Applied Med. Distribution Corp. v. Jarrells, 2024 WL 1007523 (Cal. Ct. App. 2024)
Stephen Jarrells worked for Applied as a vice president in charge of group purchasing organizations and had previously held other positions during his tenure with the company. When he was hired, Jarrells signed Applied’s proprietary information agreement in which he agreed to hold in “strictest confidence” Applied’s trade secrets and confidential/proprietary information. Shortly before his resignation eight years later, Jarrells created a folder titled “Good Stuff” on the laptop computer supplied to him by Applied, which contained trade secrets and confidential information that belonged to Applied. Jarrells then transferred the contents of the “Good Stuff” folder onto a thumb drive and uploaded that data to a computer issued to him by his new employer, Bruin Biometrics, LLC, one of Applied’s competitors. Then, Jarrells wiped his Applied computer and network drives and returned his Applied computer to Applied.
In the lawsuit that followed, Applied sued Jarrells for misappropriation of trade secrets and breach of the proprietary information agreement. At trial, the jury found Jarrells liable for breach of contract and misappropriation of trade secrets but awarded no damages to Applied on any of its claims. The court issued a permanent injunction against Jarrells and Bruin and awarded Applied $554,000 in attorney’s fees and costs (though Applied had requested over $3.9 million). Both parties appealed. In this opinion, the Court of Appeal held the following: (1) Even though the jury awarded it no damages, Applied prevailed on its misappropriation of trade secrets and breach of contract claims and thus was entitled to a permanent injunction against Jarrells as well as prevailing‑party attorney’s fees; (2) the trial court erred in its assessment and apportionment of fees and costs recoverable by Applied; (3) the trial court erred in excluding from Applied’s damages calculation the fees incurred by Applied’s forensic computer expert; and (4) the trial court erred by granting nonsuit on the issue of whether Jarrells’s conduct in misappropriating trade Applied’s trade secrets was willful and malicious.