Catwalk to Sidewalk, Inc. v. Hurt-Watson CA2/1 ( 2023 )

Filed 8/18/23 Catwalk to Sidewalk, Inc. v. Hurt-Watson CA2/1
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
CATWALK TO SIDEWALK, INC., B304088
Plaintiff, Cross-defendant and (Los Angeles County
Appellant,
Super. Ct. No. BC702335)
v.
LANSEL ANN HURT-WATSON,
Defendant, Cross-complainant
and Respondent;
HEYRI J., INC.,
Defendant and Respondent.
APPEAL from a judgment and postjudgment orders of the
Superior Court of Los Angeles County, Stephanie M. Bowick,
Judge. Affirmed in part and remanded in part with directions.
Legacy Pro Law and Gi Nam Lee for Plaintiff, Cross-
defendant and Appellant.
Park & Lim, S. Young Lim and Jessie Y. Kim for
Defendant, Cross-complainant and Respondent Lansel Ann Hurt-
Watson.
Law Offices of Park & Zheng, Stella K. Park and Yalan
Zheng for Defendant and Respondent Heyri J., Inc.
_________________________
INTRODUCTION
Lansel Ann Hurt-Watson worked as a sales representative
for a clothing manufacturer called Catwalk to Sidewalk, Inc.
(Catwalk). For a time, she simultaneously worked as a sales
representative for another clothing manufacturer called Heyri J.,
Inc. (Heyri J.); she then stopped working for Catwalk while
continuing to be a Heyri J. sales representative. Catwalk
responded to Hurt-Watson’s departure by suing her and Heyri J.
for allegedly stealing its trade secrets. Hurt-Watson cross-
complained for unpaid commissions she claimed Catwalk owed to
her. The jury found no trade secret misappropriation and
awarded Hurt-Watson $485,373 on her cross-claim.
On appeal, Catwalk argues we should reverse the judgment
because of three alleged errors: a flawed special verdict form,
insufficient evidence supporting the damages award to Hurt-
Watson, and an improper award of prejudgment interest. We
affirm the trial court’s orders as to the special verdict form and
damages award, and remand with directions to correct the
judgment’s prejudgment interest award.
2
FACTUAL AND PROCEDURAL BACKGROUND
A. Hurt-Watson Works for Catwalk as a Sales
Representative and Helps Sell Catwalk’s Pleione
Brand to Nordstrom
We base our factual recitation on the evidence introduced
at trial. Hurt-Watson started working for Catwalk in March
2007. Hurt-Watson characterized her role at Catwalk as an
“independent sales rep[resentative].” Hurt-Watson testified that
in the fashion industry an independent sales representative can
work for multiple manufacturers. During the time she worked
for Catwalk, she also worked for Crystal K., Liverpool, and one
other manufacturer whose name she could not recall. According
to Catwalk’s owner, Kyong Won “Billy” Kang, when Catwalk
initially hired Hurt-Watson it gave her a salary and paid her
travel expenses, but at some point it began paying her through
commissions.
Hurt-Watson knew the buyers for Nordstrom and
Nordstrom Rack, and had earlier worked for them at Nordstrom
for many years. Hurt-Watson’s value to her client manufacturers
was the relationship she had with Nordstrom; she had especially
useful information about the “P.O.V.” (Point of View) department
at Nordstrom (POV), as she had started the department while
she worked for Nordstrom. Knowing the buyers was key to her
success as a salesperson. Kang testified that he hired Hurt-
Watson in part because of her connection with Nordstrom.
One of the Catwalk brands Hurt-Watson worked on was
“Pleione,” which generated many sales for Catwalk. Catwalk sold
the Pleione brand to the Nordstrom POV department. Catwalk
became one of the main manufacturers for Nordstrom after Hurt-
Watson began working for Catwalk.
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B. A New Nordstrom Buyer Demands that Catwalk
Lower Its Prices
In May 2015, Mary Beth Gaffney became the buyer for the
Nordstrom POV department. Hurt-Watson had worked with
Gaffney at Nordstrom. From the time Gaffney became the buyer
for the POV department, she complained that Catwalk’s prices
for the Pleione brand were too high. Gaffney continued to submit
orders for the brand, but Hurt-Watson believed this was because
Gaffney did not want to abruptly stop stocking the brand given
that some customers went to Nordstrom to buy Pleione. Hurt-
Watson relayed Gaffney’s comments to Kang and told him
Catwalk needed to lower its prices. Kang acknowledged that
Gaffney wanted Catwalk to lower its prices.
At a meeting on September 12, 2017, Gaffney told Hurt-
Watson that Nordstrom’s sales of Pleione were down 37 percent
year to date, and its receipts from sales of Catwalk products were
down 28 percent. Gaffney demanded that Catwalk pay
Nordstrom $432,000 because Nordstrom had not achieved its
“guaranteed gross margin” pursuant to Nordstrom’s purchasing
agreement. A guaranteed gross margin is the profit margin the
retailer expects to achieve; for Nordstrom, the margin was 55
percent. If a manufacturer’s product does not achieve the
expected profit margin, then the manufacturer has to pay
Nordstrom the difference.
Hurt-Watson met with Kang on September 14, 2017, to
discuss Nordstrom’s demand that Catwalk pay under the
guaranteed gross margin arrangement. Although Hurt-Watson
and Kang dispute certain details of their discussions not relevant
to the issues before us, both Hurt-Watson and Kang testified
4
that, as a result of the meeting, Hurt-Watson agreed to lower her
commission by 0.5 percent for five months.
The next day, September 15, 2017, Kang sent an e-mail to
Gaffney, with a copy to Hurt-Watson, acknowledging that Hurt-
Watson had shared with him Catwalk’s “[gross margin]
performance plus that our cost[s] are higher than our
competition.” Kang wrote, “I realize this year has been a
challenge and I know we can turn it around and get back on top.
I’m going to make it right and will give you the best cost, quick
delivery and take fabric liability so we can turn quicker.”
Catwalk paid Nordstrom “[v]endor [f]unded [m]arkdowns”
totaling a little over $428,000.
C. Hurt-Watson Starts Working for Heyri J.
Heyri J. is a clothing manufacturer owned by Tiffany Lim.
Shortly before the reduction in her sales commission with
Catwalk, Hurt-Watson started speaking with Lim in August 2017
about becoming a sales representative for Heyri J. Hurt-Watson
entered an agreement with Heyri J. in September 2017 to become
a sales representative for it. On November 20, 2017, Hurt-
Watson reported to Heyri J. that Gaffney, the Nordstrom POV
buyer, was interested in selling Heyri J.’s clothes online and then
at its stores.
Hurt-Watson continued to represent Catwalk, along with
Heyri J. On December 6, 2017, she met with Gaffney to discuss
both Catwalk’s and Heyri J.’s styles. According to Hurt-Watson,
she first discussed Catwalk’s Pleione brand and then later had a
separate discussion about Heyri J.’s products. Hurt-Watson
provided separate notes to Catwalk and Heyri J. about the
meeting. Gaffney placed orders with both Catwalk and Heyri J.
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D. Hurt-Watson Stops Representing Catwalk and the
Parties Sue Each Other
On March 2, 2018, Hurt-Watson e-mailed Kang to notify
him that she was going to stop working for Catwalk effective
March 6, 2018.
Six weeks later, Catwalk filed a complaint against Hurt-
Watson, Heyri J., and Lim. Catwalk filed an amended complaint
on July 17, 2018, in which it asserted causes of action under the
Uniform Trade Secrets Act (UTSA; Civ. Code, § 3426 et seq.)
along with various tort causes of action, including breach of the
implied covenant of good faith and fair dealing, intentional and
negligent interference with contractual relations and prospective
economic relationships, and conversion.
Hurt-Watson filed an initial cross-complaint on August 21,
2018, in which she sought only indemnity and declaratory relief
from fictitiously named cross-defendants. On September 20,
2018, she filed a first amended cross-complaint seeking unpaid
commissions from Catwalk under breach of contract and
misrepresentation theories. Hurt-Watson filed a second amended
cross-complaint on March 11, 2019, in which she maintained her
claim for unpaid commissions and also added new claims not
relevant to this appeal.1
On October 8, 2019, shortly before trial was set to begin,
Catwalk filed a second amended complaint in which it narrowed
its claims to assert only causes of action under the UTSA against
1 Those additional claims are not relevant because Hurt-
Watson later withdrew them and proceeded with only her claim
for unpaid commissions.
6
Hurt-Watson, Heyri J., and Lim.2 Catwalk alleged three specific
types of trade secrets: (1) “[t]rend [r]eports” from clients,
including Nordstrom, which had information regarding the styles
the clients were interested in buying for the upcoming season;
(2) a “[d]esign [d]atabase,” which contained information
regarding the clothes Catwalk manufactured; and (3) client
information, including the names of retailer contacts,
“preferences and desires as to [Catwalk’s] products, and financial
accommodations.” Catwalk alleged that Hurt-Watson
“misappropriated . . . [Catwalk’s] samples and/or designs to
[Heyri J.] in order for [Hurt-Watson and Heyri J.] to develop
similar designs and sell them to [Catwalk’s] [c]lients for [Hurt-
Watson’s and Heyri J.’s] benefit.”
E. Trial
A jury trial began on October 10, 2019, with testimony
continuing through October 21, jury instruction and closing
arguments on October 22 and 23, and jury deliberations on
October 23 and 24.
1. Catwalk’s Claims Under the UTSA3
Catwalk’s theory at trial was that Heyri J. hired Hurt-
Watson specifically to obtain orders from Nordstrom POV, and
2 Catwalk filed the second amended complaint after the
trial court dismissed Catwalk’s tort causes of action on the
ground that the UTSA preempted them.
3 During trial, Catwalk dismissed its claim against Lim,
Heyri J.’s owner, with the stipulation that her actions “may still
be attributed to . . . Heyri J.” Our summary of the evidence and
the parties’ positions thus does not address Catwalk’s separate
claim asserted against Lim.
7
that in the process of trying to obtain those orders Hurt-Watson
and Heyri J. misappropriated Catwalk’s trade secrets. Kang
testified that Catwalk’s sales to Nordstrom POV declined
beginning in 2016 and were a fraction of what Catwalk expected
during that time period: in 2015 the sales were $10.7 million, and
they decreased to $6.7 million in 2016, to $3 million in 2017, and
to $90,000 in 2018; Catwalk had no sales to Nordstrom POV in
2019. Kang attributed this decline in sales to Heyri J. getting
orders from Nordstrom POV instead of Catwalk.
Hurt-Watson testified that Catwalk’s sales to Nordstrom
POV declined for a different reason, namely that Catwalk’s prices
were too high. Hurt-Watson recounted that, when she met with
Gaffney in December 2017, to discuss Catwalk’s products, they
spent approximately 35 to 45 minutes talking about Gaffney’s
position that Catwalk’s prices were too high. Hurt-Watson
named the three reasons that Catwalk’s sales to Nordstrom
decreased over time as “price, price, [and] price.”
Kang testified about Catwalk’s design database, known as
the “W.I.P.” database, which he claimed contained trade secrets
regarding Catwalk’s products. The database contained designs
and patterns for garments Catwalk was producing, along with
other information such as the fabric used, vendors who supplied
materials, where the garments were fabricated, and the price and
number of garments being produced. According to Kang, Hurt-
Watson had “full access” to the W.I.P. database until she left
Catwalk in March 2018. Kang claimed he did not know, before
Hurt-Watson stopped working for Catwalk in March 2018, that
she had been working for Heyri J., and if he had known he would
have cut off her access to the W.I.P. database.
8
Hurt-Watson acknowledged that while working with
Catwalk she had access to the W.I.P. database, which she also
referred to as the “Work In Progress” database, and testified that
she used the database to access information regarding clothes she
had already sold for Catwalk.
Kang claimed that Hurt-Watson had “leaked” Catwalk’s
designs. He identified four styles which he claimed Heyri J. had
copied using information from Catwalk’s W.I.P. database. The
Heyri J. designer responsible for the four styles testified that she
had developed the styles by modifying designs she had created in
prior years, and that she based her modifications for three of the
styles on images the Nordstrom POV buyer, Gaffney, had posted
on the internet through the Pinterest app. Kang agreed that
Hurt-Watson had provided the images from Gaffney’s Pinterest
account to both Catwalk and Heyri J., and that Catwalk came up
with the designs it claimed Heyri J. copied based on the Pinterest
images.
In addition to the W.I.P. database, Kang testified that
Catwalk considered its “client information” to constitute trade
secrets. Kang described this “client information” to include the
buyer’s preferences and “buying style.” Kang also included in the
concept of “client information” trend reports Catwalk received
from Nordstrom. However, Kang and Hurt-Watson both testified
that Hurt-Watson was Catwalk’s exclusive representative with
respect to Nordstrom POV (and Nordstrom Rack), and Kang
testified that Catwalk hired Hurt-Watson because of her prior
relationship with, and knowledge about, Nordstrom, including
the POV department.
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2. Hurt-Watson’s Claim for Unpaid Commissions
Hurt-Watson was paid commissions as a percentage of
sales that were delivered or “shipped” to retailers, such as
Nordstrom, and she was paid her commission only after the
product was delivered. There was a delay, lasting several
months, between the time a retailer ordered product and when
the product was delivered. Hurt-Watson was paid different
commission rates for different retailers, and sometimes there
would be adjustments to her commission rates.
a. Alleged Underpayment of Commissions from
2014 to 2018
Hurt-Watson testified that she had been underpaid for
commissions she earned from 2014 to 2018 while she was still
representing Catwalk. She testified that she calculated she had
earned $3,766,000 in commissions from 2014 to 2018. Hurt-
Watson told the jury that she believed she was owed $1,110,000,
based on her comparison of the $3,766,000 amount she had
earned with the amount of commissions Catwalk had actually
paid her during 2014 to 2018. Hurt-Watson also attempted to
introduce corroborating testimony and documents from two
personal assistants that worked for her. The court excluded the
offered exhibits at the request of Catwalk because Hurt-Watson
was only entitled to commissions on the amount of product
shipped, and the documents at issue recorded the amount of
product ordered and not the amount shipped.
b. Unpaid Commissions from 2018 Onwards
Both parties agreed that Catwalk had not paid Hurt-
Watson for commissions on product shipped in February 2018
and the following months. Kang admitted that Hurt-Watson was
entitled to $15,639.89 in commissions for February 2018
10
shipments. On April 2, 2018, Catwalk issued a check to Hurt-
Watson in the amount of $15,639.89, but stopped payment on the
check. Kang testified that Catwalk stopped payment on the
check “because . . . there was still a pending order . . . that was
worth . . . $1.7 million . . . that needed to be . . . checked on.”
Kang also admitted that Catwalk owed Hurt-Watson $62,825.60
in commissions for product shipped in March 2018; he likewise
explained the non-payment of that amount based on the $1.7
million order which was still pending.
The $1.7 million issue was apparently related to a request
by Nordstrom Rack to cancel part of an order it had made, which
resulted in Catwalk producing product that Nordstrom Rack
would not accept. Hurt-Watson denied that she owed any money
to Catwalk in February or March of 2018, and stated that, as a
sales representative, she would not be responsible to pay the
manufacturer out of unrelated commission income if a retailer
cancels an order.
There was no evidence about the specific amount of
commission that Hurt-Watson was entitled to receive for orders
shipped in April 2018 or the following months. She testified that
she brought in $15 million to $20 million for Catwalk after she
started working for Heyri J. and later testified she had not been
paid commissions on orders for “like 25, 30 million” in product,
and her commissions on those orders would have been paid out
through October 2018.
3. The Special Verdict Form
A party can be held liable under the UTSA for
misappropriating a trade secret by improperly acquiring,
disclosing, or using it; there is a separate standard jury
instruction for each of “acquisition,” “disclosure,” and “use.”
11
(CACI Nos. 4405 [acquisition], 4406 [disclosure], 4407 [use].)
When the parties discussed jury instructions on October 22, 2019,
Catwalk’s counsel agreed that the instruction for “disclosure” of a
trade secret (CACI No. 4406) would only apply to Hurt-Watson,
and not to Heyri J. In addition, all counsel agreed the jury
instruction regarding “acquisition” of a trade secret (CACI
No. 4405) would apply only to Heyri J., and not to Hurt-Watson.
The parties left in jury instructions regarding “use” (CACI
No. 4407) as to both Hurt-Watson and Heyri J.4
Counsel for Hurt-Watson prepared a proposed special
verdict form, which the court and counsel discussed on
October 23, 2019.5 Hurt-Watson’s counsel explained that he had
structured the question regarding whether Hurt-Watson had
misappropriated Catwalk’s trade secrets (question No. 5) to ask
only if Hurt-Watson had “disclosed” Catwalk’s trade secret.
According to counsel, this was based on the parties’ agreement
4 Consistent with this agreement, the jury was provided
with separate instructions regarding alleged “disclosure” (CACI
No. 4406) and “use” (CACI No. 4407) of trade secrets by Hurt-
Watson, and alleged “acquisition” (CACI No. 4405) and “use”
(CACI No. 4407) of trade secrets by Heyri J. However, the
parties failed to apply these changes to the more general
introductory instructions (CACI Nos. 4400 and 4401). As a
result, the jury was also instructed Catwalk claimed Hurt-
Watson and Heyri J. had “misappropriated” its trade secrets, and
“ ‘Misappropriation’ means the improper acquisition, use, or
disclosure of the trade secret” (CACI No. 4400); and it was
instructed Catwalk had to prove that Hurt-Watson and Heyri J.
“improperly acquired, used, or disclosed” the alleged trade secrets
(CACI No. 4401).
5 The proposed form itself is not in the record.
12
the day before that the jury instructions would only address one
type of misappropriation by Hurt-Watson, namely “disclosure” of
trade secrets. The proposed form also told the jury to skip
questions about Heyri J.’s liability if it did not find Hurt-Watson
had improperly disclosed a trade secret.
Hurt-Watson’s counsel was partially correct and partially
mistaken about the jury instructions: while the instructions did
not include the instruction regarding “acquisition” of the trade
secrets by Hurt-Watson (CACI No. 4405), they did still include
the instruction regarding “use” of the trade secrets by Hurt-
Watson (CACI No. 4407). When Hurt-Watson’ counsel brought
up the issue, both the court and Catwalk’s counsel apparently
forgot that the parties had agreed to limit the jury instructions
on misappropriation. Catwalk’s counsel argued that the special
verdict form should include “[a]cquire, disclose or use.” The
parties then agreed to make the change requested by Catwalk’s
counsel, and the court read the agreed-upon language as follows:
“Question 5, ‘Did [Hurt-Watson] acquire, use or disclose any of
[Catwalk]’s [t]rade [s]ecrets?’ ” The court asked, “Right?” and all
counsel agreed. The court read the agreed-upon language in the
parallel question regarding Heyri J. (question No. 9) as follows:
“Did [Heyri] J. acquire, use or disclose any of the trade secrets, by
improper means?” and Catwalk’s counsel agreed it was
acceptable.6 As with the prior version of the form, if the jury did
not find Hurt-Watson liable for acquiring, using, or disclosing a
Catwalk trade secret, it was not to answer question No. 9 about
6 This was despite the jury instructions only addressing
Heyri J.’s “use” and “acquisition” of Catwalk’s trade secrets and
not any purported “disclosure.”
13
Heyri J.’s liability. When the parties finished reviewing the form,
the court took over the task of making the edits to the special
verdict form document.
After counsel had completed their closing arguments, the
court provided counsel with a revised version of the special
verdict form.7 But question No. 5 on the form had not in fact
been revised, and still asked, “Did [Hurt-Watson] disclose any of
the Catwalk . . . trade secret [sic] by improper means?” Nor had
question No. 9 on the form been revised, as it still asked, “Did
Heyri J. acquire and use any of the trade secrets by improper
means?” However, after providing counsel an opportunity to
review the form, when the court asked Catwalk’s counsel if he
was “happy with the final version of the verdict form,” counsel
responded, “Very happy, your Honor” and did not note any errors
or omissions on questions Nos. 5 or 9.
4. The Jury’s Verdict
The jury returned its verdict on October 24, 2019. The jury
found that Catwalk’s design database was a trade secret, but the
trend reports generated by Nordstrom and Nordstrom’s contact
information were not. In response to the question, “Did . . . Hurt-
Watson disclose any of the Catwalk . . . trade secret [sic] by
improper means?” the jury answered “No.” Following the
instructions on the form, the jury did not answer question No. 9,
“Did Heyri J. acquire and use any of the trade secrets by
improper means?” or any of the following questions about Heyri
J.’s alleged liability because the jury answered the question about
Hurt-Watson in the negative. The jury found that Catwalk owed
Hurt-Watson commissions in the amount of $485,373.
7 This revised form is not in the record either.
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5. The Judgment
On November 22, 2019, the trial court entered judgment on
the jury’s verdict, and filed and served a notice of entry of
judgment that same day. Under the judgment, Hurt-Watson was
awarded prejudgment interest at a rate of 10 percent “from the
date of filing of [Catwalk’s initial] [c]omplaint.”
F. Catwalk’s Postjudgment Motions
Catwalk filed three posttrial and postjudgment motions: a
motion to set aside and vacate the judgment under Code of Civil
Procedure8 section 663, a motion for new trial, and a motion for
judgment notwithstanding the verdict (JNOV).
In its motion to set aside and vacate the judgment, Catwalk
challenged the award of prejudgment interest to Hurt-Watson
from the date its complaint was filed, and the award of costs to
Heyri J.
In its motion for new trial, Catwalk presented two
arguments of relevance to this appeal. The first claimed the
special verdict form was “fatally defective” because it allowed the
jury to find Hurt-Watson liable only if she “disclosed” Catwalk’s
trade secrets, and required the jury to make a finding about
Heyri J.’s liability only if it found Hurt-Watson liable for
disclosure of a trade secret despite the UTSA’s liability provisions
for improperly “acquiring” and “using” a trade secret in addition
to liability for “disclosing” one. The other argument claimed that
insufficient evidence supported the judgment in Hurt-Watson’s
favor for unpaid commissions.
8 All unspecified statutory references are to the Code of
Civil Procedure.
15
In its JNOV motion, Catwalk sought judgment in its favor
on its claims under the UTSA and on Hurt-Watson’s claim for
unpaid commissions. Catwalk also contended in its JNOV
motion that the special verdict was fatally flawed, but it did not
explain how the alleged deficiency entitled it to a judgment in its
favor against Hurt-Watson or Heyri J. under the UTSA.
The court denied Catwalk’s motion to set aside and vacate
the judgment on January 14, 2020. It denied Catwalk’s motions
for new trial and for JNOV on January 23, 2020. We address the
court’s rulings on Catwalk’s motions below to the extent they are
pertinent to Catwalk’s appellate arguments.
G. Catwalk Appeals
On February 18, 2020, Catwalk filed a timely notice of
appeal of the judgment and the trial court’s rulings on Catwalk’s
posttrial motions.
DISCUSSION
A. The Special Verdict Form
The trial court utilized a special verdict form which
required the jury to answer factual questions. “[A] special verdict
is that by which the jury find the facts only, leaving the judgment
to the [c]ourt. The special verdict must present the conclusions of
fact as established by the evidence, and not the evidence to prove
them; and those conclusions of fact must be so presented as that
nothing shall remain to the [c]ourt but to draw from them
conclusions of law.” (§ 624.)
Catwalk claims the trial court erred in denying its posttrial
motions on the UTSA claims, and that we should reverse the
judgment, because the special verdict form was “fatally defective”
in that it did not require the jury to address all the issues
16
presented by Catwalk’s claims. Catwalk first contends that the
verdict form should have asked whether Hurt-Watson
“acquire[d],” “use[d],” or “disclose[d]” any of Catwalk’s trade
secrets, but the form only asked whether Hurt-Watson had
“disclose[d]” any trade secrets. It also contends the form “failed
to ask the jury to determine Heyri J.’s liability at all” because
the jury was instructed to skip questions about Heyri J. if it
determined that Hurt-Watson did not disclose any trade secrets.
In the crush of trial, errors can and do happen. What
occurred here with the special verdict form illustrates that
reality. The special verdict form given to the jury did not reflect
agreed-upon edits. Even if those edits had been made, they
would have been at odds with the agreed-upon jury instructions
given to the jury. But merely establishing an error occurred is
not the end of the inquiry. Catwalk was entitled not to a perfect
trial but to a fair one, because “taking into account the reality of
the human fallibility of the participants, there can be no such
thing as an error-free, perfect trial.” (United States v. Hasting
(1983) 461 U.S. 499, 508 [103 S.Ct. 1974, 76 L.Ed.2d 96].) It is
for such reasons that Article VI, section 13 of the California
Constitution provides: “No judgment shall be set aside, or new
trial granted, in any cause, on the ground of misdirection of the
jury, or of the improper admission or rejection of evidence, or for
any error as to any matter of pleading, or for any error as to any
matter of procedure, unless, after an examination of the entire
cause, including the evidence, the court shall be of the opinion
that the error complained of has resulted in a miscarriage of
justice.” This constitutional principle applies to errors in a
special verdict form. (Rodriguez v. Parivar, Inc. (2022) 83
17
Cal.App.5th 739, 756 [“A court’s defective special verdict question
requires reversal if the error results in a miscarriage of justice”].)
As explained below, Catwalk forfeited its challenge to the
special verdict form by failing to object to any error in the form’s
language prior to the trial court’s discharge of the jury, and in
any event the errors here were harmless.
1. Catwalk Forfeited Its Challenge
All counsel approved the special verdict form actually used
by the jury before it was submitted to the jury. It is also
undisputed that neither Catwalk nor anyone else raised any
concern about the special verdict form while the jury was
deliberating, when the form was read aloud after the jury
reached its verdict, when the jury was polled about its verdict, or
at any other point before the jury was discharged. In those
circumstances, Catwalk cannot now claim error.
In Taylor v. Nabors Drilling USA, LP (2014) 222
Cal.App.4th 1228, the special verdict form erroneously instructed
the jury to skip some questions relating to the defendant’s
liability. (Id. at p. 1241.) Our colleagues in Division Six
concluded the trial court did not err in denying the defendant’s
JNOV motion on the ground the defense counsel had not objected
to the defect before the jury was discharged, stating, “ ‘ “Failure
to object to a verdict before the discharge of a jury and to request
clarification or further deliberation precludes a party from later
questioning the validity of that verdict if the alleged defect was
apparent at the time the verdict was rendered and could have been
corrected.” [Citation.]’ ” (Id. at p. 1242, quoting Keener v. Jeld–
Wen, Inc. (2009) 46 Cal.4th 247, 263-264.) “Because [the
defendant] did not object and had expressly approved the
erroneous verdict form, it forfeited its claim that the special
18
verdict is defective because the jury did not answer [some]
questions [relating to liability].” (Id. at pp. 1242-1243; see also
Jenson v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112,
131 [affirming denial of motion for new trial because the
defendant had “waived any objection to the special verdict form
by failing to object before the court discharged the jury”].)
Catwalk relies on a statement in Saxena v. Goffney (2008)
159 Cal.App.4th 316 that “courts have declined to apply the
waiver rule ‘where the record indicates that the failure to object
was not the result of a desire to reap a “technical advantage” or
engage in a “litigious strategy.” ’ [Citations.]” (Id. at pp. 327-
328.) The facts here, however, are distinguishable from that
case. In Saxena, the plaintiffs submitted a special verdict form
that did not require the jury to find a fact legally necessary to the
award of certain damages. (Id. at pp. 324-326.) The appellate
court found the defendant did not waive his objection to the
special verdict form for purposes of appeal where he did object
before the trial court that the special verdict form was erroneous,
“[i]t was [the] plaintiffs’ responsibility to tender their case to the
jury,” and the defendant was not required to renew his objection
because “[i]f [the] plaintiffs chose to submit a verdict form
tendering less than their full case to the jury, [the defendant] had
no further incentive to object.” (Id. at p. 328.) Here, of course,
Catwalk was the plaintiff on the UTSA claims at issue, bore the
responsibility to tender its claims to the jury, and did not object
to the special verdict form until after the jury was discharged.
Catwalk had two clear opportunities to object. The first
was when the court circulated the special verdict form before it
was presented to the jury. Catwalk argues without any record
support that its counsel was given only “moments” to review the
19
form before it was to be presented to the jury. What the record in
fact shows is that Catwalk’s counsel had sufficient time to notice
certain corrections that needed to be made and notified the court
about them. Moreover, counsel did not inform the court he did
not have enough time to review the form, nor did he request
additional time. Instead, when the court asked counsel if he was
“happy with the final version of the verdict form,” counsel
responded, “Very happy, your Honor.” While it does appear that
the final form did not conform with what the parties had agreed
to earlier that day, we would expect counsel to review those
portions of the form the parties had discussed to verify that
agreed-upon corrections were made and to notice that they had
not.
The second clear opportunity for Catwalk to object was
when the jury’s verdict was announced in court. The clerk read
the special verdict aloud (such that any missing verbiage would
have been apparent) and, after the jury was polled on each
question it answered, the court asked Catwalk’s counsel,
“anything further that you’re requesting with the jury present,”
to which he responded, “Nothing.” The jury was then discharged.
Under these circumstances, the failure to object before the jury
was discharged forfeits Catwalk’s appellate challenge to the
special verdict form.
2. There Was No Miscarriage of Justice Requiring
Reversal
Even if the claim of error was not forfeited, any deficiencies
in the special verdict form were harmless. “[A] defective special
verdict form is subject to harmless error analysis.” (Taylor v.
Nabors Drilling USA, LP, supra, 222 Cal.App.4th at p. 1233.) We
review for a miscarriage of justice, which “has occurred if, upon
20
our examination of the entire cause, including the evidence, we
conclude ‘ “it is reasonably probable that a result more favorable
to the appealing party would have been reached in the absence of
the error.” ’ [Citation.]” (Rodriguez v. Parivar, supra, 83
Cal.App.5th at pp. 756-757.) The Supreme Court has “ ‘made
clear that a “probability” in this context does not mean more
likely than not, but merely a reasonable chance, more than an
abstract possibility.’ [Citation.]” (Cassim v. Allstate Ins. Co.
(2004) 33 Cal.4th 780, 800.)9
The jury found that the only trade secret Catwalk had
established was its W.I.P. database. Hurt-Watson indisputably
had access to the database while at Catwalk and was familiar
with facts in it from her work as a sales representative. There
was no evidence Hurt-Watson took that database with her when
she left the company, and the jury instructions by design did not
include the specific instruction, CACI No. 4045, about whether
Hurt-Watson improperly “acquired” trade secrets. The omission
of the “acquired” prong from the special verdict form as to Hurt-
Watson was therefore not only harmless but appropriate given
the parties’ agreement not to give a jury instruction on that issue
as to Hurt-Watson.
We further conclude that, given the jury’s unanimous
finding that Hurt-Watson did not “disclose” the trade secrets in
the W.I.P. database, there was no reasonable chance it would
9 We reject Catwalk’s assertion that de novo review applies.
The de novo standard applies to review of potentially ambiguous
or inconsistent verdicts (e.g., Zagami, Inc. v. James A. Crone, Inc.
(2008) 160 Cal.App.4th 1083, 1091-1092; City of San Diego v.
D.R. Horton San Diego Holding Co., Inc. (2005) 126 Cal.App.4th
668, 678) and not to errors in the form itself.
21
have found that Hurt-Watson “use[d]” those trade secrets.
Catwalk’s theory of misappropriation was that Hurt-Watson
disclosed Catwalk’s designs to Heyri J., which copied the designs
to produce its own garments. In particular, Catwalk’s case rested
on its claim that Heyri J. had copied four specific styles using
information from the W.I.P. database. Given that any such “use”
could have come only after the alleged “disclosure” to Heyri J. of
information from Hurt-Watson, we perceive no reasonable chance
the jury would have found “use” when it found no “disclosure” of
that information to Heyri J. in the first place. Furthermore,
Catwalk did not claim that Hurt-Watson had improperly “used”
information from the W.I.P. database other than to disclose it to
Heyri J., nor was there any evidence adduced to support such a
claim.
Similarly, given the jury’s finding that Hurt-Watson had
not disclosed the trade secrets in the W.I.P. database, there was
no reasonable chance the jury would have found that Heyri J.
acquired, disclosed, or used those trade secrets. There was no
evidence adduced at trial showing that Heyri J. could have
known about information from the W.I.P. database (which it
would have needed to do to acquire, disclose, or use that
information) other than by obtaining it from Hurt-Watson. The
errors in the special verdict form were therefore harmless.10
10 Because we find any errors with the special verdict form
harmless, we need not address Catwalk’s argument that the trial
court improperly concluded Catwalk failed to support its new
trial motion related to the special verdict form with affidavits
under section 658.
22
B. Hurt-Watson’s Claim for Unpaid Commissions
Catwalk next contends that the trial court erred in denying
its motions for new trial and for JNOV as to Hurt-Watson’s claim
for unpaid commissions.
1. Standard of Review
“A trial court may grant a motion for [JNOV] only if the
evidence, viewed most favorably to the prevailing party, is
insufficient to support the verdict.” (Markow v. Rosner (2016) 3
Cal.App.5th 1027, 1044-1045.) “ ‘On appeal from the denial of a
JNOV motion, an appellate court must review the record de novo
and make an independent determination whether there is any
substantial evidence to support the jury’s findings. [Citations.]’
[Citation.]” (Minnegren v. Nozar (2016) 4 Cal.App.5th 500, 514,
fn. 7.) “The denial of a new trial motion is reviewed for an abuse
of discretion, except that a trial court’s factual determinations are
reviewed under the substantial evidence test.” (Ibid.)11
11 Hurt-Watson contends that we should affirm the trial
court’s rulings on the motions for JNOV and a new trial on the
ground Catwalk failed to submit evidence to the trial in support
of its motions. Catwalk did not submit any trial transcripts or
copies of exhibits in support of its motions, and the trial court
denied the motions on that ground, among others. However,
given that our review of the denial of the JNOV motion is de novo
and we must make an independent determination on the
substantial evidence question (Minnegren v. Nozar, supra, 4
Cal.App.5th at p. 514, fn. 7), the alleged inadequacy in the
separate new trial motion on the same issue does not thwart our
obligation to address Catwalk’s sufficiency arguments based on
the record on appeal, including the trial transcript and the trial
exhibits.
23
“In reviewing the sufficiency of evidence to support the
jury’s finding, we review the record in the light most favorable to
the prevailing party, resolving in favor of the prevailing party all
conflicts in either the evidence or the reasonable inferences to be
drawn therefrom, to determine whether the record contains
substantial evidence, contradicted or uncontradicted, supporting
the finding. [Citations.] ‘ “Substantial evidence” is evidence of
ponderable legal significance, evidence that is reasonable,
credible and of solid value.’ [Citation.] ‘The focus is on the
quality, rather than the quantity, of the evidence.’ [Citation.]
‘Inferences may constitute substantial evidence, but they must be
the product of logic and reason. Speculation or conjecture alone
is not substantial evidence.’ [Citation.] ‘The ultimate test is
whether it is reasonable for a trier of fact to make the ruling in
question in light of the whole record.’ [Citation.] The testimony
of a single witness may be sufficient. [Citation.]” (Markow v.
Rosner, supra, 3 Cal.App.5th at p. 1045.)
2. Sufficient Evidence Supported the Jury’s Award to
Hurt-Watson
In arguing the evidence it owed commissions was
insufficient, Catwalk focuses on an alleged lack of documentary
evidence but ignores Hurt-Watson’s testimony at trial. She
testified that Catwalk owed her $1,110,000 in commissions she
had earned from 2014 to 2018 and explained how she calculated
that amount. That testimony provided substantial evidence to
support the jury’s award of less than half of that amount to her
as damages. Hurt-Watson’s testimony was based in part on a
Catwalk sales report admitted into evidence, and for sufficiency
of the evidence purposes her testimony was reasonable, credible
and of solid value.
24
Catwalk argues there was no competent evidence that this
sales report reflected shipped goods, as opposed to merely ordered
goods. However, Kang agreed in his testimony that the report at
issue “reflects sales of Catwalk . . . to . . . all of its vendors.” Kang
had earlier testified that Catwalk completes a sale “[w]hen the
goods are . . . shipped out completely.” Furthermore, the jury
could reasonably infer that Hurt-Watson, who worked as a sales
representative for Catwalk for over a decade, could interpret
Catwalk’s sales report.
Catwalk also argues that there was no evidence the report
“included chargebacks, or excluded orders on which Hurt-Watson
was not entitled to a commission pursuant to her agreements
with [Catwalk].” However, the jury could reasonably infer that
Hurt-Watson was aware of any instances where she was not
entitled to a commission on specific orders and had factored that
into her calculation. In any event, the jury’s award suggests that
the jury discounted the amount claimed by Hurt-Watson to
account for potential chargebacks, excluded orders, and other
factors that reduced the amount owed.
In addition, the evidence showed that Catwalk did not pay
Hurt-Watson for commissions she earned based on goods that
were shipped in February 2018 and the following months. In
fact, Kang agreed that Catwalk had not paid Hurt-Watson any
commissions since January 2018. Kang admitted that Hurt-
Watson was entitled to $15,639.89 in commissions for February
2018 shipments. On April 2, 2018, Catwalk issued a check to
Hurt-Watson in the amount of $15,639.89, but stopped payment
on the check. Kang also admitted that Catwalk owed Hurt-
Watson $62,825.60 in commissions for March 2018 that it had not
paid. Kang attempted to explain that Catwalk had held up these
25
two payments due to a “pending order,” but Catwalk presented
no evidence to support this claim nor any explanation how the
purported “pending order” issue would impact Hurt-Watson’s
commissions earned on other sales. Furthermore, Hurt-Watson
denied that this purported issue would impact her commission,
which provided substantial evidence for the jury to reject
Catwalk’s explanations for its failure to pay.
“ ‘Where the fact of damages is certain, the amount of
damages need not be calculated with absolute certainty.
[Citations.] The law requires only that some reasonable basis of
computation of damages be used, and the damages may be
computed even if the result reached is an approximation.
[Citation.]’ ” (Sargon Enterprises, Inc. v. University of Southern
California (2012) 55 Cal.4th 747, 774.) The jury’s award to Hurt-
Watson satisfies this principle. We accordingly reject Catwalk’s
claim that substantial evidence does not support the jury’s award
of unpaid commissions to Hurt-Watson.
C. Hurt-Watson’s Claim for Prejudgment Interest
Catwalk’s final claim is that the trial court erred in
awarding Hurt-Watson prejudgment interest from the time
Catwalk filed its lawsuit. Catwalk contends that Civil Code
section 3287, subdivision (b) (section 3287(b)) limited the court to
starting the accrual of prejudgment interest no earlier than the
time Hurt-Watson filed her first amended cross-complaint, which
was the first time she asserted a claim for unpaid commissions.
We agree with Catwalk that the trial court was limited under
section 3287(b) to starting prejudgment interest from the date
Hurt-Watson filed her first amended cross-complaint, but for
slightly different reasons than those advanced by Catwalk.
26
“We review the trial court’s ruling on prejudgment interest
under section 3287(b) for abuse of discretion. [Citation.] We will
uphold the trial court’s exercise of discretion ‘if it is based on a
“reasoned judgment” and complies with the “. . . legal principles
and policies appropriate to the particular matter at issue.” ’
[Citation.]” (Hewlett-Packard Co. v. Oracle Corp. (2021) 65
Cal.App.5th 506, 574.) We review questions of law regarding the
interpretation of section 3287(b) de novo. (Airs Aromatics, LLC v.
CBL Data Recovery Technologies, Inc. (2020) 50 Cal.App.5th
1009, 1013.)
Section 3287(b) provides: “Every person who is entitled
under any judgment to receive damages based upon a cause of
action in contract where the claim was unliquidated, may also
recover interest thereon from a date prior to the entry of
judgment as the court may, in its discretion, fix, but in no event
earlier than the date the action was filed.”12 “The rationale for
precluding prejudgment interest on unliquidated claims is ‘that it
is unreasonable to expect a defendant to pay a debt before he or
she becomes aware of it or is able to compute its amount.’
[Citation.] By allowing the trial court to consider awarding
prejudgment interest on an unliquidated contractual claim
within the limits prescribed by the statute, section 3287(b) aims
12 Civil Code section 3287, subdivision (a) governs the
award of prejudgment interest where the damages are “certain,
or capable of being made certain by calculation.” Hurt-Watson
contends that the trial court’s award of prejudgment here was
proper under this provision. However, the trial court did not rely
on this provision, and Hurt-Watson has forfeited this argument
as she conceded the inapplicability of Civil Code section 3287,
subdivision (a) in the trial court.
27
‘to balance the concern for fairness to the debtor against the
concern for full compensation to the wronged party.’ [Citation.]”
(Hewlett-Packard Co. v. Oracle Corp., supra, 65 Cal.App.5th at
p. 576.)
The statutory language that the start date for prejudgment
interest can “in no event [be] earlier than the date the action was
filed” (§ 3287(b)) is ambiguous. One can read it as the trial court
did, to refer to the initial pleading in the lawsuit regardless of
who filed it. Or one can read it, in the case where the breach of
contract claim is asserted via cross-complaint, to refer to the date
the cross-complaint was filed. Because the statutory language
permits more than one reasonable interpretation, we consider
other aids, such as the statute’s purpose, legislative history, and
public policy. (Segal v. ASICS America Corp. (2022) 12 Cal.5th
651, 662.) We also consider the context of the entire statute and
the statutory scheme of which it is a part to give significance to
every part of them. (Ibid.)
The legislative history is silent on the definition of “action.”
The parties instead point to different definitions of “action” in the
Code of Civil Procedure as supporting their respective
interpretations of the term. Hurt-Watson relies on section
411.10, which provides: “A civil action is commenced by filing a
complaint with the court.” Although Hurt-Watson does not make
her argument explicit, the inference is presumably that the filing
of a cross-complaint cannot commence an “action,” only a
complaint.13 Catwalk relies on section 583.110, subdivision (a),
13 We note for the sake of completeness that Hurt-Watson
agreed to prejudgment interest running from the date of her first
amended cross-complaint in the trial court before the trial court
28
which defines “action,” for purposes of the chapter in which it is
located (which governs dismissal for delay in prosecution), to
“include[ ] an action commenced by [a] cross-complaint.” Catwalk
also notes our Supreme Court has recognized in other contexts
that “action” can sometimes refer to proceedings on a cross-
complaint. (E.g., Shepard & Morgan v. Lee & Daniel, Inc. (1982)
31 Cal.3d 256, 260 [“In prior cases, albeit in other contexts, we
have deemed that a complaint and cross-complaint are separate
actions”].)
There is an additional definition of “action” in section 22
which seems to us more informative. Section 22 provides: “An
action is an ordinary proceeding in a court of justice by which one
party prosecutes another for the declaration, enforcement, or
protection of a right, the redress or prevention of a wrong, or the
punishment of a public offense.” This definition suggests that
“action” encompasses the claims of one party against another,
which would suggest that prejudgment interest on Hurt-Watson’s
contract claim cannot go all the way back to Catwalk’s complaint,
as that complaint did not assert Catwalk had wronged Hurt-
Watson, but the exact opposite.
Considering these interpretive aids and the statutory
purpose, we conclude the phrase “the date the action was filed” in
section 3287(b) refers to the filing of the cross-complaint where
the cause of action against a cross-defendant which is the basis
for the prejudgment interest award is asserted by cross-
complaint. This balances the two fundamental concerns at issue
in section 3287(b)—that the wronged party receive full
rejected her concession. That, of course, does not preclude her
from defending the prejudgment interest award on appeal.
29
compensation and “ ‘that it is unreasonable to expect a defendant
to pay a debt before [it] becomes aware of it or is able to compute
its amount.’ ” (Hewlett-Packard Co. v. Oracle Corp., supra, 65
Cal.App.5th at p. 576.) While it is logical to assume that, by
being sued, a defendant has become aware of a debt owed to the
plaintiff, that logic does not justify an inference that a plaintiff,
by suing a defendant, is aware of any unliquidated debt the
defendant might claim the plaintiff owes or is able to compute its
amount.
Catwalk attempts to take the interpretation of “action” in
section 3287(b) a step further. It contends the filing of the
“action” for purposes of section 3287(b) is not when Hurt-Watson
first cross-claimed but when she filed her first amended cross-
complaint, because it was in that pleading that she first asserted
her purported right to contractual damages. We need not
address the interesting interpretive question of whether the
initial complaint or cross-complaint must allude to the breach of
contract claim for purposes of section 3287(b)’s definition of
“action.” That is because Hurt-Watson’s initial cross-complaint
was not asserted against Catwalk at all. To the contrary, the
initial cross-complaint sought only indemnity and declaratory
relief from fictitiously named cross-defendants. Catwalk was
first named as a cross-defendant in Hurt-Watson’s first amended
cross-complaint and was not a party to the cross-complaint before
that time.14 It was the filing of the first amended cross-
14 In amending the cross-complaint, Hurt-Watson added
Catwalk as a cross-defendant and did not substitute Catwalk for
one of the fictitiously named parties.
30
complaint which therefore initiated Hurt-Watson’s “action”
against Catwalk, and that governs under the facts here.
In conclusion, under the specific facts of this case, section
3287(b) limited the trial court to starting the accrual of
prejudgment interest at the earliest from when Hurt-Watson
filed her first amended cross-complaint on September 20, 2018.
Accordingly, we vacate that portion of the judgment awarding
prejudgment interest “from the date of filing of the Complaint”
and remand for the trial court to correct the judgment to award
prejudgment interest “from the date of filing of the First
Amended Cross-Complaint . . . .”
DISPOSITION
The judgment is remanded with directions to strike that
portion of the judgment stating prejudgment interest is awarded
“from the date of filing of the Complaint” and replace it with
“from the date of filing of the First Amended Cross-
Complaint . . . .” The judgment and the postjudgment orders are
otherwise affirmed. Hurt-Watson and Heyri J. are awarded their
costs on appeal.
NOT TO BE PUBLISHED
WEINGART, J.
We concur:
ROTHSCHILD, P. J. CHANEY, J.
31