Insights

by James D. Crosby

Forget “The Book” – Just get a Case!

For young attorneys looking to generate new business, it may help to stop thinking about “Building a Book” and start thinking about just “Getting a Case”.

The “Book of Business”, a daunting, interesting phrase. Every lawyer talks about it. It is ever present in the legal business, in any law firm. He has a big “book”. She has built a nice “book”. He has a portable “book” and is looking to make a lateral move. You need to build a “book” or you will never be a partner. I need a “book”. You need a “book”. “Book”, “Book”, “Book.” And, so on. But, what does that mean?

The “Book” – it describes, or implies, highly successful attorneys who carry a few large loyal clients around in their pockets who generate reams of cases year after year after year. And that is the reality for some attorneys – most large firms have attorneys who have such books – insurance carriers or private clients who provide an ongoing flow of repeat work. And that is wonderful.

But, for a great many attorneys, including myself, it is not about the “Book” as defined above. Rather, it is about the ability to consistently generate work, one case at a time, from a variety of sources, year in and year out. I have a nice group of cases right now, from a variety of sources both inside and outside my firm. But, most of those cases will be gone a year, or even three months, from now, to be replaced by the next nice group of cases from a variety of sources. Is that a “Book of Business”? I don’t know. But, it is a flow of good work for me, for my associates and for my firm. Let’s call it a “book” I am currently reading, to be replaced with the next book when I am done reading the current one. That’s my “book”! And, I hustle all the time to keep that “book” refilled with new cases.

My “book” ebbs and flows. Sometimes, there are lots of new cases in my “book”; other times, the “book” runs low, needs to be refilled and I am laying awake at night worrying. There are very good years with big fat “books” (think, big hard-bound Russian novels) and there are ok years with thinner books (think, trade paperback spy novels). But, I have found that if I continue to hustle and work hard, my “book” is always there – there is always another case.

For lots of attorneys, I suspect, for most, its not 20 cases from one source, its 20 cases from 20 different sources. And they get those 20 cases, one case at a time! But, 20 good cases is 20 good cases, no matter where they come from.

For many attorneys, especially young attorneys, it just too daunting, too overwhelming, to think about “building a book”. Just seems to difficult to do, so they do nothing, year after year after year. I suggest it is much better to think in terms of “getting a case”. Just get a case, sign it up, deposit the retainer, add it to your case list, pat yourself on the back – then get the next case, sign it up, deposit the retainer, add it to your case list, pat yourself on the back, – then get the next, then get the next. One case at a time, one client at a time! Next thing you know, you are keeping yourself busy with your own “book” of cases and pounding on the partnership door. Every successful rainmaker will tell you they are always hustling for the next case, then the next case, then the next case,…… And so it goes.

So, for those attorneys who want to generate their own work and build their own practices, I say: Forget “The Book”, Just get a Case!

by James D. Crosby

Reasonable Royalties under the California Uniform Trade Secrets Act – What does “provable” mean under Civil Code section 3426.3(b)?

California’s Uniform Trade Secrets Act (“CUTSA”), Civil Code sections 3426 et. seq., provides exclusive remedies for misappropriation of trade secrets in California. CUTSA preempts common law claims of trade secret misappropriation and other common law claims, such as conversion, unfair competition and unjust enrichment, based on the same nucleus of facts as the misappropriation claim.

Under CUTSA, a plaintiff may recover damages for the actual loss caused by the misappropriation, and also for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss. If neither damages nor unjust enrichment caused by misappropriation are “provable”, the court may order payment of a reasonable royalty. A reasonable royalty is a court directed fee imposed upon a defendant for use of a misappropriated trade secret. A reasonable royalty award attempts to measure a hypothetically agreed value of what the defendant wrongfully obtained from the plaintiff. By means of a “suppositious meeting” between the parties, the court calculates what the parties would have agreed to as a fair licensing price at the time that the misappropriation occurred. If willful and malicious misappropriation exists, a plaintiff may also recover exemplary damages in an amount not exceeding twice any award for actual damages and unjust enrichment or awarded royalty.

The “reasonable royalty” remedy is not cumulative to other measures of damage. It is an alternative remedy where other damages are not provable. Where damages are awarded, it is error to also order payment of royalties. CUTSA differs on this point from both the Uniform Trade Secrets Act and federal patent law, neither of which require actual damages and unjust enrichment to be unprovable before a reasonable royalty may be imposed.

Under section 3426.3(b), the statutory precondition for the payment of a reasonable royalty is that neither damages nor unjust enrichment caused by misappropriation are “provable”. The recent case of Ajaxo, Inc. v. E*Trade Financial Corporation (2010) 187 Cal.App.4th 1295 serves to clarify the meaning of the term “provable” under the CUTSA damage provision. The Ajaxo case addresses whether unjust enrichment is “provable” under section 3462.3(b) where legally sufficient evidence of unjust enrichment has been presented to the jury and the jury rejects that evidence as a matter of fact. Or, more simply put, whether “not proven to the jury” is the same as not “provable” under section 3462.3(b).

Earlier cases have generally addressed the “reasonable royalty” remedy where actual losses and unjust enrichment were not provable. It is well-established in these cases that where damages and unjust enrichment cannot be established as a matter of law, the plaintiff may seek a reasonable royalty under section 3462.3(b).

But, the Ajaxo case appears to be the first California case to address the meaning of “provable” where the trier of fact finds that the defendant misappropriated trade secrets and plaintiff presents evidence of actual loss and/or unjust enrichment, but the trier finds, as a matter of fact, that there was no damage. In other words, assuming liability, if the plaintiff presents his damage or unjust enrichment case to a jury and the jury finds no damages, can the plaintiff then seek a reasonable royalty under section 3462.3(b) because actual loss and unjust enrichment were not “provable”. This is not an uncommon circumstance in trade secret misappropriation cases, especially in troubled economic times. A steals a secret formula for a new drink from B. A starts a new business, attempts to utilize the secret formula to manufacture and sell the new drink, fails, makes no money, and shuts down. B sues A for misappropriation of the secret formula, but can’t prove damages or unjust enrichment in part because A made no money from his misappropriation of the secret formula. As such, the Ajaxo case is important for plaintiffs in trade secret misappropriation litigation.

In the Ajaxo case, E*Trade had been found liable in an earlier trial for misappropriating trade secrets from Ajaxo relating to wireless stock trading. At the second trial, Ajaxo put on evidence of unjust enrichment to E*Trade arising from the misappropriation in the amount of $301 million. At the close of plaintiff’s case, E*Trade moved for nonsuit. The trial judge denied that motion, finding there was enough evidence “to go to the jury” on unjust enrichment. E*Trade then presented evidence of considerably smaller losses and its expenses. The trial court instructed the jury that the amount of E*Trade’s unjust enrichment was the value of E*Trade’s benefit that would not have been achieved except for its misappropriation less the amount of E*Trade’s reasonable expenses. The jury found that the value of the benefit conferred upon E*Trade by the misappropriation was $3.99 million and that E*Trade’s reasonable expenses were $6.42 million, resulting in a significant net loss to E*Trade. In other words, because E*Trade had a net loss arising from the misappropriation, Ajaxo recovered no damages. The jury had considered and rejected Ajaxo’s evidence of significant unjust enrichment to E*Trade from the misappropriation.

Following the verdict, Ajaxo asked the trial court to make an award of a reasonable royalty under the section 3462.3(b). E*Trade opposed the request, arguing that both actual losses and unjust enrichment were provable because there was evidence in the record to support either measure of damages. The trial court found that unjust enrichment was provable because the jury found that Ajaxo had proven unjust enrichment damages against E*Trade with no net amount in terms of actual damages, and denied the request for reasonable royalties.

On appeal, Ajaxo argued that unjust enrichment was not provable under section 3462.3(b) because the jury’s verdict showed that E*Trade was not enriched, i.e., there was no award of damages. E*Trade argued that Ajaxo had presented evidence of unjust enrichment to the jury, but the jury had simply chosen not to believe it. In other words, unjust enrichment was “provable” but it had just not been proven. The question posed to the California court of appeal was whether unjust enrichment is provable under section 3426.3(b) where legally sufficient evidence of unjust enrichment is presented to the jury but rejected as a matter of fact. More simply, is “not proven” the same as “not provable”?

The court of appeal in Ajaxo reversed the trial court ruling denying the request for reasonable royalties. The court concluded that where a defendant has not realized a profit or other calculable benefit as a result of his or her misappropriation of trade secrets, unjust enrichment is not provable within the meaning of section 3426.3(b), whether the lack of benefit is determined as a matter of law or as a matter of fact. More simply put, not proven is tantamount to not provable under section 3426.3(b) so as to allow a request for reasonable royalties. The court stated that to hold otherwise would place the risk of loss on the wronged plaintiff, thereby discouraging innovation and potentially encouraging corporate thievery where anticipated profits might be minimal but other valuable but nonmeasurable benefits could accrue.

The lesson of the Ajaxo decision for plaintiffs is simple – be prepared to present a request for an order of reasonable royalties in the event the jury determines that you have not proven unjust enrichment or actual loss. If the jury determine, as a matter of fact, that the defendant has not realized a profit or other calculable benefit as a result of the misappropriation, the plaintiff should request a reasonable royalty under section 3462.3(b), and be prepared to offer evidence to support the request for a royalty to the extent such evidence has not already been admitted. A recent unpublished California court of appeal decision, San Jose Construction Co., v. Foust, 2010 WL 4305047 (2010), hints at the danger of not making a request for royalties where the jury awards no damages for misappropriation. In that CUTSA case, the jury found that defendants had misappropriated plaintiff’s trade secrets but awarded no damages. On appeal, the plaintiff contended that the jury erred by failing to award damages for unjust enrichment. The court of appeal affirmed the judgment, finding that the plaintiff had simply failed to meet its burden. The decision, written by the same judge who wrote the Ajaxo decision, cited the Ajaxo decision in a footnote and noted “In this case, however, plaintiff did not ask the trial court to award reasonable royalties”. While there may very well have been valid reasons why the plaintiff in that case did not seek royalties after its damage case was rejected by the jury, the appellate court seemed to indicate that such a request would have been properly and, possibly, favorably considered by the trial court if it had been made.

On the defense side, needless to say, the defendant must be prepared to meet a request for royalties in the event the jury finds misappropriation but no damages. A defense verdict on damages and unjust enrichment is likely not the end for the defendant in a CUTSA misappropriation action. Rather, under Ajaxo, it is likely just the beginning of a second phase of the trial directed towards determining whether a royalty is proper and what that royalty should be. From the defendant’s perspective, an in limine motion for bifurcation of a request for royalties under Section 3462.3(b) from the case upon actual loss and unjust enrichment might be warranted. Evidence bearing upon issuance of a royalty order and the amount of the royalty may be inadmissible on issues of actual loss and unjust enrichment and the defense may want to keep such evidence, if harmful, away from a jury considering only actual loss and unjust enrichment.

by James D. Crosby

Trial Lawyer on the Road

Trial lawyer on the road – five depositions, five days, three states.

Depositions, as always, are fun. Always great sport to grill somebody else’s witnesses on their own turf.

Other than that – long flights, airports, hotel rooms, not enough sleep, G&Ts in hotel/airport bars, late night drives to hotel with iPhone/Siri directions, rental cars, late night/early morning prep, where are my documents?, OJ and quick snacks rushing for next plane, obnoxious attorneys, combative witnesses, snide opposing parties, friendly court reporters, crappy food, occasional good food, drinks and dinner with local counsel, strange conversations with complete strangers sitting next to you on plane, flying over major cities at night – so cool!, pages flying by on kindle, stale music on shuffle, old people cutting in line for plane, flight delays for “maintenance” issues, pounding out more emails after plane doors are closed and before attendant catches on, another drink on plane?, texts with Jill and the girls – the best, f’..ing freezing weather everywhere, sun is missing, running rest of practice from a phone, deadlines piling up at office, billing entries piling up on yellow pad, emails piling up on phone, reviewing drafts on iPhone/iPad, days crawl by, days fly by, next question, next objection, next answer, next deponent, . .

And so it goes!

All part of the job.

 

by James D. Crosby

Fonss, Estigarribia, and Klinedinst PC’s Expanding Corporate, Transactional, Securities and M&A Expertise.

In September, my firm, Klinedinst PC, added Christian P. Fonss and Mariel I. Estigarribia, principals of the transactional and securities firm, Fonss & Estigarribia LLP, as shareholders.

I have known Chris and Mariel for some time and was very pleased to have them join Klinedinst. Chris and Mariel, attorneys with a wide range of experience in M&A, corporate, securities, and transactional matters, immediately undertook to Co-Chair the firm’s Corporate and Securities and Transactional and M&A practice groups. Chris and Mariel have really hit the ground running, dramatically expanding the firm’s ability to service our diverse clientele. Fonss and Estigarribia also provide a transactional and dealmaker’s perspective for the litigators of the firm’s Complex Litigation Practice group, a practice group that I chair.

To help you understand KPC’s broad, and rapidly expanding, capabilities within the corporate, transactional and securities legal space, I am including below a representative list of transactions handled recently by shareholders Chris Fonss and Mariel Estigarribia:

Securities Matters

Served as counsel to multiple public company clients across various industries
in connection with the preparation, review and filing of ‘34 Act reports,
including Forms 20-F, 10-K, 10-Q, 8-K, 6-K, 3, 4 and 5 and proxy statements.

Represented various public company clients in the SEC review and comment
process.

Advised multiple technology startups regarding capital raising transactions.

Served as counsel to a large accelerated filer in connection with a 1-for-10
reverse stock split on domestic and foreign exchanges.

Served as counsel to Indian investor in connection with the Series A
Preferred Stock financing of a technology start-up.

Mergers & Acquisitions

Served as counsel to a leading provider of orthotics and prosthetics in connection
with numerous business acquisitions.

Represented public cyber-security company in acquisition of national communications
lifecycle management services provider.

Served as counsel to a large automotive supplier in connection with its
$250M share purchase of a European and Asian laser-welded blank subsidiary
of the largest steel manufacturer in the world.

Served as counsel to San Diego-based furniture rental company in connection
with a sale of substantially all of its assets.

Contract Drafting/Review

Advised automotive original equipment manufacturer in connection with
Spanish language promissory note and security agreement.

Drafted and negotiated private label supply agreement for Southern California
manufacturing concern.

Drafted and negotiated services and sponsorship agreement with major
California entertainment company.

Drafted and negotiated strategic supplier agreement for local specialty goods
manufacturer.

Joint Ventures

Served as counsel to a global retail company in connection with a proposed
joint venture with a leading mortgage broker.

Served as counsel to multiple entrepreneurs forming a company focused on
the promotion and operation of participatory sporting events.

Served as counsel to an SBA 8(a) company in connection with negotiations of a joint venture.

Real Estate

Served as counsel to a leading San Diego accounting firm in connection
with the drafting and negotiation of an office space lease.

Served as counsel to public cybersecurity company in connection with the
review and negotiation of multiple leases.

Again, I am very happy to have Chris and Mariel working just a few doors down the hall of our San Diego office. As a friend, its good to have them here. As a business litigator, it is good to have their perspective and insight into the deal side of disputes. As a shareholder, it is good to have them expertly undertaking significant transactional work for our clients.

Upward and onward!

by James D. Crosby

Klinedinst Unveils Complex Litigation Practice Group – Crosby to Chair.

Klinedinst PC has launched a new Complex Litigation Practice Group. I have the honor of serving as Chair of the new group.

Complex litigation regularly involves intensive pre-trial litigation and discovery, thousands of documents, huge repositories of electronically-stored information (ESI), multi-district litigation (MDL), and multi-million dollar damages. Multi-week trial support and an ability to excel under intense litigation pressures and media scrutiny are often needed to aggressively represent clients and protect their reputations and interests. More and more, we are seeing these large intense cases involving layers of complicated issues, the need to respond or seek relief immediately to protect the client, significant case management and discovery challenges, and ‘bet the business’ damages. These cases, and the risks and challenges they present, can be daunting for clients of any size. To address these significant risks and challenges facing clients, Klinedinst PC had formed the Complex Litigation practice group, made up of attorneys across California with significant pre-trial, trial, and appellate experience in large, high-exposure matters.

Members have over 300 years of combined experience handling matters involving intellectual property and trade secrets, business and accounting fraud, securities fraud, attorney malpractice, class actions, healthcare, transactional and M&A, international matters under the North American Free Trade Agreement, real estate and environmental disputes, and major construction defect disputes. And thanks to the unparalleled experience of the group’s members, the Complex Litigation team can create and tailor a plan to handle any complex matter efficiently and effectively.

I am also very pleased and quite excited to announce that I will be chairing the new practice group. I look forward to working closely with a fine group of Klinedinst attorneys representing and protecting clients in these significant, high-risk cases.

“Our Complex Litigation attorneys have solid, well-defined track records handling high-stakes, high-pressure lawsuits,” said John Klinedinst, CEO of Klinedinst PC. “The rollout of our Complex Litigation group, fresh on the heels of our expanded transactional practice, will help us represent larger, more sophisticated clients in the most complicated, multi-dimensional matters.”

The group is designed to be nimble, responsive and effective. Team leaders can identify and act on immediate priorities, assemble the right attorneys and necessary resources to pursue the claim, and coordinate the overall response across the firm’s four California offices. The Complex Litigation unit also includes pre-qualified associates whose experience in specific types of complex matters can be rapidly utilized on short notice.

The group had a soft launch this past summer to gauge client interest and to identify the needs of clients in these types of matters. “The feedback we received to having this type of tactical, response-focused team was tremendous,” added Klinedinst. “But, more importantly, we listened to what our clients were looking for in terms of rapid-response, comprehensive legal counsel. Under Jim’s leadership, we are very pleased to be formally rolling out the Complex Litigation group statewide to our clients.”

by James D. Crosby

Dictation Software – Maybe Old Dogs Don’t Need To Learn New Tricks!

Highly efficient dictation software makes for the perfect mix of old-school skills and new tech. Maybe the young dogs need to learn some old tricks!

Like most older, or as I prefer, seasoned attorneys, I learned early to dictate. Tape-based dictating machines and handhelds were my constant office companions. Instead of typing, I spoke to the recorder – micro-cassette tapes went to my smoking fast secretary, content quickly came back to edit and finalize. It was very efficient – still is. But, with the advent of computers, digital content, emails, texting, smartphones, iPads and other tablets, and now Ultrabooks, keyboards and typing rule. Dictation is, or has been, a skill in decline for attorneys. A walking tour around any law firm, including my own, reveals scores of attorneys staring at screens and typing. Don’t get me wrong, this is not some old-guy rant against the computer-based, digital, interactive world we now live in. I love my tech, my software, my phone, my software, my iPad, my computers, texting, social media, etc. I love all this stuff and am always an early adopter of new tech and software. If used wisely, all this stuff increases efficiency, allows better communication with clients, streamlines the storage and use of data, makes trial presentations more effective, makes timekeeping and billing more efficient, lowers marketing costs, etc. Overall, the tech advances of the last 10-15 years, without dispute, have made attorneys better, more efficient, and more profitable. And, I love my screens like everybody else.

But, that does not mean attorneys, including younger attorneys, should ignore and discard old skills that work. At its core, attorney work is largely about getting our thoughts, analysis and arguments on paper or on a screen and then out to the intended recipient, whether it be a client, opposing counsel or the court. Attorneys dictating – speaking – into content is a highly efficient means to get that work done. And dictation software makes that process even more effective and efficient. I use Dragon NaturallySpeaking on computers with a small bluetooth earpiece. I speak and the computer types what I speak directly into whatever program I using, Word, WordPerfect, billing software, Outlook and other email software, etc. And it really works quite well. The accuracy of the software is much improved from earlier versions and improves dramatically with regular use. And the dictating skills I learned as a young attorney lend themselves quite well to the software.

On a daily basis, I use a mixture of typing some short letters and some emails, dictating with the software into the computer, and more traditional dictation for my assistant to process using micro-cassettes. I edit primarily on the computer. But, as a general rule, with first drafts and new content, the more I touch the keyboard, the less efficient I am. Better to speak into content, rather than type into content. I find the dictation software particularly effective with email, which makes up a large part of the working days of most attorneys. I dictate, edit, spell-check, send and receive most emails, of varying lengths, largely without touching the keyboard. It is very fast and effective. It also works quite well with billing software – with billing software open, I directly dictate my time entires as billable events occur. Overall, I find myself using the software – speaking into content – more and more, and typing less.

Some attorneys – mostly younger attorneys who grew up with computers and keyboards – will argue they can compose and type just as fast as dictating the content . Maybe so, but I just don’t know. I would bet that for the vast majority of attorneys, dictating content is always faster. And with dictation software that actually works, speaking, rather than typing, into content makes even more sense.

And there is always the more serious issue of whether a client is paying for attorney work, or for an attorney doing his/her own clerical work. If an attorney can dictate a letter, email or brief using dictation software or a tape for a non-billed clerical staff to process in .2 hours, but it will take .3 hours to compose and type that letter or email, should the client be billed for that additional .1 hour for the attorney to do what can only be characterized as non-billable clerical work. I know that office work flow and attorney content generation are more complicated concepts than this simple example. But, there is a point to be made here – when does a lawyer cross the line from billing for attorney work to billing for doing his or her own clerical work?

So, I would encourage those of you who cut your teeth as attorneys on dictating content to look anew at those old skills and try the new dictation software. And for younger attorneys, I would encourage you to consider whether being a master of, or perhaps, a slave to the keyboard is always the most efficient and fair – to the client – way to work. Perhaps using some old tricks mixed with new tech will make you more efficient and effective for your clients, and more profitable and indispensable to your law firms.

Case in point, I left my bluetooth earpiece at the office and it took me a hell of a lot longer to type this than it would have taken to speak it!

by James D. Crosby

Klinedinst PC Launches Co-Counsel Services, Catering to Small Law Firms and Solo Practitioners.

Klinedinst PC has launched a brand new service aimed at supporting small firms and solo practitioners tackling significant cases throughout California.

Klinedinst’s Co-Counsel Services are designed to provide trial preparation, research resources, and case advisory services to small firms handling large, complex cases. Solo practitioners and small firms no longer have to refer out this work; instead, Klinedinst attorneys can be brought on board to instantly enhance trial preparation, technical capabilities and staff load to effectively litigate and successfully bring a case to trial.

“This is a revolutionary new concept to the world of small practitioners,” noted James D. Crosby, Shareholder and Chair of the Co-Counsel Services. “When you’re a small firm handling a complex matter, there really are two options: either work the case yourself at the expense of family and other clients, or refer it to a larger firm. Klinedinst’s new Co-Counsel Services provide a third option: keep the client, and bring on a trusted partner to help work the case with you.”

Through Co-Counsel Services, attorneys can choose how to structure their relationship with Klinedinst, The firm’s statewide network of attorneys and staff can assist with motions, discovery, depositions, document management, trial preparation, and if necessary, in-trial assistance in the second-chair role. If an attorney wishes, Klinedinst can serve as first-chair, equally sharing case work and trial duties.

Klinedinst’s Co-Counsel Services are the first of their kind in the nation. “The Co-Counsel Service is a natural progression for us,” stated John D. Klinedinst, Founder and CEO of Klinedinst PC. “We are essentially taking our recognized capabilities in handling major complex litigation, and combining it with our experience working with small firms in the Professional Liability arena.”

“Our focus in a co-counsel relationship is to act as a support system to the small-sized firms in successfully carrying out all aspects of the case,” added Crosby, a business litigator and former solo practitioner who joined Klinedinst in January, 2012. Crosby’s experience in handling complex, multi-district cases for clients served as the inspiration for the Co-Counsel Services. “When you’re a small, independent attorney, you want to do what’s right for your client, but you can only go so far before you hit a ‘capacity ceiling.’ Being able to co-counsel with a trusted legal partner allows attorneys to strengthen their relationships with important clients without sacrificing their practice or personal life.”

The new practice group is available immediately, and will be offered in all four Klinedinst PC office locations in California.

by James D. Crosby

Trial Horse?

After I started at Klinedinst, I started being called, along with other firm trial attorneys, a “trial horse”. I took it as an acknowledgment of my trial experience or, perhaps, a sign of respect for my many years in the trial trenches and active trial practice. A Google search dug up various references to well-seasoned, pugnacious, successful litigators being referred to as “trial horses”. I really liked the term, still do. Jim Crosby – Trial Horse! Cool! But, my Google search, and a simple dictionary search, also turned up a glaring problem with the term. Now, I am not so sure being a “trial horse” is such a good thing!

In the horse-racing world, a trial horse is a horse used for practice by thoroughbreds and champions. In the boxing world, a trial horse is a fighter who can take a punch, but never gets a shot at meaningful fights and gets knocked around by champions for practice. (Think DeNiro towards the end of “Raging Bull”). Online dictionaries define “Trial Horse” as one who is “set up as an opponent for a champion in trial competitions or workouts” or “an opponent who performs against a superior foe in a workout or exhibition”.

See what I mean! Taken literally, being a “Trial Horse” would mean superior attorneys regularly use me as a practice punching bag to beat on in small meaningless trials.

Think I will stick with “seasoned” trial attorney!

by James D. Crosby

Trial Court Cannot Consider The Financial Impact Of An Award of Contractual Attorneys Fees.

Can a trial court consider the financial impact of the attorney fees award in determining reasonable attorney fees under contract per Civil Code Section 1717? California’s First District Court of Appeals says it cannot. Adassa Walker v. Ticor Title Company of California – Court of Appeal Case No: A126710. In Walker, the trial court had considered the financial impact of the award on the plaintiffs in determining the amount of reasonable fees awarded to the prevailing defendants under contract per Civil Code Section 1717. The Court of Appeals held that the trial court had abused its discretion in doing so. The Walker court acknowledged that an award of contractual attorneys fees per Section 1717 may be subject to equitable considerations, but held that “a losing party’s financial condition should not be considered in setting the amount of such an award”. The court noted that unlike statutory fee awards, contractual fees are “voluntarily incurred”.

“The possibility of an award of contractual attorney fees exists because the parties chose to enter into an agreement containing an appropriate provision. The award is a business risk assigned as a matter of mutual agreement by the parties. As a result, contractual attorney fees cannot fairly be characterized as a punishment. Nor can the possibility of an award of contractual attorney fees constitute an improper denial of access to the courts, since the risk of such an award has been undertaken in return for the benefits of the contract”.

The court noted that under Section 1717 courts are instructed to consider such factors as the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case. But, the losing party’s financial condition may not properly be considered and, presumably, evidence of such financial condition would be irrelevant and inadmissible as to the issue of contractual “prevailing party” attorney fees.

Lesson to be learned – if you agree to pay attorneys fees if you lose, crying poor will not work when you do!

by James D. Crosby

Application of Computer Fraud and Abuse Act – Criminalizing Everyday Computer Activity – Nosal: 9th Circuit says No!

Real interesting new 9th Cir. opinion. U.S. v. Nosal. Does an employee who violates an employer policy prohibiting the use of work computers for non-business purposes commit a federal crime under the Computer Fraud and Abuse Act? 9th says No. Nosal – http://1.usa.gov/Hq5Ks9

Real interesting opinion. Turns on statutory construction but makes broader point on criminalizing what might otherwise been considered day-to-day activities by millions of people. Look at this passage:

Minds have wandered since the beginning of time and the computer gives employees new ways to procrastinate, by gchatting with friends, playing games, shopping or watching sports highlights. Such activities are routinely prohibited by many computer-use policies, although employees are seldom disciplined for occasional use of work computers for personal purposes. Nevertheless, under the broad interpretation of the CFAA, such minor dalliances would become federal crimes. While it’s unlikely that you’ll be prosecuted for watching Reason.TV on your work computer, you could be. Employers wanting to rid themselves of troublesome employees without following proper procedures could threaten to report them to the FBI unless they quit. Ubiquitous, seldom-prosecuted crimes invite arbitrary and discriminatory enforcement.

Employer-employee and company-consumer relationships are traditionally governed by tort and contract law; the government’s proposed interpretation of the CFAA allows private parties to manipulate their computer-use and personnel policies so as to turn these relationships into ones policed by the criminal law. Significant notice problems arise if we allow criminal liability to turn on the vagaries of private polices that are lengthy, opaque, subject to change and seldom read. Consider the typical corporate policy that computers can be used only for business purposes. What exactly is a “nonbusiness purpose”? If you use the computer to check the weather report for a business trip? For the company softball game? For your vacation to Hawaii? And if minor personal uses are tolerated, how can an employee be on notice of what constitutes a violation sufficient to trigger criminal liability?

Basing criminal liability on violations of private computer use polices can transform whole categories of otherwise innocuous behavior into federal crimes simply because a computer is involved. Employees who call family members from their work phones will become criminals if they send an email instead. Employees can sneak in the sports section of the New York Times to read at work, but they’d better not visit ESPN.com. And sudoku enthusiasts should stick to the printed puzzles, because visiting www.dailysudoku.com from their work computers might give them more than enough time to hone their sudoku skills behind bars.

The effect this broad construction of the CFAA has on workplace conduct pales by comparison with its effect on everyone else who uses a computer, smart-phone, iPad, Kindle, Nook, X-box, Blu-Ray player or any other Internet-enabled device. The Internet is a means for communicating via computers: Whenever we access a web page, commence a download, post a message on somebody’s Facebook wall, shop on Amazon, bid on eBay, publish a blog, rate a movie on IMDb, read www.NYT.com, watch YouTube and do the thousands of other things we routinely do online, we are using one computer to send commands to other computers at remote locations. Our access to those remote computers is governed by a series of private agreements and policies that most people are only dimly aware of and virtually no one reads or understands.

Take a look, interesting stuff – also an issue that will be before Supreme Court. Other circuits have come down differently on application of the Computer Fraud and Abuse Act.