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O’Reilly v. Musk

California Court of Appeals, Sixth District
Mar 23, 2011
No. H035511 (Cal. Ct. App. Mar. 23, 2011)

Opinion


JOHN O’REILLY, Plaintiff and Appellant, v. ELON MUSK, Defendant and Respondent. H035511 California Court of Appeal, Sixth District March 23, 2011

NOT TO BE PUBLISHED

Santa Clara County Super. Ct. No. CV083172.

Duffy, J.

In August 2009, John O’Reilly’s trade secret misappropriation suit was decided against him after the granting of Elon Musk’s motion for summary judgment. O’Reilly appealed, and we affirmed the judgment entered against him, concluding, inter alia, that the trial court had correctly held that O’Reilly lacked standing to sue. (See O’Reilly v. Musk (Sept. 28, 2010, H034863) [nonpub. opn.] (O’Reilly I).) Meanwhile, Musk made a postjudgment motion for attorney fees, which the trial court granted in February 2010. O’Reilly appeals that order awarding Musk attorney fees of $126,550.13.

Pursuant to Evidence Code sections 452, subdivision (d) and 459, subdivision (a), we take judicial notice of our opinion in O’Reilly I. Judicial notice of our prior opinion is appropriate and it “help[s] complete the context of this case.” (Flatley v. Mauro (2006) 39 Cal.4th 299, 306, fn. 2)

O’Reilly claims that there were procedural errors that require reversal, namely, (1) the motion was improperly heard by a different judge than the judge who heard and decided Musk’s summary judgment motion; and (2) the court improperly relied on hearsay evidence in deciding the fee motion in Musk’s favor. O’Reilly asserts further that the court abused its discretion by finding that he had brought the trade secret misappropriation suit in bad faith within the meaning of Civil Code section 3426.4—which was the statutory basis upon which the court awarded Musk his attorney fees. We conclude that O’Reilly forfeited the two procedural challenges to the fee order because he failed to raise them below. We hold further that there was evidence supporting the court’s threshold determination that O’Reilly had prosecuted the trade secret misappropriation claim in bad faith and it therefore did not abuse its discretion by awarding Musk reasonable attorney fees. We therefore affirm the order.

All further statutory references are to the Civil Code unless otherwise specified.

PROCEDURAL BACKGROUND

Because the record on Musk’s summary judgment motion is relevant to our determination of whether the court abused its discretion in finding that O’Reilly’s prosecution of the trade secret misappropriation claim was in bad faith, we present some of the detail from O’Reilly I, the prior appeal in which we disposed of O’Reilly’s claim that summary judgment was improperly granted. Our summary of the procedural background includes, in an abridged form, the procedural discussion contained in our opinion in O’Reilly I.

O’Reilly filed this action against Musk in April 2007. In July 2007, as a self-represented litigant, he filed a verified second amended complaint (complaint). O’Reilly alleged that in October 1995, he met with Musk to discuss the possibility of working as a salesman of O’Reilly’s Internet Merchant Channel (IMC), selling advertising to merchants. IMC “was [O’Reilly’s] proprietary, Internet-based mapping and advertising system.” The system, developed through the efforts of “[O’Reilly] and his staff, ” “provided a highly user-friendly interface that permitted Internet users to view merchant advertisements (such as restaurant menus) and then obtain driving directions to those merchants.” During the meeting, O’Reilly “informed Musk that IMC was proprietary and confidential, [and] Musk verbally represented to [O’Reilly] that he would keep IMC information in confidence.” (Capitalization omitted.) O’Reilly disclosed to Musk at this October meeting and on two subsequent meetings that month various aspects of the IMC, including its operation, existing and future merchant base, and pricing. Although O’Reilly told Musk that he would complete the process of hiring him after O’Reilly returned from a business trip, he was later unable to reach Musk and thought that he had simply decided not to pursue the job.

We will sometimes refer to the allegations in the complaint in this paragraph and in the succeeding paragraph without the prefatory “O’Reilly alleged” in order to avoid undue repetition of the phrase.

Musk thereafter used the proprietary information about IMC to enhance a concept that he had for his own business, “Zip2.” Zip2 was sold in March 1999 to Compaq for $307,000,000 in an all-cash transaction. O’Reilly learned about Musk’s company, Zip2, and that it was described “as ‘an online map service’ company, ” upon reading a book in April 2005, nearly 10 years after meeting Musk. It was not until this time that O’Reilly became aware of Zip2, realized “(a) that he had been injured; and (b) that it was Musk who had caused the injury.” (Capitalization omitted.)

O’Reilly alleged six causes of action in the complaint: fraud, fraudulent concealment, conspiracy to defraud, misappropriation of trade secrets under the Uniform Trade Secrets Act (Civ. Code, § 3426 et seq.; UTSA), unfair competition, and unjust enrichment. He claimed, inter alia, that he “suffered from MUSK’s wrongful expropriation of the IP, which expropriation permitted Zip2 to capture market share that would have otherwise been gained by IMC”; and “[b]y [Musk’s] aforementioned actions [alleged in the complaint and incorporated in each cause of action], MUSK misappropriated Plaintiff’s IP, which IP included certain of Plaintiff’s trade secrets....”

Musk moved for summary judgment, or, in the alternative, for summary adjudication of claims, pursuant to Code of Civil Procedure section 437c. One of essentially four grounds for the motion was that O’Reilly lacked standing to assert any of the claims alleged in the complaint because it was his former employer, Remote Telecom, Inc., a suspended corporation (RTI), that actually owned the alleged trade secrets. O’Reilly opposed the motion, arguing, under an alter ego theory, that because RTI’s and his interests were identical, he had standing to sue. The court granted Musk’s motion for summary judgment “on the ground that plaintiff lacks standing to maintain this action.” (Fn. omitted.) After entry of judgment in favor of Musk in August 2009, O’Reilly filed a motion for new trial, which was opposed by Musk. In the new trial motion, O’Reilly raised a new theory, i.e., that RTI and he were involved in a joint venture relative to the trade secret and he therefore had standing to bring the misappropriation suit. The court denied the motion, and O’Reilly appealed from the judgment.

After entry of judgment, Musk filed a motion for an award of attorney fees pursuant to section 3426.4. He asserted that O’Reilly’s trade secret misappropriation lawsuit had been “made in bad faith” thereby justifying an award of “reasonable attorney’s fees and costs to the prevailing party.” (Ibid.) The central premise of Musk’s motion was that the lawsuit was objectively specious and brought in bad faith because O’Reilly at all times knew that he was not the owner of the claimed trade secret, IMC, and therefore could not bring suit as an individual for its alleged misappropriation. Musk sought attorney fees incurred after the date of his filing of the motion for summary judgment, thereby (as he indicated to the court) seeking fees “limited to the time period after which Musk identified the infirmities in O’Reilly’s misappropriation claim in Musk’s motion for summary judgment. Despite O’Reilly’s inability to counter the arguments raised or the fact that he did not own the trade secrets, O’Reilly persisted in maintaining his meritless claim and caused the needless expenditure of money in defense of that claim.”

O’Reilly filed opposition to the motion. On February 23, 2010, the court heard argument and granted Musk’s motion, awarding attorney fees of $126,550.13. O’Reilly filed a timely notice of appeal of the attorney fee order. In the appeal, he asserts two procedural challenges to the order and claims further that the court in any event abused its discretion in concluding that he had prosecuted the trade secret claim in bad faith in making the fee award under section 3426.4.

O’Reilly appeals separately from a postjudgment order awarding statutory costs to Musk. We ordered that the two appeals be considered together for purposes of briefing, argument, and disposition. We dispose of that appeal by separate opinion filed this date. (O’Reilly v. Musk, (H035288, app. pending.)

O’Reilly does not challenge on appeal the reasonableness of the amount of attorney fees awarded by the court.

DISCUSSION

I. Applicable Law and Standard of Review

Section 3426.4, a statute under UTSA, provides in part: “If a claim of misappropriation is made in bad faith, ... the court may award reasonable attorney’s fees and costs to the prevailing party.” The Legislature did not define “bad faith” as referenced in section 3426.4. But appellate courts have determined that a showing of bad faith under section 3426.4 has two components, namely, (1) “objective speciousness of the plaintiff’s claim, as opposed to frivolousness, and [(2) the plaintiff’s] subjective bad faith in bringing or maintaining the claim.” (Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1262 (Gemini); see also FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1275-1276 (FLIR Systems); Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 578.)

“If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney’s fees and costs to the prevailing party. Recoverable costs hereunder shall include a reasonable sum to cover the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the prevailing party.” (§ 3426.4.)

The objective speciousness component is satisfied “where the action superficially appears to have merit but there is a complete lack of evidence to support the claim. [Citations.]” (FLIR Systems, supra, 174 Cal.App.4th at p. 1276.) Thus, for example, where an employer brought suit against former employees for trade secret misappropriation and sought injunctive relief, and it had no evidence of actual or threatened misappropriation but instead founded its claim on a doctrine, inevitable disclosure, not recognized under California law, the claim was held to be objectively specious to support an attorney fees award under section 3426.4. (FLIR Systems, at pp. 1276-1278; see also Gemini, supra, 95 Cal.App.4th at p. 1263 [misappropriation claim lacks merit when trade secret that is subject of suit lacks economic value].)

“ ‘Under the doctrine of inevitable disclosure, “a plaintiff may prove a claim of trade secret misappropriation by demonstrating that defendant’s new employment will inevitably lead him to rely on the plaintiff’s trade secrets.” [Citation.] The inevitable disclosure doctrine results in an injunction prohibiting employment, not just use of trade secrets....’ [Citation.]” (FLIR Systems, supra, 174 Cal.App.4th at p. 1277, fn. 3.) It is a doctrine not recognized in California. (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1447.)

The second component, subjective bad faith, considers “ ‘... the plaintiff’s subjective state of mind [citations]: Did he or she believe the action was valid? What was his or her intent or purpose in pursuing it? A subjective state of mind will rarely be susceptible of direct proof; usually the trial court will be required to infer it from circumstantial evidence. [Citation.]” (Gemini, supra, 95 Cal.App.4th at p. 1263.) “Subjective bad faith may be inferred by evidence that [the plaintiff] intended to cause unnecessary delay, filed the action to harass [the defendant], or harbored an improper motive. [Citation.] The timing of the action may raise an inference of bad faith. [Citation.] Similar inferences may be made where the plaintiff proceeds to trial after the action’s fatal shortcomings are revealed by opposing counsel. [Citation.]” (FLIR Systems, supra, 174 Cal.App.4th at p. 1278; cf. Zamos v. Stroud (2004) 32 Cal.4th 958, 970 [“an attorney may be held liable for malicious prosecution for continuing to prosecute a lawsuit discovered to lack probable cause”].)

Since an award of attorney fees for bad faith constitutes a sanction (Computer Prepared Accounts, Inc. v. Katz, (1991) 235 Cal.App.3d 428, 431), it is one in which the trial court is vested with broad discretion to decide. (Gemini, supra, 95 Cal.App.4th at p. 1262.) Under this abuse of discretion standard governing our review of such an award, “ ‘[a]ssuming some evidence exists in support of the factual findings, the trial court’s exercise of discretion will not be disturbed unless it exceeds the bounds of reason. [Citation.] [¶] In reviewing the facts which led the trial court to impose sanctions, we must accept the version thereof which supports the trial court’s determination, and must indulge in the inferences which favor its findings. [Citations.]’ [Citation.]” (Id. at pp. 1262-1263, quoting West Coast Development v. Reed (1992) 2 Cal.App.4th 693, 698.) As one court has explained, “On appeal from such an order, the appellant has an ‘uphill battle’ and must overcome both the ‘sufficiency of evidence’ rule and the ‘abuse of discretion’ rule. We need not repeat these well-settled rules. [Citation.]... [A]ppellant does not appear to appreciate the trial court’s fact-finding power and its discretionary power to award attorney fees and costs to curtail a bad faith claim of trade secret misappropriation. We do not retry cases on appeal and we do not substitute our discretion for that of the trial court.” (FLIR Systems, supra, 174 Cal.App.4th at pp. 1275-1276.)

II. Order Awarding Attorney Fees

A. Procedural Challenges

O’Reilly makes two procedural attacks on the propriety of the order awarding attorney fees. First, he contends that Musk’s motion for fees was improperly heard and decided by Judge Kevin McKenney, instead of by Judge Mary Jo Levinger, who had decided Musk’s summary judgment motion. He cites six published decisions in support of his position that the fee motion should have been decided by Judge Levinger. O’Reilly also claims that case law supports his claim that the same judge who heard the summary judgment motion should have decided the fee motion. Second, O’Reilly argues that in deciding the fee motion, the court improperly relied on hearsay evidence, namely, Musk’s statement as to the substance of the court’s summary judgment order. Musk responds that O’Reilly waived both contentions, and, in any event, they lack merit. We conclude that O’Reilly forfeited the two procedural challenges.

As a general rule, a party is deemed to have waived—or more properly termed, forfeited—a claim of error where the party failed to raise the issue before the trial court. (See generally Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2010) ¶¶ 8:264 to 8:270.4, pp. 8-167 to 8-173.) Additionally, the appellant bears the burden of citing to the record showing where he or she raised the issue in the trial court. (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 948.) “The policy behind the rule is fairness. ‘Appellate courts are loath to reverse a judgment on grounds that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider.’ [Citations.]” (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 826, quoting JRS Products, Inc. v. Matsushita Electric Corp. of America (2004) 115 Cal.App.4th 168, 178.) As a matter of fairness, the forfeiture doctrine is applied to prevent an appellant, in essence, from sandbagging the court and the opposing party by failing to raise a problem that could have been addressed, and in many instances easily rectified, by the trial court. (Children's Hospital & Medical Center v. Bonta’ (2002) 97 Cal.App.4th 740, 776.)

While “waiver” is the term commonly used to describe a party’s loss of the right to assert an appellate challenge based upon the failure to raise an objection below, “forfeiture” is the more technically accurate term. As our Supreme Court has explained: “Although the loss of the right to challenge a ruling on appeal because of the failure to object in the trial court is often referred to as a ‘waiver, ’ the correct legal term for the loss of a right based on failure to timely assert it is ‘forfeiture, ’ because a person who fails to preserve a claim forfeits that claim. In contrast, a waiver is the ‘ “intentional relinquishment or abandonment of a known right.” ’ [Citations.]” (In re S.B. (2004) 32 Cal.4th 1287, 1293, fn. 2.)

Here, at no time, either prior to, or at the hearing, did O’Reilly raise an objection to the fee motion having been assigned to Judge McKenney. Likewise, O’Reilly at no time objected that Musk was relying on a hearsay description of the court’s prior summary judgment order. (See Broden v. Marin Humane Society (1999) 70 Cal.App.4th 1212, 1226-1227, fn. 13 [failure to assert evidentiary objection to declaration forfeited it on appeal].) Although we recognize that O’Reilly is a self-represented litigant, this fact does not excuse the requirement that he assert before the trial court any contentions—in this case, objections to evidence and to the procedure of having Judge McKenney, rather than Judge Levinger, hear the fee motion—in order to preserve them on appeal. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246-1247 [self-represented party is required to adhere to same rules of procedure as parties represented by counsel].) O’Reilly had ample opportunity to raise the objections below. His failure to do so deprived Musk of the chance to argue the issues or cure any alleged error and prevented the trial court from making any ruling on either matter. He therefore forfeited both procedural challenges asserted here.

The initial motion papers indicated that the matter was to be heard by Judge Levinger; the reply papers, however, which were served on O’Reilly nearly two weeks before the fee motion was heard, indicated that the case had been assigned to Judge McKenney.

It is readily apparent to us that, O’Reilly’s forfeiture of the matters notwithstanding, there is no merit to them in any event. He cites no authority—nor is any California authority extant—that requires that a motion for attorney fees pursuant to section 3426.4 be heard by the same judge who disposed of the trade secret misappropriation case by summary judgment. Further, there is nothing in the record to suggest that Judge McKenney—assuming inadmissible hearsay was presented in Musk’s fee motion—relied on inadmissible evidence in his fee order. Moreover, O’Reilly’s contention in his reply brief that he did not waive the procedural objections because he did not intentionally relinquish a known right is unavailing. As the Supreme Court has explained, the doctrine that generally prevents an appellant from raising claims that he or she has failed to preserve by asserting in the trial court is properly one involving forfeiture, although the term “waiver” is often used to describe it. (In re S.B., supra, 32 Cal.4th at p. 1293, fn. 2.)

B. Substantive Challenge

1. Objective speciousness

As noted, the first requirement for a finding of bad faith under section 3426.4 is the “objective speciousness of the plaintiff’s claim....” (Gemini, supra, 95 Cal.App.4th at p. 1262.) “An objectively specious claim is one that is completely unsupported by the evidence, [citation], or one that lacks proof as to one of its essential elements. [Citation.]” (JLM Formation, Inc. v. Form+Pac (2004 U.S. Dist. Lexis 30369, *4, 2004 WL 1858132, *2 (N.D.Cal. 2004) (JLM Formation).)

One of the elements of a trade secrets misappropriation claim is the plaintiff’s ownership of the trade secret. (CytoDyn of Mexico, Inc. v. Amerimmune Pharmaceuticals, Inc. (2008) 160 Cal.App.4th 288, 297; Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1665; see also 4 Milgrim on Trade Secrets (2010) Trial Considerations, § 15.01[1], pp. 15-18 to 15-30.) Thus, where the plaintiff does not own the alleged trade secret, the misappropriation claim is subject to dismissal for lack of standing. (Venango River Corp. v. Nipsco Industries, Inc. (N.D.Ill. 1994) 1994 U.S. Dist. Lexis 17898, 1994 WL 702759.)

Here, there was, quite plainly, an element missing from O’Reilly’s case. From O’Reilly’s own deposition testimony, it was clear that he did not own the alleged trade secret. As we observed in O’Reilly I: “[O’Reilly’s] testimony concerning the ownership of the IMC was unequivocal: ‘Q: Did RTI own the IMC and its intellectual property? [¶ Objection. ¶ A.] I believe so, yes.’ A short time later in his deposition, O’Reilly answered ‘Yes’ in response to the question, ‘And RTI owned the intellectual property relating to IMC?’ O’Reilly testified further on multiple occasions that RTI never sold, assigned, licensed, gifted, or otherwise transferred its intellectual property, including the IMC, to anyone (including O’Reilly himself). He responded, ‘I don’t think so’ to the question, ‘Did you ever obtain any license from RTI to use any of RTI’s intellectual property?’ And O’Reilly testified that he had never obtained any ownership interest in that property: ‘Q. Did you ever obtain ownership of any of RTI’s intellectual property? [¶] A. Direct ownership? I don’t think so, no.’ ” (O’Reilly I, supra, H034863, at p. 7.) Based upon this testimony, the court concluded that O’Reilly lacked standing to bring the action, and we affirmed: “Here, the undisputed facts—based upon O’Reilly’s own testimony—were that the corporation, RTI, was the owner of the trade secret being sued on, and that RTI never sold, assigned, licensed, gifted, or otherwise transferred its interest in the trade secret to anyone (including O’Reilly). O’Reilly, as an officer and employee of the corporation, did not obtain any ownership rights to RTI’s trade secrets, even if he was involved in their creation during such employment. [Citations.] He therefore lacked standing to assert the claims, as they were all based on the alleged misappropriation of trade secrets belonging to the corporation, RTI.” (O’Reilly I, supra, H034863, at p. 10.)

O’Reilly’s assertion—made in opposition to the summary judgment motion—that he had standing based upon an alter ego theory had no merit, as both the trial court and this court concluded. “The alter ego doctrine is strictly limited by the demands of equity; it applies ‘only in narrowly defined circumstances and only when the ends of justice so require.’ [Citation.]... Alter ego is essentially a theory of vicarious liability under which the owners of a corporation may be held liable for harm for which the corporation is responsible where, because of the corporation’s utilization of the corporate form, the party harmed will not be adequately compensated for its damages. [Citation.]” (Doney v. TRW, Inc. (1995) 33 Cal.App.4th 245, 249, quoting Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301, citing Mesler, at pp. 300, 302-304.) Thus, the alter ego doctrine, as a theory under which liability may be imposed, is not one that may be raised where, as here, a shareholder-plaintiff wishes to disregard the corporate entity to bring a claim that properly belongs to the corporation. As the court held in Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 994—a case relied on by Musk—the purpose of the doctrine is “to prevent a corporation from using its statutory separate corporate form as a shield from liability only where to recognize its corporate status would defeat the rights and equities of third parties; it is not a doctrine that allows the persons who actually control the corporation to disregard the corporate form.”

Likewise, O’Reilly’s belatedly asserted theory—made in O’Reilly’s motion for new trial after summary judgment was granted—that he was entitled to sue because of an alleged joint venture involving RTI and himself had no merit. The court rejected this argument, as did we in O’Reilly I, finding both that he had waived it by failing to assert it in opposition to the summary judgment motion (O’Reilly I, supra, H034863, at pp. 17-18), and that in any event, it lacked any merit (id. at pp. 18-20).

O’Reilly’s suit had no merit because at all times he lacked standing to sue for the alleged misappropriation of RTI’s trade secrets. His contention that he had the right to bring the claim in his individual capacity under the alter ego doctrine likewise had no merit and was without any legal precedent to support it. Substantial evidence therefore supported the court’s implied finding that the misappropriation claim was objectively specious due to the absence of proof of one of its essential elements. (JLM Formation, supra, 2004 U.S. Dist. Lexis 30369, *4, 2004 WL 1858132, *2.)

2. Subjective bad faith

In assessing the record to determine whether there was a factual basis for the court’s implicit finding that O’Reilly prosecuted the action with subjective bad faith, we note at the outset that “ ‘[a] subjective state of mind will rarely be susceptible of direct proof; usually the trial court will be required to infer it from circumstantial evidence.’ [Citation.]” (Gemini, supra, 95 Cal.App.4th at p. 1263.) The objective speciousness of the trade secret claim—evident here—may be considered as some evidence upon which an inference of subjective bad faith may be drawn. (Stilwell Development, Inc. v. Chen (C.D.Cal. 1989) 1989 U.S. Dist. Lexis 5971, *12.)

Here, O’Reilly falsely alleged in his verified complaint—and did so repeatedly (in at least nine instances)—that he personally owned the IMC, the alleged trade secret upon which the suit was founded. He made the related false allegation in his complaint—also repeatedly—that he was the party personally injured as a result of Musk’s alleged acts of misappropriation. And in that same verified complaint, O’Reilly inexplicably omitted any reference to the actual owner of the IMC, O’Reilly’s employer, RTC. Instead—in addition to referring to himself individually as the owner of the alleged trade secrets—O’Reilly alleged that Musk met with him at O’Reilly’s offices to discuss employment with O’Reilly. These false allegations in O’Reilly’s verified complaint were evidence of his subjective bad faith.

In addition, O’Reilly’s conduct during the litigation presented evidence from which the court could have found subjective bad faith. (JLM Formation, supra, 2004 U.S. Dist. Lexis 30369, *4, 2004 WL 1858132, *4 [subjective misconduct may be determined “by examining evidence of the plaintiff’s knowledge during certain points in the litigation”].) Upon Musk’s filing of his motion for summary judgment in March 2009, if not earlier, O’Reilly was aware that his case had a fatal flaw, namely, that he did not have standing to assert a misappropriation claim. After obtaining the knowledge that his action was without merit, O’Reilly (1) obtained a six-week continuance of the hearing on the motion; (2) pursued discovery by filing motions; (3) filed extensive opposition papers, arguing that he had standing because he was RTI’s alter ego; and (4) filed a motion for new trial (after the summary judgment motion was granted), arguing for the first time that he had standing because of an alleged joint venture arrangement between RTI and himself. “ ‘Bad faith may be inferred where the specific shortcomings of the case are identified by opposing counsel, and the decision is made to go forward despite the inability to respond to the arguments raised.’ [Citation.]” (Gemini, supra, 95 Cal.App.4th at p. 1264; see also FLIR Systems, supra, 174 Cal.App.4th at p. 1278.)

Of course, O’Reilly’s status as a self-represented litigant does not immunize him from a finding that he continued to pursue the litigation in bad faith. “[S]elf-represented parties are entitled to no greater consideration than other litigants and attorneys [citation].” (In re Marriage of Falcone & Fyke, supra, 164 Cal.App.4th at p. 830 [substantial sanctions imposed against self-represented litigant based on the filing of multiple frivolous motions].)

Under these circumstances a factual basis existed upon which the court could infer that O’Reilly acted in subjective bad faith in the prosecution of the trade secret litigation. In light of the existence of an evidentiary basis for finding both that the action was objectively specious and that O’Reilly acted in subjective bad faith, we conclude that the court did not abuse its discretion in awarding attorney fees to Musk under section 3426.4. (Gemini, supra, 95 Cal.App.4th at pp. 1263-1264.).

DISPOSITION

The order awarding attorney fees is affirmed.

WE CONCUR: Bamattre-Manoukian, Acting P.J., Mihara, J.


Summaries of

O’Reilly v. Musk

California Court of Appeals, Sixth District
Mar 23, 2011
No. H035511 (Cal. Ct. App. Mar. 23, 2011)
Case details for

O’Reilly v. Musk

Case Details

Full title:JOHN O’REILLY, Plaintiff and Appellant, v. ELON MUSK, Defendant and…

Court:California Court of Appeals, Sixth District

Date published: Mar 23, 2011

Citations

No. H035511 (Cal. Ct. App. Mar. 23, 2011)