[00:00:00] Speaker 03:
I'll turn to 24-4076, Moxie Pest Control versus Nielsen.

[00:00:06] Speaker 03:
Mr. Hatch.

[00:00:07] Speaker 03:
Thank you, Your Honor.

[00:00:11] Speaker 00:
May it please the Court.

[00:00:14] Speaker 00:
This starts out as a very kind of exciting case because it's a corporate espionage case.

[00:00:23] Speaker 00:
There are facts alleged that the Court found that shows subterfuge, bribery, theft of trade secrets,

[00:00:30] Speaker 00:
And then it gets decidedly less exciting, but important.

[00:00:37] Speaker 00:
The judge in two paragraphs in his order at the district court level determined that there was not sufficient causation for damages.

[00:00:46] Speaker 00:
And he cited seven facts.

[00:00:47] Speaker 00:
Those facts show essentially the front end and the back end.

[00:00:51] Speaker 00:
It shows the front end that there was a theft of trade secrets.

[00:00:56] Speaker 00:
And on the back end, it shows that there was an increase

[00:00:59] Speaker 00:
in the number of sales representatives, the increase of sales, the increase of profits, that claimed that there wasn't anything in the middle to connect those two and said it would only be speculation if we jumped from one to the other.

[00:01:12] Speaker 01:
Is causation an element of a DTSA claim?

[00:01:16] Speaker 00:
It's an element of the unjust enrichment damages portion.

[00:01:21] Speaker 01:
But not necessary for injunctive relief.

[00:01:24] Speaker 00:
Not for injunctive relief.

[00:01:25] Speaker 01:
Is that still in the case?

[00:01:27] Speaker 00:
I believe it is.

[00:01:29] Speaker 00:
So here the judge in his order did not fairly characterize all the evidence of the record that was in front of him and that would connect those two dots.

[00:01:42] Speaker 00:
And at pages 4 to 15 of our opening brief, and it's discussed at pages 21 to 24 of our brief, we set forth all the facts that go and connect the middle.

[00:01:55] Speaker 00:
It talks about Aptiv being the largest direct competitor, and it cites to depositions and declarations.

[00:02:03] Speaker 00:
It says that Aptiv generates its revenues through these customer sales representatives, which are door-to-door salesmen, and they sell approximately 80 to 90 contracts per season through a deposition.

[00:02:18] Speaker 00:
Through another deposition of Aptiv, it determined that they wanted the power of Moxie's

[00:02:25] Speaker 00:
tracing and information to increase the recruiting of sales representatives.

[00:02:29] Speaker 03:
So the causation wasn't that the sales personnel for Aptiv would be better.

[00:02:37] Speaker 03:
It was your argument was that they got more sales representatives than they would have otherwise.

[00:02:42] Speaker 00:
This entire business, and I think maybe that, you know, I was not the counsel below, but it seems that the district court did not make a determination or have a complete understanding of how this business works.

[00:02:55] Speaker 00:
This is a business that does door-to-door sales and the entire business is getting competent and a sufficient number of competent door-to-door sales people that your business can grow.

[00:03:10] Speaker 03:
So the causation would have to be, would have to start with active getting more sales representatives.

[00:03:17] Speaker 03:
Correct.

[00:03:18] Speaker 03:
And you had that data.

[00:03:19] Speaker 03:
Correct.

[00:03:19] Speaker 03:
They did have more sales representatives.

[00:03:21] Speaker 03:
Correct.

[00:03:22] Speaker 03:
But then you have to show that that's because

[00:03:25] Speaker 03:
of their use of your trade secrets.

[00:03:28] Speaker 03:
Is that the argument you're breaking?

[00:03:31] Speaker 00:
Well, yes.

[00:03:34] Speaker 00:
I want the court to understand the business here, because the whole business is recruiting these sales agents.

[00:03:42] Speaker 00:
This isn't a case of trade secrets like when you're looking at phones, for instance.

[00:03:47] Speaker 00:
And there could be a number of reasons why people buy a phone.

[00:03:51] Speaker 00:
They might like the battery life.

[00:03:53] Speaker 00:
They might like the big screen that's thinner.

[00:03:55] Speaker 03:
But there are also plenty of reasons why they might have been able to hire more people.

[00:04:00] Speaker 03:
But you need to show that they were able to hire more people than they had been by using the information about Moxie's business.

[00:04:08] Speaker 03:
Is that right?

[00:04:09] Speaker 00:
And the question for this court, yes.

[00:04:12] Speaker 00:
The question for this court though, because that ultimately is a fact issue, was whether there were enough facts in the record that a reasonable inference could be drawn or a direct inference that that is why Aptiv was able to recruit as many as they were able to recruit.

[00:04:31] Speaker 00:
Okay, and those are the types of facts that I'm talking about are four to 15.

[00:04:34] Speaker 00:
I mean, it talks about

[00:04:37] Speaker 00:
In several depositions of the active people, it talks about how this trade secret information was shared throughout the organization.

[00:04:47] Speaker 00:
Employees were instructed to use it to recruit.

[00:04:51] Speaker 00:
It was used in recruiting.

[00:04:53] Speaker 00:
It talks about the battle.

[00:04:55] Speaker 00:
One of the depositions cited in our brief talks about the battle to recruit against Moxie.

[00:05:00] Speaker 00:
Understanding this is the business.

[00:05:05] Speaker 00:
This is a well-developed business in the sense that you can't, there's a reason why these types of companies are located in Utah County, Utah, in and around Provo.

[00:05:17] Speaker 00:
And in some degree, they bleed over into St.

[00:05:21] Speaker 00:
George, Utah, Salt Lake City, and Logan.

[00:05:27] Speaker 00:
You have a gold mine of people you don't have to train to do this.

[00:05:33] Speaker 00:
that have been missionaries for the Church of Jesus Christ of Latter-day Saints who have come back and they're going to school.

[00:05:39] Speaker 00:
And this is a great summer job.

[00:05:42] Speaker 00:
They've already been trained.

[00:05:43] Speaker 00:
They've already done a two-year tour at 24-7.

[00:05:46] Speaker 00:
They're not afraid of knocking on doors.

[00:05:47] Speaker 00:
They're not afraid of rejection.

[00:05:48] Speaker 03:
But what the judge seemed to be bothered by is you, I don't think, had evidence of any particular person who was convinced

[00:06:02] Speaker 03:
through the trade secret information to go to work for Aptiv rather than Moxie?

[00:06:09] Speaker 03:
Well, I don't think that's... Do you have anyone that... Yeah, I don't think that's... I decide to go to Aptiv because I learned from this data that I'd make more money with Aptiv than with Moxie.

[00:06:19] Speaker 03:
Did anyone, was there any sales rep that said that?

[00:06:23] Speaker 00:
Yeah, I think there's a deposition.

[00:06:26] Speaker 00:
I think it's cited in the Appendix 26, pages 69, 41 to 42.

[00:06:31] Speaker 00:
There's a deposition of APTIC's executive discussing his use of that information to recruit Gus Becker and Spencer Raymond.

[00:06:39] Speaker 00:
There's numerous instances where they paid $100 to try to meet with Hayden Clifford to try to get him, use the information to try to get him to switch sides.

[00:06:53] Speaker 00:
And just the fact, I think it's a reasonable inference that in using this information and doing it for two years and paying and going through all the subterfuge and the bribery and the theft that they understood that this information was, I think, a reasonable inference that this information was vital to them increasing their recruiting and sales reps.

[00:07:16] Speaker 01:
Is your understanding that district court thought that this evidence was somehow not relevant to causation or it wasn't

[00:07:23] Speaker 01:
The quantum was off, or what?

[00:07:25] Speaker 00:
How do you read the... They have already said that in their brief, but the judge certainly made no such... He just did not list it.

[00:07:31] Speaker 00:
And I think that... He simply did not what?

[00:07:35] Speaker 00:
He did not list any of the facts that we've laid out in our brief that I've been talking about here.

[00:07:40] Speaker 00:
So he didn't confront those?

[00:07:41] Speaker 00:
He didn't confront any of those.

[00:07:43] Speaker 00:
He basically just said, yeah, you did.

[00:07:46] Speaker 00:
And he called it... I thought it was a little generous to call it bad business.

[00:07:52] Speaker 00:
behavior, but, you know, he talks about the theft and he talks about the increased sales at the end, but he doesn't give any credence at all to any of the facts, which I think reasonable inferences can be drawn from, that show that it was used extensively.

[00:08:09] Speaker 00:
It was used in almost every recruiting meeting.

[00:08:12] Speaker 00:
It was seen as that important to active to use that they continued for a period of two years and were willing enough to

[00:08:21] Speaker 00:
give people money.

[00:08:22] Speaker 00:
There's at least one instance of giving someone, if he would get this information so they could use it in their word skewer moxie, he would give them $1,000 and a rare pair of Nike Air Jordan tennis shoes.

[00:08:34] Speaker 02:
I think the judge, my understanding is the judge was concerned that he didn't disagree with any of this.

[00:08:40] Speaker 02:
He just said, you can't make those big inferences that you're wanting to make, that it was too speculative, in the sense that there could have been many reasons why

[00:08:51] Speaker 02:
any particular salesperson went with Moxie.

[00:08:56] Speaker 02:
We don't know.

[00:08:56] Speaker 02:
You're assuming that every increased salesperson that they had was there for one reason and one reason only, and that's a big inference.

[00:09:07] Speaker 02:
And then you also had to make a second inference that once they got there,

[00:09:11] Speaker 02:
That was increased salespeople.

[00:09:14] Speaker 02:
The number of increased salespeople were responsible for the increased income that they had.

[00:09:21] Speaker 00:
Let me unpack that.

[00:09:21] Speaker 02:
And I think there was a lot of inferences, and the judge was struggling with the idea of where am I basing these inferences on?

[00:09:30] Speaker 00:
Yeah.

[00:09:30] Speaker 00:
I mean, there's about four things there.

[00:09:31] Speaker 00:
Let me unpack.

[00:09:32] Speaker 00:
One is I don't think there's any challenge to the fact on the facts.

[00:09:36] Speaker 00:
The facts were agreed to.

[00:09:37] Speaker 00:
I mean, they didn't challenge them in these briefs.

[00:09:41] Speaker 00:
that their business and sales recruit, that the average one gets 80 to 90 sales.

[00:09:47] Speaker 00:
Yeah, that's not what I'm saying.

[00:09:49] Speaker 00:
All of those.

[00:09:49] Speaker 02:
I didn't mean to suggest there was.

[00:09:50] Speaker 02:
I think those were all givens, but that doesn't give you that next step.

[00:09:56] Speaker 02:
And the judge seemed to be saying it's too speculative to assume that that increase was just for this reason.

[00:10:03] Speaker 02:
I think this was, for instance, I mean, just to give you an example, wasn't this during COVID, 2020, 2021?

[00:10:11] Speaker 02:
Yeah, I mean it was, I mean one reason could be that, you know, we had more people that needed jobs.

[00:10:18] Speaker 02:
They were at home.

[00:10:18] Speaker 02:
They needed jobs in their hometown, more college students at home, more people applying for these jobs.

[00:10:23] Speaker 02:
Another reason could be that, and the people were at home when they, when these college students came around, they were there and were interested in pest control.

[00:10:33] Speaker 02:
I mean, my point is there's a lot of inferences that you could make

[00:10:37] Speaker 02:
in addition to the one that you want the court to make.

[00:10:40] Speaker 00:
But my experience in trade suit cases and things like this is that you have to point to something.

[00:10:45] Speaker 00:
So typically, the most reasonable inference here is that all of these facts taken together.

[00:10:53] Speaker 00:
And I'm talking about the facts in our fact section of pages 14 and 15 of our brief.

[00:10:59] Speaker 00:
All those taken together, it's a reasonable inference that happened.

[00:11:02] Speaker 00:
Now, there's a couple other parts of what you raised, one of which is,

[00:11:07] Speaker 00:
We, at the district court level, we did not say that every single one of these people would have taken a job because of the information shared to them that was a trade secret.

[00:11:18] Speaker 00:
As a matter of fact, that's one of the reason the expert, what's her name, Susan, whatever, you know, she, we developed a thing to say how many of these people reasonably would have taken this into account and she came up with the amount of 38%.

[00:11:37] Speaker 00:
So the claim, even at the district court level, wasn't 100%.

[00:11:42] Speaker 00:
So I think there's a reasonable inference that it would have happened.

[00:11:45] Speaker 00:
There's expert testimony to make a determination of what below 100% it would have been.

[00:11:51] Speaker 00:
But the third thing that I would say, Your Honor, is in most of these cases that I've been involved with are a lot like the example I gave earlier about the phone.

[00:12:01] Speaker 00:
You would have expected, if it was speculative, for someone to do just what you did.

[00:12:07] Speaker 00:
to be able to give some factors that may have made it speculative.

[00:12:12] Speaker 00:
In the phone example, you'd say, well, you're saying they stole your idea for an antenna, but a lot of people want to buy it because of longer battery life or because it's thinner or has a bigger screen.

[00:12:22] Speaker 00:
And so you're just speculating, so how do you tie it down to the antenna?

[00:12:26] Speaker 00:
Well, we tied it down to the only thing that's in the record, which is your sales are completely dependent upon these salespeople.

[00:12:35] Speaker 00:
It's interesting to me that the judge and certainly not the appellees in any of their briefs gave any other reason for why those would be there.

[00:12:46] Speaker 00:
So, you know, we're the only ones who threw an expert, you know, took it down from 100% to 38%.

[00:12:53] Speaker 02:
It wasn't their burden to provide it.

[00:12:55] Speaker 00:
I understand it wasn't their burden, but to be speculative, there has to be something that makes it speculative.

[00:13:03] Speaker 00:
The record evidence here is the judge didn't find anything.

[00:13:07] Speaker 00:
There's nothing in that opinion that would give, say, the things you're talking about or give the antenna, the battery, the whatever.

[00:13:17] Speaker 00:
So in this instance, when you have extensive evidence showing that they routinely use this, it was key to them.

[00:13:25] Speaker 00:
They knew that this would be used to be able to skewer Moxley.

[00:13:29] Speaker 00:
This was going to allow them to compete

[00:13:31] Speaker 00:
for a limited pool, because part of your original question assumed a much bigger pool.

[00:13:37] Speaker 00:
For instance, the COVID, just having time on your hand to cut a COVID isn't going to make you a good sales rep.

[00:13:46] Speaker 00:
There's a limited pool.

[00:13:47] Speaker 00:
Essentially, I'll colloquialize it to Provo, Utah, that really are, if you spend your time trying to seek any representatives from anywhere else, you're going to have to train them.

[00:13:56] Speaker 00:
There's a whole new level of your business that you're going to have to implement.

[00:14:01] Speaker 00:
to be able to make sales than being able to go to an area where people have already got two years of intensive training and aren't afraid to get out and do this kind of thing.

[00:14:13] Speaker 00:
I can address any other issues.

[00:14:15] Speaker 00:
I save a minute for rebuttal if I can.

[00:14:18] Speaker 00:
Thank you.

[00:14:19] Speaker 00:
Thank you.

[00:14:22] Speaker 03:
Mr. Stewart.

[00:14:31] Speaker 05:
Good morning, Your Honors.

[00:14:33] Speaker 05:
Thank you for having us.

[00:14:34] Speaker 05:
May it please the Court?

[00:14:38] Speaker 05:
Mr. Hatch raised a few interesting things that I'd like to respond to right off the bat.

[00:14:44] Speaker 05:
Judge Hartz, as to your question, no, Moxie below did not identify a single individual who fit the criteria of being successfully recruited

[00:14:55] Speaker 05:
because of the trade secret information or selling for active.

[00:15:00] Speaker 05:
That's just a fact.

[00:15:02] Speaker 05:
In support of its opposition for summary judgment below, Moxie identified a single individual by the name of Zach Benson.

[00:15:10] Speaker 05:
Zach Benson submitted a declaration that said, I was shown something.

[00:15:13] Speaker 05:
I don't remember what it was.

[00:15:16] Speaker 05:
I went out to sell for APTIV and I quit on day one and never even went and knocked the door, so I didn't sell anything.

[00:15:24] Speaker 05:
So setting aside the question of what he was or wasn't shown, there was no evidence that he had caused any enrichment of APTIV.

[00:15:33] Speaker 05:
And it's really what's interesting, and I was counseled below, trial counsel, Moxie really became a victim of the architecture of its own damage theory.

[00:15:44] Speaker 05:
And by that, I mean their expert Rick Hoffman made six causal assumptions for his unjust enrichment.

[00:15:52] Speaker 05:
His unjust enrichment was number of ill-gotten sales representatives times the average value of the sales rep.

[00:16:01] Speaker 05:
And that's how he got to his number.

[00:16:03] Speaker 05:
So his fifth causal assumption was what he called the hiring assumption, that individuals joined ABDIF because of the confidential information.

[00:16:13] Speaker 05:
His sixth causal assumption was the selling assumption.

[00:16:18] Speaker 05:
Those individuals, in fact, sold for APTIV and therefore enriched them.

[00:16:22] Speaker 05:
And he said, I don't have an opinion on that causation.

[00:16:25] Speaker 05:
Moxie informed me that they're going to introduce evidence at trial to support the facts that some individuals joined APTIV because of the use of the information, but they never did.

[00:16:40] Speaker 05:
And the survey report that Mr. Hatch refers to

[00:16:43] Speaker 05:
done by Sarah Butler, did a correlation study where she asked the number of respondents if company A, hypothetical company A, told you that it had a better track record of sales and you would make more money with company A, would you be more interested in company A?

[00:17:08] Speaker 05:
an unquantified increase in interest.

[00:17:11] Speaker 01:
But it shows motivation for your target demographic.

[00:17:15] Speaker 05:
It shows, well, what's interesting, the number was 38.6.

[00:17:19] Speaker 05:
So as Judge Kimball identified, that's less than 50%.

[00:17:25] Speaker 03:
So I didn't understand what difference that made.

[00:17:28] Speaker 03:
When the point is you're trying to estimate what percentage of

[00:17:34] Speaker 03:
people were recruited because of the trade secrets.

[00:17:39] Speaker 03:
If the trade secrets showed that you make more money for Active than with Moxie, then that seems reasonable.

[00:17:46] Speaker 03:
A third of the people, a little more than a third of the people, will be induced by evidence that you'll make more money there.

[00:17:54] Speaker 03:
And it doesn't have to be more than 50%.

[00:17:57] Speaker 05:
But it's an unquantified, this is what Judge Kimball correctly found.

[00:18:01] Speaker 05:
That merely shows correlation.

[00:18:05] Speaker 05:
That is a correlation between an unquantified increase in interest and these two facts that you told the survey respondents.

[00:18:14] Speaker 05:
And they didn't survey the trade secret.

[00:18:16] Speaker 05:
They just did a hypothetical, if I told you, you would make more money.

[00:18:20] Speaker 03:
It wasn't definitive number for your purposes, but the fact that the number was less than 50%, I don't understand why that matters.

[00:18:28] Speaker 05:
Because Moxie had a preponderance of the evidence.

[00:18:34] Speaker 05:
Well, I understand where you're coming from, Your Honor.

[00:18:37] Speaker 03:
I do.

[00:18:38] Speaker 05:
If the argument is, well, it's probative of what might increase a hypothetical recruits' interest in working in door-to-door sales, sure, it's probative of that.

[00:18:51] Speaker 05:
And the fact that it's less than 50% doesn't matter.

[00:18:54] Speaker 05:
I thought it was remarkable and surprising that less than 50% of people said that they would be more interested if you were going to make more money.

[00:19:02] Speaker 05:
But nonetheless.

[00:19:03] Speaker 05:
And so does those causal assumptions specifically that matter, and here's why.

[00:19:10] Speaker 05:
Because in this court's recent opinion in GeoMet Watch, it took great pains to distinguish between inference and speculation.

[00:19:21] Speaker 05:
And it ultimately concluded that there is not, if there's not foundational evidence for the conclusion, the plaintiff is seeking the jury to reach, that's speculative.

[00:19:35] Speaker 05:
And so that's important here because the conclusion is not a general, you wanted the information, you must have thought it was valuable, ergo, somebody must have joined your company because of the incident.

[00:19:48] Speaker 03:
I don't think that's a speculative.

[00:19:50] Speaker 03:
Well, in the criminal context, if you can show that the prosecutor intentionally destroyed evidence, we have a presumption that it was harmful to the defendant.

[00:20:03] Speaker 03:
Otherwise, why would you have, I mean, it would have been helpful to the defendant.

[00:20:05] Speaker 03:
Otherwise, why would you destroy it?

[00:20:08] Speaker 03:
Here, the fact that they're spending money to get these, I realize you're contesting whether they're actually trade secrets, but that's not an issue on appeal.

[00:20:16] Speaker 03:
Absolutely.

[00:20:17] Speaker 03:
But if you're spending money

[00:20:20] Speaker 03:
to get this information, that's pretty much an admission that this information is economically useful to you.

[00:20:30] Speaker 03:
I think that eliminates a lot of the speculation.

[00:20:33] Speaker 05:
But it doesn't matter because what Moxie would have asked the jury to do is find the number of ill-gotten recruits and multiply it by this number.

[00:20:43] Speaker 05:
And there was no record evidence from which the jury

[00:20:47] Speaker 05:
could conclude that anybody joined Aptiv because of the information.

[00:20:51] Speaker 05:
The jury would have had to create that out of whole cloth.

[00:20:55] Speaker 05:
And that's the point of GeoMet Watch, is it's a rather big deal to put a jury in a box.

[00:21:03] Speaker 01:
And what about Benson?

[00:21:04] Speaker 01:
That's not evidence?

[00:21:05] Speaker 05:
No, because Zach Benson's declaration was, they showed me something that caused me to believe I would sell more for them.

[00:21:13] Speaker 05:
That influenced my decision to join Active, but I never sold any accounts.

[00:21:18] Speaker 05:
Why is that not enough to get to a jury?

[00:21:22] Speaker 05:
Because there was no evidence of enrichment.

[00:21:25] Speaker 05:
What would the jury do with that?

[00:21:27] Speaker 01:
Well, together with the other evidence offered, it just seems to take it apart in bits and pieces defeats our inquiry on causation.

[00:21:37] Speaker 01:
Do you follow?

[00:21:40] Speaker 01:
If the district court said that this is all about correlation, this is not causation evidence, we have to look at the totality.

[00:21:47] Speaker 01:
And it seems to me that there was enough to get to a jury on the question.

[00:21:51] Speaker 01:
And then the issue really does become one of quantification.

[00:21:56] Speaker 05:
And that's where I think GeoMetWatch stands for the proposition that there is this difference between an inference, which this court defined as

[00:22:08] Speaker 05:
a deduction of the existence of a fact, which through human experience is proved by the existence of other facts, right?

[00:22:20] Speaker 05:
And so there's not a predicate fact about joining active and selling active.

[00:22:27] Speaker 05:
There's no evidence.

[00:22:29] Speaker 05:
In fact, the evidence is nobody joined active because of the use of the trade secret information.

[00:22:35] Speaker 03:
Well, that's where I think there is

[00:22:37] Speaker 03:
strong evidence because even after a year of having used this trade secret, alleged trade secret information, active still thought it was worth spending money to get the next years.

[00:22:53] Speaker 03:
And would they do that if they didn't think they were making more money?

[00:22:57] Speaker 03:
In other words, hiring more people as a result.

[00:23:00] Speaker 03:
I think that's a valid inference.

[00:23:02] Speaker 03:
But let me state it in broader terms.

[00:23:06] Speaker 03:
Once you have a wrongdoer, the plaintiff just has to provide reasonable evidence, the amount that you can expect in the circumstances.

[00:23:20] Speaker 03:
What evidence do you think they could have put on and didn't that would have been enough?

[00:23:27] Speaker 05:
Testimony from somebody who says, I joined Aptiv because I was shown the trade secret information.

[00:23:34] Speaker 05:
And to your point,

[00:23:35] Speaker 05:
I expected Mr. Hatch to lean into the bribery.

[00:23:38] Speaker 05:
I mean, we contested those things, but those inferences were drawn in his favor.

[00:23:42] Speaker 05:
Fair enough.

[00:23:43] Speaker 05:
But what this court pointed out in Geo Met Watch, the emails from the defendant put a final nail in their coffin.

[00:23:50] Speaker 05:
They can't still think they're in the game.

[00:23:53] Speaker 05:
Devastate the competition.

[00:23:55] Speaker 05:
And finally, the plan includes to have Geo Met Watch burn in hell.

[00:24:00] Speaker 05:
And this court said none of that matters.

[00:24:03] Speaker 05:
because none of that solved the causal problem that GeoMetWatch had, which was it had no evidence that a substitute guarantor was going to step in and backstop the $100 million loan that had been pulled away.

[00:24:18] Speaker 05:
That's the causal fact that matters.

[00:24:21] Speaker 03:
What about their argument that the judge prevented them from conducting further discovery?

[00:24:27] Speaker 05:
That's an interesting argument.

[00:24:29] Speaker 05:
Under Pump v. Kelly, that's an abusive discretion, this court's decision, Pump v. Kelly.

[00:24:34] Speaker 05:
But the problem is, and what I love, Pump v. Kelly, because it basically says, this court says, don't propound over broad discovery and expect the trial court to fix that for you.

[00:24:48] Speaker 05:
That's what it stands for.

[00:24:49] Speaker 05:
The discovery they sought, they sought five years back to 2016 of all our customer contracts

[00:24:58] Speaker 05:
and our employment agreements.

[00:25:00] Speaker 05:
2.1 million customer contracts, 20,000 employment agreements.

[00:25:06] Speaker 05:
Judge Jenkins said, that's too much.

[00:25:09] Speaker 05:
I think I would give you the 2019 and 2020 rosters.

[00:25:13] Speaker 05:
And they never came back and asked for it.

[00:25:16] Speaker 05:
They waived that.

[00:25:19] Speaker 03:
And that's punk V. Kelly.

[00:25:20] Speaker 03:
Was that a final decision by Jenkins that that's the most you'll get as those rosters?

[00:25:26] Speaker 05:
No, as part of that order, he extended fact discovery another four months.

[00:25:32] Speaker 05:
He actually ordered a balance of each company's rosters and that resulted in five names and the plaintiff didn't even go take the depositions of those five individuals because they didn't want actual evidence of causation.

[00:25:49] Speaker 05:
They wanted to use a fancy survey expert that established this correlation and then have their damage expert, Rick Hoffman, the same expert in GeoMedWatch, multiply the ill-gone recruits by an average value of sales rep, 180,000.

[00:26:07] Speaker 04:
Well, why would you use a value that...

[00:26:17] Speaker 03:
in view every sales rep.

[00:26:19] Speaker 03:
If they had gotten a representative sample, that would have been enough, don't you think?

[00:26:24] Speaker 03:
To get to a jury, yes.

[00:26:26] Speaker 03:
Can I switch to a couple other issues?

[00:26:28] Speaker 03:
Absolutely, sir.

[00:26:30] Speaker 03:
When you moved for summary judgment, you said we're not seeking to stop the injunction.

[00:26:37] Speaker 03:
That's correct.

[00:26:38] Speaker 03:
We have to send it back down for that issue, do we not?

[00:26:41] Speaker 05:
Well, I think that the court's finding of a lack of causation

[00:26:47] Speaker 05:
of damage is the equivalent of the absence of evidence of harm that would support an injunction.

[00:26:54] Speaker 01:
The causation is not an element of the claim if you're seeking an injunction.

[00:26:59] Speaker 05:
No, no.

[00:27:00] Speaker 05:
And under, I'm glad you asked that.

[00:27:02] Speaker 05:
Thank you.

[00:27:02] Speaker 05:
Under both trade secret acts, and those are the statutory injunctions they sought, it's actually forward looking.

[00:27:09] Speaker 05:
An injunction is available to a plaintiff if it's necessary to prevent attempted

[00:27:17] Speaker 05:
or misappropriation of the trade secret.

[00:27:20] Speaker 03:
But it's just unfair to not move for summary judgment on the injunction.

[00:27:26] Speaker 03:
So they have no reason to respond and explain why they think an injunction should be enforced.

[00:27:34] Speaker 03:
I mean, that's just not fair.

[00:27:37] Speaker 05:
I fundamentally understand that, Your Honor.

[00:27:39] Speaker 05:
I do fundamentally understand this.

[00:27:41] Speaker 05:
Now, it has been

[00:27:43] Speaker 05:
over four years since there's been any allegation of the use of this information.

[00:27:47] Speaker 05:
That you may well win on that.

[00:27:50] Speaker 05:
Right.

[00:27:50] Speaker 05:
But on a procedural standpoint, yes.

[00:27:52] Speaker 05:
They said, we have this injunctive claim.

[00:27:55] Speaker 05:
In our opposition to the summary judgment said, we're not moving on injunctive relief.

[00:28:00] Speaker 05:
OK.

[00:28:00] Speaker 05:
The other thing is royalty relief.

[00:28:02] Speaker 03:
Yes.

[00:28:03] Speaker 03:
This is a problem by having two judges.

[00:28:06] Speaker 03:
Yes.

[00:28:06] Speaker 03:
One judge has to understand what the private

[00:28:09] Speaker 03:
I've seen this many times happen, that it just isn't the communication that would happen within one person's brain.

[00:28:16] Speaker 03:
So he says, that doesn't mean, this is what Judge Jenkins said, that doesn't mean that we can't talk about damages.

[00:28:24] Speaker 03:
So I think at this point what I'm going to do is deal with the question of royalty and indicate I'm not going to preclude people from talking about damages, but I'm not going to be dealing with anything called royalty.

[00:28:37] Speaker 03:
Then explain,

[00:28:39] Speaker 03:
We'll skip characterizing anything as royalty, but nothing says we can't talk about licenses, which is an equivalent notion in this context, at least, or damages or value of running off with something that doesn't belong to you.

[00:28:52] Speaker 03:
To that modest extent, I'll grant your motion.

[00:28:55] Speaker 03:
That, to me, doesn't read as foreclosing royalties.

[00:29:00] Speaker 03:
The judge may have had good reason for not allowing royalties to proceed because

[00:29:07] Speaker 03:
the offer of evidence on the subject was pretty, but if that's like with the injunction, if that's not challenged in your summary judgment, we also should get summary judgment with respect to their potential royalties claim, then the plaintiff doesn't have a reason to present.

[00:29:25] Speaker 05:
But they didn't preserve it below at the motion for summary judgment stage because they didn't argue that they survived summary judgment because they had royalty damages.

[00:29:34] Speaker 05:
They didn't brief it.

[00:29:35] Speaker 05:
And it's the exact situation as in Geo Met Watch where plaintiff's counsel said, OK, OK, but we've got this other theory of business valuation that we disclosed in our supplemental disclosure.

[00:29:47] Speaker 03:
So when you move for summary judgment, that motion

[00:29:51] Speaker 03:
clearly would have encompassed royalties and not just unjust enrichment?

[00:29:56] Speaker 05:
Absolutely.

[00:29:56] Speaker 05:
We were moving to dismiss the trade secret claims, which there are three enumerated damages available, lost profits, unjust enrichment, or royalty damages as an alternative theory.

[00:30:08] Speaker 05:
And we moved to dismiss those claims for lack of causation, not just on unjust enrichment.

[00:30:14] Speaker 03:
And they didn't believe in this royal... For lack of causation, the causation that was missing

[00:30:20] Speaker 03:
with unjust enrichment was to show that the use of the trade secrets enabled them to get more employees.

[00:30:27] Speaker 03:
For royalties, as I understand it, you just value the information and say you should have had to pay a royalty for the value of the information, even if it turned out to be totally unsuccessful.

[00:30:40] Speaker 03:
So the causation argument doesn't prevent the royalties claim, does it?

[00:30:43] Speaker 05:
Sure, but they didn't preserve that blow because they did not have a royalty theory.

[00:30:48] Speaker 02:
The motion to exclude... Did you make that argument in your summary judgment?

[00:30:52] Speaker 02:
You didn't say anything about royalties.

[00:30:53] Speaker 02:
Shouldn't you have said they don't have any basis for their royalties?

[00:30:57] Speaker 05:
Yes.

[00:30:58] Speaker 05:
No, we actually did.

[00:30:59] Speaker 05:
In our statement of genuine facts, undisputed facts in our summary judgment, we said their only damages are unjust enrichment because royalty damages were excluded.

[00:31:10] Speaker 02:
But that's not accurate.

[00:31:12] Speaker 02:
They weren't excluded.

[00:31:13] Speaker 05:
They were excluded.

[00:31:14] Speaker 02:
What the judge said was basically you can't call them royalty damages.

[00:31:19] Speaker 02:
It was a very confusing order, but he definitely did not exclude them.

[00:31:25] Speaker 02:
And if you accept that they weren't excluded by that very confusing order, then you didn't move for summary judgment on causation as to royalty damages.

[00:31:40] Speaker 05:
Sure, by virtue of moving for summary judgment on those

[00:31:43] Speaker 05:
claims, the federal defense trade secret claim and the Utah misappropriation of trade secret claim, we move for the dismissal of those claims, not based upon a particular theory of damages.

[00:31:54] Speaker 02:
Based on?

[00:31:56] Speaker 02:
I'm sorry.

[00:31:56] Speaker 05:
I'm sorry.

[00:31:57] Speaker 05:
No, I don't want to interrupt you.

[00:31:58] Speaker 02:
Well, I don't think we're talking about the same thing.

[00:32:01] Speaker 02:
I mean, you filed a motion for summary judgment, and you said, oh, the royalty claims have been excluded.

[00:32:07] Speaker 02:
But if we disagree with that, and I think I do, which is because that order didn't say that at all,

[00:32:13] Speaker 02:
then what was the basis for your summary judgment motion on the royalty damages?

[00:32:20] Speaker 05:
There was no evidence of royalty damage.

[00:32:22] Speaker 02:
And did you argue that?

[00:32:23] Speaker 05:
Yes.

[00:32:24] Speaker 02:
Okay.

[00:32:25] Speaker 02:
You argued that and didn't just put a statement of fact in that there was... No, this was a four-hour argument.

[00:32:32] Speaker 02:
Oh, we're talking about the actual argument?

[00:32:35] Speaker 05:
We briefed it and we argued it.

[00:32:37] Speaker 02:
And you briefed the issue of summary judgment on royalty damages based on their lack of proof of royalty damages.

[00:32:47] Speaker 02:
Yes.

[00:32:47] Speaker 02:
Of a $19 million.

[00:32:49] Speaker 05:
Now, I don't want to mislead you, but the way we characterize... That's not what I understood.

[00:32:52] Speaker 05:
No, the way we characterize it in our briefing is they still cannot tell us the basis of this $19 million of royalty.

[00:33:03] Speaker 05:
Understand, throughout the course of the litigation,

[00:33:05] Speaker 05:
They said, we're going to have an expert witness who gends up a royalty damage theory.

[00:33:10] Speaker 05:
Something I'm very familiar with.

[00:33:11] Speaker 05:
I've seen lots of experts do that.

[00:33:13] Speaker 05:
Expert disclosures come.

[00:33:15] Speaker 05:
No expert opinion on royalty, nor any evidentiary basis for the $19 million disclosure, which came weeks after the close of fact discovery and for the first time.

[00:33:26] Speaker 05:
And the final point, if I can make on this, when I deposed the owner and CEO of Moxie,

[00:33:33] Speaker 05:
right, because he was an unretained expert.

[00:33:36] Speaker 05:
So this was well after fact discovery.

[00:33:37] Speaker 05:
And I asked him, I said, Mr. Walton, what's the basis for this naked $19 million royalty?

[00:33:43] Speaker 05:
And he said, well, I was told that there was going to be an expert witness on that.

[00:33:49] Speaker 03:
It's the procedural thing that bothers me.

[00:33:51] Speaker 03:
On this record, you probably have a good argument for summary judgment on the royalties issue.

[00:33:57] Speaker 03:
But if that issue wasn't presented in district court, then Moxie

[00:34:02] Speaker 03:
wasn't alerted that they had to give you that evidence at the time.

[00:34:07] Speaker 03:
So your motion for summary judgment from the document, from what I understand, simply said there is no royalty claim here or something that's been disposed of.

[00:34:20] Speaker 03:
You said that where?

[00:34:21] Speaker 03:
In the statement of undisputed fact?

[00:34:23] Speaker 05:
No, we stated in the body of the motion where we said that

[00:34:30] Speaker 05:
Royalty damages were excluded.

[00:34:31] Speaker 05:
We understand Moxie disagrees because of the confusing nature of the order, which I concede it was a confusing hearing.

[00:34:38] Speaker 05:
And I may have, that may be partly my fault because I think Judge Jenkins may have believed I was seeking to exclude all damages, right?

[00:34:48] Speaker 05:
And he said, well, we're not going to talk about, you know, excluding the value of something that somebody took that wasn't there.

[00:34:56] Speaker 05:
Judge Jenkins.

[00:34:58] Speaker 05:
And the motion for summer judge was before Judge Campbell.

[00:35:01] Speaker 05:
Correct.

[00:35:01] Speaker 05:
And sadly, Judge Jenkins passed away shortly after that hearing.

[00:35:06] Speaker 05:
It was sad for many reasons.

[00:35:07] Speaker 03:
Yeah.

[00:35:08] Speaker 03:
He was a brilliant judge.

[00:35:12] Speaker 03:
So then at the hearing on your motion, was royalties discussed?

[00:35:18] Speaker 05:
Yes.

[00:35:19] Speaker 03:
OK.

[00:35:19] Speaker 03:
Well, that may be.

[00:35:21] Speaker 03:
Well, we'll have to look at the record.

[00:35:23] Speaker 05:
You have to look at the record.

[00:35:24] Speaker 05:
And I do understand the, I mean, I think if you were

[00:35:27] Speaker 05:
I understand.

[00:35:28] Speaker 05:
Thank you very much for your time.

[00:35:33] Speaker 00:
On this point, I think our understanding is the same as yours, Judge Moritz.

[00:35:47] Speaker 00:
There is no record evidence.

[00:35:49] Speaker 00:
This is all attorney argument.

[00:35:50] Speaker 00:
It's not in this briefing.

[00:35:52] Speaker 00:
It wasn't in the summary judgment briefing.

[00:35:54] Speaker 00:
This is all after the fact.

[00:35:56] Speaker 00:
The judge threw, frankly, in his order, threw in, threw out injunction and royalty damages without any analysis and without any record, without any opportunity to argue it.

[00:36:06] Speaker 03:
Did ABTIV in its motion for summary judgment, somewhere in that motion, assert that royalties

[00:36:15] Speaker 03:
were dispensed by Judge Jenkins.

[00:36:16] Speaker 03:
That's not my understanding.

[00:36:19] Speaker 03:
Did you say anything about royalties in your response?

[00:36:22] Speaker 00:
I was not the counsel below.

[00:36:24] Speaker 00:
But as I understand it, there's no record evidence of that.

[00:36:28] Speaker 03:
There's no record evidence that the Demasi attorney said anything about royalties?

[00:36:34] Speaker 00:
That was an issue in that summary judgment.

[00:36:38] Speaker 00:
It wasn't in the briefing, and it wasn't

[00:36:40] Speaker 00:
It wasn't directly addressed and the judge didn't directly address it.

[00:36:44] Speaker 03:
It was addressed in the hearing.

[00:36:46] Speaker 03:
Are you saying it doesn't count if it was said at the hearing?

[00:36:49] Speaker 00:
If it was stated.

[00:36:50] Speaker 02:
There was some discussion at the hearing.

[00:36:52] Speaker 02:
As I recall seeing, there was some discussion at the hearing about the fact that there wasn't any, essentially that you had given this $15 or $19 million figure for royalty damages, but that there was no backup, no

[00:37:06] Speaker 02:
basis for it.

[00:37:07] Speaker 02:
I think that came up at the hearing.

[00:37:08] Speaker 00:
It may have come up in passing, but it wasn't part of the summary judgment.

[00:37:12] Speaker 00:
It wasn't part of the judge's decision.

[00:37:15] Speaker 00:
I just also want to make it somewhat clear is, you know, the evidence in the record is that Moxley did use, we don't have to, you're right, we don't have to show every single person, but they did use the information recruited Spencer Raymond and Gus Becker.

[00:37:29] Speaker 00:
That's in volume 26.

[00:37:31] Speaker 00:
pages 69, 41 to 42 and pages 70, 85 and 96.

[00:37:36] Speaker 00:
It's also in the record that they persuaded Zach Benson to accept a job there using that information and that's in several places in the record and it's related in our brief.

[00:37:50] Speaker 00:
The discovery issue becomes kind of an interesting one, because Judge Jenkins kind of seems not to have understood.

[00:37:56] Speaker 00:
And what he restricted discovery on is he said, you can only, this is why I'm somewhat getting whipsawed.

[00:38:02] Speaker 00:
He said, you can only discover if it was somebody who was a MOXIE employee who was persuaded to leave MOXIE and go over to APTIF.

[00:38:12] Speaker 00:
And that's not our case.

[00:38:14] Speaker 03:
Yeah, but he said, let's take a look at that.

[00:38:17] Speaker 03:
As I read,

[00:38:19] Speaker 03:
what the judge said.

[00:38:20] Speaker 03:
He was saying, let's look at that stuff, then maybe we can do some more.

[00:38:27] Speaker 03:
I don't think he was cutting you off.

[00:38:29] Speaker 03:
And the fact that it was another three months of discovery reinforces my view of that.

[00:38:34] Speaker 00:
And I understand that from a discovery point.

[00:38:36] Speaker 00:
Where it's important though is they're now in the context

[00:38:41] Speaker 00:
that say the summary judgment and other things saying that you haven't shown anything and we have shown that they used the information, they used it to recruit people, they used it to recruit people who started there and the reasonable inference from everything else is that this was really important to their business.

[00:38:59] Speaker 03:
What I want to focus on is why didn't you then, after getting the first discovery that was allowed by Judge Jenkins, why didn't you pursue

[00:39:12] Speaker 03:
depositions of at least some of the people who didn't work for Aptiv.

[00:39:18] Speaker 03:
That would have been the evidence that would have been most telling.

[00:39:22] Speaker 00:
Well, but they did.

[00:39:23] Speaker 00:
I mean, they did do depositions of the CEO, Mr. Bess Pearson.

[00:39:29] Speaker 00:
Salespeople.

[00:39:30] Speaker 00:
They did.

[00:39:31] Speaker 00:
They did.

[00:39:31] Speaker 00:
Kyle Nielsen, the Aptiv president of sales.

[00:39:34] Speaker 00:
I don't know if I'll get them all here.

[00:39:37] Speaker 02:
No, he's not asking about that.

[00:39:38] Speaker 03:
I'm talking about the executives, the management.

[00:39:40] Speaker 00:
I'm talking about... You're looking about... I know, you're looking for the... People who would say, who could testify... The Sam's Roofs.

[00:39:44] Speaker 00:
Well, of course I would... I believe they took the deposition of Benson, so that would be one.

[00:39:51] Speaker 00:
I can't remember if they took the depositions of Raymond and Becker.

[00:39:57] Speaker 00:
I'm looking for, see if there's anything in my notes that would indicate that.

[00:40:00] Speaker 03:
Well, let me... Did you acknowledge that you...

[00:40:03] Speaker 03:
could have pursued discovery on that issue if you had desired.

[00:40:08] Speaker 00:
It's not clear because they, my understanding, again, I wasn't the counsel below, but my understanding of what's in the record and we mentioned this in our brief is that they use the Judge Jenkins motion of the limiting to stop discovery.

[00:40:27] Speaker 00:
And so anytime we asked for things like that, they said,

[00:40:30] Speaker 01:
But that's not what the order, the order would have permitted you to come back because it was, seemed to have been modulating the burden on the parties and sort of doing the classic discretionary thing that district court judges do all the time and wouldn't have prevented you from coming back.

[00:40:49] Speaker 00:
Yeah, if the lawyers had been a little more vigilant, yeah, could they have come back and done a reconsideration essentially?

[00:40:55] Speaker 01:
No, no, not a reconsideration, but come back and ask for more discovery.

[00:40:58] Speaker 00:
Oh, I see what you're saying.

[00:41:00] Speaker 00:
Well, but on that particular discovery, the judge had closed the door.

[00:41:03] Speaker 00:
So I'm having to talk about it on the council and say, should they have gotten more aggressive with Judge Jenkins?

[00:41:11] Speaker 00:
I've been in front of him many times, and sometimes that works, and sometimes it has a disastrous result.

[00:41:17] Speaker 00:
But I don't think accepting the judge's order was necessarily a bad thing for them to have done.

[00:41:25] Speaker 00:
Thank you, Your Honor.

[00:41:26] Speaker 00:
Thank you very much.

[00:41:28] Speaker 03:
Thank you, counsel.

[00:41:29] Speaker 03:
Case is submitted.

[00:41:31] Speaker 03:
Counselor excused.