Precision Automation, Inc. v. Technical Services, Inc. et al
Filing
214
Findings & Recommendation - Krevanko has met ORS 647.467's "prevailing party" standard for award of attorney fees, and he is entitled to reasonable attorney fees incurred to defend Plaintiffs' trade secret claims. In addition, Kre vanko has met the burden under FRCP 37(c)(2) for an award of attorney fees, and he is entitled to reasonable fees incurred to prove the fact Plaintiffs denied. Accordingly, Krevanko's motion for attorney fees 171 should be granted. This ruling is a determination of liability for attorney fees, made separately from the determination of the amount of fees to be awarded, in accordance with LR 54.3(c)(1). Krevanko shall submit documentation to support his claim for attorney fees. Objections to this Findings and Recommendation are due by 2/5/09. If objections are filed, a party may file a response to those objections within 14 days of the filing date of the objections. Signed on 1/22/09 by Magistrate Judge John V. Acosta. (peg)
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UNITED STATES DISTRICT C O U R T DISTRICT O F O R E G O N
P R E C I S I O N A U T O M A T I O N , INC., a W a s h i n g t o n Corporation, TIGERS T O P LLC, an Oregon Corporation, Plaintiffs, v. T E C H N I C A L S E R V I C E S , I N C . , an I o w a Corporation, and DAVID K R E VANKO, an individual, Defendants. FINDINGS AND RECOMMENDATION Civ. No. 07-707-AC
ACOSTA, Magistrate JUdge: D e f e n d a n t D a v i d K r e v a n k o ( " K r e v a n k o ' ' ) m o v e s t h e c o u r t f o r an a w a r d o f a t t o r n e y fees a n d expenses for defending against claims brought b y Precision Automation, Inc. ("Precision") and TigerStop LLC ("TigerStop") (collectively "Plaintiffs"). Krevanko aSserts an entitlement to attorney fees under Oregon Revised Statutes ("ORS") 646.467 and Federal R u l e s o f Civil Procedure ("Rules") 5 4 and 37.
FINDINGS A N D R E C O M M E N D A T I O N
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{KPR}
Factual Background On M a y 14, 2007, Precision filed suit against Technical Services, Inc. ("TSI") and Krevanko. P r e c i s i o n a l l e g e d c l a i m s o f p a t e n t i n f r i n g e m e n t , trade s e c r e t m i s a p p r o p r i a t i o n , w i l l f u l t r a d e s e c r e t misappropriation, tortious interference with business relations, aild unfair competition. On June 20, 2007, Precision amended its complaint to add TigerStop, LLC as a plaintiff. T h e c o u r t dismissed Plaintiffs unfair competition claim o n De<:cmber 14, 2007. On M a y 15, 2008, Plaintiffs again amended their complaint to add a claim o f ,:;opyright infringement. I n a February 25, 2008, response to Krevanko' s first request for admissions, TigerStop denied that Krevanko h a d not signed a covenant not to compete, a confidmtiality agreement, or a nond i s c l o s u r e a g r e e m e n t w i t h Tigerstop. O n A u g u s t 1 5 , 2 0 0 8 , P l a i n t i f f d i s m i s s e d w i t h p r e j u d i c e p a t e n t infringement claims arising from U.S. P a t e n t No. 6,631,006. Also o n August 1 5 , 2 0 0 8 , Plaintiffs d e p o s e d K r e v a n k o . I n t h e c o u r s e o f t h e deposition, P l a i n t i f f s gave K r e v a n k o a d o c u m e n t m a r k e d d e p o s i t i o n E x h i b i t 2 ( h e r e i n a f t e r r e f e r r e d t o as " E x h i b i t 2 " ) . E x h i b i t 2
was a form employment
agreement dated January 1, 2005, which displayed Krevanko' s n a m e and address under the "Parties" h e a d i n g , a n d b e a r i n g t h e w o r d s " T i g e r S t o p C u r r e n t E m p A g r e e m e n t s " i n t h e footer. E x h i b i t 2 w a s n o t s i g n e d b y a n y party, i n c l u d i n g K r e v a n k o , w h o t e s t i f i e d t h a t h e h a d n o t s e e n E x h i b i t 2 b e f o r e Plaintiffs' counsel presented i t to him at deposition. O n S e p t e m b e r 19, 2 0 0 8 , t h e p a r t i e s f i l e d a s t i p u l a t e d d i s m i s s a l o f t h e t r a d e s e c r e t a n d t o r t i o u s interference with business relations claims, as well as a stipulated dismissal o f K r e a v n k o as to all claims. O n S e p t e m b e r 2 2 , 2 0 0 8 , i n l i e u o f a forensic e x a m i n a t i o n b y K r e v a n k o o f T i g e r S t o p ' s c o m p u t e r s y s t e m , T i g e r S t o p a d m i t t e d t h a t E x h i b i t 2 w a s c r e a t e d a f t e r A u g u s t 30, 2 0 0 6 , t h e d a y K r e v a n k o ' s e m p l o y m e n t w i t h T i g e r S t o p terminated.
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Discussion
K r e v a n k o c l a i m s entitlement t o a t t o m e y f e e s o n t w o grounds: ( 1 ) t h e O r e g o n U n i f o n n T r a d e S e c r e t s A c t ( " O r e g o n U T S A " ) , D R S 6 4 6 . 4 6 7 a n d (2) R u l e s 3 7 a n d 54.
1:.
Attorney Fees Under ORS 646.467 U n d e r O r e g o n U T S A , " [ t ] h e c o u r t m a y a w a r d r e a s o n a b l e a t t o r n e y fees to t h e p r e v a i l i n g p a r t y
if: (1) A c l a i m o f m i s a p p r o p r i a t i o n i s m a d e i n b a d f a i t h . " OR. REV. STAT. 6460467 ( 2 0 0 7 ) . T h e p a r t i e s do n o t d i s p u t e t h a t K r e v a n k o i s a p r e v a i l i n g party, for p u r p o s e s o f t h i s m o t i o n , w h i c h m o t i o n is b a s e d o n t h e p a r t i e s ' S e p t e m b e r 1 9 , 2 0 0 8 , J o i n t Stipulation to D i s m i s s T r a d e S e c r e t a n d Tortious Interference Claims. T h e s t i p u l a t i o n d i s m i s s e d P l a i n t i f f s ' t r a d e secret m i s a p p r o p r i a t i o n a n d tortious interference c l a i m s w i t h prejudice and read, i n relevant part: " B e c a u s e D a v i d Krevanko i s n o t a p a r t y t o a n y r e m a i n i n g c l a i m , t h e p a r t i e s a l s o h e r e b y s t i p u l a t e t o D a v i d K r e v a n k o ' s d i s m i s s a l as a d e f e n d a n t i n t h i s a c t i o n . " ( D o c k e t No. 1 6 6 . ) See TelephoneMgmt. Corp. v. Gillette, 2001 U ; S . D i s t . L E X I S 4 5 7 3 , a t * 8 (D. Or. F e b . 2 0 , 2 0 0 1 ) ( " B a s e d o n [ p l a i n t i f f ] ' s d i s m i s s a l o f i t s t r a d e s e c r e t s c l a i m , and the fact t h a t i t c a n n o t articulate a single trade secret t h a t w a s d i s c l o s e d b y [defendant], it is c l e a r l y a p p r o p r i a t e to c o n s i d e r [ d e f e n d a n t ] t h e p r e v a i l i n g p a r t y u n d e r t h e t r a d e s e c r e t s c l a i m . " ) ; c f
Highway Equipment Company, Inc. v. FECO, Ltd., 4 6 9 F 3 d 1027, 1035 (Fed. Cir. 2 0 0 6 ) ( " W e h a v e
likewise h e l d that a d e f e n d a n t w a s t h e p r e v a i l i n g p a r t y for p u r p o s e s o f c o s t s u n d e r R u l e 5 4 w h e r e t h e p l a i n t i f f voluntarily d i s m i s s e d i t s c a s e against o n e defendant w i t h p r e j u d i c e . " ( c i t i n g Power
Mosie! Techs., L.L.C. v. Siemens AGI, 3 7 8 F . 3 d 1396, 141Q (Fed. Cir. 2 0 0 4 » ) .
U n d e r t h i s O r e g o n U T S A p r o v i s i o n a u t h o r i z i n g a t t o r n e y f e e s f o r Claims m a d e i n b a d f a i t h , a c o u r t m a y " a w a r d r e a s o n a b l e a t t o r n e y fees to a p r e v a i l i n g p a r t y as a d e t e r r e n t to s p e c i o u s claimS o f m i s a p p r o p r i a t i o n . " Telephone Mgml. Corp., 2001 W L 2 1 0 1 7 9 , at*2. O r e g o n c o u r t s h a v e n o t
FINDINGS AND RECOMMENDATION
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{KPR}
addressed t h e s p e c i f i c c o n t o u r s o f a b a d faith c l a i m o f m i s a p p r o p r i a t i o n , so t h e c o u r t l o o k s t o o t h e r c o u r t s interpreting a s i m i l a r p r o v i s i o n in t h e U n i f o r m T r a d e S e c r e t Act. In general, c o u r t s h a v e a d o p t e d a t w o - p a r t t e s t t o e s t a b l i s h b a d faith: " [ ( 1 ) ] o b j e c t i v e s p e c i o u s n e s s o f t h e p l a i n t i f f s c l a i m a n d [(2) p l a i n t i f f s ] s u b j e c t i v e t n i s c o n d u c t i n b r i n g i n g o r m a i n t a i n i n g a c l a i m f o r m i s a p p r o p r i a t i o n o f trade secretS." Contract Materials ProC(~Ssiflg, Inc. v. Kataleuna G m b H Catalysts, e t al., 2 2 2 F. Supp. 2 d 7 3 3 , 7 4 4 (D. Md. 2 0 0 2 ) ( q u o t i n g Gemini Aluminum Corp. v. California Custom Shapes,
Inc., 95 Cal. App. 4 t h 1249, 1262 (2002)). T h i s t e s t w a s earlier a p p l i e d i n S t i l w e l l D e v . Inc. v. Chen,
11 U . S . P . Q . 2 d 1328, 1331 (C.D. Cal. 1989), interpr~ting C a l i f o r n i a ' s v e r s i o n o f t h e u r S A , w h e r e t h e d i s t r i c t c o u r t " r e v i e w [ e d ] p l a i n t i f f s ' c o n d u c t On t h e s t a n d a r d s o f s u b j e c t i v e m i s c o n d u c t a n d obj e c t i v e s p e c i o u s n e s s . "
a.
Objectively Specious
K r e v a n k o argues t h a t P l a i n t i f f s ' trade secret c l a i m against him c o m p l e t e l y lacked m e r i t b e c a u s e t h e i n f o r m a t i o n r e p o r t e d l y d i s c l o s e d d i d n o t i n c l u d e t r a d e s e c r e t s and, in a n y event, K r e v a n k o d i d n o t s i g n a c o n f i d e n t i a l i t y a g w e m e n t p r o h i b i t i n g him from d i s c l o s i n g n o n - t r a d e secret information. Plaintiffs argue t h a t t h e y d i s m i s s e d t h e c l a i m b e c a u s e , t h r o u g h discovery, t h e y learned that the p o t e n t i a l damages were minimal a n d , t h e r e f o r e , prosecuting t h e c l a i m w a s n o t w o r t h t h e effort. P l a i n t i f f s m a i n t a i n t h a t t h e c l a i m h a d m e r i t a t t h e t i m e i t w a s f i l e d a n d c o n t i n u e s to h a v e merit. A c l a i m i s o b j e c t i v e l y s p e c i o u s "wh.ere t h e r e i s a c o m p l e t e l a c k o f e v i d e n c e s u p p o r t i n g [ a p l a i n t i f f ' s ] c l a i m s . " Computer Ecan., Inc.
'1.
Gartner Group, Inc." 1 9 9 9 W L 3 3 1 7 8 0 2 0 , a t *6 (S.D.
Cal. Dec. 14, 1999). U n d e r O r e g o n law, a t r a d e secret i s i n f o r m a t i o n , i n a v a r i e t y o f f o r m s , t h a t " ( a ) D e r i v e s i n d e p e n d e n t e c o n o m i c v a l u e , a c t u a l o r p o t e n t i a l , f r o m n o t b e i n g g e n e r a l l y k n o w n to t h e
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{KPR}
public o r t o o t h e r persons w h o c a n o b t a i n economic value from i t s disclosure o r use; a n d (b) Is t h e s u b j e c t o f efforts that a t e reasonable u n d e r t h e circumstances to maintain its secrecy." OR. REv. STAT. 646.461(4) (2007). I f information does h o t constitute a t r a d e secret, t h e n t h a t information c a n n o t b e t h e b a s i s o f a c l a i m o f m i s a p p r o p r i a t i o n o f t r a d e secrets. h T S I ' s corporate deposition testimony
P l a i n t i f f s c l a i m t h e r e i s e v i d e n c e th~,t K r e v a n k o d i s c l o s e d t h e c o n f i d e n t i a l i d e n t i f i e s o f s o m e o f TigerSt o p ' s customers and dealers, b u t ":he record does n o t s u p p o r t t h i s claim. T h e y cite T S I ' s c o r p o r a t e d e p o s i t i o n f o r t h e p r o p o s i t i o n l h a t " [ T S I ] l e a r n e d t h e i d e n t i t i e s o f a t l e a s t [thirteen] T i g e r S t o p c u s t o m e r s from K r e v a n k o . " ( P l a i n t i f f s ' R e s p o n s e B r i e f ( " P i s . ' R e s p . B r . " ) 5.) I n t h e deposition, TS1's r e p r e s e n t a t i v e w a s
askl~d
to identify " t h e c u s t o m e r s o f T i g e r S t o p that were
disclosed b y M r. Krevanko to T81, t h e ide:1tity o f w h i c h T S I did n o t p r e v i o u s l y k n o w . " (Kolitch D e c l a r a t i o n ( " D e c l . " ) , E x h i b i t ( " E x . " ) C a t 253: 1 2 - 1 5 . ) T S I i d e n t i f i e d C l o p a y , N o r t h l a n d F u r n i t u r e , Kitchens A m o r e , Lanz Cabinets, Son-Byrd, a n d W o o d l a n d F u r n i t u r e as c u s t o m e r s disclosed b y Krevanko. T S I also identified M i c r o A u t o m a t i o n , Tri-State Nortbwest, a n d P r i e s t Enterprises, a s d i s c l o s e d b y Krevanko, t h o u g h it w a s u n s u r e w h e t h e r t h e s e w e r e c u s t o m e r s o r dealers. T S I also identified E u r o - T e c h Services,. N o r t h w e s t Vvood Products, A d v a n c e d Machinery, a n d Sacramento Machinery as dealers d i s c l o s e d b y Krevank·=>. (Kolitch Decl., Ex. C at 253.: 16-255 :2..) B a s e d o n this . deposition, T S I a d m i t t e d t h a t i t l e a r n e d the identities o f thirteen dealers and customers from K r e v a n k o t h a t i t d i d n o t a l r e a d y h a v e k n o w l e d g e of. P l a i n t i f f s c o n t e n d t h a t t h e s e are u n l a w f u l d i s c l o s u r e s a n d a r e e v i d e n c e s u p p o r t i n g t h e i r m i s a p p r o p r i a t i o n claim, b u t t h a t t h e s e d i s c l o s u r e s u l t i m a t e l y r e s u l t e d i n n o s i g n i f i c a n t harm. Plaintiffs explain t h a t t h e y learned t h r o u g h discovery that " T S I h a d a l r e a d y b e e n a w a t e o f s o m e other
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TigerStop customer identities before Krevanko went to work for TSI, a n d that T S I h a d made o n l y a few sales to t h e TigerStop customers i t learned abo.ut from Krevanko." (PIs.' Resp. Hr. 5.) Therefore, b a s e d o n information that PlaifitJfs had no way o f knowing p r i o r to discovery, the trade secret misappropriation claim " w o u l d n o t b e worth the legal expense." ld. K r e v a n k o argues t h a t these d e a l e r a n d c u s t o m e r n a m e s w e r e n o t t r a d e s e c r e t s t o b e g i n w i t h , a n d h e is c o r r e c t f o r t w o r e a s o n s . F i r s t , T i g e r S t o p p o s t e d a l i s t o f i t s d e a l e r s o n i t s w e b s i t e i n 2 0 0 4 .
See Johnson Decl., Ex. H. Once a trade sc<:ret is posted on the internet, even for a limited amount
o f time, i t loses its s e c r e c y and, thus, its legal protection. See Religious Technology Center v.
Netcom On-Line Communication Service.Y~ Inc., 923
F,
Supp. 1231, 1256 (N.D. Cal. 1995)
("Although a 'Work posted to an Internet newsgroup remains accessible to the public for only a limited amount o f time, once that trade sec:~et has been released into the public domain there is no retrieving it. . . . [ O ] n c e p o s t e d , the works lost their secrecy.") (internal citations omitted). S e c o n d , e v e n i f t h e o n l i n e p o s t i n g d i d n o t d e s t r o y t h e s e c r e c y o f c e r t a i n c u s t o m e r s o r dealers o r i n c l u d e all t h e n a m e s a n d i d e n t i t i e s P l a i n t i f f s d a i m K r e v a n k o u n l a w f u l l y d i s c l o s e d , i t i s i r r e l e v a n t because their identities were not trade secrets to begin with. Krevanko cites the deposition testimony o f S c o t t Brode, Central Regional Sales M a n a g e r for TigerStop. B r o d e testified t h a t h e did not consider the n a m e s o f dealers, customers, o r end-users to b e confidential. (Johnson Decl., Ex. F at
72:6-13.) Although Plaintiffs claim that this does not reflect T i g e r S t o p ' s actual policy, Brode, a
r e g i o n a l s a l e s m a n a g e r f o r T i g e r S t o p , p r o v i d e d the o n l y e v i d e n c e o f t h e c o m p a n y ' s p o l i c y . P l a i n t i f f s submitted no written policy, no testimony, and no other evidence to refute B r o d e ' s testimony o r show that, in fact, TigerStop treated this information as a confidential trade secret.
II
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!!:.
K r e v a n k o ' s email tel T S I
P l a i n t i f f s a l s o c l a i m t h a t K r e v a n k o ' s F e b r u a r y 1 3 , 2 0 0 7 , e m a i l t o T S r s p r e s i d e n t is e v i d e n c e t h a t K r e v a n k o r e v e a l e d confidential i n f o r m a t i o n a b o u t TigerTurbo, a n e w p r o d u c t K r e v a n k o learned a b o u t d u r i n g h i s e m p l o y w i t h TigerStop. Again, t h e r e c o r d does n o t s u p p o r t P l a i n t i f f s ' claim. Plaintiffs s t a t e t h a t t h e y learned dur:_ng d i s c o v e r y t h a t t h e p o t e n t i a l for d a m a g e s arising from t h i s c l a i m w a s m i n i m a l and, therefore, t h e c l a i m w a s n o l o n g e r w o r t h p u r s u i n g , b u t t h e r e c o r d s h o w s t h a t t h i s i n f o r m a t i o n w a s n o t a t r a d e secret, either. F i r s t , a f o n n e r e m p l o y e e t e s t i f i e d t h a t a f t e r h i s e m p l o y m e n t e n d e d h e s t i l l h a d u n f e t t e r e d a c c e s s to T i g e r S t o p f a c i l i t i e s w h e n h e r e t u r n e d f o r a n u n s c h e d u l e d visit. S e c o n d , t h o u g h Plaintiffs p o i n t o u t t h a t a f o r m e r e m p l o y e e w o u l d l i k e l y r e c e i v e d i f f e r e n t t r e a t m e n t t h a n a s t r a n g e r o r a competitor, K r e v a u k o c o r r e c t l y o b s e r v e s t h a t Plaintiffs h a v e p r o v i d e d no e v i d e n c e o f t h e s t e p s t h e y t o o k t o p r e s e r v e t h e i r t r a d e s e c r e t s , e x c e p t s t e p s t a k e n a f t e r K r e v a n k o ' s p e r i o d o f e m p l o y m e n t , i n c l u d i n g s o m e i m p l e m e n t e d i m m e d i a t e l y b e f o r e t h e y filed this l a w s u i t . I n s h o r t , t h e r e is n o e v i d e n c e o f a n y e f f o r t , s u c h a s p r o t o c o l s t o r e s t r i c t o u t s i d e r s ' a c c e s s t o P l a i n t i f f s ' b u s i n e s s p r e m i s e s o r to s a f e g u a r d t r a d e s e c r e t s t h r o u g h c o n t r o l l i n g t h e i r d i s s e m i n a t i o n , c o n s i s t e n t w i t h e f f o r t s to p r o t e c t t h e i r c o n f i d e n t i a l i t y . iii. TigerStop brochure
K r e v a n k o s u b m i t s a c o p y o fo n e o fT i g e r S top ·s b r o c h u r e s d e t a i l i n g t h e s p e c i f i c a t i o n s for o n e o f i t s n e w p r o d u c t s , t h e TigerSaw, which K r e v a n k o argues destroyed t h e secrecy o f its p r o d u c t specifications. ( J o h n s o n S u p p l e m e n t a l Decl., Ex. N.) I t i s u n c l e a r t o t h e court, h o w e v e r , i f this is the s a m e p r o d u c t referred to i n t h e email that i s Plaintiffs' E x h i b i t D a s t h e " T u r b o T i g e r , " o r s o m e o t h e r TigerStQp p r o d u c t . E v e n s o , d i s c l o s u r e o f n e w p r o d u c t s p e c i f i c a t i o n s i n a p u b l i c b r o c h u r e strongly refutes t h e claim t h a t s u c h i n f o r m a t i o n w a s c o n s i d e r e d confidential.
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b.
Subjective M i s c o n d u c t
Krevanko argues t h a t Plaintiffs act(ld i n b a d faith b y denying that Kravanko did n o t s i g n a c o n f i d e n t i a l i t y a g r e e m e n t a n d b y p r o d u c i n g a " f a b r i c a t e d " a n d m i s l e a d i n g d o c u m e n t ( E x h i b i t 2 ) as a n e x h i b i t a t d e p o s i t i o n . " S u b j e c t i v e m i s c o n d u c t e x i s t s w h e r e a p l a i n t i f f k n o w s o r i s r e c k l e s s in n o t k n o w i n g that i t s c l a i m for t r a d e s e c r e t m i s a p p r o p r i a t i o n h a s n o merit. I n p r o v i n g s u b j e c t i v e m i s c o n d u c t , a p r e v a i l i n g d e f e n d a n t m a y r e l y o n d i r e c t e v i d e n c e o f p l a i n t i f f ' s k n o w l e d g e . . . and [subj e c t i v e m i s c o n d u c t ] m a y a l s o b e i n f e r r ~ d f r o m t h e s p e c i o u s n e s s o f p l a i n t i f f s t r a d e s e c r e t c l a i m a n d its conduct d u r i n g litigation." Contract Materials Processing, Inc., 2 2 2 F. Supp. 2 d a t 744 ( q u o t i n g Computer Econ., Inc., 1999 W L 3 3 1 7 8 0 2 0 a t * 6 ) (internal quotation m a r k s omitted). T h e c o n d u c t a t i s s u e o c c u r r e d w h e n P l a i n t i f f s ' counsel p r e s e n t e d E x h i b i t 2 to Krevanko during his deposition. E x h i b i t 2, entitled " E m p l o y m e n t A g r e e m e n t , " listed K r e v a n k o and TigerStop LLC as " P a r t i e s , " as w o u l d b e true o f a n authentic agreement; s h o w e d January 1, 2005, as t h e " D a t e , " w h i c h d a t e fell w i t h i n K r e v a n k o ' s p e r i o d o f e m p l o y m e n t w i t h p l a i n t i f f T i g e r S t o p ; a n d reflected a footer that referenced an electronic file labeled " T i g e r Stop C u r r e n t E m p Agreements, " implying t h a t the d o c u m e n t h a d b e e n store:! as i t w o u l d h a v e b e e n i f c r e a t e d i n t h e n o r m a l course o f business. After presenting E x h i b i t 2, P l a i n t i f f s ' counsel t h e n p o s e d this q u e s t i o n t o Krevanko:
i'Okay~ L e t ' s go t o w h a t I ' l l m a r k a s E x h i b i t 2. T h i s i s a m u l t i p a g e u n s i g n e d e m p l o y m e n t agreement
t h a t does n o t b e a r a B a t e s n u m b e r . Y o u ' l l s e e t h a t t h e f i r s t p a g e i d e n t i f i e s D a v i d K r e v a n k o . H a v e you e v e r s e e n this d o c u m e n t b e f o r e ? " (Johnson Dec!., Ex. C, a t 136:4-12.) K r e v a n k o answered t h a t h e first saw Exhibit 2 after this case w a s i n : itigation. (Johnson Decl., E x . C , at 136: 13.) Krevanko a l s o testified: "I d o n ' t t e c a l l e v e r having a n employment agreement . . . p r e s e n t e d to m e . " Id. a t 138:1-4.
FINDINGS A N D R E C O M M E N D A T I O N
8
{KPR}
Both parties submitted this portion o f K r e v a n k o ' s deposition i n support o f their brieftng oli this motion. T h e deposition excerpts rev(:al that at no time d u r i n g the deposition did Plaintiffs' counsel state that Exhibit 2 had b e e n created for purposes o f l i t i g a t i o n o r the deposition itself, or that i t was only an example o fthe agreement tha: Plaintiffs contended Krevanko signed o r agreed to sign.
In questioning Krevanko, Plaintiffs' c o u n s d never explained to h i m w h y it chose to use an example
bearing his name a n d showing a date falling within his p e r i o d o f employment, instead o f a blank: form o f the agreement. Indeed, although Plaintiffs' counsel did not identify E x h i b i t 2 as the Employment Agreement applicable to Krevanko, Plaintiffs' couilse1' s o p e n i n g question to Krevanko about Exhibit 2 creates t h e c l e a r iliferenc:e that Exhibit 2 i s a contemporaneous document that Krevanko received during his employnu:nt, and K r e v a n k o ' s answers to t h a t a n d subsequent questions e v i d e n c e that h e was u n d e r t h a t : m p r e s s i o n . Predictably, a f t e r t h e d e p o s i t i o n K r e v a n k o s o u g h t a forensic e v a l u a t i o n o f E x h i b i t 2 a n d o f P l a i n t i f f s ' c o m p u t e r s , t o d e t e r m i n e E x h i b i t 2 ' s creation date. Ultimately, Plaintiffs admLted that E x h i b i t 2 was created after August 30, 2006, K r e v a n k o ' s t e n n i n a t i o n date. T h e subjective m i s c o n d u c t standard i s m e t h e r e . A l t h o u g h Plaintiffs m a y n o t h a v e created Exhibit 2 intending to deliberately fabricat(; evidence, they knew t h a t Exhibit 2 w a s n o t K r e v a n k o ' s a c t u a l e m p l o y m e n t a g r e e m e n t b u t d i s r e g a r d e d t h a t fact b y u s i n g t h e d o c u m e n t i n a m a n n e r t h a t created the impression i t was authentic. T h e effect was to mislead Krevanko at deposition and prompt his attorneys to use additional discovery efforts to pursue Exhibit 2 ' s origins. Plaintiffs' a r g u m e n t that i t w a s K r e v a n k o ' s r e s p o n s i b i l i t y t o a s k a b o u t E x h i b i t 2 ' s o r i g i n s i s , q u i t e simply, a l u d i c r o u s p o s i t i o n , e s p e c i a l l y i n the c o n t e x t o f t h e i r a f f t r m a t i v e c o n d u c t i n c r e a t i n g t h e document, a n d t h e n p r e s e n t i n g a n d u s i n g i t a t K r e v a n < o ' s deposition.
FINDINGS AND RECOMMENDATION
9
{KPR}
c.
Conclusion
For all these reasons, K r e v a n k o ' s motion for attorney fees under ORS 6 4 7 . 4 6 7 should b e granted. 2. A t t o r n e y F e e s u n d e r t h e F e d e r a l R u l e s o f Civil P r o c e d u r e Attorney fees m a y b e awarded if, i n response to a request for admission, a party fails to admit a fact that the propounding party subsequently proves. U n d e r the federal rules, a party can b e s a n c t i o n e d f o r failure t o m a k e a p p r o p r i a t e d i s c l o s u r e s o r o t h e r w i s e c o o p e r a t e i n discovery. R u l e 37(c)(2) applies to. requests for admission, and reads:
(2) Failure to Admit~
I f a party fails to admit what is req uested under R u l e 3 6 and i f t h e requesting party later
p r o v e s a d o c u m e n t t o b e g e n u i n e o r t h e m a t t e r t r u e , t h e r e q u e s t i n g p a r t y m a y m o v e t h a t the party who failed to admit p a y the reasonable expenses, including attorney's fees, incurred in making that proof. T h e court m u s t so order unless: (A) the request Was held ob~ ectionable under Rule 36(a); (B) the admission sought was o f no substantial importance;
(C) the p a r t y failing to admil had a reasonable ground to believe that i t might prevail o n t h e matter; o r
(D) t h e r e w a s o t h e r g o o d r e a s o n f o r t h e f a i l u r e to a d m i t . FED. R.
e l Y . P.
37(c)(2) (2008). Only exceptions (C) and (D) are r e l e v a n t t o this motion; Plaintiffs
never objected to the request at issue a n d vfhether Krevanko signed a c'onfidentiality agreement is
an important issue in this case because o f i:s relevance to Plaintiffs' trade secret claims.
O n F e b t u a r y 2 5 , 2008, Plaintiffs responded to K r e v a n k o ' s first request for admissions which i n c l u d e d R e q u e s t N o . 5 : " A d m i t t h a t Krevanko n e v e r signed a c o n f i d e n t i a l i t y agreement with T i g e r S t o p . " P l a i n t i f f s r e s p o n d e d : ' ' D e n i e d . ' ' ( J o h n s o n D e c l . , Ex. A a t 2 . ) K r e v a n k o c l a i m s t h a t
FINDINGS AND R E C O M M E N D A T I O N
10
{KPR}
Plaintiffs' r e f u s a l t o a d m i t t h a t h e n e v e r s i g l e d a c o n f i d e n t i a l i t y a g r e e m e n t v i o l a t e s this federal r u l e a n d l e d to e x t e n s i v e a n d u n n e c e s s a r y d i s c o v e r y a n d e x p e n s e . P l a i n t i f f s r e s p o n d e d t h a t t h e y " b e l i e v e that Krevanko likely signed a n Employment A g r e e m e n t w i t h Tigerstop t h a t included a c o n f i d e n t i a l i t y c l a u s e . " ( P I s . ' R e s p . Br. 4.) T o s u p p o r t t h e i r c o n t e n t i o n , P l a i n t i f f s c i t e d t h e deposition t e s t i m o n y o f S p e n c e r Dick, T i g e r s t o p ' s president, n o t i n g that h e "testified t h a t Krevanko a g r e e d t o s i g n s u c h a n a g r e e m e n t ; " observ(:d t h a t o t h e r T i g e r s t o p e m p l o y e e s i n " s i m i l a r p o s i t i o n s " to K r e v a n k o s i g n e d s u c h a g r e e m e n t s " d w i n g t h e s a m e t i m e p e r i o d , " s u g g e s t i n g t h a t K r e v a n k o " w o u l d h a v e b e e n a w a r e " o fT i g e r S t o p ' s c o n 1 i d e n t i a l i t y p o l i c y a n d p r o b a b l y w a s p r e s e n t e d w i t h s u c h a n a g r e e m e n t ; a n d c i t e d t o t h e g e n e r a l obli~;ation u n d e r O r e g o n l a w to " p r o t e c t a n e m p l o y e r ' s t r a d e seCrets a n d o t h e r c o n f i d e n t i a l i n f o n n a t i o n . " l d . N o n e o f t h e s e a r g w n e n t s a r e a v a i l i n g o n the s p e c i f i c p o i n t a t issue, t h a t K r e v a n k o n e v e r s i g n e d a c o n f i d e n t i a l i t y agreement. First, D i c k testified t h a t K r e v a n k o " a g r e e d t o s i g n a n o n c o m p e t e a g r e e m e n t " ( K o l i t c h D e c l . , Ex. Ai a t 3 1 8 : 2 1 - 2 4 ) , n o t h e a.ctually s i g n e d a c o n f i d e n t i a l i t y a g r e e m e n t . A s to s i g n i n g a n o n - c o m p e t e a g r e e m e n t , D i c k t e s t i f i e d t h a t h e w a s " u n a w a r e o f w h e t h e r [Krevanko] d i d o r d i d n o t . " (ld. a t 3 1 8 : 2 5 - 3 1 9 - 3 . ) T h e d i s t i n c t i o n i s key, b e c a u s e K r e v a n k o ' s r e q u e s t for a d m i s s i o n f o c u s e d o n t h e e x i s t e n c e o f a w r i t t e n c o n f i d e n t i a l i t y a g r e e m e n t t h a t h e s i g n e d d u r i n g h i s employment w i t h Tigerstop, n o t w h e t h e r h e agreed t o sign s u c h a d o c u m e n t o r t h a t h e a g r e e d to s i g n a d i f f e r e n t d o c u m e n t , a n o n - c o m p e t i t i o n a g r e e m e n t . P l a i n t i f f s p r o d u c e d n o s i g n e d c o n f i d e n t i a l i t y a g r e e m e n t o r testimony f r o m a n y T i g e r S t o p e m p l o y e e t h a t Krevariko e v e r s i g n e d s u c h a n agreement, n o r d i d t h e y r e f u t e K r e v a n k o ' s deposition t e s t i t n o n y t h a t T i g e r S t o p n e v e r presented t o h i m d u r i n g h i s e m p l o y m e n t a n e m p l o y m ~nt a g r e e m e n t t o sign. ( K o l i t c h D e c l . , Ex. G, a t 137: 11138:5.)
FINDINGS AND R E C O M M E N D A T I O N
11
{KPR}
Second, no o t h e r s i g n e d employment agreements e x i s t for the p e r i o d o f K r e v a n k o ' s e m p l o y m e n t , A u g u s t 1 2 , 2 0 0 2 , t o A u g u s t 3 0 , 2 0 0 6 . ( J o h n s o n S u p p . D e c l . , E x . M , a t 1-2; P i s . '
Complaint~ 17.)
T h i s refutes Plaintiffs' c;ontention t h a t a n employment agreement for Krevanko
likely existed because o t h e r employees i n " s i m i l a r positions" to Krevanko signed such agreements " d u r i n g the s a m e time p e r i o d . " (PI. ' s Resp. Br. 4.) T h i r d , Plaintiffs' reliance on a1 e m p l o y e e ' s general legal obligation to maintain confidentiality is irrelevant to whether Krevanko signed an employment agreement with TigerStop t h a t i n c l u d e d a c o n f i d e n t i a l i t y p r o v i s i o n . T h e r e q u e s t for a d m i s s i o n a t i s s u e focuses s o l e l y o n w h e t h e r K r e v a n k o s i g n e d a w r i t t e n agreement. P l a i n t i f f s ' c o n t e n t i o n c o n s i s t e n t l y h a s b e e n that K r e v a n k o s i g n e d s u c h a d o c u m e n t o r t h a t t h e y b e l i e v e d h e did, n o t t h a t c o m m o n l a w o b l i g a t i o n s b o u n d him to confidentiality. Thus, the reliance o n any Common law obligation is simply inapposite. R e l i e f u n d e r R u l e 37(c)(2) requires the p a r t y s e e k i n g r e l i e f t o " p r o v e [ ] . . . t h e t r u t h o f t h e m a t t e r . " K r e v a n k o h a s m e t t h a t b u r d e n he:~e, as h e h a s d e m o n s t r a t e d t h a t h e n e v e r s i g n e d a w r i t t e n confidentiality agreement. In addition, PIC?intiffs h a v e failed to demonstrate t h a t their conduct was p e r m i s s i b l e p u r s u a n t t o s u b s e c t i o n s ( C ) a n d (D) o f R u l e 3 7 ( c ) ( 2 ) . A c c o r d i n g l y , K r e v a n k o i s e n t i t l e d t o a t t o r n e y fees i n c u r r e d i n c o n n e c t i o n w i t t h a v i n g l o p r o v e t h e f a c t w h i c h h i s r e q u e s t f o r a d m i s s i o n a s k e d P l a i n t i f f s t o a d m i t a n d w h i c h t h e y denied.
d..
Common L a w Attorney F e e s Krevanko also alleges a common law claim for attorney fees. B e c a u s e court has found that
Krevanko is entitled to attorney fees u n d e r b o t h ORS 647.467 and F R C P 37(c)(2), it n e e d not a d d r e s s this a d d i t i o n a l a r g u m e n t .
II
FINDINGS AND R E C O M M E N D A T I O N 12 {KPR}
Conclusi01! a n d R e c o m m e n d a t i o n
Krevanko has m e t ORS 6 4 7 . 4 6 7 ' s "prevailing party" standard for an award o f attorney fees, and he is entitled to reasonable attorney fel~s incurred to defend Plaintiffs' trade secret claims. I n addition, Krevanko h a s met the burden under FRCP 37(c)(2) for a n award o f attorney fees, and he is entitled to reasonable fees incurred to prove the fact Plaintiffs denied. Accordingly, K r e v a n k o ' s motion for attorney fees should b e granted. This ruling i s a determination o f liability for attorney fees, m a d e separately from the detelTIlination o f the amount o f fees to b e awarded, in accordance with Local Rule 54.3(c)(1). Krevanko shall submit documentation to support his claim for attorney feeS, which documentation shall precisely comply with all the requirements o f Local Rille 54.3(a). T h e court will n o t consider a fee request, o r any p a r t thereof, that does not comply w i t h the local rule. Plaintiffs then m a y submit a n y o b j e c t i o n s i n a c c o r d a n c e w i t h L o c a l R u l e 54.3(b).
ScJ!eduling O r d e r
T h e above Findings and Recommendation will b e referred to a United States District Judge for review. Objections, i f any, are due n o : ater than F e b r u a r y 5 , 2 0 0 9 . ! f n o objections are filed, r e v i e w o f t h e F i n d i n g s a n d R e c o m m e n d a t i o n w i l l go u n d e r a d v i s e m e n t o n t h a t d a t e .
I f objections are filed, any party m a y file a response within fourteen days after the date the
objections are filed. R e v i e w o f t h e Finding:; and Recommendation will go under advisement w h e n tbe response is d u e o r filed, whichever date is earlier. D A T E D this 2 2 n d d a y ofJanuary, 2009.
~-)
~
Db
{KPR}
V.ACOSTA United States Magistrate Judge
FINDINGS A N D R E C o M M E N D A n O N
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