Modular Mining Systems, Inc. v. Jigsaw Technologies, Inc. Olson Blacutt

FILED BY CLERK
IN THE COURT OF APPEALS APR 30 2009
STATE OF ARIZONA
COURT OF APPEALS
DIVISION TWO DIVISION TWO
MODULAR MINING SYSTEMS, INC., )
an Arizona corporation, ) 2 CA-CV 2008-0118
) DEPARTMENT A
Plaintiff/Appellant, )
) OPINION
v. )
)
JIGSAW TECHNOLOGIES, INC., an )
Arizona corporation; JONATHAN )
OLSON and NAYADE OLSON, husband )
and wife; and SERGIO BLACUTT and )
GAIL BLACUTT, husband and wife, )
)
Defendants/Appellees. )
)
APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY
Cause No. C-20046306
Honorable Deborah Bernini, Judge
AFFIRMED
Haralson, Miller, Pitt, Feldman & McAnally, P.L.C.
By Gerald Maltz and Peter T. Limperis Tucson
Attorneys for Plaintiff/Appellant
Lewis & Roca, LLP
By John N. Iurino and Sivan R. Korn Tucson
Attorneys for Defendants/Appellees
E S P I N O S A, Judge.
¶1 Modular Mining Systems, Inc. (“Modular”) challenges the trial court’s grant
of summary judgment in favor of appellees Jigsaw Technologies, Inc.; Jonathan Olson and
Nayade Olson; and Sergio Blacutt and Gail Blacutt (collectively, “Jigsaw”). We affirm.
Factual and Procedural Background
¶2 On appeal from a summary judgment, we view the facts in the light most
favorable to the party against whom judgment was entered and draw all justifiable inferences
in its favor. Ratliff v. Hardison, 219 Ariz. 441, ¶ 2, 199 P.3d 696, 697 (App. 2008); Nat’l
Bank of Ariz. v. Thruston, 218 Ariz. 112, ¶ 17, 180 P.3d 977, 981 (App. 2008). “However,
we consider as true those facts alleged by [the moving party]’s affidavits that [the non-
moving party] did not controvert.” Jennifer G. v. Ariz. Dep’t of Econ. Sec., 211 Ariz. 450,
¶ 3, 123 P.3d 186, 188 (App. 2005).
¶3 Modular manufactures a mine-management system known as “Dispatch,”
which is a combination of hardware and software that gathers data about a mine’s equipment
and calculates the equipment’s optimal use. The Dispatch system consists of a central server
and one or more field units that are attached to mobile mining equipment, such as trucks and
mining shovels. Each Dispatch field unit is equipped with a wireless transceiver that sends
and receives messages from the central server regarding the equipment’s location and
operation.
¶4 Jonathan Olson is a former employee of Modular. He resigned his position as
Modular’s chief technical officer in August 2003 but continued to work as a part-time
consultant through March 2004. Olson and Sergio Blacutt, another former employee of
2
Modular, formed Jigsaw in October 2003, initially to create software products for the quarry
industry, a market Modular does not serve. Less than a year later, however, Jigsaw expanded
its products to include the mining industry, placing Jigsaw in direct competition with
Modular. Jigsaw’s mine-management system is marketed under the name “MineOps.” Like
Dispatch, MineOps provides mine monitoring and optimization through wireless
communications between a central server and field units mounted on the mine’s mobile
equipment.
¶5 Modular filed this action in 2004. Its original complaint named Jigsaw and
eight individual defendants and included claims of misappropriating trade secrets in violation
of Arizona’s Uniform Trade Secrets Act,1 unfair competition, intentional interference with
business relationships, intentional interference with contract, “aiding and abetting,” and
conspiracy, as well as claims of breach of employment agreements and breach of the
covenant of good faith and fair dealing. Modular also sought a preliminary injunction against
Jigsaw. The trial court denied the requested injunction in May 2005 after a five-day
evidentiary hearing, and this court affirmed on appeal. Modular then amended its complaint
in August 2007. The amended complaint sought only injunctive relief and punitive damages,
named half of the original individual defendants, and abandoned Modular’s claims of
conspiracy, aiding and abetting, and breach of the covenant of good faith and fair dealing.
¶6 In its statutory trade secrets claim, Modular contended Jigsaw had
misappropriated two computer configuration codes (“commands”) and used them to allow
1
A.R.S. §§ 44-401 through 44-407.
3
Jigsaw’s field units to communicate with Modular’s field units aboard selected vehicles at
two mines in Peru and Argentina.2 Modular sought injunctive relief prohibiting Jigsaw from
utilizing these commands.
¶7 Jigsaw moved for summary judgment on all of Modular’s claims in January
2008. In its reply to Modular’s opposition to its motion, Jigsaw asserted it had been unaware
Modular considered the particular commands to be trade secrets until Jigsaw took the
deposition of Modular’s expert in February 2008.3 Jigsaw further asserted that, upon
learning Modular considered the commands to be trade secrets, it immediately discontinued
their use and implemented an alternate procedure using a command contained in Modular’s
published guides and manuals. Jigsaw disputed Modular’s assertion that the two commands
at issue were trade secrets, and it maintained that, in any event, the Dispatch systems would
be decommissioned in both mines by the end of 2008. 4 Modular did not dispute that Jigsaw
2
Modular previously had asserted additional allegations of misappropriation of trade
secrets by Jigsaw, including that Jigsaw had misappropriated portions of Modular’s source
code. The trial court found Modular had abandoned such claims by the time Jigsaw moved
for summary judgment in January 2008, a finding Modular does not dispute on appeal.
3
Because Modular’s expert was unavailable until after the deadline for dispositive
motions, Jigsaw was unable to take his deposition until after it had filed its motion for
summary judgment.
4
Jigsaw also explained that both mines had decided in 2006 to replace their Dispatch
systems with MineOps. Both mines previously had been using Modular’s radio-based
communications equipment but, to comply with pending legislation by their respective
governments banning the use of radio frequencies in mines, it became necessary to replace
the mines’ radio networks with new communications systems. Jigsaw’s wireless
infrastructure uses a commercial Wi-Fi standard permitted by the legislation. Accordingly,
during the phased transition to MineOps, Jigsaw had installed its own field units that could
communicate with the Dispatch field units remaining aboard some of the mines’ equipment.
4
was using the commands only at the two specified mines in Peru and Argentina or its
assertion that both mines stopped using Dispatch during 2008.
¶8 The trial court granted Jigsaw’s summary judgment motion in its entirety. As
part of its decision, the court determined Modular’s claim for injunctive relief was moot. It
also awarded Jigsaw its requested attorney fees, in the amount of $510,561.50, pursuant to
A.R.S. §§ 12-341.01 and 44-404. We have jurisdiction over Modular’s appeal pursuant to
A.R.S. §§ 12-120.21(A)(1) and 12-2101(B).
Discussion
¶9 Modular argues the trial court erred in finding its claim for injunctive relief
moot, in granting summary judgment on its trade secrets claim, and in awarding attorney
fees.5 “We review a superior court’s ‘grant of summary judgment on the basis of the record
made in [that] court, but we determine de novo whether the entry of [summary] judgment was
proper.’” Nat’l Bank, 218 Ariz. 112, n.3, 180 P.3d at 980 n.3, quoting Schwab v. Ames
Constr., 207 Ariz. 56, ¶ 17, 83 P.3d 56, 60 (App. 2004) (alterations in Nat’l Bank). In
determining whether the court properly granted summary judgment, we apply the same
standard a trial court uses in ruling on a summary judgment motion. Id.
¶10 The entry of summary judgment is appropriate “if the pleadings, deposition[s],
answers to interrogatories, and admissions on file, together with the affidavits, if any, show
5
Modular does not appeal the trial court’s grant of summary judgment on its claims
of breach of employment agreements, unfair competition, or intentional interference with
business relationships and contracts, nor its determination that punitive damages are
unavailable.
5
that there is no genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law.” Ariz. R. Civ. P. 56(c)(1).
When a moving party meets its initial burden of production by
showing that the non-moving party does not have enough
evidence to carry its ultimate burden of proof at trial, the burden
then shifts to the non-moving party to present sufficient
evidence demonstrating the existence of a genuine factual
dispute as to a material fact.
Nat’l Bank, 218 Ariz. 112, ¶ 26, 180 P.3d at 984. “To defeat the motion, the non-moving
party must call the court’s attention to evidence overlooked or ignored by the moving party
or must explain why the motion should otherwise be denied.” Id.
¶11 Applying these principles, we first address Modular’s argument that the trial
court erroneously found moot its request for an injunction prohibiting Jigsaw from “using,
directly or indirectly, [Modular’s] confidential, proprietary, or trade secret information.”
Modular argues the court erred in making its determination “without hearing from the
witnesses” and contends it “is entitled to have the trier of fact evaluate the evidence and
determine whether Jigsaw infringed and whether injuncti[ve] relief against future
infringement is warranted.”
¶12 “The issue of injunctive relief is moot when the ‘events make it absolutely clear
the allegedly wrongful behavior could not reasonably be expected to recur.’” SAL Leasing,
Inc. v. State ex rel. Napolitano, 198 Ariz. 434, ¶ 39, 10 P.3d 1221, 1229 (App. 2000), quoting
State ex rel. Babbitt v. Goodyear Tire & Rubber Co., 128 Ariz. 483, 486, 626 P.2d 1115,
1118 (1981). “[T]he burden of proof . . . in any action for injunction . . . is upon the plaintiff
to show a likelihood that the defendant will in the future engage in the conduct sought to be
6
enjoined.” Babbitt, 128 Ariz. at 487, 626 P.2d at 1119. “Factors that may point to a danger
of future violations include past violations, involuntary cessation of the violations, and their
continuance in disregard of the lawsuit.” SAL Leasing, 198 Ariz. 434, ¶ 39, 10 P.3d at 1229.
Although “the mere cessation of illegal conduct does not necessarily render a case moot . . .
the ‘necessary determination is that there exists some cognizable danger of recurrent
violation, something more than the mere possibility which serves to keep the case alive.’”
Winokur v. Bell Fed. Sav. & Loan Ass’n, 560 F.2d 271, 274 (7th Cir. 1977), quoting United
States v. W.T. Grant Co., 345 U.S. 629, 632-33 (1953).
¶13 Here, the trial court reasoned that Modular’s claim for injunctive relief was
moot, because: “Plaintiff has not contested Defendants’ factual assertion that as soon as
Jigsaw learned of the newest allegation in February 2008, it terminated the challenged form
of reconfiguration and implemented an alternative method which did not use any of the
information Plaintiff alleged to be secret.” Accordingly, the court found, “[T]he sole remedy
sought by Plaintiff is an injunction, [and] there is nothing to enjoin.”
¶14 On appeal, Modular contends its expert, Dr. Sandeep Chatterjee, “controverted
Jigsaw’s contention that its assertion that it would discontinue integrating its products with
Modular’s at two identified mine sites in the future renders its use of Modular’s
configuration code ‘moot.’” Modular relies on the following portion of Chatterjee’s
affidavit:
I disagree with this assessment [that the issue is moot]
and I believe that the information used by Jigsaw to integrate
its systems with those of Modular is central to this matter, in
general, and to the current motion for summary judgment, in
7
particular. As I wrote on pages 26-28 of my expert report, I
believe that “Jigsaw’s ability to seamlessly integrate with and
interoperate with Modular’s products allowed Jigsaw to enter
a market it otherwise probably would not have been able to
enter.” This conclusion is supported by a number of data
points, including documentation from Jigsaw’s potential clients
. . . and Jigsaw’s own sales material, which stated that a
potential client would be able to “Maximize [its] current
Investment” because Jigsaw’s systems interoperate with and
upgrade Modular’s systems . . . .
Therefore, I believe that even if Jigsaw ceases its
integration with Modular’s systems, Jigsaw’s previous actions
related to the integration are akin to the well-known fruit of the
poisonous tree metaphor. That is, Jigsaw’s previous
performance of integrations with Modular’s systems, if those
integrations utilized Modular trade secret information, would
need to be carefully assessed to determine whether those
previous integrations have enabled or contributed, in any way,
to Jigsaw’s current and/or future ability to deploy its systems
without integration with Modular’s systems.
¶15 Modular has the burden of proving its claim for injunctive relief and can only
defeat Jigsaw’s motion for summary judgment by demonstrating that disputed, genuine issues
of material fact necessitate a trial. “If the party with the burden of proof on the claim
. . . cannot respond to the motion by showing that there is evidence creating a genuine issue
of fact on the element in question, then the motion for summary judgment should be
granted.” Nat’l Bank, 218 Ariz. 112, ¶ 21, 180 P.3d at 982. “A ‘genuine’ issue is one that
a reasonable trier of fact could decide in favor of the party adverse to summary judgment on
the available evidentiary record.” Martin v. Schroeder, 209 Ariz. 531, ¶ 12, 105 P.3d 577,
580 (App. 2005).
8
¶16 For several reasons, Chatterjee’s statements fail to satisfy Modular’s burden
“to come forward with evidence establishing the existence of a genuine issue of material fact
that must be resolved at trial.” Nat’l Bank, 218 Ariz. 112, ¶ 12, 180 P.3d at 980. First,
nothing in the cited portion of his affidavit provides any evidence controverting Jigsaw’s
factual assertions that it had used the disputed commands in only two mines and had stopped
using them once it learned Modular considered them to be trade secrets. Thus, Modular has
failed to demonstrate that a disputed issue of material fact remains concerning its claim for
injunctive relief—namely, that in any current or future installations, Jigsaw will or may need
to use the disputed commands.
¶17 The substance of Chatterjee’s statements—the possibility that Jigsaw could
benefit from its past use of Modular’s trade secrets—is irrelevant to Modular’s claim for
injunctive relief, the only relief sought in its amended complaint. Thus, Chatterjee’s theory
that “Jigsaw’s ability to seamlessly integrate with and interoperate with Modular’s products
allowed Jigsaw to enter a market it otherwise probably would not have been able to enter”
does nothing to demonstrate a genuine factual dispute concerning Modular’s claim for
injunctive relief. Cf. Menendez v. Paddock Pool Constr. Co., 172 Ariz. 258, 269-70, 836
P.2d 968, 979-80 (App. 1991) (expert affidavit opposing summary judgment failed to create
genuine issue of material fact where opinion expressed immaterial to legal question at issue).
Rather, as Jigsaw correctly points out, “Chatterjee’s theory merely addressed the market[ing]
advantage Jigsaw had supposedly gained from ‘previous’ integrations, assuming they would
cease.”
9
¶18 Furthermore, Chatterjee’s statements are clearly dependent on additional
research and further discovery: “previous performance of integrations with Modular’s
systems, if those integrations utilized Modular trade secret information, would need to be
carefully assessed to determine whether those previous integrations have enabled or
contributed, in any way, to Jigsaw’s current and/or future ability to deploy its systems
without integration with Modular’s systems.” (Underline emphasis added.) This language
would be more appropriate in support of a Rule 56(f) motion; it does not demonstrate the
existence of a genuine factual dispute precluding summary judgment.6
¶19 Indeed, this portion of Chatterjee’s affidavit contains only speculation and no
specific facts demonstrating a material factual dispute concerning Modular’s claim for
injunctive relief. “An expert affidavit opposing a motion for summary judgment must set
forth ‘specific facts’ to support an opinion.” Florez v. Sargeant, 185 Ariz. 521, 526, 917
P.2d 250, 255 (1996), quoting Ariz. R. Crim. P. 56(e). “Sheer speculation is insufficient . . .
to defeat summary judgment.” Badia v. City of Casa Grande, 195 Ariz. 349, ¶ 29, 988 P.2d
134, 142 (App. 1999); see also Menendez, 172 Ariz. at 269, 836 P.2d at 979 (“Speculation
that some slight doubt, scintilla of evidence, or dispute over irrelevant or immaterial facts
6
Rule 56(f), Ariz. R. Civ. P. provides that a court “may refuse the application for
judgment or may order a continuance to permit . . . depositions to be taken or discovery to
be had.”
10
might blossom into a real controversy at trial is insufficient to forestall summary
judgment.”).7
¶20 Modular nevertheless contends the trial court erred in finding its claim for
injunctive relief moot because “[a] defendant cannot simply declare it has stopped the
objectionable activity . . . and thus defeat the plaintiff’s claim for an injunction.” But we
agree with Jigsaw that Modular failed to produce any “evidence suggesting that there is any
reason or likelihood that Defendants would revert to using the previous configuration
procedure.” Because Modular did not come forward with any evidence disputing Jigsaw’s
facts or otherwise demonstrating a genuine issue of material fact warranting a trial on its
entitlement to an injunction, Modular failed to meet its burden in opposing Jigsaw’s motion
for summary judgment.8 Accordingly, the trial court correctly determined Modular’s request
7
Modular also argues “Jigsaw’s own sales materials inform potential clients that
. . . ‘Jigsaw’s systems interoperate with and upgrade Modular’s systems.’” But lacking is
Modular’s explanation of how this shows Jigsaw should be enjoined from using Modular’s
trade secrets. Likewise, Modular asserts, “[E]ven if, as Jigsaw now claims, it ceased its
proven (and admitted) integration with Modular’s systems, those integrations may have
enabled or contributed to Jigsaw’s current or future capacity to deploy its systems without
integration.” Again, Modular’s vague and speculative language does not explain what trade
secrets it seeks to enjoin Jigsaw from using, let alone controvert Jigsaw’s evidence that it
already had implemented an alternative to the two disputed commands and would stop all
integrations with Dispatch in 2008. The same is true for Modular’s conclusory contention
that “Jigsaw’s interoperability with Modular’s systems will continue to enable Jigsaw to enter
into markets and opportunities in which Modular has a presence—utilizing Modular’s trade
secrets.”
8
Without citation of authority, Modular asserts Jigsaw’s refusal to stipulate to an
injunction also demonstrates its claim for injunctive relief is not moot, arguing “[t]hat alone
is evidence [Jigsaw] intends to leave the door open to a repetition of its infringement.”
Jigsaw counters that this assertion “has no basis in the record and is untrue” and claims it is
based on Modular’s counsel’s suggestion at the hearing on Jigsaw’s motion for summary
11
for injunctive relief was moot. Because we affirm that ruling and because Modular’s
amended complaint sought only injunctive relief, we need not reach its claim that Jigsaw
misappropriated Modular’s trade secrets.9
judgment that the parties “could probably enter into a stipulation and solve the case and settle
the case and everybody could go home.” Jigsaw asserts it “did not ‘refuse’ counsel’s
suggestion” but, rather, “the parties exchanged settlement correspondence, but were unable
to reach agreement.” It is unclear whether Modular’s isolated statement at the hearing was
sufficient to present this argument to the trial court. See Schoenfelder v. Ariz. Bank, 165
Ariz. 79, 90, 796 P.2d 881, 892 (1990) (“On appeal from summary judgment, we will not
consider new factual theories raised in an attempt to secure reversal of the trial court’s
determinations of law.”); Rand v. Porsche Fin. Servs., 216 Ariz. 424, n.8, 167 P.3d 111, 121
n.8 (App. 2007) (appellate court does not consider arguments not first presented to trial
court). In any event, we do not find the mere fact Jigsaw refused to stipulate to the injunction
Modular sought can satisfy Modular’s burden of coming forward with evidence to refute
Jigsaw’s otherwise undisputed factual assertion that it no longer used, nor would use in the
future, the two commands at issue.
9
Likewise, we need not address the propriety or implication of Jigsaw’s motion
brought pursuant to Rule 56(d), which Modular failed to oppose and the trial court granted.
By its terms, Rule 56(d) applies only when summary judgment is not granted in its entirety.
The rule provides specific procedures for its application:
If on motion under this Rule judgment is not rendered upon the
whole case or for all the relief asked and a trial is necessary, the
court at the hearing of the motion, by examining the pleadings
and the evidence before it and by interrogating counsel, shall if
practicable ascertain what material facts exist without
substantial controversy and what material facts are actually and
in good faith controverted. It shall thereupon make an order
specifying the facts that appear without substantial controversy
. . . . Upon the trial of the action the facts so specified shall be
deemed established, and the trial shall be conducted accordingly.
12
Attorney Fees Award
¶21 Pursuant to §§ 12-341.01 and 44-404, the trial court awarded Jigsaw all of its
requested attorney fees in the amount of $510,561.50. Section 12-341.01(A) provides that,
in “any contested action arising out of a contract, express or implied, the court may award
the successful party reasonable attorney fees.” The applicability of § 12-341.01(A) “is a
question of statutory interpretation, which we review de novo.” Ramsey Air Meds, L.L.C. v.
Cutter Aviation, Inc., 198 Ariz. 10, ¶ 12, 6 P.3d 315, 318 (App. 2000). “The trial court’s
decision on the amount of fees to award is reviewed under the abuse of discretion
standard.” Id.
¶22 Modular does not dispute Jigsaw’s entitlement to attorney fees incurred in
connection with Modular’s claims for breaches of employment agreements. However, it
argues Jigsaw is not entitled to any attorney fees incurred in defending Modular’s trade
secrets claim because this claim did not “aris[e] out of a contract” as § 12-341.01(A)
requires. Jigsaw contends the trial court properly awarded all of its requested attorney fees
because Modular’s trade secrets claim does “aris[e] out of a contract” under § 12-341.01(A)
and because Jigsaw’s fees were “incurred in litigating interwoven and overlapping contract
and tort claims.”
¶23 Because we agree Modular’s claims were inextricably interwoven, we conclude
the trial court did not abuse its discretion in awarding Jigsaw the full amount of its fee
request. Accordingly, we need not reach the separate and more difficult issue whether
Modular’s trade secrets claim and other claims “ar[o]s[e] out of a contract” for purposes of
13
§ 12-341.01(A). See A.H. ex rel. White v. Ariz. Prop. & Cas. Ins. Guar. Fund, 190 Ariz. 526,
529, 950 P.2d 1147, 1150 (1997) (noting § 12-341.01(A)’s requirement that claim arise from
contract “has proven to be a matter of some difficulty for the courts when questions of
contract are mixed or combined with other questions, such as tort law or statutory
interpretation”). “It is well-established that a successful party on a contract claim may
recover not only attorneys’ fees expended on the contract claim, but also fees expended in
litigating an ‘interwoven’ tort claim.” Ramsey Air Meds, 198 Ariz. 10, ¶ 17, 6 P.3d at 318;
see also Campbell v. Westdahl, 148 Ariz. 432, 441, 715 P.2d 288, 297 (App. 1985)
(“Attorney’s fees may be awarded under [§ 12-341.01(A)] for tort claims that are intertwined
with contract claims.”); Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 189, 673 P.2d
927, 933 (App. 1983) (in cases where “one claim for relief may involve related legal
theories,” “‘[m]uch of counsel’s time [may] be devoted generally to the litigation as a whole,
making it difficult to divide the hours expended on a claim-by-claim basis’”), quoting
Hensley v. Eckerhart, 461 U.S. 424, 435 (1983); cf. City of Cottonwood v. James L. Fann
Contracting, Inc., 179 Ariz. 185, 195, 877 P.2d 284, 294 (App. 1994) (trial court “has
significant discretion to award fees in a matter intertwined with another matter for which it
may not grant attorney’s fees”).10
10
Other jurisdictions have reached a similar conclusion. See, e.g., Erickson v. R.E.M.
Concepts, Inc., 25 Cal. Rptr. 3d 39, 48 (Cal. Ct. App. 2005) (trial court could reasonably find
plaintiff’s various claims against defendant “were ‘inextricably intertwined’ . . . making it
‘impracticable, if not impossible, to separate the multitude of conjoined activities into
compensable or noncompensable time units’”; affirming attorney fees award “[b]ecause
[plaintiff]’s tort theories and [defendant]’s defense to [plaintiff]’s contractual theories were
interrelated as raising common issues requiring virtually identical evidence”), quoting
14
¶24 It is undisputed that the central claims in this litigation were the trade secrets
claim and the breach of employment contract claims. The record demonstrates these claims
were based on the same set of facts, involving the common allegation that Jigsaw had
misappropriated and made use of Modular’s trade secrets. Accordingly, as Jigsaw asserts,
these claims “required the same factual development and research work,” and “all
depositions and all other work related to discovery and disclosure w[ere] necessary in
connection with both claims.”
¶25 The legal issues concerning these claims were also intertwined and
overlapping. First, the trade secrets claim was premised on the asserted misappropriation of
Modular’s trade secrets, which was allegedly committed primarily by the individual
Abdallah v. United Sav. Bank, 51 Cal. Rptr. 2d 286, 293 (Cal. Ct. App. 1996); Chodorow v.
Moore, 947 So. 2d 577, 579 (Fla. Dist. Ct. App. 2007) (“In the event a party is entitled to an
award of fees for only some of the claims involved in the litigation, i.e., because a statute or
contract authorizes fees for a particular claim but not others, the trial court must evaluate the
relationship between the claims and ‘where the claims involve a common core of facts and
are based on related legal theories, a full fee may be awarded unless it can be shown that the
attorneys spent a separate and distinct amount of time on counts as to which no attorney’s
fees were sought [or were authorized].’”), quoting Anglia Jacs & Co. v. Dubin, 830 So. 2d
169, 172 (Fla. Dist. Ct. App. 2002) (alterations and emphasis in Chodorow); Sunset Fuel &
Eng’g Co. v. Compton, 775 P.2d 901, 904 (Or. Ct. App. 1989) (“Attorney fees need not be
apportioned when they are incurred for representation on an issue common to a claim in
which fees are proper and one in which they are not.”); Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299, 313-14 (Tex. 2006) (“Intertwined facts do not make tort fees recoverable;
it is only when discrete legal services advance both a recoverable and unrecoverable claim
that they are so intertwined that they need not be segregated.”); Brown v. David K. Richards
& Co., 978 P.2d 470, ¶ 19 (Utah Ct. App. 1999) (attorney fees may be awarded “even though
some of the fees may not have been incurred on strictly compensable issues, because proof
of the compensable and non-compensable claims overlapped”); Dice v. City of Montesano,
128 P.3d 1253, ¶ 31 (Wash. Ct. App. 2006) (“If the court finds that claims are so related that
segregation is not reasonable, then it need not segregate the attorney fees.”).
15
defendants’ breaching the confidentiality provisions of their employment agreements and
using Modular’s “inside information.” Similarly, whether the commands Modular claimed
as trade secrets were in fact “trade secrets” for purposes of the Uniform Trade Secrets Act
was likewise substantially dependent on the confidentiality provisions of the employment
agreements.11 Finally, Modular’s unfair competition and tortious interference claims were
based on the same set of facts as its trade secrets claim. As Jigsaw explains, those claims
“were completely dependent upon Modular’s ability to prevail on its misappropriation
claims” and “required no separate legal services.”
¶26 Because we have concluded the trial court did not abuse its discretion in
awarding Jigsaw the full amount of its requested attorney fees pursuant to § 12-341.01, and
because the court made its award pursuant to both §§ 12-341.01 and 44-404, we need not
determine whether the award also was warranted under § 44-404.12 See Kuehn v. Stanley,
208 Ariz. 124, ¶ 33, 91 P.3d 346, 354 (App. 2004) (where attorney fees award affirmed under
one theory, no need to reach arguments pertaining to alternative theory).
11
The Uniform Trade Secrets Act defines a “trade secret” as information that both
“[d]erives independent economic value . . . from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic value from
its disclosure or use” and “[i]s the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.” § 44-401(4). Modular claimed the confidentiality
provisions in its employment contracts demonstrated that it took reasonable precautions to
maintain the secrecy of its confidential information.
12
Section 44-404 of the Uniform Trade Secrets Act allows a court to award the
prevailing party reasonable attorney fees on a misappropriation claim made in bad faith.
§ 44-404(1).
16
¶27 Finally, Jigsaw has requested an award of attorney fees on appeal pursuant to
§§ 12-341.01, 44-404, and Rule 21, Ariz. R. Civ. App. P. As outlined above, Jigsaw has
prevailed on the dispositive claims raised in Modular’s appeal. Therefore, in the exercise of
our discretion, we grant Jigsaw its reasonable attorney fees on appeal in an amount to be
determined upon its compliance with Rule 21(c).
Disposition
¶28 For the reasons set forth above, we affirm the trial court’s grant of summary
judgment and attorney fees award, and we grant Jigsaw its attorney fees on appeal.
PHILIP G. ESPINOSA, Judge
CONCURRING:
JOSEPH W. HOWARD, Presiding Judge
JOHN PELANDER, Chief Judge
17