HCC Insurance Holdings, Inc. v. Flowers et al
OPINION AND ORDER denying Defendants' Motion for Attorney's Fees and Expenses 124 . Signed by Judge William S. Duffey, Jr on 11/6/17. (ddm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
HCC INSURANCE HOLDINGS,
VALDA FLOWERS, MICHAEL
REMEIKA, and CREATIVE RISK
OPINION AND ORDER
This matter is before the Court on Defendants’ Valda Flowers (“Flowers”),
Michael Remeika (“Remeika”), and Creative Risk Underwriters, LLC (“CRU”)
(collectively, the “Defendants”) Motion for Attorney’s Fees and Expenses 
On September 16, 2015, HCC Insurance Holdings, Inc. (“Plaintiff”) initiated
this action alleging that Flowers, at the direction of Remeika, misappropriated
Plaintiff’s trade secrets to establish CRU and compete with Plaintiff.1 Plaintiff
claimed Flowers engaged in a variety of activities that indicated that she
misappropriated Plaintiff’s trade secrets. On July 29, 2016, Defendants moved for
summary judgment , and on February 22, 2017, the Court granted the motion
and dismissed the action with prejudice  (“Summary Judgment Order”).
On March 8, 2017, Defendants filed their Motion requesting the Court find
that Plaintiff HCC brought and maintained in bad faith its claim for
misappropriation of trade secrets pursuant to the Georgia Trade Secrets Act,
O.C.G.A. § 10-1-760.
Defendants seek attorney’s fees pursuant to the Georgia Trade Secrets Act,
which provides that “[i]f a claim of misappropriation [of trade secrets] is made in
bad faith . . . the court may award reasonable attorney’s fees to the prevailing
The Revised Second Amended Complaint , filed on June 30, 2016,
specifically asserted the following claims: (1) misappropriation and theft of trade
secrets, in violation of the Georgia Trade Secrets Act, O.C.G.A. § 10-1-760, et seq.
(“GTSA”); (2) breach of contract; (3) tortious interference with contract; (4)
violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, et seq.
(“CFAA”); (5) breach of fiduciary duty; and (6) attorney’s fees under O.C.G.A. §
party.” See O.C.G.A. § 10-1-764. “Whether to grant attorney’s fees is firmly
within the discretion of the [c]ourt.” Greenberg Farrow Architecture, Inc. v.
Perkins Eastman Architects, P.C., No. 1:12-cv-1435-ODE, 2014 WL 12694260, at
*6 (N.D. Ga. July 1, 2014); see also Brandenburg v. All-Fleet Refinishing, Inc.,
252 Ga. App. 40, 43 (Ga. Ct. App. 2001) (finding “the court may award reasonable
attorney fees to the prevailing party” pursuant to O.C.G.A. § 10-1-764).
The statute, which is based on the Uniform Trade Secrets Act, does not
define “bad faith,” and Georgia authority applying O.C.G.A. § 10-1-764 is almost
nonexistent. Greenberg, 2014 WL 12694260 at *6. The one decision in this
district considering the issue applied the authority of other circuits interpreting the
bad faith language used in the Georgia trade secrets statute or other state laws
patterned after the Uniform Trade Secrets Act. Id. at *6.
That authority dictates a two-prong approach to determine whether (1) the
plaintiff’s claim was “objectively specious” and (2) the plaintiff exhibited
“subjective misconduct” in bringing or maintaining the claim. Rent Info. Tech.,
Inc. v. Home Depot U.S.A., Inc., 268 F. App’x 555, 560 (9th Cir. 2008)
(interpreting the “bad faith” requirement of O.C.G.A. § 10-1-764). “Objective
speciousness exists where there is a complete lack of evidence supporting
plaintiff’s claim.” Id. (citing Computer Econ., Inc. v. Gartner Group, Inc., No. 98-
cv-312 TW(CGA), 1999 WL 33178020, at *6 (S.D. Cal. Dec. 14, 1999).
“Subjective misconduct [or bad faith] exists where a plaintiff knows or is reckless
in not knowing that its claim for trade secret misappropriation has no merit.” Id.
Defendants argue that Plaintiff’s trade secrets claim2 is objectively specious
“because there is a complete lack of evidence as to every element of a
misappropriation of trade secrets claim.” ([124.1] at 7). Defendants, to support
their argument, rely on Hill v. Best Medical Intern, Inc., which found objective
speciousness where “[the defendant] failed entirely to come forth at summary
judgment with evidence to support any of its misappropriation claims.” 2011 WL
6749036, at *8 (W.D. Pa. Dec. 22, 2011).3 The facts here reveal, however, that
Plaintiff did not “fail entirely” to provide evidence to support its claim. Instead,
Plaintiff provided some evidence, albeit circumstantial, to support at least some
The GTSA “provides that a plaintiff may recover damages for the
misappropriation of trade secrets upon proof that (1) it possessed a trade secret,
and (2) the opposing party misappropriated it.” Diamond Power Intern., Inc. v.
Davidson, 540 F. Supp. 2d 1322, 1332 (N.D. Ga. 2007).
Defendants appear to suggest in their Motion that the mere grant of
summary judgment is itself sufficient to show “bad faith” on the non-moving party.
The rule cannot be, however, that where a party fails to meet the summary
judgment standard (e.g. that there is a genuine issue of material fact), he or she has
impliedly pursued a claim in bad faith.
elements of its misappropriation claim.4 The Court in the Summary Judgment
Order noted that Plaintiff “present[ed] circumstantial evidence that Flowers or Mr.
Flowers may have transferred documents to Flowers’ home computer.” ( at
20). The Court also observed that Plaintiff provided some circumstantial evidence
that Defendants may have used or disclosed its alleged trade secrets to acquire
customers from Plaintiff, including evidence that
CRU was formed from the ground up in approximately two
months, and “stole” its first account from HCC one month after
Remeika and Flowers resigned.
Within the first five months of CRU’s existence, CRU “stole”
17 former HCC Life accounts.
A July 2015 CRU strategy document stated that CRU’s strategy
was to “cherry-pick” accounts from HCC.
( at 21). The fact that the Court ultimately held that Plaintiff failed to present
The Court held in its Summary Judgment Order that Plaintiff did not present
“any evidence” that it “(1) labeled the [alleged trade secrets] confidential or
otherwise communicated the confidentiality of the [alleged trade secrets] directly
to its employees; (2) directed its employees to maintain the secrecy of the file other
than through a general confidentiality agreement that did not expressly mention the
[alleged trade secrets]; or (3) tracked the use of [the alleged trade secrets].” (
at 16). The Court concluded that Plaintiff “did not, as a matter of law, take
reasonable efforts to maintain the security of the [alleged trade secrets][, and] thus
[could not] establish that its [alleged trade secrets were] entitled to protection . . .
under the GTSA.” (Id. at 16-17). The fact that the Court determined that there
was a lack of evidence as to part of Plaintiff’s misappropriation claim does not
support that Plaintiff’s claim was not objectively specious.
evidence sufficient to create a genuine issue of material fact on its
misappropriation claim does not, as Defendants seem to suggest, imply that
Plaintiff pursued its claim in bad faith. Plaintiff presented at least some evidence
to support its misappropriation claim, and therefore it cannot be, as the objective
speciousness definition provides, that “there is a complete lack of evidence
supporting plaintiff’s claim.” The Court holds that Plaintiff proffered at least some
evidence as to its misappropriation claim, which is sufficient to overcome the
question of whether Plaintiff’s claim was objectively specious.
Defendants also contend that Plaintiff exhibited “subjective misconduct” in
bringing and maintaining its misappropriation claim. Defendants state that “[e]ven
after learning early in the litigation that there was no evidence that Defendants
copied any [of Plaintiff’s] information, [Plaintiff] decided to go forward with its
trade secret claim.” ([124.1] at 10). Defendants argue that Plaintiff continued to
pursue its claim even after a neutral forensic examiner and Plaintiff’s own forensic
expert were unable to identify information or files taken from Plaintiff. (Id.).
Plaintiff disputes that the forensic investigation conclusively established or put
Plaintiff on notice that its misappropriation claim was meritless. ( at 21).
Defendants also argue that the testimony of Plaintiff’s executives
demonstrates that Plaintiff knew its claim was without merit. For example,
Defendants cite to the testimony of Plaintiff’s former Regional Vice President of
Sales, Bruce Shaver, identified by Plaintiff in its Initial Disclosures  as a
witness that may have had knowledge of its claims. The following exchange
occurred in Shaver’s deposition,
You understand that HCC has alleged that Mr. Remeika stole HCC
trade secrets; correct?
And you personally do not believe that, do you?
I do not.
And you do not believe the allegation made by HCC, you personally,
that Val Flowers stole HCC trade secrets, do you?
I personally would not have thought that she would have stole trade
([94.3] at 3). Plaintiff argues that the deposition testimony that Defendants
reference in their Motion, including that of Dan Strusz and Bruce Shaver, fails to
prove that it acted with subjective bad faith. ( at 21-22). Plaintiff contends
the testimony involves personal opinions and speculation. (Id. at 22). Defendants
argue finally that Plaintiff’s “evasiveness during discovery further supports that it
knew or should have known that its trade secret claim was baseless.” ([124.1] at
13). Plaintiff objects to Defendants’ contention. (Id. at 23).
The record here reveals that circumstantial evidence existed as to Plaintiff’s
misappropriation claim, and the Court cannot conclude that Plaintiff’s decision to
continue to litigate the claim was in bad faith. While the expert reports revealed
that there was no direct evidence of a transfer of trade secrets, the Plaintiff’s
expert’s report and deposition testimony is sufficient to show that Plaintiff was
warranted in believing it may have had a legitimate claim. The following
exchange, for example, occurred during the Plaintiff’s expert’s deposition:
You have got on Page 3 of your report, “Flowers’ Activity on HCC’s
Computer System and Her HCC Life Work Computer in the Days
Before Her Resignation.” You see that?
And you focus on activities where she moved and deleted a bunch of
e-mails and accessed a bunch of Hot Sheets, correct?
Through my experience and the activity and her suspicious behavior,
she moved that number of e-mails for no apparent reason through the
investigation or no alerts or limits that were brought to my attention.
Just the overall activity and moving them outside of the HCC
network, and then having the ability to move those to other devices
without being tracked, yes, I find that highly suspicious.
([92.4] at 9). The expert report explained that “8,683 e-mails were moved from
Flowers’ HCC Life Insurance Company (“HCC Life”) e-mail account to her
personal home folder on HCC Life’s network server,” that a number of the alleged
trade secret materials were copied onto the local drive of Flowers’ work computer,
including the alleged trade secret materials, and that those files were deleted days
before Flowers’ resignation. Although the expert admitted that he could not locate
direct evidence of transferred trade secrets to Defendants’ personal computer or
other devices, he provided at least some circumstantial evidence suggesting
conduct supporting the claim. Advanced Technology Services, Inc. v. KM Docs,
LLC, No. 1:11-cv-3121-TWT, 2013 WL 3280032, at *2 (June 27, 2013) (finding
that although circumstantial evidence presented by the plaintiff as to its copyright
claim was insufficient to overcome summary judgment, the plaintiff did not act in
The Court further finds that the testimony of Plaintiff’s own witnesses
regarding whether Defendants may have engaged in misappropriation of trade
secrets does not itself support the fact that Plaintiff engaged in subjective
misconduct. A review of the record shows that those witnesses provided personal
opinions regarding legal conclusions of the case. Such evidence does not prove
that Plaintiff knew or was reckless in not knowing that its claim for trade secret
misappropriation had no merit. And, finally, the Court finds Defendants’
argument regarding Plaintiff’s “evasiveness” during discovery unsupported by
facts in the record.
The Court holds that Plaintiff did not engage in subjective misconduct in
bringing or maintaining its misappropriation claim.
For the foregoing reasons,
IT IS HEREBY ORDERED that Defendants’ Motion for Attorney’s Fees
and Expenses  is DENIED.
SO ORDERED this 6th day of November, 2017.
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