Joshua David Mellberg LLC v. Jovan Will ( 2021 )

FILED
NOT FOR PUBLICATION
SEP 30 2021
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOSHUA DAVID MELLBERG LLC, No. 20-16215
DBA JD Mellberg Financial, an Arizona
limited liability company; JOSHUA D.C. No.
DAVID MELLBERG, an individual, 4:14-cv-02025-CKJ-LCK
Plaintiffs-counter-
defendants-Appellants, MEMORANDUM*
v.
JOVAN WILL, an individual; TREE
FINE, an individual; FERNANDO
GODINEZ; CARLY URETZ,
Defendants-Appellees,
IMPACT PARTNERSHIP LLC, a Georgia
limited liability company,
Defendant-counter-claimant-
Appellee,
and
JOHN STEVE ARECO; JANE DOE
ARECO; JANE DOE GODINEZ;
PATRICIA LATHAM; JOHN DOE
LATHAM; JOHN DOE URETZ,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Defendants.
JOSHUA DAVID MELLBERG LLC, No. 20-16216
DBA JD Mellberg Financial, an Arizona
limited liability company; JOSHUA D.C. No.
DAVID MELLBERG, an individual, 4:14-cv-02025-CKJ-LCK
Plaintiffs-counter-
defendants-Appellees,
v.
JOVAN WILL, an individual; TREE
FINE, an individual; FERNANDO
GODINEZ; CARLY URETZ; JOHN
STEVE ARECO; JANE DOE ARECO;
JANE DOE GODINEZ; PATRICIA
LATHAM; JOHN DOE LATHAM; JOHN
DOE URETZ,
Defendants,
and
IMPACT PARTNERSHIP LLC, a Georgia
limited liability company,
Defendant-counter-claimant-
Appellant.
Appeal from the United States District Court
for the District of Arizona
Cindy K. Jorgenson, District Judge, Presiding
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Argued and Submitted September 1, 2021
San Francisco, California
Before: SCHROEDER, RAWLINSON, and BYBEE, Circuit Judges.
Appellants Joshua Mellberg and his company, Joshua David Mellberg, LLC
(JDM) filed this action against former employees and their company, Impact, for
misappropriation of trade secrets, and unjust enrichment. The district court granted
summary judgment to defendants and we affirm. We also affirm the district
court’s grant of summary judgment to plaintiffs on defendants’ counterclaim.
Summary judgment was appropriate on the trade secret claim because
plaintiffs failed to establish defendants’ conduct caused any damages. To support
their claim of monetary loss in excess of $16 million from the loss of the trade
secrets, plaintiffs offered the expert opinion of Lynton Kotzin. His opinion
assumed liability on the part of the defendants and opined only on the amount of
damages. There was no evidence that defendants caused plaintiffs to lose
possession of their trade secrets, or indeed that the information was no longer
contained on plaintiffs’ server network. Moreover, there was undisputed evidence
that defendant Fine and one of plaintiffs’ employees uploaded the data on Fine’s
computer to the plaintiffs’ network in order to preserve it. There was thus no
showing that defendants caused plaintiffs monetary damages from the loss of
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trade secret data and summary judgment for the defendants was appropriate. See
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
With respect to the claim of unjust enrichment, plaintiffs had offered no
damage calculation as of the time discovery closed. They offered a supplemental
declaration from Mellberg a year late, and it represented no more than his lay
opinion that defendants had been unjustly enriched by more than $27 million. The
district court sanctioned plaintiffs by excluding the late damage calculation. This
was within its discretion pursuant to FRCP 37 (c) (1), after it took into account the
length of the delay and the prejudice it would cause. Rule 26a (1)(A)(iii) requires a
computation of each category of damages and making available the supporting
evidentiary material. It is not enough to rely on general allegations of the
complaint, as plaintiffs attempt to argue on appeal. Fed. R. Civ. P. 26a(1)(A)(iii)
(requiring “a computation of each category of damages claimed”); see R & R Sails,
Inc. v. Ins. Co. of Pennsylvania, 673 F.3d 1240, 1243, 1246-47 (9th Cir. 2012).
There was also no abuse of discretion in the district court’s denial of
plaintiff’s motion for sanctions for spoliation of evidence relating to the
reformatting of defendants’ computers. Because the plaintiffs could not prove
damages in any event, the computers were no longer material and the spoliation
claim was moot. Similarly, without a showing of harm requisite for success on the
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merits, the plaintiffs were not entitled to permanent injunctive relief. See Edmo v.
Corizon, Inc., 935 F.3d 757, 784 (9th Cir. 2019).
Mellberg’s claim against defendant Will relates to the alleged mishandling
of funds belonging to the LLC, and was appropriately dismissed for failure to
comply with the statutory requirements pertaining to derivative suits set forth in
A.R.S. § 29-831(2)-(3). The magistrate judge’s decision to raise this issue sua
sponte at summary judgment did not result in prejudice because Mellberg had the
opportunity to respond in his supplemental briefing before the magistrate judge.
See Rivera v. Anaya, 726 F.2d 564, 566 (9th Cir. 1984) (“[A]bsent prejudice to the
plaintiff, a defendant may raise an affirmative defense in a motion for summary
judgment for the first time”).
Defendant Impact’s counterclaim for false advertising under the Lanham
Act, 15 U.S.C. § 1125(a)(1)(B), was not supported by any sufficient showing of
materiality. See Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139
(9th Cir. 1997).
AFFIRMED.
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