Wallis v. PHL Associates, Inc., 168 Cal. App. 4th 882 (2008)

The trial court imposed approximately $43,000 in sanctions against Hygieia Biological Laboratories, its principals and their attorney in this case involving alleged misappropriation of trade secrets. During the course of the litigation, the parties agreed to a protective order, which the trial court issued, allowing the parties to file under seal certain confidential documents containing alleged trade secrets. PHL’s attorney filed under seal a declaration in the case, including attachments which PHL contended were trade secrets. When the document later appeared in the court’s publicly available file, Hygieia’s attorney notified her clients of the accessibility of the information; in an attempt to defeat PHL’s claim that the information contained trade secrets, Hygieia had third parties view and copy the declaration and the attachments. In response, PHL filed a motion for sanctions pursuant to Cal. Code Civ. Proc. § 128.5 on the ground that Hygieia and its attorney’s actions were frivolous and taken in bad faith, which the trial court granted and the Court of Appeal affirmed.