it suffered damages of $1.7 million. Cross-defendants contend the trial court erred in awarding Cohen $230,000 on his cross-complaint, asserting the amount was not supported by substantial evidence.
We conclude that even if the trial court erred in granting nonsuit, Primetech was not prejudiced because the trial court’s factual findings in its statement of decision preclude any recovery on the breach of duty claim. The trial court also did not err in limiting Primetech’s damages because it was not required to accept the opinion of Primetech’s expert, and had a reasonable basis for rejecting much of his testimony. Finally, we conclude cross-defendants waived any claim that the award to Cohen was unsupported by substantial evidence because in their appellate briefs they failed to fairly summarize all of the material evidence admitted at trial on the issue, or include in the record any of the numerous exhibits supporting that award. Accordingly, we affirm the judgment.
I
Factual and Procedural Background
Primetech was in the business of supplying aircraft parts to the military and civilian industry. In July 2003, Primetech hired Cohen, agreeing to pay him both a small salary and 40 percent of the company’s profits. While at Primetech, Cohen helped produce a database of aircraft parts, which included information on specifications, availability, and cost that allowed Primetech to quickly respond to a customer’s request for a quote, or “RFQ.” While working at Primetech, Cohen was required on occasion to buy aircraft parts and pay company expenses with his personal credit card, with the understanding Primetech would reimburse him.
In September 2004, the United States Air Force suspended, or “debarred,” Primetech and many of its principals from any government contracting, pending resolution of federal court charges alleging Primetech knowingly delivered counterfeit turbine vane arms to the Department of Defense. In March 2005, Primetech’s chief executive officer, Michael Murphy, was convicted of two counts of fraud.
With Primetech and many of its principals and officers debarred from government business, Cohen and another employee, Aundre Holmes, formed Air Sonic, which conducted an aircraft parts business using Primetech’s database. According to Cohen, he started the business with express consent obtained from Robert Prestwood, Primetech’s vice president, who recognized Cohen was not affected by the debarment.
In July 2005, Cohen separated from Primetech. According to Cohen, he voluntarily resigned after Prestwood proposed joining Air Sonic with funds Cohen believed Primetech owed him. Believing Prestwood intended to circumvent the debarment, Cohen left Primetech to avoid being implicated in the scheme. Despite Prestwood’s entreaties that he remain at Primetech, Cohen submitted a resignation letter formalizing his decision.
According to Prestwood, however, Primetech fired Cohen. Prestwood asserted Cohen surreptitiously started Air Sonic with Holmes, using without permission Primetech’s database, financial information, and customer lists to solicit business from Primetech’s customers while he was still employed with the company. According to Prestwood, Cohen submitted the resignation letter after termination to create the appearance his separation was voluntary.
When he left, Cohen took with him several of Primetech’s computers and a Quick Books data base program containing Primetech’s financial information. Cohen asserted he took the Quick Books program to preserve evidence of money owed from Primetech. Cohen later abandoned Air Sonic, and started a new aircraft parts company, Air Spectrum.
Primetech sued Cohen, Air Spectrum, and others seeking restitution, damages, and injunctive relief based on causes of action for misappropriation of trade secrets, unfair competition, unjust enrichment, interference with prospective economic advantage, conversion, trespass to chattel, intentional interference with prospective advantage, negligent interference with prospective advantage, and breach of loyalty. Cohen cross-complained against Primetech, Prestwood, Murphy, and others seeking his 40 percent share of Primetech’s profits and reimbursement for debts Cohen incurred on Primetech’s behalf.
After a bench trial, the trial court, based on the stipulation of the parties, rendered an oral statement of decision. The trial court entered judgment in favor of defendants on Primetech’s causes of action for misappropriation of trade secrets, unfair competition, intentional interference with prospective advantage and negligent interference with prospective advantage. The court ruled in favor of Primetech and against defendants on its causes of action for unjust enrichment, trespass to chattel, and conversion, awarding Primetech a total of $10,000. The court ruled in favor of Cohen on all causes of action in his cross-complaint, awarding Cohen $230,000. Primetech and cross-defendants now appeal.
II
Discussion
A. Any Error in Granting Nonsuit on Primetech’s Breach of Duty Cause of Action Did Not Prejudice Primetech
In its breach of duty cause of action, Primetech alleged Cohen breached his duty of loyalty when he began conducting business in competition with Primetech while still employed there. This breach included Cohen negotiating with Primetech’s customers so that Cohen could supply them with aircraft parts upon his departure from the company. In the judgment, the trial court granted Cohen nonsuit on this cause of action, but did not specify its reason for doing so. Primetech argues the trial court granted nonsuit because it erroneously concluded insufficient evidence demonstrated Cohen was an officer of the corporation. Cohen argues the trial court did so because Primetech failed to present sufficient evidence of a breach, and also failed to provide any evidence of damages.
“A defendant is entitled to a nonsuit if the trial court determines that, as a matter of law, the evidence presented by plaintiff is insufficient to permit a jury to find in his favor. [Citation.] ‘In determining whether plaintiff’s evidence is sufficient, the court may not weigh the evidence or consider the credibility of witnesses. Instead, the evidence most favorable to plaintiff must be accepted as true and conflicting evidence must be disregarded. The court must give “to the plaintiff[’s] evidence all the value to which it is legally entitled, . . . indulging every legitimate inference which may be drawn from the evidence in plaintiff[’s] favor.”’ [Citation.] A mere ‘scintilla of evidence’ does not create a conflict for the jury’s resolution; ‘there must be substantial evidence to create the necessary conflict.’ [Citation.] [¶] In reviewing a grant of nonsuit, we are ‘guided by the same rule requiring evaluation of the evidence in the light most favorable to the plaintiff.’ [Citation.] We will not sustain the judgment ‘“unless interpreting the evidence most favorably to plaintiff’s case and most strongly against the defendant and resolving all presumptions, inferences and doubts in favor of the plaintiff a judgment for the defendant is required as a matter of law.”’ [Citation.]” (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291, original italics.)
Substantial evidence was presented that Cohen was an officer of Primetech. For example, exhibit 136 is a Primetech corporate resolution bearing Cohen’s signature as secretary of the corporation. Similarly, Cohen’s resignation letter states that due to his resignation, he is “no longer the Director of Operations and/or Secretary of the Corporation.” The foregoing evidence alone is sufficient to support a finding that Cohen was Primetech’s officer.
Substantial evidence also demonstrated that, during the time he was employed at Primetech, Cohen set up a competing business, Air Sonic, using Primetech’s database. This would certainly constitute a breach of his duty of loyalty as a Primetech officer. Whether substantial evidence demonstrates that Cohen harmed Primetech as a result of setting up a competing company, however, is less clear. Primetech does not cite to any evidence in the record demonstrating it suffered damages when Cohen set up a competing company while still a Primetech officer. Instead, it cites to the trial court’s damage findings. The findings, however, are not clear on whether these damages relate to harm cased by Air Sonic, or Cohen’s actions unrelated to that competing venture.
Nonetheless, even if the trial court erred in granting nonsuit, we are not compelled to reverse the judgment. Reversal is required only when the asserted error is prejudicial. (Piedra v. Dugan (2004) 123 Cal.App.4th 1483, 1499.) For example, in Piedra, the plaintiff contended the trial court erred in granting nonsuit on his battery cause of action, which arose from his doctor’s alleged failure to obtain his parents’ consent to administer certain medication. We determined that even if the trial court erred in granting nonsuit on the battery cause of action, recovery on that claim was necessarily foreclosed by the jury’s findings in connection with his separate informed consent claim. (Id. at p. 1500.)
Here, the trial court found in connection with Primetech’s remaining causes of action that Primetech never made Cohen an officer, but treated him as an officer only “when convenient.” The court also found Cohen started Air Sonic with the consent and blessing of Prestwood, Primetech’s vice president, to avoid Primetech’s debarment. The court further found Cohen had not formed the design to compete with Primetech through Air Spectrum until after he had separated from the company. Accordingly, the trial court concluded the absence of a non-compete clause in his employment contract gave Cohen the right, like any ex-employee, to compete with Primetech.
Accordingly, despite the introduction of substantial evidence to overcome nonsuit, the trial court’s finding Cohen was neither an officer nor an employee when he entered into competition with his former company forecloses Primetech from succeeding under its breach of loyalty theory.
B. The Trial Court Did Not Err in Limiting Primetech’s Damages to $10,000
Primetech contends the trial court erred in limiting Primetech’s damages to $10,000, asserting the trial court improperly assumed the purloined database had only minimal value because it contained information readily ascertainable from public sources. We disagree.
In assessing damages, the trial court considered the various pieces of information contained within the parts database, noting that some was readily available to the public, and some was not. The court concluded that although the database did contain some useful information, Primetech “vastly overstated” the value of the database.
Asserting the trial court should not have discounted the database because it contained readily available information, Primetech cites Courtesy Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278 and Readylink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006. In each of these cases, the courts recognized a protectable trade secret may include a data compilation consisting of publically available information. Neither case, however, suggested that the court may not consider whether the information is publically available in determining the value of the trade secret.
Primetech further contends the trial court erred in rejecting the $1.7 million damage figure calculated by its expert witness, Jules Kamin, noting that Kamin’s testimony was “unrebutted.” We again disagree.
Although a trier of fact is not bound by an expert’s opinion, the expert’s opinion may not be arbitrarily or unreasonably rejected. (Abbott v. Taz Express (1998) 67 Cal.App.4th 853, 858.) In rejecting the opinion of Primetech’s expert witness, the trial court observed: “Here, the testimony of Jules Kamin was singularly unhelpful and completely discounted. There is no basis whatsoever, in the first place, for future damages. . . . [T]his was an amazing example of a witness, Mr. Kamin, with his head into the sand, as to what really happens in the real world. His testimony made some sense mathematically; I won’t fault him for that, but none of it is in relation to the facts of this case.” The trial court explained that Kamin failed to take into consideration that Cohen had been doing the majority of the work at the company, but was no longer employed there. The court also noted that Kamin did not take into consideration that Primetech’s key officer had been indicted and imprisoned, and that in light of the debarment, Prestwood said that Primetech would not survive. The court also noted that no evidence was introduced demonstrating that Cohen’s taking of the Quick Books or parts databases harmed Primetech.
Primetech does not challenge any of the trial court’s stated reasons for discounting Kamin’s testimony. We therefore conclude the trial court’s rejection of Kamin’s testimony was not arbitrary or unreasonable, and reject Primetech’s challenge to the damages awarded on its complaint.
C. Cross-Defendants Waived Their Challenge to the Sufficiency of the Evidence Supporting the Damage Award on Cohen’s Cross-Complaint
Cross-defendants contend the trial court’s award of $230,000 is unsupported by substantial evidence, citing the trial court’s oral statement of decision decrying Cohen’s lack of credibility, and the poor and unhelpful documents admitted into evidence.
“‘“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.” [Citations.]’ [Citation.] . . . [Citation.] And we presume that the record contains evidence to sustain every finding of fact. [Citation.] It is the appellant’s burden to demonstrate that it does not.” (Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1658, original italics (Boeken).)
To meet this burden, the appellant must fairly summarize all of the material evidence admitted at trial, not merely the evidence favorable to his or her position. (Boeken, supra, 127 Cal.App.4th at 1658; Kanner v. Globe Bottling Co. (1969) 273 Cal.App.2d 559, 564.) We are not required to scour the record to ascertain whether it sustains the appellant’s contentions. (Eistrat v. J. C. Wattenbarger & Sons (1960) 181 Cal.App.2d 57, 63.) Consequently, failure to set forth all material evidence amounts to waiver of the alleged error and we may presume the record contains evidence to sustain every finding of fact. (Toigo v. Town of Ross (1998) 70 Cal.App.4th 309, 317.)
The damages awarded on Cohen’s cross-complaint were based on extensive testimony and various exhibits, including Quick Books printouts, cancelled checks, and credit card statements. But Primetech has cited to none of the relevant testimony and included in the record none of the exhibits relating to this subject. Even if we were willing to plunge into the many volumes of the trial transcript in this case, we could not fairly evaluate the evidence, including the trial court’s credibility determinations without seeing the relevant exhibits.
Indeed, even with the relevant documents, we would leave the issue of credibility to the trial court. “A written transcript of testimony is but a pallid reflection of what actually happens in a trial court. ‘“The best and most accurate record is like a dehydrated peach; it has neither the substance nor the flavor of the fruit before it was dried.” It resembles a pressed flower.’ [Citation.] ‘The cold record cannot give the look or manner of the witnesses; their hesitations, their doubts, their variations of language, their precipitancy, their calmness or consideration. A witness may convince all who hear him testify that he is disingenuous and untruthful, and yet his testimony when read, may convey a most favorable impression.’ [Citation.] ‘There are many factors aiding in a reasonable conclusion which are presented to the trier of facts in the first instance and not available to one going over the cold record. There is what might be called the “feel” of the case. This embraces a consideration of the witnesses, the manner in which they testify and their general attitude in the court room.’ [Citation.] ‘“[O]ne witness may give testimony that reads in print, here, as if falling from the lips of an angel of light, and yet not a soul who heard it, nisi, believed a word of it; and another witness may testify so that it reads brokenly and obscurely in print, and yet there was that about the witness that carried conviction of truth to every soul who heard him testify. . . .” [Citation.]’ [Citation.]” (Meiner v. Ford Motor Co. (1971) 17 Cal.App.3d 127, 140.)
Although the trial court expressed deep concern regarding the credibility of many of the witnesses in the case –– including Cohen –– and questioned the helpfulness of many of the documents, the court also deemed a certain amount of the evidence sufficiently reliable to support the amount awarded. Because we have not been presented with a sufficient basis upon which to review that award, we decline to overturn it.
III
Disposition
The judgment is affirmed.
WE CONCUR: SILLS, P. J., IKOLA, J.